Abstract
Increasing the use of merit-based competition has become a popular policy idea for federal transportation funding. Focusing on a competitive program—the 2009 Transportation Investment Generating Economic Recovery (TIGER) program—this article asserts thatsuch competition does not guarantee transparency or that awards will actually maximize benefits. In addition, competitive award programs can widen gaps across places and among people. Rather than rush towards competition, careful program design is needed, and more debate on the federal role in transportation is warranted.
Policy makers, administrators, and other stakeholders have proposed increased use of competition to award federal transportation funds. The logic for competitive funding—maximizing federal return on investment, increasing transparency, and selecting the most beneficial projects—is compelling. Yet, federal competition does not guarantee transparency or that awards will actually maximize benefits. Perhaps more importantly, competitive award programs can widen gaps across places and among people. The following essay describes potential problems with competitive funding, focusing on transportation projects funded competitively by stimulus dollars distributed through the 2009 Transportation Investment Generating Economic Recovery (TIGER) program. Based on this and other programs, a major shift to competitive programming and demands for extensive cost-benefit analysis (CBA) may introduce new problems. The conclusion identifies several approaches to avoid or mitigate the problems of competitive funding.
Distributing Federal Transportation Funds
Most federal transportation funds are distributed via formulas that consider factors such as population, roadway miles, and transit ridership. Agencies focused on one mode (e.g., marine, mass transit, highways) manage and award most federal funds through various programs. Reformers have suggested a number of changes, including increased multimodal funding, consolidating programs, shifts in federal agency structure, and most relevant for this discussion, increased use of merit-based competition.
Stimulus funding was the impetus for creating a new, multimodal competitive funding program in 2009. Of the US$48 billion allocated to transportation in the American Recovery and Reinvestment Act, US$1.5 billion was designated for a discretionary program, which became the TIGER program. The significance of the program is not based on its share of spending but because it marks an increasing emphasis on competition. While the TIGER program was initially authorized for 1 year and funding cycle (2009), the U.S. Department of Transportation (DOT) continues to award funds as TIGER grants albeit with additional funds and modified provisions.
The Limits of Competition
Potential, significant problems with competitive grant programs include that evaluations may fail to deliver transparency and maximum return on investment and that competition could re-enforce disparities. The sections below discuss competition generally and the first round of TIGER specifically, based on the scope of existing research.
Is CBA Worth Its Cost?
Further increasing complexity in evaluative tools—such as CBA—may not lead to better decisions despite demanding increased time and resources. First, benefits are based on forecasts of highly contingent future conditions. The estimated benefits of any project are highly dependent on forecasted demand, and in turn, demand is tied to many macro-factors, such as economic cycles, population changes, and technological revolutions. Thus, although forecasts are useful, CBAs are as uncertain and contingent as their underlying forecasts.
Second, program designers and decision makers should be weary of trying to create wholly “objective” decisions from quantitative evaluations. While measurements and metrics may be useful tools and indicate a winner, such assessments are based on the scope of analysis and standards for monetizing costs and benefits; values, expertise, and priorities inform these choices. Is there full accounting of externalities, such as green-house gas emissions and noise? Are quality of life benefits and costs fully accounted for in ways meaningful to local residents? Even when conducting a multifaceted evaluation, complete comprehensiveness is likely impossible, even though some CBAs are relatively robust. Furthermore, the relevant factors may also vary on a case-by-case basis—some costs and benefits or local public values may be specific to individual projects. This makes direct comparison of projects and competition difficult. Given the variability in projects and places, some deviation from evaluation metrics could be defensible.
Yet, deviation from stated metrics and evaluation tools can raise questions about transparency—a presumed benefit to merit-based, competitive funding—and the rationale behind award decisions, as in the case of TIGER 2009. The (final) TIGER “Review Team” selected 51 projects for awards, announced early in 2010. Project benefits vis-à-vis costs (called benefit-cost analysis in the case of TIGER) may have been important in the first stage, acting as a minimum threshold to identify finalists from the pool of about 1,450 applications. Among the 166 finalists, funded projects did not have significantly better ratings relative to unfunded projects (Homan, Adams, & Marach, 2014). The U.S. Government Accountability Office (GAO; 2011) points out that this committee, in addition to the evaluation metrics, weighed legislative directives: geographic equity, shovel-readiness, and nonfederal sources of funding. The GAO thus suggests that it is “not unreasonable” that the final awards differed somewhat from the original ratings made by technical teams. Regardless, the final award decisions were neither transparent nor well documented (Eno Center for Transportation, 2013; GAO, 2011). More recently, the GAO (2014) reported that poorly rated projects had advanced to funding and ratings were changed without any documented rationale during TIGER V evaluations (2013). Officials later explained that this was in part “because senior officials had specific knowledge of the capabilities of individual applicants to deliver projects” (GAO, 2014, p. 6) and thereby identified the important role for capacity in competitive programs.
