Can Needs‐Based Grants Improve Local Transit Performance? Varying Effects by Level of Control

Obed Pasha and Theodore H. Poister

Public Budgeting & Finance, 2020, vol. 40, issue 2, 3-19

Abstract: Needs‐based grant programs are budgeting systems that tie grant dollars to the needs of the grantees as determined by objective indicators. Although performance improvement is not an explicit goal of such grants, the associated awards could work as incentives for grantees to meet the grant criteria. In other words, grantees seek to improve their performance to fulfill the criteria, even though the grant‐makers intend such grants to support the existing operational needs of the grantees. This study tests these assertions in the context of the small transit intensive cities (STIC) grant that was established as a needs‐based grant system by the federal government to support small local transit agencies operating with unusually high service demands. This study argues that these systems would have a stronger impact on indicators over which grantees have more control. This study tests these assertions using a difference‐in‐differences analysis of 290 transit agencies over 17 years. The findings show that STIC is effective in improving grantee performance, at least on the indicators which are more amenable to control.

Date: 2020
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