One of the highest risks to the Federal Highway Administration and state departments of transportation is expenditure of federal transportation funds by local governments, due to the complex requirements for such expenditures and the lack of experience of local government with these requirements. Failure to properly follow all federal requirements for implementation of federally funded transportation projects can result in withdrawal of all federal funds for the project and make the state department of transportation, and consequently the local government, liable for refunding expended federal dollars and funding the entire project with state or local dollars. The Federal Funds Exchange process allows local governments to follow project delivery processes with which they are familiar and alleviate most of the risks involved with expenditure of federal transportation funds for all levels of government involved. Thirteen states currently practice Federal Funds Exchange. Many more states and local governments could benefit from this practice. This session seeks to familiarize more local governments with the practice (some local governments may not even know their state allows Federal Funds Exchange) and provide them with knowledge to be able to discuss the practice with their state departments of transportation to determine if it would be beneficial to their state and local transportation funding programs.