Project Development Academy PDA Project Funding September 19

Project Development Academy (PDA) “Project Funding” September 19, 2007 Ron Rigney, P. E. & P. L. S. Director Division of Program Management

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.

Programming documents are required for authorization of the initial funding to begin the corresponding phase activities and the modifications to previously authorized funding. Modifications add or reduce funds to correspond with the projected amount of required funding to complete the remaining work of the corresponding project phase.

The majority of the funding for transportation projects is either state funding or federal funding. However, a project may include both state and federal funding and may even include partial funding from a local city or county agency.

Various transportation funding programs are available for transportation projects within KYTC. Each of these funding programs has state/federal regulations which must be followed throughout the entire project process. The regulations outline the type of project activities that are eligible for the designated funding and the required processes that must be followed throughout the entire project.

Funding for KYTC projects include transportation projects funded through the Rural Secondary Program with funds allocated to each of the 120 Kentucky counties for construction, reconstruction, and maintenance of secondary and rural roads in each county. The program is funded by 22. 2 percent of the motor fuels taxes and distributed by formula to each of the 120 counties. The projected annual amount of funding through the Rural Secondary Program is approximately $110 million per year.

Also, funding for KYTC projects include transportation projects funded through the County Road Aid Co-op Program allocated to each of the 120 Kentucky counties for construction, reconstruction, and maintenance of secondary and rural roads in each county. The program is funded by 18. 3 percent of the motor fuels taxes and distributed by formula to each of the 120 counties, but the funding is expended by the fiscal court in each county. The projected amount of funding through the County Road Aid Co-op Program is approximately $92 million per year.

In addition, funding for KYTC projects include transportation projects funded through the Municipal Aid Co-op Program for construction, reconstruction, and maintenance of urban roads and streets within 421 incorporated cities and 46 unincorporated urban places throughout Kentucky. The funding is 7. 7 percent of the motor fuels taxes and is distributed by formula and expended by the fiscal court within each of the urban areas. The projected amount of funding through the Municipal Aid Co-op Program is approximately $38 million per year.

The Rural Secondary Program, the County Road Aid Co-op Program and the Municipal Aid Co-op Program are administered through the Department of Governmental Relations, Office of Rural and Secondary Roads.

Also, state funding provided through the Division of Maintenance and the Division of Traffic Operations are provided for normal maintenance and operations of existing roadways throughout the entire Commonwealth of Kentucky. The projects include bridge maintenance, pavement resurfacing, guardrail, slide repairs, drainage, pavement markers, pavement striping, roadway signing and lighting, and other traffic operations projects. The projected amount of funding through the maintenance and operations programs is approximately $280 million per year.

In addition to these KYTC programs, KYTC has projects funded through the state road fund (FD 04) and through the federal transportation funding (FD 52) programs. The projects funded through the FD 04 and FD 52 programs must come through the Six-Year Highway Plan (SYP) process and must be approved by the Kentucky General Assembly. Each fiscal year, the projected amount of funding available for the FD 04 program is approximately $200 million and approximately $600 million through the FD 52 federal program.

In addition to the FD 04 and FD 52 programs, the 2005 General Assembly approved the sale of $300 million in state bonds and $150 million in federal GARVEE bonds.

The 2006 General Assembly approved the sale of $350 million in state bonds and an additional $290 million in federal GARVEE bonds.

The combined bond programs provided $650 million in state bonds and $440 million in GARVEE bonds for funding construction phases of KYTC roadway projects.

Kentucky Six-Year Highway Plan (SYP)

KYTC projects that are funded through the state road fund (FD 04) program, through the federal transportation funding (FD 52) program, through the 2005 and 2006 state bond programs, and through the 2005 and 2006 GARVEE bond programs must come through an “Enacted Six-Year Highway Plan (SYP)” approved by the Kentucky General Assembly.

KYTC submits to the General Assembly in February of even number years a “Recommended Six-Year 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 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 Enacted SYP contains the listing of projects scheduled to utilize state roadway funding (FD 04) and federal-aid highway program funding (FD 52).

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). ”

Legislative approval by Congress for SAFETEA-LU was signed into law by President Bush on August 10, 2005.

Normally, a transportation act covers a period of six years, but SAFETEA-LU only covers five years – FY 2005 through FY 2009.

With SAFETEA-LU scheduled to expire at the end of FY 2009 (October 1, 2009), preliminary work has already begun on the next transportation act.

