U.S. Foreign Assistance: Budget Development and Execution

U.S. Foreign Assistance: Budget Development and Execution

April 23, 2020
U.S. Foreign Assistance: Budget Development and Execution
U.S. foreign assistance provided through Department of
those specific to SFOPS, such as the 653(a) Report, country
State, Foreign Operations, and Related Programs (SFOPS)
funding directives, and certain congressional notifications.
appropriations is subject to a high level of congressional
input, as mandated under the Foreign Assistance Act of
Budget Development and Request
1961 (FAA, P.L. 87-195), as amended. Congress works
The budget request that the President submits to Congress
with the relevant executive agencies through a distinctive
is the product of an 18-month negotiation process among
executive-congressional process to allocate assistance,
OUs, budget offices, State/F, and OMB.
especially allocations by country in Titles III and IV. The
process described in this product is particular to SFOPS
Mission/Bureau Resource Request (begins two years
assistance and focuses especially on the executive branch
prior to fiscal year start). An OU initiates budget planning
and congressional oversight. More information on
by developing an explanation of its strategic priorities for
appropriations is at https://www.crs.gov/iap/appropriations.
the fiscal year and the human and financial resources
needed to achieve them. These proposals serve as the basis
Key Actors
for the agency-wide budget requests that administering
Several entities across the executive and legislative
bureaus negotiate with budget offices, which then submit
branches play formal decisionmaking roles in the process:
them to OMB. One year before the start of the fiscal year,
OMB sends agencies’ budget requests back to agencies,
Office of Management and Budget (OMB): Part of the
requesting revised funding levels that align with the
Executive Office of the President, OMB formulates funding
President’s budget priorities in a step known as “passback.”
proposals and oversees federal spending to align with the
State and USAID negotiate between OMB and OUs to align
President’s priorities.
their budgets with the President’s priorities.
State Bureau of Budget and Planning (State/BP) and
President’s Budget and Congressional Budget
U.S. Agency for International Development (USAID)
Justification (CBJ) (early February prior to fiscal year
Office of Budget and Resource Management
start). OMB submits the President’s Budget, the
(USAID/BRM): These budget offices coordinate budget
Administration’s annual budget request, to Congress (31
development between operating units and OMB, focusing
U.S.C. §1105) after negotiating funding levels with
on legal and administrative issues. They administer account
agencies. State publishes its own CBJ on the same day,
funding once it is appropriated.
which articulates requested budget needs and proposed
activities. State issues annexes providing detailed country-
Office of Foreign Assistance Resources (State/F): Based
level account breakdowns after publishing the CBJ, usually
in the State Department (State) and staffed by USAID and
several weeks later (FAA Section 634, 22 U.S.C. §2394).
State personnel, State/F sets overall strategy for U.S.
foreign assistance and steers funding to advance those
Budget Consideration and Enactment
goals, coordinating between operating units and OMB.
Appropriations Act/Conference Report/Joint
Explanatory Statement (required before start of fiscal
Administering Bureau: For each account, a select State or
year). With the President’s Budget, the CBJ, and
USAID bureau is designated to coordinate budget requests
Administration officials’ budget hearings, Congress
and administer funds after they are appropriated.
formulates annual SFOPS appropriations. Titles III and IV
of the bill set account appropriations, and Title VII,
Operating Units (OUs): Over 200 headquarters bureaus
“General Provisions,” includes funding directives for
and overseas posts (including missions and embassies)
certain countries. An accompanying conference report or a
submit budget proposals to their parent agencies and
Joint Explanatory Statement (JES) includes “allocation
ultimately oversee the expenditure of appropriations.
tables” designating account breakdowns for country
funding directives. In recent years, Congress has included a
Relevant Committees: The Appropriations Committees of
provision in SFOPS (Section 7019 of the FY2020 Act)
the House and Senate, the Senate Foreign Relations
barring the Administration from deviating below funding
Committee, and the House Foreign Affairs Committee each
levels in these allocation tables by more than 10% without
contribute to foreign assistance allocation decisions.
congressional consultation.
Budget Process
653(a) Report (sent to Congress 30 days after
The process described here is a composite of government-
appropriations enacted, as required by the FAA). State/F,
wide budget procedures, such as the President’s Budget,
State/BP, and USAID/BRM develop a comprehensive table
congressional appropriations, and OMB authorities, and
that satisfies the funding directives and allocation tables set
https://crsreports.congress.gov

