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Resource Allocation of Available Funding to Programs of Work (2017)

Chapter:Chapter Four - Case Examples of Resource Allocation

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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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Suggested Citation:"Chapter Four - Case Examples of Resource Allocation." National Academies of Sciences, Engineering, and Medicine. 2017. Resource Allocation of Available Funding to Programs of Work. Washington, DC: The National Academies Press. doi: 10.17226/24793.
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29 chapter four Case examples of ResouRCe alloCation Case examples illustrate how states are making decisions about resource allocation among programs of work. The survey describes a state of the practice in which states work to maintain discretion over resources in the face of increasing state and federal requirements and funding uncertainty and seek better data and models to support their allocation decisions. The case examples are selected to represent different contexts and types of resource allocation processes. The cases are intended to include a diversity of planning environments and contexts of resource allocation decisions. The following general profiles served as criteria for selecting case examples: 1. Include at least one agency that has significant top-down discretion to determine resource allocation strategies based on performance targets, planning objectives, and anticipated outcomes. 2. Include at least one agency that has acquired greater discretion over its resource allocation process over time, exploring the factors that led to the level of agency discretion and how the agency used this discretion to achieve different outcomes. 3. Inasmuch as possible, include a diversity of agencies with respect to size, geographic cover- age, urban–rural dynamics, and modal and program complexity. For case examples, states are chosen that represent different geographic regions of the United States; different mixes of urban, rural, and suburban environments; and different sizes and levels of sophistica- tion. Furthermore, the case examples illustrate in specific terms the characteristics of states, legislative and executive processes, and scrutiny that constrain (and in some cases empower) the ways agencies can allocate resources. The four studied states are: 1. Oregon, a state with significant staff and analytical capabilities, significant nonhighway programs, and highly structured and involved stakeholder processes. 2. Florida, among the largest states, has multiple major metropolitan areas, one of the most elabo- rate port systems in the United States, and a body of state law that mandates investment in an intermodal transportation system. 3. Massachusetts, one of the newest DOTs in the United States, has an explicit mission to balance investments and performance needs among several programs with long histories of operating independently. Massachusetts DOT also is representative of the states in which one metropoli- tan area dominates statewide needs and customized decision-making technology plays a role in shaping how resources are allocated. 4. Idaho represents many American states with limited urban areas but diverse geographic needs and constraints, significant legislative scrutiny, and a growing need to understand and articulate its investment decisions in terms of strategic program and performance areas. This chapter summarizes how these four states embody the issues raised nationally by the state- of-the-practice review and the survey. The examples present lessons learned from these four states. The case example selection and interview process is documented in Appendix A: Case Example Screening Criteria and Discussion Guide.

30 oRegon DepaRtment of tRanspoRtation Oregon DOT (ODOT) provides an example of a state transportation agency resource allocation policy that has evolved in response to many of the challenges facing agencies today. Oregon has a medium-size DOT in terms of transportation spending (21st in 2014) and highway infrastructure (33rd in 2014) [National Association of State Budget Officers (NASBO) 2015; FHWA 2016]. Oregon’s major capital allocation process is a biannual update to the STIP. This process involves identify- ing off-the-top programs, such as required federal matches for modal programs, and working with the Oregon Transportation Commission (OTC) to allocate remaining capital resources to “Fix-it” and “Enhance” pools of funding (programs) and a parallel capital program called ConnectOregon (Figure 6). Effectively the amount of annual revenue available for Fix-it and Enhance funding is determined by the amount left after “off-the-top” allocations are made, with the Fix-it allocation level determined by a highly interactive process of stakeholder boards informed by asset management pro- grams (with preset asset condition targets for the Fix-it program) and other modeling resources of the ODOT. A separate dedicated revenue stream (from lottery bonds) determines the annual allocation to the ConnectOregon program, which incorporates different performance, modal, and programmatic objectives. This case example focuses on Oregon’s sequential allocation of resources through the Fix-it, Enhance, and ConnectOregon programs, noting that ConnectOregon is an important supple- ment to the main allocation process. The role of the OTC and Oregon’s perhaps unique Area Com- missions on Transportation (ACTs) in resource allocation decisions is emphasized. stakeholder engagement and area Commissions on transportation Among the case examples, Oregon is particularly strong in its use of stakeholder groups and boards in the resource allocation process. Although many states have a transportation board, Oregon also has decentralized stakeholder commissions that play an important role. Oregon has a strong five-member transportation commission, appointed by the governor, that is actively involved in many resource alloca- tion decisions, from determining splits between the Fix-it and Enhance categories to approving project lists for the final programs. This high level of involvement has allowed ODOT to develop strong working relationships with the commission so that it functions as much as a partner as an oversight body. In addition to the OTC, Oregon has an unusual stakeholder structure that includes 12 ACTs. The ACTs are elected boards of regional officials who support local programming. The ACTs are inde- Figure 6 Diagram of the steps for the Oregon resource allocation process discussed in this case example. Source: eDr group analysis of case study interviews and documents.

31 pendent of the five ODOT regions and the ten MPOs but play a major role in coordinating program- ming efforts with these groups. Because the ACTs cover the entirety of Oregon and represent local stakeholder perspectives, they have been one of the most important entities for securing buy-in to the Fix-it and Enhance program designations and funding levels. In addition to building support for the preservation-first state program and recognizing the state’s limited ability to provide modernization funding, ACTs play an important role in coordinating projects among the different programs. The ACTs assist with reviewing the Fix-it programs project list and develop the project list for a State Highway System Leverage Funds program to add additional features to Fix-it projects. The ACTs also assist with coordination between the Enhance and ConnectOregon programs, among other project selection tasks. ACTs bring together the large and small components of their regions to help organize needs across jurisdictions and the state. By formalizing an additional local level of engagement, below the state- level OTC, ODOT has simplified the channels of communication for building support for resource allocation plans and executing their allocation strategies. fix-it and enhance ODOT has undergone significant reorganization of its resource allocation strategy at a policy level during the last two STIP update cycles, during which the agency implemented the Fix-it/ Enhance split in funding. Before the 2015–2018 STIP, revenues were allocated based on predeter- mined apportionments to a larger number of modal and other program categories. Funding for the Fix-it and Enhance categories comes from traditional revenue sources, including state fuel taxes and other transportation fees and federal programs. The Fix-it and Enhance investment categories are developed based on influence from the governor’s office and OTC, coinciding with ODOT’s internal Intermodal Oregon initiative. The intention is to provide maximum flexibility to find the right solution for each transportation problem in a funding-constrained environment. Despite new top-level allocation programs, ODOT retains many of the decision support tools and techniques that have been relied on and improved over time. The current strategy allows the agency to meet its core goals internally while also meeting numerous external pressures from various stakeholders. The main resource allocation process includes the two overarching categories of Fix-it and Enhance, which were developed during the 2015–2018 STIP process. The program funding levels for Fix-it and Enhance are determined after setting aside funding for the 15 other off-the-top capital programs shown in Table 4. Significant portions of the off-the-top programs are nondiscretionary distributions to other governmental entities, whereas others, such as the Immediate Opportunity Fund, are set-asides for flexible spending on small projects that come up between STIP cycles. The total allocation for off-the-top programs is roughly $420 million of the $1,461 million allocated within the STIP process. More than $220 million of this off-the-top money is federal pass-through, over which the state and ODOT have absolutely no discretion. Fix-it Fix-it is ODOT’s dedicated program for preserving the state-owned transportation system. Despite the multimodal motivation for moving to an allocation strategy with only two major categories, Fix-it covers traditional ODOT highway assets, such as bridges, culverts, and pavements. The total STIP allocation for highway Fix-it projects is $850 million, including $35 million specifically for seismic bridge work and an additional $77 million that was added based on new authorizations under the FAST Act (Garrett 2015; OTC 2016). Outside the main Fix-it program, the STIP includes $15 million for replacement of state-owned buses, $10 million for Americans with Disabilities Act compliance projects, and $6 million for active transportation add-ons to Fix-it highway projects. In addition to the $15 million for bus replacement, all transit investment is contained in the off-the-top public transit program and within the Enhance program.

