Federal Funding Flexibility: Use of Federal-Aid Highway Fund Transfers by State DOTs (2022)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

6 Research Approach This project used both desktop research and industry outreach. For desktop research, a comprehensive literature review of federal regulation and guidance, as well as prior studies on federal highway funding transfers, was conducted to establish an understanding of the history of the transfer authority and how it evolved to its current state. Appendix A summa- rizes the literature review. Chapter 3 draws from that literature to provide an overview of the history, presence, and future of the transfer authority based largely on review of legislation and regulations. The project also obtained funding data directly from the FHWA and performed a series of statistical analyses of the historical trends of funding transfer practices by states during the MAP-21 and FAST Act period between FFY2013 and FFY2020. After studying the “what,” the research team examined the “why” through extensive industry outreach, including an Internet survey of all 50 states and the District of Columbia, more in-depth case studies of selected states and MPOs, and three workshops with American Association of State Highway and Trans- portation Officials (AASHTO), American Public Transportation Association (APTA), and the Association of Metropolitan Planning Organizations (AMPO), respectively. The industry outreach provided direct knowledge of the considerations behind the fund transfer decisions by states and MPOs, perceived benefits and trade-offs of transfers, and barriers and opportunities in relation to using the transfer authority. The findings and conclusions documented in this report reflect the transfer practices of states and the considerations that motivate such practices as reported by states and MPOs. This research does not evaluate any particular policy choice of states with regard to fund transfer. 2.1 Data Analysis The project included a comprehensive statistical analysis of funds transfer practices based on FHWA accounting records. The sources of these data included: • FHWA Financial Management Information System (FMIS) data for FFY2013 to FFY2020, including: – Report L11A, transfer among FAHP categories by state by funding apportionment year. – Report L18A, transfer from FHWA to other agencies by state by funding apportionment year. – Report W10A, fund status by state (e.g., beginning balance, obligations, unobligated balance, and possible lapse in future years). • FHWA Highway Statistics data on funding for FFY2012 to FFY2018, including: – Table SF-1, revenue for state-administered highways. – Table LGF-1, revenue for local government-administered highways. C H A P T E R 2

Research Approach 7   The data analysis focused on how states have recently exercised their transfer authority in using FAHP funds. The research sought to identify how federal highway funds have been trans- ferred among highway program categories and to other modal administrations, in particular the FTA. It also examined the potential correlation between fund transfers and the composition of highway funding by source (FHWA, state, and local), between fund transfers and risks of rescission and lapsing, and between fund transfers and unobligated balance of the previous fiscal year. The data analysis was conducted at both the national and state level. Comparisons across states revealed differences among states in their transfer of federal highway funds that informed the subsequent industry outreach. Major findings from the data analysis can be found in Chapters 4 and 5. 2.2 Survey of State DOTs As a first step in industry outreach, the research included a survey of the DOTs of all 50 states and the District of Columbia. The survey included questions about the practices of fund transfer, transfer decision process, considerations behind the transfer decisions, benefits of transfers, and perceived risks or opportunities if transfer authority were to change in the future. The survey received responses from 38 states and the District of Columbia, as listed below: Alabama Illinois Nevada South Dakota Alaska Iowa New Hampshire Tennessee Arkansas Kansas New Jersey Texas California Kentucky North Carolina Utah Colorado Louisiana Ohio Virginia Connecticut Maryland Oklahoma Washington District of Columbia Massachusetts Oregon West Virginia Florida Michigan Pennsylvania Wisconsin Georgia Mississippi Rhode Island Wyoming Hawaii Missouri South Carolina The questionnaire used for the survey can be found in Appendix B. Appendix C provides a summary of the survey responses. 2.3 State and MPO Case Studies Based on the data analysis results and survey responses and with the input from the research team, five states and two MPOs were selected for more in-depth case studies. Following is a list of the selected states and MPOs with a brief description of their characteristics regarding fund transfer practices. 2.3.1 States The states that were selected for more in-depth case studies are as follows: • Kansas: Low utilization of authority to transfer funds among FAHP categories; average utilization of authority to transfer funds to FTA; primary focus on highways. • Oregon: Balanced focus on urban and rural transportation needs; multimodal approach that emphasizes regional travel options and transit-oriented development; MPOs play a meaningful role in directing suballocated funds; provides significant state transportation funds through the Keep Oregon Moving program; implemented a vehicle miles traveled fee program.

8 Federal Funding Flexibility: Use of Federal-Aid Highway Fund Transfers by State DOTs • Pennsylvania: Zero transfer among FAHP categories between 2013 and 2020; regular transfers to FTA; multimodal approach. • South Carolina: Average utilization of authority to transfer funds among FAHP categories; low utilization of authority to transfer funds to FTA; primary focus on highways. • Utah: High utilization of authority to transfer among FAHP categories; average utilization of authority to transfer funds to FTA; multimodal approach; MPOs play a deliberate role in funding transfer decisions; state and local funding for transportation plays a significant role, including road user charges. 2.3.2 MPOs The MPOs that were selected for more in-depth case studies are as follows: • Albany, New York (Capital District Transportation Committee): Plays a significant role in all program category transfers. • Memphis, Tennessee (Memphis Urban Area Metropolitan Planning Organization): Plays a limited role in funding transfer decisions. Interviews were conducted with chief executive officers, chief financial officers, and key policy and practice leaders of the state DOTs and MPOs. The case studies focused on understanding why transfer practices differ across the country. While each of the interviews was tailored to the history and characteristics of each case study, a sample of the questions for the case studies can be found in Appendix D. A summary of the case studies can be found in Appendix E. 2.4 Industry Group Workshops Industry group workshops were conducted with the support of AASHTO, APTA, and AMPO, respectively. Each of the workshops investigated the differences in the fund transfer authority and transfer practices among the participants. • Two AMPO workshops were conducted on February 23, 2021. The discussion focused on the role of MPOs in funds transfer decisions and implementation. • An AASHTO workshop was conducted on September 10, 2021. The discussion focused on funds transfer among FAHP categories and states’ considerations behind the transfer decisions. • An APTA workshop was conducted on December 16, 2021. The discussion focused on funds transfer from FHWA to FTA and states’ considerations behind the transfer decisions. Key takeaways from the four workshops are documented in Appendix F.