Utilization by States of the Flexibility to Transfer Federal Funds Among Eligible Federal Programs (2009)

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Research Results Digest 338 July 2009 C O N T E N T S Summary, 1 Chapter 1 Background, 2 Chapter 2 Research Approach, 3 Chapter 3 Findings and Applications, 4 Chapter 4 Conclusions, 6 Author Acknowledgments, 6 Appendix A, 7 Appendix B, 13 Appendix C, 18 Appendix D, 19 SUMMARY Following the passage of the most re- cent federal surface transportation legisla- tion reauthorization (SAFETEA-LU), state departments of transportation (DOTs) were granted the option of reallocating specific sources of federal transit funding into their urbanized area grant (Section 5307) and non-urbanized area grant (Section 5311) programs. Some state DOTs have already chosen to take advantage of this flexibility in order to better match available resources with local needs and priorities. However, many other states have not yet utilized this flexibility, either because such funding transfers do not address their needs or be- cause of lack of knowledge about the pro- gram. This report examines the recent his- tory of these funding reallocations, with the goal of providing state DOTs across the country with better information to help de- cide whether such transfers could be bene- ficial to their states (see Appendix A). An examination of states that have uti- lized the option to transfer funds from one or more eligible federal transit programs in the last 3 federal fiscal years (FY 2005– FY 2007) revealed that 17 states and three insular areas have used this option in order to transfer funds. (Insular areas are U.S. territories that are not part of the 50 states or the District of Columbia. The three insular areas identified in this report are American Samoa, Guam, and the Northern Mariana Islands.) Of this group, 11 states and three insular areas had more than one transfer in the study period. The survey showed examples of funds from Section 5316 (Job Access and Reverse Commute (JARC)), Section 5317 (New Freedom), Section 5310 (elderly and disabled), and Section 5311 (non-urbanized areas) being reallocated into Section 5307 (urbanized area) funding programs. At the same time, funds from JARC, New Freedom, Section 5307, Section 5310, and the Rural Transit Assistance Program (RTAP) were also ob- served being reallocated into Section 5311 funding programs. A complete list of the specific transfers, including the amount and percentage of eligible federal funds involved in the transfer, is presented in Appendix B of the report. In addition to the frequency of these re- allocations, another important question is the share (by dollar amount) that such trans- fers constitute of a state or area’s total ap- portionment. For the states, the share of the transfer as a percentage of total state ap- portionment was generally quite modest— ranging from 0.01% to 6.9% in any given year. However, for the insular areas, the share was sometimes much higher, with figures ranging from 0.3% to 88.4%. This share is higher because federal funding UTILIZATION BY STATES OF THE FLEXIBILITY TO TRANSFER FEDERAL FUNDS AMONG ELIGIBLE FEDERAL PROGRAMS This digest presents the results of NCHRP Project 20-65, Task 19. The research was conducted by Mark L. Schofield and Vi Truong, AECOM Consult, Arlington, VA. Subject Areas: IA Planning and Administration; VI Public Transit Responsible Senior Program Officer: Gwen Chisholm-Smith NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM

regulations allow insular areas much greater flexi- bility than states to consolidate their various funding program resources into a single program, and the in- sular areas are also exempt from many requirements for matching funds, applications, and reports with respect to the consolidated grants. It should be noted, however, that although the share of transferred funds relative to the states’ overall apportionments was gen- erally small, in many cases entire program amounts were transferred within a given year. Follow-up interviews with state DOT represen- tatives revealed several benefits to these transfers of funds among eligible transit programs. The benefits included the following: • enhancement or expansion of transit services in the rural areas of a state, • reduction of administrative burden for the state and the 5307 grantees who can apply for the funds directly to the Federal Transit Adminis- tration (FTA) instead of having a separate grant with the state DOT, • greater ability for states to utilize unspent funds within a fiscal year, • ability to distribute JARC and New Freedom funds to 5307 properties, and • ability to view transit needs from a statewide perspective and fund the maximum amount of needs each year instead of carrying over indi- vidual balances. Most state DOT representatives felt that the transfer process was easy and that the information provided to them by the FTA regarding the transfer process is sufficiently clear and readily available. Most importantly, every state that requested trans- fers received approval and none of the states inter- viewed was ever denied a request for a transfer. The important lessons that have been learned by the DOT representatives regarding transit funding trans- fers include the following: • Allow sufficient time. In general, it will be eas- ier to complete the transfers when the DOT is submitting its current year 5311 Program of Projects (POP). The agency also needs to make sure that the transfers are identified and consistent with the Statewide Transportation Improvement Program (STIP). • Transfer to a Small Urbanized Area (SUZA) if possible. It can significantly reduce the amount of oversight required if funds can be transferred to a SUZA. • Bring the Region staff into the process. Work- ing with FTA Region staff throughout the process is important so that their support is en- sured and the successful experience of other Regions can be drawn on. • Creativity is needed for New Freedom and JARC. Since New Freedom and JARC funds cannot be transferred between all funding cat- egories, some future apportionments may lapse unless creative transfers can be arranged. Based on the usage of the funding transfer option and the survey responses, it is clear that the funding transfer option provides real value to those state DOTs that utilize it. In addition, some comments from the state DOT representatives indicate that the funding transfer process could be improved through addi- tional training, information from FTA, and poten- tially increased flexibility in transferring funds to and from certain programs. CHAPTER 1 BACKGROUND The ability of local areas to “flex” federal trans- portation funds between highway and transit pro- grams is well established and widely applied. The In- termodal Surface Transportation Efficiency Act of 1991 (ISTEA) provided this flexibility for local areas to determine the most appropriate use of specific fed- eral transportation funds to support transit or high- way projects based on local planning priorities. This flexibility provision was continued in successor leg- islation, the Transportation Equity Act for the 21st Century (TEA-21) and the Safe, Accountable, Flex- ible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). The flexible funds under the transportation legislation include Federal High- way Administration (FHWA) Surface Transporta- tion Program (STP) funds and Congestion Mitigation and Air Quality Improvement Program (CMAQ) and FTA Urban Formula Funds. In large urbanized areas (with populations over 200,000), the flexing decision is made by the metropolitan planning organizations (MPOs). In small urban areas (with populations be- tween 50,000 and 200,000), the MPOs cooperate with their state DOTs in making funding decisions; in rural areas, the state DOTs, which administer the non-urbanized area formula program, determine the transfers of flexible funds. What is less well known, however, is the related ability of state DOTs to reallocate funding within and across the federal transit funding programs. For 2

