State-Foreign Operations Spending Bills
Advance in Senate and House

Yesterday the Senate Appropriations Committee approved its FY15 State-Foreign Operations Appropriations bill in a 25-5 vote, following the Subcommittee markup on Tuesday afternoon. Senators Richard Shelby (R-AL), Thad Cochran (R-MS), Mitch McConnell (R-KY), Lamar Alexander (R-TN), and John Hoeven (R-ND) voted against the bill, citing concerns about Overseas Contingency Operations (OCO) funding in the measure.

The Senate’s action coincided with subcommittee approval on Tuesday evening of the House’s State-Foreign Operations Appropriations bill. While both the House and Senate bills are identical on the total spending level, they differ significantly on the split between base and OCO funding.  In addition, the two bills differ on the prioritization of some accounts.

Both bills total approximately $48.3 billion, but the Senate bill includes $39.7 billion in base funding and $8.6 billion in OCO funds, while the House bill includes $42.4 billion in base funding and $5.9 billion in OCO funds – approximately $3 billion difference in base funding.

Significantly, the Senate cuts base funding $2.82 billion (6.6%) below current levels while the House reduces the base by only $100 million (-0.2%). To mitigate this cut, the Senate increases OCO levels by $2.1 billion above FY14 amounts. In total — base and OCO — both bills are about $700 million (1.4%) less than current spending.

While the USGLC supports the overall funding of both bills, we are very concerned about the Senate’s cut to base funding and issued a statement from USGLC Co-Presidents Bill Lane of Caterpillar and Carolyn Miles of Save the Children saying that while “the Overseas Contingency Operations (OCO) funds can mitigate the impact of funding shortfalls in the short term, the long term implications of reducing the baseline are dangerous given cuts totaling 14 percent over the past four years.”

State-Foreign Operations Appropriations

FY14 Enacted

FY15 Request

FY15 House

FY15 Senate

$42.481b Base

$42.657b Base

$42.381b Base

$39.660b Base

$6.519b OCO

$5.912b OCO

$5.912b OCO

$8.625b OCO

$49.000b Total

$48.569b
Total

$48.293b
Total

$48.285b
Total

During Senate consideration of the bill, Subcommittee Chairman Patrick Leahy (D-VT) stated “This was a difficult bill to draft because of the rapidly worsening humanitarian crises in Syria, Iraq, and Africa, and the dramatic surge in migration of unaccompanied minors from Central America.”  Similarly, Subcommittee Ranking Member Lindsey Graham (R-SC) said, “The world is blowing up, all you got to do is watch television, and the base funding of this bill is going down.  Refugee problems in Jordan, Lebanon, and now Iraq.  Now is the time for Congress and the Senate to consider emergency supplemental to deal with these issues.”

Amendment to Restore Base Funding Fails

To address Republican concerns about the OCO funding level, which they believe Democrats inflated in order to increase funding for discretionary programs beyond levels agreed to in the Murray-Ryan FY14-15 budget agreement, Senator Graham offered an amendment in the full Committee markup that would impose a government-wide rescission of $2.7 billion in order to move base funding from OCO back into the baseline. That rescission would translate to a 0.266% cut across all discretionary accounts.  Democrats opposed the amendment, citing the cuts it would make to many programs, including Veterans Affairs, the National Institutes of Health, and the Defense Department.  The amendment failed on a nearly party-line 13-17 vote, with Senator Susan Collins (R-ME) the only Republican to vote against it.

In the House Subcommittee markup on Tuesday, Chairwoman Kay Granger (R-TX) noted that the bill “is a product that reflects many of the priorities facing the subcommittee in today’s challenging and unpredictable world.”  Ranking Member Nita Lowey (D-NY) thanked Chairman Hal Rogers (R-KY) “for the bill allocation’s recognition of the importance of foreign assistance and diplomacy” while expressing concern about a few areas, including cuts to USAID operating expenses.

The House bill will be taken up by the full Appropriations Committee next Tuesday morning. Further action on the bills (e.g. floor consideration) is unlikely in the House or Senate before the fiscal year begins on October 1.

We will provide additional updates following the House action next week.

Overview of Senate and House FY15 State-Foreign Operations Bills

As in past years, the House and Senate bills align on the prioritization of some accounts while differing considerably on others.  In terms of similarities, both the House and Senate bills prioritize funding for disaster and refugee aid, Global Health, and embassy security. In addition, both measures add funding above requested levels for Ukraine and other former Soviet and East European nations that face regional threats.  The major differences in the bills center on contributions to International Organizations, UN Peacekeeping, and the Multilateral Development Banks.  The House imposes significant cuts in these areas while the Senate maintains funding levels in keeping with the Administration’s request.  Detailed analysis of the bills is below.

