Advance Leadership Academy Highway Project in a Day “Programming and Funding” July 16, 2009 Ron Rigney, P.E. & P.L.S. Director Division of Program Management

Project Funding 1.What are the various functions of the KYTC Division of Program Management? 2.What is the KYTC Six-Year Highway Plan (SYP)? 3.What is the KYTC Statewide Transportation Improvement Plan (STIP)? 4.What are the different funding sources for KYTC projects? 5.What determines the source of project funding? 6.Who requests funding for a project that is identified within the Six-Year Highway Plan? 7.What is a TC-10? 8.What is a PR-1? 9.What is the meaning of authorization of funding? 10.What is the meaning of obligation of funding? 11.What is the meaning of project budget amount? 12.What is the meaning of project encumbrances? 13.What is the meaning of project expenditures? 14.What is the meaning of remaining available budget? 15.When does project funding actually become available to cover project expenditures? 16.If a project is identified within the SYP, why does the project manager have to request project funding? 17.Why does the project manager have to provide projected monthly expenditures of the requested funds? 18.What tools are available for project managers to use in preparing projected monthly project expenditures? 19.Is it better to under estimate or better to over estimate the projected monthly project expenditures? 20.If the requested funding is approved and setup in eMARS, what is the purpose of the Cash Management Process? 21.Who uses the information from the Cash Management Process? 22.At the end of the day, does it really matter if the Project Manager monitors the project funding?

The Division of Program Management is responsible for preparing the programming documents for authorization of state and federal funding for the Preliminary Engineering (PE) and Environmental, Design, Right-of-Way, Utility, and Construction phases of KYTC projects.

KYTC transportation roadway projects are funded through different programs within the Cabinet, and the type of funding used depends upon the program in which the project activity is conducted.

As an example, the Department of Governmental Relations, Office of Rural and Secondary Roads allocates state funding for the following programs: The Rural Secondary Program allocates by formula approximately $110 million per year of funding to the 120 Kentucky counties. The County Road Aid Co-op Program allocates by formula approximately $92 million per year to the 120 Kentucky counties. The Municipal Aid Co-op Program allocates by formula approximately $38 million per year to the 421 incorporated cities and 46 unincorporated urban places throughout Kentucky.

In addition, approximately $280 million per year of state funding is provided through the Division of Maintenance and the Division of Traffic Operations for normal maintenance and operations of existing roadways throughout the entire Commonwealth of Kentucky.

In addition to these KYTC programs, KYTC has projects funded through the state road fund (FD04) and through the federal transportation funding (FD52) programs. The projects funded through the FD04 and FD52 programs must come through the Six-Year Highway Plan (SYP) process approved by the Kentucky General Assembly. The projected fiscal year amount of funding available for the FD04 program is approximately $200 million per year, and approximately $650 million per year through the FD52 federal program.

The 2009 General Assembly approved the sale of $400 million of state bonds and the sale of $231 million of GARVEE bonds. The 2009 state bonds will be used to fund KYTC roadway projects in the 2008 Highway Plan as identified by the 2009 General Assembly. The $231 million of GARVEE bonds will be used for phases of the Louisville Ohio River Bridges project in the 2008 Highway Plan as approved by the 2009 General Assembly.

Recovery Act Funding $421 Million Statewide ($368 Million) Transportation Enhancement (TE) ($12.6 Million) MPO Dedicated ($40.6 Million) –Cincinnati - $8,761,860 –Evansville - $831,184 –Lexington/Fayette - $7,845,004 –Louisville - $23,149,098

Recovery Act Projects Statewide projects – Identified within 2009 Six-Year Highway Plan by the General Assembly TE projects – 2008 application process MPO dedicated projects – Projects selected within the MPOs by local committee members

Recovery Act Requirements ARRA – Important Dates February 17, 2009 – ARRA enacted. March 3, 2009 – 120 days for 50% obligation requirements begin. June 30, 2009 – Before this date 50% of the apportioned funds must be obligated ($148 million). Any portion that is not, will be redistributed to other states. Cut-off date is June 29, 2009 at 11:59 PM. March 2, One year after apportionment, by March 1, 2010 at 11:59 PM, all Recovery Act funding must be obligated. September 30, 2010 – Recovery Act funding released from one project can be obligated on other projects. September 30, 2015 – Obligated balances are available for reimbursement of project expenditures. Any remaining Recovery Act funding balances will be withdrawn and will not be available for reimbursements. Date PR-1 is signed – Reporting requirements begin and continue until project is closed in FMIS. By 7 th day of each month – LPA to submit FHWA 1589 and FHWA 1585 forms to KYTC.

