Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
JUNE 18, 2025
Subject
SUBJECT: FISCAL YEAR 2025-26 TRANSIT FUND ALLOCATIONS
Action
ACTION: APPROVE RECOMMENDATIONS
Heading
RECOMMENDATION
Title
CONSIDER:
A. APPROVING $2.9 billion in Fiscal Year 2025-26 (FY26) Transit Fund Allocations for Los Angeles County jurisdictions, transit operators, and Metro Operations as shown in Attachment A. These allocations comply with federal, state, and local regulations and Metro Board approved policies and guidelines. Federal and state fund allocations are subject to actual fund apportionments;
B. APPROVING fund exchanges in the estimated amount of $3,140,305 of Metro’s Transportation Development Act (TDA) Article 4 allocation with Municipal Operators’ shares of the Low Carbon Transit Operations Program. Funding will be adjusted based on LCTOP actual allocations;
C. APPROVING fund exchanges in the estimated amount of $1,035,635 of Metro’s Proposition (Prop) C 40% allocation with Antelope Valley, Santa Clarita, Burbank, and Glendale’s shares of the Low Carbon Transit Operations Program (LCTOP). Funding will be adjusted based on LCTOP actual allocations;
D. APPROVING fund exchange of Federal Section 5307 discretionary fund awarded to the Southern California Regional Transit Training Consortium (SCRTTC) through Long Beach Transit in the amount of $360,000 with Metro’s TDA Article 4 allocation subject to final federal apportionments. If federal funds are not available for this fund exchange, $360,000 in FY27 TDA Article 4 funds will be allocated to Metro off the top as reimbursement;
E. APPROVING fund exchanges in the amount totaling $15.6 million of Metro’s Federal Section 5307 share with Municipal Operators’ shares of Federal Sections 5337 and 5339 subject to final federal apportionments;
F. AUTHORIZING the Chief Executive Officer to adjust FY26 Federal Section 5307 (Urbanized Formula), Section 5339 (Bus and Bus Facilities), and Section 5337 (State of Good Repair) allocations upon receipt of final apportionments from the Federal Transit Administration and amend the FY26 Budget as necessary to reflect the adjustments;
G. APPROVING fund exchange in the amount of $5 million of Metro’s Prop C 40% allocations with the Local Transit Operators’ share of federal Section 5307 funds to implement the Local Transit Systems Subcommittee’s (LTSS) Zero Emission Vehicle (ZEV) Call for Projects subject to final federal apportionments;
H. APPROVING revised Zero Emission Transit Capital Program (ZETCP)-Equivalent fund allocations to the Included and Eligible Transit Operators commensurate with current ZETCP fund availability to Metro (Attachment B), and delegate authority to the Chief Executive Officer to negotiate any future amendments if further adjustments are made in funding availability;
I. ADOPTING a resolution designating Transportation Development Act (TDA) and State Transit Assistance (STA) fund allocations are in compliance with the terms and conditions of the allocations (Attachment C); and
J. AUTHORIZING the Chief Executive Officer to negotiate and execute all necessary agreements, amendments to existing agreements, and FY26 Budget amendments to implement the above funding programs.
Issue
ISSUE
Each year, transit operating and capital funds consisting of federal, state, and local revenues are allocated to Metro Operations, transit operators, and Los Angeles County local jurisdictions for programs, projects, and services according to federal guidelines, state laws, and established funding policies and procedures. The Board of Directors must approve allocations for FY26 prior to fund disbursement. As in prior years, the proposed transit allocations include fund exchanges of Metro funding for municipal and local transit operator shares of federal and state grant programs to enable them to draw down funding quickly with fewer requirements, contingent on federal and state fund availability.
Background
BACKGROUND
The Los Angeles County Metropolitan Transportation Authority (Metro), as the Regional Transportation Commission for Los Angeles County, is responsible for planning, programming, and allocating transportation funding to Los Angeles County jurisdictions, transit operators, and Metro Operations. The Metro Board approval will allow the continued funding of transportation projects, programs, and services in Los Angeles County.
The recommended FY26 Transit Fund Allocations are developed according to federal, state, and local requirements, as well as policies and guidelines previously approved by the Metro Board. Details of significant information, methodologies, and assumptions are described in Attachment D.