Comparison of Senate and House FY15 State-Foreign Operations Bills

Similarities

Differences

  • Embassy/Diplomatic Security: Senate supports request; House increases
  • Peacekeeping Response Mechanism: Both bills deny $150 million funding but allow transfers from other accounts
  • National Endowment for Democracy:  Both bills fund above the request at $135 million
  • Global Health: Senate adds 1% to the request; House adds 3%; but with different priorities
  • Development Aid: Both bills cut the request, House by 3.5%, Senate by 8%
  • Disaster Aid: Both significantly increase the request: House by 39%, Senate by 31%
  • Refugee Aid: House increases the request by 49% and the Senate by 31%
  • Economic Support Fund:  Both measures cut the request: House by 11% and Senate by 21%
  • Millennium Challenge Corporation: Both measures maintain current levels, but 10% below request
  • Ukraine:  Each bill adds funds for Ukraine and other former Soviet Soviet/East European states facing Russian threats
  • International Organizations contributions: Senate funds near the request, 13% higher than the House
  • UN Peacekeeping:  Senate provides requested amounts; House cuts by 43%
  • USAID Operating Expenses: Senate provides funding near the request while the House cuts amounts by 17%
  • Complex Crisis Fund: Senate provides $243 million and allows transfers for peacekeeping operations
  • Security Aid: The House bill provides $8.5 billion for security aid while the Senate includes $7.4 billion
  • Multilateral Development Banks:  House cuts the request by 15.5%; the Senate provides near full funding
  • IMF reforms:  The Senate provides authority for the U.S. to accept IMF reforms; the House does not

OCO Composition

With the drawdown of American military forces, OCO funding for International Affairs has been declining.  From a high of $11.2 billion in FY12, OCO appropriations dropped to $6.5 billion in FY14 and further to $5.9 billion in the President’s request for FY15.  While the Administration, until the FY15 request, proposed to fund only urgent diplomatic operations and foreign aid for Afghanistan, Pakistan, and Iraq within the OCO category, Congress has broadened the scope of OCO and increased funding levels to accommodate other global contingencies, especially for humanitarian needs.  For the first time, the Administration also went beyond the Frontline States in its FY15 OCO request, including $1.3 billion for Syria and $150 million for a new, flexible Peacekeeping Mechanism.

The Senate proposes to increase OCO to $8.6 billion, $2.7 billion higher than the request.  This add-on essentially covers the cuts recommended to base State-Foreign Operations.  The reduction to base amounts was made in order to accommodate additional resources for several domestic spending measures that would otherwise not fall within the limits of discretionary spending caps for FY15.  OCO is considered “emergency” spending and is not subject to budgetary cap limitations.

With the additional $2.7 billion, the Senate Committee broadens the scope of what will be supported with OCO resources.  The Senate measure significantly increases OCO funding for UN and international organizations (activities in Iraq and Afghanistan), UN peacekeeping operations (Somalia, Central African Republic, and Mali), International Disaster Assistance (for crises in the Frontline States, Syria, Lebanon, Jordan, Lebanon, Yemen, and Africa), the Complex Crisis Fund (allowing for transfers to peacekeeping accounts), Migration and Refugee Aid (for relief in the Middle East, South Asia, and Africa), and several other accounts shown in the table below.

The House, on the other hand, funds OCO accounts much closer to the Administration’s request, although with several notable exceptions.  House appropriators increase International Disaster and Refugee accounts by $433 million and non-UN peacekeeping operations by $146 million.  Offsetting these increases are cuts to the Administration’s proposed budget for the Economic Support Fund, International Narcotics, Foreign Military Financing, and the Complex Crisis Fund.

OCO

FY14
Enacted

FY15
Request

FY15
House

FY15
Senate

TOTAL

$6.52 billion

$5.91 billion

$5.91 billion

$8.625 billion

Diplomatic/Consular

$1.39 billion

$1.55 billion

$1.51 billion

$1.35 billion

Embassy Security

$275 million

$261 million

$261 million

$261 million

Conflict Stabilization Ops

$8.5 million

$0

$0

$15 million

State Dept. IG

$50 million

$57 million

$57 million

$57 million

Education/Cultural Exch.

