Section 5: Research Funding and Budgeting

General

The discussion in this section is limited to work which meets the definition of research, implementation or technology transfer and is managed through RTI.

Federal Funding of State Planning and Research (SPR) Program

Source of SPR Funds
 — 23 U.S.C. 505 provides for SPR funding. Of the total funds apportioned to states, it authorizes two percent of most apportionment categories to be used only for planning and research activities. These funds are administered and accounted for as a single fund, regardless of the category of Federal-aid highway funds from which they were derived.
The 25 Percent Rule
 — 23 U.S.C. 505 further states that not less than 25 percent of the SPR funds apportioned to a state for a fiscal year shall be used for research, unless the State meets the requirements for a waiver of this rule.
Sharing of SPR Program Funds
 — Federal SPR funds are shared between RTI and the Transportation Planning and Programming Division (TPP).
Obligation of SPR Funds
 — RTI requests obligation of federal SPR funds before each annual program is initiated, based on eighty percent of the total Legislative appropriation for that program. Obligation of SPR funds for projects which are not part of an annual program are handled individually for each project.

Federal SPR Work Program

Requirements for the SPR Work Program
 — Title 23, Section 420.111 of the Code of Federal Regulations (CFR) requires that the proposed use of FHWA Planning and Research funds be documented by
RTI
 in a work program “acceptable to the FHWA.” Work must be approved by FHWA before SPR funds can be obligated.
Separate Work Programs for Planning and Research
 — RTI prepares an SPR
Subpart B
 Part (research) annual work program, including quarterly updates, separate from the SPR
Subpart A
 Part (planning) work program prepared by TPP. The
Subpart B
 Part work program includes information on TxDOT
RTI’s
 research and implementation programs.
Purpose of the Work Program
 — The annual Work Program gives a Program overview and relates financial data for the current state fiscal year (September 1- August 31). The fiscal data details how funds are obligated, how much federal and state funding each project receives, as well as what sum total amounts the universities receive. The FHWA approves project templates, which are summaries of each individual project. The template includes fiscal data, project start and end date,
project title,
 whether the project has been modified, the university name,
the researcher,
 and the Project Manager. The projects are separated into functional areas, pooled funds, and administrative. Once the Work Program is complete, the document is certified
and executed
 by the Director
of RTI
. Once the Director approves the Work Program, it is then submitted to FHWA
for review and approval
.
Modifications to the Work Program
 — Once the annual Work Program has been approved by FHWA, any modifications shall be administered and prior approval must be obtained in accordance with provisions found in 23 CFR 420 and 2 CFR 200, to include but not limited to, the following: 1.) budget and programmatic changes, including additional federal funds
needed
 to complete the project; 2.) allowable cost which requires prior approval; 3.) changes to the principal investigator also known as Project Supervisor; 4.) change to scope of effort or objectives of the project or program; 5.) disengagement from the project for more than three months or 25 percent reduction in time; 6.) transfer of funds budgeted for participant support costs, as defined in 2 CFR 200.75, to other categories of expense; 7.) the sub-awarding transferring, or contracting out of any work under Federal award; 8.) expenses more than 90 calendar days pre-award cost (see also 2 CFR 200.458 Pre-award costs); 9.) a one-time extension of the period of performance by up to 12 months unless one or more of the conditions
apply as
 outlined in paragraphs of 200 CFR 200.308 (d)(2)(i) through (iii) which are; (i) the terms and conditions of the Federal award prohibit the extension, (ii) the extension requires additional Federal funds, (iii) the extension involves any change in the approved objectives or scope of the project, and 10.) incurrence of special or unusual costs as provided in 2 CFR 200.407.

Annual Performance and Expenditures Report (APER)

Requirements for the Annual Performance and Expenditures Report (APER)
 - Title 23, Section 420.117 of the CFR requires that TxDOT issue a report for FHWA approval to continue and carry out statewide transportation planning and research activities as authorized. This report is created by TxDOT staff to ensure that all activities are monitored and that the work is being managed satisfactorily.
The requirements for the APER include a comparison of actual performance to established goals, status of expenditures in a format compatible with the Work Program and a comparison of actual costs incurred to costs budgeted. In addition, all approved Work Program revisions, cost overruns/underruns and any supporting data shall be reported within the APER.
This report must be submitted to
and approved by
 FHWA by the last day of the calendar year.
The data for the APER is collected after the end of the state fiscal year from the main accounting spreadsheet and various spreadsheets containing pertinent project data, including the status of deliverables. The projects are separated between closed projects and continuing projects further categorized by functional area.

