August 2, 2022 (WASHINGTON) – This statement is delivered on behalf of the Modernizing Foreign Assistance Network (MFAN) by Co-Chairs Lester Munson, Larry Nowels and Tessie San Martin.
On July 28, the Senate Appropriations Committee released a strong Fiscal Year (FY) 2023 State, Foreign Operations and Related Programs appropriations bill, providing an $8.5 billion (14.7%) increase compared to the FY22 (non-emergency) enacted level. In addition, the bill also includes $5.95 billion in emergency funding for the global COVID-19 response, global health security, and pandemic preparedness.
Taken together, these funding levels provide vital resources for addressing the multitude of demands on U.S. foreign assistance programs. The Modernizing Foreign Assistance Network applauds Senate Appropriators for this action and for including important provisions that will strengthen the effectiveness of US foreign assistance.
MFAN appreciates the Committee for fully funding the requests for the U.S. International Development Finance Corporation-DFC ($1 billion) and the Millennium Challenge Corporation ($930 million). These two agencies play invaluable roles in fostering economic growth and poverty reduction in developing countries through metric-driven criteria, in partnership with the private sector and other partners. MFAN is especially pleased that DFC and MCC funding levels for administrative costs equal the Administration’s request, ensuring the agencies maintain sufficient capacity to effectively manage program resources.
For USAID, the Senate bill provides $1.743 billion for its Operating Expenses (OE) – the same as the Administration’s request and the House bill, which is an increase of $100 million (6%) over current levels. Robust funding for the USAID OE account is essential for aid effectiveness and supports USAID’s efforts to drive innovation, attract and retain skilled development talent, oversee program implementation, improve transparency and accountability, evaluate results, and apply a strong learning agenda for future programming. While the Committee’s $100 million increase is a positive development, MFAN is concerned that a significant portion of the funds will be needed just to meet the 4.6 percent cost of living (COLA) increase for federal workers requested by the Administration. In addition, Administrator Power’s important locally led development initiative will require more personnel, including significantly more contracting officers – a function that has been short-staffed for years. Therefore, as the FY23 appropriations process moves forward, MFAN urges Congress to provide additional OE resources to meet these needs within the Agency.
MFAN is pleased that the Senate joins the House in including strong report language regarding locally led development (LLD). We commend the Committee for highlighting the importance of increasing ownership by local partners, enhancing coordination and burden sharing, leveraging the private sector, embracing innovation and risk-taking, and documenting and applying lessons learned. MFAN strongly supports the Committee’s requirement for USAID to report to Congress on how the agency defines a ‘‘local entity,’’ tracks funding to local entities, assesses the capacity of local entities to effectively implement and manage funds, is progressing toward stated locally-led development targets, and plans to reach such targets in subsequent fiscal years. We also commend the Committee for directing USAID to develop and make publicly available “policies and procedures for rewarding agency personnel who demonstrate the skills and commitment” to advancing localization. Such transparency and incentives will enhance the long-term sustainability and success of the agency’s localization efforts.
MFAN commends the Committee for including report language supporting Domestic Resource Mobilization (DRM) initiatives on the part of USAID. As the Committee noted, strengthening revenue generation and budgetary capacity is vital to increasing partner countries’ investments in health, education, and other development sectors. In addition to USAID, other federal agencies have an important role to play in advancing DRM. To that end, MFAN urges the creation of a clear and comprehensive DRM strategy by the USAID Administrator, in consultation with other relevant agencies including the State Department, Treasury Department, and Millennium Challenge Corporation.
MFAN also applauds funding for workforce diversity, equity and inclusion initiatives in foreign affairs agencies and is encouraged by the Committee’s attention to strengthening and diversifying agencies’ workforces.
Regarding the DFC, MFAN notes that the Committee did not include last year’s requirement for a report on potential scoring alternatives, including a net-present-value method, for DFC equity investments. While the BUILD Act significantly strengthened the DFC’s toolbox by authorizing the Corporation to make equity investments, the current dollar-for-dollar scoring calculation for such equity deals severely limits the DFC’s ability to effectively utilize this new tool – contrary to the intent of the BUILD Act. Correcting the scoring problem would substantially reduce the appropriation requirement for DFC equity investments and free up vital resources for other programs within the International Affairs 150 account. On other DFC-related matters, MFAN commends the Committee for noting the importance of DFC facilitating market-based private sector development and inclusive economic growth, especially in low and lower-middle-income countries.
Lastly, MFAN has consistently advocated for more flexible foreign aid funding mechanisms on the part of Congress that are paired with appropriate and timely accountability on the part of the White House and executive agencies. Serious conversations between the two branches are needed to restore trust and confidence and provide more latitude to development agency professionals on the ground to adjust funding allocations in order to address local priorities and achieve the greatest development impact. We encourage Congress to consider ways to advance more flexible mechanisms, including further changes to annual allocation directives.
MFAN congratulates Chairman Leahy, Subcommittee Chairman Coons, and the members of the Committee for assembling this important legislation for America’s global leadership. We look forward to continuing to work with the Committee to further strengthen the impact and efficiency of U.S. foreign assistance. On the occasion of Chairman Leahy’s retirement, we especially want to express our deep gratitude to the Senator and his staff for the outstanding leadership they have provided for many years in building and strengthening America’s global development and humanitarian relief efforts around the world.
