Feds freeze GDOT's transit grants

By Ariel Hart

The Atlanta Journal-Constitution

At a moment when mass transit is taking center stage as a solution to transportation problems nationwide, a federal report has concluded that the Georgia Department of Transportation’s transit program is riddled with financial management problems, according to a report obtained by the Atlanta Journal-Constitution.

The problems were so severe that the federal government has frozen DOT’s transit grants, which average about $28 million a year, including some from the federal stimulus program. The report cast doubt on whether DOT could manage grants for the commuter rail line proposed to go south through Lovejoy.

The Federal Transit Administration reviewed DOT’s handling of federal grants to smaller and rural transit operators throughout the state — not big systems like MARTA. It found pervasive problems, including:

● A Georgia grant that funded a bus route with no stops in Georgia.

● A financial reporting system that misstated the time period for reports and used the wrong kind of accounting to calculate them.

● Reimbursement requests in which the documentation did not receive even a cursory review.

● Life insurance premiums that one transit operator charged to “office supplies.”

“In recent years we have not done a good job of managing this program,” DOT spokesman David Spear said in an e-mail Tuesday. “We acknowledge that; we regret it; and we are fixing it.”

A spokesman for the federal agency, Paul Griffo, said the grants had been frozen and the release of the money was conditioned on getting a satisfactory action plan from DOT. Griffo said such a plan has been filed, and Spear said DOT is confident the freeze would be lifted after a meeting Friday.

News of the federal review comes just a week after the state auditor and the state inspector general issued scathing reports on the DOT’s financial practices. Those reports said the former DOT treasurer abused his authority in making the agency’s accounts look better off than they were. The state attorney general is reviewing the matter.

The state reports covered large areas of DOT finance — not specifically mass transit — said John Thornton, director of the Georgia auditor’s state government division, and the problems take time to fix.

Thornton said he had not fully read the federal report, but if DOT wasn’t meeting federal requirements “it’s probably consistent with the same type of general mismanagement issues we found.” The year-and-a-half period for the mass transit review ended Dec. 31, 2008. DOT officials disputed some of the findings in the federal mass transit review, saying, for example, that DOT believed its bus routes were appropriate for the grants.

Mike Meyer, a professor at Georgia Tech and a former top transportation official in Massachusetts, said he saw the report partly as a shot across the bow on Georgia’s undertaking the commuter rail line to Lovejoy and Griffin.

“This is more of a warning that if you really are going to do this project you’re going to have to do some things different than what you’ve done before,” said Meyer, who had not read the federal review.

The review said that DOT lacked adequate technical resources, policies and procedures to properly manage such a large project.

There is far more than that at stake. The Obama administration seems to be making high-speed rail its signature transportation initiative, and the federal stimulus bill included $8 billion to jump-start a national network that could have lines in Georgia.

Meyer said he didn’t know whether the problems were only due to sparse resources — DOT’s Intermodal Division has 23 employees handling rail, transit, aviation and waterways, in an agency of 5,400 — or if there was a culture of sloppiness.

“But clearly, both on highway side and [transit] side, they both are saying financial management is not at the level it needs to be,” he said.

How we got the story

The Federal Transit Administration commissioned a regular review of the state Department of Transportation’s financial management of FTA grants. The preliminary report was issued to DOT in March and is the subject of continuing negotiations between the state and the federal governments. The AJC obtained a copy this week and interviewed current and former transportation and audit officials.