I Was an FTA Grants Manager. Here’s how the Trump Funding Freeze Could Impact Public Transportation

By the time you read this, President Trump’s decision to freeze trillions of dollars in Federal grants may have been overtaken by events and we’ll have moved on to the latest breaking news, but as of the morning of January 29, it remains a live issue that could impact Federal support for public transportation in the days and weeks to come. The Trump Administration attempted to backtrack on the scope of the order, indicating it does not apply across the board. The U.S. Department of Transportation has not issued a statement on which programs (if any) are, or are not covered. (It’s possible the department was waiting for Secretary Sean Duffy to be confirmed, which he was yesterday afternoon by a 77-22 vote with some Democrats voting no to protest the funding freeze). The American Public Transportation Association (APTA) issued a legislative alert noting: “Of most immediate concern is whether DOT will allow FTA and FRA to continue to reimburse legally binding commitments without interruption.” Unlike state Medicare funding, transportation officials have not yet reported payment systems turned off.

Shortly before the freeze was set to go into effect at 5 pm yesterday, a District of Columbia judge paused the pause until February 3rd at which point he plans to hear legal arguments. Still, it’s unlikely that Federal agencies would return to “business as usual” any time soon. Even if allowable, non-career leaders may be reluctant to approve new funding awards or disbursements lest they attract unwelcome attention from the White House. Federal, state, and local leaders are grappling with mixed messages and uncertainty and struggling to understand how a pause would impact funding for their communities.

I’m no mind reader and I lack any special talent for divining meaning or predicting the future of Trump Administration policies, but I was a grants manager at the Federal Transit Administration for ten out of my twenty years at the agency and I have access to publicly available information on transit grant awards posted to www.usaspending.gov. I’m tapping into both of these resources to estimate the magnitude and implications of a 12-day pause on new awards and disbursements on the transit industry and the communities they serve.

The bottom line is that a brief pause in funding would be more of an inconvenience than an existential crisis for transit, but hardship would increase the longer funds are frozen and the unexpected move adds additional and uncessesary tension to state and local transit agencies already under stress.

The Language of Money

The funding freeze memo states, in part, “Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance….” Defining of “obligation” and “disbursement” can help us better understand the impact of this statement for transit.

An obligation is a a binding legal commitment from the federal government to provide funds. It represents the point at which the government commits to paying for specific goods or services, even though the actual disbursement (payment) may occur later. In the transit world, FTA enters into obligation when it issues a grant award, typically approved by an FTA Regional Administrator or their designee. After FTA obligates funds, the recipient’s leadership executes the award, thereby agreeing to its terms and conditions. You can think of the obligation/execution as a handshake. The Federal government agrees to provide a certain amount of funding for a specific scope of work (such as replacing old buses with new ones, renovating a facility, demonstrating an innovative technology, or conducting a planning study). The recipient (usually a transit agency but sometimes a State Department of Transportation, planning organization, or university or non-profit) agrees to carry out the scope of work under the timeline established in the grant award. They are entitled to receive payment for the goods and services eligible in the award.

Once the award is executed, the recipient can begin to request disbursements from the award, however the recipient is not allowed to receive a payment that lingers in their bank account. Payments are made on a reimbursement basis. The recipient first pays its staff (if projects are being carried out in-house) and frequently to vendors, contractors, or suppliers for goods and services delivered and then draws down funds from their obligated grant to be made whole.

With this process in mind, we can better understand how both a pause in Federal obligations (i.e awards) and disbursements could impact transit.

Pausing New Awards

How many awards how much money, and how many recipients would be impacted by a transit obligation freeze like the one described in the original Trump memo? It is hard to know for sure without information on the number of grant applications that are likely to be awarded over the next few weeks, information which is not publicly available. What is available via www.usaspending.gov is data on FTA awards made around this time period in prior years. For this post, I downloaded data on FTA awards made between 1/28/2024—2/10/2024 and 1/28/2023—2/10/2023 (including additional prior years would provide a more robust data set but would also introduce COVID recovery obligations almost all of which have been completed by now).

Data from the past is a relatively good proxy for current and near-future obligations because in the world of transit funding administration, there is little year-to-year change in the types of funding and projects implemented. Although new transit like the Second Avenue Subway or the Hudson Tunnel attract attention, most transit funding is allocated on the basis of statutory formulas and is intended for recapitalization, preventive maintenance and bringing infrastructure into a state of good repair—the mundane stuff that sustains the world.

The timing of a funding freeze also matters. The winter months are typically a slow time for obligations because the season falls in between the start of the Federal fiscal year (October 1) and when Congress appropriates funding for the entire year. During this time, Federal agencies such as U.S. DOT are under a continuing resolution where funds are doled out in smaller installments as Congress and the White House debate personnel or policy, using appropriations as leverage.

Although funding for all of FY 2025 is not yet available, there remain billions of funding for transit that Congress has appropriated in prior fiscal years which carries over from one year to the next. During the first and second quarters of a fiscal year, FTA typically makes grants using this “prior year” money and begins awarding “current year” money in the third and fourth quarters.

Details from recent usaspending.gov reports can help us estimate what’s at stake today. From January 28-February 10, 2024, FTA made 45 awards for $307 million. During this time period in 2023 FTA made 17 awards for $105.9 million. Individual obligations across both years ranged from $100,000 to $64 million. These dollar amounts may sound large but they account for less than 2% of the transit funds Congress made available for transit in those years. (Congress appropriated approximately $21 billion for FY 2023 and in FY 2024).