Congressional Procedures

To better understand the federal-aid highway program the following terms are provided:

Authorization Act: This is the current transportation act (SAFETEA-LU) which establishes or continues federal transportation programs or agencies and establishes an upper limit on the amount of funds for the program(s).

Appropriations Act: Yearly action by Congress that makes funds available for expenditures with specific limitations as to amount, purpose, and duration. It permits funding previously identified in the authorization act to be obligated and payments made.

Apportionment: The distribution of funds as prescribed by a statutory formula.

Allocation: An administrative distribution of funds for programs that do not have statutory distribution formulas.

Obligation Limitation: A restriction, or “ceiling, ” on the amount of federal funding that may be obligated during a specified time period.

Obligation: The federal government’s legal commitment to pay or reimburse the states for the federal share of a project’s eligible costs.

The obligation limitation of federal funds do not affect the apportionment or allocation of federal funds. It controls the rate or the amount of which funds may be used.

Thus, the amount of apportionments and allocating of federal funds made available in each fiscal year that is actually available to obligate is controlled by the amount of obligation limitation for each program.

The obligation limitation received each year normally ranges between 85 to 95 percent of apportionments, with some allocation programs receiving 100 percent obligation limitation.

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 runs 6 to 10 days.

Contract Authority Programs

Kentucky Statewide Transportation Improvement Program (STIP) and 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 FHWA federal discretionary programs represent special funding categories where FHWA solicits for project candidates and selects projects for funding based on applications received for each of the different discretionary programs. Each of the federal discretionary programs has its own eligibility and selection criteria that are established by federal regulations.

Since 2000, the projects receiving federal discretionary program funding have been identified through Congressional earmarks. However, the FY 2007 discretionary program will be selected through applications submitted to FHWA from KYTC.

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. MPO Areas • 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

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

The Division of Program Management is also responsible for tracking the availability of state and federal funds for projects identified within the Enacted SYP and STIP. We are in close communication with each of the Districts, each of the Central Office Divisions, Office of Budget and Fiscal Management, Executive Directors, the State Highway Engineer, the Commissioner of Highways, and the Secretary of Transportation.

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.

F ED E R AL H IG H F U ND RE V WA EN U YT $ ES $ T O RUS $ $ KY T TC $ OAD UE ER AT EVEN ST D R $ $ N $ FU $ ST BU ATE“ DG FI ET XE ITE D C M DS F UN ING JECT S O CH AT L PR E M RA AT EDE ST R F FO T” OS S 6 Y P “S P ” PRO J EC T S STATE FUNDS HES APD IM FEDERAL K PROGRAMS N , S TE NH * DEBT SERVICE * MAINTENANCE * RESURFACING * STATE POLICE & OTHER AGENCIES * GENERAL ADMIN. & SUPPORT * REVENUE SHARING * VEHICLE REGULATION * HIGHWAY OPERATION * CAPITAL CONSTRUCTION * JUDGEMENTS & OTHER * SECRETARY’S CONTINGENCY 6 YP E DG CM AQ “FIXED COST” ITEMS: B RI X , SL SLO ST P NON 6 YR BUDGET FH RRP RRS HP P KY D

ENACTED FY 2007 -2008 BIENNIAL HIGHWAY PROGRAM AND IDENTIFIED PRECONSTRUCTION PROGRAM PLAN FOR FY 2009 - FY 2012 ANTICIPATED FUNDING LEVELS $73, 000 $514, 200, 000 $708, 200, 000 (10) (9) (1) $158, 200, 000 (2) $1, 528, 600, 000 $1, 000, 200, 000 (8) (3) $3, 000 $785, 200, 000 (7) $406, 100, 000 (6) (4) $168, 600, 000 (5) (1) FED-AID INTERSTATE MAINTENANCE (6) FED-AID BRIDGE REPLACEMENT (2) FEDERAL SAFETY PROGRAM FUNDS (7) FEDERAL FOREST HIGHWAY FUNDS (3) FED-AID SURFACE TRANSPORTATION (8) STATE CONSTRUCTION FUNDS EXPECTED PROGRAM TO BE AVAILABLE FOR OBLIGATION ("SP") (Includes Trans. Enhancement and Metro-specific funding categories) (4) FED-AID NATIONAL HIGHWAY SYSTEM (5) FEDERAL HIGH PRIORITY PROJECTS (9) (10) FEDERAL APPALACHIAN HIGHWAYS FUNDS FED-AID CONGESTION MITIGATION

FEDERAL AND STATE HIGHWAY SIX-YEAR HIGHWAY PLAN FUNDING LEVELS FROM 2007 THRU 2012 (as estimated by the Kentucky Transportation Cabinet) $1, 200 $1, 000 $381 $348 $200 M illions $800 $40 $200 $40 $40 $596 $597 $40 $600 $400 $625 $647 $653 $200 $0 2007 2008 Federal 2009 2010 S tate & Local M atch 2011 S tate Projects "SP " 2012

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 request for project funding identifies the SYP Item Number, the Phase that funding is required, outlines if the funding is initial or additional funding, the estimated amount of required funding, and includes an area for the Project Manager to provides details on funding request.