a number of years, the federal transportation legis- lation and FTA have allowed DOTs the flexibility of reallocating selected sources of federal funding among urbanized area grants (Section 5307), non- urbanized area grants (Section 5311), and grants for those providing special services for the elderly and persons with disabilities (Section 5310). Some state DOTs have already chosen to take advantage of this flexibility in order to better match available re- sources with local needs and priorities. However, many other states have not utilized this flexibility, either by choice or because they are unaware of the option. This research will inform these states and FTA about the benefits of funding flexibility. This research is intended to determine which states have utilized the option to transfer funds from one or more eligible federal transit programs for the last 3 federal fiscal years. The research will identify which federal funding programs were involved, the amount and percentage of eligible federal funds in- volved in the transfer, the reasons (if any) given by the state DOT for transferring the funds, and the ben- efits that resulted from utilizing the flexibility option. CHAPTER 2 RESEARCH APPROACH Transfers Among FTA Programs Guidance on Transfers Complete details on eligibility for federal fund- ing transfers, as adapted from the relevant FTA Cir- culars containing program guidance and application instructions, are provided in Appendix A. In general, a transfer among eligible programs requires the con- sultation and approval of all affected grantees and public transportation providers before approval will be granted. It also requires notification to FTA and confirmation that the amount to be transferred is available and has not already been committed. Assessment Process Comprehensive data on FTA grants are contained in the FTA’s Transportation Electronic Award Man- agement (TEAM) database. In cooperation with TEAM staff, the consultant team designed database queries that identified the universe of funds trans- ferred between eligible federal transit programs dur- ing the previous three federal fiscal years (FY 2005, FY 2006, and FY 2007). The raw data results of the queries were transferred to spreadsheet format, where the data were then summarized and analyzed. An ini- tial review of the data revealed that some of the trans- fers that occurred in the previous 3 fiscal years were from apportionments that went back as far as FY 2003. Thus, the analysis of the percentage transfer as a percentage of total apportionment is based on the amount transferred compared with the total appor- tionment of the apportionment year, not the appor- tionment of the year that the transfer took place. State total grant program apportionments and each program total were extracted from reports titled “Federal Tran- sit Administration Grant Program Apportionment Summaries by State” (FY 2003 through FY 2007) and prepared by the FTA Office of Program Management. Specific project numbers were identified for each transfer by the FTA central office. However, this study effort revealed that there is not a central- ized location where the letters of request to the FTA from the state DOTs are kept. As a result, the con- sultant team contacted the regional FTA offices of the states involved to request the state DOT’s origi- nal letter of request for the transfer. The original re- quests from the DOTs contain relevant information about the specific use of the transfer requested, as well as the appropriate contact person for the follow up interview process. The consultant team contacted all state DOTs with more than one transfer in the last 3 years for interview. The interviewee list is pre- sented in Appendix C, and sample letters of request from state DOTs are presented in Appendix D. A review of transfer guidance in the FTA circu- lars revealed that the transfer guidelines for the 50 states and the District of Columbia are significantly different than those for the insular areas (which in- clude the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands). The insular areas are able to consolidate any or all grants, and many of the requirements for matching funds, applications, and reports with respect to the consolidated grants are waived. In addition, the insular areas may use the consolidated grant funds for any purpose or program authorized for any of the consolidated grants. For this reason, the consultant team has presented the data for the insular areas separately and did not pur- sue individual interviews with representatives from those areas. A total of 11 states were contacted for interviews, and the consultant team was ultimately able to achieve a 100% response rate for the survey. The interview process was conducted in sev- eral steps. First, the consultant team contacted the DOT representatives responsible for the transfers (as indicated in the transfer letters) via telephone to introduce the project and the objectives of the study. 3

The consultant team then requested the state repre- sentative to fill out the interview guide and to verify the transfer amount and date of the transfer data as extracted from TEAM through the email survey process. The consultant team then followed up with additional phone conversation with state DOTs as necessary to clarify answers. Summary of Transfer Data The points below summarize the transfer data that was provided by FTA from the TEAM database. The summary encompasses transfers that took place dur- ing FY 2005, FY 2006, and FY 2007. A detailed sum- mary of transfers is provided in Appendix B. It should also be noted that although FTA guidance does allow for “pooling” of RTAP funds between states, the query of the FTA TEAM database did not indicate any such pooling occurred during the time period. (See Ap- pendix A for additional information.) • Seventeen states and three insular areas trans- ferred funds among eligible FTA programs during the 3-year period. • Eleven states and three insular areas had more than one transfer during the period. • The percentage of transfer as a percentage of total apportionment were relatively small for the states, but were higher for insular areas. • The percentage of transfer as a percentage of program totals by the states and insular areas were significantly higher as compared with the total apportionment analysis. • The TEAM database recorded instances of JARC, New Freedom, Section 5310, and Sec- tion 5311 funds being transferred to Section 5307. • The TEAM database recorded instances of JARC, New Freedom, Section 5307, Section 5310, and RTAP funds being transferred to Section 5311. The frequency of each specific type of transfer during the 3-year period is noted below, with the most frequent transfer types listed first: • From Section 5310 to Eight states and Section 5311: three insular areas. • From Section 5307 to Five states and Section 5311: one insular area. • From Section 5311 to Four states. Section 5307: • From New Freedom One state and to Section 5311: three insular areas. • From JARC to One state and Section 5311: three insular areas. • From RTAP to Three insular Section 5311: areas. • From JARC to Two states. Section 5307: • From Section 5310 to One state. Section 5307: • From New Freedom to One state. Section 5307: CHAPTER 3 FINDINGS AND APPLICATIONS Funding Transfer Procedures The Transfer Process State agencies were asked to describe the process that their state uses to transfer transit funds from one program to the next. As the survey revealed, the processes are considerably different from one state to the next. In some cases, the transfer process can be as easy as having the DOT director send a request letter to the regional FTA director and initiate the transfer process. In other states, a series of conver- sations is necessary between the particular MPO, Section 5307 grantee, the state DOT, and in some cases FTA itself. Once the concept of the transfer has been finalized, the MPO takes the transfer request to their Board for approval, and a letter from the MPO Board President is sent to the DOT. A similar pro- cess takes place with the 5307 provider/grantee. If the STIP needs to be amended, the DOT develops the amendment (coordinating that process through the Planning Division) and presents the amendment to the DOT Board for approval. Once approval is given, the DOT submits all paperwork to the appropriate FTA Regional office requesting the transfer. When the transfer is complete (between Regional office and FTA head quarter), the DOT completes an amend- ment in the TEAM web system for the transfer. Transfer Authority and Frequency of Transfer The transfer process authority generally rests with the state DOT director; however, the process can also be initiated by the MPO that is transferring its funds, or the program’s grantee or sub-recipients. As the data revealed, transfer from one transit pro- gram to another does not happen frequently because 4

