FY2018 Foreign Aid Budget Request: Impact on USAID

FY2018 Foreign Aid Budget Request: Impact on USAID

May 31, 2017
FY2018 Foreign Aid Budget Request: Impact on USAID
If enacted, the Trump Administration’s FY2018 foreign aid
Program Funding Accounts
request would have a deep impact on current program
recipients, sectors, and operations of the U.S. Agency for
All of USAID’s appropriations program accounts would be
International Development (USAID), the leading
cut under the FY2018 proposal. Two issues are particularly
humanitarian and development arm of the U.S. government.
noteworthy:
Agency Funding Levels
First, the FY2018 request would zero fund the P.L.480 Title
II Food for Peace program within the Agriculture
The USAID budget is made up of 14 appropriations
appropriations and support food aid entirely through the
accounts—10 supporting aid programs and 4 supporting
International Disaster Assistance (IDA) account instead.
agency administration. Seven program accounts are “fully-
P.L.480 restrictions that limit the proportion of funding that
owned” by the agency, but three—State’s Global Health
can be used for cash purchases of food commodities in local
(HIV-AIDS), Economic Support Fund (ESF), and the
markets would not apply. Commodities purchased abroad
Assistance for Europe, Eurasia & Central Asia (AEECA)
would not be subject to cargo preferences requiring use of
accounts—are “shared” with other agencies, with USAID
U.S. shippers to deliver half of food aid.
receiving between 60% and 94% of funding from these
Second, the Development Assistance (DA), ESF, AEECA,
accounts in any given year. This makes any calculation of
Democracy Fund, and International Organizations and
its real functioning budget somewhat imprecise—if only
USAID’s portion of these accounts is
Programs (IO&P) accounts would be eliminated and
counted, the agency’s
replaced by an Economic Support and Development Fund
budget is likely $2-$4 billion less than the $25 billion
(ESDF). The ESDF is described in the FY2018 State,
FY2017 level, which includes both fully and partially
Foreign Operations Congressional Budget Justification as
managed accounts.
supporting “those countries and programs that are most
The FY2018 proposal would severely cut the USAID
critical to U.S. national security and strategic objectives.”
budget however it is defined. Total program and
The Administration provides no measure to distinguish
administrative funding would be cut by 39% from FY2017
recipients of the new ESDF from those countries expected
levels (counting the Security Assistance supplemental
to no longer receive DA or ESF. While the Administration
appropriations approved in December 2016, P.L. 114-254).
would likely argue that assistance should be provided
Total program funding, including shared accounts, would
foremost to countries of strategic significance to U.S.
be decreased by about 41%—the shared accounts would be
interests, many observers contend that eliminating dozens
cut by only 12%, but USAID’s core, solely managed
of recipients is a short-sighted strategy. In their view, it
program budget would be cut by nearly 67%.
ignores the potential for every low-income country to
Administrative Accounts
become a focus of terrorism, disease, and political
instability if their problems are not addressed before they
Relative to the program cuts, the agency’s administrative
get out of hand. Further, many note that foreign assistance
budget would be reduced by a comparatively light 13%
is often an entryway for collaboration with foreign
from FY2017 levels. However, personnel levels are
government ministries that diplomatic approaches lack.
expected to fall by 16% overall among U.S. direct hires
It is not clear under what specific legal authorities the
between now and the end of FY2018. The number of
ESDF would operate. State Department officials indicated
Foreign Service Officers will decline by 9% and civil
they have no plan to offer draft legislation to establish the
service by 25%. Both are expected to fall as a result of the
ESDF in law, saying it would be regulated by the
current hiring freeze and attrition.
authorities that currently apply to all five of the accounts it
Diminished personnel levels, as well as cuts to key
would absorb. As ESF and DA have discrete authorities
functional bureaus that support agency programs, raise
within the Foreign Assistance Act of 1961 (P.L. 87-195, as
concerns regarding the ability of the agency to maintain
amended), Congress may wish to clarify the parameters of a
technical expertise in key development sectors. The Policy,
new aid account.
Planning and Learning Bureau, which leads strategic
Aid Recipients
thinking and evaluation practices for the agency, would be
reduced by 44% from FY2016 levels, the most recent year
Thirty-seven countries that received DA, ESF, or AEECA
data available for bureaus and sectors. The agency’s
in FY2016 would no longer receive funding through these
agriculture back-stop, the Bureau for Food Security, would
accounts or the proposed ESDF. Assistance to 18 of these
be cut by nearly 71% and its Economic Growth, Education,
countries was under $5 million, but a number of larger
and Environment Bureau’s budget would be decreased by
programs would be eliminated, including Mozambique ($43
about 38%. The Global Development Lab, perhaps the most
million in FY2016), Zambia ($39 million), Cambodia ($43
prominent legacy of former Administrator Rajiv Shah,
million), India ($27 million), and Sri Lanka ($38 million).
which promotes the application of science and technology
Budget documents do not discuss possible USAID mission
to development problems, would be cut by 85%.
closures.
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Aid Sectors
Health program would be cut by 51%. Together, health and
Large-scale program funding cuts would translate into
humanitarian sectors would, however, likely continue to
decreased funding for specific development assistance
represent about two-thirds of USAID sector funding. With
sectors. USAID’s humanitarian programs—International
regard to sectors mostly funded from the DA and ESF
Disaster Assistance and P.L.480 food aid—would be cut
accounts, basic education would be cut by 53%, higher
collectively by 58% from FY2017 levels, with P.L.480
education by 46%, biodiversity by 76%, microenterprise by
eliminated entirely. The agency’s solely managed Global
63%, water and sanitation by 41%, and democracy and
governance by 31%—all from FY2016 levels.
Table 1. USAID Fully and Partially Managed Program and Administration Appropriations
(in current $ millions)
% change
FY2017
FY2018
FY17-FY18

