The Foreign Service Journal, July-August 2020

THE FOREIGN SERVICE JOURNAL | JULY-AUGUST 2020 79 AFSA NEWS Operating Expense Funds and Program Funds: A Division that Unites Us All This column is about money—the foreign assis- tance funding entrusted to USAID on behalf of the Ameri- can people. I have enormous respect for all my colleagues who pro- vide steadfast stewardship of public funds and who fight to achieve impact despite a budget system that would baffle even Rube Goldberg. Indeed, USAID’s bifurcated budget structure undermines the agency’s effectiveness, and real reform is needed. First, a few caveats: 1) I am no budget expert; 2) There are a lot of waivers, excep- tions and laws involved; and 3) I am simplifying complex issues. But I hope you will see that the main point stands: Reform is needed. Congress separates USAID’s budget into two parts: the administrative cost of delivering foreign assistance (aka operating expenses, or OE); and the cost of foreign assistance itself (aka program funds). This makes sense on the surface, and the allocation between these two seems easy when you’re dealing with goods : textbooks, solar panels, seedlings, syringes, etc. All are program-funded, as are the costs of the imple- menting partner staff deploy- ing the goods. Now, let’s think about the people , those involved in managing USAID programs. There are certain U.S. direct- hire staff, including career Foreign Service and Civil Service employees, who must be OE-funded. Their salaries and benefits, travel, training and support costs must be paid by OE. Then there are non–direct hire colleagues, whose fund- ing is determined by their function-inherently govern- mental duties and/or those relating directly to the cost of doing business (e.g., budget preparation, accounting, cer- tain acquisition & assistance functions). Their particular function determines whether these colleagues are OE- or program-funded. (It’s compli- cated!) Program costs are much greater than OE costs, a reflection of the generosity of the American people and of USAID’s mission. Over the years, and particularly after 9/11, the program budget skyrocketed, making the program-to-OE ratio highly unbalanced. Doing more [program- funded activities] with less [OE-funded staff] has become the new normal. With an insufficient num- ber of career FSOs, USAID has developed operational workarounds to get the job done. The passion is com- mendable, but these less- than-best personnel practices leave career FSOs stretched thin, with their field perspec- tive drowned out in Wash- ington and their professional growth and training opportu- nities limited by scarce OE. Program-funded non- career staff are generally sup- posed to provide temporary fixes for specific, time-bound problems (e.g., specialized skills needed on a short-term basis to meet unforeseen urgent circumstances). But many colleagues hired under non-career mechanisms have served five, 10 or 15 years or more, and bureaus regularly seek expansions and exten- sions. Congress recognized the problem and in 2019 provided OE “for not less than 1,600 permanent Civil Service staff and 1,850 permanent Foreign Service Officers ... restoring USAID personnel to pre-hiring freeze levels.” This is a good start, but USAID does not yet have an adequate strategic workforce plan accounting for its current workforce—Foreign Service, Civil Service, Foreign Service Limited, personal service con- tractors, institutional support contractors and staff on a myriad of mechanisms in the Global Health Bureau—much less a plan that is forward- looking. As a result, non-career program-funded staff con- tinue to be onboarded to do jobs that are in fact long- term, critical roles best suited for OE-funded career public servants. As the world’s lead- ing development agency, we must break this cycle. An overarching agency goal should be the develop- ment of a comprehensive strategic workforce plan in conjunction with elimination of the OE-program divide. Realistically, the agency does not yet have the systems, staff and discipline in place to do either. And as long as the agency fails to transparently track and report staff of all types, and robustly account for staff-related program and OE funds, Congress is likely to insist on the funding distinc- tion. In the interim, the agency should consider supporting a third-party audit that spells out the quantifiable and non- quantifiable consequences and costs (on both activities and staffing) of maintaining a bifurcated budget. USAID should publish details on the OE budget and a clear analysis of program and OE staffing dynamics. USAID should develop a three- to five-year plan for phasing out its bifurcated budget structure that is tied to the demonstration of commitment and capacity to manage its operations and staff. Any such plan should be developed in close coordina- tion with Congress, stakehold- ers and employee organiza- tions including the unions. We should all be united in ending this budget divi- sion. n USAID VP VOICE | BY JASON SINGER Contact: | (202) 712-5267