July 27, 2023 (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 20, the Senate Appropriations Committee approved the Fiscal Year (FY) 2024 State, Foreign Operations and Related Programs (SFOPs) appropriations bill by a vote of 27-2. The bipartisan measure provides a total of $60.3 billion in non-emergency funding. While this is $1.3 billion (2%) below current FY23 non-emergency levels, it is $6 billion (11%) higher than the level in the companion bill recently approved by the House Appropriations Committee. The Senate bill also includes an additional $3.25 billion in emergency funding, including $2.5 billion for humanitarian assistance and $785 million in economic assistance. MFAN applauds the Senate for rejecting deep cuts to international affairs accounts and working to ensure that sufficient resources are provided for U.S. programs that help alleviate suffering and build global stability and prosperity.
We are very pleased the Committee, even in a constrained budget environment, increases funding (by $53 million) for USAID’s Operating Expenses (OE) – a recognition of the vital role these funds play in aid effectiveness. The hard truth is that USAID has inadequate staffing levels to effectively manage its current workload, much less meet the additional demands placed on it from record levels of procurements due to unprecedented global needs. For example, USAID contracting officers currently manage more than four times the workload of their contracting counterparts at the Department of Defense. The boost in funds for FY24 OE will help strengthen USAID’s oversight of program implementation, measure and evaluate impact, and apply a strong learning agenda for future programming. OE funds are vital to the agency’s efforts to attract and retain skilled talent, adopt more innovative approaches that will boost the return on investment (ROI) for U.S. taxpayers, and deliver on its goals to increase locally led development and promote self-reliance. MFAN is also pleased the Committee affirms USAID can enter into personal service agreements with locally employed (LE) staff, to help reduce administrative burden and inequities among foreign nationals employed under different hiring mechanisms.
Regarding other USAID provisions in the bill and report, locally led development is widely seen as a more effective and sustainable way to deliver aid; it is vital to long-term self-reliance and accelerating country transitions from aid to broader forms of partnership with the United States. MFAN is pleased the Committee continues reporting requirements on how the agency is progressing toward and will reach locally led development targets for development and humanitarian assistance. We also commend the Committee for requesting information on USAID’s “policies and procedures for rewarding agency personnel who demonstrate the skills and commitment to building lasting partnerships with local government officials and community leaders to implement programs that are designed to encourage and support local initiative and local ownership.”
MFAN applauds the Committee for the inclusion of other provisions for USAID that will help advance aid effectiveness. These include:
Regarding the Millennium Challenge Corporation (MCC), while we are pleased the agency’s budget was maintained at current levels, we regret the Committee’s decision to rescind $100 million in previously appropriated funds. Following the $515 million and $100 million rescissions in FY22 and FY23, respectively, we are concerned about creating a harmful precedent that could negatively affect MCC’s unique operations model.
Concerning the International Development Finance Corporation (DFC), MFAN is disappointed the Committee did not seek to address existing limitations on the agency’s equity investments in low- and lower-middle-income countries. The bipartisan Better Utilization of Investments Leading to Development (BUILD) Act of 2018, which established the DFC, provided the new agency with several critically important new investment tools, particularly the ability to make equity investments. Unfortunately, DFC’s ability to carry out its mission and fully realize its investment potential is being restricted because the agency’s equity financing is scored on a dollar-for-dollar basis – as if every dollar invested is a grant that would never be paid back to the U.S. government. In actuality, these equity investments in most cases will eventually be paid back along with a financial return. Rectifying the current scoring methodology needs to be a priority to both expand the agency’s ability to make critical early-stage investments in low- and lower-middle-income countries and to decrease the fiscal impact of this equity authority on the International Affairs budget.
Also, with regard to the DFC, we are pleased the Committee increases funding for administrative expenses by $23 million (10%) given their importance for enabling the agency to boost its capacity while also effectively managing program resources. We also commend the inclusion of: (1) reporting requirements for a detailed plan for DFC staffing and expenditures on monitoring and evaluation; (2) affirmation that DFC’s use of waivers of its Environmental and Social Policies and Procedures should be “limited to compelling circumstances and in furtherance of an important U.S. national interest.”
Lastly, MFAN is pleased the Committee maintains (in Section 7019) the current rules that permit USAID and the State Department to “deviate” up to 10 percent from amounts specified in tables set out in the bill’s report. While we will continue to press for a deviation level of at least 15 percent and for other flexible funding options that will lead to better outcomes and results, we applaud the Committee for not reducing the deviation level to 5 percent (as was done by the House Appropriations Committee).
MFAN congratulates Subcommittee Chairman Coons, Ranking Member Graham, and the members of the Committee for assembling this important legislation and working to protect global health, development, and humanitarian relief programs from cuts. As this bill moves through the legislative process, MFAN looks forward to continuing to work with the Committee to further enhance the effectiveness of foreign assistance.