If you're considering using Federal-aid Highway Program funds on a local public
agency or LPA project
you'll need to understand some key points about this type of funding and
how you can use it.
This overview module will help you attain an awareness about Federal-aid
funding itself and some important criteria that you will need to meet in order
to use the money on your project.
Let's begin with a brief explanation of the source of the Federal-aid funding and
how these funds are provided to and administered by the states.
Congress established the Highway Trust Fund in 1956 to support
building the interstate system as one of the earliest major initiatives of
the Federal-aid Highway Program.
Today this fund continues to provide a steady source of surface transportation
financing for the Federal-aid program.
User fees such as gasoline taxes go into the Highway Trust Fund
to finance surface transportation system projects
primarily for highways and bridges.
Federal aid funds are generally distributed to states using formulas
specified in Federal law
although the money is not provided upfront.
The Federal law provides a promise of future reimbursement.
The funds distribution enables the State Department of Transportation or State DOT
to enter into agreements with the Federal Highway Administration or
FHWA that will ultimately be reimbursed from Highway Trust Fund
receipts.
The funds distribution is provided to each state within funding categories for
programs that focus on key areas such as Surface Transportation Program and the
Highway Safety Improvement Program.
State DOT's are the designated recipients or grantees for the funds and
LPA's are sub recipients or sub grantees, meaning LPA's receive funds via the
State DOT
State DOT's oversee decisions regarding the selection of projects
for funding and are responsible for ensuring Federal requirements are met,
Including those for funds eligibility.
Two important characteristics of Federal-aid are that it is both a reimbursable and
a matching program.
Reimbursable means that FHWA pays grantees and sub recipients
the actual eligible expenses incurred under progress payment basis.
Money is not provided in advance so a DOT or LPA must initially
finance the project.
The states and the LPA's incur project cost and are reimbursed with
Highway Trust Fund receipts.
A matching program means that the federal funds are matched with state
or local resources to cover the total project cost.
Federal funds typically provide 80% of the project's eligible cost
with the remaining 20% provided by state or local agency
funding
Now that you have a general awareness of where Federal-aid funds come from and how
they make their way to local projects.
Let's introduce a few of the important criteria for using the funds
The first criterion to know is that most funds must be used on eligible highways.
Often termed "Federal-aid Highways"
An eligible highway must have a certain functional classification
which may not include all LPA roads.
Each state DOT maintains maps showing highway functional classifications.
and can help you determine whether your project is eligible for Federal-aid
highway funding.
There are some exceptions that permits certain funding programs to be used for
projects on other public roads.
You should contact your State DOT to get more information on Federal-aid
funding programs that lend themselves to use on LPA projects.
A second important criterion is that Federal-aid funding is available for
capital improvement
and planned upkeep of highway assets.
Federal-aid funding may not be used for routine maintenance activities such as
pothole patching, mowing,
snow removal or graffiti removal.
Another criterion is that Federal-aid funds are provided to states within
specific funding programs and each one has its own eligibility criteria for
allowable work.
For Example
Surface Transportation Program funds
must be used for eligible surface transportation project activities
and Highway Safety Improvement Program funds must be used for certain safety projects.
The Highway Safety Improvement Program is an example of funding that can be
used for eligible projects on any public road,
even if not on a Federal-aid highway.
Another major criterion to note is your project must be included in the
Statewide Transportation Improvement Program or STIP
to be eligible for Federal-aid funds.
The STIP is the State DOT's multi year list of selected projects resulting from
collaboration with urban planning agencies,
known as metropolitan planning organizations
and with LPA's.
Being aware of the nature of federal aid funds and the criteria for using them
is a good starting point for pursuing federal funding for your LPA project
This video is meant to raise your awareness of funding basics and important
eligibility criteria.
We learned previously in this video that Federal-aid can only be used on
eligible highways
and that the Federal-aid Highway Program is both reimbursable and a matching
program.
The Federal-aid Highway Program is for capital improvement and significant
upkeep
and not for routine maintenance.
We also learned that there are unique eligibility requirements for each
funding program or category
and that your project must be in your State DOT's STIP to be eligible.
More in-depth information about Federal-aid Highway Program funding
can be obtained from the module's companion resources, weblinks and your State DOT.