How Do Public Transit Funding Sources Work with NEMT and Microtransit?

The popularity of microtransit in general, especially non-emergency medical transportation (NEMT), has continued to grow with America’s aging population alongside exciting advances in technology. With this growth comes new financial opportunities to enter the field or upgrade an existing fleet.

Although private funding does exist--mostly in the form of startup capital--public funding is an important source of revenue for any microtransit operation. Understanding the basics of how the relevant public funding systems work is essential to understanding the microtransit industry overall. Read on to learn more about the most common grants and how they’re applied to public and private NEMT or other microtransit operators.    

Common Transit Funding Sources

So who funds most microtransit programs? The short answer is that it’s complicated. While some money does exist in the startup world, public funding is an important and perhaps crucial element of successful microtransit operators, especially those concerned with the field of NEMT.

This is because private and public fleets alike can fund startup and operating costs with a wide variety of grants and other money from local, state, and Federal governments. For example, Medicaid transit benefits are an important source of funds for NEMT-specific providers. Grants from the Federal Transit Association represent an important source of funds for a wider variety of transit operators.  

How Does Public Funding Affect Transit Organizations or Companies?

Of course, with federal grants come certain eligibility requirements. These can vary from state-to-state or be Federally-mandated across the board. The regulatory framework can be quite complex. For example, the ADA (Americans with Disabilities Act) applies to both public and commercial vehicles.

In 2010, the ADA developed a set of accessibility guidelines, including specific items for all transit vehicles. Among other requirements, ADA-compliant vehicles must have a working wheelchair ramp that meets certain size specifications, have adequate interior lighting, and 4-point safety belts for passengers.

In most cases, public funding also comes in the form of grants. These grants impact all potential operators because they may outline complex requirements around everything from the process of hiring drivers and the number of hours they can work, to the area the vehicles may operate in. This can lead public and private transit agencies to struggle with red tape if their fleets aren’t up-to-date in regards to the vehicles themselves as well as the software used to dispatch and operate them.

How Can Independent Operators Get Public Funding?

Although non-for-profit and publically-run transit agencies make up a large part of the market for public funding, that doesn’t mean there isn’t room for contractors. Across the US, cities are trying innovative public-private partnerships that aim to combine the best parts of public transportation (lower cost, convenience) with the agility and cutting-edge technology that transit startup companies have.

Although these public-private partnerships have only taken off in a handful of cities so far, public funds aren’t just accessible to startups in places like California and Massachusetts. There are also ways for independent operators, whether they be NEMT or other forms of microtransit, to benefit directly from how some public transportation funding is distributed

The Federal Transit Administration: An Important Source of Public Transit Funding

The Federal Transit Administration (FTA) can provide funding to nearly every element of eligible microtransit services in a variety of settings, including planning, initial fundraising and operation, and the acquisition of public transportation service contracts. The FTA also regulates what budget portions each state must spend on public transit.

Although the FTA oversees the entirety of America’s public transportation network, NEMT and other specialized transit programs most commonly receive money from two of the FTA’s funding programs:

• Section 5310, otherwise known as Enhanced Mobility of Seniors & Individuals with Disabilities, helps to ensure that the transportation needs of citizens with special accessibility needs are met, through either public and independent transit operators. This program applies in any case where available public transportation is insufficient, inappropriate, or even completely unavailable. The funding also covers a huge array of both “traditional” projects like buying buses or vans and making them ADA-compliant, all the way to more innovative projects like improving how passengers access services with physical or technology updates.  
• Section 5311, Formula Grants for Rural Areas, concerns areas of the US where the spread-out nature of the local population means that public transit may simply not be reasonably accessible or viable. Typically, section 5311 deals with local areas that have less than 50,000 inhabitants. Money from this FTA program can be applied to Federally-recognized Indian tribes, public transit agencies, state or local governments, nonprofit organizations, and other operators of commercial transit that are working to bridge local gaps to public transportation needs.   

How Does Good Technology Help Transit Operators Get Funding?

Having up-to-date tools in place to efficiently and accurately run the entire operation should be a priority for any transit organization for many reasons--and funding is an important element. Good dispatch and operations software not only makes running transit smoothly much easier, but it can actually help providers prepare for some of the stipulations that come with public funding.

For instance, an organization may be more likely to win a publically-funded contract if they can show a good history of data and fleet management. This includes crucial factors like accurate and timely ridership numbers, live fleet location services, and “smart” route planning to save operating (and therefore bidding) costs.

If your NEMT or other microtransit organization is looking to capitalize on the abundant public transit funding sources available in the US, there are plenty of practical steps you can take, like making sure your fleet is all ADA-compliant. Even the best fleet is only as good as the way it is managed, however. Improve your chances by educating yourself about how to make sure your organization has the right software in place before you start exploring new contracts.