$8.6 million

$0

$0

$0

Contributions Int’l Orgs

$74 million

$0

$0

$74 million

UN Peacekeeping Ops

$0

$0

$0

$556 million

PKO Mechanism

$0

$150 million

$0

$0

Int’l Broadcasting

$4.4 million

$0

$0

$0

US Peace Institute

$6 million

$0

$0

$0

USAID Op Expenses

$81 million

$65 million

$65 million

$172 million

USAID IG

$10 million

$0

$0

$0

Int’l Disaster Aid

$924 million

$635 million

$774 million

$1.24 billion

Transition Initiatives

$9.4 million

$0

$0

$0

Complex Crisis Fund

$20 million

$0

$0

$218 million

Economic Support Fund

$1.656 billion

$1.678 billion

$1.525 billion

$1.66 billion

Migration & Refugees

$1.284 billion

$465 million

$759 million

$1.91 billion

Int’l Narcotics/Law

$334 million

$396 million

$344 million

$292 million

Nonprolif./Anti-terror Aid

$70 million

$0

$20 million

$85 million

PKO Operations

$200 million

$115 million

$261 million

$225 million

Foreign Military Finance

$530 million

$537 million

$338 million

$507 million

Middle East/N Africa Fund

$0

$0

$0

$5 million

Rescissions

-$427 million

$0

$0

$0

Global Health

House and Senate bills increase funding for Global Health compared to the request although neither provides current level amounts. In total, the House bill adds about $260 million to the Administration’s request, including a $300 million increase for bilateral PEPFAR programs, a 5% increase for Maternal/Child Health and 10% more for Nutrition.

Senate totals are about $90 million higher than the request, with small plus-ups for several elements shown in the table below.  Family planning funding levels continue to be a matter of dispute between the House and Senate.  The House provides $461 million from all accounts in the bill while the Senate includes $644 million.

Global Health

FY14
Enacted

FY15
Request

FY15
House

FY15
Senate

TOTAL

$8.44 billion

$8.05 billion

$8.31 billion

$8.14 billion

Bilateral PEPFAR

$4.02 billion

$4.02 billion

$4.32 billion

$4.02 billion

Global Fund

$1.65 billion

$1.35 billion

$1.35 billion

$1.35 billion

HIV/AIDS (USAID)

$330 million

$330 million

$330 million

Malaria

$670 million

$674 million

$670 million

Tuberculosis

$236 million

$191 million

$225 million

Maternal/Child Health

$705 million

$695 million

$732 million

$700 million

Vulnerable Children

$22 million

$15 million

$22 million

$22 million

Nutrition

$115 million

$101 million

$115 million

$111 million

Family Planning

$524 million

$538 million

$461 million

$539 million

NTDs

$100 million

$87 million

$100 million

Pandemic Influenza

$73 million

$50 million

$73 million

Note: State Department and USAID Global Health Accounts only, except for family planning.  Additional funds for some Global Health programs are included in other accounts.  FY14 reflect directives in the appropriation and are subject to possible change.

Development Assistance

The House provides $2.53 billion, a level slightly higher than current funding but $92 million less than the request.  With several House directives set at or above FY14 amounts, as shown in the table below, the Administration may not have enough resources for planned increases for initiatives like Feed the Future and Power Africa.

The Senate amount is less than the House — $2.42 billion or 8% below the request.  Food Security and Agriculture is set at $1 billion, $100 million under current funding and $176 million less than the request.  At this amount, USAID would not be able to increase funding for Feed the Future, as recommended.

Development Aid Sectors

FY14
Enacted

FY15

Request

FY15

House

FY15

Senate

Basic Education

$800 million

$533 million

$800 million

$534 million

Higher Education

$225 million

$250 million

$250 million

Biodiversity

$213 million

$225 million

$250 million

Food Security & Ag

$1.10 billion

$1.177 billion

$1.001 billion

Microenterprise

$265 million

$207 million

$265 million

$210 million

Trafficking in Persons

$44 million

$47 million

$58 million

$56 million

Water & Sanitation

$365 million

$225 million

$365 million

$400 million

* Development Assistance and all other accounts in the bill.  FY14 reflect directives in the appropriation and are subject to possible change.

Humanitarian Assistance

Given the increasing humanitarian requirements – in Syria, South Sudan, Central African Republic, Iraq – both the House and Senate bills increase spending well beyond the Administration’s request for these emergency situations.  House and Senate measures provide about $4.9 billion, nearly 50% more than requested for FY15.  House levels match those provided for FY14 while the Senate increases International Disaster aid by nearly $100 million while trimming the amount for refugees slightly.

Humanitarian Aid

FY14
Enacted

FY15

Request

FY15

House

FY15

Senate

TOTAL

$4.91 billion

$3.4 billion

$4.91 billion

$4.90 billion

Disaster Aid (IDA)

$1.8 billion

$1.3 billion

$1.8 billion

$1.9 billion

Refugees (MRA)

$3.06 billion

$2.05 billion

$3.06 billion

$2.95 billion

Emergency Refugees

$50 million

$50 million

$50 million

$50 million

Frontline State Funding

The Senate bill provides a total of $4.1 billion in State Department operations and foreign assistance to Afghanistan, Pakistan, and Iraq.  This is about $1 billion (-20%) below the Administration’s request.  House totals are not available at this time.

