USDANEWS                                                           VOLUME 58 NO. 7 — September 1999

Using Public Transit Can Put Cash Back In Our Pockets
   Subways Qualify; Car Pools Don't

by Ron Hall, Office of Communications

Since December 1998 USDA agencies have had the option to participate in a "transit incentive" program, designed to encourage employees at headquarters and field offices to use public transportation. And since certain tax-related questions have recently been resolved, participating agencies now have an additional form of participation to choose, if they wish to pursue it.

In Departmental Regulation No. 4060-2 dated December 15, 1998, and titled "Transit Incentives," USDA outlined its new policy on authorizing monetary incentives to employees who use qualifying forms of public transportation to commute to and from their USDA workplace.

The regulation noted that USDA's subcabinet officials have the option of approving the use of transit incentives for their organizations, and can delegate that decision to agency administrators. But it said "No additional funding is available to pay the transit incentive."

"Mission areas and staff offices will therefore need to review their budgets carefully taking into consideration all funding needs," the regulation advised. "Highest priority should be placed on avoiding furlough and reduction in force."

Elizabeth Daly, a personnel management specialist in the Office of Human Resources Management, explained that ‘public' or ‘mass' transportation covered under USDA's regulation includes travel by bus, subway, train, and ferry boats. In addition, van pools qualify if they include at least six adult passengers plus the driver, and at least 80 percent of the van's mileage is for transporting employees between their homes and places of work. Car pools, irrespective of size, do not qualify.

She said that USDA's new regulation reflects a change in the Department's position on this issue. Public Law 101-509, which was signed into law on November 5, 1990, allowed--but did not require--federal departments to participate in programs to encourage use of public transportation. "But then--as now--no additional funds were appropriated to pay for the cost incentives," she said.

USDA officials subsequently reviewed the matter but, citing budgetary reasons, opted in March 1992 to not participate as a Department in such a program. The May 1992 issue of the USDA News carried a story about that decision.

Then in 1997, based on an agreement between the Foreign Agricultural Service and the American Federation of State, County, and Municipal Employees Union, FAS employees at GS-10 and below were allowed to participate in a transit incentive program.

According to Gloria Abbott, an FAS budget analyst who administers the program, FAS employees who qualified could receive a "Metrochek"--that is, an actual subway card--worth up to $25 a month tax free. Riders who use forms of public transportation other than subway could turn that subway card into a local public transportation office and exchange it for a ‘fare medium' such as bus passes or tokens or vouchers for other accepted forms of public transportation. The maximum amount has since increased to $30 a month tax free for qualifying FAS employees, and FAS's program has since expanded to cover GS-11 employees too.

Later that same year, following an office move to a more congested part of downtown Washington, DC, Economic Research Service Administrator Susan Offutt adopted a transit subsidy program for ERS employees, all of whom work in Washington, DC.

"The increased congestion, high cost of parking, and excellent access to public transportation made the transit subsidy a particularly attractive option," explained Vicki Smith, assistant to the ERS administrator and coordinator of that agency's program when it began.

ERS's subsidy also relies on the "Metrochek" plan, but its maximum reimbursement is $65 monthly tax free for its employees who use qualifying forms of mass transit.

In 1998 USDA officials decided to review the Department's earlier decision in 1992 that it would not participate, as a Department, in transit incentives. Departmental Regulation No. 4060-2 resulted from that review.

Daly explained that USDA agencies which elect to participate in some form of transit incentive have three basic options, as follows:

1. Benefits in Addition to Compensation--Under this option, the benefit provided to USDA employees is in some form of actual ‘Metrochek-like' subway card, bus pass or token, or some form of voucher, up to $65 per month tax free. This is provided in addition to--but is not included in--an employee's paycheck.
   
   
2. Benefits in Lieu of Compensation--Under this option, USDA employees are permitted to "set aside up to the federal nontaxable limit...or the actual commute cost, whichever is less, of their gross income before taxes are computed, to pay for qualifying transit." USDA agencies do not pay for this benefit.
   
   And just what does all that language mean? "Under this option," Daly advised, "employees are, in effect, sheltering a portion of their income from taxes--and it is equal to the amount they pay monthly in mass transit costs, subject to the $65 ceiling."
   
   She added that this option is similar to how an employee's Thrift Savings Plan (TSP) contributions are treated for tax purposes. As with the TSP, this transaction is reflected on an employee's Statement of Earnings and Leave.
   
   In June 1999 the National Finance Center in New Orleans developed a procedure to accommodate this option.

3. Combination--Under this option, USDA employees may receive a ‘Metrochek-like' form of reimbursement, as described in the first option above, plus a ‘Thrift Savings Plan-like' tax shelter, as described in the second option above--all not to exceed the $65 monthly ceiling.
   
   USDA agencies which opt to participate in some form of transit incentive are responsible for setting up their own programs, identifying a point of contact, and maintaining appropriate records of its expenditures. "
   
   So far in 1999 we've seen increased use of these options by our headquarters employees who qualify and whose agencies are participating," Daly noted. "We encourage similarly qualified field employees to consider these options as well." 

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