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Budget Justification
FY 2001
>> Return to Home Page >> Operating Expenses, USAID OPERATING EXPENSES
Dollars in Thousands FY 1988
ActualFY 1999
ActualFY 2000
EstimateFY 2001
RequestFor FY 2001, USAID is requesting $520,000,000 in Operating Expenses (OE). These funds, combined with other funding sources, such as local currency trust funds, will provide a total of $586,848,700 to cover operating costs of the agency for FY 2001, compared to $573,641,000 in FY 2000. These funds are required to enable the Agency to maintain the staff necessary to carry out the important national security and foreign policy activities of which the development, economic, and humanitarian programs USAID manages are a part.
Sources of Funding for Operating Expense Costs. The operating costs of USAID are financed through several sources, including new budget authority, local currency trust funds, reimbursements for services provided to others, recoveries of prior year obligations, and unobligated balances carried forward from prior year availabilities, as shown below.
Local currency trust funds available for recurring Operating Expense costs continue to decline, with anticipated availabilities dropping to $25.6 million in FY 2001 compared to $39.1 million in FY 1999. In addition, recoveries of prior year funds will decline significantly during the next two years from the high of $21.6 million in FY 1999. The large recovery level in FY 1999 was due largely to a concerted effort to review all unliquidated obligations to ensure funds not required were deobligated. This is an on-going effort which is anticipated to result in higher than normal recoveries in FY 2000 as well ($16.5 million estimated), but recoveries are anticipated to decline by FY 2001 to a level of about $14 million as prior year obligations are cleaned up. With these reductions in non-appropriated funds, it becomes even more critical that the full request for Operating Expenses be provided.
Funding Sources for Operating Expenses
($000)Category FY 1998
ActualFY 1999
ActualFY 2000
EstimateFY 2001
RequestAppropriated Operating Expenses Appropriation Transfers Rescission Availability - New Budget Authority OE Unobligated Balance Obligations - New Budget Authority OE Program Funds -- Environmental Travel SEED Funds used for OE Local Currency Trust Funds (Recurring) Local Currency Trust Funds (Real Property) Reimbursements Unobligated Balance, Start of Year Rescission Recovery of Prior Year Obligations Unobligated Balance, End of Year Obligations - Other Funding Sources Total Obligations Use of Operating Expenses. The OE budget can be described most easily in terms of the 8 major uses of the funds:
- U.S. Direct Hire Salaries and Benefits
- Field Mission Support Costs
- Field Mission Facility Relocations
- Information Technology
- Washington Rent, Utilities and Support Costs
- Washington Office and Bureau Budgets
- Staff Training
- Other Agency Costs
Shown below are the funding levels from FY 1998 through FY 2001, together with U.S. direct hire workforce levels, followed by a brief description of each category and explanation of the FY 2001 funding requirement.
Category FY 1998
ActualFY 1999
ActualFY 2000
EstimateFY 2001
RequestU.S. Direct Hire Salaries and Benefits Field Mission Support Costs Field Mission Facility Relocations Information Technology Washington Rent, Utilities, Support Costs Washington Office and Bureau Budgets Staff Training Other Agency Costs Total Obligations U.S. Direct Hire Workforce End-of-Year On-Board Levels Full-Time Equivalent Workyears U.S. Direct Hire Salaries and Benefits ($213.3 million - $4.3 million over FY 2000)
About 36% of the OE budget goes to fund salaries and benefits of U.S. direct hire employees. Costs under this category include salaries and the Agency share of benefits, such as retirement, thrift plan, social security, and health and life insurance, for all U.S. direct hire personnel. The major reasons for the increase in costs are:
- full year funding of the January 2000 Federal pay raise (only 9 months funding in FY 2000);
- the impact of an anticipated January 2001 Federal pay raise, and;
- the fact that a larger share of the Agency's total workforce is now under the new retirement systems, which are more expensive to the Agency.