agencies don’t have a need for it or because they have awarded all available funds to their programs and don’t have unspent funds to transfer. One state DOT stated that they don’t utilize the transfer option often because of time constraints. Source of Knowledge about Transfer The consultant team asked the interviewed agen- cies about the sources from which their agency learned about the transferability of transit funding provisions. Most stated that they have acquired the knowledge directly from FTA staff and the relevant Circulars. However, others did state that they learned of transfer options from other states, FTA training, and at national conferences. State DOT Views on Funding Transfers Transfer Benefits The respondents noted several benefits to trans- ferring funds among the eligible transit programs. These benefits included the following: • enhancement or expansion of transit services in the rural areas of the state, • reduction of administrative burden for the state and the 5307 grantees who can apply for the funds directly to FTA instead of having a separate grant with the DOT, • greater ability for the state to utilize unspent funds within a fiscal year, • ability to distribute JARC and New Freedom funds to 5307 properties, and • ability to view transit needs from a statewide perspective and fund the maximum amount of needs each year instead of carrying over indi- vidual balances. Opposition to Transit Funds Transfers Generally speaking, there was very little opposi- tion expressed to the option to transfer transit funds, and most of the surveyed agencies stated that they have not faced any opponents to the transfers. How- ever, some agency representatives felt that the Sec- tion 5307 funds should stay within that program and that the particular urban area should look for more ways to capture local match and enhance or expand service. One state representative said that when they are facing funding constraints and unmet needs across all programs, it can be hard to justify taking funds from one program and giving it to another. Another representative argued that program funding levels represent national priorities and are not in- tended to be spent outside of the originating program source. One DOT representative stated that there are no opponents in his state because they provide a clear channel of communication among all parties to get everyone’s agreement or buy-in. Barriers to Funds Transfers and Easing of Regulations When asked to list some barriers that they may encounter when transferring funding in the planning process, some representatives indicated that there are none but others responded that they simply didn’t know. One agency representative stated that the fol- lowing barriers are all realistic: • administrative complexity affecting the fund transfer; • lack of support from other regional agency; • local match requirement (availability and/or eligibility); • state or local policy restrictions, law or regu- lation; and • lack of knowledge about provisions. One state representative noted that all their trans- fers were from Section 5307 to Section 5311 and that the process was relatively easy, but that they don’t know what barriers they would encounter if they had to transfer among other programs. However, this same state representative also observed that his/her state has much greater project needs than available fund- ing, so there generally are not any unused funds avail- able to transfer between programs. Given the barriers noted above, the consultant team asked what suggestions the representatives would make to mitigate these barriers. The sugges- tions included increased training and a “Dear Col- league” letter providing information on the timing and process for funds transfer. Finally, the consultant team asked the surveyed respondents whether they would use the transfer op- tion more frequently if regulations changed to allow easier transferability. The responses varied, with sev- eral respondents saying “yes” and a few saying “no.” One representative noted that the current process is “not that bad” and that there are adequate controls and regulations that ensure that the process is followed correctly. Another state representative noted that changes in regulations would give states more flex- 5

ibility to re-allocate resources where they are mostly needed. One state representative noted that his/her state would like transfer more funds if greater trans- ferability were applied to the New Freedom program and if some of the transfer restrictions were lifted from JARC. However, the most frequent transfers (5311 to 5307 and vice versa) would likely continue at the same level. CHAPTER 4 CONCLUSIONS Conclusions A summation of the lessons learned, as shared by the surveyed agencies, is presented below: • Allow sufficient time. The most frequent point raised by the interviewees was to allow enough time to get the transfer done. In general, it will be easier to complete the transfers when the DOT is submitting its current year 5311 POP. The agency also needs to make sure that the transfers are identified and consistent with the STIP since an amendment to the STIP will al- most certainly delay the process. • Transfer to a Small Urbanized Area (SUZA) if possible. The survey respondents felt that it can significantly reduce the amount of oversight re- quired if funds can be transferred to a SUZA. • Bring the Region staff into the process. Work- ing with FTA Region staff throughout the process is important so that their support is en- sured and the successful experience of other Regions can be drawn on. • Creativity is needed for New Freedom and JARC. Because New Freedom and JARC funds cannot be transferred between all fund- ing categories, some future apportionments may lapse unless creative transfers can be arranged. Although the majority of states have not utilized the funding transfer option during the past 3 years, 17 states and three insular areas have utilized this flexibility. As indicated by the specific responses from state DOT representatives in the follow-up sur- vey, the transit funding flexibility provides real value to DOTs by (a) allowing for enhancement of rural transit services; (b) reducing administrative burden; and (c) giving states greater ability to utilize unspent funds within a fiscal year. AUTHOR ACKNOWLEDGMENTS The research reported herein was performed under NCHRP Project 20-65 (Task 19) by AECOM Consult of Arlington, Virginia. Mr. Mark L. Schofield, Con- sulting Manager at AECOM Consult, was the Proj- ect Director and co-Principal Investigator. Ms. Vi Truong, Senior Consultant at AECOM Consult, was the other co-Principal Investigator of this report. The authors wish to thank the TEAM (Trans- portation Electronic Award Management) system staff at the FTA for their assistance with the data collection for this report, as well as the state DOT representatives who responded to the follow-up survey. 6

