Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
OPERATING EXPENSES
For FY 1998, USAID is requesting $473,000,000 in Operating Expenses (OE). These funds, combined with other funding sources, such as local currency trust funds, will provide a total of $532,421,000 to cover operating costs of the agency for FY 1998, compared to $575,405,000 in FY 1997. These levels for FY 1997 and FY 1998 include about $37.1 million and $1.3 million, respectively, for one-time costs associated with the move of agency headquarters to the Ronald Reagan Federal Building and the construction of a new office building in Cairo, Egypt. Adjusting for these one-time costs, the recurring costs of operating the agency are expected to drop by $7.2 million from FY 1997 to FY 1998 because of reduced staffing levels. The cost of the budget's proposed additional 1.51 percentage point agency payment to the Civil Service Retirement and Disability Fund for Civil Service Retirement System employees will be absorbed within this request, once the proposal has been enacted.
FY 1998 Request . . . . . . . . . . . . . . . . . $473,000,000 At the FY 1998 OE request level, USAID anticipates an on-board OE funded staffing level at the end of FY 1998 of 5,778, of which 2,331 would be U.S. direct-hire employees. This represents a reduction of 472 from the estimated FY 1997 staffing level, of which 77 are U.S. direct-hire employees. Program-funded staffing levels will also decrease, from the estimated level of 1,584 at the end of FY 1997 to a level of 1,494 at the end of FY 1998. These personnel are responsible for managing a USAID-administered program (Development Assistance, P.L. 480 Food for Peace, Economic Support Fund, and other accounts) of almost $6.7 billion.
The major OE cost components, required to support the planned staffing level, are as follows:
* Employee salaries and related benefits, at an estimated cost of $304.9 million, are the largest component of the OE budget. These costs account for slightly more than 57% of the total OE budget.
* Rents, communications and utility charges, together with office and residential security guards, will cost about $80.1 million in FY 1998, or 15% of the total budget.
* Travel and transportation of persons and freight costs associated with post assignment, home leave, etc., make up another 7% of the budget, at a cost of $35.5 million.
* USAID will spend about $22.5 million to purchase goods and services from other U.S. Government agencies, such as Foreign Affairs Administrative Support services obtained from the Department of State. This does not include categories of costs currently funded by the Department of State but which are proposed to be funded by other agencies upon implementation of the International Cooperative Administrative Support Services (ICASS) system.
* About $21.2 million is required to cover the cost of operating and maintaining buildings and equipment throughout the agency.
* Service contracts related to automated data processing (ADP) systems design, maintenance, and other ADP-related support will cost $25.1 million.
* The balance of $43.1 million will be used for staff training activities agency-wide, the purchase of office and residential furniture and equipment, primarily overseas, supplies and materials, support for education for dependents of agency employees, etc.USAID has undergone massive changes during the past four years - some of them very traumatic, such as the reduction in force implemented at the end of FY 1996. These changes have included:
* The closing of 32 overseas missions by the end of FY 1998 and restructuring others to improve efficiency and recognize new ways of operating;
* Introduction and implementation of reengineering for many agency processes and practices;
* Introduction of new management systems;
* The development and implementation of methods for measuring results of our development activities; and
* The planned move of Agency headquarters operations into a single building during 1997.Reform Initiatives. Agency reform initiatives have been a management priority for the past several years. One of the first steps in the agency's reform initiatives was the reorganization announced on October 1, 1993. This reorganization reflected the basic principles of Vice President Gore's National Performance Review initiative.
The reorganization streamlined the structure of the agency, broadened spans of control, and eliminated unnecessary layering and redundant processes. For example, it eliminated one high-level management layer and reduced the number of major organizational units by five. Functions were realigned to facilitate cooperation among all bureaus and missions. The reorganization was also supported by clearer policy direction and new and betters tools. These tools included expanded technical capacity and better access to information, made available by the development of the new management systems.
USAID next launched a process of internal rightsizing. Since the Marshall Plan after World War II, the number of countries receiving U.S. assistance had grown steadily. The USAID rightsizing was the first modern initiative to reduce the overall number of recipient countries, with the aim of making the agency's remaining programs more effective. On November 19, 1993, the agency announced the closing of 21 USAID field missions, to occur by the end of FY 1996. This was later expanded so that 26 missions actually closed by the end of FY 1996. By the end of FY 1998 USAID will have closed an additional six missions, for a total of 32. The agency will have a U.S. direct-hire staff presence by the end of FY 1998 in about 66 full and limited missions plus a small number of countries receiving humanitarian assistance.
The objective of rightsizing in Washington was to achieve the optimal mix of organizational structure, staffing resource allocations, and operating procedures. The effort resulted in the elimination of redundant functions, a reduction in supervisory layers, increased span of control, and a much more streamlined operation.
In July 1996, a series of decisions were made to restructure and further downsize the agency's overseas presence. USAID missions were recategorized as full, limited, limited-humanitarian, or exit and non-presence. A few additional close-out missions were identified and a number of other missions were to convert to more limited operations with smaller staffs.
