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GREATER MINNESOTA

GETS ON BOARD
TRANSIT RIDERSHIP GROWS
WHILE INVESTMENT DECLINES
Conrad deFiebre
Minnesota 2020 Fellow
December 2009
Table of Contents___
Introduction & Key Findings 1

Addressing Inequality 4

Turf Squabbles 6

Changing Rural Communities 8

Mismatched Needs
& Assistance 10

Conclusion
& Recommendations 12

Appendix 13
Cover photo by Randy Stern used under Creative Commons.
Introduction & Key Findings___________
In the eyes of many Minnesotans, public transit is a creature of the big cities, a way to get around the urban
jungle that is generally praised by policy progressives for enhancing mobility and prosperity, but denounced by
conservatives as welfare on wheels.
This ongoing debate tends to overlook the growing role of transit in Greater Minnesota, where it enjoys
support from citizens and local officials across the political spectrum and ridership gains that significantly
exceed the metro area’s, despite chronic resource challenges. It’s not hard to see why when you consider the
stories of people like Dan Wieberdink of Pennock, Minn.
Kandiyohi Area Transit (KAT) gives Wieberdink, 25, a lifeline to work and volunteer opportunities miles from his
rural group home despite cerebral palsy that keeps him in a wheelchair. “I take the bus wherever I go,” he said.
“It gives me my independence. I’m able to do things on my own.”1
For six years, Wieberdink has ridden KAT’s lift-equipped vans to his job as an administrative assistant for the
Willmar Area United Campus Ministry and volunteer shifts at the Bethesda Pleasantview Nursing Home.
Without KAT, founded in 1999, “it would be a lot different,” he said. “I wouldn’t be able to do half the stuff I do
now.”
KAT is one of 60 different Greater Minnesota transit services that cover most, but not all, rural counties in
the state as well as urban centers such as Duluth, Rochester and St. Cloud. Ridership on this far-flung system
reached a record 11.2 million in 2008, an astonishing 7.8 percent increase over 2007 (compared with Metro
Transit’s strong 6.1 percent gain). Ridership outside the Twin Cities is on track for another 4.2 percent rise this
year to an estimated 11.6 million.2 Still, state officials say fiscal constraints keep non-metro service far short of
need and demand.
The Minnesota Department of Transportation (MnDOT) says this gap is likely to widen as the state’s elderly
population doubles by 2035, bringing parallel increases in the numbers of disabled and the poor who depend
on transit for basic mobility. MnDOT also envisions greater demand for rural transit job commuting, especially
in growing regions north and northwest of the Twin Cities, but no boost in resources to meet it.
Applications by rural Kittson and Pine counties to establish transit services this year were rejected by state
officials because of stagnant funding, including $1.9 million in transit unallotments by Gov. Tim Pawlenty.
That left four counties in Minnesota lacking any public transit and eight others having only municipal, not
countywide, services.3
“It’s really unfortunate,” said Pine County Engineer Mark LeBrun. “We’re left with people not going places
because they can’t, or spending more driving when they shouldn’t.”4
That’s largely because state-level transit funding hasn’t kept pace with demand or the growing contributions
from federal and local sources.
The federal government increased its contributions to Greater Minnesota transit operations from $3.1 million
in 1999 to an estimated $10.3 million this year, a 232 percent boost. Over the same period, state General Fund
support grew by less than one-tenth that rate, from $13.2 million to $16 million, not even enough to cover
inflation.
Local property taxpayers in Greater Minnesota kicked in rapidly growing shares of transit funding totaling
$16.2 million from 1999 through 2001 before a portion of motor vehicle sales taxes (MVST) was dedicated to
1
Telephone interview, August 2009.
2
Tom Gottfried, MnDOT Office of Transit, telephone interview, September 2009.
3
MnDOT Greater Minnesota Transit Plan draft. Kittson, Pine, Waseca and Wilkin counties have no transit service. Blue Earth, Cass,
Clearwater, Freeborn, Le Sueur, Nicollet, Olmstead and Rice counties have services only within some city limits.
4
Telephone interview, Sept. 22, 2009.