APPENDIX A: FTA TRANSFER GUIDELINES 7 Guidance for Transfer of Apportionment to Urbanized Area Formula Program (5307): (Adapted from FTA Circular C 9030.1C “Urbanized Area Formula Program: Grant Application Instructions”) From the State's Apportionment. The Governor may allocate amounts of the state's Urbanized Area Formula Program apportionment for urbanized areas under 200,000 in population among those same urbanized areas under 200,000 (49 U.S.C. 5336(g)), unless the urbanized area is a Transportation Management Area. Also, the Governor may transfer amounts of the state's Urbanized Area Formula Program apportionment to non-urbanized areas to supplement funds apportioned to the state under the Non-urbanized Area Formula Program (49 U.S.C. Section 5311). The Governor also may transfer amounts of the state's Urbanized Area Formula Program apportionment to an urbanized area with a population of 200,000 and over. The Governor may make such allocation only after consultation with responsible local officials and providers of publicly owned transit service in each area to which the funding was originally apportioned. Funds remaining available for obligation 90 days prior to the expiration of their period of availability (year for which apportioned plus three) may be used by the Governor in any area within the state without prior consultation. From the Non-urbanized Area Formula Program to Supplement the Urbanized Area Formula Program. The Governor may transfer funds from the state's apportionment under the Non- urbanized Area Formula Program to supplement funds apportioned to the state under the Urbanized Area Formula Program for urbanized areas under 200,000 in population. Amounts so transferred may be used for any expenditures eligible under the Urbanized Area Formula Program (49 U.S.C. 5336(g)). From the Elderly and Persons with Disabilities Program to Support the Urbanized Area Formula Program. The Governor also may transfer funds under the Elderly and Persons with Disabilities Program (49 U.S.C. Section 5310, capital assistance for transportation for elderly persons and persons with disabilities): any amount of a state's apportionment under this program that remains available for obligation 90 days before the expiration of these funds' period of availability may be transferred to supplement Urbanized Area Formula Program funds apportioned to the state for areas under 200,000 in population. From Larger Urbanized Areas to the Governor of the State. A designated recipient in an urbanized area with a population of 200,000 and over may transfer its Urbanized Area Formula Program apportionment, or a portion thereof, to the Governor, who must in turn distribute it to urbanized areas of any size in the state pursuant to the requirements of 49 U.S.C. Section 5307 (see also 49 U.S.C. Section 5336(g)(4)). In such cases, the following process is applicable: The designated recipient, after consultation with all potential grantees in the urbanized area, writes to the FTA Regional Office of the designated recipient's intent to transfer its apportionment or a part thereof to the Governor. This letter must identify the amount of the apportionment to be transferred and the fiscal year for which it was appropriated, and confirm that all potential grantees have been consulted. All of the designated recipients in an urbanized area must concur in this letter.

8The Governor, either together with the designated recipient or separately, advises the FTA Regional Office in writing of the Governor's willingness to accept the apportionment; confirms that the apportionment will be used only in accordance with Urbanized Area Formula Program requirements; and acknowledges that transferred funds will be subject to the capital and operating assistance limitations applicable to the original apportionment of such amounts; and After receipt of these letters and verification that the apportionment is in fact available for transfer (i.e., the funds have been apportioned, have not been otherwise committed, etc.), FTA, in writing, notifies both the designated recipient and the Governor that the apportionment is available to the Governor for distribution in accordance with the Urbanized Area Formula Program upon receipt by FTA of an appropriate grant application. Notification to FTA. Prior FTA approval is not required, but notification to FTA of a transfer must be provided by the Governor for each transaction, so that FTA can accurately reflect this transfer decision in overall program budget levels and urbanized area apportionment records. Further, transfers must be shown in the grant application project budget. Guidance of Transfer of JARC Apportionment to Urbanized Area Formula Program (5307): (Adapted from FTA Circular C 9050.1 “The Job Access and Reverse Commuter (JARC) Program Guidance and Application Instructions.”) Small Urbanized Areas under 200,000 in population. The State is the designated recipient and may apply directly to FTA for grant funds for itself and its sub-recipients. In order for projects to be implemented by transit providers in small urbanized areas, the State, after consultation with responsible local officials and publicly owned operators of public transportation, may transfer JARC funds to Section 5307 for administration of competitively selected JARC projects within a Section 5307 grant to an eligible recipient under that program. This transfer also removes the oversight responsibility for those funds from the JARC designated recipient to the grant recipient under Section 5307. The State will only be responsible for the program requirements (such as competitive selection and certifying projects were derived from a coordinated plan) and data collection for annual reporting purposes. Although the funds can be applied for in a Section 5307 grant, the grant should only contain funding and activities for the JARC project. JARC, New Freedom, and Section 5307 funds cannot be combined in a single grant because disbursements cannot be recorded to the appropriate program. Non-urbanized Areas. The State is the designated recipient for JARC funds for non-urbanized areas. Only the State may apply to FTA for JARC funds for sub-recipients in non-urbanized areas. Federally recognized Indian tribes are eligible direct recipients under the Section 5311 program. A tribe may apply directly to FTA for JARC funds that have been competitively awarded to the tribe, or the State may transfer JARC funds to Section 5311 so that FTA can make a direct grant to the tribe under that program. a. Transfer between Funding Categories. A State may use funds apportioned for small urbanized and rural areas for projects serving another area of the State, if the chief executive