32 The Fix-it allocation is determined based on needs before setting a level of funding availability for the Enhance programs. The asset categories are treated as individual programs within the Fix-it category, with a degree of top-down decision making involved in setting funding levels based on needs assessments in each category. In addition, at least 20% of Fix-it allocations will be to key freight corridors as identified by ODOT staff. These key corridors help set aside resources for proj- ects that may not be otherwise prioritized by statewide asset management systems. Table 5 shows the major programs within the Fix-it and Enhance categories. Program Value Surface Transportation Program (STP) to large MPOs $85,417,662 STP allocation to cities, MPOs, and counties $73,683,378 Local bridge $69,271,208 State Planning and Research $58,500,000 Congestion Mitigation and Air Quality Improvement $47,718,339 Public transit $31,500,000 Transportation Growth Management $12,825,000 MPO planning (includes state match) $10,556,951 Immediate Opportunity Fund $10,500,000 Transportation Alternatives program to large MPOs $4,937,873 Active Transportation Discretionary $4,200,000 Recreational trails (to state parks) $4,124,825 Workforce Development/On-the-Job Training $3,150,000 Railroad–Highway crossings—state $2,100,000 Safe Routes to School education $1,500,000 Boldface type indicates major nondiscretionary pass-through categories. Source: Garrett 2015. TABLE 4 OrEGON DOT’s “OFF-THE-TOP” STIP PrOGrAMS Fix-It Categories Enhance 2018–2021 Categories Bicycle/Pedestrian capital maintenance Bicycle/Pedestrian on or off highway right-of-way Bridges Public transit capital projects Culverts Public transit fleet replacements High-Risk rural roads Safe Routes to School capital projects Illumination, signs, and signals Transportation alternatives Operations, including Intelligent Transportation Systems and Transportation Demand Management (TDM) Scenic byways Pavement preservation TDM Railroad–Highway crossings Transportation options Safety Salmon (fisheries mitigation) Source: ODOT 2012; ODOT 2015c. TABLE 5 ExAMPLES OF INvESTMENT CATEGOrIES By PrOGrAM

33 Current funding levels, in this second iteration, continue to track historic allocations relatively closely because there have not been major updates in the definition of needs. However, the new struc- ture is allowing a gradual transition to a more flexible cross-program allocation strategy. For exam- ple, relative to historic allocations and the first Fix-it/Enhance STIP, a 67/33 split between pavement and bridge funding is transitioning to roughly a 50/50 division. This new split was allocated based on seven criteria (shown in Table 6), which are applied to bridge and pavement preservation projects. There are plans for adding more types of Fix-it projects into this pool of standardized criteria, which was developed by Highway Division staff. Although the criteria initially were tested with equal weights, the department decided that too much investment was being focused on high-volume routes. The allocation between categories is expected to be revised for each update of the STIP. The increased bridge allocation reflects an increased emphasis on project needs for meeting seis- mic safety goals. Besides rebalancing within Fix-it, additional bridge and culvert funds for seismic issues are a major cause for increasing the level of funding for Fix-it in the 2018–2021 STIP from 76% to roughly 85% of departmental revenues after funding off-the-top programs. Owing to limited funding availability, Oregon has placed a strong emphasis on preservation-first programming to maintain the current system under the standard STIP process. Increasing needs assessment levels have further squeezed non–Fix-it funding. Fix-it project lists are developed by the ODOT regions using asset management programs and reviewed with ACTs and MPOs. This process is not new with the changed policy paradigm and is not a response to recent state or federal regulations. Oregon initially developed many of its management systems and business processes when ISTEA briefly required deployment of management systems. After that requirement was rescinded, Oregon continued to develop its asset management capabilities. The asset management system serves in an asset-tracking capacity for generating 150% lists of proj- ects, with engineering judgment driving final allocation decisions. Oregon’s fix-it-first perspective has continued to develop and be refined over the last 20 years. Enhance The Enhance program is a competitive, application-based, project-selection process that covers most system improvement projects. Enhance improves on long-standing multimodal and active transpor- tation emphases at ODOT. recognizing that all modal areas are historically underfunded, Enhance is aimed at helping to prioritize the most important strategic investments in the system. Projects can be submitted by ODOT or any other public agency in Oregon. The funding level for the Enhance program is determined by the amount of revenue remaining after off-the-top and Fix-it allocations. For the 2015–2018 STIP, roughly $220 million was available for transportation expansion or improvement projects, with public transportation, bicycle/pedestrian, and road projects competing with Criterion Weight Functional classification 50% data driven Average daily traffic Average daily truck traffic Years of life added per dollar Life-cycle cost considerations Program manager input 50% professional judgment Regional priority projects Source: EDR Group phone interview with ODOT staff. TABLE 6 CrITErIA USED TO PrIOrITIzE PrOjECTS ACrOSS PAvEMENT AND BrIDGE PrOGrAMS

34 each other. For the 2018–2021 STIP, $159 million is available but will not be distributed as a single pro- gram. Highway projects will be funded separately from the multimodal projects. Funds will be directed as $50 million for State Highway System Leverage Funds, $49 million for freight from the FAST Act, $25 million for “Strategic Investments,” and $35 million for “Enhance Non-highway.” The amount for these non-Fix-it programs was much smaller in resource allocations proposed before the FAST Act increased funding certainty and available federal funding. Enhance funding is geographically distributed to the five ODOT regions based on a long-standing Modernization Equity Split formula. Enhance does not provide funds for aviation, marine, or rail projects because the major funding source is still federal highway funds. The categories eligible for Enhance Non-highway funds in the 2018–2021 STIP can be seen in Table 5. The Enhance Nonhighway projects are assessed based on their provision of (1) benefit to the state multimodal transportation system, (2) plan consistency, (3) modal attributes, and (4) cross-mode criteria (see Table 7). All project lists are developed at the regional level by ACTs with ODOT staff support, so resource allocation across modes is determined only when the final program lists are combined for submittal to the OTC (ODOT 2015b). Connectoregon Because of funding shortfalls and uncertainty from the state fuel tax and federal sources, Oregon has developed several alternative resource pools. One of the longest standing of these, ConnectOregon, is backed by lottery bonds. ConnectOregon has received authorization from the legislature for six biennia and has become an integral part of ODOT’s funding portfolio. ConnectOregon is one of the main tools for allocating resources to marine, aviation, and freight rail projects, as well as passenger rail, bicycle/pedestrian, and transit projects that do not or cannot receive funding under Enhance using federal highway dollars. Any project that would qualify for state Highway Trust Fund resources is ineligible for ConnectOregon. Despite being completely sepa- rate from the STIP process, ConnectOregon project selection is set up to coincide with the 2018–2021 STIP development process. The agency expects that some projects will have components funded by Enhance and ConnectOregon. ConnectOregon and Enhance nonhighway programs are both multimodal programs that are much smaller than the Fix-it program or even the state highway leverage and freight programs. Both attempt to allocate money across modes with some geographic balance. However, the pro- grams allocate different revenue sources and cover different facilities because ConnectOregon cannot fund projects in the state highway right-of-way and Enhance cannot fund marine, aviation, or rail projects (other than rail-highway crossings). The emphasis of ConnectOregon is more strongly on economic development, but both programs, because of their small size, are focused on stra- tegic investments in completing links and creating connections on a multimodal transportation network. Modal Attribute Cross-Modal Criteria Connectivity and system benefits Economic development Safety and public health Social benefits Accessibility and mobility Environmental stewardship Safety Project readiness Leverage Source: ODOT 2015b. TABLE 7 ENHANCE PrOPOSAL EvALUATION CrITErIA

