MFAN Commends House Appropriations Committee FY23 SFOPS Bill

June 30, 2022 (WASHINGTON) – This statement is delivered on behalf of the Modernizing Foreign Assistance Network (MFAN) by Co-Chairs Lester Munson, Larry Nowels and Tessie San Martin.

On June 29, the House Appropriations Committee reported out a strong Fiscal Year (FY) 2023 State, Foreign Operations and Related Programs appropriations bill, providing an $8.5 billion (15%) increase compared to the FY22 (non-emergency) enacted level. While this funding is $1.2 billion (-1.8%) below the Administration’s FY23 request and does not fully provide the level of resources needed to meet the array of demands on U.S. foreign assistance programs, the bill provides much-needed increases to many accounts. The Modernizing Foreign Assistance Network applauds the Committee for this action and for including important provisions that will strengthen the effectiveness of US foreign assistance.

The bill provides $1.743 billion for USAID Operating Expenses (OE), a much-needed increase of $100 million (6%) over current levels. Robust funding for the USAID OE account is essential for aid effectiveness and supports USAID’s efforts to drive innovation, attract and retain skilled development talent, oversee program implementation, improve transparency and accountability, evaluate results, and apply a strong learning agenda for future programming.  While the Committee’s $100 million increase is a positive development, MFAN is concerned that a significant portion of the funds will be needed just to meet the 4.6 percent cost of living (COLA) increase for federal workers requested by the Administration. In addition, Administrator Power’s important locally led development initiative will require more personnel, including significantly more contracting officers that have been short-staffed for many years. Therefore, as the FY23 appropriations process moves forward, MFAN urges Congress to provide additional OE resources to meet these needs within the Agency.

MFAN notes the Committee included $915 million for the Millennium Challenge Corporation (MCC), an increase of $3 million (3%) over the FY22 enacted level but short of the Administration’s request for $930 million. The additional resources requested had been intended for administrative expenses. Like USAID, MCC relies on talented staff to carry out its mission, employing a data-driven approach centered on country partnerships. And for many years, MCC has been at the leading edge of evaluation and learning. Providing sufficient administrative funding is important to seeing that work not only carried forward but expanded.

MFAN applauds the House Committee’s strong report language regarding locally led development (LLD). Local leadership empowers local communities and the institutions that support their development to be effective leaders to sustainably serve the common good. We strongly support the Committee’s requirement for USAID to report to Congress on how the Agency tracks funding to local entities, the progress that has been made to date on its LLD targets, and how the Agency plans to reach targets in subsequent years. We also commend the Committee for directing the USAID Administrator to develop a clear and consistent definition of “local entity,” including as part of the Centroamerica Local initiative, and for requiring reporting of how USAID is working to increase funding to capable local and national nongovernmental entities as part of programming under the Development Assistance and International Disaster Assistance accounts.

MFAN also supports funding for workforce diversity, equity and inclusion initiatives in foreign affairs agencies and is encouraged by the Committee’s attention to strengthening and diversifying agencies’ workforces, including through more transparent and disaggregated demographic data collection and reporting on the workforces for USAID and the U.S. Development Finance Corporation (DFC).

Regarding the DFC, MFAN notes that the Committee did not include last year’s requirement for a report on potential scoring alternatives, including a net-present-value method, for DFC equity investments. While the BUILD Act significantly strengthened the DFC’s toolbox by authorizing the Corporation to make equity investments, the current dollar-for-dollar scoring calculation for such equity deals severely limits the DFC’s ability to effectively utilize this new tool – contrary to the intent of the BUILD Act. MFAN is encouraged by negotiations underway between Congress and the Administration, as part of work on a conference agreement on the U.S. Innovation and Competition Act (USICA), that could provide a permanent fix to DFC’s equity scoring – consistent with bipartisan language authored by Rep. Joaquin Castro that was included in last year’s House-passed EAGLE Act/COMPETES Act – or an interim fix. Correcting the scoring problem would substantially reduce the appropriation requirement for DFC equity investments and free up vital resources for other programs within the International Affairs 150 account. On other DFC-related matters, MFAN commends the Committee for noting the importance of DFC facilitating market-based private sector development and inclusive economic growth, especially in low and lower-middle income countries.

MFAN commends the Committee for reiterating the importance of the Sustainable Development Goals and urging the Secretary of State and USAID Administrator to recommit to implementing U.S. commitments for the SDGs.

MFAN is disappointed with the omission of previous SFOPs report language supporting efforts to strengthen Domestic Resource Mobilization (DRM) initiatives on the part of USAID and other agencies. Efforts by the U.S. government to assist partner countries in strengthening tax and fiscal policy, public financial management, revenue collection, and countering tax avoidance are vital to marshalling greater domestic investments in the well-being and economic growth of countries’ populations and also will compliment local financing as part of USAID’s LLD initiative. MFAN urges the creation of a clear and comprehensive DRM strategy by the USAID Administrator, in consultation with other relevant agencies including the State Department, Treasury Department, and Millennium Challenge Corporation.

Lastly, MFAN has consistently advocated for more flexible foreign aid funding mechanisms on the part of Congress that are paired with appropriate and timely accountability on the part of the White House and executive agencies. Serious conversations between the two branches are needed to restore trust and confidence and provide more latitude to development agency professionals on the ground to adjust funding allocations in order to address local priorities and achieve the greatest development impact. We encourage Congress to consider ways to advance more flexible mechanisms, including further changes to annual allocation directives.

MFAN congratulates Chairwoman DeLauro and Subcommittee Chairwoman Lee, as well as all members of the Committee, on advancing this important legislation for America’s global leadership. We look forward to continuing to work with the Committee to further strengthen the impact and efficiency of U.S. foreign assistance.

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