InterAction Budget Analysis. FY2015 House and Senate International Affairs Budgets Released. June 24, 2014

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1 InterAction Budget Analysis FY2015 House and Senate International Affairs Budgets Released June 24, 2014 The House and Senate appropriations committees have each unveiled their State-Foreign Operations Appropriations bills and Agriculture Appropriations bills for FY2015, providing a detailed look at what each chamber is proposing for U.S. engagement in global development and humanitarian assistance in FY2015. The Overall Picture: A Great Deal in Common In the recent past, the House and Senate had put forward starkly different bills, largely due to a wide gap in overall funding levels in the two chambers. The Republican-controlled House had typically sought to cut budgets and had much lower overall budgets to work from than the Democratic-controlled Senate. In FY2014, for example, the two chambers had a $90 billion difference in overall discretionary spending, which trickled down to the various appropriations bills. For SFOPS in particular, that led to a $10 billion discrepancy in the two bills, which had enormous impacts on how funding was allocated across the global development and humanitarian assistance accounts. By the end of the FY2014 appropriations cycle, though, the two chambers had agreed on a final overall spending level of $1.012 trillion, about half-way between where the House and Senate had been previously. For FY2015, the agreed-upon cap is essentially the same as last year ($1.01 trillion), leading to much more parity between the two chamber s proposals than in previous years. For SFOPS, the two bills are remarkably similar overall: $48.3 billion in both chambers, approximately 1.5% below last year s funding level and 0.3% below the President s request. Base vs. OCO: An Area of Concern Looking more closely, though, there are some fairly significant differences within those top-line spending levels. In the House, the base SFOPS spending is $42.38 billion, with an extra $5.9 billion the Obama Administration requested in funding for Overseas Contingency Operations (OCO) essentially funding for Iraq, Afghanistan and a few other hot-spots like Syria. In the Senate, by contrast, Appropriations Chairwoman Barbara Mikulski (D-MD) was forced to change to her committee s allocations (based on a recalculation of the spending cap) and decided to shift $2.7 billion out of the base SFOPS budget, leaving it with just $39.7 billion. She simultaneously increased the OCO account from the president s requested level of $5.9 billion to $8.6 billion, which wouldn t affect the overall discretionary spending level, because OCO is excluded. Senate Republicans objected, accusing Sen. Mikulski of using a budget gimmick to avoid having to cut spending for domestic priorities. InterAction Budget Analysis, June 24, 2014, Page 1 of 7

2 Proposed State-Foreign Operations Overall Spending Levels, FY2015, House and Senate House Senate Base $ billion $39.66 billion OCO $5.913 billion $8.625 billion Total $ billion $ billion This shift has also raised red flags for advocates of the International Affairs budget, for different reasons. While the additional funding is welcome, there is a great deal of concern that OCO funding is scheduled to decline, not increase. They say it is therefore unwise to place more money in OCO now. Tod Preston of the U.S. Global Leadership Coalition compared it to a worker s salary: Imagine your employer told you he was cutting your salary, but that he d make up for it by giving you almost the same amount in a bonus. Does it solve your cash crunch? Yes, in the short-term. But it comes at a price, and a price that will escalate over time. It s going to be very hard to get your pay increased to back where it was, especially in tight budget times, and there are certainly no guarantees that you ll continue to get a bonus to compensate for the pay cut. It s really risky. Looking at the specific details in the two bills, there are a number of differences there as well, though much appears to be easily squared between the two chambers bills. Global Health: Largely Bipartisan Support The overall global health totals in the House and Senate are about 2% apart $8.3 billion in the House and $8.14 billion in the Senate, both of which are below last year s level of $8.44 billion. Most of the shortfall in the Senate is in the State Department health accounts, which it funds at just $5.37 billion compared to $5.67 billion in the House. This is largely due to an expected $300 million decline in the amount the U.S. plans to contribute to the Global Fund to Fight AIDS, Malaria and Tuberculosis (falling from $1.65 billion to $1.35 billion). While the Senate has decided to strip that $300 million from the State Department health programs, the House simply moves it to the President s Emergency Plan for AIDS Relief (PEPFAR), increasing its funding to $4.32 billion from $4.02 billion. Another difference is the Family Planning account, which is always a point of contention. It typically gets far less funding in the GOP-led House than in the Democratic-led Senate and this year is no exception $461 million in the House vs. $644 million in the Senate. If history is any guide, the final appropriation is likely to fall somewhere closer to the Senate level than the House. The other global health accounts fared better in the House, when compared to the Senate numbers. Maternal and Child Health would receive $732 million in the House and $700 million in the Senate (both include $200 million for GAVI). The Malaria account would receive $674 million in the House and $669.5 million in the Senate (both small increases over last year). Nutrition and Tuberculosis would both stay steady in the House from last year s levels ($115 million and $236 million respectively) but would take a slight drop in the Senate ($111 million and $225 million, respectively). Efforts to combat the resurgence of polio would receive $59 million in both the House and Senate, while Neglected Tropical Diseases receive $100 million in the Senate and an unspecified amount in the House. The House and Senate bills provide equal levels of funding for some accounts, including $22 million for Vulnerable Children and $330 million for USAID HIV/AIDS programs. InterAction Budget Analysis, June 24, 2014, Page 2 of 7