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 TC 10 for approval signatures.

The Division of Program Management prepares the project authorization document (TC 10) outlining the project location, scope of project, the type of state or federal funding, and the required amount of funding in the Project Authorization System (PAS), and prints the unsigned TC 10 to route for approval signatures.

In addition to the TC 10, 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 TC 10 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.

Upon receiving the approved signed TC 10, if the funding is state funding the Division of Program Management enters the state funding into the e. MARS accounting system and the funding is ready for project expenditures.

However, if the TC 10 is for federal funding, the Division of Program Management then begins the process to prepare the federal funding programming document (PR 1) to be submitted to FHWA. This process can vary from a couple of days to several weeks depending upon several factors, which include the status of the environmental document, and the status of project in the STIP or MPO TIP.

Upon submittal of the federal PR 1 document to FHWA, normally the approval process through FHWA is completed within two to three weeks depending upon the availability of staff reviewing and approving the PR 1 document.

Upon receiving the approved federal PR 1 document, the Division of Program Management enters the federal funding into the e. MARS accounting system and the funding is ready for reimbursement of project expenditures.

Please keep in mind that the federal PR 1 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 PR 1 are not eligible for reimbursement of federal funds.

Type of Funding & Funding Regulations

The type of funding for a given project will determine the state and federal funding regulations that the Project Manager must meet so the project is eligible for the designated funding. These funding regulations may establish project milestones that must be met before the funding can be authorized for the project to proceed into the next phase of the project.

The federal funding is broken down into the following core programs, and each program has defined regulations that must be met to be eligible for federal funding: Bridge Replacement (BR) Congestion Mitigation (CM) Interstate Maintenance (IM) National Highway (NH) Safety Program (HES) Surface Transportation Program (STP) Forest Highway Program (FH) Appalachian Development (APD)

In addition to the normal state and federal funding programs, KYTC utilizes both state and federal bond programs to fund roadway projects. As previously discussed, the 2005 and 2006 General Assembly passed legislation allowing KYTC to sell $650 million in state bonds and $440 million in GARVEE bonds.

$440 Million Grant Anticipation Revenue Vehicle (GARVEE) Bond Program 64 Total Cost = $127 million 265 24 75 Total Cost = $135 million 75 64 64 65 65 Total Cost = $178 million 75 Interstate 64: Widen to six lanes from the Snyder Freeway in Jefferson County toward Shelbyville (total cost $127 million) Interstate 65: Widen to six lanes from the Tennessee State line to Bowling Green (total cost $178 million) Interstate 75: Widen to six lanes from the end of the current six-lane section in northern Scott County to the current six-lane section south of KY 22 in Grant County (total cost $135 million)

The funding regulations are in addition to design standards and environmental regulations, which a Project Manager must meet as he tries to keep the project on schedule and within the scheduled cost of the project. However, the programming of funding for each phase of the project is a critical element to completing the project and being able to fund other roadway projects.

Historic Construction Awards ($) 1. 2 bil (potential) 1. 1 bil 900 792 800 689 millions 700 750 736 695 655 638 605 600 564 500 463 424 400 390 382 304 300 336 333 200 100 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 Calendar Year 04 05 06 07 08 09 10 11 12

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 Oracle SYP system is used to prepare and print the Recommended and Enacted Six-Year Highway Plan and to track the current status of each project.

The Oracle SYP Precon Status system provides the means to track the current estimated cost of each phase of the project, the scheduled fiscal year of funding for each phase of the project, and the type of scheduled funding for each phase of the project.

In addition, the Oracle SYP system allows the user to track current environmental information, current right-of-way information, utility relocation information, and projected letting dates. Also, the project manager can enter various project milestone data elements and dates for each project.

Also, the means are provided to enter and save project remarks throughout the various stages of the project, along with a place to enter CAP (Communicating All Promises) data, so as the project moves from one phase to the next, the various people working on the project can review any previous promises made to other agencies, elected officials, general public, or property owners along the project route.

