April 3, 2003

Mr. Chairman and members of the Subcommittee,

The American Foreign Service Association (AFSA) serves as both the professional organization and the recognized bargaining agent for the 23,000 active-duty and retired members of this Nation's Foreign Service, including the over 1,000 members of the Foreign Service at the United States Agency for International Development (USAID). AFSA's direct concern has always been for the welfare of the members of the Foreign Service and their having the appropriate resources and infrastructure for them to do their work successfully.
AFSA certainly welcomes the Administration's requested overall increase in funding for the programs covered by this Subcommittee. However, as we survey the international environment in the coming years, we believe additional funds may be needed for this and subsequent years. We believe there will be increased demands on USAID and its personnel in rebuilding Afghanistan and Iraq. The initiation of the Millennium Challenge Account and the Global AIDS Initiative will further place greater demands on USAID and its people. Yet, there continues to be the need to meet the on-going challenges of starvation, internal refugee migrations, the spread of diseases, the need to grow economies and all that it entails, the continuing need to assist in democratization, and responsible self-governance and more that has
been the traditional and on-going part of U.S. foreign assistance.

THE NEED FOR A WORKFORCE PLAN and SUBSEQUENT ADDEQUATE FUNDING.

In the FY 03 funding request, it said that USAID planned "to increase its direct-hire staffing by 3% in FY 2002, and will hold constant in FY2003." It is AFSA's understanding that USAID continues to struggle to recruit Foreign Service Officers at the rate of attrition, and it is not meeting that goal.
However, AFSA believes that meeting attrition should not be the objective, but rather having the right number of people with the right talents needed in the right place at the right time. We believe that the same workforce planning review that gave rise to the State Department's seminal Diplomatic Readiness Initiative is required at USAID. Under the Diplomatic Readiness Initiative, the Department will hire over 1,100 foreign affairs professionals over three years to fill identified staffing gaps and provide for a training float. It takes a forward-looking Workforce Plan to determine the future needs of the Agency and how to get there.
The Committee's House Report, H Rept. 107-663, accompanying the FY03 Foreign Operations Appropriations bill, clearly stated many of the problems coming in the future. It stated,
"The Committee is concerned that the agency is failing to adequately address its current and future human resource needs necessary to meet the current and rapidly evolving foreign policy challenges of the United States…
"In the future, both in light of a scale up of U.S. resources to fight the HIV/AIDS pandemic as well as the natural progression of retirements within the agency, USAID faces tremendous human resource challenges. By 2005, almost 60 percent of the U.S. direct hire foreign service personnel will be eligible for retirement. In the same year, thirty percent of the agency's civil service personnel will be eligible for retirement, an amount three times what it is today. Separate from these sobering trends, the Committee notes that USAID has experienced a decline in both Foreign Service and Civil Service
staff as a percentage of total work force from 1995 to 2000. In 1995, Foreign Service and Civil Service staff represented about 15.1 and 16.1 percent respectively of the total workforce. By 2001, the percent had dropped to 13.3 and 12.8 percent respectively. The

committee is concerned that accompanying this increase is a continued tendency for USAID to rely on non-foreign service officers for the performance of core USG responsibilities…."

A January 2003, General Accounting Office report on the "Major Management
Challenges and Program Risks - U.S. Agency for International Development" (GAO-03-111), identified similar concerns. It found "limited progress" in addressing its human capital management issues." The report raised concerns that the human management capital issues "could affect its ability to deliver assistance efficiently, specifically in postemergency humanitarian situations. A major concern is USAID's inability to establish and integrate a comprehensive workforce plan with its strategic goals and objectives."
The GAO report also discusses the changing nature of the role of USAID as it faced declining direct-hire staff levels without a workforce plan. It reported that, "USAID has had to evolve from an agency that directly implements projects to one that plans and monitors them. Mission directors have become increasingly reliant on other types of employees, such as personal service contractors, to manage mission projects implemented by third parties. For example, as of September 2002, foreign personal service contractors made up approximately 60 percent of USAID's workforce and U.S. direct hires made up about 26 percent of its workforce." However, the problem is greater, because of the declining numbers of Foreign Service and civil service with specialized technical expertise, there is currently an insufficient number of personnel with needed skills and experience. What we now have is less experienced personnel managing increasingly complex overseas programs.
Mr. Chairman, certainly the Administrator of USAID has taken steps to address many of
these issues. We commend the Agency's decision to begin hiring once again International Development Interns, (IDIs) who are the core Junior Officers of USAID who will develop over

