Weak transit board oversight is hurting public transportation investment

Transit boards decide how transit systems are funded and built. But many boards are not set up to adequately review these decisions. This weakens oversight of public spending and results in poorly evaluated investment decisions. To fix this problem, we need to rethink both the structure and the operations of these boards.

Transit boards became widespread after the Urban Mass Transportation Act of 1964, which expanded federal funding for state and local government as they took control of private transit systems. These state and local governments then created dedicated transit agencies. 

Because these boards were created through state and local legislation, there is no single model for how they are structured. Their role is not to manage the day-to-day operations of the transit agencies they oversee. Instead, they are responsible for setting goals, overseeing major contracts, and coordinating service across providers. Because of that role, transit boards have a fiduciary responsibility to the system, and decisions should prioritize long-term performance and financial sustainability.

How these boards are structured shapes how those responsibilities are carried out. The Transit Cooperative Research Program (TCRP) Report 85 finds that transit boards vary widely in size, selection method, and authority. Boards can range from five to 23 members. Members are often tied to geographic districts.

Transit boards are made up of elected officials and appointed members, often with backgrounds  communications and politics. While these backgrounds provide general experience, they do not always translate into transit-specific expertise in operations, capital planning, or performance evaluation, leaving boards without a consistent framework for evaluating major investment tradeoffs.

TCRP 85 identifies member preparation specifically training in financial and performance evaluation as critical for effective oversight. Without it, decisions are not consistently evaluated for cost, performance, and tradeoffs, resulting in inconsistent review of major investments and weaker accountability for how public funds are planned, approved, and tracked. 

A good example of this issue can be seen at the Regional Transportation District (RTD) in Denver, Colorado. The agency is governed by a board of 15 publicly elected directors, whose members represents geographic districts and serve a four-year term.

To support decision-making, RTD’s board includes committees for audit, finance and planning, operations and safety, and performance, along with operating guidelines that direct board members to focus on policy and avoid managing day-to-day operations. Its fiscal policy requires capital investments to align with the strategic plan.

Even with these structures in place, the Colorado Office of the State Auditor’s 2024 performance audit found problems with fiscal governance, including gaps in planning and limited board training. The findings show that the board’s oversight did not ensure that financial plans were fully developed and considered. The audit noted that RTD’s 2024 budget included about $153 million in projects that were not fully reflected in its planning documents and identified weaknesses in onboarding and ongoing training for board members.

In Colorado, Senate Bill 26-150 aims to reduce the RTD board from 15 to nine members, starting with the board elected after the 2028 election. Under this bill, five members would still be elected, and the governor would appoint four members with expertise in public finance, land use and transportation planning, transit operations, and programs for communities most affected by these decisions. RTD’s reforms would change the size of the board and may lead to more knowledgeable members. 

Other transit agencies have dealt with similar governance challenges. In 2011, the U.S. Government Accountability Office (GAO) reported that the Washington Metropolitan Area Transit Authority (WMATA), which is governed by a 16-member board with eight voting and eight alternate directors, faced governance problems where board members became involved in day-to-day management rather than focusing on oversight. Additionally, it struggled with unclear roles and responsibilities, and the board did not consistently evaluate its own performance or long-term plans.

These findings show that even with formal governance structures, boards do not always meet their oversight and strategic duties. In the case of WMATA, governance changes were later implemented, including adopting formal bylaws that clearly separated board and management responsibilities, restructuring committees and decision processes, introducing regular board self-evaluations, and establishing a long-term strategic plan with defined performance measures.

An upcoming book, 21st Century Transit, by my Reason Foundation colleague Baruch Feigenbaum, argues for similar reforms nationwide. It makes the case for smaller boards with members selected in part for experience in transportation, transit operations, or service delivery. This is a better model that pairs representation with the skills needed to oversee complex transit systems.

The following reforms build on that approach and focus on how transit boards should be structured and how they should operate to better match the decisions for which they are responsible:

1. Board selection should include clear qualification requirements and formal onboarding. Members should demonstrate the ability to review budgets, capital plans, and system performance, and complete required training on agency finances and planning processes before voting on major decisions.
2. When boards make decisions that differ from staff recommendations, they should explain their reasoning in writing. This explanation should compare the staff’s analysis with the board’s decision and include cost estimates, expected results, and important assumptions.
3. Agencies should conduct regular evaluations of board performance. This includes checking whether board decisions align with financial plans and system goals, and using those results to improve board structure, training, and decision-making practices.

When a board’s structure does not reflect the complexity of its responsibilities, decisions may not be properly reviewed or enforced. Instead of changing who the board represents, it is more effective to ensure members have the necessary knowledge and are held accountable for their duties.

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Source: https://reason.org/commentary/weak-transit-board-oversight-is-hurting-public-transportation-investment/