35 As part of the legislature’s role in authorizing lottery bond revenues for use in funding ConnectOregon, the evaluation criteria for the program has been laid out in statute (see Table 8). The legislature decides the size of the allocation to this multimodal funding source. Project evaluations are carried out by agency staff based on application form responses. ODOT staff also evaluate project eligi- bility and feasibility. Following ODOT’s review and assignment to tiers based on a point system, modal and regional review committees prioritize projects. The modal review committees are listed in Table 9, and the regional review committees are composed of ACT members. In this process, ODOT has relatively limited discretion of allocations to modal categories or areas such as freight. ODOT staff members support committees (modal, regional, and final) but largely in technical and administrative capacities. In addition to ConnectOregon, ODOT has relied on special programs authorized by the legislature to fund major capital preservation, modernization, and expansion with non–fuel-tax revenue. Such legislation has included two major bridge programs and the jobs and Transportation Act. The Oregon Transportation Investment Act III State Bridge Delivery Program provided $1.3 billion in funding for bridge evaluation, rehabilitation, and replacement, which was a more than 25% increase in capital resources. The 2009 jobs and Transportation Act provided an increase in the fuel tax (from 24 to 30 cents) that created much-needed revenue for the department; however, it also required that most of the new revenues be used on 51 specific projects detailed in the legislation. The agency is optimistic about the legislature providing additional funding during the 2017 session and expects to be able to add highway modernization and multimodal passenger and freight expan- sion projects into the agency’s programs. Although any additional funding is likely to come with restrictions on its use, ODOT personnel are reasonably confident the projects or programs identified by the legislature will align with the needs identified by the agency. Statutory Review Categories Project reduces transportation costs for Oregon businesses or improves access to jobs and labor markets Project results in economic benefit to Oregon Project is a critical link connecting elements of Oregon’s transportation system that will improve utilization and efficiency of the system Share of project cost born by applicant using matching funds from other sources Project readiness for construction Length of useful life expectancy Boldface type indicates criteria are strategic and receive double weight. Source: ODOT 2015a. TABLE 8 EvALUATION CrITErIA FOr ConnECtOrEGON vI Mode Committee(s) Aviation Oregon Aviation Board Freight Oregon Freight Advisory Committee Public transit Public Transit Advisory Committee Rail Rail Advisory Committee Marine Marine Project and Planning Advisory Committee and Oregon Business Development Department Bicycle and pedestrian Oregon Bicycle and Pedestrian Advisory Committee Source: ODOT 2015a. TABLE 9 MODAL rEvIEW COMMITTEES FOr ConnECtOrEGON

36 oregon Case takeaways Based on needs assessments, the OTC has agreed that ODOT will allocate most of the agency’s standard revenue sources to a single Fix-it program. The Fix-it program is further allocated to investment categories on the state highway system. There are a few discretionary programs that receive off-the-top funding and money remaining after Fix-it is allocated to additional programs. In the 2015–2018 STIP process, all of the remaining money was competed for through an application-based Enhance program. In the current 2018–2021 STIP, most discretionary money is allocated to strategic investment and state highway leverage programs, with federal require- ments determining the size of Enhance Nonhighway and freight programs. Because of the limited resources of multimodal improvements, alternative revenue sources have been authorized by the legislature for programs such as ConnectOregon. Although these programs meet essential funding needs, they come with additional requirements from the legislature, including project earmarks in some cases. Oregon provides a valuable case of a transportation agency that must coordinate resource alloca- tion decisions closely with the legislature and a strong governor-appointed commission and yet has been able to reorganize funding programs to maintain flexibility and prioritize strategic investments. ODOT reports the agency has been able to make a convincing case for a robust preservation alloca- tion, which allows the department discretion to complete projects it identifies using asset manage- ment systems. While increasing stakeholder engagement and abiding by legislative mandates, the agency has secured a strong technical role in programs that allow the agency to influence how limited nonpreservation funds are used, such as Enhance and ConnectOregon. floRiDa DepaRtment of tRanspoRtation Florida has one of the largest transportation programs in the nation, one that is in a class with California, Texas, and New york (NASBO 2015). Florida DOT (FDOT) owns more than 43,000 lane-miles of highway and ranks eighth in total public road lane-miles, despite being 26th in land area (FHWA 2016). Florida is home to many busy airports and seaports and spends nearly 15% of its capital budget on transit investments. Florida is a particularly interesting case example for resource alloca- tion because of its numerous urban areas, the number of modes involved in its program, and its efforts to integrate investments across modes in a strategic way. Florida has 15 programmatic categories of work, each with multiple phases and allocation among the 15 programs determined by complex rules (see Table 10). However, the Strategic Inter- modal System (SIS) is an innovative construct by which FDOT channels investment into strategic priorities across modes and programs (FDOT 2016). After FDOT uses statewide asset management systems to determine highway and bridge preservation requirements (usually 20% of outlays), remaining funds are allocated to meet federal requirements for the Surface Transportation Program and Congestion Mitigation and Air Quality Program, as well as some state-required pass-throughs to counties. This leaves approximately 30% of Florida’s program to be invested in capacity enhance- ments on the SIS, with 12% going to capacity enhancements on other facilities. Between federal and state legislation and regulation, Florida faces a complicated set of inter- related and nested resource allocation decisions. The policies have been proposed and supported by the DOT before they were codified and also come from other sources. For example, Florida has a legislative requirement to meet preservation criteria before investing in other projects and also policies and procedures laid out in statute for implementation of statewide capacity projects on the SIS. These requirements result in a sequential allocation of resources to required pro- grams, preservation, and then multimodal capacity. FDOT staff have indicated that despite the complexity, they are able to implement a resource allocation strategy under which they think the agency has significant discretion to deliver programs in the way the agency thinks is efficient and effective and can meet FAST Act performance requirements. Florida has a robust highway expan- sion program, which also invests heavily on nonhighway modes, including support to private facilities.