FY2016
est.
req.
req.
USAID Program (Fully and Partially Managed) TOTAL
21,579.5
23,548.4
14,018.9
-40.5%

Core Programs (Fully Managed by USAID):
10,431.0
12,294.6
4,105.7
-66.6%
—Global Health Programs—GH-USAID
2,980.8
3,054.9
1,505.5
-50.7%
—Development Assistance (DA)
2,781.0
2,995.5
0.0
-100%
—International Disaster Assistance (IDA)
2,794.2
4,126.3
2,508.2
-39.2%
—Transition Initiatives (TI)
67.0
122.8
92.0
-25.1%
—Complex Crises Fund (CCF)
30.0
30.0
0.0
-100%
—Development Credit Authority (DCA) Subsidy [Possible Transfer from
other Accounts]
[40.0]
[50.0]
[60.0]
20%
—P.L. 480 Food for Peace Title II (USDA Appropriations)a
1,716.0
1,900.0
0.0
-100%
—Democracy Fund (allocation to USAID)
62.0
65.1
0.0
-100%

Shared Programs (Partially Managed by USAID):
11,148.5
11,253.8
9,913.1
-11.9%
—Global Health Programs—GH-State Dept.
5,670.0
5,670.0
4,975.0
-12.2%
—Economic Support Fund (ESF)
4,493.8
4,681.5
0.0
-100.0%
—Economic Support and Development Fund (ESDF)b
—
—
4,938.1
—b
—Assistance for Europe, Eurasia & Central Asia (AEECA)
984.7
902.3
0.0
-100%

USAID Administration TOTAL:
1,535.3
1,643.3
1,420.9
-13.5%
USAID Operating Expenses
1,292.9
1,363.2
1,182.3
-13.3%
USAID Capital Investment Fund
168.3
200.0
158.0
-21.0%
Development Credit Authority Administration
8.1
10.0
9.1
-9.0%
USAID Inspector General
66.0
70.1
71.5
2.0%

TOTAL: USAID Program (Fully and Partially Managed) &
Administration
23,114.8
25,191.7
15,439.8
-38.7%
Source: Department of State Budget Documents and CRS Calculations.
Notes: Totals include Overseas Contingency Operations (OCO) and transfers. FY2017 appropriations include additional funds provided in the
Security Assistance Appropriations Act, 2017 (P.L. 114-254, Division B): USAID OE: $5mil ion; CIF: $25 mil ion; IG: $2.5 mil ion; IDA: $616.1
mil ion; TI: $50.2 mil ion; ESF: $1,030.5 mil ion; and AEECA: $157 mil ion.
a. P.L.480, Title II, managed by USAID, is funded in the Agriculture Appropriations legislation. Other USAID accounts are appropriated in
the State, Foreign Operations, and Related Programs Appropriations legislation.
b. ESDF, proposed for FY2018, combines DA, ESF, Democracy Fund (including State portion: $145.4 mil ion), Assistance for Europe, Eurasia,
& Central Asia (AEECA) and IO&P accounts. These totaled $9,063.1 mil ion in FY2017. ESDF, therefore, represents a 45.5% cut from the
FY2017 level.

Curt Tarnoff, Specialist in Foreign Affairs

IF10662

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FY2018 Foreign Aid Budget Request: Impact on USAID

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