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transit in 2002 as a partial replacement. Lagging auto sales, however, held the MVST aid below the $8.5 million
recorded in 2004 for every year afterward until it hit $9.6 million in 2008 and an estimated $14.2 million this
year, thanks mostly to a greater share of the tax going to transit.
And despite the MVST dedication, Greater Minnesota property taxpayers have continued to support transit in
their communities to the tune of more than $2 million per year.

This year, with the state facing a huge budget deficit, General Fund transit support was cut statewide, although
a shift of 1.25 percent of MVST revenue from roads to transit is expected to maintain current operations in
Greater Minnesota. The shift totals $6 million over two years, but $4 million of that is to finance Northstar
commuter rail operations that began in November and new dial-a-ride services in outlying areas of the seven
Twin Cities counties starting in January.
State officials say that leaves no room for expansion of basic transit in the 80 Greater Minnesota counties.5
Meanwhile, under bipartisan legislation being pushed by U.S. Rep. James Oberstar of Minnesota in Congress,
federal transit investment would increase 90 percent from current levels to $99.8 billion over six years,
continuing Washington’s aggressive support for rural mobility.6 That initiative, however, appears to be bottled
up until next year at the earliest. The Obama administration has called for delaying it into 2011.

5
Tom Gottfried, MnDOT Office of Transit, telephone interview, Oct. 13, 2009.
6
U.S. Rep. James Oberstar, statement before U.S. House Ways and Means subcommittee on select revenue measures, July 23, 2009,
p. 2. http://transportation.house.gov/Media/file/Full%20Committee/20090723wm/Ways%20and%20Means%20Testimony%20
72309.pdf

2 Greater Minnesota Gets On Board


Key Findings
• Unbeknownst to many Minnesotans, public transit is an important lifeline for people in Greater
Minnesota, especially growing populations of elderly, low-income and the disabled. It enjoys strong
public support in most rural areas of the state.
• A government-sponsored study pegged transit’s average economic impact per rural county in America
at more than $1 million per year, with a benefit-cost ratio of more than 3 to 1.
• Transit services, often dial-a-ride vans, are available in much of rural Minnesota. Only four outstate
counties lack any public transit, although eight others, mostly in south central Minnesota, have only city
services.
• Despite these and other gaps in service and an unprecedented halt to expansion of the system because
of state funding cutbacks, Greater Minnesota public transit posted a 7.8 percent increase in ridership in
2008 and is on track for another 4.2 percent gain this year, to 11.6 million trips.
• From 2003 to 2008, Greater Minnesota ridership increased 21.5 percent at the same time that state
funding declined by 8 percent.
• The Minnesota Department of Transportation projects demand for Greater Minnesota transit next year
at 17.9 million rides but predicts a 42 percent shortfall in funding. Because of scant resources as far as
the eye can see, MnDOT expects to fall 27 percent short of its formal goal of meeting just 80 percent of
the demand.
• When MnDOT asked existing Greater Minnesota transit providers to identify their greatest challenges,
94 percent of them named inadequate funding.
• Lagging state General Fund support – dropping this year to a level not seen since 2001 -- has hindered
Greater Minnesota transit development. Fast-growing federal aid, motor vehicle sales tax contributions,
local property taxes and operating revenues have had to pick up the slack.
• The most successful of Greater Minnesota’s 60 transit agencies have overcome parochial insularity and
short-sightedness to improve quality of life for many residents. Top strategies for getting the most for
the money include routes across county lines, aggressive efforts to coordinate with dozens of special
federal transportation programs and their local grantees, trip-scheduling technology, on-staff mobility
managers and alternatives to costly dial-a-ride service such as route deviation, subscription ridership
and volunteer drivers using their own vehicles.

Greater Minnesota Gets On Board 3


Addressing Inequality_________________
Throughout the United States, an estimated 40 percent of rural counties have no public transit. Minnesota
does better than that with 85 percent of its 80 counties outside the Twin Cities receiving some level of service.
But in too many of those places buses and vans don’t operate outside city limits or on evenings, weekends and
some weekdays.
The resulting inequality across the state in mobility and access should be addressed with increased public
support – especially from the state General Fund, whose estimated contributions to rural transit this year are
falling to their lowest level since 20017 while federal aid and rider fares have posted strong increases.

