Resource Allocation of Available Funding to Programs of Work (2017)

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51 chapter five ConClusions Overall, the process of resource allocation among programs of work in transportation agencies is more complex and challenging than it has ever been in the history of U.S. transportation programs. With decision-making authority shared by federal law, federal executive rules, legislatures, appointed transportation boards, and agency staff, the need for consistency and transparency is paramount in the process. Models, ranging from pavement and bridge asset management systems, travel demand models, multi criteria tools, and economic impact tools, are playing an increasing role in communi- cating among decision makers and reconciling complex requirements for how revenues are invested. Although state departments of transportation (DOTs) are confident in their ability to meet the signifi- cant benchmarking, planning, and asset management requirements introduced in the Moving Ahead for Progress in the 21st Century Act (MAP-21) and continued in the Fixing America’s Surface Trans- portation (FAST) Act, the DOTs responding to this synthesis survey almost universally indicate a desire for better and more consistent and easy-to-use technical and modeling resources. A synthesis of available information on how transportation agencies allocate resources among programs of work yields conclusions that can be expressed in terms of the types of balance that agencies seek to achieve in the process. BalanCing Preservation with exPansion Because of the age, cost, and critical importance of the nation’s highway and bridge infrastructure (and transit rolling stock), a consistent defining characteristic of resource allocation policies centers around the need to preserve existing assets. However, geographic transportation markets, changes in urban hierarchies, and the evolving complexity of the use of ports and freight systems preclude most states from simply relying on asset management systems to dictate program sizes based on forecast- able asset condition models. Instead, agencies typically set asset condition targets (usually through a subjective process of collaboration among transportation boards and pavement and bridge engineers) that determine the level of allocation going to preservation programs and thus largely determining the remaining funds to be spent on expansion and modernization efforts. Transit preservation models are less developed, with ongoing research seeking a best practice in determining return on investment (and consistent needs-based planning) for transit state of good repair. For all modes, states increas- ingly use supplemental streams of revenue (though state taxes, lotteries, and other mechanisms), which can create revenues allocated specifically to nonpreservation programs. Federal transportation law requires that states do much more than simply preserve; instead, they must leverage available funds across several performance areas. Thus, for most states, resource allocation is not as simple as “fix-it first” and allocating leftover funds to selected individual projects. Instead, it is a process that involves multiple criteria, such that preservation, modernization and expansion can work simultaneously to achieve larger performance targets. Modal BalanCe Although at the state level, highway programs and models account for the largest share of discretion- ary outlays, with transit investments determined by federal match requirements or specific state or federal earmarks, state agencies increasingly include transit in their discretionary resource allocation process. Resources for transit capital investments are most often incorporated when a state has a multimodal expansion or enhancement program and sets weights in a multicriteria process that gives “points” for transit or for investments that encourage modal balance in the selection of projects. This

52 is not the same as allocating funds explicitly to a transit program, but it is a policy mechanism that explicitly seeks to include transit opportunities in larger multimodal programs. Investments in ports, bicycle and pedestrian facilities, and other modal components are most commonly addressed through project investment criteria within multicriteria, multimodal programs. Otherwise these modes gen- erally have resources allocated through dedicated federal matches or through project-level federal programs, such as the Transportation Investment Generating Economic Recovery (TIGER) and Fostering Advancements in Shipping and Transportation for the Long-Term Achievement of National Efficiencies (FASTLANE) grants. geograPhiC BalanCe With the increasing sophistication of asset management systems and economic benefit and impact modeling systems, states have become less reliant on geographic designations in the allocation of resources among programs, especially for preservation. In all four of the case examples included in this synthesis, audits, statutes, or agency processes had realized opportunities to better leverage preservation resources to urgent needs (and improve life-cycle cost benefits) by allocating resources on a statewide basis instead of rigidly within districts, corridors, or regions. However, geographic balance remains an important issue for system modernization and expansion investment with state- wide and regional boards playing key roles in the process. The current state of geographic balance in resource allocation can best be understood as one in which preservation and asset management decisions are based increasingly on statewide needs, with expansion and modernization investments being made with consideration of regional perspectives that are increasingly informed by larger tech- nical models of travel demand, performance forecasts, and economic benefits or impacts. BalanCing transParenCy and CoMPlexity State DOTs are recognizing the increasing complexity of resource allocation decisions and finding a need to respond with processes that are data driven, transparent, and analytical. The survey in this synthesis indicates that 86% of responding agencies found models to be very important in determining how they allocate resources among programs, with 70% indicating a need for better data on system conditions and performance and 67% indicating a need for better predictive models to support resource allocation decisions. However, 67% also indicated the importance of transparency in the resource allocation process, and 60% indicated limited staff resources available for implementing resource allo- cation processes. This suggests there is a compelling need for technical resources that are data driven and rigorous to substantiate resource allocation decisions, transparent enough to readily explain to stakeholders, and practical to implement by agencies with limited resources. Case examples show that states may develop custom software or tools, such as Florida’s Strategic Investment Tool (SIT) tool or Massachusetts’ Planning for Performance (PfP) tool to arrive at allocation outcomes that satisfy pro- gram or performance area criteria in ways that can be readily understood by stakeholders. In the Mas- sachusetts case, before the agency developed the PfP tool, some recommendations were considered for a process that was more data and computationally intense, but limitations on agency staff and resources ultimately led to the creation of a tool seen as the most transparent and practical to implement. It is promising that NCHRP 08-91 offers relatively new tools for approaching cross-asset resource alloca- tion decisions; however, it is yet to be seen how such tools will be adopted by agencies and how they may shape program-level resource allocation decisions in the future (Maggiore et al. 2014). BalanCing toP-down and BottoM-uP ProCesses Although the clearest and most explicitly developed program allocations in state agencies are between highway and bridge preservation programs and other programs, it is clear that agencies understand “programs” in different ways. Often at the top-down level, states identify funding streams for pave- ment and bridge preservation and may lump all other investments (net of federal matching funds or other requirements) into one large expansion or modernization program. However, further exploration shows that within these expansion/modernization programs (such as ConnectOregon or Idaho’s stra- tegic initiatives program) is a concentrated policy of channeling resources toward particular program-

