After weeks of intense negotiations, Congress passed an omnibus appropriations bill for FY17 that will keep the government open through the end of the fiscal year. The bill passed the House by a vote of 309-118 and the Senate by a vote of 79-18, and was signed into law by the President.

The omnibus is largely consistent with the two-year budget deal that Congress and the Obama Administration negotiated in 2015, providing $1.07 trillion in base discretionary funding. It also provides additional funding for the Overseas Contingency Operations (OCO) account, which is not subject to discretionary spending caps, above what was approved in FY16. Most of this increase is for the Department of Defense, but the International Affairs Budget also received a slight boost in OCO funding for famine relief.

Considering the numerous proposals to drastically reduce spending on development and diplomacy in FY17 and FY18, the International Affairs Budget fared very well in the omnibus, receiving $54.8 billion – just less than a 1% increase compared to FY16. As in the past, the total is split: $38.3 billion in base funding and $16.5 billion in OCO.

When looking at total enacted funding for FY17, the International Affairs Budget received $59.1 billion, roughly 8% above FY16. The extra boost came from the $4.3 billion that Congress approved in December to help counter ISIS and provide humanitarian relief and support for programs in the Middle East.

Total International Affairs Budget Snapshot

* Reflects the additional $5.8 billion requested in November 2016 by the Obama Administration

**Reflects the additional $4.3 billion provided through the FY17 Further Continuing and Security Assistance Appropriations Act (H.R. 2028) that was enacted in December 2016.

Importantly, the omnibus spending bill also includes critical language requiring the Administration to report to Congress any actions taken related to the reorganization of the State Department and USAID. This language comes at a time when proposals are being considered to significantly reduce the autonomy of USAID and importance of development as a key pillar of U.S. engagement overseas.

While some programs within the International Affairs Budget received cuts, total spending levels remain largely the same compared to FY16 – a strong statement from Congress on the importance of protecting development and diplomacy as key pillars of national security and foreign policy. As a reminder, the Administration recommended cutting approximately $3.4 billion (6%) from the International Affairs Budget in FY17.

USGLC released a statement applauding Congress for their support of the International Affairs Budget in FY17.

HIGHLIGHTS OF INCREASES AND DECREASES

Increases compared to FY16 enacted*

• Diplomatic & Consular Programs: up $373 million (+5%)
• Embassy Security and Construction: up $135 million (+6%)
• Global Health: up $222 million (+3%)
• International Disaster Assistance: up $1.02 billion (+36%)
• USAID Operating Expenses: up $74 million (+6%)
• Development Assistance: up $214 million (+8%)
• Democracy Fund: up $60 million (+40%)
• International Narcotics Control and Law Enforcement: up $36 million (+3%)
• Educational and Cultural Exchanges: up $43 million (+7%)
• Broadcast Board of Governors: up $37 million (+5%)
• Export-Import Bank: up $4 million (+4%)
• Overseas Private Investment Corporation: up $7 million (+11%)
• Trade and Development Agency: up $15 million (+25%)

Decreases compared to FY16 enacted*

• Treasury International Programs: down $520 million (-23%)
• Food Aid (PL 480): down $116 million (-6%)
• Economic Support Fund: down $668 million (-16%)
• Assistance to Europe, Eurasia and Central Asia: down $184 million (-20%)
• Nonproliferation, Antiterrorism and Related: down $43 million (-5%)
• UN Peacekeeping: down $553 million (-22%)
• Contributions to International Organizations: down $87 million (-6%)

*Including base and OCO funding, but excluding funding provided in the FY17 Further Continuing and Security Assistance Appropriations Act (H.R. 2028)

NOTABLE PROGRAMS AND POLICY ISSUES

Humanitarian Assistance: Strong Increase Given Significant Needs

Congress reacted to the growing and significant humanitarian needs around the world – from record numbers of refugees and displaced people in the Middle East to the threat of famine – by providing $6.9 billion in humanitarian assistance funding in the omnibus, $1 billion (17%) above current levels.

As mentioned earlier, the bill provides an additional $990 million specifically for famine relief. Most of the $990 million is designated for the International Disaster Assistance (IDA) account. However, at least $300 million is directed to be dispersed through Food for Peace (PL 480/international food assistance). This funding comes at a critical time as four countries – South Sudan, Somalia, Nigeria, and Yemen – and 20 million people face famine.

*In addition, $616 million in IDA and $300 million in MRA funding was provided in H.R. 2028.

State Operations: Growth for Diplomatic and Embassy Security

Reflecting growing threats to America’s diplomatic presence worldwide, the omnibus includes a total of $6.1 billion for Diplomatic and Embassy Security, $455 million (9%) more than approved for FY16.

Altogether, the bill sets out $8.6 billion for Diplomatic and Consular Programs (D&CP), a $373 million (5%) increase from FY16. Also notable – the Embassy Security, Construction and Maintenance (ESCM) account receives $2.4 billion, representing a $135 million (6%) increase.

International Security Assistance: Increases for FMF and INCLE

Given rising security concerns, international security assistance accounts saw a 6% increase ($493 million) in FY17 – including a $404 million boost that passed in December to help counter ISIS. The omnibus includes $9 billion for international security assistance accounts, $89 million (1%) more than for FY16.

Compared to current levels, the omnibus provides an additional $36 million for International Narcotics Control and Law Enforcement (INCLE) programs. It also provides $86 million more for Foreign Military Financing (FMF), including an additional $75 million for Israel – raising the total amount for Israel to $3.175 billion.

Notably, the omnibus cuts Nonproliferation, Anti-Terrorism, Demining, and Related (NADR) programs by $43 million and holds funding for non-UN peacekeeping operations and International Military Education and Training (IMET) programs essentially flat.

