Budgeting and Finance 101


This section of the toolkit introduces budgeting and finance concepts that rural transit managers need to know. Developing and monitoring your annual budget, ensuring your expenses are in line with your budget, and obtaining funding from a variety of sources are key to sustaining the transit system.

The section begins with a brief introduction to the Federal Transit Administration (FTA) financial management requirements for Section 5311 subrecipients. More detailed information can be found in the National RTAP training module Fundamental Financial Management for Rural Transit Agencies.

Importantly, strategic planning is a key element of budget development and financial management.  The Planning and Evaluation section of this toolkit includes information about strategic planning.

Also, it is important that any purchases using FTA funds comply with FTA procurement requirements.  These are summarized in the Procurement 101 section of this toolkit.

This section of the toolkit is organized into the following subsections:

FTA Financial Management Requirements for Grantees

Subrecipients of Section 5311 funding must meet federal requirements related to how grant funds and related revenues are controlled, accounted for, spent, reported on, audited, and ultimately closed out. The FTA requirements are primarily based on 2 CFR Part 200, often referred to as the “Super Circular” of the Office of Management and Budget (OMB) (because these regulations superseded several previous OMB circulars). FTA Circular 5010.1E, Award Management Requirements, provides guidance on how the Super Circular applies to FTA grants such as Section 5311. National RTAP’s Fundamental Financial Management for Rural Transit Agencies is an in-depth training module on FTA’s financial requirements, many of which are introduced here.

  • Internal controls – Grantees must have internal controls to ensure that:
  • Grant-funded financial transactions are conducted in compliance with federal statutes, regulations, and the terms and conditions of the grant award
  • Funds, property, and other assets are safeguarded against loss
  • Transactions are properly recorded and accounted for

This includes having an accounting system that tracks how grant funds are spent and ensures accuracy and reliability in financial, statistical, and other reports, and cash management procedures to safeguard from theft.

  • Non-federal share – Most FTA grants require non-federal funds to cover part of the cost of the transit operations, vehicle, or other project being funded by the grant. The non-federal share is often called local match, and can include funding provided by the state. For example, the federally allowed maximum federal local shares for Section 5311 program are generally:
  • Operating: maximum 50% federal share (minimum 50% non-federal share)
  • Planning: maximum 80% federal share (minimum 20% non-federal share)
  • Capital: maximum 80% federal share (minimum 20% non-federal share)
  • Administrative: maximum 80% federal share (minimum 20% non-federal share)

While these are the general matching rates for Section 5311, it may be helpful to note:

  • The match rates are for the net project cost.  For operating grants, net project costs are calculated by subtracting fares from the total project cost.
  • The maximum federal share for operating and capital grants may exceed the above amounts in states with sliding scale rates under the Section 5311 program (see pages III-16 to III-18 of FTA Circular 9040.1G).
  • The federal share may exceed 80% for certain capital projects related to compliance with the Americans with Disabilities Act (ADA) or the Clean Air Act (CAA), or for bicycle facilities.  More information can be found on pages III-15 to III-16 of FTA Circular 9040.1G.
  • Subrecipients should check with their State DOT for details about the matching rates in their state.  States have the discretion to fund grants at lower federal shares, and some states provide state funds toward local match.

The local match requirement typically means the local subrecipient must have resources available to cover the non-federal share (although a state may allow in-kind match for some types of grants). As part of the grant agreement, an organization commits to having the local share available. Local match sources allowed by the federal Section 5311 program include state or local appropriations, dedicated tax revenues, private donations, net income generated from advertising and concessions, in-kind match (such as indirect costs), and non-DOT federal funds (if allowed by that particular funding source).