Staff has reviewed the recommended allocations, related methodologies, and assumptions with Metro Operations, transit operators, Los Angeles County local jurisdictions, Technical Advisory Committee (TAC), Bus Operations Subcommittee (BOS), and the Local Transit Systems Subcommittee (LTSS). The TAC, BOS, and LTSS have all formally adopted the recommended FY26 Transit Fund Allocations.
Discussion
DISCUSSION
Fund Exchanges
Metro has been requested to facilitate fund exchanges with the municipal and local transit operators to help them access funding more rapidly and with fewer administrative requirements as follows:
• The Municipal operators are requesting fund exchanges of their Federal Sections 5339 and 5337 allocations with Metro’s share of Federal Section 5307 allocation to minimize the impact on administrative processes associated with these funding programs. These exchanges are subject to federal fund availability.
• The Municipal Operators, Burbank, and Glendale are requesting fund exchanges of their LCTOP allocations with Metro’s TDA Article 4 and Prop C 40% fund allocations to minimize the impact on administrative processes associated with these funding programs.
• Long Beach Transit is requesting a fund exchange of their share of Section 5307 15% Discretionary funds with Metro’s TDA Article 4 funds for the Southern California Regional Transit Training Consortium (SCRTTC). In April 2023, BOS awarded $360,000 a year for three years for the regional training program through an award to Long Beach Transit. If federal funds are not available for this fund exchange, $360,000 in FY27 TDA Article 4 funds will be allocated to Metro off the top as reimbursement.
• Fifteen (15) Los Angeles County Low Carbon Transit Operations Program (LCTOP) recipients (Contributing Sponsors) have submitted "Letters of Intent" to transfer $4,175,940 in PUC 99314 FY 2024-25 LCTOP funds to Metro which was approved by the Metro Board on April 24, 2025, to fund Metro’s FY 2024-25 LCTOP A Line Operations Project.
• To expedite grant approval and fund disbursement by the Federal Transit Administration, Metro will exchange the $5 million allocated to the Local Transit Operators under Section 5307 grants with its Prop C 40% funds to implement the LTSS ZEV program, subject to federal fund availability.
Reallocation of Federal Section 5307 Capital Revenues for LTSS ZEV Call for Projects
In June 2022, the Board approved a reallocation of greater than anticipated Federal Section 5307 Capital revenues made available by the Federal Infrastructure Investment and Jobs Act (IIJA), to fund a zero-emission vehicle capital call for projects available to local transit operators and administered by the LTSS. Staff, working with members of the BOS, and Los Angeles County Municipal Operators Association (LACMOA), agreed to collectively set aside the Section 5307 funding as follows: $10 million in FY22, $5 million in FY24 and $5 million in FY26, for the purpose of addressing the capital needs of local operators, particularly the mandated conversion to electric or other zero emission vehicles. This will total $20 million for the life of the IIJA. Metro is then exchanging local funds with Section 5307 funds to help expedite project delivery by reducing administrative requirements for the local operators. The Metro Board approved a fund exchange in June 2022 for the first $10 million allocation and in June 2023 for the second $5 million allocation. Staff is requesting approval of a fund exchange this year for the final $5 million allocation in FY26 Section 5307 funds, subject to federal fund availability.
The first call for projects was conducted during FY23 and the Board approved fund awards for seven projects totaling $13.9 million in June 2023. It is anticipated that LTSS will conduct the final call for projects during FY26 with a total of $6.1 million available for eligible competitive projects. The proposed awards will be brought before the Board for consideration in June 2026.
Revision to ZETCP-Equivalent Allocations
As reported to the Board last month, Governor Newsom’s recent revision to the State budget cuts $201.1 million from Metro’s Zero Emission Transit Capital Program (ZETCP) funding. As part of last year’s State budget, Metro was set to receive $320 million in ZETCP funding and to date, Metro has received $119.5 million of which will be used to advance Metro’s transition to zero emission buses. In support of the Los Angeles County Regional Zero Emission Bus Procurement Policy, the Board approved an advance of ZETCP-Equivalent funding to the Included and Eligible Operators in September 2024 with amounts predicated on Metro receiving the full ZETCP fund allocation. Staff is requesting approval to revise the Included and Eligible Operator’s ZETCP-Equivalent funding commensurate with the ZETCP funding being made available to Metro utilizing the same Board-adopted allocation formula. The revised commensurate amount for the Included and Eligible Operators is $18.58 million as shown in Attachment B. The change in funding estimates will necessitate amending existing agreements with the Included and Eligible Operators. These allocations could be further adjusted either upward or downward, in the event the State makes further revisions to Metro’s ZETCP allocation.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
Adoption of this item will provide funding for increased safety efforts.