The transit services themselves can do more as well to boost outreach and save money. Multi-county transit
coordination in Minnesota’s northeastern Arrowhead, southeast corner and western prairies has produced
fare box recovery measures comparable to those of fixed-route buses in Minnesota’s largest cities.8
More coordination is needed, as well, with at least 62 separate federal programs administered by eight
different departments that provide special transportation services to the disabled, the elderly and the poor.
This “presents a challenge to coordinate services in the most cost-efficient and effective manner,” MnDOT says.
“Each program may require different data to be reported and may operate under a different funding cycle [and
with] different billing systems … In many cases, insurance requirements prohibit agencies from sharing vehicles
or clients.”9
For example, at least 86 different hospitals, nursing homes, nonprofits and units of government operate elderly
and disabled transportation services in Greater Minnesota – all separate from the 60 public transit agencies
serving the same area.10 This can multiply capital and administrative costs that eat into operating budgets and,
7
Tom Gottfried, MnDOT Office of Transit, telephone interview, Oct. 30, 2009.
8
MnDOT, Op. Cit. Greater Minnesota Transit Plan draft, p. 59.
9
MnDOT, Op. Cit., p. 3-26.
10
MnDOT, Op. Cit.

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ultimately, the number of people who can get where they need to go.
Efficiencies can also be gained by introducing trip-scheduling technology or mobility managers to the dial-a-
ride services that predominate in sparsely populated rural areas. In some cases, route deviation, a dial-a-ride
hybrid that serves riders within a short distance of set routes; subscription services for regular riders, and
volunteer drivers, who use their own vehicles to transport riders in return for mileage-based expenses, can be
the most cost-effective approaches to rural transit.
Transit managers from across the state showed they recognize the need for these and other improvements in
seven workshops MnDOT conducted as part of developing a plan for Greater Minnesota transit through 2030.11
But the most important key to meeting Greater Minnesota’s transit needs is more public investment. At this
point, however, prospects for that appear dim.
MnDOT’s draft plan projects a 42 percent shortfall in funding to meet Greater Minnesota transit demand for
17.9 million trips next year. Unless resources increase, the gap would grow to 54 percent of projected demand
for 22.3 million trips by 2030.
Faced with these daunting figures, MnDOT’s formal goal, adopted in 2001, is to meet just 80 percent of the
demand. That, too, hasn’t been reached, with a 27 percent shortfall expected in 2010.12

“Transit systems in rural Minnesota are absolute lifelines,” said Tony Kellen, president of the Minnesota Public
Transit Association. “But right now we’re just maintaining a basic level of service. Sometimes people have
to wait a week to get a ride.”13 Not all the obstacles to rural transit come from shortages of public funding
or inefficient use of it. In some places, city and county officials resist authorizing service for fear that newly
mobile residents will do their shopping in the next town or county, damaging the local economy.
Those concerns are mostly unfounded, as attested by the broad popularity of rural transit once it’s established.
No Minnesota county has ever dropped transit on economic grounds.

11
Ibid.
12
Ibid.
13
Telephone interview, September 2009.

Greater Minnesota Gets On Board 5


Turf Squabbles________________________
But county commissioners who stood in the way of transit in rural Pipestone County – largely out of worry that
tiny Edgerton, Hatfield and Ruthton would wither in the gravitational pull of the county seat at Pipestone (pop.
4,500) -- were voted out of office in 1996. Pipestone County Transit now boasts the highest per capita ridership
among Minnesota’s 25 county transit systems.14 Pipestone’s pro-transit board, however, had to wait until 1999
to get the vans rolling as the state weathered another periodic funding crunch.15
Delays like that come with an opportunity cost. A Transit Cooperative Research Program study sponsored by
the Federal Transit Administration found an average economic impact of transit per rural county of more than
$1 million per year and a benefit-cost ratio of 3.35 to 1.
“This is a significant level of benefits,” the report notes. “The ratio of 3.35 to 1 exceeds by a large margin the
returns for many governmental programs that are considered successful.”16
Positive economic impacts from rural transit include improved access to employment, education and medical
services such as dialysis, increased tourism and tourism-related jobs and reduced living costs in remote areas,
the study said.