  • Financial plan – FTA requires its recipients to have multi-year financial plans (3–5 years) for operating and capital revenues and expenses to implement FTA Awards. State DOTs, as Section 5311 recipients, may pass this requirement on to their subrecipients as they ideally need to know what their subrecipients’ financial plans are in order to develop their own state-level plans for the Section 5311 program. A state may require a transit development plan or other type of plan that includes some type of multi-year financial plan, including costs and funding for administration, operations, vehicles, other equipment, technology, and facilities. Whether or not this a requirement for a grant, a multi-year financial plan is a vital tool for sustaining a transit system, as it allows the system to anticipate future year costs and apply for funding accordingly. Additional information on multi-year financial planning is found later in this section of the toolkit.
  • Allowable costs – FTA grants must be spent on the project for which the grant was awarded, and must be necessary and reasonable for the project. A Section 5311 operating grant must generally be spent to provide public transportation in rural areas during a specific period of time (the grant “period of performance,” such as a fiscal year, or spanning up to three fiscal years). Some costs are shared by multiple programs with different funding sources, such as the cost to insure vehicles that operate on routes funded by different programs. These costs need to be fairly distributed across services through cost allocation. National RTAP has developed a Cost Allocation Calculator to help rural transit managers allocate their costs. Readers can also find helpful information in National RTAP’s Fundamental Financial Management for Rural Transit Agencies and National RTAP’s Cost Allocation Webinar.

    In addition to knowing what costs are allowed under a grant, it is important to know that some costs are not eligible for funding under any federal grants. These include costs incurred before the grant award (unless specifically allowed by FTA), costs that have been funded by another federal grant (which would amount to “double dipping” of federal funds), and costs related to bad debt, fines, and alcoholic beverages.
  • Indirect costs – Some public transit systems are part of a larger organization, such as a county government or a non-profit corporation with many programs. A larger organization is likely to provide centralized services, the costs of which are shared among all departments and programs, typically through a standard percent added onto the department’s or program’s own costs. Such indirect or overhead rates must be supported by a Cost Allocation Plan (CAP) or an Indirect Cost Rate Proposal (ICRP) that is approved by FTA or whichever federal agency provides the most funding (referred to as the “cognizant federal agency”) to the organization.
  • Program income – FTA grantees can earn program income through activities such as providing transportation services under contract to social service agencies, selling advertising space, renting out part of a facility, intercity bus ticket sales, and concessions. Depending upon the grant program, other types of program income can be applied toward local match or cash reserves. The Section 5311 program allows income from contracts to provide human service transportation to be used either to reduce the net project cost (treated as fare revenue) or to provide local match for operating assistance (treated as program income). Passenger fares must be deducted from the total operating costs before calculating the maximum federal share of funding.
  • Audit – Every organization should have an annual audit, and the State DOT may require this of all subrecipients. If an organization spends $750,000 or more in a year in federal assistance from all sources (not just FTA), a federally-compliant “single audit” must be conducted in accordance with 2 CFR Part 200, subpart F. If the single audit report contains any findings and recommendations related to the FTA program or other DOT funds, the report must be submitted to the State DOT (who will submit it on behalf of the subrecipient to the FTA), and the findings must be resolved.  Subrecipients should check with the State DOT for state-specific requirements related to audits.
  • Reporting requirements – States are subject to grant reporting requirements to FTA (including financial reports and milestone progress reports). To prepare their reports, and to help ensure funding is being spent in accordance with the subrecipient grant agreement, states need reports from their subrecipients. Subrecipient financial reporting requirements vary from state to state. Data required for the National Transit Database (NTD) are common to all states, including total annual revenue, sources of revenue, total annual operating costs, total annual capital costs, fleet size and type, related facilities, revenue vehicle miles, and ridership.
  • Recordkeeping requirements - Financial records, supporting documents, statistical records, and all other records pertinent to a federal award must be retained at least three years from the date of submission of the final expenditure report. Section 5311 subrecipients should retain grant-related records for three years beyond closeout of the subrecipient grant with the State DOT.
  • Closeout – A federal grant is generally closed out after all of the actions funded by the grant are complete. FTA requires that grantees (states) close out projects on a timely basis, generally 90 days after the end of the “period of performance” of the grant. To do this, states must close out sub-grants with subrecipients on a timely basis. As stated in Circular 9040.1G, FTA expects grants awarded for a specific program of projects to be completed within a reasonable, specified time frame, generally two to three years. If small amounts of funds remain in an inactive grant, the state should request that the funds be de-obligated and the project closed out. Subrecipients need to be aware that they have a finite amount of time to spend their grant awards, after which the funds could be transferred to another project.
  • Revenue from sale of FTA-funded assets – Subrecipients that intend to sell FTA-funded facilities, vehicles, or other equipment should check with their State DOT on disposition procedures that must be followed and how the proceeds must be handled. For example, sale of FTA-funded real property or vehicles with remaining useful life valued more than $5,000 will require reimbursement to the FTA of the federal share of the value of the asset. If the value is below this threshold, the state may have its own requirements for how the proceeds can be used. The agency should refer to the State Management Plan to determine what are the disposition requirements for FTA funded real property and/or vehicles.

