Federal funding is the primary funding source for plans and transportation improvements and is procured primarily by the Federal Highway Trust Fund, which is supplemented by general funds. Current financing provisions began in 1991 with the enactment of the Intermodal Surface Transportation Efficiency Act (ISTEA), and continued with the 1998 reauthorizing legislation, the Transportation Equity Act for the 21st Century (TEA-21) and the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), the 2005

reauthorizing legislation. Note that with a few exceptions federal transportation funds are sent directly to and administered by INDOT, who then allocates the money to urban and rural areas. Most transit funds for urban areas are sent directly from the FTA to the transit operator.

At the most basic level of identification of transportation improvements, a given municipal or county capital improvement program will identify a portion of those improvements for potential federal funding. Typically those projects will be major road reconstruction, added travel lanes and intersection projects, as well as bridge reconstruction/replacement projects.
 
As required by federal regulations, all transportation improvements located in the Indianapolis MPA that use federal funds must appear in the IRTIP. Additionally, it is a prerequisite that all roadway projects that add capacity to the system (added travel lanes or new roadways) must be in the Long Range Transportation Plan before they may be programmed in the IRTIP. Note that most transportation improvements use an 80% federal and 20% local funding formula. 

The IRTIP also identifies the local matching funds provided by the implementing agency that has jurisdiction over the geographic area in which the specific improvement resides. INDOT implements projects on Interstates, U.S. Routes and, State Roads, and thus provides State funds as the 20% local match. Each county, city, and town provides local funds as match for the transportation improvements that they implement. There also may be private sector funding that supplements State and locally implemented projects. The IRTIP also includes projects and programs from quasi-public organizations, such as IndyGo and the Indianapolis Airport Authority (IAA) (although IAA projects are included for information purposes only). 

Federal funds are made available to the Indianapolis MPO and its planning partners through a specific process:

• Authorizing Legislation: Congress enacts legislation that establishes or continues the existing operation of a federal program or agency, including the amount of money it will have to spend. Congress re-authorizes federal transportation programs (known as the Federal-aid Highway Program) over a multi-year period. The amount authorized, however, is not always the amount that ends up being available to spend. 
  
• Appropriations: Each year, Congress decides on the federal budget for the next fiscal year. This process is known as the appropriation process. The amount appropriated to a federal program is often less than the amount authorized for a given year and is the actual amount available to federal agencies to spend. 
  
• Apportionment: The distribution of funds among states using a formula provided in law is called an apportionment. An apportionment is usually made on the first day of the federal fiscal year (October 1) for which the funds are authorized. At that time, the funds are available for obligation (able to be spent) by the State, in accordance with the approved Indiana Statewide Transportation Improvement Program (INSTIP).
  
• Spending Authority: Only a portion of a fund's apportionment is eligible to be programmed for transportation projects and programs in the IRTIP. This limitation is the spending authority. During the years of TEA-21 and SAFETEA-LU transportation bills, the spending authority has been approximately 90%, so for an apportionment of $10 million for a given funding category only $9 million may be programmed in the IRTIP.
  
• Determining Eligibility: Federal transportation funding is eligible to be spent only on certain specific projects and activities, these determinations are made by Federal guidelines.
  
• Match: Most federal transportation programs require a non-federal match. State or local governments must contribute some portion of the project cost. Legislation establishes the required percentage for local match, as well as appropriate sources for that match. For almost every federal funding category, the amount that the state or a specific local government has to contribute is 20 percent of cost of the project cost for most transportation improvements, with higher non-federal match required for major transit capital investments.