Capacity and Competition
In competition, multiple types of capacity could increase the likelihood of receiving an award, and thus, competition could exacerbate disparities among regions. For example, high-capacity planning and transportation agencies can better identify suitable projects and make compelling proposals. Regions with more local funding can fulfill the federal preference for matching funds. Finally, regions with more political clout or civic capacity may more effectively advocate for their projects. However, regions with appropriate projects and substantial needs could lack the resources required to create compelling proposals, secure matching funding, or lobby behind the scenes.
Recent statistical analysis (Lowe, Reckhow, & Gainsborough, 2013) shows that TIGER I may have reinforced disparities among places and people. The study showed significant relationships between a metro area’s likelihood of receiving a TIGER I award and civic capacity (nonprofit organizations per 10,000 residents). Three other factors had significant relationships with the likelihood of winning an award: total population, a senator on the surface transportation subcommittee, and the spatial concentration of poverty. In other words, larger regions, with more civic capacity, a well-positioned senator, and/or more economic segregation, were more likely to win TIGER I funds.
Even if a region wins TIGER money, projects may not address disparities in the metropolitan area. Constituent groups with more capacity—such as business associations, land developers, and port authorities—may garner support for their favored projects, whereas low-income communities may not be able to push their priorities to the top of the regional agenda. Lowe et al. (2013) found some evidence that regions with more equity-oriented advocacy were more likely to support neighborhood revitalization projects with TIGER awards. Interestingly, among metros winning TIGER awards, metros with higher poverty rates were less likely to direct funds to projects with neighborhood development goals and/or specified benefits for low-income and/or minority groups.
The first round of TIGER funding is not the only example of competition seeming to widen disparities. A multiyear study of a competitive mass transit program (New Starts) showed the importance of local capacity and a limited impact from quantitative evaluation of benefits (Lowe, 2013). Likewise, in education, Manna and Ryan (2011) found that state capacity correlated with the receipt of competitive federal education awards. Thus, low-capacity places may struggle to win federal funds, whereas places with high capacity could be more successful at securing federal grants. Certainly counter-examples exist, but these findings provide rationale for re-thinking competition in transportation.
Implications for Policy and Administration
The logic of competitive program design is compelling, but to ensure that the transition costs of reform are warranted, program design must account for the limits of merit-based competition. First, to increase accountability and public discourse, public administrators can more clearly explain the limitations, as well as the insights, of CBA. This would mean acknowledging the values behind quantitative evaluations and the uncertainty in any forecast. Final decision making should be well documented, including justification for when awards deviate from evaluation criteria. Second, increased emphasis on capacity building could mitigate disparities that competition can widen. This would include but go beyond the technical assistance that DOT and its administrations currently offer to applicants. It would include more support in general planning and operating capacities for a whole range of transportation agencies. At least in the case of mass transit, making federal funds more generally available for operating—not just capital—activities may help level the field. Capacity building might also include supporting and deepening the engagement of constituencies and communities that have not been influential in transportation decisions yet. Finally, continuing and institutionalized dialogue with regional and local stakeholders can help federal administrators design programs in ways that account for uneven capacities.
Before reform and mitigation, however, more debate is needed on whether competitive reform is desirable and what the federal role should be in transportation. Competitive funding reform has universal or at least bipartisan support (Bipartisan Policy Center, National Transportation Policy Project, 2009), even though studies demonstrate its limits. Competitive programming may make national infrastructure spending reflect an aggregation of state, regional, and local priorities, even though national interests are more than the sum of these. Climate change, supra-metropolitan connectivity, and poverty affect the nation, but states and localities may not be able to or gain few benefits from addressing these issues, especially when funding is awarded competitively. Policy makers and administrators should consider not just reform emphasizing subnational competition but also alternatives, such as a more pro-active federal role, albeit one tempered by the lessons of the interstate era.
Footnotes
Acknowledgements
Sarah Reckhow and Juliet Gainsborough collaborated on highly related research which is referenced in the article.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The U.S. Department of Transportation, University Transportation Centers Program award to the SouthwestRegionUniversityTransportationCenter provided support for this research.