Public transit systems across California are experiencing a financial crisis, with ridership and fare revenues remaining depressed as inflation and tariffs push costs higher. Fortunately, the Newsom administration and the state legislature have worked hard to help keep the state’s transit agencies solvent. As federal relief funding for transit began to run out in 2023, the state augmented total statewide transit funding by $5.1 billion, and this year it agreed to authorize $750 million in lifeline loans to help BART, Muni, Caltrain, and AC Transit buy time to avoid service cuts and generate more local funding via a regional ballot measure planned for November 2026. (However, as the legislative session came to conclusion, the loan had not been finalized, creating significant uncertainty for operators who are months away from a “fiscal cliff.”) Additionally, the state is contemplating how much funding to provide on a continuous basis through the Cap-and-Trade program.
As Sacramento is asked to commit more resources to agencies that are locally controlled, the question of how to ensure that transit is “accountable” to lawmakers, taxpayers, and riders looms large.
Transit agencies are already subject to extensive oversight and reporting requirements. While the desire for more accountability is widely held, there’s less unanimity on what the concept means in practice. For some policymakers, accountability is about customer experience: safety, cleanliness, ease of use, and convenience. For others, accountability is about financial oversight and transit productivity metrics such as number of riders served or operating cost per hour of service. In this case, accountability means ensuring that state funds are transparently and efficiently spent to achieve state policy goals.
Accountability has emerged as a critical issue in the development of Senate Bill 63, the bill authorizing a future regional transit funding measure in the Bay Area. But even beyond the regionally specific issues addressed in that leg- islation, broader questions about accountability are likely to persist at the state government level. The issue was first broached when, as part of the relief package provided in 2023, the state legislature required the California State Transportation Agency to establish the Transit Transformation Task Force to recommend ways to grow transit ridership and improve customer experience. Similarly, accountability questions are bound to emerge as the legisla- ture considers reauthorizing the Cap-and- Invest (formerly Cap-and-Trade) Program, a significant funding source for public transit, and discusses potential reforms to the Transportation Development Act, a state fund- ing program for transit operations that also sets reporting and performance requirements.
SPUR is a leading advocate for transit funding and reform at both the state and local level. We have developed five accountability principles that we hope can help guide state policymakers as they consider new investments and require- ments for California’s transit operators.
1. Be sensitive to scale.
California’s more than 200 transit agencies dif- fer widely in financial and operational scale. Just three operators — LA Metro, the San Francisco Municipal Transit Agency, and BART — account for more than 50% of all transit riders, and while the state’s smallest public transit operators have annual operating budgets in the hundreds of thousands of dollars, LA Metro’s 2023 operat- ing budget was more than $2 billion. An accountability approach that makes sense for an agency of LA Metro or BART’s scale will be unrealistically burdensome for a small rural bus operator. There may be some account- ability requirements that make sense across all agencies, but the state should also be open to approaches that are more tailored to the scale of agency and investment.
2. Consider the state’s stake.
The state plays a significant but minority role in transit funding. In 2019, for example, California funded only about 19% of all transit operations. The state also plays a minority role in capital investment; transit agencies reported using state funds for an average of 16% of their capital expenditures between 2018 and 2022.
Accountability requirements should reflect the state’s investment profile relative to other layers of government. Instead of attaching novel requirements to relatively small investments, the state should consider how its account- ability measures enhance and align with those imposed by other layers of government. Con- versely the state may want to consider tailoring more specific accountability requirements for projects and services in which it invests most heavily and for which it is the dominant funder.
3. Direct investment where it will achieve policy goals.
The state distributes funding for transit differ- ently across many programs. Some monies are provided on a formula basis, with awards linked to population and agency budget size. Other monies are distributed competitively, with agencies applying to fund projects or using state funds as a match to compete for federal monies. In some cases, the metropolitan plan- ning organization or regional transportation planning agency plays an intermediate role in funding allocation decisions.
State funding programs’ fragmented nature and diverse distribution methods can dilute the state’s ability to achieve transit policy outcomes. One way to more tightly link investment with these outcomes might be to distribute any new state transit funding using a formula tied to ridership or passenger miles traveled (the number of passengers multiplied by the number of miles traveled). Such an approach would mean the state was directly paying for outcomes, with more people traveling more miles directly translating into fewer greenhouse gas emissions. This approach would be administratively simpler for the state and operators, and it would make state funds more flexible and predictable for both capital projects and operating uses.
4. Monitor transit performance.
Much of the state’s interest in transit relates to how it supports policy objectives such as reducing greenhouse gases and supporting infill development. But while these objectives are important, SPUR recommends focusing ac- countability metrics on the measures of actual transit performance that are most within the direct control of transit operators — specifically, service output and quality, cost-effectiveness and cost control, service productivity, safety and cleanliness, and customer satisfaction. These metrics describe the basic health and operations of a transit system and are the best indicators for the state to determine whether its investments are being used effectively.
5. Plan corrective intervention.
Any accountability approach must allow for proportionate interventions so that the state can ensure its investments in transit are going to good use. SPUR believes that this objective is best achieved via interventions that are corrective, not punitive. The state should work with operators on a progressive basis, correct- ing performance deficiencies early and escalat- ing intervention only as needed. One of the first steps might be working alongside operators to develop cost and quality targets and a time- line for correction, rather than moving directly to withholding of funding, a last resort.
Transit is both immensely valuable to Califor- nia and a costly investment. Thinking strategi- cally about accountability can help ensure that California’s riders and taxpayers get the most out of their trains and buses. ✹