But while the total funding amounts were a slice of the pie, they supported communities across the United States. Awards made during late January/early February in FY 2023 and 2024 funded projects across 23 states/territories and 52 cities. Some of these places, like Denver and Seattle have large transit agencies but other smaller communities like Sitka, Alaska, Stateline Nevada, or Garden City, Idaho probably don’t come to mind as transit metropolises. Several of the recipients were native American tribes. Others were State Departments of Transportation that passed through Federal funding to county agencies or non-profits to serve older adults, people with disabilities, or people living in rural areas.

If the past is prologue and data from around this time in the past two years approximates current funding being prepared for obligation, than a funding freeze like the one proposed in the Trump memo would delay anywhere between 10 and 50 new awards for between $100 to $350 million impacting communities large and small.

The practical effects of an award delay depends on the type of projects being funded and the non-Federal resources available to the recipient. Most transit funding supports capitol projects (buying new buses and rail cars, building facilities, and the like) and unless a recipient has chosen to use pre-award authority (a tangential topic we’ll save for another day) the project can’t start until funds are awarded so that the recipient can pay it’s workers and suppliers and then get reimbursed. A delay of a few days or weeks is negligible but longer schedule slippages can start to impact project costs.

More concerning are Federal funds that are used for operating assistance—to pay driver salaries, purchase fuel, and administer transit service. Recipients that are allowed to use funds for operating tend to be in smaller cities and have fewer resources then their counterparts in larger areas. They rely more heavily on Federal dollars to run their system. Again, a relatively limited pause in new funding would not result in service cuts or layoffs, but a longer freeze, such as what occurred during the 2018-2019 Federal government shutdown can increase the pain.

Lessons from the 2018-2019 Shutdown on Disbursements

There is data available on www.usaspending.gov on FTA funds disbursed to transit agencies, however due to the infrequency of disbursement reporting and timing of when disbursements occur vs. when they are posted, I was not able to find reliable data for disbursements that occurred between January 28 and February 10 in recent years.

A less recent, but still reasonable proxy for a funding pause is the disbursement backlog that accrued during the 35-day Federal government shutdown from December 22, 2018 through January 25, 2019. This shutdown resulted in a backlog of 1,400 payment requests totaling $531 million which FTA processed the first day that staff returned. Pro-rating this amount would pause 40 payments per day for $15 million in disbursements for each day the freeze was in effect. And given the increases in Federal funding obligated for transit since 2019, it’s reasonable to assume that the number and dollar value of disbursements is greater today than under the first Trump administration. In FY 2018 (the last full fiscal year before the 2018-2019) Congress appropriated $13.3 billion for transit. For fiscal year 2024 this amount was $20.7 billion, a 56% increase.

My rough estimate using the shutdown disbursement backlog at today’s funding levels means anywhere from $20 million to $24 million in payments to transit agencies and other recipients for each day of a funding freeze.

Unlike new obligations which are influenced by the budget cycle, disbursements occur at a steady pace throughout the year. (I don’t recall there being a seasonal or other cyclical effect). Agencies serving communities large and small come in for Federal reimbursement every day. Their common denominator is that they have already spent non-Federal funds for activities under their grant award and are requesting payment to be made whole. And for every Federal disbursement made to a transit agency, there are many more commitments a transit agency has made to vendors, contractors, and suppliers. The agencies are legally bound to pay these third-party entities. Some larger agencies may have sufficient resources to float payments to their partner organizations over the short term but smaller organizations may have more difficulty and the longer a freeze continues the more financial and legal jeopardy transit providers may find themselves in.

Pause and Effect

It is easy to say “this too shall pass” and it most likely will. Whether we’re talking about spending pause due to shutdown or OMB edict, transit agencies can still count on the full faith and credit of the United States government—we’re not in default territory at the moment. Federal disbursements will almost surely be pried loose due to court ruling or policy change and new obligations will follow as well, though I’d expect additional executive branch slow-walking on the latter.

But shenanigans like the ones we’re going through this week take a toll. They breed cynicism and make collaboration to achieve needed government reform more difficult. Transit agencies and their trade groups already bristle on the many strings that come attached to being a funding recipient but at least the dollars keep flowing. In times like these, some agencies may be wondering if “the juice is worth the squeeze” (though the size of the Federal transit pot and lack of alternatives make it unlikely that many will set aside Federal funding, disappointing those who want to shrink the size of the Federal government) life will go on but it will leave stakeholders at all levels of government more risk averse, likely to hunker down instead of pressing forward for institutional changes.

According to OMB, the raison d’etre for the spending pause has to do with “[prior] use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.” Do any of these demons lurk in Federal transit awards? To find out, I reviewed the grant narratives from my www.usaspending.gov dataset. Here is a sample of what they contain:

—The City of Turlock, California paid for driver salaries and fuel to continue providing operations permitting individuals to travel to work and other destinations.

—The Colorado Department of Transportation paid for mobility services to maintain transportation operations for seniors and individuals with disabilities in small urban and rural areas throughout the state,

—The City of Fort Collins, CO removed underground biodiesel storage tanks at their maintenance facility, preventing pollution and contamination and restoring the area to its previous condition.

—The Delaware Department of Transportation paid for planning work to improve the lives of people living in communities experiencing long-term economic distress by improving transit and enhancing safety,

And the list goes on. It’s hard to conjure the specter of Karl Marx, Caitlyn Jenner, Angela Davis, or Alexandria Ocasio Cortez. Instead, what comes to mind is a passage from Martin Luther King’s Letter from a Birmingham Jail: “We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly.” The Hill staffers who wrote the funding legislation, the lawmakers who voted on, the civil servants who administer the grants, and the people who drove the buses in Turlock, wrote the planning studies for Newcastle, Delaware, and excavated the leaky storage tanks in Fort Collins are all tied together in work to promote the general welfare. The White House funding freeze may cast a chill, but thinking about this collaboration gives me a warm feeling inside.