3 Humanitarian Relief: Strong Funding Using Differing Approaches As in past years, both chambers have responded to the growing crises around the globe with strong funding levels for humanitarian relief, well above the President s requested levels. For International Disaster Assistance (IDA), the Senate is slightly higher than the House ($1.895 billion vs. $1.8 billion), whereas for Migration and Refugee Assistance (MRA), the House edges out the Senate ($3.059 billion vs. $2.95 billion). Each chamber would allocate $50 million for Emergency Refugee and Migration Assistance (ERMA). While the overall funding levels are strong, there are differences in the details: for the House, most of the funding comes from the base (over $1 billion in IDA and nearly $2.3 billion in MRA); for the Senate, however, most of the funding comes from OCO (over $1.235 billion for IDA and $1.912 billion in MRA). InterAction will continue advocating that Congress put as much of the funding in the base as possible. Proposed International Disaster Assistance Funding, FY2015, House and Senate House Senate Base $1.027 billion $660 million OCO $774 million $1.235 billion Total $1.801 billion $1.895 billion Proposed Migration and Refugee Assistance Funding, FY2015, House and Senate House Senate Base $2.299 billion $1.039 billion OCO $759 million $1.912 billion Total $3.059 million $2.95 billion Development Assistance: A Mixed Bag Overall, the Development Assistance (DA) account would get about 4.2% more in the House ($2.53 billion) than in the Senate ($2.42 billion). Compared to last year s total of $2.5 billion, the House would provide slightly more than last year and the Senate slightly less. The House also outpaces the Senate with significantly stronger funding in Basic Education, which would receive its typical $800 million in the House, compared with $534 million in the Senate. The Senate matches the President s request for this account, but House Appropriations Ranking Member Nita Lowey (D-NY) always ensures that the House makes greater investments in this sector. The Senate's report also notes that there is a significant amount of previously appropriated, unspent basic education resources and outlines conditions that must be met for disbursement of FY15 funding. The Senate bill states that the basic education allocation may be made available for other accounts if that "pipeline" issue is not resolved. Microfinance, which has received $265 million for several years, would receive that same amount in the House, but would only get $210 million in the Senate, in line with the President s request. For InterAction Budget Analysis, June 24, 2014, Page 3 of 7

