Public works directors and elected leaders in Kansas were frustrated: because federal funding comes with specific standards and requirements, projects built with federal money cost more than projects built with local money. In response to their need to stretch their transportation dollars, KDOT created the Federal Funds Exchange. Under the program, local governments can swap their federal funds for state funds that carry fewer requirements. Because KDOT bears the costs of using the more-restrictive federal funds, the exchange rate is 90 cents of state money for every dollar of federal money.
By having flexibility to construct projects to a county standard, rather than to federal standards, counties have been able to build projects at a 30% cost savings, according to Norm Bowers of the Kansas Association of Counties.
Indeed. Because of greater flexibility in the type and scope of projects that could be built under the fund exchange program, the miles improved for $25 million (federal aid program) increased from 15.4 miles in 2010 to 195.2 miles in 2011.