New Management System. The new management system (NMS) is an integrated, computer-based management information system which encompasses the agency's core business practices. The system was designed to correct long-standing problems and improve operational efficiency and effectiveness. NMS is fundamentally changing the way the agency works. For example, data will be entered once overseas or in Washington, and will be available worldwide throughout the system. This will reduce errors, and make real-time information available to managers throughout the agency. While some problems have been encountered, this is to be expected in a new system which combines the number of functions encompassed in NMS. The agency is addressing all problems which have been encountered to date. The automated portion of NMS, which is now operational, consists of four components:
* Operations component supports the agency's new program procedures and processes for planning, implementing, monitoring and evaluating the foreign assistance programs.
* Budget facilitates the management of the operating year budget and fund allocations within the agency.
* Acquisition and Assistance (A&A) provides greater efficiency and accountability in the formation and administration of the agency's procurements and assistance agreements.
* The Agency Worldwide Accounting and Control (AWACS) component replaces multiple "stand-alone" systems and performs the agency's core accounting functions.Subsystems for human resources management and property management are currently being worked on for incorporation into NMS.
The design and implementation of NMS have been a major challenge for the agency, involving the redesign of many business practices of the agency and the integration into a single system of the accounting systems, contracting system, and development of automated budget and operations modules. During the past three years, the agency has purchased and installed hardware and software worldwide, including the purchase and installation of secure telecommunications and satellite service worldwide. A large, ongoing training program has been developed to train all agency personnel in how to utilize NMS, and an extensive help network has been established to assist operating units with problems and questions.
By the end of FY 1997, the agency expects to have the system fully operational, including the completion of data migration from the old Washington and overseas accounting systems.
Move to the Ronald Reagan Federal Building. By the end of October 1997, all headquarters personnel will have been moved from nine buildings located in the District of Columbia and Virginia to the Ronald Reagan Federal Building. This move will provide substantial benefits for USAID, including:
* Improved communications among and between staff and managers of all headquarters organizations;
* Improved management oversight of administrative operations, currently scattered among the various locations;
* Improved use of staff resources and property;
* Reduced support costs through consolidation of support functions that currently have to be duplicated in multiple buildings;
* Reduction in staff time lost in traveling between buildings in the District of Columbia and Virginia to attend meetings and carry out daily business;
* Improved physical, telecommunications, and data security resulting from the up-to-date facilities available in the new building; and
* Reduction in costs of any potential future internal organizations due to the use of open space and "modular" furniture.While cost savings associated with these above benefits cannot be precisely measured, it is estimated that administrative savings, including savings through better utilization of staff time, will be between $2 million and $3 million per year.
Benefits will also accrue to the Department of State, as the Department will be able to consolidate some of its personnel into space being vacated in the Main Department of State Building, once that building has been renovated.
Funding Sources. Operating expense costs of the agency are funded from several sources, including new budget authority appropriated by the Congress, reimbursements for services provided to other operations, local currency trust funds provided by some host country governments, and recoveries from prior year obligations.
The sources of funds used for operating costs in FYs 1996 through FY 1998 are shown below:
Funding Sources for Operating Expenses
($000)FY 1996 FY 1997 FY 1998 Category Actual Estimate Request Appropriated Operating Expenses 465,750 470,750 473,000 Program Funds Used for OE 25,560 75 75 Appropriation Transfer 3,000 17,500 Subtotal - New Budget Authority 494,310 488,325 473,075 Local Currency Trust Funds (Recurring) 40,138 36,544 35,370 Local Currency Trust Funds (Real Property) 130 8,301 976 Reimbursements 5,555 6,000 6,000 Unobligated Balance, Start of Year 27,195 39,935 17,000 Recovery of Prior Year Obl. (Sec. 511) 25,939 14,000 12,000 Unobligated Balance - End of Year - 39,935 - 17,000 - 12,000 Required for Prior Year Adjustments - 700 End of Year Balance, Expired - 234 Total Obligations 553,098 575,405 532,421 Less: Overseas real property and one-time costs of the Headquarters office move - 6,171 - 37,152 - 976 Total Recurring Obligations 546,927 538,253 531,445
Local Currency Trust Funds. Some host country governments provide USAID with local currency trust funds to partially offset the cost of administering development assistance programs. These local currencies are usually generated through development activities such as commodity import programs, although some host country governments appropriate funds specifically for the use of USAID field missions.
