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Section 4: Funding for the Metropolitan Transportation Planning Process

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Authorizations

FHWA metropolitan planning funds, also known as Public Law (PL) funds, are a one-percent set-aside from certain funds authorized in 23 USC. The PL funds are to be used to support activities undertaken by the MPOs for developing long-range metropolitan transportation plans (MTP), transportation improvement programs (TIP), and the planning process in general as described in 23 USC §134. Examples of activities include, but are not limited to inventories of existing routes to:

  • determine their physical condition and capacity
  • determine types and volumes of vehicles using these routes
  • predict the level and location of future population, employment and economic growth
  • convert this information into the need to improve existing roads or to build new routes to meet the future demands.

“Authorizations” are made by multi-year surface transportation acts that authorize the U.S. Secretary of Transportation, acting through the FHWA and FTA, to obligate funding authorized by Congress. Authorized funds are apportioned to the states based on a ratio of urbanized population in individual states to the total nationwide urbanized-area population. Each state is required to allocate these funds to MPOs in accordance with a formula developed by the state and concurred by FHWA and FTA. Current authorizations are made under TEA-21. TEA-21 terminates on September 30, 2003.

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Budget and Contract Authority

Most federal programs require two steps to implement budget authority. The first is passage by Congress of an authorization act that sets up the upper limit of program funding. The second is an appropriations act that usually sets the amount that can be used for the program. “Contract authority” is a form of budget authority where the sums authorized in the federal-aid highway acts are available for obligation without an appropriations action.

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Deductions and Apportionments

Before federal authorizations are released (distributed to the states), deductions are made. In accordance with 23 USC 104(f), a deduction is made to finance the metropolitan transportation planning activities as mandated by 23 USC §134. The deduction is one percent of the National Highway System (NHS), Interstate Maintenance (IM), Surface Transportation Program (STP), Congestion Mitigation and Air Quality (CMAQ) and Bridge Replacement and Repair (BRR) programs of work. This deduction becomes the FHWA metropolitan planning funds, PL funds.

The FHWA PL funds are distributed to each state by apportionment formula. After the deductions or ”set-asides” are made, the federal agencies apportion the remaining sum authorized for the various programs among the states. This apportionment is based on formulas and procedures prescribed by law. Examples of formula criteria include Interstate mileage, vehicle miles of travel, urbanized population, etc.

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Obligations and Limitations

An “obligation” is a commitment of the federal government to pay, through reimbursement to the states, the federal share of a project’s eligible cost. In the case of planning funds, this commitment is made when PL funds are authorized.

U.S. Congress in their apportionment bill routinely places a “limitation” on the apportionments. This “limitation” or “ceiling” is also known as obligation authority. The obligation authority is normally for a specific fiscal year. Unobligated balances of state apportionments at the end of any fiscal year are carried over to the next year. Unused obligation authority does not carry over to the next fiscal year.

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Reimbursable Program

The federal-aid highway program operates as a “reimbursable program.” FHWA only reimburses states for costs actually incurred. Once a state has obligated or committed some part of its apportionment for a project or planning effort, it must provide the front-end financing to start the project. Then the state will receive reimbursement for the federal share when the project is completed.

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Federal Funds Distribution and Eligibility

Federal PL funds are apportioned to the states based on a ratio of urbanized population in individual states to the total nationwide urbanized area population. PL funds may be used to support transportation planning in accordance with 23 USC §134.

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TxDOT Funds Distribution Methods and Matching

PL funds are the one-percent funds authorized under 23 USC §104(f) to carry out the provisions of 23 USC §134(a). The following subsection describes the TxDOT TPP allocation and administration process for these funds.

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FHWA Metropolitan Planning Funds Allocation

Upon apportionment of the FHWA metropolitan planning funds to the state, that amount is distributed or allocated to the MPOs. TxDOT Commission Minute Order 106921 delegates authority for allocation of these funds to the Executive Director. TPP is responsible for calculating allocations.

The allocation formula was developed in cooperation with the MPOs and has been approved by the Texas Transportation Commission, FHWA, and FTA. The formula is based on the urbanized area population of the individual MPO, with special consideration given to nonattainment areas and the Transportation Management Areas (TMAs) because of their additional responsibilities. The following narrative describes fund allocations:

  • Two million dollars of the total apportionment is distributed among the nonattainment and TMAs
    • One million dollars is distributed to the nonattainment areas. Each receives a minimum of $50,000 and the remaining amount is distributed based on their population relative to the total nonattainment area population.
    • One million dollars is distributed to the TMAs. Each receives a minimum of $50,000 and the remaining amount is distributed based on population relative to the total TMA population.
  • The remaining apportionment (total minus $2 million) is allocated to all the MPOs. Each MPO receives a minimum of $50,000 with the remaining distributed by population.
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Co-mingling of FHWA and FTA Funds

ISTEA changed the previous funding process of direct grants to MPOs by allowing FTA Section 5303 funds (formerly Section 8) to pass through TxDOT. Since two federal funding sources were to pass through TxDOT to the same recipient, a systematic approach to manage these funds was developed. The concept of “co-mingling” was the result of this effort. FHWA and FTA funds are treated as one source and referred to as Transportation Planning Funds (TPF).

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General Transportation Planning Funds

The General Transportation Planning Fund (GTPF) is a sub-category of FHWA PL funds. When an individual MPO’s excess unobligated balance and new allocation exceed the maximum of two years’ allocation, the excess balance is transferred to the GTPF. These funds are used for special planning studies selected by their uniqueness and potential benefit to the MPOs and the statewide transportation planning process. TxDOT Commission Minute Order 106921 delegates authority for allocating these funds to the Executive Director. TPP is responsible for recommending allocations.

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Matching of Federal Funds Used for Planning Purposes

The federal transportation planning funds require a 20 percent match. TxDOT, through its MPO agreement, has agreed to provide an in-kind match for both FHWA planning funds and FTA Section 5303 planning funds. The match comes from the district expenditures for monitoring and assisting the MPOs in their planning activities as well as TPP staff time and expenditures. The match is applied on a statewide basis and not for individual MPOs. If Congestion Mitigation and Air Quality (CMAQ) funds or Surface Transportation Program (STP) Metropolitan Mobility/Rehabilitation funds are used by an MPO for planning purposes, the 20 percent matching funds are not included in the state match. The match for CMAQ and STP funds is a local requirement.

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Authorization Amount

Upon approval of the MPO’s Unified Planning Work Program (UPWP) and budget, when FHWA and FTA funds are available, TPP issues a work order which details the authorization amount and authorizes the MPO to begin work. The “authorization” is the actual amount the MPO is allowed to expend in the fiscal year. Later determination of unexpended amounts called “carryovers” require an amendment of the work order.

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