USAID looks ahead to uncertain operating budget

The U.S. Agency for International Development will “exhaust” this year any carryover funding it has to help offset operating expenses budget cuts included in the fiscal year 2014 omnibus bill, according to an agency official. That means things could get rocky in 2015 — if funding for Afghanistan continues to scale back and Congress decides the current operating budget is USAID’s new normal. USAID’s operating expenses budget took a hit this year, and agency planners are still trying to figure out what it means for the agency’s ability to pay salaries, hire new staff and fund the administrative costs of managing programs at headquarters and country missions beyond fiscal year 2014. The current operating expenses appropriation includes both “enduring” funds for the agency’s ongoing programs as well as “Overseas Contingency Operations” funds — the Obama administration’s term for stabilization and reconstruction programs in Afghanistan, Pakistan and Iraq, formerly known as the “global war on terrorism.” The overall OE appropriation for USAID declined 11 percent, or $139 million, from the fiscal year 2013 post-sequestration level. However, funding for enduring operating expenses — as opposed to OCO funds — actually rose by $22 million from last year. That means the entire reduction came from cuts to the OCO portion of the OE appropriation. “Given how constrained the budget environment is, USAID views this mark favorably and should be able to maintain its current level of operations this year,” an agency official told Devex. The official was optimistic USAID will be able to carry over unspent money and “recoveries of prior year obligations” to balance out the cut to the operating budget this year. However, the agency’s budget forecasters are less hopeful they can absorb the impacts beyond 2014 if Congress decides the 2014 appropriation is USAID’s new normal. “All carryover funding will be exhausted this year, which will make fiscal year 2015 very challenging if the fiscal year 2014 enacted level becomes USAID’s new base for future appropriations,” the official added. With the decline in operating expenses funding associated with a declining U.S. presence in Afghanistan, USAID’s window for building up the staffing numbers and expertise required for activities like internal project design evaluation, procurement reform, and investments in science, technology, and innovation, could be closing. Read more on U.S. aid reform online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.