Rural Transit Budget Development

Whether a transit system is a stand-alone organization or a department within a government or private organization, its annual budget is an essential tool. A realistic budget can help control costs, manage case flow, spend grants appropriately, monitor system performance, and forecast future funding needs. State DOTs (and other grant funding sources) typically require their subrecipients to provide a detailed budget as part of the grant application, as part of the justification of the need for the grant. If an agency is part of a city or county government or a tribe, its budget development needs to fit within the budget development framework of the government.  Strategic planning, addressed in the Planning and Evaluation section of this toolkit, also drives budget development.  As discussed later in this section under Developing a Multi-Year Financial Plan for Rural Transit, it also vital to have a strong multi-year plan. 

Developing a realistic and sustainable budget requires knowing what it costs to operate the service, maintain the vehicles and facilities, and administer and manage programs, based on the level of services currently provided along with planned expansions (or reductions). This involves estimating not only the cost to provide the service, but also what vehicles, other equipment, and facilities are needed for the transit system, when they will need to be replaced (or expanded), and what this will likely cost. It is important to understand that any changes in the scope of an agency’s service will have a direct impact on budgeting.  Adding or eliminating services in a small or medium sized agency could create a variance of as much as 10-20%. Budget development also requires knowing what funding sources are available to cover costs (including fares, grants, tax revenues, advertising revenue, and in-kind support). Steps involved in developing a rural transit system budget include:

  1. Determine the timeline for developing the budget. If the transit system is part of a larger organization, such as a local government, tribal government, or non-profit organization, the timeline for transit budget will need to fit within the timeline of the larger organization. As a Section 5311 subrecipient, Section 5311 budget development will also need to fit within the state’s grant application cycle. A sample of a State DOT budget cycle for FTA grants is provided as Figure 1 below.  Although some states have different cycles (some are biennial, for example), each state has elements of this example and Section 5311 subrecipients need to be aware of the timing of their state’s Section 5311 program, in order to develop grant application budgets accordingly (even though the agency’s overall annual budget may be developed on a different cycle). 
  1. Determine the team that will be involved in the budgeting process. This includes managers who should provide input on the budgets they are responsible for managing.
  1. Review current-year budget and year-to-date expenses and revenues. If the current-year budget reflects actual costs and funding, this provides a realistic starting point for next year’s budget. If the current budget doesn’t match reality, this provides important information about where costs or revenues may need adjustment in the next year’s budget. If it is still early in the current fiscal year, also review the preceding year’s actual expenses and revenues.
  2. Review the organization’s mission, vision, goals, objectives, and plans for the coming year. Development of the budget, like any planning endeavor undertaken by the transit agency, should be driven by the organization’s mission and vision. Is the agency planning to expand services next year or starting a new program? Will the agency be expanding its fleet (increasing maintenance expenses)? Will the agency need to increase or reduce staffing levels to implement planned changes? Are major organizational changes planned that may result in changes to the indirect/overhead rate? Will any vehicles and/or other equipment need replacement, requiring that local match be budgeted?
  3. Estimate revenues and direct expenses for each program. Factors to consider in this step include historical revenues and expenses, the organization’s goals and objectives for the coming year, external factors (such as the economy, fuel prices, changes in the population of the service area, and anticipated changes to local taxes that fund services), and seasonal trends (for example, service and staffing levels may need to increase to serve visitors to a tourist destination during the summer). Be sure to get input from staff on each of the program budgets they oversee.
  1. Estimate indirect/overhead costs, by applying the agency’s approved indirect cost rate to estimated expenses.
  1. Estimate general funding revenue. This is revenue that is not specific to one program (program specific funding was estimated in an earlier step).
  1. Explicitly list major assumptions used to prepare the budget. Assumptions should be presented with the budget to clarify to reviewers and decision-makers the reasons for proposed expenses and revenues (which they may or may not agree with), and facilitate reasoned decision-making.
  1. Put it all together in a budget form, which includes an overall budget as well as individual budgets for each program.