The following table provides information on the dollar equivalent of local currency trust funds made available for USAID's use:
Dollar Equivalent of Local Currency Trust Funds($000) FY 1996 FY 1997 FY 1998 Country Actual Estimate Proposed Africa Burundi 112.8 Ethiopia 649.5 225.0 225.0 Ghana 1,040.0 1,100.0 1,180.0 Lesotho 4.6 Mozambique 499.7 466.6 470.6 Tanzania 768.0 1,026.1 1,128.2 Uganda 1,768.9 443.0 668.5 Zimbabwe 960.2 1,030.0 1,039.5 Subtotal - Africa 5,803.7 4,290.7 4,711.8 Asia and the Near East Bangladesh 319.7 277.3 215.3 Egypt 14,444.6 15,385.2 15,224.8 Indonesia 1,600.0 1,600.0 1,600.0 Jordan 225.8 211.3 211.3 Morocco 400.0 100.0 Pakistan 4.8 Philippines 3,402.9 3,200.0 2,500.0 Subtotal - Asia and the Near East 20,397.8 20,773.8 19,751.4 Latin America and Caribbean Belize 56.1 Bolivia 1,700.0 1,500.0 1,500.0 Colombia 374.0 422.8 Costa Rica 1,380.0 Dominican Republic 1,100.0 1,100.0 1,084.0 Ecuador 14.0 El Salvador 4,058.8 3,557.2 3,423.1 Guatemala 2,355.5 2,280.8 2,260.8 Guyana 45.9 Honduras 1,222.9 1,307.0 1,307.0 Jamaica 1,370.7 1,112.7 1,132.2 Nicaragua 308.8 200.0 200.0 Subtotal - Latin America and Caribbean 13,986.7 11,480.5 10,907.1 Total Trust Funds (Recurring) 40,188.2 36,545.0 35,370.3
In addition to local currency trust funds used for recurring costs, trust funds are sometimes made available for the purchase or construction of real property (offices, residences, and warehouses) overseas. The availability of trust funds for these purposes is as shown below:
Dollar Equivalent of Local Currency Trust FundsWork Force Resources. The agency's work force consists of U.S. and foreign service national personnel, both direct hire and non-direct hire. The following table provides information on the makeup of the agency's work force related to managing agency activities. The data excludes those personnel funded from the separate appropriations for IG operating expenses and credit administrative expenses. Information is for actual and anticipated end-of-year, on-board levels.($000)
FY 1996 FY 1997 FY 1998
Country Actual Estimate Proposed
Malawi 121.2 225.0
Uganda 57.8 31.0
Egypt 8.4 8,142.9 944.4
Total Trust Funds (Real Property) 129.6 8,425.7 975.9
9/30/96 9/30/97 9/30/98 OE Funded Personnel: Actual Estimate Request Washington: U.S. Direct Hire 1,587 1,639 1,605 Overseas: U.S. Direct Hire 775 755 722 Other U.S. Citizens 131 124 105 Foreign Service Nationals 3,834 3,718 3,342 Total - Overseas 4,740 4,594 4,169 Total USAIDThe above work force levels exclude those personnel funded from the separate appropriations for Operating Expenses of the Office of the Inspector General and for credit administrative expenses.U.S. Direct Hire 2,362 2,394 2,327 Other U.S. Citizens 131 124 105 Foreign Service Nationals 3,834 3,718 3,342 Total - USAID 6,327 6,236 5,774 Program Funded Personnel: Washington 302 383 343 Overseas 1,095 1,201 1,151 Total Program Funded 1,397 1,584 1,494 TOTAL (Program and OE) 7,724 7,820 7,268
The changes in costs from FY 1997 to FY 1998, for object class codes changing by $0.5 million or more, are outlined below:
Personnel Compensation - Decrease of $1.6 million
This category of costs includes basic compensation for U.S. and foreign national direct-hire and personal service contract (PSC) employees worldwide, including base pay, hardship differential, and special pay such as Sunday pay. The reduction reflects savings from reduced staffing levels, offset in part by the cost of anticipated pay raises.Total salaries and benefits for agency employees in FY 1998 will be about $304.9 million or 57% of the total OE budget of the agency. Staff reductions will result in a net decrease in costs of $1.6 million from FY 1997 to FY 1998.
Travel and Transportation - Decrease of $2.0 million
This decrease is related to reduced staffing levels combined with reduced training travel, the latter associated primarily with NMS training, most of which will be completed by the end of FY 1997.Transportation of Things - Decrease of $1.5 million
This decrease is due to reduced staffing levels, which will reduce post assignment and home leave costs.Rental Payments to GSA - Increase of $15.2 million
This increase is the result of the headquarters consolidation, where all rent would be paid to the General Services Administration (GSA). This increase is offset, in part, by reductions in rental payments to others (see next object class).Rental Payments to Others - Decrease of $10.6 million
This decrease reflects the move out of office space in Washington where rent is not paid to GSA. For example, we pay the Department of State for rent in the main Department of State building. The Department, in turn, pays GSA. In addition, overseas residential rental costs will be lower due to reduced staffing levels.Advisory and Assistance Services - Decrease of $1.8 million
This decrease is primarily related to the completion of work on the new headquarters building, for which specialized services had to be obtained.Other Services - Decrease of $3.4 million
This decrease reflects the completion of most upgrades in hardware, software, and communications related to full implementation of NMS, including savings resulting from "turning off" legacy systems.Purchase of Equipment - Decrease of $28.2 million
This decrease is primarily related to one-time costs incurred in FY 1997 for the purchase of office furniture and equipment, including telephone and security equipment, for the new headquarters building.Lands and Structures - Decrease of $8.5 million
This decrease is because the bulk of the activities associated with the construction of the new office building in Cairo, Egypt will have been completed by the end of FY 1997.4 OE Lotus Tables
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