The budget for FY 2001 will support salary and benefit costs to maintain the FY 2000 overseas workforce level of 653. The workforce level in Washington, however, will decline from 1,401 at the end of FY 2000 to 1,383 at the end of FY 2001. This reduction is due to the shift of some staff from OE funding to Credit Administrative Expense funding beginning in FY 2001 under the proposed consolidated credit program. Credit Administrative Expense funding, which includes costs to support 29 U.S. direct hire, is discussed in the section on Credit.
Field Mission Support Costs ($227.3 million - $8.2 million over FY 2000)
This category, representing the cost of maintaining field missions, comprises 38% of total OE funding in FY 2001. The major categories of costs are:
- Salaries and benefits for foreign service national (FSN) direct hire and Personal Service Contractors (PSCs) and U.S. PSCs overseas. For FY 2001, mission funded salary and benefit costs will be about $94.3 million, or 41% of total field costs. Savings in this major category of costs can be achieved only if the already limited staffing levels at field missions were to be reduced even further.
- Residential and office rents, utilities, security guard costs, and communications. The Agency will require about $49.3 million in FY 2001 to fund these costs - 21% of total overseas funding. As with mission funded salaries and benefits, these costs are mandatory over the short-term and with given workforce levels.
- International Cooperative Administrative Support Services (ICASS), the cost of administrative support provided to missions by other U.S. Government agencies (generally the Department of State) will cost an estimated $21.9 million in FY 2001.
- Supplies, materials, and equipment. This category includes the cost of replacing worn out office and residential equipment, official vehicles, IT hardware and software, and general office and residential supplies and materials. Missions estimate that $18.2 million will be required in FY 2001 to cover essential replacement items.
- Mandatory travel and transportation costs such as post assignment, home leave, and R&R, will cost $16.5 million.
- Operational and training travel. Essential travel to visit development sites, work with host country officials, and other travel of an operational nature, combined with travel to obtain training will cost $12 million in FY 2001.
- Operation and maintenance of facilities and equipment. In FY 2001, $6.3 million is required to fund the cost of operating and maintaining facilities and equipment at overseas missions.
Field Mission Facility Relocation Costs
In addition to recurring support requirements, OE funds were used in FY 1998 through FY 2000 for Field Mission Facility Relocations - the cost of moving into new office facilities and/or the purchase or construction of new office facilities. The estimate for FY 2000 includes $15 million for the new office in Tanzania, the balance being trust funded costs related to the new office building in Cairo. For FY 2001, the budget request of the Foreign Buildings Office of the Department of State includes $50 million for USAID projects that will be used for the new office buildings in Kenya and Uganda if approved by the Congress.Information Technology ($72.5 million - $17.0 million over FY 2000)
FY 1998
ActualFY 1999
ActualFY 2000
EstimateFY 2001
RequestTelecommunications Systems Maintenance Technical Support (clients) Equipment Operation/Maint. IT Purchases All Other IT Subtotal Systems Development Total IT Budget In discussing the Information Technology (IT) budget, it is useful to distinguish between costs of keeping minimal operations going and costs for capital improvements (systems development). As shown above, the majority of the IT budget is required to cover on-going costs (the large reduction from FY 1999 to FY 2000 being in part related to the funds spent in FY 1999 for Y2K related activities - $10.7 million from a supplemental appropriation.)
- The category of telecommunications reflects the cost of the Agency's telephone system and access to the Department of State's overseas communications system (DTS-PO).
- Systems maintenance costs are primarily related to maintenance of legacy systems ($3.5 million in FY 2000 and $3.9 million in FY 2001.) The balance is for maintenance of the current version of the Agency's Washington based financial management systems, i.e. NMS. The funding levels identified will cover only minimal maintenance. If funding to complete the replacement of the core financial system is not provided, costs associated with maintaining legacy systems will be significantly higher.
- The largest expense for FY2000 and FY2001 is for technical support. This category includes funds to support the contractor costs associated with areas such as the Information Technology Help Desk, Mission Support, Business Analysis, Internet Data Services and other IT Support Services.
