A methodology for prioritizing transportation funding in diverse rural environments is described based on experiences in the state of Montana. In 1999, the state of Montana redesigned its secondary highway-funding program. The amended statute allocated federal-aid and state matching funds by formula to each of Montana's five transportation districts and terminated a county-level suballocation that had been in place for more than 30 years. Instead of creating regional planning organizations or formal decision-making bodies such as "councils of governments," the Montana counties statutorily retained direct decision-making authority to set funding priorities, but at the district level. Through a cooperative process, the state of Montana and its 56 counties developed a goals achievement methodology for project prioritization that is responsive to a broad range of transportation needs and goals across all transportation districts of the state. This methodology is applicable for roads with very diverse characteristics and for decision makers with very different goals for the transportation systems under their jurisdiction. The methodology has the advantage of supporting a regional approach to funding prioritization. In addition, it has overcome the funds management problems that had occurred in the Montana secondary program with funds suballocated into 56 individual county accounts. Benefits and problems associated with direct suballocation of transportation resources were studied and the reformed Montana program was evaluated in terms of retaining the benefits and addressing the problems.