Kentucky Highway Plan

KYTC submits to the General Assembly in February of even number years a “Recommended Highway Plan” containing a listing of proposed projects including the scheduled project phases, proposed type of funding, scheduled fiscal year, and the estimated cost of the corresponding project phase.

The General Assembly reviews the projects identified in the Recommended SYP, and they may make revisions to projects, they may add projects, and they may even remove projects before they approve the SYP. Approval of the SYP normally is in April of even number years and also depends upon approval of the state budget by the General Assembly.

The Enacted SYP is the state document that by law as outlined within KRS, the Transportation Cabinet can proceed with the identified project phases scheduled within the next biennium depending upon the availability of identified funding for each project.

Federal-Aid Highway Program Funding

The federal-aid highway program funding is in accordance with the current federal transportation act, “Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU).” The federal-aid highway program is funded through the Highway Trust Fund. The revenues of the Highway Trust Fund is from taxes on motor fuels and truck related user taxes.

Legislative approval by Congress for SAFETEA-LU was signed into law by President Bush on August 10, Normally, a transportation act covers a period of six years, but SAFETEA-LU only covers five years – FY 2005 through FY With SAFETEA-LU scheduled to expire at the end of FY 2009 (October 1, 2009), preliminary work has begun on the next transportation act.

The federal-aid highway program is not a grant program. The federal-aid highway program is a reimbursement program, which means project expenditures must be paid first with state funds, and then the state sends requests to FHWA for reimbursement of eligible costs.

KYTC submits a weekly federal billing to FHWA requesting reimbursement of federal funds, and the turn-around time to receive reimbursement normally runs 6 to 10 days.

FHWA has notified the states that the Highway Trust Fund is reaching a point that they may not have sufficient available federal-aid funding to reimburse states their requested federal-aid funding.

What effects may this have on the Transportation Cabinet? The timeline to finance the federal-aid projects with state funding may increase. The delay in receiving federal-aid funding reimbursements may further delay the start of state funded projects. Depending upon the duration of Congress delaying legislative action addressing the shortfall in the Highway Trust Fund, the start of new federal-aid funded projects may be delayed.

In tracking the Federal-Aid Highway Program funding, we normally break down the federal-aid into the following three (3) general types of funds: Formula Funds Non-Formula Funds Discretionary Funds

“Formula Funds” - the distribution of federal funds using a formula provided in law and the distribution of funds is called apportionments. The “Formula Funds” apportionments are broken down into various federal funding categories, such as the following core programs: Interstate Maintenance (IM), National Highway (NH), Bridge (BR), Congestion Mitigation (CM), Safety (SAF), and Surface Transportation (STP). The Bridge, Safety, and Surface Transportation core programs are broken down into additional various funding categories, and each category has different eligibility requirements.

“Non-Formula Funds” - the distribution of federal funds through allocations as earmarked within the Transportation Act as defined by Congress (High Priority Projects), Equity Bonus, and Appalachian Development Highway System (APD) funding. The eligibility of “Non-Formula Funds” is determined by the type of funds. The High Priority Projects (HPP) project funding is only eligible for the specific projects as defined by Congress. The Appalachian Development Highway System (APD) funding is only eligible for projects associated with the completion of the APD system in Kentucky, which is limited to the US 460 coordinator in Pike County and US 119 in Letcher County. The Equity Bonus funding has the flexibility that it can be used on any federal project, but we use the Equity Bonus to cover projects that would normally fall under the STP funded projects.

Discretionary Funds - yearly allocations of federal funds through the various federal discretionary programs, such as Interstate Maintenance, Ferry Boats, Public Lands Highways, Scenic Byways, Transportation and Community and System Preservation Program. Projects receiving yearly federal Discretionary funding is normally announced by Congress, and the discretionary funding is only eligible for the specified project as defined by Congress.

