Allocations. After a project is fully processed and approved, FAA regions notify airport sponsors of an allocation of funds for a project. This is merely a notification of intent to grant (obligate) funds and does not involve a transfer of funds. Total allocations by FAA regions can never exceed funds made available by the FAA's Office of Airports’ Headquarters to a region in either planning figures or allotments.

Allotments. The Office of Management and Budget (OMB) approves the DOT's apportionment request and the DOT subsequently approves the FAA's apportionment request. The FAA then requests that its budget office make an allotment of funds to FAA regions to support previously issued planning figures. Allotments and adjustments to allotments are made throughout the year as required.

Apportionments. There are two actions referred to as apportionments:

1. The authorizing legislation requires FAA to apportion funds on the first day of the fiscal year to airport sponsors and States based on formulas contained in the authorizing legislation. This apportionment notifies airport sponsors and States that these funds are available for eligible work, but it does not involve any transfer of funds. Such apportionments are more commonly referred to as "entitlement funds" (see Glossary for definition).
2. The other type of apportionment is a plan to spend resources provided by law. Once OMB approves the FAA's apportionment, FAA may obligate congressionally authorized AIP funds. The OMB apportionment is formally requested by FAA, which provides a financial plan for orderly use of the funds. The financial plan is based on the FAA's regional submission of annual program plans. The OMB apportionment may contain restrictions on the use of funds such as restrictions on the amount that may be used quarterly.

Appropriations. This is a legislative act that provides a designated amount of public funds for a specific purpose. Sometimes Congress enacts a "continuing resolution" for a specific period of time in place of an actual appropriations bill. A continuing resolution is a temporary appropriation providing funding during the interim at some fixed rate, usually the lesser of the prior year's rate or the rate provided by a passed bill. In the case of the AIP, legislation provides the necessary authorization to obligate funds and issue grants in the form of contract authority. Congress also uses the appropriation process to establish an obligation limit for the AIP.

Authorization. This is a legislative act granting FAA the "contract authority" to issue AIP grants within a specified dollar amount.

Authorizing Legislation. The AIP is authorized by title 49 U.S.C., chapter 471, as amended.

Discretionary. The term "discretionary" refers to funds that are available for use on eligible projects at the FAA's discretion after satisfying required apportionments. The authorizing legislation establishes formulas and requirements for the use of discretionary funds. There are three discretionary set-aside funds:

• noise compatibility planning, noise mitigation, and other types of environmental improvements;
• the MAP; and
• a special set-aside for certain types of reliever airports.

Of the remaining discretionary funds, 75 percent must be used for preserving and enhancing C/S/S/N projects at primary and reliever airports. The remaining 25 percent, known as remaining or pure discretionary, may be used for any eligible project at any airport.

Entitlements. The term "entitlements" refers to the passenger, cargo service, and State Apportionments (including nonprimary apportionments when applicable) available to sponsors and states based on formulas in title 49 U.S.C., section 47114. See the definition of "Apportionments" above.

Grant Assurances. There are three types of standard grants assurances that sponsors must agree to when accepting AIP funds: airport sponsor assurances, noise compatibility assurances for non-airport sponsors, and planning Agency assurances. Airport sponsor assurances are used for airport development grants, airport planning grants, and noise compatibility program grants. Noise compatibility assurances for non-airport sponsors are used for noise compatibility projects undertaken by sponsors who do not own the airport that has the noise compatibility program. Planning Agency assurances are used for integrated airport system planning grants made to planning agencies.

Obligations. The execution of a grant agreement with an airport sponsor constitutes an obligation of the U.S. Government to pay the amounts specified in the grant. Obligations of funds are processed through FAA regional accounting offices in two steps:

1. A "reservation of funds" is made before the grant is signed, and
2. An "obligation" is reported when the grant is signed.

Total obligations in a region may never exceed the total of funds allotted to a region.

Obligation Limitation. This is language in an annual appropriations act that limits annual grant funds to either the authorized level or to any different level determined by Congress to be suitable for economic requirements.

Passenger Facility Charges (PFCs). These are fees imposed by public agencies at commercial airports they control for projects and at fee levels approved by FAA within an overall statutory limit. They are collected by airlines from enplaned revenue passengers and remitted to airport sponsors, who then use the resulting funds to implement FAA-approved projects that enhance safety, security, or capacity; reduce noise; or increase air carrier competition.

Payments. The FAA provides funding to airport sponsors for eligible and allowable costs incurred on a project included in an AIP grant.

Protected Entitlement Funds (Formerly "Carryover" Funds). These are funds apportioned for primary or cargo service airports, states (including nonprimary apportionments when applicable), and Alaskan airports for eligible work. Specifically, these are funds that an airport sponsor can claim to use during the fiscal year for which the amount was apportioned and the 2 fiscal years immediately after that year (or the 3 fiscal years immediately following that year in the case of primary nonhub airports and nonprimary airports).

Recoveries. As adjustments to grants are made based on final actual grant payments, funds may be recovered (deobligated) from previous grants and, under certain circumstances, may be reobligated for new projects or for upward adjustments to existing projects. For state block grants, funds are not normally recovered. These funds may be used within the block grant for other eligible projects.

Set-Aside Funds. Portions of discretionary funds are set-asides designed to achieve funding minimums specified in title 49 U.S.C., sections 47117 and 47118. The set-asides include:

1. 35 percent for noise compatibility planning and implementing noise compatibility programs and other environmental improvements under title 49 U.S.C., section 47501, et seq.;
2. 4 percent for the MAP; and
3. 0.66 percent for a limited number of reliever airports if AIP is funded at $3.2 billion or above.¹

Small Airport Fund. Title 49 U.S.C., section 47114(f), requires that AIP funds apportioned to a large or medium hub airport be reduced if a PFC is imposed at that airport. In accordance with title 49 U.S.C., section 47116(b), FAA distributes the withheld apportionments as follows:

1. 12.5 percent to the AIP discretionary fund, and
2. 87.5 percent to the small airport fund of which certain amounts must be spent at small hub primary airports, general aviation airports (including reliever airports), and nonhub commercial service airports.

¹ Reliever airports are defined as having more than 75,000 annual operations, a runway with a minimum usable landing distance of 5,000 feet, a precision instrument landing procedure, at least 100 based aircraft, and which relieve airports with at least 20,000 hours of annual delays in commercial passenger aircraft takeoffs and landings.