“Without our services in this rural region, senior citizens, people with mental and physical disabilities and
low-income individuals would be unable to attend to the normal, daily activities that the rest of us take for
granted,” said Earl Henry, director of Northeast Iowa Community Action Transit, which serves five counties and
has regularly scheduled service to the Mayo Clinic in Rochester, Minn.
“Activities such as medical and dialysis appointments, getting to work, grocery shopping, meal site preparation,
barber and beauty shop appointments, visiting spouses, family and friends in nursing homes and hospitals, as
14
MnDOT Greater Minnesota Transit Plan, Op. Cit. Appendix D, p. 21.
15
Marc Hall, Pipestone County Transit director, telephone interview, Sept. 29, 2009.
16
TCRP Report No. 34, 1998. http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_rpt_34.pdf

6 Greater Minnesota Gets On Board


well as social activities that enhance the quality of one’s life.”17
Dave Engstrom, executive director of the Minnesota Association of Small Cities, said the rapidly aging
population of Greater Minnesota has the same needs. “Small-town Minnesota is a very, very nice place to grow
old in, but we need more services,” he said. Cuts in state aid, however, have forced increases in property taxes,
not for new programs, but just to minimize cuts in existing ones, he added.18
Recent opinion research in Itasca County shows the importance of rural transit as a link to social services for
the disabled, elderly and poor, but at the same time little willingness to support it either financially or with
volunteer work.
Surveys of county residents, focus group participants and donors to the United Way of 1000 Lakes in Grand
Rapids placed transportation at or near the top of issues facing the community, services needing improvement
and greatest barriers to accessing other services. But transportation also finished at or near the bottom of lists
of needs being well served and efforts getting direct help from respondents.19
The researchers concluded that accessibility to services, education, health care and employment is key to
meeting the needs of Itasca County’s most vulnerable populations. And that prompted the Grand Rapids-based
Blandin Foundation to finance a new $50,000 study, due out in December, of ways to improve transportation in
the county.
“This finding corroborated what we’ve been hearing for several years – that transportation is an issue for
significant segments of Itasca County residents, including those in poverty, the elderly and students,” said
Wade Fauth, Blandin Foundation director of grants.20

Added Jody Hane, United Way of 1000 Lakes executive director: “The most important thing is that when the
study is complete, we will have some specific, concrete tasks to begin bridging the transportation gap and to
help all residents start thinking differently about transit.”21

17
Earl Henry, quoted in Community Transportation magazine, summer 2002. http://www.ctaa.org/webmodules/webarticles/
articlefiles/ct/ruraltransit02/roundtable.pdf
18
Dave Engstrom, telephone interview, Sept. 22, 2009.
19
United Way of 1,000 Lakes, “What Matters – An Assessment of Human Services Needs in Itasca County,” 2008. http://www.
unitedwayof1000lakes.org/what_matters.pdf
20
Blandin Foundation news release, Aug. 20, 2009, “Blandin Foundation awards grants for residential transportation study.” http://
blog.lib.umn.edu/hhhevent/insider/Blandin%20Foundation%20Press%20Release.pdf
21
Ibid.

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Changing Rural Communities_________
Rural transit sounds like an oxymoron to urbanites who retain a bygone image of life in the country. A century
ago, “most rural residents were involved in farming, forestry and mining; they lived in small communities
with few outside contacts,” the Transportation Research Board reported. “Today rural economies have a wide
diversity of economic activities and demography, and rural life is much more connected to national markets.”22
As America matured in the 20th century, its rural areas underwent deep changes as well. The automobile and
the spread of highways multiplied the options for those able to drive. Meanwhile, the commercial vitality of
the smallest towns waned along with the availability of alternatives to the private car.

“In 1977 rural residents drove a third more miles to work and double the miles on family business than their
urban counterparts,” Community Transportation editor Scott Bogren wrote in 1997.23 “Between 1960 and
1973, bus service in rural areas declined by 53 percent, while passenger rail service was cut by more than 80
percent. The poor, the elderly and people with disabilities, in particular, were becoming increasingly stranded.”
Then a federal rural transit demonstration program, launched in 1973 under President Richard Nixon, “opened
the door for transportation in rural areas,” said Linda Wilson, who used it to start bus service in Charlottesville,
Va.24
In the next dozen years, the U.S. rural transit network swelled to more than 1,000 agencies, gaining broad
nationwide support. Rural transit operators are “service oriented, penny-pinching, flexible and innovative,
representing all the values that this [Reagan] administration ought to be embracing,” Rep. Newt Gingrich,
R-Ga., said during a U.S. House hearing he led in 1985 along with Rep. James Oberstar, D-Minn.25
Minnesota was among the pioneers of modern rural transit. Arrowhead Economic Opportunity Inc., a
nonprofit community action agency, began transporting senior citizens in four northeastern counties under the
federal Older Americans Act in 1974.
Today Arrowhead Transit is one of the nation’s largest rural transit operators, with 85 vans and buses serving
22
Op. Cit. TCRP Report No. 34.
23
“Rural Transit: You Can Get There From Here.” Community Transportation magazine, 1997. http://www.ctaa.org/webmodules/
webarticles/articlefiles/ct/spring98/rural_transit.pdf
24
Ibid.
25
Ibid.