- The second largest expense for FY2000 and 2001 in this budget summary is for Equipment Operation and Maintenance. This includes the mainframe computer, LAN/UNIX servers, end-user hardware, cable room operations and Information Technology Security maintenance. Amounts identified are the bare minimums necessary to operate and maintain equipment - any reductions would result in significant increases in down-time when problems develop and would bring into question the ability of the Agency to have equipment operational during weekends (access to the mainframe and LAN servers).
- IT Purchases cover the purchase of both hardware and software items required to maintain operations. Major IT Purchases for 2000 and 2001 include plans to upgrade USAID's network operating systems in Washington and in overseas missions. The purchase of a new network operating system, estimated to cost $14.4 million, will allow USAID to avoid a major vulnerability of using an operating system for the USAID network that is no longer widely supported in the IT industry and that no longer has a broad customer base. Replacement of the operating system will eliminate the risk of continuing use of an operating system that is facing technical obsolescence.
- The All Other category covers a multitude of other costs, such as IT security ($1.9 million in FY 2000 and $2.8 million in FY 2001), Facilities Management Support for the Technical Hub in Rosslyn, Virginia ($1.6 million in FY 2000 and $1.6 million in FY 2001), FEDSIM fees to other government Agencies, supplies and materials.
- Systems Development includes capital improvements in the Agency's core financial system. These improvements are needed to strengthen stewardship of Agency resources, eliminate material weaknesses, improve business processes and assure critical financial services are delivered better, quicker and cheaper. Failure to make the improvements will result not only in problems in managing resources entrusted to the Agency, but would require significantly higher costs to maintain the various legacy systems and NMS to keep them operational. Under consideration by USAID's Administrator is a proposed plan whereby the Agency would enter into a cross-servicing agreement with another Federal agency for personnel and payroll transaction processing services to reduce the cost of IT operations and improve the quality of services and reporting for Agency personnel. The Agency's mainframe-based personnel and payroll systems capital assets will eventually be retired. Using the services of another Federal Agency to process USAID's personnel and payroll actions will also reduce the following two major vulnerabilities: 1) a declining in house direct hire support staff and 2) increased difficulty maintaining and operating a 30 year old Human Resources data base system.
- Capital improvements in the Agency's procurement system (A&A) will assure integration of accounting and procurement services, improve and extend procurement services, achieve compliance with regulatory reporting requirements and allow us to provide consistently reliable information to Agency personnel as well as personnel outside the Agency. It is critical that adequate resources be made available to improve the existing procurement software module to enhance performance and to assure the system is ready to be successfully integrated into the Agency's new core financial system.
Every effort has been made to optimize available funds for IT capital improvements. The funding identified for capital improvements would be used as follows:
FY 1998
ActualFY 1999
ActualFY 2000
EstimateFY 2001
RequestAccounting Systems Procurement Systems Operating System Upgrade At the FY 2000 and 2001 funding levels, the Agency will be able to do the following:
- Acquire and implement a replacement accounting system in USAID/W.
- Prototype new accounting system at two overseas missions.