37 Role of Highway preservation spending and other Requirements The department’s mission, goals, and objectives are laid out in statute to include (1) ensuring 80% of pavement meets standards, (2) 90% of bridges meet standards, and (3) 100% of the acceptable maintenance standard is achieved on the state highway system. The department also is charged with providing a safe transportation system, but there is not a separate program designation for safety projects; instead, safety is a consideration throughout all planning efforts, and federal safety funding streams are allocated at a project level as appropriate. Although these statutory requirements focus heavily on the highway mode, the SIS is also recognized by Florida statute and plays an integral role in resource allocation decisions, as is explored in subsequent sections of this synthesis. Unlike some other states where preservation-first orientations require devoting almost the entire budget to preservation and maintenance activities, highway and bridge preservation accounts for only about 20% of agency spending in Florida. Many factors influence this percentage. Florida’s total capital program exceeds $10 billion per year, so Florida is spending more on preservation in absolute terms than is available for total capital programs of many other DOTs. Florida benefits from the relatively young age of many of its facilities, which were added as the state grew rapidly. Con- tinuing investments in new capacity also improve many facilities as part of those projects rather than having to complete a dedicated preservation project. Interviews revealed that Florida’s proactive emphasis on preservation has prevented development of the costly backlogs faced by other states; Florida responded to emerging problems during a period when pavement and bridge life-cycle costs were lower. Preservation spending is set every spring in May and june during annual departmental pro- gram planning workshops. Florida budgets annually, so the DOT updates the STIP and rebalances Category Phase Highways Construction Transit Capital Miscellaneous (administration) Design-Build Turnpike Operations Aviation Administration Maintenance Right-of-way Intermodal Preliminary engineering Rail Bridge/Roadway contract maintenance Seaport Railroad and utilities Planning Planning Transportation disadvantaged Project development and environmental Multimodal Environmental Research and testing Repayment Fixed capital outlays Research Florida Rail Enterprise Contract incentives Miscellaneous Ordered from largest to smallest based on planned 2016 outlays. Source: Identified from 5-year work plan. Web application: http://www2.dot.state.fl.us/ fmsupportapps/workprogram/workprogram.aspx. TABLE 10 FLOrIDA WOrk PrOGrAM CATEGOrIES AND PHASES

38 among funding programs each year in response to changes in legislative requirements or modeled needs. Needs are updated in the asset management models after annual pavement condition sur- veys and biannual updates of bridge inspection results. Programming is responsive to observed needs, with any bridge rated structurally deficient replaced within a 6-year time frame (written into the next year’s STIP) if it is no longer efficient to repair. The bridge program has consistently been allocated enough resources to achieve that target replacement schedule. Projects identified by the asset management systems are removed from program needs if they are also covered by capacity projects. Florida has several other legislative requirements that direct revenues to specific program areas, geographic regions, or individual projects. Examples of legislative restriction include federal pass- through programs for the Surface Transportation Program, Transportation Alternatives Program, and Congestion Mitigation and Air Quality Program; state requirements for transit spending (minimum of 15% of capital); landscaping; allocations to counties through programs such as the Small County road Assistance and Small County Outreach programs; and transportation disadvantaged programs (nearly $60 million in 2016). Of state fuel taxes, 7.4 of 20.7 cents of gasoline and diesel taxes collected in Florida must be spent within the county in which the taxes were collected. After subtracting all funding obligated under these programs to specific projects, programs, or other entities, the state directs 75% of available funding to the SIS and 25% by formula to the districts to support the MPO-driven TIP processes. Of a total 5-year work program of $43 billion, $12.7 billion goes toward capacity projects on the SIS (30%) and roughly $5 billion goes to non–SIS district-directed capacity projects (11.5%) (Sirianni 2015). Agency staff have indicated districts coordinate effectively with Florida’s 27 MPOs. The 25% managed directly by districts also frequently aligns with some required distributions, such as the Transportation Alternatives Program, without having to take funding off the top as a separate set-aside. This increases modal and regional flexibility when identifying resources for the 75% of revenues that go to projects on the SIS. florida’s strategic intermodal system The SIS originated in 2005 and was formalized in statute based on proposals originating in the depart- ment and as an outcome of the 2001 Florida Transportation Plan (FTP) process. Following the 2001 FTP, an SIS steering committee was formed that assisted in developing the framework for a state- wide network in which key capacity investment in facilities and corridors would be concentrated. The DOT helped to staff the committee, which brought together stakeholder groups from across the economy and state, and fully supported development of the SIS network and associated planning and programming policies. This network and guidelines for agency processes for allocating resources to the network were codified in statute by the legislature. Updates to the FTP continue to include a broad range of stakeholders and include slight modi- fications to the agency’s strategies while highlighting key issues and challenges. Overall, inter- views indicate that the department mission and direction have been stable for 20 years, including before and after the SIS implementation reorganized programming practices, with little major change in goals and objectives. However, the SIS and new methods improved the ability to meet department goals. The SIS is a multimodal network that is designated based on certain criteria for each mode/ facility type. The SIS is not necessarily a funding program but a framework for making program- ming statewide priorities. The modes included in the network are shown in Table 11. Connections between modes for freight and passengers are emphasized during development of a 10-year SIS plan. Because of the nature of these projects, which are largely facility expansion, the SIS plan is longer than the 5-year work plan and STIP. In addition to the 10-year program of SIS projects, there is a cost-feasible plan with additional projects for the following 10 years that could be accel- erated if resources become available. A strong network-level plan is needed to coordinate the large statewide initiative of the SIS.

39 Over the lifetime of the SIS, resources have been allocated to highways and other modes using an 80/20 split. This is a policy-level decision that could be changed but is not expected to be revised because it is not a point of contention. In most cases, highways are essential to access to other intermodal facilities, and there has been little consideration that another funding balance between programs might be needed. Within highway and nonhighway categories, the specific allocation among subprograms or performance areas is based on a project-level investment pri- oritization methodology. In the approved 2016–2020 work program, the split leans slightly further toward highway, with only 10% of state dollars going to nonhighway modes (Sirianni 2015). This represents a significant level of investment for nonhighway programs compared with the funding of other states. The SIS investment program is developed with heavy reliance on the Strategic Investment Tool (SIT), which evaluates highway capacity and modernization projects on more than 20 factors, including economic impacts, level of service, safety, and intermodal access measures. These measures fall within the six goals of the Florida Transportation Plan, as can be seen in Table 12. The agency views SIT as a “very precise” tool that is “equitable to all factors.” The tool has used a consistent set of factors over the years and provides an objective framework for comparing state highway projects. By quantifying many aspects of a project and the potential return on investment, the SIS plan is almost seen by the agency as a needs-based program with “needs” defined by the parameters of the tool. Modes Facilities Aviation 19 airports Highways 4,701 centerline mi Multimodal 20 passenger terminals; 8 freight terminals; 1 intermodal logistics center Rail 2,325 mi Seaport 12 seaports Waterway 1,986 mi Spaceport 2 spaceports Transit 36 urban fixed guideway systems Source: Florida Department of Transportation (2016). TABLE 11 MODES AND FACILITIES INCLUDED IN FLOrIDA SIS NETWOrk FTP Goal Number of Measures Total Points Safety and security 5 20 Maintenance and operations 4 20 Mobility and connectivity 8 20 Economic competitiveness 14 20 Livable communities 7 20 Environmental stewardship 13 20 Total 51 120 Source: Sirianni (2015). TABLE 12 STrATEGIC INvESTMENT TOOL HIGHWAy SCOrING CATEGOrIES FrOM FLOrIDA TrANSPOrTATION PLAN

