Roadmap to Reauthorization

Reducing local match requirements has long been a topic in the MPO community and continues to be a priority. MPOs are typically required to provide a local match of 20% for federal transportation funds used both in agency operations and in project implementation. These local funds are collected from a variety of sources, including local government budgets, state government contributions, membership dues, federal grants, public-private partnerships (PPPs), local sales tax initiatives, transportation user fees, grants from non-profit organizations, impact fees, and other local funding sources. While the funding structure of MPOs is diverse and varies based on the region and local government arrangements, the vast majority receive their match from local governments.

Local governments may struggle to provide the required local match to federal funds due to budgetary constraints, infrastructure backlogs, economic disparities, unpredictable revenue streams, competing priorities, political challenges, infrastructure ownership and responsibility issues, and varying matching percentages. Limited financial resources, competing priorities, and the complexity of federal funding requirements pose significant challenges for local governments, making it difficult for them to allocate the necessary funds as a local match for federal transportation projects. The substantial addition of new discretionary grants in the Infrastructure Investment and Jobs Act (IIJA) and their match requirements have further increased the challenge faced by MPOs and local governments in matching multiple grants. These difficulties can impede their ability to access critical transportation funding and hinder the implementation of essential infrastructure projects in their communities.

These struggles were exacerbated during the Covid-19 pandemic, further stressing and diverting limited local funds; many communities have yet to recover financially. By reducing the local match MPOs and their regions could benefit in several ways.

Learn more in the full Policy Roadmap.

Through the IIJA, roughly $150B of discretionary funds were made available to the transportation community. This historic amount of competitive funding, while welcomed, has sparked the conversation around whether certain discretionary programs would be better utilized as formula funding. Eliminating competition for funds that improve transportation systems and services is all in our best interest. A shift of discretionary funds to formula funds under the next federal transportation bill could offer potential benefits to MPOs with limited resources that would otherwise be dependent upon competing for grants.

While not all discretionary programs may be suitable for this shift, AMPO is working with its leadership to identify which, if any, may be a good fit while also supporting those programs that should remain discretionary. This shift from discretionary funds to formula funds could offer significant advantages to MPOs with limited resources. It ensures equitable funding allocation, stability in long-term planning, reduced administrative burden, enhanced project flexibility, improved project pipelines, capacity building, collaborative opportunities, and a focus on addressing transportation equity. This change could result in a more efficient, coordinated, and inclusive approach to transportation planning and development across various regions.

Learn more in the full Policy Roadmap.

Currently, federal law, as outlined in 23 USC 118, focuses on obligation authority, providing that funds apportioned or allocated in a State shall remain available for obligation for a period of three years after the last day of the fiscal year for which the funds are authorized. The law does not explicitly mandate states to extend obligation authority beyond the current federal fiscal year, leading to varied interpretations and practices among states. While contract authority allows for commitments in anticipation of future funding, the specific provisions of 23 USC 118 govern how obligation authority is managed. As a result, some states may be restricting MPOs from accessing suballocated transportation funds beyond the current fiscal year. Many MPOs have expressed a desire for consistent access to the full amount of funds as intended over the life of the federal transportation bill, as this would provide greater flexibility in project implementation and planning. The potential benefits of a more uniform approach to carryover obligation authority would be significant.

MPOs would be guaranteed the ability to carry over funds to subsequent years, enabling the completion of long-term and large-scale transportation projects without the constraints of an annual funding cycle. This change would foster more efficient use of federal funds and reduce the potential for rushed project implementation to avoid losing funding. It is essential to strike a balance to avoid excessive accumulation of unspent funds, which could hinder the timely delivery of transportation projects or lead to the misallocation of resources. Proper guidelines and oversight mechanisms would be necessary to ensure responsible and effective use of carryover funds.

Overall, the shift to allow MPOs in all states to carry over federal funds for multiple years (i.e., 3 years plus year of apportionment) could result in more strategic, efficient, and impactful transportation planning and implementation, benefiting both MPOs and the communities they serve.

Learn more in the full Policy Roadmap and read the full Obligation and Carryover Survey Report below.

Currently, federal transportation funds are administered by state Departments of Transportation (DOTs), which then review plans for federal compliance prior to being submitted to the Federal Highway Administration. This prevents MPOs from dealing directly with federal agencies and delays the approval process. The additional layer can slow the timeline for getting federal funds into communities. Many mid- to large-size MPOs have expressed the desire to allow MPOs to opt into a voluntary direct recipient status, bypassing the state level project administration process through reauthorization.

Despite the many benefits, it is important to note that this hypothetical shift has been identified as a voluntary option, not a requirement for all MPOs. Becoming a direct recipient of federal funds comes with its own set of burdens and challenges. Managing federal funds increases administrative overhead, including financial management, auditing, and compliance monitoring. MPOs may need to invest in additional staff, technology, and expertise to effectively handle these administrative tasks. In cases where MPOs sub-allocate federal funds to local governments or other entities, additional responsibilities arise in overseeing subrecipient compliance and project execution, which can be resource intensive.

While becoming direct recipients of federal funds would offer mid- to large-size MPOs more control and autonomy in transportation planning and project selection, it would also entail significant administrative, financial, and regulatory burdens. Having the choice to opt into becoming a direct recipient is imperative in potential legislation.

Learn more in the full Policy Roadmap.