Figure 1: Sample 5311 Timeline for Apportionment & Budget
Budgeting Timeline

Chart Credit, Curtis Sims, Jr., CSSO, Training, Safety/Security, and RTAP Program Manager Office of Public Transit, South Carolina DOT


More guidance on developing a budget for rural transit can be found in Comprehensive Financial Management Guidelines for Rural and Small Urban Public Transportation Providers, Chapter 5.

Transportation by the Numbers, a toolkit developed by the former National Center on Senior Transportation, provides guidance for determining true costs to provide human service transportation, and can also be useful for rural transit systems.

The National Council of Nonprofits provides links to a number of resources on developing budgets designed for nonprofit organizations.

The Wallace Foundation provides numerous resources on financial management for nonprofits, including budgeting. 

For organizations that are part of local governments, there may be state-level resources that provide budgeting guidance. For example, the Municipal Research and Services Center (MRSC), a nonprofit organization that helps local governments across Washington State, provides an overview of the budgeting process for municipalities

Budget Monitoring

On a frequent basis, transit managers should compare actual revenues and expenses to budgeted amounts to ensure that funding sources are not exhausted before the end of the year. Ideally this should be done monthly. If costs are identified that significantly exceed what was budgeted, the manager will need to find other items within the budget where costs can be reduced or find new funding sources to cover the difference in order to avoid a budget deficit (“going into the red”),

Significant changes to a budget typically require approval from the agency’s governing board.  Section 5311 subrecipients should also check with their State DOT for any state requirements related to budget modification and/or adjustment.

If actual costs are significantly higher than what was budgeted, grantees should check with the State DOT on options for appropriately using grant funding or covering expenses (when they exceed the budget). Note that FTA-funded grants are usually for a very specific project, and funds must be used for the costs identified in the grant budget. If an organization becomes unable to use an FTA grant as specified in the award, it generally will not have the flexibility to use the grant for other project costs.

Developing a Multi-Year Financial Plan for Rural Transit

A multi-year financial plan is a vital tool for sustaining a transit system, as it allows management to anticipate future year costs and apply for funding accordingly. A three- to five-year financial plan may also be a requirement for Section 5311 subrecipients in some states (sometimes as part of a transit development plan), to help the state prepare their own FTA-required multi-year financial plan.

A multi-year financial plan is based on the organization’s:

  • Mission, vision, goals and objectives
  • Strategic plan
  • Plans to increase (or decrease) services during each of the years in the plan.  Any changes in an agency’s transit service levels will have a direct impact on budgeting, and future plans for service expansions or reductions should be addressed in future year budgets.
  • Major service or organizational changes
  • Anticipated changes in expenses for current levels of service (for example, rising fuel or insurance costs, new benefits for employees, and overall inflation)
  • Potential changes in revenue (for example, implementation of a local sale tax to support transit, or loss of contracted service such as Medicaid non-emergency medical transportation)
  • Planned fare policy changes (and its likely impact on ridership and overall fare revenue)
  • Replacement or expansion vehicles, equipment, and facilities needed to support operations. They should be related to a service implementation plan and a vehicle replacement and expansion plan.
  • Multi-year plans are often developed at a high level (summary), without the line item detail that should be included in the annual budget. They provide annual estimates to help the organization anticipate when additional funding may be needed to ensure sustainability and ideally, planned growth.