FEDERAL & STATE HIGHWAY FUNDING LEVELS AVAILABLE FOR OBLIGATION FROM 2009 THRU 2014 (As estimated by the Kentucky Transportation Cabinet)

Federal-aid Highway Program “Funding Terms”

“Authorization Act” is the Congressional legislation that establishes or continues Federal programs or agencies and establishes an upper limit on the amount of funds for the program(s). The current Transportation Act, SAFETEA-LU, is for the federal-aid highway program. “Appropriations Act” is the Congressional legislation that makes federal funds available for expenditure with specific limitations as to the amount, purpose, and duration. For the federal-aid highway program, the appropriations act specifies amounts of funds that Congress will make available for the fiscal year to liquate obligations. “Apportionments” distribution of federal funds using a formula provided in law and the distribution of funds is called apportionments. “Allocations” are the distribution of federal funds through allocations as earmarked within the Transportation Act as defined by Congress (High Priority Projects), Equity Bonus, Appalachian Development Highway System (APD), and yearly Discretionary funding allocations earmarked by Congress or FHWA. “Project Agreement” is the federal-aid highway programming document (PR-1) outlining the location of the project, the phase of the project, the project scope, type of work, type and amount of federal funds, and state matching funds, which is signed by KYTC and FHWA. The FHWA approval date is the official date that state expenditures are eligible for reimbursement with federal funds.

“Obligation” is the term used for the federal government’s legal commitment (promise) to reimburse the state for the federal share of a project’s eligible costs. “Obligation Authority” is the total amount of funds that may be obligated in a fiscal year. “Obligation Limitation” is a restriction or ceiling on the amount of federal funds that may be obligated during a specified time period. The obligation authority or obligation limitation does not change the distribution of apportionments or allocations of federal funds; it controls the amount or rate at which the funds may be obligated. In order to obligate federal-aid funding, you must have available the corresponding amount of funding apportionments/allocations and you must have available the corresponding amount of obligation authority. Normally, each year the total federal apportionments and allocations are greater than the obligation authority. At the end of the federal fiscal year, the remaining apportionment/allocation amounts are carried forward into the next fiscal year. However, yearly obligation authority made available for the “Formula Funds” must be obligated during the fiscal year, or the state loses the remaining available obligation authority associated with the “Formula Funds.” The obligation authority for the “Non-Formula” and “Discretionary” funding can be carried forward into the next fiscal year.

“Rescissions” are when unused balances of previous apportionments or allocations are cancelled through legislative actions of Congress. The designated rescission amount reduces available funding apportionments or available funding allocations, and normally does not reduce obligation authority.

“End of Year Redistribution of Additional Obligation Authority” In late July or early August of each year, FHWA submits an official notice to each state requesting the state to prepare a request for “End of Year Redistribution of Additional Obligation Authority” for federal-aid highway “Formula Funding.” However, before you can request additional obligation authority, first you must prove that you can use the current remaining obligation authority. Second you must prove that you have projects available so you can obligate the federal funds before the end of the federal fiscal year (October 1). And, third you must have available funding apportionments within the category of “Formula Funds” that you want to obligate, if provided additional obligation authority through the redistribution of additional obligation authority process.

End of Fiscal Year Redistribution of Obligation Authority FY 2002 thru FY 2008

Often times you will hear us refer to programming the federal funds as “Advance Construction (AC).” The federal “Advance Construction” process provides states the ability to request and receive approval from FHWA to conduct designated project activities in advance of having to use current apportionments and obligation authority of federal-aid highway funds, and that expenditures associated with the designated project activities will be eligible for federal reimbursement when the advance construction amount is converted using available apportionment and obligation authority of federal-aid funds. “Advance Construction” is like using the state’s federal-aid funding credit card, and project expenditures will be paid with state funds and reimbursement of expenditures will not be requested until federal-aid funding apportionments and obligation authority is available to convert the advance construction amount.