Palestinian Assistance

While not suspending assistance for West Bank/Gaza, the House bill tightens current restrictions that would lead to a cut-off of aid if the Palestinian government forms an agreement with Hamas.  The Senate measure requires additional consultations with Congress regarding circumstances with the Palestinian government prior to the obligation of assistance.

Ukraine and other regional states

The House measure adds $215 million above requested levels for Ukraine and other former Soviet and East European nations that face regional threats.  The Senate adds a similar provision, providing an additional $100 million for regional states threatened by Russian aggression.

Guantanamo detainees

The House adds a new provision that prohibits assistance to countries that agree to accept Guantanamo detainees unless the State Department notifies Congress in advance of the details of such an agreement.

Peacekeeping

The House proposes a significant reduction to the Administration’s request for three Peacekeeping accounts, trimming levels by $750 million (-25%).  Although House appropriators do not include the new Peacekeeping Response Mechanism that could fund emerging or unanticipated requirements, the bill allows the transfer of $150 million from the ESF account for similar purposes.

The Senate, on the other hand, fully funds at $2.5 billion all U.S. commitments to UN peacekeeping operations, as requested.  While not including $150 million for the Peacekeeping Response Mechanism, the Senate bill adds resources to the Complex Crisis Fund and permits transfers to peacekeeping accounts if the Administration deems necessary.

Peacekeeping

FY14

Enacted

FY15

Request

FY15

House

FY15

Senate

TOTAL

$2.19 billion

$3.0 billion

$2.25 billion

$2.86 billion

UN Operations

$1.77 billion

$2.52 billion

$1.77 billion

$2.52 billion

Non-UN Ops

$436 million

$336 million

$482 million

$345 million

PKO Response

$0 million

$150 million

$0

$0

Millennium Challenge Corporation

The House bill includes flat funding ($898 million) for the Millennium Challenge Corporation (MCC), compared with FY14, but falls 10% less than the request.  The Senate provides a slightly higher amount at $901 million.  At these levels, the MCC would not be in a position to fully fund several Compacts currently in development that contribute to Power Africa, or undertake other new initiatives proposed for next year.

Other Notable Issues

  • Multilateral Development Banks: A key difference between House and Senate bills is funding for various international financial institutions.  The House reduces the request by $624 million (-14%).  The largest cuts come from denying funds for several International Financial Institutions, including the Clean Technology Fund, the Strategic Climate Fund, debt relief for the International Development Association and the African Development Fund.

    The Senate measure, however, provides only a slight cut (-1%) to requested MDB amounts and includes resources for institutions not included by the House.

  • International Monetary Fund reforms:  For the past three budget cycles, the Administration has sought Congressional authority to restructure the U.S. financial position at the IMF and agree to several reforms negotiated in 2010.  The Senate, as it has in the past, approves the IMF reform request and appropriates sufficient amounts to restructure U.S. resources.  The House, however, does not include the necessary authorization or funds for the IMF request arguing that it would place American support at too high of a financial risk.
  • International Security Assistance: The House measure prioritizes funding for security aid programs, including Narcotics and Law Enforcement, Foreign Military Financing, Anti-Terrorism, and non-UN peacekeeping.  The $8.5 billion in security assistance funding is the same as FY14 but nearly $700 million higher than the FY15 request.

    The Senate reduces amounts for security assistance, setting levels over $1 billion less than the House and about $400 million under the Administration’s request.  A $300 million cut in military aid for Egypt is a major factor in the overall reeducation.

  • State Department Operations:  While the House reduces overall State Department operating expenses and related programs by $128 million from FY14 and $926 million below the request, the bill provides full funding for Diplomatic Security, including the Accountability Review Board’s recommendations for bolstering efforts to keep U.S. diplomatic personnel and facilities secure after the Benghazi attack.

    The Senate measure also fully funds Diplomatic Security requirements at the Administration’s requested levels.

  • USAID Operations:  The House measure cuts the request for USAID operating expenses by $237 million (-17%).  Compounding this reduction is a cap imposed by the FY14 appropriation that limits the amount USAID can carry-forward into FY15.  Consequently, the total available for USAID under the House mark, including both appropriated funds and carry-forward amounts, is nearly $175 million less than total funds available currently.

    The Senate recommends $1.34 billion for USAID operations, 3% less than requested but $200 million higher than current appropriations.  The Senate measure further includes strong support for several USAID reforms and adds funding for the Agency to create a new Foreign Service position – Local Sustainable Development Officers – aimed at strengthening USAID efforts to work with local institutions and achieve more sustainable results.

  • Aid to Egypt:  The House bill provides full funding for Egypt – $1.3 billion in military aid and $200 million in economic assistance – while continuing current conditions concerning Egypt’s strategic partnership with the U.S., its commitment to the peace treaty with Israel, and its efforts to move forward with democratic transition initiatives.  The Senate, however, cuts Egyptian assistance to $1 billion in military aid and $150 million for economic programs.