If a State DOT requires a multi-year financial plan, they may provide guidance on how to develop this plan, sometimes as part of a larger document. Examples include:

If a State DOT does not require this for rural transit systems, the above resources can still be leveraged for developing a financial plan as a recommended practice. The Texas toolkit provides guidance for developing a five-year plan, while the other resources listed are intend for 10-year plans (or longer)..

Potential Funding Sources for Rural Public Transportation

Common funding sources for rural transit systems include both FTA grant programs and non-federal sources.

FTA Grant Programs

Section 5311—Formula Grants for Rural Areas

Section 5311, Formula Grants for Rural Areas, is the FTA program specifically intended for rural public transportation. Section 5311 funds operating, administrative, planning, and capital projects. The maximum federal share under Section 5311 is generally 50 percent of net operating deficit and 80 percent of non-operating costs (with higher shares allowable for vehicles and vehicle-related equipment needed to comply with the ADA and Clean Air Act as well as bicycle facilities; FTA also offers a higher share on a sliding scale for capital and operating grants in several states). FTA apportions funds to each state (as well as to the territories of American Samoa, Guam, Northern Mariana Islands and Puerto Rico) based on a formula that takes in account rural population and land area.

Each state determines its own approach to distributing funds equitably across the state. Local application for these funds is made to the State DOT, and each state has its own application process and eligibility requirements. Under the federal level, eligible recipients include states and Indian tribes or Alaskan Native villages, groups or communities identified by the Bureau of Indian Affairs (BIA). Eligible subrecipients allowed under the federal program include states and local governmental authorities, non-profit organizations, and operators of public transportation or intercity bus service that receive FTA grant funds indirectly through a recipient. Tribes can also receive Section 5311 funding as a subrecipient through a state. Because each state administers its Section 5311 differently from other states, the best source of information about applying for Section 5311 as a subrecipient is the State DOT.

Note that, within the federal Section 5311 program, there are several sub-programs, including:

  • Appalachian Development Public Transportation Assistance: Provides grants to 13 states in the Appalachian region (Alabama, Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia) for the delivery of safe, reliable public transportation services to rural areas in the Appalachian region. For more information, contact the State DOT.
  • Intercity Bus Program: States must use 15 percent of their total Section 5311 funding to support intercity bus service, unless the governor, in consultation with intercity providers, certifies that intercity bus needs are being adequately met. For more information, contact the State DOT.
  • Public Transportation on Indian Reservations Program (Tribal Transit Program): Provides grants to tribes as direct recipients for planning, capital, and, in limited circumstances, operating assistance for tribal public transit services. For more information visit the FTA Tribal Transit web page.  As a future reference, National RTAP is preparing to develop a new Tribal Transit Toolkit.   

Section 5310—Enhanced Mobility of Seniors and Individuals with Disabilities

The Section 5310—Enhanced Mobility of Seniors & Individuals with Disabilities program provides funding to assist in meeting the transportation needs of older adults and people with disabilities when the transportation service provided is unavailable, insufficient, or inappropriate to meeting these needs. Funds are apportioned based on each state’s share of the population for these two groups. Formula funds are apportioned to direct recipients, which are State DOTs for rural and small urban areas (and designated recipients chosen by the governor in large urban areas), and the direct recipients award grants to subrecipients. Eligible subrecipients allowed under the federal program include private non-profit organizations, states or local government authorities, or operators of public transportation. Rural public transit systems may be eligible for Section 5310 funding depending upon the state program specifics and the types of organizations the state funds under its Section 5310 program. Federal match levels are comparable to those under Section 5311. Projects funded under the Section 5310 program must be included within a locally-developed, coordinated public transit-human services transportation plan. Because each state administers its Section 5310 differently from other states, the best source of information about applying for Section 5310 as a subrecipient is the State DOT.