These project remarks are the project “History” file that can be used to determine why and when certain project activities occurred or why certain decisions were made concerning the project.

The Oracle SYP Precon Status system is the backbone and foundation for development of the SYP and STIP and for tracking the current status of SYP projects.

When a SYP project is let to construction and the construction contract is awarded, the project becomes “Inactive” in the Oracle SYP Precon Status system and becomes “Active” in the Division of Construction’s Transport system.

Federal regulations require that each state DOT have an approved financially fiscal constrained STIP, where the estimated federal-aid funding apportionments compared to the planned federal-aid funding obligations have a ratio of 1.

The fiscal constraint calculations for the 2008 STIP must meet new federal regulations where the planned federal-aid funding obligations are based upon the estimated costs of the corresponding project phase activities for the projected fiscal year of initial funding authorization.

In order to meet the federal regulations, a new “Cost Escalator” process is being developed within the Oracle SYP Precon Status System that Project Managers will have the ability to enter the estimated cost of each phase of a project in current year dollars and the projected year of when the funding will be required for each phase of the project.

The “Cost Escalator” process will have cost inflation factors assigned for each phase of the project to calculate the projected year of authorization cost based upon today’s cost and projected year of required funding authorization.

The projected cost will be used in preparing the 2008 SYP and the 2008 STIP, so again the Oracle SYP Precon Status system is the backbone and development of the SYP and STIP.

The Division of Program Management has developed several 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.

At the beginning of each month, the Division of Program Management prepares and distributes a copy of the monthly project status report, which contains a listing of all the projects identified within the Enacted SYP. In addition, the monthly status report is available on the DOT Intranet, Division of Program Management website.

“Explanation of Item Number Series” 0 - 99 … Interstate Construction (Non-Pavement Rehab) 100 - 899 … Non-Interstate Reconstruction, Construction, New Route, etc 900 - 999 … HES Projects 1000 - 1999 … Federal Bridge Replacement Program 2000 - 2999. . . Pavement Rehabilitation (Interstate, Parkways or Primary Routes) 3000 - 3999. . . Transportation Enhancement Projects 4000 - 4299. . . County Bridge Replacement Program (State Funds) 4300 - 4999. . . Guardrail Replacement Program (State Funds) 5000 - 5999. . . Rockfall and Landslide Repairs 6000 - 6999. . . Open 7000 - 7999. . . 1998 SYP General Assembly Added Projects 8000 - 8099. . . 2000 SYP General Assembly Added Projects 8100 - 8199. . . 2002 SYP General Assembly Added Projects 8200 - 8299. . . 2004 SYP General Assembly Added Projects 8300 - 8999. . . 2006 SYP General Assembly Added Projects 9000 - Above. . . Open

KEY TO INTERPRETING INFORMATION PRESENTED FY 2007 - FY 2012 STATUS REPORT

KEY TO INTERPRETING INFORMATION PRESENTED FY 2007 - FY 2012 STATUS REPORT

KEY TO INTERPRETING INFORMATION PRESENTED FY 2007 - 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.

The Oracle SYP Precon Status System is available for KYTC employees, upon submittal of request from the District Pre-Construction Engineer or Division Director to Ron Rigney in the Division of Program Management.

The “Project Managers Toolbox” is available on the DOT intranet on the Division of Program Management’s home page.

“Cookbook” Login Process to Access e. MARS to Check Available Budget & Current Expenditures

1. Log into e. MARS: Use address above to go to login screen. Or go to Kentucky Finance & Administration Cabinet homepage (http: //finance. ky. gov/). Select e. MARS in See Also… box on right side of screen. Under Applications, select e. MARS (Financial Production). User IDs can be found on the Vender/Customer (VCUST) table within e. MARS. To have a password reset, email Finance. CRCGroup@ky. gov or call 502 -564 -9641 or 877 -973 HELP.

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

3. Select Page Search from list:

4. Type “BQ 39*” in Page Code field. Hit “Enter” key or click on “Browse”:

5. Click on Funding Priority (BQ 39 LV 1):

6. A Search window will automatically pop-up when Funding Priority has been selected. Enter in search criteria (Department, Major Program, etc. ). Use * as a wildcard. Example: if you want to see all programs for a project enter “ 73701*”. If you want to see a specific program, enter “ 7370101 C”. If the search window does not pop-up, click on “Search” to get the Search window.

THANK YOU.