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seven counties and nearly half a million riders of all ages each year. It offers a broad array of services tailored
to the needs of individual communities, not one size fits all.
For example, hours and days of operation vary across Arrowhead’s sprawling jurisdiction from Duluth to
International Falls and Grand Rapids to Grand Marais. It covers 16,123 square miles, more area than the states
of Connecticut, Delaware, Massachusetts and Rhode Island combined.26
Arrowhead provides rides five days a week in some areas, six or seven days in others, and coordinates trips
across county lines. This year Arrowhead increased its service in International Falls to 12 hours each weekday,
mainly to serve Rainy River Community College’s commuter campus. And everyone in the region can access
Friday bus rides to the Miller Hill Mall and medical facilities in Duluth, with city transit connections to other
destinations.27
To the four original counties of Itasca, Koochiching, Lake and St. Louis, Arrowhead Transit added Cook in
1976, Aitkin and 1979 and Carlton in 1986. In recent years, it took over city dial-a-ride services in Cloquet and
Virginia.
But when Arrowhead applied to extend service to neighboring Pine County beginning this year, something
strange occurred. Its request for $700,000 in state and federal assistance was turned down for lack of funds.
“That had never happened before,” said Pam Smith of Arrowhead Transit. “We were so sure we had a program
in place that we’d printed promotional materials and planned a media blitz.”28

The freeze on funding scuttled plans for express routes to Duluth and up and down Interstate Hwy. 35, plus
dial-a-ride services for Hinckley, Pine City, Sandstone and surrounding areas. Now a slimmed-down proposal
that would “drastically cut” much of that plan is pending with state officials, but “expectations aren’t very
high,” Smith said.

26
Pam Smith, public relations and marketing director Arrowhead Transit, telephone interview, Oct. 2, 2009.
27
Ibid.
28
Ibid.