9officer of the State certifies that all of the objectives of JARC are being met in the specified areas. For example, if all objectives of the JARC program are being met in rural areas, funds designated for rural areas may be transferred to urbanized areas of less than 200,000 in population. Funds apportioned to small urbanized and rural areas may also be transferred for use anywhere in the State including large urbanized areas, if the State has established a statewide program for meeting JARC program goals. There is no authority to transfer funds apportioned to large urbanized areas to small urbanized or rural areas. Guidance for Transfer of Apportionment to Rural and Small Urban Areas (5311): (Adapted from FTA Circular C 9040.1F “Non-Urbanized Area Formula Program Guidance and Grant Application Instructions”) Notification of Transfer. The State initiates the transfer of FTA funds by notifying FTAís Regional Administrator of its intent to transfer funds. Notice of transfers of Section 5307, 5310, 5316, and 5317 funds to the State’s Section 5311 apportionment should include the following: (1) the amount of funds to be transferred; fiscal year in which they were apportioned; program section(s); and (2) the contact information if questions arise that the State must address before FTA can process the transfer. Notice of transfers of Section 5310, 5316, and 5317 funds must also include the specific competitively selected rural projects to which the State will apply the transferred funds. Transfer of Section 5307 Funds to Section 5311. The Governor may transfer any amount of the State’s apportionment for urbanized areas under 200,000 population to any urbanized area in the State, or to supplement the State’s Section 5311 program. The Governor may make such transfers only after consultation with responsible local-elected officials and publicly owned operators of public transportation services in each area to which the funding was originally apportioned. The Governor may transfer funds without consultation within the last 90 days in which the funds are available for obligation. If Section 5307 funds are transferred to supplement a State’s Section 5311 apportionment, the funds are treated as additional Section 5311 funding and all the requirements of Section 5311 apply. Two conditions, however, follow the Section 5307 funds when they are transferred to Section 5311. The period of availability of the transferred funds remains that of the Section 5307 apportionment, which is 1 year longer than the same year’s Section 5311 apportionment. A State may use any funds transferred from its Section 5307 program for planning activities, at the federal share for capital projects. The transfer of Section 5307 funds to Section 5311 does not increase the amount of Section 5311 funds that the State may use for administration, planning, and technical assistance with no local share. The State may use up to 15 percent of its original Section 5311 apportionment for administration, planning, and technical assistance. Transfer of Section 5310/5316/5317 Funds to Section 5311. Section 5310 (Elderly Individuals and Individuals with Disabilities), 5316 (Job Access and Reverse Commute (JARC)) and 5317 (New Freedom) program funds may be transferred to the Section 5311 program. The purpose of the transfer provision, however, is not to supplement the resources available under the State’s Section 5311 apportionment. One purpose is to allow the State to apply in one grant for projects

10 selected under those programs that will be implemented by Section 5311 sub-recipients. Transfer to Section 5311 is permitted, but not required. FTA will also award stand-alone Section 5310, 5316 and 5317 grants to the State. Stand-alone grants facilitate the State’s ability to recover and reprogram Section 5310, 5316, or 5317 program funds within the period of availability if they are not expended for the projects the State originally selected. If the State does choose to consolidate the funds in the Section 5311 program, FTA has established new scope codes: (641) for Section 5310 projects, (646) for Section 5316 projects, and (647) for Section 5317 projects included within a Section 5311 or 5307 grant. The State must track, manage, and report on each program’s funds separately within the consolidated grant. Another purpose for transferring the other program funds to Section 5311 is to allow Federally recognized Indian tribes, which are eligible direct recipients under the Section 5311 program but not under the other programs, to apply directly to FTA for funds allocated to them under the State’s competitive selection process for those programs. Consolidation of Grants to Insular Areas. FTA grants to insular areas may be consolidated under the provisions of 48 U.S.C. 1469a. This provision permits Federal agencies to streamline and consolidate certain grant-in-aid programs available to the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands. These insular areas receive Section 5311 apportionments and RTAP allocations annually as well as Section 5310, 5316, and 5317 funds, and in some cases, Section 5307 funds. [Note: Section 3009 of SAFETEA–LU treats the Virgin Islands as an urbanized area for the purpose of 5307. FTA does not apportion Section 5311 or RTAP funds to the Virgin Islands.] Specifically, 48 U.S.C. 1469a permits: Federal agencies to consolidate any or all grants to each of the insular areas and to waive requirements for matching funds, applications, and reports with respect to the consolidated grants; and Each insular area to use the consolidated grant funds for any purpose or program authorized for any of the consolidated grants. FTA implements this consolidation of Section 5310, 5311, 5316, and 5317 funding into a single grant by transferring funds from one Section to another, similar to the transfer of funds between Section 5311 and Section 5307 for small urbanized areas described above. The insular areas may transfer all or a portion of the funds apportioned for Section 5310, 5316, or 5317 to Section 5311 for use under any of these Sections. This should improve the efficiency of grant making and grant management for these areas which have limited staff resources and receive small amounts of funds under each of these programs. Those insular areas interested in submitting applications for consolidated grants should notify the appropriate FTA regional office for application procedures and consolidation requirements. Among other things, the area should identify the intended use of consolidated funds and should document that the transportation of elderly people and people with disabilities will not be adversely affected. In addition, 48 U.S.C. 1469a(d) allows a Federal agency to waive any local matching share requirements for grants to insular areas. FTA has no authority under 48 U.S.C. 1469a to waive any cross-cutting requirements, such as Buy America or drug and alcohol testing. With several exceptions, FTA limits the eligibility of planning costs to funds available within the 15 percent State administration cap. As described in Chapter VIII, planning and marketing for

