This paper examines the accuracy of data in annual unlinked passenger trips reported to the National Transit Database (NTD) at the individual agency level. This examination takes a twostep approach. The first step compares the ridership reported by member agencies to the American Public Transportation Association (APTA) and the ridership reported to the NTD as recipients of transit formula grants. The NTD ridership can be as high as 50 percent more than the APTA ridership, and such significant positive deviation exists persistently over time across many agencies. The second step explores potential sources of these positive deviations by examining their components. Random errors, including both sampling errors and some of the non-sampling errors, do not help explain these one-sided deviations. Nor do occasional annual adjustments such as special events ridership to a direct count in the NTD ridership. Much of these positive deviations appear to be attributable to systematic non-sampling errors that result from undercounting in direct counts, from unintentional biases in procedures, or perhaps from intentional manipulation. Limited evidence in the literature, however, suggests that undercounting in direct counts is small at the systemwide level. The paper then quantitatively examines how these systematic non-sampling errors affect the allocation of two formula grants to Florida transit agencies: the Urbanized Area Formula Grant Program at the federal level and Florida’s Transit Block Grant Program at the state level. The paper also discusses a strategy for reducing these systematic non-sampling errors.