time to be our experienced dedicated senior officers. AFSA also appreciates the Agency's decision, as reported in the Department of State's "Summary and Highlights: International Affairs Function 150 for Fiscal Year 2004," to "recruit, train and assign up to 50 direct hire staff overseas in FY 2004." This seems to point to a workforce problem. It seems that the 50 new direct hires are to meet the growing problem of attrition and insufficient, overly stretched staffing, and further, as these new employees are all sent abroad, AFSA is concerned that the workload on the Washington staff will only increase. Fifty people may be a fine target to aim for on FY04 but we don't know if it is, because we do not know what the true shortages are and where they are located.
AFSA also appreciates the new $6 million Diplomatic Readiness request for FY 04. We understand that this is part of a multiyear "readiness" initiative that would culminate in "establishing a new ceiling for U.S. direct hire staff. The 1,000 strong Foreign Service would be increased by 15 percent, the percentage used by the Department of State in establishing a training and assignment float…." The desire to develop a training and assignment float should be supported and we encourage the Committee to provide sufficient funding in the OE account to allow this to happen. However, again, AFSA is concerned that there is an unfortunate mindset pre-determining a ceiling of 1,000 Foreign Service Officers with an additional 15% that would be the float. It would seem only logical to await the findings of a comprehensive Workforce Plan before recognizing "ceilings." The Congress and Secretary Powell working together have shown
that if the need can be validated, hiring of needed personnel can go above attrition to meet true
staffing gaps and shortages.
AFSA continues to believe from reports of our members that USAID continues to suffer staffing gaps at home and abroad. There is a deep need for a training float, and the human

resources system at USAID needs to rationalize its workforce to develop an adequate core of professional, direct hire personnel to do USAID's work instead of expanding its many categories of non-direct hire employees that seriously impacts the Agencies work.

THE NEED FOR ADEQUATE FUNDING
Mr. Chairman, besides knowing how many people you need and what their talents need to be, adequate training and resources must also be provided. We believe that possibly $40 million above the $604 million already requested for FY 04, could be utilized by USAID in just its Operating Expense (OE) Account alone. For instance, we understand that more than the $10 million allocated for FY04 was originally requested for staff training. The training provided covers a wide range of subjects from core professional skills to Procurement Managers Certification Training, to Contracting Skills Training and ADP Training. The $10 million is an increase over FY03, but a greater sum would increase the numbers of those who could go through training and address the clearly recognized problem at USAID of its aging staff, the need to hire more Foreign Service personnel, and the need to train our younger staff already in difficult positions abroad.
Besides training, we understand that twice as much as the Administration's $20 million request could be utilized by USAID for Information Technology. A more fulsome funding would increase the capability of the Agency to fund the cost of deploying a financial system
abroad and deploying a new procurement system, both of which were criticized by the General Accounting Office.
Mr. Chairman, there are times when, for its own reasons, the Administration will not request amounts that are truly needed. An example of this was soon after the bombings of our

two embassies in east Africa. It took the demands of the appropriations committees, and particularly the House Appropriations Committee to force the Administration to revise their request for embassy security upwards, and submit a larger request for embassy security. The Foreign Service is forever grateful that at that point, the Congress did not believe the Administration's request set the ceiling. We hope that as the Committee considers the Administration's request for the Operating Expense Account, it will look carefully at the programs and once again conclude that the Administration does not set the ceilings.

USAID AND SECURITY FUNDING
Ever since the bombings of our embassies in Dar Es Salaam and Nairobi in 1998, we have become much more aware of the new threat of international terrorism. In the findings of the Accountability Review Boards, chaired by Admiral William Crowe, reported that:
"…there was a collective failure by several Administrations and Congresses over the past decade to invest adequate efforts and resources to reduce the vulnerability of US diplomatic missions around the world to terrorist attacks."

After 1999, when the Congress insisted that the Clinton Administration submit a reasonable request for embassy security funding, both the Administration and the Congress have supported funding along the lines recommended by the Crowe Board and the Overseas Presence Advisory Panel for World Wide Security at our embassies and consulates. The American
Foreign Service Association is very appreciative of this support provided by the Congress for our diplomats assigned to our embassies and consulates abroad. Congress has further taken the lead in urging that consideration be given to the needs of "soft targets" as we harden our posts and missions. AFSA also appreciates this effort which we urged in our testimony submitted to the Commerce, Justice, and State Subcommittee for the FY03 appropriations cycle.