Cost Principles

The OMB published 2 CFR Part 200 (referred to as the “Supercircular”) to streamline the Government-wide guidance on Administrative Requirements, Cost Principles, and Audit Requirements for Federal awards.
The consolidation of the circulars is a key component of a larger effort to more effectively focus Federal resources on improving performance and outcomes, while ensuring the integrity of Federal funds in partnership with State, local, and tribal stakeholders. The Department of Transportation (DOT) adopted the Supercircular regulation under 2 CFR Part 1201 effective December 26, 2014. The implementation of the Supercircular cancelled 49 CFR Parts 18 and 19.
The adjustments set forth by the guidance include, but are not limited to, the following:
  • Increased internal control efforts;
  • Standardization of terminology and definitions in the industry (including changes to the cost principles that reflect modern business practices and use of technology);
  • Standardized business processes and cost treatment.

Budget

Funds for research are budgeted under
RTI’s
 budget each fiscal year.
RTI develops a research budget each fiscal year composed of funds for:
  • Work Program administration (RTI staff and office expenses),
  • Work Program and project management performed by TxDOT research project teams, and
  • research conducted with Texas state-supported universities.
RTI funds an implementation program each year for:
  • assisting TxDOT in implementing research results and products,
  • technology transfer activities and support, and
  • implementation program administration and management.
Funding available for research and implementation programs is set by TxDOT administration through TxDOT’s budgeting process, and is adjusted as necessary depending upon State and federal appropriations.
Additional Federal Funds
may
be used
 — Research and implementation budgets reflect approximately eighty (80) percent federal SPR funds and twenty percent (20) state matching funds. Estimated federal funds are included in TxDOT’s Legislative Appropriations Request (LAR) to assist lawmakers in appropriating adequate State funds to match the federal funds. The final State appropriation includes those estimated federal funds. If federal funds in excess of those identified in the LAR become available during the fiscal year (such as through work orders issued by FHWA), the research budget may be increased by the amount of new federal funds available.
RTI’s budget is only increased when total research expenditures, including for projects funded with these additional federal funds,
are expected to
 exceed RTI’s original budget. At that point, the
Financial Management Division
 works with RTI to identify the additional funds available and needed, and adjusts RTI’s budget.
Other Funds
 — Research or implementation funding may come from sources other than TxDOT state funds or federal SPR funds apportioned to Texas. Including but not limited to:
  • Other state agencies
     – Occasionally, other state agencies offer to contribute money to TxDOT to fund research of mutual interest, which TxDOT is managing. For example, the agency can recommend that they contribute the state's twenty (20) percent share.
  • Federal Agencies
     – FHWA often contributes up to 100 percent of the budget for specific research or demonstration projects which may have a compelling national importance. FHWA issues work orders for each project and approves funding. If a university will be performing the work, an agreement is executed by RTI in accordance with established research contracting procedures.
  • SPR funds apportioned to other states
     – FHWA recognizes a type of project called a Pooled Fund project. For these projects, one or more states and FHWA pool together to conduct research of regional or national significance. FHWA may waive the usual twenty percent non-federal match on these projects. When Texas leads one of these projects, all the expenditures on the project flow through RTI’s budget because the work on the project is managed by RTI. SPR funds from other states are recovered as discussed above under “Additional Federal Funds
    may be used
    .”
  • Other agencies or entities
     (including private institutions) – Projects of mutual benefit may be developed with agencies in addition to those mentioned above. Joint-funded projects with private entities are possible under certain circumstances, and may be performed with strict guidelines to protect the public interest.
  • No
    other TxDOT sources
     – Current TxDOT policy requires all research work to be funded through RTI (such a restriction is not placed on implementation work). Additional TxDOT funds for research can come only from the
    Financial Management
     Division increasing RTI’s budget upon approval by TxDOT’s Administration.

Conflict of Interest

Members of the Project Team and members of research committees may have no direct or indirect financial interest in any project they are evaluating or managing.
Additionally, they
 may have
no
 family, personal,
nor
 business relationships with university employees or Federal agency that would create a conflict of interest, or the appearance of a conflict of interest, between their duties as a member of a research committee and their personal or business interests.
A university shall only assign an employee responsible for the design, conduct or reporting of research to a project funded under the terms of the CRIA, and who is in full compliance with the University’s Financial Conflicts of Interest Policy.
Each Project Team member and all RTI employees are expected to disclose any potential conflicts of interest. Each situation is then evaluated and structured to avoid true or apparent conflicts of interest.