Section 5339 - Bus and Bus Facilities Infrastructure Investment Program

The Section 5339 - Bus & Bus Facilities Infrastructure Investment Program provides funding for capital bus and bus-related projects that will support the continuation and expansion of public transportation services. FTA awards grants to designated recipients in large urban areas and states for rural and small urbanized areas. The federal program allows public agencies and private non-profit organizations engaged in public transportation to be subrecipients, and states determine how Section 5339 funds are distributed among subrecipients. The best source of information on about applying for FTA funding as a subrecipient is the State DOT.


FTA provides funding to help the nation’s public transportation systems respond to the coronavirus (COVID-19) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  The CARES Act was signed into law on March 27, 2020. FTA CARES Act funding is provided at a 100 percent federal share, with no local match required. It is available to support operating, capital and other expenses generally eligible under those programs, and incurred beginning on January 20, 2020, to prevent, prepare for, and respond to COVID-19. Operating expenses incurred for all rural and urban recipients are also eligible, including operating expenses to maintain transit services as well as paying for administrative leave for transit personnel due to reduced operations during an emergency. CARES Act funding can replace lost revenue (such as fares or sales tax) on a reimbursement basis for expenses incurred beginning January 20, 2020. This includes lost revenue needed to support regular operations as well as expenses directly related to COVID-19 response. CARES Act funding cannot be used as local match for other federal funding programs

Answers to Frequently Asked Questions about this funding are available on FTA’s web site.  Rural transit agencies should consult with their State DOT for information on availability of CARES Act funding for transit in their state.

Emergency Relief Program

On March 13, 2020, FTA expanded eligibility of federal assistance available under FTA’s Emergency Relief Program to help transit agencies respond to COVID-19 in states where the Governor has declared an emergency. This includes allowing all transit providers to use federal formula funds for emergency-related capital and operating and operating expenses.  Emergency Relief funding, which provides up to 80% Federal share for operations, must be directly related to COVID-19 response (or another emergency declared by the Governor or President). For existing Section 5307 and 5311 grants in states with declared emergencies, FTA raised the federal share cap to 100 percent for COVID-19-related public transportation capital or operating expenses, regardless of whether operating expenses generally are an eligible expense for a recipient. This flexibility applies not only to the expenses listed above, but also to administrative leave for personnel due to service reductions or quarantine. For other expenses under existing grants, FTA has also raised the cap on the federal government’s share of net operating expenses (incurred March 13 or later) to 80 percent, and allows large urbanized systems to use Section 5307 funds for operating expenses.

FTA Funding under the Next Reauthorization

The most recent authorization of FTA grant programs under the U.S. Department of Transportation is the Fixing America's Surface Transportation (FAST) Act of 2015.  The FAST Act is set to expire on September 30, 2021, following a one-year extension included in H.R 8337 - Continuing Appropriations Act, 2021 and Other Extensions Act, signed into law on October 1, 2020. The next reauthorization may result in changes to FTA grant programs in future years. The Investing in a New Vision for the Environment and Surface Transportation in America Act (INVEST Act) is currently a bill in Congress (H.R.7095).  Rural transit managers can find updates on reauthorization on the websites of the Community Transportation Association of America (CTAA) and the American Public Transportation Association (APTA).

Non-Federal Sources

State Grant Programs

In addition to administering FTA programs, State DOTs may offer state funding for rural public transportation services. A state’s FTA funding application process for FTA programs may also be the application to apply for state funds, but this is not always the case. Contact the State DOT for information about state-level funding opportunities.

Medicaid Non-Emergency Medical Transportation (NEMT) Contracts

As stated in TCRP Research Report 202, “Handbook for Examining the Effects of Non-Emergency Medical Transportation Brokerages on Transportation Coordination,” Medicaid is the federal government’s largest program for human services transportation. Medicaid funds non-emergency medical transportation (NEMT) services. Historically, Medicaid NEMT contracts have been a major source of funding for rural public transportation providers who often provide coordinated human service transportation services in the context of the public transportation system. Each state administers its own Medicaid NEMT program, with varying approaches and opportunities for contracting to provide these services. Depending upon the state’s current approach and the rates offered to transportation providers, a Medicaid NEMT contract may be a viable funding opportunity for an organization. To learn more about the NEMT opportunities in a state, check with the state Medicaid program and peers across the state (for example, through the state transit association).