40 The SIT is not used for allocating the share of funding to nonhighway projects, which mostly rely on work by the managers in FDOT’s modal divisions to define facility needs and collect data for analysis from facilities and customers. These needs and data are organized in modal master plans and within the SIS planning documents. Whereas SIS highway capacity projects can be 100% funded by the state, modal projects require as much as a 50% match from facility owners. Examples of eligible seaport projects range from on-port roads or railroads that connect the facility to other SIS facilities to gantry cranes and bulk storage facilities. For the 2016–2020 work plan, SIS modal investments are roughly $110 million for transit, $490 million for aviation, $277 million for seaports, $264 million for rail, and $149 million for intermodal facilities (Sirianni 2015). accountability Given the number and size of urbanized areas in Florida, resource allocations generally are coordinated with MPOs and local governments, who have roles as stakeholders and participants in the decision- making process. Because of the statewide nature of the SIS, there are no explicit geographic balance requirements on the SIS. However, because of the importance of working with regional and local stake- holders, there typically is informal consideration of balance during the development of the plan. The agency reports there has been minimal difficulty explaining to partners that, given the large nature of most SIS projects, in any given year some areas will not be allocated as much money. Preservation and maintenance projects are needs based, but adequate funding levels typically prevent concern over unequal allocations. Local and regional governments also receive considerable amounts of flexible fund- ing directly through allocations to counties, pass-through of federal STP funding, and so forth. The nine-member Florida Transportation Commission is an additional important stakeholder group; it provides oversight authority of the resource allocation process. This oversight is mainly in terms of statutory compliance review of the department activities to ensure all state and federal legis- lative and regulatory requirements are met. Each year the commission publishes a major report that analyzes the tentative work program. This review is necessary because of the high level of specificity laid out in some portions of statutes, which also results in the development of the tentative work plan by FDOT’s Office of Work Program and Budget that focuses on identifying funding streams from revenue source to project delivery. FDOT has a long history of tracking performance measures, both for the commission and legis- lature as well as internally and for partner agencies. These performance measures affect resource allocation through a strong feedback loop using monthly performance review meetings that include the department’s executives. This allows coordination among divisions when addressing challenges and rebalancing programs if performance does not follow expected trends. In general, FDOT staff indicate that performance measures are a useful tool for understanding issues but hesitate to use them for directly making programming decisions. Although FDOT does not anticipate needing to imple- ment many new performance measurement systems to comply with new federal regulations, concern exists that the agency will lose funding streams or discretion over resource allocation if decisions are made strictly on one-size-fits-all measures. florida Case takeaways Florida navigates a significant amount of legislative direction in most aspects of its allocation pro- cess. This is not considered a significant burden on FDOT’s discretion because the agency was involved in developing many of the requirements and maintains significant project prioritization latitude, which combined with a healthy revenue stream means the agency is able to meet many of its performance goals. A proactive preservation program has managed life-cycle costs and allowed the agency to maintain a small backlog. The SIS provides an integrated framework for flexible, performance-driven, multimodal investments statewide, including nonhighway modes. However, Florida has not determined a process to prioritize projects across programs, and allocations in high- way capacity compared with improvements in other modes remains a relatively uncritical policy decision without significant program-level analysis.

41 massaCHusetts DepaRtment of tRanspoRtation Massachusetts DOT (MassDOT) was created in 2009 to put several Massachusetts transportation agencies under one roof. It is a particularly interesting case example for resource allocation, as the agency to a large degree was formed explicitly to promote consistency and strategic coherence among what had been different agencies with interrelated programs and objectives. Since its inception, MassDOT has been working toward performance-based planning that allocates revenue among programs housed across its modal divisions. MassDOT manages a large multimodal budget in one of the nation’s smaller but more densely populated states. A large portion of the state’s population and transportation infrastructure is in the greater Boston area, with other portions of the state being much less densely settled. The Boston region MPO is aligned with the boundary of the Metropolitan Area Planning Council (MAPC), which for the 2010 Census contained 3.16 million of Massachusetts’s 6.5 million residents (MAPC 2016). This dense settlement results in high project costs and a mix of modes. Between Massachusetts Bay Transportation Authority (MBTA), passenger rail, and regional Transit Authority (rTA) spending, nonhighway modes make up the greater portion of the 5-year cap- ital investment plan (CIP). A significant portion of the spending is dedicated to bike and pedestrian facilities, on and off roads. MassDOT’s allocation process is interesting in its focus on program-level performance mea- sures for making program allocation decisions rather than project-level performance measures for prioritization of projects that then build up programs. The current allocation process includes all capital programs simultaneously and also consideration or restricted use fund sources. After adding funding already committed under each program, total program allocations are determined based on comparisons against one another in terms of performance targets and gaps for each program. This case examines the tools and processes MassDOT is using to balance program performance goals with allocations across programs and the future developments the agency has planned for the process. moving to performance-Based planning and programming A significant step in Massachusetts’s revenue allocation process has been the development of weMove Massachusetts (WMM), the state’s updated long-range plan, which was released in 2014. The plan introduced program-level performance measures and utilized new tools, including the Plan- ning for Performance (PfP) scenario analysis tool, which examines performance over time given cur- rent and historic funding allocations across modes. The 2017–2021 CIP continues to use PfP, which has been refined and expanded to cover additional program areas between its initial 2012 delivery and the current version and to align more closely with restrictions on various sources of revenue. The CIP represents a shift in culture toward a focus on priorities and programs by examining cross-program trade-offs, rather than one of developing an investment plan directly from projects with minor consideration given to changes in program size from historic levels. MassDOT expects the new resource allocation strategy based on performance measures to satisfy its requirements for performance-based planning and programming under MAP-21 and the FAST Act to provide a frame- work that will be refined as more performance measures are added. Massachusetts’ CIP includes all projects in the state with federal and nonfederal aid, making the CIP considerably larger than the state’s published STIP. The CIP does not include administrative or operating expenses such as routine contract maintenance. In comparison to the STIP, which is focused on highway and public transit capital projects that receive federal funding, the CIP includes all of MassDOT’s divisions and modal responsibilities, including passenger and freight rail; aero- nautics; the registry of Motor vehicles; streets, roads, and bridges without federal aid; additional bike and pedestrian facilities; and other programs. For fiscal year 2016, MassDOT and MBTA CIPs (which previously were separate documents) included total capital outlays of $3.2 billion. The STIP included only $1.7 billion of projects using federal highway or transit funding (53% of the CIP). The resource allocation strategy being employed by MassDOT has three core steps. First, the CIP is built around three strategic priorities for the agency: (1) reliability, (2) modernization, and (3) expansion, including improving modal options. Second, program sizes are established based on

42 analysis of performance and relation to strategic priorities. Finally, after funding levels are set, indi- vidual projects are programmed. The first two steps are relevant to this synthesis and are included in the PfP tool, one of the major innovations this case example discusses. PfP allows completely manual exploration of different programmatic allocations’ effects on performance measures and goal achievement and a partial-optimization solution that suggests programmatic allocations based on goal and program weighting and performance targets. The Massachusetts resource allocation strategy does not have any explicit considerations of geo- graphic balance during programmatic allocations, and the issue is given only a small role at the proj- ect prioritization level. There is some regional balance as a result of MPOs being assigned a budget cap for the TIPs, which are included in the CIP before prioritizing other projects. An analysis for the final CIP found that the program allocation and project prioritization process produced reasonable regional balance without explicit consideration. strategic priorities Each of the funding programs at MassDOT has been assigned to a strategic priority (reliability, mod- ernization, or expansion and modal options). This framework makes it simple to track how much funding emphasis is being allocated to each area. After previous commitments to the funding of under-way projects are taken into consideration, the investment plan is designed such that reliability- focused programs receive most of the funding and expansion-focused programs receive the least. reliability-focused programs are prioritized because of a high level of needs and a higher likelihood of cost-effective performance improvements in those areas. Although each funding decision is made at the program level, a report like that seen in Figure 7 easily shows the impact at the priority level based on funding allocated to programs. These three strategic priorities were established in collaboration between the MassDOT Divisions and MBTA, and confirmed through public involvement, legislative guidance, executive direction, Figure 7 Allocations by strategic priority in the Draft 2017–2021 CiP. Source: Massachusetts Department of Transportation (2016).