11 intercity bus services can be funded with a 20 percent local share and is not subject to the 15 percent cap on State administrative expenses. Similarly, funds transferred from Section 5307 can be used for planning with a 20 percent local share and are not subject to the 15 percent administrative cap. However, flexible funds transferred into the Section 5311 program can be used for planning with no local share but are subject to the 15 percent administrative cap on planning and other State administration activities. A number of urbanized area recipients of Section 5307 funds also receive Section 5311 funds to carry out projects in outlying non-urbanized areas. The Governor has the authority to transfer Section 5307 funds apportioned to the State for sm all urbanized areas to supplement the State’s Section 5311 apportionment. The Governor may also transfer Section 5311 funds to supplement the State’s apportionment of Section 5307 funds for small urbanized areas. These transfer provisions give Governors greater flexibility to allocate formula transit funds in both urbanized and non-urbanized areas to enable States to fully utilize available funds. A Section 5310 sub-recipient may purchase service with Section 5310 funds from both public transit agencies and private providers. The State may use its 10 percent of Section 5310 apportionment to administer the program, plan, and provide technical assistance. In addition, a State may transfer Section 5310 funds to its Section 5311 program for rural projects selected under Section 5310. A State may transfer its JARC funds to its Section 5311 program for eligible JARC projects. However, a State may only transfer its JARC funds after it consults with responsible local officials and public transportation operators in each area for which the State originally awarded JARC funds in the State’s competitive selection process. A State may transfer New Freedom funds to its Section 5311 program for eligible New Freedom projects. Before transferring its New Freedom funds, the State must consult with responsible local officials and public transportation operators in each area that the State originally awarded in the State’s competitive selection process for New Freedom funding. Pooling of State RTAP Funds . FTA encourages States to consider “pooling” or consolidating RTAP funds in order to support activities or projects that would be more effectively carried out on a larger scale than a single State. Two or more States within a region could do such pooling. Examples of activities that could be funded through pooled State RTAP funds include regional workshops or training courses, development of technical assistance information, and peer-to-peer assistance activities. Contributions to combined efforts such as the Multi-State Technical Assistance Program (MTAP) of the American Association of State Highway and Transportation Officials (AASHTO) are eligible only to the extent that they support RTAP objectives and benefit non-urbanized public transportation. FTA has determined that annual MTAP dues are an eligible State RTAP expense. Two methods are available to consolidate funding: 1. Participating States may obligate funds for the joint project as part of the State RTAP program of projects in its Section 5311 grant and subsequently transfer the funds to the implementing organization through a contract or sub-agreement; or

12 2. Participating States may designate a single State to receive and administer all of the pooled funds. Each participating donor State then informs its FTA regional office, in writing, of the amount of State RTAP funds to be transferred to the allocation of the State administering the joint project. FTA will adjust the allocations accordingly and the administering State will apply to FTA for the entire funding of the joint project as part of the State RTAP program of projects in its Section 5311 grant application. Transfer to Other FTA Programs. A State may transfer JARC funds apportioned to it for rural or small urbanized areas to apportionments under Section 5311(c) or 5307, or both. The purpose of the transfer provision, however, is not to supplement the resources available under the State’s Section 5311 or Section 5307 apportionments. Transfer to Section 5311 or Section 5307 is permitted, but not required. FTA will also award stand-alone JARC grants to the State. Stand- alone grants facilitate the State’s ability to recover and reprogram JARC program funds within the period of availability if they are not expended for the projects the State originally selected. If the State does choose to transfer the funds into the Section 5311 or Section 5307 programs, FTA has established a scope code (646) for JARC projects included within a Section 5311 or 5307 grant. Although JARC funds can be transferred to Section 5307 for award directly to a small urbanized area recipient in a Section 5307 grant, the grant should only include funding and activities for the JARC project(s). States may combine funds from multiple programs in a consolidated Section 5311 grant, but the State must track, manage, and report on each program’s funds separately within the consolidated grant. One purpose for transferring JARC program funds to Section 5311 is to allow Federally recognized Indian tribes, which are eligible direct recipients under the Section 5311 program but not under the other programs, to apply directly to FTA for funds allocated to them under the State’s competitive selection process for JARC. Similarly, transferring JARC funds to Section 5307 allows direct recipients of Section 5307 grants in small urbanized areas, to apply directly to FTA for funds competitively awarded under the State’s JARC program. Notification of Transfers. The State must notify the FTA regional administrator of the State’s intent to have funds transferred so that FTA can initiate the transfer. For transfers of JARC funds to the Section 5307 program for urbanized areas under 200,000 in population or Section 5311(c), the notification must indicate the amount of funds transferred, the program to which they are being transferred, and specific projects selected under JARC.

13 Summary of State Transfers Table B-1: Summary of State Transfers (source: FTA TEAM database) Transfer Type State FY of Apportion- ment Apportion- ment and Allocation (state total) Transfer Year Amount Transferred Transfer as % of Total Apportionment Indiana 2006 310,629,558$ 2006 178,861$ 0.06% North Dakota 2006 10,850,708$ 2007 158,286$ 1.46% South Dakota 2006 15,682,932$ 2007 312,746$ 1.99% South Dakota 2007 11,851,954$ 2007 329,612$ 2.78% New Freedom to Sec 5307 North Dakota 2006 10,850,708$ 2007 80,285$ 0.74% South Dakota 2006 15,682,932$ 2007 80,730$ 0.51% South Dakota 2007 11,851,954$ 2007 83,154$ 0.70% New York 2003 983,801,302$ 2005 56,897$ 0.01% Oregon 2007 180,711,789$ 2007 16,389$ 0.01% Illinois 2006 591,464,536$ 2006 88,360$ 0.01% Oregon 2006 104,278,720$ 2006 15,594$ 0.01% Oregon 2005 97,988,255$ 2005 15,337$ 0.02% Illinois 2005 609,931,387$ 2006 214,710$ 0.04% Idaho 2004 18,231,735$ 2006 96,699$ 0.53% South Carolina 2004 44,734,665$ 2005 334,690$ 0.75% Idaho 2005 18,372,552$ 2005 146,699$ 0.80% Idaho 2003 10,838,325$ 2005 135,000$ 1.25% Idaho 2007 22,871,078$ 2007 296,699$ 1.30% South Carolina 2003 34,344,175$ 2005 1,500,000$ 4.37% Sec 5310 to Sec 5307 Tennessee 2005 66,896,874$ 2006 325,000$ 0.49% Connecticut 2004 807,873,425$ 2005 125,138$ 0.02% Connecticut 2005 830,334,476$ 2006 367,414$ 0.04% New Hampshire 2005 183,190,441$ 2005 142,839$ 0.08% Colorado 2005 147,594,785$ 2005 292,760$ 0.20% Minnesota 2004 151,046,986$ 2005 409,684$ 0.27% Tennessee 2005 66,896,874$ 2006 325,000$ 0.49% Tennessee 2004 70,654,627$ 2005 527,838$ 0.75% Ohio 2005 170,753,636$ 2005 1,700,000$ 1.00% Idaho 2005 18,372,552$ 2005 338,952$ 1.84% North Carolina 2005 119,216,095$ 2005 2,676,455$ 2.25% New York 2005 ############ 2006 429,600$ 0.03% Colorado 2007 199,217,007$ 2007 106,400$ 0.05% Wisconsin 2007 74,352,656$ 2007 594,175$ 0.80% Wisconsin 2006 78,202,163$ 2007 1,256,501$ 1.61% Wisconsin 2006 78,202,163$ 2006 1,927,255$ 2.46% Montana 2006 16,811,951$ 2006 1,155,000$ 6.87% Sec 5310 to Sec 5311 Sec 5311 to Sec 5307 JARC to Sec 5307 JARC to Sec 5311 New Freedom to Sec 5311 Sec 5307 to Sec 5311 APPENDIX B: COMPILATION OF TRANSFERS AMONG FTA PROGRAMS