U.S. Foreign Assistance: Budget Development and Execution
by Congress, then allocates remaining funds as agencies
Reporting Spending (February following fiscal year end).
determine (FAA Section 653(a), 22 U.S.C. §2413). Certain
State and USAID calculate funding “Actuals” by country
accounts are typically allocated by country in this “653(a)
and account and incorporate them into the following year’s
Report,” while other accounts are allocated to central
CBJ (e.g., FY2018 Actuals appear in the FY2020 CBJ).
bureaus to fund responses to emerging events:
Actuals represent a final plan for allocation, but not
necessarily final obligations or disbursements—agencies
 Allocated accounts: Global Health Programs; Economic
may continue to reprogram or transfer funds, particularly
Support Fund; Assistance to Europe, Eurasia, and Central
because most funds are available beyond that fiscal year.
Asia; International Narcotics Control and Law
Authoritative final figures are reported in USAID’s Foreign
Enforcement; Foreign Military Financing; International
Aid Explorer by the fiscal year of obligation and
Military Education and Training; Nonproliferation, Anti-
disbursement (FAA Section 634, 22 U.S.C. §2394).
terrorism, Demining, and Related; Development
Assistance; Democracy Fund.
Issues for Congress
 Situation-responsive accounts: Peacekeeping
Tracking Funds. No data repository connects funding from
Operations; Transition Initiatives; Migration and Refugee
each budget stage. Both USAID’s Foreign Aid Explorer
Assistance; Complex Crisis Fund; United States
and State’s ForeignAssistance.gov databases focus on
Emergency Refugee and Migration Assistance Fund;
obligations and disbursements. Neither connects enacted
International Disaster Assistance.
funding to expenditures, presenting difficulties in reviewing
adherence to congressional mandates or 653(a) allocations.
Budget Execution
Apportionment (30 days after appropriations enacted, and
Funding Requirements. OUs have expressed concern that
ongoing if changes needed). An “apportionment” is OMB’s
the average of more than 700 annual SFOPS directives in
authorization to the State and USAID budget offices to
recent years may contradict OUs’ expertise or create new
obligate funds (31 U.S.C. § 1512). Apportionments
burdens for already-constrained administrative staff. Others
typically provide a timetable to obligate funds, often by
have argued that these directives achieve balance between
quarter. This timetable is meant to avoid “deficiencies”—
presidential and congressional authority, with OUs able to
prematurely exhausting funds and thereby requiring
provide input to Congress as it enacts appropriations.
additional appropriations—and to avert unlawful
“impoundments”—preventing appropriated funds from
Reporting Delays. State has delivered the 653(a) Report
being spent. These twin requirements aim to set a spending
five months late on average in recent years, and it releases
pace that is neither too fast to cause a shortfall, nor too slow
CBJ country annexes several weeks after the CBJ. The
to prevent expenditure of appropriations before they expire.
Government Accountability Office (GAO) has made and
State has concurred with recommendations to resolve such
Allotment and Sub-allotment (following apportionment).
delays, which may impede congressional input in country
Upon apportionment, budget offices manage administering
allocations or lead to congressional funding holds.
bureau requests for “allotments.” Although allotments are
not necessarily statutorily binding, they are roughly
Transparency. While the CBJ is public, the 653(a) Report
analogous to apportionments—they give instructions for
is not. As Congress has appropriated much more SFOPS
administering bureaus about obligating funds. For overseas
funding than requested in recent years, the 653(a) Report
posts, administering bureaus then “sub-allot” funds to OUs.
has become more important in allocation decisions. Despite
laws like the Foreign Aid Transparency and Accountability
Transfers and Reprogramming (ongoing). Programmatic
Act of 2016, P.L. 114-191, the greater role of 653(a)
or other changes may prompt agencies to adjust the plans
allocations has reduced transparency for the general public.
described in the CBJ and the 653(a) Report. These changes
may include transfers—a shift of funds across accounts—
Program Planning. Trump Administration budget requests
and reprogramming—redirecting funds within an account.
have regularly proposed 30% less foreign assistance than
Congress ultimately has enacted. OUs’ budget plans and
Congressional Notifications (CNs) and Holds (15 days
proposals thus do not align with the funding they ultimately
prior to an action). No less than 15 days prior to obligation
receive. Congress may consider whether to adapt the budget
of certain funds, as well as transfers and reprogramming,
planning process with participatory budgeting approaches
agencies must notify the relevant committees prior to (1)
both to engage appropriators early, as OUs begin
intent to obligate certain funds, and (2) transfers or
developing budgets, and to engage OUs in appropriations
reprogramming (FAA Section 634A, 22 U.S.C. §2394–1).
dialogue, as funding directives are established.
The committees may place a hold to delay obligation and
confer with an agency. This may lead to further
Apportionment Notifications. OMB’s apportionment
justification, funding adjustments, or reprogramming.
authority has drawn recent controversy. In 2019, security
assistance to Ukraine was delayed without a CN. GAO
Obligation and Disbursement (ongoing). After the prior
determined this delay was improper, but OMB disputed that
steps, OUs may contract to spend funds (i.e., “obligate”
opinion. Obligations often require CNs, but decisions not to
funds). Following obligation, agencies may direct the
obligate may not. Congress may consider whether OMB’s
disbursement of funds after receiving goods or services.
interpretation of CN responsibilities align with
congressional interests.
https://crsreports.congress.gov

U.S. Foreign Assistance: Budget Development and Execution

Nick M. Brown, Analyst in Foreign Assistance and
Foreign Policy
IF11515

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https://crsreports.congress.gov | IF11515 · VERSION 1 · NEW