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Transportation Funding & Financing

Mechanisms to Leverage Federal Aid

This section of the Clearinghouse website describes management techniques designed to provide states with greater flexibility in managing Federal-aid highway funds. Typically state and local governments must provide 20 percent of the funding for projects benefiting from Federal aid. The principal objective of the management techniques described here is to ease restrictions on the timing of obligations and reimbursements and create a broader range of options for meeting matching requirements. While finding money for projects is always a challenge, states and other project sponsors also have to align the flow of projects with the availability of local funding. Grant management mechanisms provide state and local agencies with cash flow tools helping them to leverage Federal funding and expedite the implementation of projects. These techniques are summarized in the table below and are available to all states as part of the regular Federal-Aid Highway Program.

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Federal Matching Flexibility
The Federal funds management tools described in this section are designed to provide more flexibility to the states in their management of Federal funds and to increase investment and accelerate projects.

Advance Construction (AC)
Advance Construction and Partial Conversion of Advance Construction (PCAC) allows a state to begin a project even if the state does not currently have sufficient Federal-aid obligation authority to cover the Federal share of project costs. Under PCAC, a state may elect to obligate funds for an advance-constructed project in stages.