Opinion: 5 next steps for USAID now that policy and budget are merged

The U.S. Agency for International Development began 2024 celebrating the correction of a four-decade separation of policy, strategy, and budget: Administrator Samantha Power swore in Michele Sumilas as head of the newly instituted Bureau for Planning, Learning and Resource Management on Jan. 10. With the PLR bureau now fully functional, there are further steps to take for its full potential to be reached, including adequate staffing, ensuring the PLR bureau is led by a Senate-confirmed assistant administrator, and establishing productive workflows with USAID’s new independent Offices of Policy and the State Department’s Office of Foreign Assistance. Over a decade in the making The rejoining of these critical and interdependent functions into a single bureau has been a key recommendation for improving USAID’s effectiveness for more than a decade. It was proposed in 2009 when Rajiv Shah was appointed USAID administrator and the agency’s staff strongly recommended it reinstitute policy planning and budget capabilities, which had been moved to the Department of State in 2006, leading to the creation in 2010 of the Bureau for Policy, Planning and Learning and the Office of Budget and Resource Management. It took years to build back USAID’s capacity after it was moved to the Department of State in 2006, critical to guiding the world’s largest bilateral development agency. While this was an important first step, separate lanes for policy planning and budget have been consistently raised as an obstacle to coherent development leadership. Completing USAID’s reorganization plan Under former USAID Administrator Mark Green, a “transformation” plan for the agency’s reorganization was launched, which included bringing policy and budget together. This was the only major element of the well-designed reorganization plan that was still left to be executed when the Biden administration assumed office in 2021. Now the reorganization is complete under Administrator Power, and the PLR bureau will align budget, strategy, and planning. This means the agency can ensure the three are integrated and coherent, be more responsive to administration priorities, and operate with greater efficiency. Significantly, the merger moves budget from an independent office into a bureau, which puts PLR more at the level of its principal Department of State counterpart, the Office of Foreign Resources. Budget and policy go hand in hand There is much truth to the adage that “budget is policy” and to the operational principle that “policy should drive budget.” In an ideal world, budgets flow from policy. For the first three decades of USAID’s existence, budget and policy were joined together in the Bureau of Policy and Program Coordination, or PPC. The head of the bureau was a key adviser to the administrator and was the principal USAID representative in senior interagency deliberations and congressional hearings and markups. But foreign assistance does not operate in an ideal world. USAID began to lose these authorities at the end of the Clinton administration with the attempt of Senator Jesse Helms to eliminate USAID. The compromise reached was to shift budget oversight to the State Department to save the agency from being folded into the department. Every administration seeks to function via a set of policies and strategies, but they do not operate in a vacuum — they confront congressional earmarks and directives, foreign policy imperatives to support or withhold support from a country or organization, global crises that disrupt policy and budget, and greater demands for funding than budgets can meet. There is constant friction between policy and budget that is nearly impossible to align if the two are managed separately with two disparate sets of staff responding to different demands. Further, discussions between government departments and agencies and with Congress are never just about policy or just about budget, they are about how the two are aligned to advance U.S. development priorities. USAID needs to be represented by officials who understand both. The best thought-out policy will be irrelevant, possibly counterproductive, if there are inadequate resources — human and financial — to carry it out, or even if there is too much budget due to political interests proposing a large influx of funding, like what happened in Afghanistan or Iraq. What too often happens after the completion of a well-designed policy or country strategy is inadequate budget for implementation. For example, in 2022 USAID revised and issued a thoughtful, robust Youth Policy in Development, but there has been little funding for youth programs. A second example is assistance to Africa, where USAID missions regularly identify the need for the U.S. to be more engaged in building democracy and economic growth, yet in 2022 over 80% of available funding — $14.2 billion of $17 billion — was allocated for humanitarian and health, leaving little for the range of other development sectors. The dynamics are best explained in an oral history by former Assistant Administrator Alex Shakow who headed PPC at a time when the bureau was responsible for policy, planning, and budget: “By taking away the budgetary responsibilities of PPC, it really diminished significantly the value of PPC to the Administrator. … The budgetary clout and what went on in trying to understand how funds were being used, and what they should be used for, is just very important. … I think it ought to be tied to policy much more than it has been.” What actions are needed to allow the PLR bureau to reach its potential? It is our recommendation as longstanding policy analysts that the following five steps be taken to ensure the PLR bureau is set up to fulfill its mission: 1. Designate the head of the PLR bureau as a Senate-confirmed position: Recognizing that the head of the PLR bureau is one of the senior-most important positions in the agency, it should be designated as a Senate-confirmed position so that the assistant administrator has the stature to fully represent the agency. 2. Increase staffing and expertise for the PLR: The bureau needs to be adequately staffed in numbers and expertise — especially to be able to support USAID’s seat on the National Security Council — and include staff exchanges with pillar and regional bureaus so there is full integration of policy and budget with the operating bureaus. 3. Clearly define the role of the Office of Policy: The role of the new independent Office of Policy, established by Administrator Power to address wider foreign policy and national security issues that impact development, such as engagement on the National Security Strategy or migration policy, should be clearly delineated to ensure that its important work on policy development and engagement is institutionalized and avoids duplication with the PLR bureau and plays a key interagency role in the future. 4. Strengthen the working relationship between PLR and the Department of State: The PLR bureau’s main counterpart/interlocutor at the Department of State is the Office of Foreign Resources. The functionality of the relationship depends largely on the personalities holding the principal positions. A strong working relationship is key for addressing many of the most significant interagency interactions on foreign assistance. It needs to function constructively and not be dependent on professional relationships based on personalities. The secretary of state, the administrator, or their deputies, should negotiate a memorandum to right-size the Office of Foreign Resources, specifically delineating its core role for interagency assistance coordination and USAID’s role in the management of development resources and programs. 5. Institutionalize the Policy Advisory Council: The PLR bureau and Office of Policy should institutionalize the Policy Advisory Council and provide leadership for USAID’s policy development for cross-cutting priorities, as well as reviewing sectoral and regional strategies to align budget, policy, and strategy. Authors’ note: This commentary is in honor of Tom Fox, assistant administrator for the Bureau of Policy and Program Coordination in the mid-1990s and lifelong stellar development leader, who died Jan. 3, 2024.