What Is Section 5311? Rural Transit Grants and Contract Work for NEMT Companies

Out in the counties where you run long dialysis trips, the county bus or dial-a-ride van you pass may be paid for in part by Section 5311. That agency can be a customer, a partner, or a competitor for Medicaid trips, depending on how you approach it.

What Section 5311 is

Section 5311, the Formula Grants for Rural Areas program, funds capital, planning, and operating costs for public transportation in rural areas with fewer than 50,000 people. The Federal Transit Administration (FTA) apportions it each year by a formula built on rural land area, population, vehicle revenue miles, and low-income residents. Each year’s money stays available to obligate for that year and two more.

The money moves in two steps:

1. Recipients. FTA gives the money to states and federally recognized tribes. In each state, the department of transportation manages it.
2. Subrecipients. The state passes it to state or local government authorities, nonprofits, and operators of public transportation or intercity bus service.

FTA lists eligible uses as planning, capital, operating, job access and reverse commute projects, non-emergency medical transportation, mobility management, and buying public transportation services. The law names service agreements with private providers as one way to buy them (49 U.S.C. 5311(b)). Each state must also spend at least 15 percent of its share on intercity bus service, unless its governor certifies that those needs are met.

FTA apportioned $956,643,454 for fiscal year 2025. Its full-year tables for fiscal year 2026, posted March 31, 2026, made $981,967,584 available for allocation. The law behind the program authorized it through September 30, 2026. Public Law 119-103, signed September 2, 2026, extends it through December 11, 2026, at a prorated share of 2026 funding.

What it pays and where the match comes from

The federal share may not exceed 80 percent of capital and planning costs, 50 percent of net operating costs, and 80 percent of ADA paratransit costs. The agency has to find the rest. Under 49 U.S.C. 5311(g), the local share can come from cash from non-government sources, advertising, a service agreement with a state or local social service agency, or money from federal programs outside the Department of Transportation that can be spent on transportation.

Medicaid fits that last group. CMS and FTA’s joint fact sheet (November 2024) says revenue from contracts to provide Medicaid NEMT can be used as local match for Section 5311. Fares cannot. They come off the agency’s operating costs instead.

Say a rural agency’s demand response service costs $600,000 a year to run and collects $60,000 in fares:

1. Fares come off first, leaving $540,000 in net operating cost.
2. Under the general 50 percent limit, Section 5311 can pay up to $270,000.
3. The agency must find the other $270,000 itself, and revenue from a Medicaid NEMT contract can count toward it.

That gives a rural transit agency a reason to want Medicaid trips, whether it carries them itself or with a partner.

How a NEMT company works with a 5311 agency

A private NEMT company can come in three ways.

• As a contracted operator. An agency may buy service from you instead of running it, under a service agreement. Some states route for-profit companies only through contracts like this. Mississippi’s state management plan (revised January 2026) lets private for-profit operators provide 5311 service only through contracts with eligible agencies or its intercity bus program. Watch county and regional transit procurements, as government NEMT contracts explains.
• As a coordination partner. The law requires each state’s 5311 program to coordinate with transportation paid for by other federal programs. Mississippi requires every 5311 applicant to give private providers written notice of proposed services, consider their proposals, and justify turning them down. When public and private operators both want a service, it calls for comparing fully allocated costs, including subsidies, capital grants, and use of public facilities. Ask the agency to put you on its notice list. See human service transportation.
• Alongside the agency on Medicaid trips. Some 5311 agencies carry Medicaid trips, and some run them. SVTS is the Section 5311 provider for five eastern Kentucky counties and Kentucky’s regional broker for Medicaid and other human service rides in the same counties, with local companies as subcontractors. CMS says a public agency that coordinates NEMT must be picked through competitive bidding, and Medicaid pays for rides, not vehicles. See rural NEMT.

Rules that come with 5311 work

• FTA drug and alcohol testing. 49 CFR 655.3 covers every contractor of an agency that receives Section 5311 money. Driving a revenue service vehicle, vans included, and controlling dispatch are safety-sensitive jobs. Mechanics are covered unless the 5311 agency contracts its maintenance out. Set up the program before you bid. See NEMT driver drug testing.
• ADA service rules. Under 49 CFR 37.23, a private company running demand response service for a public agency must meet the ADA rules the agency would meet. Vehicles you buy for that service must be accessible wherever the agency’s would have to be. See ADA paratransit contractor and paratransit.
• Open service and reporting. Section 5311 pays for public transportation, and Mississippi, for one, requires 5311 services to be accessible to the general public. Each recipient reports ridership, vehicle revenue miles, and costs to FTA every year (49 U.S.C. 5311(b)(4)), so expect to hand the agency ridership and mileage counts for its service, kept apart from your broker trips.

How to get 5311 work, step by step

1. Find your state’s 5311 office in the state department of transportation. Ask for the plan that sets its program rules (Mississippi calls it a state management plan) and its list of current subrecipients.
2. Ask each subrecipient near you how it runs service. Some drive every trip themselves, and some contract operations out to private providers.
3. Get on the private provider notice lists and answer the notices, even when you only want part of the work.
4. Set up FTA drug and alcohol testing first, so you can sign when a contract opens.
5. Bring a Medicaid angle. An agency that can earn Medicaid contract revenue gains local match, so a partner that helps it carry broker trips is worth talking to.

For the senior and disability grant that can sit beside 5311 in the same agency, see Section 5310 grants.