(b) Performance reviews will be undertaken for each local transportation organization on regular intervals at least every 5 years.

1. (1) A performance review will include, but is not limited to, a review of management, finance, operations, maintenance, capital projects and system performance.
2. (2) The Department will maintain on its web site, at ftp://ftp.dot.state.pa.us/public/bureaus/publictransportation/generalinformation/tpr[lowbar]presentation.pdf, a performance review policy that will discuss the process for conducting a performance review.

(d) Performance reviews will be conducted as follows:

1. (1) Comparison to peers.

   1. (i) The Department will identify at least five prospective peer systems for each mode of the local transportation organization being reviewed. The Department will finalize the peer group selection after consultation with the local transportation organization.

   2. (ii) The peer selection process will include, without limitation, the following data items:

      1. (A) Revenue vehicle hours (car hours for rail and fixed guideway).
      2. (B) Revenue vehicle miles (car miles for rail and fixed guideway).
      3. (C) Number of peak vehicles.
      4. (D) Service area population.

   3. (iii) The Department will evaluate the local transportation organization based on the following performance criteria in accordance with the act:

      1. (A) Passengers per revenue vehicle hour.
      2. (B) Operating costs per revenue vehicle hour.
      3. (C) Operating revenue per revenue vehicle hour.
      4. (D) Operating costs per passenger.

   4. (iv) The Department will:

      1. (A) Calculate the average of each performance criterion by mode for the peer group (which includes the local transportation organization under review), using the single most recent year for which data is available.
      2. (B) Calculate the standard deviation for each performance criterion by mode for the peer group and local transportation organization under review.

   5. (v) The local transportation organization under review will be in compliance if the following conditions are met:

      1. (A) Passengers per revenue vehicle hour is within plus or minus one standard deviation or exceeds plus one standard deviation.
      2. (B) Operating revenue per revenue vehicle hour is within plus or minus one standard deviation or exceeds plus one standard deviation.
      3. (C) Operating costs per revenue vehicle hour is within plus or minus one standard deviation or is below minus one standard deviation.
      4. (D) Operating costs per passenger is within plus or minus one standard deviation or is below minus one standard deviation.

   6. (vi) The local transportation organization will be determined at risk if one or more of the following apply:

      1. (A) Passengers per revenue vehicle hour is below minus one standard deviation.
      2. (B) Operating revenue per revenue vehicle hour is below minus one standard deviation.
      3. (C) Operating costs per revenue vehicle hour exceeds plus one standard deviation.
      4. (D) Operating cost per passenger exceeds plus one standard deviation.

2. (2) Trend analysis.

   1. (i) The Department will prepare a 5-year trend analysis for the local transportation organization under review and the peer systems by performance criteria and by mode.
   2. (ii) If the 5-year trend for all performance criteria by mode is positive and consistent with the peer trend, the local transportation organization is in compliance.
   3. (iii) If the 5-year trend for any performance criterion by mode is negative, but consistent with the peer trend, the local transportation organization may be in compliance based on Department determination.
   4. (iv) If the 5-year trend for any performance criterion by mode is negative and not in keeping with peers, the local transportation organization will be determined to be at risk.

3. (3) Minimum performance standard.

   1. (i) In consultation with the local transportation organization, the Department will establish minimum performance standards to be met within 5 years from the date the standards are established.
   2. (ii) The local transportation organization shall develop and submit to the Department within 90 days of the final report of the performance review a strategic action plan focused on continually improving the system to achieve the established minimum performance standards. The Department will provide technical assistance upon request.
   3. (iii) The local transportation organization shall submit the strategic action plan to its governing body.
   4. (iv) The local transportation organization shall report to its governing body and to the Department on strategic action plan progress on at least a quarterly basis.
   5. (v) A revised minimum performance standard for each performance criterion by mode will be established in each subsequent performance review.
   6. (vi) Upon request by the local transportation organization and submission of proper justification, the Department may approve revised minimum performance standards at times other than during a performance review.
4. (4) Review and report. Each year in the Pennsylvania Public Transportation Annual Performance Report, the local transportation organizations which have been reviewed during the preceding fiscal year will be identified. The report will include a summary of the reviews, the findings and the recommendations.

(e) The application of funding reduction will be as follows.

1. (1) Operating fund reductions in section 1513(g) of the act may be implemented for grantees subject to this section that are not satisfying the minimum performance standards, considering all other provisions of section 1513 of the act. A funding reduction may be assessed in cases when a local transportation organization fails to report progress or fails to implement the agreed upon strategic action plan, or both.
2. (2) Funding reductions may not exceed 5% of the total section 1513 of the act operating assistance allocation in any one fiscal year.