Kentucky Statewide Transportation Improvement Program (STIP) & Federal Discretionary Funding Programs

As noted, the Enacted SYP is the state document required by KRS, however, federal regulations require that KYTC prepare and submit to FHWA and FTA a Statewide Transportation Improvement Program (STIP).

The STIP identifies the transportation programs and projects within Kentucky that will utilize federal funding. The STIP is prepared in the summer of even number years and includes highway, public transit, aviation, transportation enhancement, Safe Routes to School and recreational trail projects. Each of the programs contains a listing of scheduled projects and scheduled costs for the next four Federal Fiscal Years. The scheduled costs of the projects listed in the STIP must be fiscally constrained.

The Division of Program Management is also responsible for preparing applications and documents for FHWA federal discretionary funding programs.

The Division of Program Management is responsible for monitoring the approved STIP and verifying that funding requests for proposed projects are identified within the STIP.

In addition to the STIP requirements, federal funded projects located within the nine Metropolitan Planning Organizations (MPO) areas must be identified within their MPO Transportation Improvement Program (TIP) before project funding can be authorized. If a project is not identified within the MPO TIP, KYTC must request the MPO to amend their TIP to include the project, and this process may take several months to complete. KIPDA Jefferson, Bullitt, Oldham Counties, KY Clark, Floyd Counties, IN OKI Boone, Kenton, Campbell Counties, KY Butler, Clermont, Hamilton, Warren Counties, OH Deerborn County, IN FIVCO Boyd and Greenup Counties, KY EUTS Henderson County, KY GRADD Daviess County, KY BRADD Warren County, KY LTADD Hardin County, KY CMCRPC Christian County, KY LFUCG Fayette and Jessamine Counties, KY MPO Areas

KYTC “Cash Management Balance Process” & Processing Project Funding Requests

The 2000 General Assembly changed the funding authorization process to allow the Cabinet to authorize funding based on projected expenditures. Going from an authorization base to an expenditure base required the Cabinet to develop a “Cash Management Balance” process and model. The Cash Management Balance process and model is used to determine the bottom line cash balance to cover current fixed cost items, current expenditures of currently authorized projects, current modifications to existing projects, and proposed new funding requests. S T A T E “ F I X E D C O S T ” B U D G E T I T E M S S T A T E R O A D F U N D R E V E N U E $ $ $ $ 6 Y P “ S P ” P R O J E C T S F O R F E D E R A L P R O J E C T S S T A T E M A T C H I N G F U N D S F E D E R A L H I G H W A Y T R U S T F U N D E R V E N U E S T O K Y T C $ $ $ $ $ F H H E S A P D I M S T P N H T E C M A Q B R I D G E K Y D H P P R R S R R P 6YP NON 6YR BUD GET FEDERAL PROGRAMS S L O, S L X, S N K STATE FUNDS “FIXED COST” ITEMS: * DEBT SERVICE * MAINTENANCE * RESURFACING * VEHICLE REGULATION * HIGHWAY OPERATION * CAPITAL CONSTRUCTION * JUDGEMENTS & OTHER * SECRETARY’S CONTINGENCY * STATE POLICE & OTHER AGENCIES * GENERAL ADMIN. & SUPPORT * REVENUE SHARING

KYTC project managers are responsible for submittal of funding requests for their projects. All funding requests for projects identified within the Enacted SYP and STIP are submitted to the Division of Program Management.

The Division of Program Management reviews the request for funding and determines: 1)If the request is for the initial funding to start a project phase, the project phase and scheduled funding must be identified within the biennium of the current SYP and if federal funds it must be identified within the STIP. 2)If the request is for additional funding for a previously authorized funded phase, a detailed explanation of the additional funding is required for submittal along with the unsigned TC10 for approval signatures. 3)An authorized TC10 with approval signatures from the Secretary of Transportation and State Highway Engineer are required for all state and federal funded project phases.

The Division of Program Management prepares the project authorization document (TC10) and prints the unsigned TC10 to route for approval signatures.

In addition to the TC10, the projected expenditures and required cash flow for each funding request is entered into the KYTC “Cash Management Balance” model to determine if cash is available to cover the projected expenditures.