53 matic or performance objectives through multicriteria weighting or the project development process. In some cases (such as in Idaho), although the state does not preallocate resources to areas such as safety, mobility, and economic opportunity, the state tracks aggregate investment levels by these areas and views them largely as “program areas” for assessing how resources are being spent. In a similar way, the literature shows that statewide long-range transportation plans (LRTPs) often designate pro- grammatic investment targets, but state transportation improvement programs (STIPs) seldom simply allocate master investment levels among projects within neat program categories. Instead, they use programmatic (or performance area) targets to shape what is still a project-level prioritization process. Allocating nonpreservation resources at the project level (versus the program level) gives states flex- ibility in programming but increasingly does not indicate the complete absence of internally under- stood program areas and objectives shaping the allocation process. In the future, understanding the role of programmatic objectives and performance areas, even in project-by-project prioritization, will be important for recognizing how states allocate resources to achieve performance targets. BalanCing ConsistenCy with FlexiBility Sixty-four percent of state DOTs responding to this synthesis survey indicated that a major reason for employing programmatic investment policies is to ensure consistency in investment decisions over time. However, the literature and case examples show that state DOTs recognize the need to be responsive to specific opportunities or events at the programming level and often avoid overly rigid program resource allocation schema. For example, significant drivers of transportation need, such as port investments by federal agencies such as the U.S. Army Corps of Engineers, business location decisions, and natural disasters, are largely unpredictable and outside the control of agencies. Conse- quently, agencies employ consistent standards for asset management levels but often keep allocation decisions fairly broad in larger programs that encompass multiple types of investments. Such is true in the case example of Florida DOT, which has more than 15 program areas, some of which do not have rigid allocations; instead, funds are allocated broadly between Strategic Intermodal System (SIS) expansion and off-SIS expansion. BalanCing suBjeCtivity with oBjeCtivity In the face of increasingly complex system performance challenges, federal laws calling for rigorous consideration of system conditions and performance, and increasingly intricate stakeholder demands, resource allocation ultimately remains a subjective process. Not a single state has been identified that relies on simple formulas, complex models, or calculations to create an optimal programmatic mix for implementation. Instead, agencies are increasingly dependent on objective data and analysis to inform and enhance ultimately subjective decisions made by agency executives in consultation with appointed boards and commissions. Although state DOTs have indicated through their responses to this synthesis survey (substantiated by the case examples) that objective analysis is increasingly important for supporting data to inform resource allocation decisions, resource allocation choices are subjective based on the values of the communities served and the stakeholders involved. Data, models, and tools are essential for accountability in the process but never drive the entire decision. There is a clear need for systems, tools, and data that maximize the ability of decision makers to be accountable in resource allocation decisions but also are transparent enough to be readily explained to a wider community of stakeholders. Closing oBservations and Future researCh Transportation agencies have more data, models, and resources to support decisions regarding resource allocation among programs than at any other time in the history of the United States. Asset management systems in areas other than pavement and bridges are rapidly evolving, and agencies are beginning to have more easily or readily available planning and performance data on bicycles, pedestrians, transit, and subsections of the road network. Yet agencies with limited staff resources and mounting stake- holder, state, and federal demands struggle to use this information efficiently and transparently. On the most basic measure of whether agency programmatic resource allocations are publicly accepted, less

54 than 14% of state DOTs responding to the survey reported that their resource allocation processes were not widely accepted, but most were enthusiastic about the necessity to improve their processes. Most respondents indicated strong needs for better data, models, and tools, especially in areas such as predicting asset condition, changing system demands, and economic outcomes. Establish- ing consensus on some useful mode-neutral performance measures for the transportation system is one possible area of research. Research aimed at improving the accuracy of and confidence in assessments of the future impacts of investment will help agencies better prioritize projects and value program investments. Development of new data systems and tools could focus on providing transparency and interpretability for the public and decision makers. This may require simplifying the inputs and outputs of tools and determining the appropriate level of complexity. Future research into integrating the use of various types of resource allocation and prioritization resources will serve transportation agencies well. Decision support frameworks are needed that can reconcile project-level prioritization weights across programs or directly compare programs. Research could further explore resource allocation topics such as: • Innovative decision techniques, including – decision trees, – collaborative frameworks for establishing weights (such as the Delphi method), – weighting structures for organizing relationships (such as the analytic hierarchy process), or – nominal decision processes (valuing alternatives without making comparisons to a baseline). • Approaches for communicating the rationale and outcomes of decisions using these tools in a concise and transparent manner to external audiences. Overall, the state of the practice for state DOT resource allocation is evolving from baseline engi- neering into the area of strategic decision making, with technology creating the need and opportunity for agencies to devote an increasing share of decision-making resources to assessing the true value of transportation spending and likelihood of predicted long-term outcomes.