Financial_Impact
FINANCIAL IMPACT
The FY26 Transit Fund Allocations are included in the FY26 Budget in multiple cost centers and multiple projects. Approval of these recommendations authorizes Metro to disburse these funds to the Los Angeles County jurisdictions and transit operators.
Equity_Platform
EQUITY PLATFORM
Under Board-adopted guidelines, this item enables the programming of funds to recipients to support the implementation of various transportation projects and improvements throughout the region. The FY26 Transit Fund Allocations referenced in Attachment A are intended to enhance mobility for pedestrians, cyclists, transit users, and individuals with disabilities. Through the process of public input and engagement, local decision-making, and project implementation, cities and unincorporated areas of the county and transit operators have control to appropriately and equitably address the needs of their communities.
Vehicle_Miles_Traveled _Outcome
VEHICLE MILES TRAVELED OUTCOME
VMT and VMT per capita in Los Angeles County are lower than national averages, the lowest in the SCAG region, and on the lower end of VMT per capita statewide, with these declining VMT trends due in part to Metro’s significant investment in rail and bus transit. * Metro’s Board-adopted VMT reduction targets align with California’s statewide climate goals, including achieving carbon neutrality by 2045. To ensure continued progress, all Board items are assessed for their potential impact on VMT.
As part of these ongoing efforts, this item as a whole is expected to contribute to further reductions in VMT. This item supports Metro’s systemwide strategy to reduce VMT through investment activities that will maintain and further encourage transit ridership, ridesharing, and active transportation. Los Angeles County’s Transit Fund allocation formula directs 50 percent of funding to each transit operator based on fare units (normalized boardings) and 50 percent based on vehicle service miles. This performance-based structure ties half of the subsidy directly to ridership levels: operators that attract more riders receive proportionally more funding, reinforcing the shift away from single occupant car trips. At the same time, the service- mile component ensures that coverage is maintained and expanded only where service is productive, incentivizing agencies to concentrate service on high demand corridors where each vehicle mile carries the most passengers.
By this program’s design, agencies that grow both ridership and efficient service span see their allocations rise. As a result, this allocation framework drives continuous efficiency gains in the system and measurable declines in per-capita VMT in Los Angeles County. Metro’s Board-adopted VMT reduction targets were designed to build on the success of existing investments, and this item aligns with those objectives.
*Based on population estimates from the United States Census and VMT estimates from the highway performance monitoring system data between 2001-2019.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The recommendation supports the following goals of the Strategic Plan by funding the improvement projects presented in Attachment A:
• Goal 1: Provide high-quality mobility options that enable people to spend less time traveling
• Goal 2: Deliver outstanding trip experiences for all users of the transportation system
• Goal 3: Enhance communities and lives through mobility and access to opportunity
Alternatives_Considered
ALTERNATIVES CONSIDERED
The Board may choose not to approve the FY26 Transit Fund Allocations and instruct staff to use an alternative methodology for allocation. This alternative is not recommended as federal, state, and local requirements, as well as prior Metro Board policies and guidelines require an annual allocation of funding to Los Angeles County jurisdictions, transit operators, and Metro Operations for programs, projects, and services. Allocation methodologies and assumptions comply with federal, state, and local requirements, as well as policies and guidelines previously approved by the Metro Board and have been agreed upon by affected operators and jurisdictions.
Next_Steps
NEXT STEPS
Upon Board approval of the recommended allocations and adoption of the resolution, we will work with Los Angeles County jurisdictions, transit operators, Southern California Association of Governments (SCAG) and Metro Operations to ensure the proper disbursement of funds.
Attachments
ATTACHMENTS
Attachment A - FY26 Transit Fund Allocations
Attachment B - Revised ZETCP-Equivalent Fund Allocations
Attachment C - TDA and STA Resolution
Attachment D - Summary of Significant Information, Methodologies and Assumptions
Prepared_by
Prepared by: Manijeh Ahmadi, Senior Manager, Transport. Planning, (213) 922-3083
Cosette Stark, Executive Officer, Finance, (213) 922-2822
Michelle Navarro, Deputy Chief Financial Officer (Interim), Finance, (213) 922-3056
Reviewed_By
Reviewed by: Nalini Ahuja, Chief Financial Officer, (213) 922-3088