43 and internal departmental discussions. Major outreach activities included youMOvE Massachu- setts, a series of 10 public workshops, an interactive website, and traditional comment channels, additional WMM outreach to environmental justice and Title vI communities, 17 public meetings (“your vision, Our Future, a Transportation Conversation in 2012”) and 16 public workshops in 2015 (“Capital Conversations”), and 15 additional public meetings in the spring of 2016 focused specifically on CIP development after the release of a draft. Cross-program trade-off analysis Efficient programmatic funding comparisons require effective systemwide performance estimates at different funding levels. The 2017–2021 CIP process establishes a framework for assessing program resource allocation in a systematic way that is expected to be refined in future programming itera- tions. This process used program performance measures, when available, to compare the effect on department outcomes. Other program budgets were established by more traditional policy negotia- tions, but the CIP process significantly increased the number of conversations program and division leaders had with one another and with senior leadership regarding the value of various programs to the department. The process helped the agency to work with the MassDOT board to determine the level of bridge funding appropriate after the end of the Accelerated Bridge Program (ABP). Although the CIP includes much higher bridge funding than before the ABP, it was decided that initially proposed levels were too high, and overall departmental performance goals would be advanced by allocating addition funds to non-Interstate pavements and other priorities. The department is optimistic that future itera- tions of the programming process will continue to identify additional cross-program efficiencies that would not have been identified if divisions and program offices submitted their preferred projects as had been done for past CIPs. There is no direct comparison of projects across programs. For example, priorities for highway reconstruction and aeronautics building renovations are established based only on strategic goals and system-level performance measures; then specific programs are prioritized to use that available budget. Project prioritization will occur within programs based on project selection criteria defined by a special legislative committee, the Project Selection Advisory Committee, and input from stake- holders, staff, leadership, and MPOs. Because program budgets are set before and independent of the scoring process, scores need to be consistent only within programs, and there is no need to rationalize scores between a billion-dollar transit expansion and a million-dollar IT project. The current plan uses performance-based allocations for 23 programs that defined performance measures and investment responses. The availability of performance data and measurement scales varies significantly from program to program and division to division. Improving the underlying data of performance measures across programs will increase the department’s ability to compare alloca- tion scenarios’ impacts across strategic goals, divisions, and programs. Performance response curves will be updated for the measures that already use them as additional data specific to Massachusetts becomes available and historic performance is better recorded. The department is undergoing a rigorous target-setting process for performance measures, which will provide additional inputs to a PfP optimization process. Upcoming modal plans are also expected to improve asset condition and performance metric availability for several programs. All of these projects will help to define performance measures, data sources, and targets and allow future CIPs to better align with evolving agency and division priorities. the planning for performance tool The PfP tool’s main function is to estimate the performance impact of different programmatic funding allocations on program performance measures. Performance outcomes under different allocations can be compared to support decision-making regarding how funds are distributed across programs. Thirty-three programs are included in the PfP tool. The CIP breaks these out as 59 programs, mostly

44 as additional programs in IT, the registry of Motor vehicles, and rail. Table 13 shows the programs included in PfP and performance metrics associated with each. Improvements to the tool since its use in WMM add functionality for tracking revenue sources so that program funding levels can be restricted automatically to available resources. PfP scenarios can be examined interactively or through an optimization procedure. The main interface for the tool for four programs is shown in Figure 8. Inputs are entered in the orange boxes for budgets in millions of dollars and performance targets. The blue column and blue bars represent the performance level that can be achieved in a target year with that level of funding. Targets are shown in the graphs in black and used when running the optimization procedure. Optimization also uses a set of scaling and weighting factors for normalizing and balancing the different programs. To estimate performance impacts at the program level, PfP uses performance response curves, which generally are estimated by MassDOT asset management systems or nationally recognized data and tools. These response curves provide predicted performance in future years for different levels of program funding. Asset management systems such as the Deighton Total Infrastructure Management System, the HErS-ST with Highway Performance Measurement System data, and the NBIAS with data from MassDOT’s Pontis bridge management system files were used to estimate response curves in the Highway Division. In the rail and Transit Division, performance measures and response curves are largely drawn from MBTA tools and databases on asset condition over time. During this CIP cycle, the PfP tool showed that initially proposed funding levels would result in non-Interstate pavement performance falling further below the target. The initial funding level for Interstate pavement, on the other hand, was well above the level at which additional funding provides decreasing marginal returns in performance (right of $35 million in Figure 9). Funding constraints are applied through inputs of expected revenue from 27 sources and a table of binary relationships identifying whether revenue funds are eligible to be spent on each program. Program Associated Metric(s) Program Associated Metric(s) Nontolled Interstate pavement PSI: % Good/Excellent; PSI: % Poor Roadway maintenance None DOT-owned non- Interstate pavement PSI: % Good/Excellent; PSI: % Poor Safety maintenance None Multiuse path New facility-miles Facilities None Bridge No. of SD bridges Roadway reconstruction None Highway capacity Hrs./1,000 vehicle miles traveled; 80TTI ADA retrofits Retrofits completed Intersection safety EPDO crashes prevented ITS None PSI = present serviceability index; SD = structurally deficient; TTI80 = 80-percentile travel time index; EPDO = equivalent property damage only; ITS = intelligent transportation systems. Source: Cambridge Systematics, Inc. (2016). TABLE 13 PrOGrAMS IN PfP ADMINISTErED By THE HIGHWAy DIvISION WITH ASSOCIATED PErFOrMANCE MEASUrES Figure 8 example of PfP main interface. Source: eDr group communications with MassDOT interviewees.

45 The optimization procedure is designed to first draw on more restrictive funding sources. The user also can set the level of preobligated funds for different programs to capture commitments to proj- ects under way or legal or other requirements to direct funds to a specific location. The PfP tool also allows target proportions of total funding to be aimed toward each of the three strategic areas (reli- ability, modernization, and expansion). These spending levels are achieved for each strategic priority during programmatic allocations that maximize performance within each area. The highway examples in Table 13 show that several program categories do not have well-defined performance measures. When funding impacts on performance cannot be optimized by the tool for these reasons, funding levels for such programs must be set manually based on departmental judg- ment. In some cases, when inputs or analysis methods are more limited, existing measures’ response curves are defined linearly or using agency expertise. For example, for the multiuse paths category, a simple average cost per mile is used to estimate the effect on the performance measure. Improv- ing confidence in performance response curves and adding curves for more programs improves the comparability of programs during the resource allocation process. massachusetts Case takeaways MassDOT’s current resource allocation strategy shows how programs can be brought to the center of the process to focus on department goals and priorities. The 2017–2021 CIP shows it is possible to start the process with available data and secure a significant amount of internal and external buy-in without perfecting the process or applying it to all functions. A framework has been established in which additional programs can move toward being allocated based on well-defined performance mea- sures as data are developed. As the process is developed, optimization scenario runs will become more helpful in exploring how resource allocation to programs can achieve strategic objectives. The expected future improvements show the need for continuous improvement and refinement of the resource allocation process. Even with an expanded set of performance data and targets, MassDOT personnel think a tool alone will not satisfy the need to ensure effective channels of communication between leadership and program managers and between program managers. This program-level performance is an example of a state transportation agency not focusing primarily on performance at a project or facility scale. iDaHo tRanspoRtation DepaRtment The Idaho Transportation Department (ITD) is an interesting case example for resource allocation because (1) Idaho has one significant urban area/MPO in an otherwise rural state, which requires some degree of balance in ITD’s investments; (2) ITD has gained significant discretion over its revenue Annual Funding ($ million) Pe rc en t in G oo d or E xc el le nt C on di ti on (P CI ) Figure 9 Performance response curve for interstate pavement. Source: Cambridge Systematics, inc. (2016).