The Division of Program Management routes the unsigned TC10 and “Cash Management Balance” sheet through the Preauthorization Review Team (Pre-ART) Committee for their review and recommendation to the Authorization Review Team (ART) Committee for funding approval signatures.

Cash Management Model OR

KYTC/obfm Projected Net Road Fund Cash Balance* *Based on January 2009 model

Upon receiving the approved signed TC10, if the TC10 is for federal funding, the Division of Program Management then begins the process to prepare the federal funding programming document (PR1) to be submitted to FHWA.

Please keep in mind that the federal PR1 document approved and signed by FHWA serves as the project agreement between KYTC and FHWA that the corresponding project phase activities are eligible for reimbursement of federal funds in accordance with federal funding regulations.

The FHWA approval date is the beginning date that project expenditures are eligible for reimbursement, and any project expenditures occurring prior to the approval date on the PR1 are not eligible for reimbursement of federal funds.

Oracle Six-Year Highway Plan Preconstruction Status System

In 1996 an Oracle relational database system was developed for the Division of Program Management by the KYTC Office of Informational Technology. The Oracle Six-Year Highway Plan Preconstruction Status System, which is often referred to as the Precon Status System or the Oracle SYP system, is a real time relational database system that numerous KYTC employees within the District Offices and Central Office Divisions enter data for SYP projects.

The Division of Program Management has developed reports and electronic processes to assist the project manager and management staff to track the current status of projects and current status of funding for each phase of the SYP projects. Monthly Status Report Project Managers Toolbox on the KYTC DOT Intranet website on the Division of Program Management’s homepage

KEY TO INTERPRETING INFORMATION PRESENTED FY FY 2012 STATUS REPORT

Note: The Federal Funding Program is a reimbursement program. Thus, State Funds are used first to cover the costs, and then KYTC sends weekly invoices to FHWA for reimbursement of the federal share of the costs. The normal turn around time is approximately a 7 to ten days. KEY TO INTERPRETING INFORMATION PRESENTED FY FY 2012 STATUS REPORT

Overview of KYTC “Project Managers Toolbox”

1.Go to KYTC Internet home page 2.In the address bar highlight the address and type DOT 3.You will access the KYTC IntraNet home page, and under the “Resources” block select “Program Management” 4.This will take you to the Division of Program Management home page, and then select “Toolbox” 5.This will take you to the “Project Managers Toolbox” application The following instructions are for accessing the KYTC Project Managers Toolbox:

The following applications are available in the Project Managers Toolbox: SYP Project Information Center - Access budget information by entering the PCN number, the TC-10 number, or the SYP Item number Non-SYP Project Information Center - Access budget information by entering the TC-10 number Pending, Pending - Access a list of funding requests that are waiting on TC-10s to be prepared Pending - Access a list of funding requests where the TC-10s have been prepared but not approved Active SYP Projects - Access information by selecting a county. A county map appears that identifies current active SYP projects within the corresponding county. Click on a yellow, orange, or blue box to access the current status information for the project and to “Zoom To” the project location on aerial photos Active Construction - Access a listing of active construction projects by county, and click on the PCN number to access the current status of each project TC-10 Viewer (PAS) - Access an electronic copy of a TC-10 by several means, including TC-10 number, SYP item number, county, and funding program code Unscheduled Project Info - Access the Division of Planning’s “Unscheduled Projects Information” data system by entering the KYTC district, county, project description, route number, and/or SYP item number Select SYP Project Information - Access awarded SYP projects or initial R/W phase funding authorizations Miscellaneous - Several informational type items are available for downloading electronic files or printing hard copies

“Cookbook” Login Process to Access eMARS to Check Available Budget & Current Expenditures

1.Log into eMARS: User IDs can be found on the Vender/Customer (VCUST) table within eMARS. To have a password reset, or call or Use address above to go to login screen. Or go to Kentucky Finance & Administration Cabinet homepage ( Select eMARS in See Also… box on right side of screen. Under Applications, select eMARS (Financial Production).

2. Click on Search on the left side of the screen:

3. Select Page Search from list:

4. Type “BQ39*” in Page Code field. Hit “Enter” key or click on “Browse”:

5. Click on Funding Priority (BQ39LV1):

THANK YOU.