Following is a Web version of a document from USAID's 1997 Congressional Presentation. Please note that some formatting may have been lost in the automated conversion of the original file. This document is also available for download in its original WordPerfect 5.1 format.

FY 1997 Request: $495,000,000

For FY 1997, USAID is requesting $495,000,000 in Operating Expenses (OE). These funds, combined with other funding sources, such as local currency trust funds, will provide a total of $547,065,000 to cover operating costs of the Agency. This is a reduction of $31.5 million below amounts available in FY 1996. Within these totals, the Agency will utilize about $4.9 million in FY 1997 local currency trust funds for overseas capital costs, compared to $11.5 million in FY 1996, primarily for the purchase of land and construction of a new office building in Cairo, Egypt.

USAID has made great progress in changing the way it operates, and will continue to strive for improvements. By the end of FY 1996 we will have closed 23 missions and another 4 will be closed in FY 1997. These mission closings are continuing on schedule and have contributed to the Agency's ability to reduce its operating costs. Had these missions not been closed, the additional FY 1997 cost to the Agency would have been about $62 million. However, more must be done if we are to operate at the requested funding level in FY 1997 and continue to provide adequate management oversight of development and humanitarian efforts in future years.

- Since 1992, USAID has reduced its staff by 19 percent, the second largest percentage staff reduction during this period in the Federal Government.

- At the beginning of the Clinton Administration in 1993, USAID was operating in over 120 countries, with over 70 full missions. By the year 2000, our programs will be targeted on approximately 75 countries, with no more than 30 full scale sustainable development missions.
- In 1993 the Agency was very paper-intensive, and managers found it difficult, if not impossible, to get up- to-date information on their resources and activities. With our new management systems (NMS) and restructured management operations, information will be available on-line to Agency managers and paperwork will be greatly reduced.

- The Agency has made considerable progress in decentralizing decision making. By giving those at the scene (missions, NGOs, PVOs, local governments, and the local population) more autonomy in developing activities, the activities undertaken are more likely to produce desired results.

Actions the Agency has taken, and will have to take in the future, have been painful and have caused some disruptions. To operate at the requested appropriation level of $495 million, the Agency will have to reduce its total OE funded U.S. direct hire workforce by about 400 from the December 31, 1995 on-board levels. The combined impact of a hiring freeze (which has been in-place since July 1995), anticipated attrition (including early-retirements) will reduce these levels by about 200. The remaining 200 will have to be achieved through a reduction-in-force (RIF), which the Administrator has announced will begin in June, 1996.

These staff reductions, combined with corresponding reductions of foreign national direct hire, foreign national personal service contractors (PSCs) and U.S. PSCs, will sorely test the Agency's ability to carry out its responsibilities in the short-term. While the Agency develops longer term plans to reduce the total number of countries in which we operate, many missions, as well as Washington offices and bureaus, will simply have to re- prioritize their activities. Triage of less critical activities, whether programmatic or administrative in nature, will be required.

While there will be significant difficulties in managing Agency operations during the next year or two, complete implementation of the new management systems, expected by the end of FY 1997, combined with restructuring of overseas and Washington organizations, will enable the Agency to improve overall management even with reduced staffing.

The Agency must also plan for the requirement for relocating its Headquarters operations. Offices formerly located in an annex in the Columbia Plaza building have already been relocated to temporary office space, primarily in Virginia. Offices in the Department of State building will have to be moved prior to the end of FY 1997to enable the Department of State to begin the renovation of that space. With these forced moves in mind, the Agency began examining the possibility of consolidating all Washington operations in a single building in FY 1993.

The following chart shows how the operating costs of USAID are being funded:

Category	FY 1995 Actual	FY 1996 Estimate	FY 1997 Request
Appropriated Operating Expenses	517,500	465,750	495,000
Local Currency Trust Funds (Recurring)	40,056	39,776	32,165
Local Currency Trust Funds (Real Property)	11,535	4,900
Program Funds Used for OE	731	25,500
Appropriation Transfer (Bosnia)	3,000
Reimbursements	7,824	6,000	6,000
Unobligated Balance - Start of Year	21,953	27,004	9,000
Recovery of Prior Year Obl. (Sec. 511)	16,086	9,000	9,000
Reappropriation	2,000
Rescission	-6,163
Unobligated Balance - End of Year	-27,004	-9,000	-9,000
End of Year Balance - Expired	-1,214
Total Obligations	571,770	578,565	547,065
Total Obligations excluding Real Property	571,770	567,030	542,165