It is for this reason that AFSA is concerned about the level of funding for security provided to USAID and its missions abroad. We believe USAID requires the same level of support for its security as being provided for the Department of State's posts and missions. This becomes especially crucial as there continues to be many missions still outside the U.S. embassy compound and its protective walls.
For FY 01, the Administration requested $50 million to support construction of new on-compound facilities for USAID in Kampala, Uganda and Nairobi, Kenya. The CJS Subcommittee and this Subcommittee did not provide the requested level of support, and it required reallocation of some resources by USAID. The funding request for security for FY02 once again requested $50 million for USAID, and once again it was not forthcoming.
In FY03, the Administration proposed a new line in the Foreign Operations request, the "Capital Investment Fund", which was to fund both improvements in information technology and mission security. Of the $95 million requested for FY03, $82 million was for enhanced security, and $13 million was for information technology. The Omnibus Appropriations bill for FY03, which recently became PL 108-7, allowed provided $33.084 million after subtracting for the 0.65% across the board reduction. Of the $95 million request, The Senate had recommended $63.115 million after a 2.9% across-the-board cut and the House approved an appropriations of $43 million.
In FY04, the Administration is requesting $146.3 million. While the request is a significant increase, the needs are also significant as funding for USAID security has not been as forthcoming as it has been for our embassies.
The Crowe Boards reported that there is a new international threat environment facing us.
"The renewed appearance of large bomb attacks against US embassies and the emergence of sophisticated and global terrorist networks aimed at US interests abroad

have dramatically changed the threat environment. In addition, terrorists may in the future use new methods of attack of even greater destructive capacity, including biological or chemical weapons. Old assumptions are no longer valid."

Mr. Chairman, AFSA urges that the Capital Investment Fund in the Administration's USAID request be fully funded. As it has been clearly shown, whether a person is from USAID or the Department of State, the threat of international terrorism is very real and present. USAID's missions and personnel need to be supported as they work for our nation abroad.

OVERSEAS COMPARABILITY PAY
Mr. Chairman, there is one more issue I wish to raise with the Subcommittee. At this time, it is not a request for funding though hopefully there will be a time when such a request can be made. The issue is Overseas Comparability Pay, and it is very important to Foreign Service personnel.
The Federal Pay Comparability Act of 1990, 5 USC 5301 et seq., added a locality pay component to the salaries of all federal civilian employees serving in the continental U.S. As a consequence, when Foreign Service members transfer overseas from Washington, D.C., they now suffer a 12.74 % pay cut in salary. For example, an employee going to a 15 % differential post such as Dakar, Senegal or Rangoon, Burma does not realize that 15 % pay incentive but
rather only 2.26 % (i.e., differential payment minus forgone locality pay). Moreover, the lack of locality pay abroad also dramatically reduces employees' retirement savings (including Thrift Saving Plan contributions). While most Foreign Service members join because of the psychological, not financial, rewards of serving America, a continued slicing of overseas salaries by one percent a year compared to domestic salaries will inevitably make it difficult for the foreign affairs agencies to attract and retain a talented, diverse Foreign Service.

For two years, Secretary Powell has been working to convince the White House to seek authorization and funding to pay overseas Foreign Service employees an allowance equal to the Washington, D.C. locality pay rate. This effort has been coordinated with the other foreign affairs agencies and was formally endorsed by Director Kay James of the Office of Personnel Management. OPM endorsed this effort focused on the foreign affairs agencies after OPM concluded that there was not a strong argument for the inclusion of non-foreign affairs agencies that send employees on short tours abroad or that hire expatriate American citizens to work in their foreign country of residence. (Note: two years ago, the CIA and NSA began paying their overseas employees an allowance the amount of which is exactly equal to the D.C. locality pay rate.) Unfortunately, the White House declined to seek funding or authorization for Overseas Locality Pay for Foreign Service employees. AFSA understand that the Department of State continues to believe there is a need for Overseas Comparability Pay even though the Administration does not support such a proposal at this time.
AFSA believes that Overseas Comparability Pay is needed, and when there comes a time to support an appropriations request, the Members of this Committee will do so.

CONCLUSION.
Mr. Chairman and members of the Subcommittee, we again appreciate the opportunity to share our views with you. The personnel at USAID and programs covered by the Subcommittee's jurisdiction are crucial to the implementation of our foreign policy, and the humanitarian heart of this Nation. We trust that as you consider the Administration's request, it not is considered the ceiling but rather the test of need will be applied. Your decisions will

determine how well USAID's Foreign Service and Civil Service can do their jobs and whether they will have adequate tools to promote and protect this Nation's national interest abroad.
Thank you for considering our views.