How are transportation dollars flowing in your state?

State-by-State Flex Funding Comparison Tool

The 2021 Infrastructure Investment and Jobs Act dedicated $643 billion to surface transportation over a five year period. Roughly two thirds of that investment goes to highways, while transit and rail infrastructure only receive 17% and 16% respectively.

However, states and metropolitan planning organizations (MPOs) have the ability to transfer, or “flex,” federal funds away from highway construction and send them to projects that prioritize transit, bike, and pedestrian infrastructure. This can reduce carbon emissions, shrink household transportation costs, improve public health, and stimulate local economies.

Even in the midst of fiscal emergencies for transit agencies, states have not taken anywhere close to full advantage of flex funding. They continue to double down on highway construction when they have the ability to chart a different course.

CCI’s interactive State-by-State Flex Funding Comparison Tool shows you how your state has flexed funds across federal highway programs and into transit- and pedestrian-oriented uses over the last three years. Advocates can use this tool to evaluate their state’s recent use of flex funding and identify opportunities to flex more funds toward climate-friendly, equitable transportation options.

Visit the Flex Funding Comparison Tool

Take action

Ask your state Department of Transportation (DOT) to publish its transfers and details about the projects funded.
Demand to know why funds have been transferred out of transit and climate friendly programs and into highway friendly programs.
Identify good projects that are unfunded on the current Transportation Improvement Program (TIP) or Statewide Transportation Improvement Program (STIP) and push your state DOT and MPOs to flex funds into those projects and away from road/highway capacity expansion projects.

How does flex funding work?

In many cases, states can use Federal Highway Administration (FHWA) funds for non-highway purposes while keeping the funds within their original program. (See the table below for examples.) However, by flexing funds out of their original programs states can more dramatically transform the balance of funding–potentially positioning as much as 75% of total highway funds in programs where they can be used for active transportation and transit.

States and MPOs can flex funds in a variety of ways, either across FHWA programs or out of the FHWA into the Federal Transit Administration (FTA).

Examples:

Transferring funds to the FTA in order to displace transit agency capital expenses and free up state and regional transit funds for operating expenses
Moving funds from highway-oriented programs like the National Highway Performance Program (NHPP) into programs like Congestion Mitigation and Air Quality Improvement Program (CMAQ) or Carbon Reduction Program (CRP) that can fund transit and active transportation projects

Flex funds must be used for projects that are already approved through an MPO’s TIP or STIP.

Federal Highway Administration (FHWA) programs

Federal Transit Administration (FTA) programs

FTA programs fund a variety of transit capital or operations expenses. These can include bus purchases, light rail investments, or other transit projects. FTA programs result in decreased emissions; investments in public transit are essential to limit the extent of climate change.

Flexing from FHWA to FTA

Federal funds for public transit are typically handled through the Federal Transit Administration (FTA), but states can elect to transfer funds out of highway programs into the FTA as long as the funds are still used for purposes eligible under both the sending program and the FTA.

Flex funds make it possible for states with tight transit budgets to free up their existing state transit funds for operating expenses by leveraging highway funds to cover certain eligible non-operations transit costs such as rolling stock purchases or upgrading transit stations. In some cases, CMAQ and Carbon Reduction funds can be used directly for transit operating assistance.

The funds need to be used for projects already approved through an MPO’s TIP or the state’s STIP. The state DOT needs to request the transfer with agreement from the relevant MPO if it is within a metropolitan planning area, in a letter to the FHWA State Division Office.

Flexing between FHWA Programs

In general, states can flex up to 50% of the funds allocated to NHPP, STBG, CMAQ, CRP, HSIP and NHFP into a different highway program, but STBG funds allocated to a specific metro region must remain within that region.

Unlike transfers to the FTA–which can only fund projects that meet eligibility requirements under both the sending program and the FTA–transfers across highway programs have more flexibility in their end use. These transfers between FHWA programs can be used for projects that only meet the receiving program’s requirements, regardless of which program they came from.

This feature gives states a great amount of leeway in how they use federal highway funds. For example, a state wishing to fund bus rapid transit stations or bike lanes can take up to 50% of the funds from NHFP–where those funds were previously not eligible for transit or bike infrastructure–and transfer them to STBG, CMAQ or CRP where they are.

Unfortunately, many states have elected to flex funds in the opposite direction–away from restrictive federal sources such as CMAQ or CRP that tend to favor transit, toward the more flexible programs such as STBG that tend to fund road projects that increase vehicle miles traveled and carbon emissions.

Between Fiscal Year 2021 and Fiscal Year 2023 for example, states made 80 individual transfers out of CRP, and only 2 into CRP. Most of these transfers went into STBG, which tends to fund projects with higher carbon impact than CRP.

How can advocates and policymakers maximize benefits from flex funding?

States and MPOs have the ability to flex a far greater percentage of funds and can collaborate immediately to set the wheels in motion for flexing funds away from highway and road expansion, towards public and active transportation.

Identify unfunded or underfunded transit and active transportation projects in current TIPs and STIPs
Implement a moratorium on major road and highway capacity expansion projects; divert funds to diversified transportation projects through flex funding
When necessary, begin the process to amend TIPs and STIPs to include appropriate projects

State DOTs can institutionalize a proactive approach to encourage and facilitate their MPOs to take advantage of flex funding.

Assign a flex funding liaison in the state DOT whose role is to outreach to MPOs and assist with the application process. This person would liaise with the local sponsor as well as the FHWA division office and FTA to expedite transfers.
Provide incentives, such as matching funds, for MPOs to flex funds toward transit and active transportation. States could offer a capped percentage of matching funds to any MPO that requests certain types of transfers, such as from NHPP to FTA.
Streamline and fasttrack TIP and STIP amendments made for the purpose of flexing funds away toward transit and active transportation

Congress and the USDOT should update the rules for flex funding to ensure that states do not use flexing to counteract Congressional and state commitments to reduce climate impacts and increase the diversity of transportation options.

Institute one-way flexibility that prevents funds in pots earmarked for safety, transit, or carbon reduction from being moved into highway programs.
- Give maximum flexibility for general purpose highway funds, such that they can be used for transit operations or other transit-related uses that are outside the eligibility within their program of origin.
- Give minimal flexibility for CMAQ, CRP, TA or other funds dedicated to carbon reduction, active transportation, transit or safety, such that states cannot use these funds for road expansions.

There is a need for deeper structural shifts ranging from state and MPO project selection to federal funding allocation.

In the long run, states and MPOs need to fill their STIPs and TIPs with bike, ped and transit projects because funds can only be transferred for projects in an approved STIP or TIP. To do this, state and MPOs can require TIPs to meet GHG reduction or VMT reduction criteria and implement more democratic voting structures that give urban residents equal representation on MPO boards.
Congress should transform federal funding formulas to allocate more for transit, active transportation, maintenance and operation–and less for general purpose highway funds that fuel capacity expansion.