4 two other sectors, though, the Senate exceeded the House: for Biodiversity, the Senate allocated $250 million, which is $25 million more than the House allocation of $225 million; for Water and Sanitation projects, the Senate invests $400 million, or $35 million more than the House ($365 million). Climate Change: Stark Differences As in the past, there are enormous differences in how the two chambers fund efforts to combat the effects of climate change. The Senate funds several different initiatives, including the Strategic Climate Fund ($63 million, up 27% from FY14) and the Clean Technology Fund ($201 million, up 9% from FY14). It also provides $506 million in bilateral Climate Change funding, equal to the President s request. 1 While the Senate report does not specifically mention the Special Climate Change Fund, it does provide authority for contributions to multilateral environment funds and facilities, such as the Least Developed Countries Fund, the Green Climate Fund, the Forest Carbon Partnership Facility, and others to support adaptation and mitigation activities. While the House report has not been released yet and may contain further information, the only reference to climate change in the House SFOPS bill itself is to restrict all funding for the Intergovernmental Panel on Climate Change and the United Nations Framework on Combating Climate Change. Food Security and Agriculture: Mostly Encouraging In their Agriculture Appropriations bills, which were released several weeks ago, both chambers allocated $1.466 billion for Food for Peace Title II, the same amount that was appropriated in FY2014. Neither Agriculture Appropriations bill included key food aid reform elements for which InterAction had advocated. In committee, though, Senate appropriators voted 16 to 14 to adopt an amendment co-sponsored by Senators Mike Johanns (R-NE) and Patrick Leahy (D-VT) to include $35 million in additional cash flexibility in Food for Peace Title II. This provision had been included in the FY14 omnibus, as well. For McGovern-Dole International Food for Education and Child Nutrition, there was a 7% difference, with the Senate extending last year s $185 million allocation and the House adding $13 million, to $198 million. The 2014 Farm Bill authorized a new $80 million U.S. Department of Agriculture (USDA) Local and Regional Procurement (LRP) program. The Obama Administration did not request USDA LRP funding in FY2015, likely due to the fact that the Farm Bill had passed too late for it to be included in the president s budget, and neither chamber had initially allocated any funding for it. However, when the House began considering the bill on the floor, Foreign Affairs Committee Chairman Ed Royce (R-CA) offered an amendment cosponsored by Rep. Earl Blumenauer (D-OR) and Rep. Betty McCollum (D-MN) that would provide $10 million in funding for the USDA LRP Program. The amendment passed by a vote of but its fate is unknown as the Agriculture Appropriations bill was pulled from the floor due to House Majority Leader Eric Cantor s (R-VA) primary loss and ensuing changes in House leadership. Meanwhile Senate Majority Leader Harry Reid (D-NV) pulled his chamber s version of the Agriculture Appropriations bill off the floor, amidst procedural disagreements, and it is unclear when it will be considered. 1 The Senate report includes $193.3 million for adaptation and mitigation, $ million for clean energy, and $123.5 million for sustainable landscapes activities, totaling $ million. InterAction Budget Analysis, June 24, 2014, Page 4 of 7

5 In the SFOPS bill, the Senate allocates just a shade over $1 billion for the Feed the Future (FTF) initiative, equal to the President s request, but down 9% from last year. While the House bill does not allocate funding for FTF specifically, it does provide authority for food security and agricultural development programs while supporting the Feed the Future Collaborative Innovation Lab, which is the first time a House SFOPS bill has referred to FTF in a positive light. The Senate also contains funding for the Innovation Lab and in its report expresses strong support for Feed the Future. Each chamber would fund the International Fund for Agricultural Development (IFAD) at the consistent level of $30 million. On a more negative note, following the president s recommendation, neither chamber allocates funding directly for the Global Agriculture and Food Security Program (GAFSP). The Senate s SFOPS report notes that funds made available in prior appropriations acts exist to meet the U.S. pledge for GAFSP, and the House states that funds may be made available as a contribution to GAFSP if such contribution will not cause the U.S. to exceed 33% of the total amount of funds contributed to GAFSP by all donors. International Organizations: Perennial Disagreements Another predictable area of disagreement is on International Organizations, where the House generally seeks to reduce the U.S. s role in such organizations and the Senate typically prefers the status quo. Thus, funding for International Organizations and Programs (IOP) would be 29% higher in the Senate than in the House ($351 million vs. $271 million). Last year s allocation was $344 million. Similarly, the Senate gives Contributions to International Organizations 13% more than the House ($1.51 billion vs. $1.34 billion). It is important to note, however, that the House s FY2015 allocations for these accounts are far higher than they had been for last year. In FY2014, the House had recommended zeroing out the voluntary contributions in IOP entirely and allocating just $746 million for CIO. Peacekeeping: Another Area of Contrast The two SFOPS bills put forward starkly contrasting visions for U.S. peacekeeping efforts. The Senate, which often favors a more multilateral approach, would make strong Contributions to International Peacekeeping Activities of $2.52 billion, while the House would only contribute $1.77 billion, a 43% difference. The House s level is equal to last year s, while the Senate is equal to the President s FY2015 request. By contrast, the House invests more in the Peacekeeping Operations (PKO) account, giving it $482 million, as opposed to $345 million in the Senate, a 28% gap. Last year s allocation was $435 million, so the Senate would significantly decrease funding for PKO. However, both chambers exceed the president s request of $336 million. In his budget, President Obama requested $150 million for a new, more flexible Peacekeeping Response Mechanism (PKRM). While neither chamber creates such an account explicitly they both appear to recognize its value. The Senate bill would provide significantly increased funding for the Complex Crises Fund ($243 million, compared with $40 million in FY14) and provides transfer authority to address increasing and unanticipated peacekeeping requirements. The House appears to provide an additional $150 million in peacekeeping funding through OCO, though it is unclear how much of that could be utilized for the purposes intended in the PKRM. Gender: Empowering Women As in past years, the Senate supports the budget request of $1.8 billion for gender programs to promote women's political leadership, implement a multiyear strategy to respond to gender-based InterAction Budget Analysis, June 24, 2014, Page 5 of 7