14 Summary of Insular Area Transfers Transfer Type Insular Area FY of Apportion- ment Apportion- ment and Allocation (area total) Transfer Year Amount Transferred Transfer as % of Total Apportionment Guam 2006 1,122,868$ 2006 82,309$ 7.33% Guam 2007 833,438$ 2007 86,742$ 10.41% North Mariana Islands 2006 948,974$ 2006 125,962$ 13.27% North Mariana Islands 2007 962,130$ 2007 132,758$ 13.80% American Samoa 2006 363,388$ 2006 82,198$ 22.62% North Mariana Islands 2007 962,130$ 2007 26,145$ 2.72% Guam 2007 833,438$ 2007 22,802$ 2.74% Guam 2006 1,122,868$ 2006 51,248$ 4.56% American Samoa 2006 363,388$ 2006 17,270$ 4.75% North Mariana Islands 2006 948,974$ 2006 55,300$ 5.83% North Mariana Islands 2004 763,737$ 2005 2,540$ 0.33% Guam 2005 603,046$ 2006 4,711$ 0.78% North Mariana Islands 2007 962,130$ 2007 10,334$ 1.07% North Mariana Islands 2006 948,974$ 2006 10,268$ 1.08% North Mariana Islands 2005 797,494$ 2005 10,156$ 1.27% Guam 2006 1,122,868$ 2006 15,507$ 1.38% Guam 2005 603,046$ 2005 8,489$ 1.41% Guam 2007 833,438$ 2007 16,874$ 2.02% Guam 2004 582,234$ 2005 13,219$ 2.27% American Samoa 2006 363,388$ 2006 12,038$ 3.31% American Samoa 2005 231,293$ 2006 11,184$ 4.84% North Mariana Islands 2004 763,737$ 2005 167,999$ 22.00% North Mariana Islands 2006 948,974$ 2006 664,700$ 70.04% North Mariana Islands 2007 962,130$ 2007 697,739$ 72.52% North Mariana Islands 2005 797,494$ 2005 704,872$ 88.39% North Mariana Islands 2004 763,737$ 2005 2,956$ 0.39% Guam 2005 603,046$ 2006 11,798$ 1.96% North Mariana Islands 2007 962,130$ 2007 64,411$ 6.69% North Mariana Islands 2006 948,974$ 2006 63,579$ 6.70% North Mariana Islands 2005 797,494$ 2005 61,506$ 7.71% Guam 2006 1,122,868$ 2006 164,792$ 14.68% American Samoa 2006 363,388$ 2006 62,456$ 17.19% Guam 2007 833,438$ 2007 167,228$ 20.06% Guam 2005 603,046$ 2005 146,919$ 24.36% American Samoa 2005 231,293$ 2006 60,555$ 26.18% Guam 2004 582,234$ 2005 157,115$ 26.98% Sec 5310 to Sec 5311 JARC to Sec 5311 New Freedom to Sec 5311 RTAP to Sec 5311 Sec 5307 to Sec 5311 Table B-2: Summary of Insular Area Transfers (source: FTA TEAM database)

15 Transfers of JARC Funds Table B-3: Summary of Transfers of JARC Funds (source: FTA TEAM database; ‘FYOA’ means Fiscal Year of Appropriation) State Transfer Year JARC Total (FYOA) Amount Transferred Tran s f er as a % of JARC Total (FYOA) Indiana 2006 6,580,016 $ 178,861 $ 2.7% N orth Dakota 2007 291,405 $ 158,286 $ 54.3% South Dakota 2007 329,612 $ 329,612 $ 100.0% South Dakota 2007 312,746 $ 312,746 $ 100.0% American Samoa 2006 82,198 $ 82,198 $ 100.0% Gu a m 2007 86,742 $ 86,742 $ 100.0% Gu a m 2006 82,309 $ 82,309 $ 100.0% N orth Mariana Islands 2007 132,758 $ 132,758 $ 100.0% N orth Mariana Islands 2006 125,962 $ 125,962 $ 100.0% Insular Area Transfers of New Freedom Funds Table B-4: Summary of Transfers of New Freedom Funds (source: FTA TEAM database; ‘FYOA’ means Fiscal Year of Appropriation) State Transfer Year New Freedom Total (FYOA) Amount Transferred Transfer as a % of New Freedom Total (FYOA) N orth Dakota 2007 146,896 $ 80,285 $ 54.7% South Dakota 2007 172,368 $ 83,154 $ 48.2% South Dakota 2007 165,571 $ 80,730 $ 48.8% American Samoa 2006 17,270 $ 17,270 $ 100.0% Gua m 2007 22,802 $ 22,802 $ 100.0% Gua m 2006 51,248 $ 51,248 $ 100.0% N orth Mariana Islands 2007 26,145 $ 26,145 $ 100.0% N orth Mariana Islands 2006 55,300 $ 55,300 $ 100.0% Insular Area