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Mismatched Needs & Assistance______
It’s not only areas without any transit services that are suffering under fiscal constraints. When MnDOT asked
existing Greater Minnesota transit providers to identify their greatest challenges, 94 percent of them named
inadequate funding. When asked about barriers to expanding or improving their service, 97 percent pointed
to funding for operations. If additional funds were available, 43 percent would increase their service hours, 34
percent would expand their service area and only 3 percent would replace or add equipment.29
Perversely, however, American Recovery and Reinvestment Act stimulus funds for transit were granted only
for equipment purchases, not service upgrades. Rural Minnesota systems got 58 new buses worth $7.1 million
and $4.3 million in facility improvements, but nothing for operations.30 Metro Transit, meanwhile, was able to
bolster its operating budget by putting millions of dollars in stimulus money into fleet and facility maintenance.
Minnesota state agencies have been addressing inadequate coordination of general public transit services with
special transportation programs for the elderly, disabled, unemployed and poor since at least 2004. In that
year, a survey of two dozen separate funding streams found that MnDOT’s Greater Minnesota transit programs
accounted for less than half of the statewide total of $126.7 million in annual expenditures. Human service
transportation programs alone spent nearly $7 million more than the Greater Minnesota transit total of $57.8
million in federal, state and local funds.31
Subsequent reports from the state’s Interagency Committee on Transit Coordination have highlighted isolated
success stories of local transit providers teaming up with other agencies on trip scheduling and vehicle
maintenance, sharing and storage. In some cases, human service and economic development agencies can
save money by contracting with general transit providers, which in turn get a boost to their bottom lines.
Arrowhead Transit, for example, provided more than 43,000 rides for Head Start, day activity centers, county
and private social services and other programs in 2004 for less than $800,000 in contract fees. That saved
an estimated $4 million compared with state reimbursement rates charged by private Special Transportation
Service providers in the region. The average cost per trip was $4.22, significantly less than Arrowhead’s
overall average cost that year of $7.63, thanks largely to aggressive efforts to co-mingle clients from different
agencies on the same trips. The contract fees provided most of Arrowhead’s required 15 percent local share of
operating funding, $312,000; the rest went for capital purchases.32
The Midwestern Governors Association has called for “more federal transit options for residents in rural areas,”
especially for “transporting individuals from smaller towns to larger cities/towns,” mainly for nonemergency
medical care. “Public transit will likely play a greater role in keeping these elderly Americans in their homes,
and lowering public and private expenditures on more expensive care options.”33
The Minnesota interagency committee’s 2008 report, however, noted a “continuing need to reduce barriers
between state and federally funded human service programs and Minnesota’s public transportation systems”
and “duplication and inefficiencies caused by the ‘siloing’ of transportation funds through various state and
federal programs.”34
“We’ve had scattered successes all over the state in this area,” said Hal Freshley, policy and planning
coordinator for the Minnesota Board on Aging. “But it only works with extraordinary leadership and persistent
29
MnDOT. Op. Cit. Appendix B, Electronic survey Exhibits E1 and E2.
30
MnDOT American Recovery and Reinvestment Act Greater Minnesota Transit Projects. http://www.dot.state.mn.us/
federalrecovery/lists/greater-mn-transit-03242009.pdf
31
Interagency Committee on Transit Coordination, Report to the
Governor, Nov. 1, 2006. Table 2, 2004 Minnesota Community Transportation Expenditures – Across Agencies.
32
MnDOT Office of Transit, Minnesota Public Transit-Human Services Transportation Coordination Study, March 31, 2006, pp. VI5-VI8.
http://www.coordinatemntransit.org/reports/mncoordstudy/documents/0-FullCoordinationStudy.pdf
33
Midwestern Governors Association, Surface Transportation Recommendations. March 2009, pp. 17-18. http://www.
midwesterngovernors.org/Publications/Transportation_Recommendations.pdf
34
Interagency Committee on Transit Coordination Report to the Governor, Nov. 1, 2008.

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individuals who keep pushing for coordination. We need to make it happen for everybody.”35
He estimated that no more than about one-third of Greater Minnesota transit agencies have made significant
progress in coordinating efforts with other government transportation programs.

Meanwhile, there has been no updating of the 2004 funding survey or cost-effectiveness accounting of the
many specialized transportation programs. Greater Minnesota public transit agencies compile and publish that
information on their services annually.

35
Hal Freshley, Minnesota Board on Aging, telephone interview, Oct. 22, 2009.

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Conclusion & Recommendations______
It will be a challenge for Minnesota to meet the growing demand for transit services outside the Twin Cities
area, but rising to that challenge is a must for the livability and prosperity of the state’s non-metro areas. Both
state and local policymakers, in cooperation with an ongoing aggressive approach at the federal level, have a
part to play in this vital effort.
Here are the key elements:
• State financial support for Greater Minnesota transit should increase at least enough to match growth
in demand. In better economic times than these, it should exceed that rate, allowing real growth in the
system to address unmet needs.
• Local leaders must set aside parochialism that can block rural transit initiatives. In the long run,
adequate, affordable mobility will contribute more to a small town’s vitality than it loses in retail sales
that may move down the road.
• Many transit agencies in Greater Minnesota need to boost their efficiency and outreach by aggressively
partnering with neighboring areas and parallel transportation efforts funded by health, human services
and economic development programs.

Rural transit, lacking the population and trip densities of urban services, must continually seek new cost-
effective strategies. This can include trip-scheduling technology, on-staff mobility managers and dial-a-ride
alternatives such as route deviation and volunteer drivers using their own vehicles.

12 Greater Minnesota Gets On Board


Appendix____________________________
Transit in Greater Minnesota

2008 Statistics
Statewide

Urban Systems

Greater Minnesota Gets On Board 13


Dial-A-Ride Systems

Small Urban Systems

14 Greater Minnesota Gets On Board


Rural Systems

Greater Minnesota Gets On Board 15

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