46 allocations in recent years; and (3) the agency is significantly increasing the role of performance- based categories in how it internally understands its investments. Resource allocation at itD Each year, ITD allocates resources among several major capital programs. In 2015, ITD’s outlays included: • Pavement preservation (37%), • Bridge preservation (25%), • Strategic initiatives (13%), and • Other programs, including transit, aeronautics, safety, and local aid (25%). Internally, ITD regards the pavement, bridge, and strategic programs as the more discretionary ones because the other programs (accounting for 25% of outlays) have state outlays determined by federal matching funds and formulas. The outlays listed do not include federal funds that pass directly to the MPO as a transportation management area or federal STP funds or matching monies that go directly to local areas (allocated to local areas based on population). Consequently, the pave- ment preservation, bridge preservation, and strategic initiatives demonstrate how ITD uses discre- tion each year in allocating revenues at the state level. allocation among the three major programs As stated, 75% of ITD’s outlays are allocated among the three major programs of pavement pres- ervation, bridge preservation, and strategic initiatives. ITD allows asset management systems to determine needed investments for pavement and bridges to achieve given performance and asset condition targets, with the remainder of the 75% going to ITD’s strategic initiatives program, which includes projects that are proposed for safety, mobility, and economic opportunity objectives. Pavement Preservation Because pavement preservation is the largest program area for ITD, its outlay largely determines available outlays for the other two major programs. ITD has set a programmatic target to maintain 82% of all pavements as good, as determined by pavement condition parameters in the agency’s asset management system. The investment level required to maintain pavement condition is not based on a target statewide pavement condition from future projections. Instead, the investment level is based on the existing pavement condition at the time each STIP is committed and the cost within each 5-year STIP funding cycle to maintain the overall statewide level at 82% good or invest additional funds to achieve and maintain that target. Bridge Preservation For bridge preservation, ITD uses the Bridge resource Management (BrM) software provided by AASHTO to determine the needed investment level to prevent closures of load-, width-, or height- restricted bridges based on existing conditions and projected conditions over the 5-year STIP cycle. Strategic Initiatives ITD’s strategic initiatives program includes all mobility, safety, or economic opportunity invest- ments. The overall investment level in this program is determined by the available funds in any given year, less the required matches for smaller programs (transit, aeronautics, etc.) and pavement and bridge preservation. However, some money is guaranteed to strategic initiatives because fed- eral funding from the Highway Safety Improvement Program is always designated as part of the strategic initiatives program. This usually accounts for approximately 25% of the program’s outlays

47 designated for safety objectives. The seven-member Idaho Transportation Board (appointed by the governor and approved by the state senate) has the authority to change the performance targets for pavement and bridge preservation, increase funding for strategic initiatives, and reallocate money among these major programs. In 2015, for the first time in many years, the Idaho legislature made additional funding available to ITD for bridge and pavement rehabilitation and restoration. This additional $58 million per year designated for preservation programs freed up sufficient funds to double the size of the strategic initiatives program, giving the agency significantly more discretion over its outlays than had existed in previous cycles. Investments made in the strategic initiatives pro- gram are prioritized based on a combination of benefit–cost analysis and wider economic impacts, including projected permanent job creation and gross state product contribution over time (based on an input-output model). evolution of idaho’s programmatic allocation process Idaho’s process has evolved in recent years because of a statewide audit of transportation outlays in the years from 2010 to 2012. Before the audit, almost all outlays in Idaho’s pavement, bridge, and expansion programs were determined by a formula designating revenues among ITD geographic districts, with one-third of the funds allocated based on population, one-third based on vehicle miles traveled, and one-third based on each district’s share of deficient facilities. The only exception was the bridge rehabilitation program (a portion of today’s bridge preservation program), for which resources were allocated statewide as they are now. The audit revealed significant enhancements to efficiency in terms of life-cycle cost and overall system efficiency by determining programmatic needs on a statewide basis instead of a district-by- district basis. This has given ITD the opportunity to use its pavement and bridge asset management systems to allocate resources to facilities throughout the state where investments have the greatest life-cycle cost savings and to address the most significant state of good repair needs. The statewide assessment of pavement and bridge needs reduces the overall amount of pavement and bridge preservation outlays needed to achieve and maintain state-of-good-repair targets set by the agency and supported by the transportation board. The only remaining purely geographic resource alloca- tion is the urban/rural split of local highway technical assistance funds, which are divided 50/50 between urban and rural areas (based on the distribution of highway lane miles between urban and rural areas). However, since the audit, a potentially more significant change has occurred in the strategic initiatives program. This program has grown significantly, with a doubling of its funding in the last year. Given the discretion to prioritize strategic initiatives statewide on the basis of the three areas of safety, mobility, and economic opportunity, ITD has demonstrated, through the use of modeling benefits and economic impacts of its investments, how the STIP contributes to the achievement of the agency’s objectives. Although the investment level in the strategic initiatives is not set based on safety, mobil- ity, and economic opportunity needs, the ultimate investment mix in any given year is reported to executive and legislative decision makers in terms of its effects on these areas (as modeled using ITD’s benefit–cost and economic impact tools). ITD’s ability to demonstrate how the strategic ini- tiative program affects wider outcomes in the state’s economy and quality of life has been a critical factor in increasing the program’s overall size (and share of resource allocation) and has been seen by the agency as critical to recent success in increasing the overall revenues available. Although 2016 is only the third year ITD has tracked outlays in the strategic initiatives program by performance area (safety, mobility, and economic opportunity), the agency plans to benchmark actual outcomes regarding these three strategic areas with the potential to further organize its investment within the strategic initiatives program among subprogram areas to optimally balance the three objec- tives. For example, the ITD uses a benefit/cost ratio consistent with the suggestions in AASHTO’s User and non-User Benefit Analysis for Highways (2010, commonly known as the redbook); this allows the agency to see which programs have primarily safety benefit versus mobility or economic opportunity benefit. Through benchmarking over time, the agency may be in a position to invest more in certain types of projects aligned with performance targets that are shown to be lagging

