Report 2007-106 Summary - September 2007

Grade Separation Program:

An Unchanged Budget and Project Allocation Levels Established More Than 30 Years Ago May Discourage Local Agencies From Taking Advantage of the Program

HIGHLIGHTS

Our review of the Grade Separation Program found that:

  • Although the average cost of a grade separation project has increased from $2.5 million in 1974 to a current average of just more than $26 million, the annual funding of $15 million available for the Grade Separation Program has not changed since 1974.
  • Local agencies say they are experiencing difficulties securing the funding necessary to pay for their share of grade separation projects; thus, some are not nominating new projects to be included on the Public Utilities Commission's (Commission) priority list and many are not applying for funds for the projects already on the priority list.
  • A report prepared by the Commission in March 2007 showed that $165 million is needed to provide funding for the same number of grade separation projects that $15 million provided in 1974.
  • Additional funding will be available for grade separation projects from a bond measure approved by California voters in November 2006, which will provide a one-time amount of $250 million to improve railroad crossing safety.
  • The California Department of Transportation does not always comply with state regulations when allocating supplemental funds to projects for which the final costs exceed the preliminary cost estimates.

RESULTS IN BRIEF

According to data from the Federal Railroad Administration, 167 accidents occurred near at-grade crossings throughout California in 2006. An at-grade crossing, often referred to as a railway crossing, is an intersection of railway tracks and a roadway at the same elevation, or grade. One method used to address dangerous at-grade crossings is to eliminate them by separating the railway and roadway so they no longer intersect, usually via an overpass or bridge. Grade separation projects involving local roadways are the responsibility of the local agency that has jurisdiction over the roadway. The average cost of these projects is $26 million, according to the Public Utilities Commission (Commission), based on a current list of high-priority grade separation projects.

To help local agencies pay for these projects, the State makes some funding available through what is commonly referred to as the Grade Separation Program. As part of the process of determining which grade separation projects will receive funding from the Grade Separation Program, state law requires the Commission to establish a list by July 1 of each year prioritizing each eligible project nominated by local agencies. Further, state law gives the California Transportation Commission (CTC) the responsibility for allocating the annual Grade Separation Program appropriation of $15 million to the projects included on the Commission's priority list. CTC has delegated this responsibility to the California Department of Transportation (Caltrans).

Although the Commission's priority list of grade separation projects for the past several years has contained more than 50 projects, Caltrans has been unable to allocate all the Grade Separation Program funds because local agencies often have not taken the additional steps necessary to apply for the funds once their projects are included on the Commission's priority list. Part of the reason for this failure to apply for funds is that the cost of grade separation projects has increased more than tenfold over the past 30 years, while the funds available from the Grade Separation Program have remained unchanged. Specifically, based on data provided by the Commission, we found that the average cost of a grade separation project has increased from $2.5 million in 1974 to a current average of just more than $26 million. However, the annual funding of $15 million available for the Grade Separation Program has not changed since 1974. Local agencies say they are experiencing difficulties securing the funding necessary to pay for their share of grade separation projects. As a result, some are not nominating new projects to be included on the Commission's priority list. Furthermore, many are not proceeding with projects that are already on the priority list, so they are not applying for funds for the projects.

A report prepared by the Commission in March 2007 showed that $165 million is needed to provide funding for the same number of grade separation projects that $15 million provided for in 1974. Although the report identified a need to increase the funding for the Grade Separation Program, according to a deputy director, the Commission has not performed an analysis to identify where it could obtain additional funding. The Grade Separation Program currently is funded through the State Highway Account, which also funds other transportation programs. Consequently, increasing the funding for this program would redirect funds from other transportation programs and projects unless another funding source is identified. Some of this additional funding will be available from a bond measure approved by California voters in November 2006, which will provide a one-time amount of $250 million to improve railroad crossing safety. The bond measure makes $150 million of these funds available for allocation under the process established for the Grade Separation Program. In addition to the funds made available from the bond measure, the State Transportation Improvement Program can provide funding to local agencies for various transportation projects including grade separation projects.

When applying for an allocation from the Grade Separation Program, local agencies generally submit a preliminary cost estimate—a rough estimate based on such things as the scope of work to be performed, data from previous projects, and experience—to Caltrans. They are reluctant to spend the money needed to develop a more accurate estimate of a project's costs until they receive an allocation. As a result, the final costs of eight of the nine grade separation projects we reviewed exceeded the preliminary cost estimates local agencies submitted to Caltrans in their applications by amounts ranging from $1.5 million to $19.6 million. However, when we compared the final costs for seven of these projects to the preconstruction estimates (two local agencies were unable to provide these cost estimates), the cost overruns were much less, between $80,000 and $3.7 million. The preconstruction estimate is an estimate of a project's cost based on the final design, using current construction and material costs.

Finally, we found that Caltrans does not always comply with state regulations when allocating supplemental funds to projects for which the final costs exceed the preliminary cost estimates. For example, four of the six applications we reviewed did not include one or more of the required certifications, and two were missing a statement explaining in detail why the original allocation was insufficient. Additionally, Caltrans' current regulations are inconsistent with statutes; thus, applicants may not be aware of changes in law and may either choose not to submit an application or submit inconsistent applications.

RECOMMENDATIONS

In light of local agencies' limited participation in the Grade Separation Program, the Legislature should reconsider its intent for the program and the extent to which it wishes to continue assisting local agencies with their grade separation projects. Among possible courses of action, the Legislature could:

  • Discontinue the program after the proceeds from the bond measure approved in November 2006 have been allocated and require local agencies to compete with a broader range of projects for funding available to them through other programs such as the State Transportation Improvement Program.
  • Continue the program and increase the annual budget of $15 million and allocation limits per project because it desires to continue providing a specific source of funding focused on grade separation projects.

To ensure that it administers the Grade Separation Program in compliance with state regulations, Caltrans should follow state regulations when making supplemental allocations. Further, to be consistent with statute, it should seek to revise current regulations to conform to recent amendments to statute.

AGENCY COMMENTS

Caltrans agrees with our recommendation and will take steps to address it.


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