16 Transfers of Section 5307 Funds Table B-5: Summary of Transfers of Section 5307 Funds (source: FTA TEAM database; ‘FYOA’ means Fiscal Year of Appropriation) State Transfer Year Section 5307 Total (FYOA) Amount Transferred P ercenta g e Transfer as a % of Section 5307 Total (FYOA) Idaho 2007 12,747,381 $ 296,699 $ 2.3% Idaho 2005 12,193,150 $ 146,699 $ 1.2% Idaho 2006 11,620,292 $ 96,699 $ 0.8% Idaho 2005 5,701,149 $ 135,000 $ 2.4% Illinois 2006 265,245,948 $ 88,360 $ 0.0% Illinois 2006 256,110,367 $ 214,710 $ 0.1% N ew York 2005 548,231,063 $ 56,897 $ 0.0% Oregon 2007 44,001,321 $ 16,389 $ 0.0% Oregon 2006 42,143,921 $ 15,594 $ 0.0% Oregon 2005 42,942,086 $ 15,337 $ 0.0% South Carolina 2005 25,248,894 $ 334,690 $ 1.3% South Carolina 2005 14,182,689 $ 1,500,000 $ 10.6% N orth Mariana Islands 2007 697,739 $ 697,739 $ 100.0% N orth Mariana Islands 2006 664,700 $ 664,700 $ 100.0% N orth Mariana Islands 2005 704,872 $ 704,872 $ 100.0% N orth Mariana Islands 2005 672,596 $ 167,999 $ 25.0% Insular Area

17 Transfers of Section 5310 Funds Table B-6: Summary of Transfers of Section 5310 Funds (source: FTA TEAM database; ‘FYOA’ means Fiscal Year of Appropriation) State Transfer Year Section 5310 Total (FYOA) Amount Transferred Trans f er as a % o f Section 5310 Total (FYOA) Colorado 2005 1,207,854 $ 292,760 $ 24.2% Connecticut 2006 1,175,039 $ 367,414 $ 31.3% Connecticut 2005 1,125,150 $ 125,138 $ 11.1% Idaho 2005 471,058 $ 338,952 $ 72.0% Minnesota 2005 1,361,686 $ 409,684 $ 30.1% N ew Hampshire 2005 473,239 $ 142,839 $ 30.2% N orth Carolina 2005 2,676,455 $ 2,676,455 $ 100.0% Ohio 2005 3,584,027 $ 1,700,000 $ 47.4% Tennessee 2006 1,997,567 $ 325,000 $ 16.3% Tennessee 2006 1,997,567 $ 325,000 $ 16.3% Tennessee 2005 1,908,598 $ 527,838 $ 27.7% American Samoa 2006 62,456 $ 62,456 $ 100.0% American Samoa 2006 60,555 $ 60,555 $ 100.0% Gua m 2007 167,228 $ 167,228 $ 100.0% Gua m 2006 164,792 $ 164,792 $ 100.0% Gua m 2005 158,717 $ 146,919 $ 92.6% Gua m 2006 158,717 $ 11,798 $ 7.4% Gua m 2005 157,115 $ 157,115 $ 100.0% N orth Mariana Islands 2007 64,411 $ 64,411 $ 100.0% N orth Mariana Islands 2006 63,579 $ 63,579 $ 100.0% N orth Mariana Islands 2005 61,506 $ 61,506 $ 100.0% N orth Mariana Islands 2005 60,959 $ 2,956 $ 4.8% Insular Area Transfers of Section 5311 Funds Table B-7: Summary of Transfers of Section 5311 Funds (source: FTA TEAM database; ‘FYOA’ means Fiscal Year of Appropriation) State Transfer Year Section 5311 Total (FYOA) Amount Transferred Trans f er as a % o f Section 5311 Total (FYOA) Colorado 2007 7,315,810 $ 106,400 $ 1.5% Montana 2006 6,259,894 $ 1,155,000 $ 18.5% N ew York 2006 9,669,001 $ 429,600 $ 4.4% Wisconsin 2007 11,806,200 $ 594,175 $ 5.0% Wisconsin 2006 11,215,751 $ 1,927,255 $ 17.2% Wisconsin 2007 11,215,751 $ 1,256,501 $ 11.2%

18 Transfers of RTAP Funds Table B-8: Summary of Transfers of Section RTAP Funds (source: FTA TEAM database; ‘FYOA’ means Fiscal Year of Appropriation) Insular Area Transfer Year RTAP (FYOA) Amount Transferred Transfer as a % of RTAP Total (FYOA) American Samoa 2006 12,038 $ 12,038 $ 100.00% American Samoa 2006 11,184 $ 11,184 $ 100.00% Gua m 2007 16,874 $ 16,874 $ 100.00% Gua m 2006 15,507 $ 15,507 $ 100.00% Gua m 2005 13,200 $ 8,489 $ 64.30% Gua m 2006 13,200 $ 4,711 $ 35.70% Gua m 2005 13,219 $ 13,219 $ 100.00% N orth Mariana Islands 2007 10,334 $ 10,334 $ 100.00% N orth Mariana Islands 2006 10,268 $ 10,268 $ 100.00% N orth Mariana Islands 2005 10,156 $ 10,156 $ 100.00% N orth Mariana Islands 2005 10,157 $ 2,540 $ 25.00% APPENDIX C: INTERVIEW RESPONDENTS State DOT Contact Person Phone Number Email Colorado Heather Copp 800-999-4997 heather.copp@dot.state.co.us Connecticut Duane Campbell 860-594-2815 duane.campbell@po.state.ct.us Idaho Marty Montgomery 208-334-8848 martin.montgomery@itd.idaho.gov Illinois David Spacek 312-793-2154 david.spacek@illinois.gov New York Stephanie Mielnik 518-457-8335 smielnik@dot.state.ny.us North Dakota Bruce Fuchs 701-328-2194 bfuchs@state.nd.us Oregon Sharon Peerenboom 503-986-4414 sharon.k.peerenboom@odot.state.or.us South Carolina Debra Rountree 803-737-1240 johnsongc@scdot.org South Dakota Bruce Lindholm 605-773-7045 bruce.lindholm@state.sd.us Tennessee Jerry Roache 615-253-1038 jerry.roache@state.tn.us Wisconsin John Alley 608-266-0189 john.alley@dot.state.wi.us

19 APPENDIX D: SAMPLE OF STATE DOT TRANSFER REQUESTS

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Transportation Research Board 500 Fifth Street, NW Washington, DC 20001 These digests are issued in order to increase awareness of research results emanating from projects in the Cooperative Research Programs (CRP). Persons wanting to pursue the project subject matter in greater depth should contact the CRP Staff, Transportation Research Board of the National Academies, 500 Fifth Street, NW, Washington, DC 20001. COPYRIGHT PERMISSION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FTA, or Transit Development Corporation endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP.