Implementation of Uncrewed Aircraft Systems Operational Capabilities: A Guide (2025)
Chapter: 7 Funding Considerations
CHAPTER 7
Funding Considerations
A lack of funding is often one of the issues state DOTs encounter when starting a UAS program or trying to grow and mature their UAS program capabilities. This chapter outlines the various funding considerations for financially supporting a UAS program, including federal grants, state-appropriated funds, internal state DOT budgets, and year-end money. The chapter also outlines funding strategies for sponsoring AAM initiatives at the state and local levels.
Funding the UAS Program
It can be challenging to secure ongoing funding to support the UAS program. State DOTs often get started with initial one-time funding and, with detailed data that demonstrate ROI, can usually secure additional funding to continue to build the program. These state DOT UAS program budgets can range from a few thousand dollars to multi-million-dollar budgets. Typically, the more utility and ROI that can be demonstrated, the higher the budget. Many state DOT personnel have turned to federal resources for initial funding or additional funds to grow their programs. For example, the FHWA State Transportation Innovation Council (STIC) grant program is one way for state DOTs to obtain grants of up to $100,000 (FHWA 2022). In the focus groups held for this project, almost 16 percent of the participants reported using STIC funds to support UAS programs, and another 10 percent noted that grant money from other federal or state sources was utilized. Another federal grant program that could provide funding is the Strengthening Mobility and Revolutionizing Transportation (SMART) grants program. The average awarded amount through the SMART grant program in fiscal year 2022 was $1,541,154. UAS implementation can be an eligible project because it can fit into one of the required categories: sensors, coordinated automation, innovative aviation, or systems integration (USDOT 2023).
Section 912, “Drone Infrastructure Inspection Grant Program,” in the Securing Growth and Robust Leadership in American Aviation Act, which was signed into law in May 2024, will be yet another federal funding source available to state DOTs. This grant program will help state and local governments expand infrastructure inspection programs using UAS. The authorized appropriations to support this grant program is $12 million per year through fiscal year 2028 (H.R. 3935 - FAA Reauthorization Act of 2024).
Other external funding could come from requesting additional funding from the state legislature through the appropriate channels. In the focus groups held for this project, almost half of the surveyed pool of state DOTs reported using appropriated state funds (Figure 19). When requesting additional funding from the state legislature, it is important for UAS program leadership to strategically coordinate with state DOT executive leadership. The request for legislator-approved funding specific to the UAS program needs to be fully backed by solid data. UAS program managers
should track the ROI and other benefits of UAS use across state DOT workflows and operations. These data points can be provided to executive leadership to coordinate with the appropriate state legislators or legislative committee.
The other funding avenue is to advocate internally for additional and, ideally, ongoing funding. State DOTs can prioritize funding for UAS programs within their existing budgets. By proving the long-term benefits of UAS to executive leadership in terms of cost savings, increased efficiency, and improved safety, state DOTs can allocate resources from their traditional budgets to invest in UAS technology. This approach requires a strategic assessment of the state DOT’s overall priorities and a commitment to integrating UAS into its broader transportation strategy. Some state DOTs have found that once they can prove that UAS are another supplemental tool in the toolbox, UAS can be treated as an equipment line item in operational budgets.
State DOTs often face the challenge of efficiently using their total budget, which is distributed across various divisions. The divisions are allocated specific budgets that need to be spent within the fiscal year because any unspent funds may result in reduced allocations for the subsequent year. This creates a scenario where divisions are motivated to expend their budgets to avoid potential cuts in future funding. The concept of end-of-year money arises when funds are not initially allocated but must be spent before the fiscal year concludes. In the context of UAS programs, the UAS program manager can strategically leverage end-of-year funds to support and enhance UAS initiatives.
To capitalize on end-of-year funds for UAS programs, it is important for the UAS program manager to proactively establish relationships with various divisions within the state DOT. By collaborating with division heads, the UAS program manager can offer solutions for effectively spending their remaining budgets on UAS equipment. This approach helps allocate unused funds and facilitates the integration of UAS technology into diverse operations across the state DOT. However, careful consideration must be given to the organizational model to manage the acquired UAS throughout their lifespan. It is important for a coherent and sustainable structure for UAS management to be in place to guarantee their effective utilization and maintenance to maximize the long-term benefits of the investment.
Other unique strategies for UAS program funding include leveraging other types of grant programs or funding sources. For example, the South Carolina DOT used a research project to purchase UAS equipment. In some cases, state DOTs contract their employees who have been able to expense UAS batteries, registration fees, or other support equipment.
One other funding option that could be leveraged by multiple states in collaboration is through the FHWA Transportation Pooled Fund Program (https://highways.dot.gov/research/opportunities-partnerships/opportunities/transportation-pooled-fund-program), which allows state DOTs to pool their funds to support a project (FHWA 2019). The Alaska DOT&PF is currently leading an effort to earn commitments from other state DOTs and organize a project scope to create data standards for UAS. The proposed pooled fund project would create, test, validate, and publish data standards across various use cases such as surveying, construction inspection, bridge inspection, earth movement, and emergency and incident response. By combining funds from multiple states, the project can be completed to benefit all of the participating states and other transportation agencies in maturing their UAS programs.
AAM Funding
The integration of AAM into city and regional transportation systems represents what could potentially be a significant opportunity. As states and cities explore the potential of AAM, the crucial challenge lies in securing adequate funding for the planning, development, and implementation of these initiatives. Several funding considerations that transportation agencies can explore when seeking to fund AAM initiatives are described in this section.
Federal AAM funding may leverage existing aviation funding mechanisms. There are essentially three methods of government funding for airport, heliport, and vertiport facilities. The first is the most basic, where an individual airport or other facility works with and applies for grants directly through the local FAA Airports District Office staff. For this method, it is not necessary for the airport to work through any state division of aeronautics. There may be separate state grants that can be applied for, but those are independent of the FAA grant process.
The second method, often referred to as a “pass-through,” requires local municipalities to work through a state office to apply for any federal funding. In this case, individual airports, heliports, or vertiports collaborate with a state division of aeronautics to submit a unified funding request to the FAA Airports District Office. Pass-through grant requests often combine federal and state grant applications for funds to be used at the local level.
The third method is known as a “block grant.” In this scenario, the state offices manage the entirety of the funding program and the associated state aviation system plan. The state system plan drives the state funding request, and the FAA issues a lump sum block grant to the state division of aeronautics. The state office then determines the best use of the funds and where and how they should be allocated according to the state aviation system plan.
For pass-through and block grant states, there may be a more involved role in achieving federal funding options for vertiports or other AAM infrastructure. Timelines for renewing state aviation system plans may dictate when the planning process for vertiports should begin in block grant states. Likewise, in pass-through states, cities that are interested in considering vertiports in their jurisdictions may want to consider initiating those discussions with their state division of aeronautics.
City-Level Funding Strategies
Orlando serves as an exemplary model for planning for AAM in its Future Ready City Master Plan. By strategically incorporating AAM into its long-term vision, the city was able to secure financial backing when the city council approved the master plan. A key aspect of this success was allocating funds from municipal general funds specifically for Future Ready Master Plans. Cities looking to fund AAM initiatives can consider similar approaches by earmarking funds within
their general budgets for visionary master plans that encompass AAM integration. They can use similar approaches when working on a regional level with metropolitan planning organizations.
State-Level Funding Strategies
Several states have taken proactive steps to fund AAM studies and assessments. Ohio and Utah were two of the first state DOTs to perform comprehensive statewide studies to evaluate the opportunities and potential impacts of AAM adoption. Virginia, Arkansas, Georgia, Florida, and California have or are currently executing similar AAM studies. These planning studies allow states to establish a clearer vision for AAM and define roadmaps for implementation, which directly assist in guiding future investments.
Utah is an example of a phased funding approach to AAM. A state senate bill provided a small amount of funding that was more than matched by the internal Utah DOT budget to provide a pooled fund to sponsor the initial AAM statewide analysis study. Based on the findings of the initial study, the Utah Senate passed Senate Bill 161, which outlined additional items to be studied by the Utah DOT (Wheeler et al. 2022). Florida is another example of a state that has taken a phased funding approach. After completing its statewide AAM study in 2022, there has continued to be legislative activity, with both House Bill 981 and Senate Bill 1362 passing in the 2024 legislative session, prompting the governor’s budget to include funding for AAM infrastructure, such as vertiports (FDOT Communications Office 2023). Funding from various streams, such as additional appropriated funds, the continuation of internal state DOT funds, and the governor’s budget, will support the continuous AAM initiatives.
Other potential funding strategies include state or municipal bonds, user fees, registration fees, and tax revenues. The state DOT should work with the many stakeholders within the AAM committee described in the coordination section to collaborate and identify funding strategies.
Alternative Funding Mechanisms
There are consistent efforts at the federal level to create additional funding opportunities for AAM, but relying solely on traditional aviation infrastructure funding mechanisms is not likely to be sustainable because these mechanisms are primarily designed for conventional airports, and the addition of vertiports may require a new funding model. States need to explore innovative financing options to ensure the successful integration of AAM.
Public-Private Partnerships
Collaborating with private entities can be a viable strategy for funding AAM initiatives. Public-private partnership (P3) models allow governments to leverage private sector investments and expertise and share risks and rewards. The “AAM Outreach” section highlights cities and states that have partnered with OEMs. These partnerships with OEMs and other private companies involved in AAM development may find P3 arrangements as a viable AAM funding mechanism.
An existing aviation example of a P3 is when airlines fund airport construction or improvement projects, particularly at airline hub airports. Perhaps existing airline and eVTOL manufacturer partnerships could be approached to collaborate on AAM infrastructure development funding.
SMART Grants
The SMART grants program highlighted in the “Funding the UAS Program” section can also be leveraged to fund AAM initiatives. States can apply for SMART grants that can be tailored to support research, development, and implementation of AAM technologies and infrastructure. The applicable SMART grant categories are coordinated automation, connected vehicles, delivery/logistics, and innovative aviation.