- Update USAID's Network Operating System
Washington Rent, Utilities, and Support Costs ($39.0 million - $2.4 million over FY 2000)
In FY 2001, payments for office rent and utilities in the Ronald Reagan Building and warehouse space in the metropolitan area will cost about $28.9 million, 74% of this budget category. The remainder is also relatively fixed, being required for building and equipment maintenance and operations costs, postal fees, bulk supplies, and other general support costs for Headquarters personnel.Washington Office and Bureau Budgets ($17.2 million - $0.8 million under FY 2000)
Budgets for operational travel and administrative supplies for offices and bureaus in Washington are reflected here. In addition, there are costs of contractual support for some organizations, primarily voucher examiners for the Office of Financial Management and support for the Office of Procurement in the Management Bureau and PVO registration in the Bureau for Humanitarian Response. The reduction in FY 2001 reflects the transfer to the request for Credit Administrative Expenses of costs associated with Loan Outsourcing and other support costs associated with the Loan Management Division in the Management Bureau.Staff Training ($6.2 million - no change from FY 2000)
Centrally funded training, primarily language and leadership training, is included here. In addition, this budget funds technical training, both for program and administrative personnel, and training in automation and other Agency required skills.About 48% of the training budget is relatively fixed. For example, language training is required for Foreign Service Officers. Certification training for procurement officers is also a requirement before warrants can be issued to contracting officers. Contract managers are also required to take the contracting skills course. All of these training programs have travel requirements, which are also funded from the training budget. Finally, computer training is a critical requirement, becoming ever more important as systems change and hardware and software upgrades are installed.
The balance of the training budget is used to:
- design and implement new training programs, such as leadership training,
- provide technical and professional training to specialists in the Agency in areas such as environment, health and population, economic growth, and human resources,
- provide funds for relative short courses offered by local vendors (including other Government agencies) to meet specific specialized office/employee needs, and
- cover the basic costs of operating the Agency training facilities, such as the purchase of training supplies and materials.
Other Agency Costs ($11.4 million - 0.4 million over FY 2000)
This category is primarily for mandatory costs, the largest being payments to the Department of State for administrative support and Dispatch Agent fees, and the Department of Labor for employee compensation claims. Personnel Support includes mandatory costs such as retirement travel for foreign service officers retiring from Washington, costs associated with the Foreign Service Panels, and costs associated with retirement processing for Foreign Service Officers.Legislative and Public Affairs Support includes the costs of publications such as Front Lines, support for Operation Days Work and Lessons Without Borders, and costs of maintaining the Agency web site, the latter category being the primary reason for the increase in costs. Funding for medical, property, and tort claims has remained relatively constant, with the exception of a large payment made in FY 1999. The category "All Other" is primarily litigation support and the cost of taxi fares in Washington.
Shown below are FY 1998 through FY 2001 funding requirements associated with the major categories included under Other Agency Costs ($000).
Category FY 1998
ActualFY 1999
ActualFY 2000
EstimateFY 2001
RequestPayments to the Department of State Payments to the Department of Labor Personnel Support Legislative and Public Affairs Support Medical/Property/Tort Claims Home Service Transfer Allowances All Other Total In FY 1999 the Agency began an in-depth review of unliquidated OE obligations, as a result of which recoveries were much higher than anticipated. The review is continuing in FY 2000 and it is anticipated that recoveries will be somewhat higher than in FY 1998, dropping back to a level of around $14 million in FY 2001. A portion of the increase in FY 1999 recoveries are being held for use in FY 2001, reducing somewhat the requirement for new budget authority for Operating Expenses. In addition, the Agency has reviewed its policies regarding forward funding for OE funded costs. It was found that the policies were not in conformance with Federal Acquisition Regulations so a new policy has been distributed for implementation. This new policy will result in a one-time reduction in OE funding requirements in FY 2000. This also provided some relief in terms of meeting cost increases due to inflation, Federal pay raises, and to meet new unanticipated requirements, such as replacing the Banyan Systems currently in use.
The following pages provide information on use of Operating Expense funds by Object Class code and a breakout by organizational unit of the Operating Expense and workforce resources of USAID. The totals by object class may not tie back to the totals included in the President's budget because of the inclusion in this table of local currency trust funds and program funds used for Operating Expense costs.
In addition to the funding and staffing identified in this section, USAID is requesting additional Operating Expense funds in an FY 2000 Supplemental Appropriation request for Kosovo, details of which are provided in that section. The Agency is also requesting funding for both FY 2000 and FY 2001 for Plan Colombia which will include funds for the staff and associated staff salaries and support costs required to manage the program. These requirements are discussed further in the section relating to Plan Colombia.
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Last Updated on: August 03, 2001 |
