What the bipartisan budget agreement means for foreign aid

The Bipartisan Budget Act of 2015 includes a heavy dose of funding for the state and foreign operations account that bankrolls U.S. aid programs. That’s great news for U.S. development programs, right? In the short term, yes. But looking further ahead, some analysts worry the U.S. government is paying for aid programs with money it shouldn’t count on having forever, while failing to resupply the base funding account that provides ongoing programs with more financial security. The budget act, which both congressional chambers approved and which President Barack Obama signed into law last week, includes an appropriation of $15 billion in “overseas contingency operations” funding for each of the next two years. That OCO money is an emergency funding pool associated with the global war on terror. But in recent years, budget negotiators have tapped this special set-aside for programs well-beyond active war zones or anti-terror missions. Broadly speaking, it’s not difficult to draw connections between foreign aid programs and a global peace and security agenda, which OCO was designed to fund. But today, appropriators use “contingency operations” funds to pay for programs that few aid watchers would describe as “contingent,” humanitarian assistance for example. And that makes some aid advocates nervous. “For our community, we’re really concerned about how much of the OCO funding is used and whether money is taken out of [State and Foreign Operations] and spent elsewhere in the base,” said Mark Lotwis, vice president for policy and government relations at InterAction. Now that the top-line budget numbers are set, the next step is for the appropriations committee to decide on spending caps — or 302(b) allocations — for each of its subcommittees, including State and Foreign Operations. The foreign aid account could even be a victim of its own success. If Congress were to add $15 billion in OCO funding to the roughly $40 billion both chambers agreed to provide state and foreign operations earlier this, the total appropriation would already meet or even exceed the president’s total request of roughly $53 billion. While that might sound like a win, it could attract some unwanted attention. Foreign aid advocates might prefer not to have to explain why their programs received more money than even the administration asked for when other priorities, like domestic infrastructure and education, remain cash-strapped, said Kate Eltrich, a partner at Sixkiller Consulting. For that reason, both Lotwis and Eltrich agree that even though the bipartisan budget agreement is freeing up a significant amount of additional spending — $25 billion for nondefense programs — foreign aid accounts shouldn’t count on seeing any of that. There’s some concern that state and foreign operations could even see a cut to its base account in the next year or two as more programs get funding from OCO. The reason that’s concerning is that many expect OCO funding to draw down over time as U.S. military commitments subside. The account was created for temporary, unpredictable expenses. That’s not how most aid advocates describe their programs though. “Our community is deeply concerned about this downward pressure on the SFOPS base funding,” Lotwis said. So on one hand the OCO boost will allow Congress to fund critical, lifesaving programs and respond to emerging crises like Syria to an extent past budgets have not allowed. And with the $15 billion from OCO those humanitarian programs won’t have to compete against domestic spending priorities. But on the other hand, foreign aid is seeing a rise in the proportion of its funding that comes from a special, provisional account — tied to a war that’s supposed to end. Stay tuned to Devex for more news and analysis of U.S. aid, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you FREE every business day.