48 relative to others. In this way, the programmatic structure of strategic initiatives may become more efficient as a result of performance-based benchmarking. ITD is also working to comply with the FAST Act by making its statewide long-range trans- portation plan a more project-specific and program-specific investment guide, which addresses the performance-based planning and asset management requirements of federal law. The agency antici- pates the benchmarking and annual assessment of projects in the strategic initiatives programs and the overall targets for its pavement and bridge maintenance programs will play a significant role in how statewide planning is understood in the future with respect to program funding levels. idaho Case takeaways Overall, the ITD’s resource allocation process demonstrates how a relatively small transportation department with somewhat limited staff and technical resources has been able to integrate asset management systems, economic benefit and modeling considerations, and interaction between agency staff and an appointed board to arrive at a resource allocation process with enough buy-in to obtain additional legislative funding and some discretion in how to allocate such funding. The simplistic design of ITD’s program categories largely reflects the nature of the state’s geogra- phy and transportation markets. The ITD case demonstrates how an external audit of the agency’s allocations—while representing external scrutiny on the agency’s process—can result in changes in programmatic allocation rules and criteria that ultimately may enable the agency to have more latitude in resource allocation when flexibility among regions or programs is shown to be more efficient than are preexisting rules. Case examples’ summaRy anD lessons leaRneD The four cases presented in this chapter indicate some of the variety of agencies’ practices for resource allocation. There are significant differences among the transportation ecosystems in states across the country and the policy environments in which DOTs operate. This has led to numerous processes being used for resource allocation. For the four case examples collected in this synthesis, Table 14 summarizes key dimensions of state resource allocation processes. All of the cases studied and most survey respondents are using asset management systems and corresponding needs models with a reasonably high degree of sophistication, which has given them the confidence to prioritize investments in system preservation and, in the case of ITD, to communicate the need for and secure additional funding and discretion. Florida and Massachusetts provide examples of custom tools that have secured a major role in the resource allocation process. All states continue to exercise a preservation-first perspective but are pushing for more flexibility to make strategic investments using remaining funds. For Florida, this is achieved through prioritiza- tion of the statewide SIS network, whereas Idaho has gained geographic flexibility with their strate- gic initiatives program. Oregon and Massachusetts both face significant preservation challenges but are able to retain a portion of their resources of strategic investments in roadways and other modal networks. These states and Florida are especially focused on improving intermodal connections and filling in missing links in larger networks. Limited funding restricts states from committing signifi- cantly more funding to multimodal networks than is required by revenue sources. These cases show a variety of ways external stakeholders play a role in resource allocation deci- sions. External stakeholders (which may include business, community, or political interests) most often enter the process through transportation boards and commissions. ODOT works frequently and collaboratively with the state’s Transportation Commission and Area Commissions on Transporta- tion and relies on the legislature for special funding programs. Florida’s legislature has codified significant portions of FDOT’s resource allocation processes, but the Florida Transportation Com- mission’s role is mostly in terms of statutory review, not proactive engagement. MassDOT and ITD also have boards involved in resource allocation policy. regardless of legal or process constraints,

TABLE 14 kEy ASPECTS OF rESOUrCE ALLOCATION FOr THE FOUr CASE ExAMPLE STATES AMS = asset management system; BCA = benefit–cost analysis; CIP = capital investment plan; Hwy = highway; MBTA = Massachusetts Bay Transportation Authority; OTC = Oregon Transportation Commission; SGR = state of good repair; SIS = Strategic Intermodal System. Aspect Oregon Florida Massachusetts Idaho 1. Preservation versus improvement balance “Off-the-top” programs including some discretionary allocations are set first (29%), then majority of funding spent on preservation (60%), with remaining funds for improvement (11%). Preservation allocations determined first (~20%), after other state and federal allocation requirements, ~42% available for improvements (75% on-SIS, 25% by district). Strategic priorities of “reliability,” “modernization,” and “expansion” with emphasis on SGR and preservation in “reliability” area. Most “expansion” funding already committed to projects under way (no new funding). Preservation allocations determined first (62% in 2015), with remaining discretionary dollars going to “strategic initiatives” (13% for safety, mobility, and economic development). 2. Modal balance 2018–2021 STIP is 8.5% hwy improvement, 2.5% non-hwy “enhance” ($35m). Additional transit and bike/pedestrian program allocations are 2.5% “off-the-top.” ConnectOregon adds $42m non-hwy. State requires more than 15% of capital budget goes to non-highway modes. Non- hwy accounts for more than 10% of SIS spending ($1.2B over 5 years). Much more involvement in airport, seaport, and freight rail than other states. Programs for MBTA, freight and passenger rail, and Regional Transit Authorities make up $7.1B of 5-year CIP versus $6.9B hwy program. Modal programs allocated only dedicated federal funds plus state match. 3. Geographic balance Majority of budget allocated through “Fix-it” program statewide based on needs in each region according to asset management processes; modernization projects in the “Enhance” programs allocated to regions by formula. 25% percent of capacity funding directed to districts for MPO TIP process and other geographic funding, state requires pass- through to counties, preservation and SIS investments are funded statewide. Must spend ~1/3 of state gas tax in the county tax is collected. No explicit consideration of geographic balance. MPOs are allocated a budget for Transportation Improvement Program project programming, the projects of which are automatically included in the current CIP document. Following a recent audit, requirement for proportional distribution of preservation and strategic funds to geographic districts was removed, giving the DOT considerably more flexibility and discretion. 4. Accountability (transparency versus complexity) Complex project rankings carried out in collaboration with stakeholders. Ability to show benefits of preservation programs to OTC has led to more trust in AMS-influence funding levels. SIS decisions are complex but well documented over time. Additionally, many of the complex programming processes have been codified by the legislature. Performance measures and budget are reviewed by Commission. Current process emphasizes communication across departments/divisions. PfP and STIP format allow transparent, centralized documentation. The list of Strategic Initiatives projects is reported to executive and legislative stakeholders. DOT intends to maintain consistent reporting to enable benchmarking. Preservation assessed under consistent needs criteria. 5. Top-down versus bottom-up Allocation based on preservation needs and otherwise top-down. Projects compete for funding from preset allocations. Preservation driven by strict need goals, most top-down splits in legislation with limited allocation decisions each year. All programs allocated top-down and assessed based on performance response of investment scenarios. Statewide needs drive program splits; no explicit top-down allocation between Strategic Initiatives goal areas. 6. Agency discretion/ flexibility versus policy/model-driven consistency “Fix-it” and “Enhance” program splits determined in collaboration with OTC. “Enhance” program projects approved by OTC. ACTs are influential in project selection. Agency has technical influence and collaborative processes. Most allocation processes codified in statute by the legislature, including preservation targets and SIS processes. Although not flexible, DOT involvement in legislative design makes policy controls seem less restrictive. Relatively high level of agency discretion gained by 2009 creation of MassDOT and ongoing development of agency business practices. Secretary and Board are actively involved in policy guidance and review program allocations. 25% of spending nondiscretionary. Idaho Transportation Board can modify allocations, but DOT has significant discretion over bridge & hwy preservation based on AMS and selects Strategic Initiatives projects. 7. Objectivity versus subjectivity Several programs driven by AMS and Needs Models; published scoring rubrics and metrics for competitive programs – but ultimately subjective rankings. Preservation-type programs driven by AMS and Needs Models; Strategic Investment Tool (SIT) for highway expansion projects on the SIS; Modal programs slightly more subjective. AMS and Needs Models used for numerous programs; Planning for Performance (PfP) Tool allows departments to compare funding effectiveness, set values and targets. Two of three major programs funded based on needs determined using AMS; Strategic Initiatives projects prioritized based on BCA and wider economic impacts.

50 state DOTs report they have significant discretion over program and project decisions and engineers are able to use the tools available and their judgment to develop effective programs. Part of the effective development of programs for three of these states is discretion over geo- graphic allocations to focus resources where they are needed rather than spreading program budgets thinly across many projects. Although Oregon maintains regional formula splits for its capacity programs, several programs have been combined to make the overall pool large enough so that fund- ing levels are sufficient to accomplish needed projects. These types have changes that allow DOTs to deliver transportation infrastructure more effectively in their states. These cases provide a variety of useful examples to other states faced with similar questions about how to allocate resources most effectively.

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TRB's National Cooperative Highway Research Program (NCHRP) Synthesis 510: Resource Allocation of Available Funding to Programs of Work explores the decision-making process in state departments of transportation (DOTs) and how they determine resource allocation among different programs. The report documents current processes, techniques, tools, and data used to evaluate and select funding allocations around the country.

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