Global Health: Modest Growth Overall

Global health programs saw a small increase in FY17, specifically a $221 million (3%) bump up from FY16 levels. The omnibus maintains flat funding for bilateral HIV/AIDS programs and the Global Fund, and includes $275 million for Gavi, the Vaccine Alliance, within the Maternal and Child Health account – a $40 million increase from current spending.

Programs to combat malaria receive a significant increase in funding. The omnibus includes $755 million for these programs, $81 million above FY16. Another notable change is the inclusion of a $70 million Emergency Reserve Fund as part of $143 million provided for Global Health Security programs.

*State Department and USAID Global Health accounts only, except for family planning.

Peacekeeping: Significant Cuts

The omnibus makes significant cuts to UN peacekeeping accounts. It provides a total of $1.9 billion for the Contributions to International Peacekeeping (CIPA) and an additional $147 million for the African Union Mission in Somalia through the Peacekeeping Operations Account (PKO). Taken together, this amounts to $2.05 billion for ongoing UN peacekeeping operations.

This total will fall far short of what is needed to cover ongoing needs, including operations in South Sudan, the Central African Republic, Lebanon, and Mali. The omnibus also reinstitutes the 25% legislative cap on peacekeeping costs, instead of the negotiated rate of 28%. As a result, the U.S. will not be able to meet its peacekeeping obligations in full, leading to arrears for the first time since 2009.

*In addition, $50 million in funding for non-UN peacekeeping operations was provided in H.R. 2028.

Development and Economic Assistance: Mixed Results, Though Offset

At a time when rumors abound that the Administration’s FY18 budget request will zero out Development Assistance (DA), Congress protected the account in the omnibus, providing an increase of $214 million – 8% above current levels.

The Millennium Challenge Corporation (MCC) and the Peace Corps are also protected. The omnibus holds funding for both at or near FY16 levels. Across all accounts, funding for Feed the Future is held steady at $1 billion as well. Notably, the omnibus cuts the Economic Support Fund (ESF) account significantly. However, the cuts are offset by the counter-ISIS funding that was approved in December.

*In addition, $1.03 billion in ESF and $157 million in AEECA funding was provided in H.R. 2028.

Multilateral Assistance: Deep Cuts to Treasury International Funding

The omnibus cuts funding for multilateral assistance by $510 million (-20%) from current levels – quite a significant reduction. These cuts disproportionately affect Treasury International Programs, funding for which falls to $1.77 billion.

The biggest cut results from the elimination of the $250 million request for a Treasury Department contribution to the Green Climate Fund. However, the omnibus does not include House language that would have explicitly prohibited any contributions to the Fund. Funding for voluntary contributions to the International Organizations and Programs (IO&P) account is held at its FY16 level of $339 million as well.

Trade Agencies: Increases across the Board

The omnibus treats trade-promoting agencies well – the Trade and Development Agency in particular receives $75 million, a $15 million (25%) increase. The Overseas Private Investment Corporation (OPIC) also gets a bump up of $7 million (11%) for a total of $70 million for administrative expenses. The bill provides $110 million for the Export-Import Bank, again for administrative expenses, which is a $4 million (4%) increase.

Food Aid: Slight Increase with Transfer

With at least $300 million in International Disaster Assistance funding required to be transferred to Food for Peace (PL 480/international food assistance), Food for Peace comes out slightly ahead of FY16 levels – even with cuts to the program in the omnibus.

The omnibus includes $1.6 billion for Food for Peace, $116 million (-6%) below the FY16 level. This includes what the appropriators describe as a one-time plus up of $134 million. However, this cut is offset by the transfer described above to support famine relief efforts.

Funding for the McGovern-Dole International Food for Education and Child Nutrition program is held steady at $202 million, the same as FY16 levels. The omnibus rejects the $15 million requested by the previous administration to purchase some food aid locally or regionally.

FY17 Agriculture Appropriations International Programs Snapshot

Policy Provisions

A few additional key policy items to note:

• The omnibus does not include the Mexico City Policy (originally included in the House bill), which would have codified the requirement that all non-governmental organizations that receive federal funding refrain from performing or promoting abortion services as a method of family planning.
• It does not include a funding cap (originally included in the House bill) for the refugee admissions program.
• It includes a requirement that the Administration report to Congress any actions taken related to the reorganization of the State Department and USAID.
• It does not include a provision (originally in the House bill) prohibiting U.S. contributions to the UN Population Fund.
• It strengthens a reporting requirement concerning obligations and expenditures, by requiring a quarterly report on unobligated balances and pipelines.

Next Steps

With FY17 completed, Congress is now turning to FY18 in full force. The Administration is expected to release its full FY18 budget request the week of May 22, after which the House and Senate Appropriations Committees will begin conducting hearings on the budget request and drafting FY18 spending bills.

However, before the appropriations process moves too far along, overall topline funding for FY18 will need to be determined. Traditionally, the House and Senate Budget Committees each draft a non-binding budget resolution for the fiscal year that determines the topline funding level for overall discretionary spending. These topline numbers are known as 302(a) allocations.

Using the 302(a) allocations, the House and Senate Appropriations Committees then determine funding levels for each of their subcommittees – including the State-Foreign Operations Subcommittee, which has jurisdiction over 96% of the International Affairs Budget. These funding levels for Appropriations subcommittees are known as 302(b) allocations.

This year, without a broader budget deal in place, the Budget Committees’ determination is particularly important. However, we’re unlikely to see a FY18 budget resolution until at least June. This week, CQ reported that the House Budget Committee is unlikely to mark up its FY18 resolution until after the Memorial Day recess and the Senate Budget Committee is even further behind schedule.

Account-by-Account Details

Download the Account-by-Account details of the FY17 omnibus here.