Human Service Transportation Contracts

Many rural public transportation programs transport consumers of human service agencies whose rides are paid for through a contract with the human service agency. Examples include the Area Agency on Aging and organizations with employment and other programs for people with disabilities.

Local Taxes

Rural public transit systems are sometimes funded through a local tax, such as a portion of local sales or property taxes. If the transit system serves a major tourist destination, and transports employees and visitors to hotels near this destination, the transit manager may wish to explore the possibility of a lodging tax to support transit.

Local Government Funds

The counties, cities, and/or towns served by a rural public transit system often provide funding for the service as a public service benefiting residents as well as customers and employees of local businesses.

Advertising Revenue

Transit agencies can sell advertising space to other organizations on and in buses, and this is a common source of additional revenue. Advertising space could also be sold on printed brochures, within passenger facilities, and on benches and shelters at bus stops, for example.  For more information on selling advertising space on vehicles, see the National RTAP’s Advertising Best Practices: Bus Wraps and In-Kind Advertising Spotlight Article.

Public/Private Partnerships and Sponsorships

Some rural transit systems have partnered with local community organizations, businesses, or employers to sponsor transportation services that benefit their customers and employees, and transit managers can sometimes use an entrepreneurial approach to leveraging support. Hospitals sometimes sponsor a transit route to ensure that their patients are able to get to and from their appointments. A major employer with difficulty hiring employees may be interested in sponsoring a transit route connecting their work site to residential areas at shift start and end times. Tourist destinations and colleges/universities with limited parking are other potential sponsors.

Passenger Fares

The fares that passengers pay to use services can also provide a source of funding, though typically fares cover only a small portion of the full cost to provide rural public transportation service.

Volunteers and In-Kind Support

In addition to cash revenues, rural transit agencies can also be partially supported by volunteer and in-kind services. Some rural transit systems rely on volunteer drivers to provide cost-effective services. It may be possible to enlist local college or university classes or student interns to conduct planning studies, develop marketing materials, or to conduct outreach efforts. Other types of in-kind support can include facility use, utility services, or donated staff time. Note that to be eligible as local match for an FTA grant, the value of volunteers and in-kind support must be documented.

Grant Writing Tips

  1. Read and reread the funding notification documents, and call the funding source to ask critical questions.  There are no dumb questions, but the grant application could face the dire consequence of being eliminated from review for a simple failure to follow the directions.
  2. Grant reviewers always cite the same complaint about the grants they review: “They failed to answer the questions.”  Be certain that the narrative answers all the questions the application asks, and actually responds to the specific questions that are asked.
  3. More is not necessarily better.  Yes, it is critical that the need statement cite the demographics relevant to the transit service area for which funding is sought, but those demographics should be succinctly stated and remain focused on establishing the need for funding support.  Too many statistics will rapidly turn the grant reviewer off.
  4. A transit grant application is basically a summation of a proposed transit service plan.  Thus, it requires the inclusion of project tasks, benchmarks, key milestones, key personnel, deliverables, routes, and schedules, as necessary to concisely describe that service plan and justify its sustainability, expansion, or additional capital acquisitions.
  5. Be sure that the funding request reflects what is required to achieve the service plan’s goals.  Also, be clear on the match requirements, and whether the match can be made in-kind or must be made with cash.
  6. Consult relevant FTA circulars for vital information on allowable costs, eligible project activities, and essential procurement procedures that will drive the project’s timeline.
  7. Proofread and share the draft with an individual outside of the applicant agency, as they will catch errors program staff may miss.  Proofread again and double-check the grant’s final assembly against the grant guidance documents.

National RTAP’s Grant Writing Made Easy: How to Write a Successful Grant Application Technical Brief offers additional suggestions.  In 2017, National RTAP hosted a Grant Writing 101 Webinar, and the webinar slides can also be downloaded.

Section Sources

Updated November 10, 2020