6 violence, and support implementation of the U.S. National Action Plan on Women, Peace, and Security. It seeks to mainstream a focus throughout U.S. diplomatic and development efforts on raising the status, increasing participation, and protecting the rights of women and girls worldwide. While the House bill does not provide the overall request for gender programs, it does state that funds in the bill should be used to promote gender equality in United States Government diplomatic and development efforts by raising the status, increasing the participation, and protecting the rights of women and girls worldwide. Both bills provide $150 million to combat Gender-Based Violence (GBV) and $50 million for women s leadership. Other Accounts The Democracy Fund, which is perennially zeroed out by the Obama Administration, would receive $130.5 million in both chambers, steady from last year. The Millennium Challenge Corporation would receive last year s allocation of $898 million under the House plan and $3 million more under the Senate s. The House and Senate would fully fund the President s request of $1.29 billion for contributions to the International Development Association, while the Senate would add another $79 million for the Multilateral Debt Relief Initiative. The House and Senate do not agree on how to fund USAID s Operating Expenses, though neither chamber fully funds the Administration s $1.38 billion request. The Senate comes closer at $1.34 billion, but the House is far lower, at $1.15 billion. That said, both funding levels exceed last year s final allocation of $1.14 billion. (Both chambers use OCO funding to achieve their totals - $261 million in the House and $556 million in the Senate.) Global Development Lab: Small Steps In his FY2015 request, the President put forward the idea of creating a Global Development Lab, which would consolidate and expand USAID's efforts in science, technology, innovation and partnerships, creating a world-class capability to discover, incubate, test, and scale transformational solutions to the greatest development challenges that we face today. Neither the House or Senate appropriates specific levels of funding for the lab, though both indicate support for the concept. The Senate bill states that funding in the bill may be used to employ up to 15 individuals on a limited appointment basis. The accompanying report states that the committee supports the goal of USAID's Global Development Lab to collaborate with U.S. entrepreneurs, corporations, NGOs, universities, and science and research institutions to find innovative solutions to some of the world's development challenges faster, cheaper, and more sustainably. It further directs the USAID Administrator to regularly consult with and ensure the participation of nongovernmental and governmental entities in developing countries at all stages of the Lab's activities. The House report similarly supports the efforts of USAID to strengthen development by utilizing science, technology, innovation, and partnerships. Conclusion and Next Steps While overall spending for the International Affairs Budget would fall about 1.5% from last year s levels, the parity between the two chambers approaches is highly encouraging. House lawmakers InterAction Budget Analysis, June 24, 2014, Page 6 of 7

7 have clearly shown that, given enough overall funding, they are prepared to make strong investments in global development, equal to and even exceeding their Senate counterparts. If anything, the greatest overall concern for the NGO community is likely in the Senate, where the movement of funds out of the base and into OCO has raised a number of red flags. While the two SFOPS bills are unlikely to reach the House or Senate floors this year, we expect that there will be negotiations in the coming months to begin reconciling the two bills and preparing a bill for final passage, as part of an omnibus or minibus spending package. While the Agriculture Appropriations bills are currently stalled, there is a likelihood the bill will move again in the House and perhaps even in the Senate. InterAction will continue tracking those developments and keep you informed as the FY2015 appropriations process progresses. InterAction Budget Analysis, June 24, 2014, Page 7 of 7