CDOT outlines MMOF cuts, proposes cash‑management and protections for encumbered awards

CDOT staff warned Transportation Commission stack members on June 4 that state budget changes have materially reduced local Multimodal Options Fund (MMOF) allocations in the short term and outlined a cash‑management approach to limit disruption.

Michael Snow, who presented the MMOF update, said staff are responding to two FY27 budget bills that affect program revenues. ‘‘House Bill 1399 effectuated the elimination of the previously committed $10.5 million annual general‑fund transfer into the program,’’ Snow said, and HB 1398 changed how remaining funds are split so the state program receives a larger share (70/30 split) than in prior years. CDOT’s analysis shows total program funding for the FY27–29 window is reduced by about 36.6% and local allocations decline roughly 48.3% over that multi‑year period.

To avoid rescinding awards already made to projects, staff recommended not reconciling all prior awards immediately. Instead CDOT proposes using FY30–31 allocations to backfill awards that were programmed in FY27–29 and applying a cash‑management strategy that lets project phases that are ready proceed while later phases may be delayed until funds are available. Snow also proposed adjusting administrative set‑asides to a flat $900,000 redistribution with a 3% annual admin rate thereafter to preserve program management capacity.

CDOT stressed that awards already under executed grant agreements or covered by option letters (which encumber funds for a project phase) are generally protected. Snow told members, ‘‘When we say they are at a ready state and we commit the funds to their project, that what that means is we execute that contracting mechanism … which formally encumbers the funds and gives them the notice to proceed. We don't come back and take those funds.’’

Local concerns and risk management: multiple TPR and MPO representatives said the unpredictability of the funding stream complicates local budgeting and service rollouts (examples included microtransit pilots). CDOT staff and other presenters encouraged agencies to keep CDOT billed for known project expenditures and to coordinate closely with CDOT project managers; staff will produce a statewide project funding schedule in the coming weeks to show likely timing for reimbursing project phases.

Next steps: CDOT will (1) produce a project phase funding schedule, (2) coordinate direct briefings with TPRs and MPOs, and (3) attend local meetings to explain option letters, IGAs and grant agreements and which arrangements encumber funds versus which remain subject to future appropriations.

What was not decided: staff recommended against wholesale rescission of awards, but acknowledged that future legislative changes could still alter revenue availability. Local projects without encumbered funds should consider the risk that their implementation phases may be delayed until revenue is restored.

Who said what: Michael Snow led the update; Jeff (regional staff) and others clarified that executed option letters and formal grant agreements provide the strongest protection for reimbursement.