Observations from the State Department and USAID FY 2018 Budget Request

Last week, the Office of Management and Budget (OMB) submitted an updated and complete FY 2018 budget request with detailed spending plans for each Executive Branch department and agency, including the Department of State and the U.S. Agency for International Development (USAID).

Department of State and USAID FY 2018 Budget Overview

The FY 2018 budget request provides $25.6 billion in State Department base discretionary budget authority, a $10.1 billion or 28% reduction from the FY 2017 level.

Other discretionary budget observations include:

• The budget provides an additional $12 billion in Overseas Contingency Operations (OCO) funding request is $2.9 billion (19%) less than in FY 2017. When including the FY 2017 OCO Security Assistance Appropriations supplemental of $4.3 billion in the comparison, the FY 2018 OCO request is $7.2 billion (37%) below the FY 2017 final level, although Congress could appropriate supplemental OCO funds that would mitigate the reduction.
• The combined State and USAID discretionary budget request for FY 2018 is $37.6B, which is $17.3 billion (-31.5%) below the FY 2017 enacted level.
• Provision of $6.9 billion for Foreign Affairs and $1.2 billion for International Organizations represent reductions from FY 2017 of $1 billion (13%) and $838 million (42%) respectively.
• State and USAID updated their management guidelines in 2016 to better evaluate, align and manage programs.

Information Technology Budget

The State Department’s FY 2018 IT budget is $1.9B, a $46.3 million (-2.4%) decrease from FY 2017 and 2.5% below the FY 2016 level. Overall, State’s IT budget has been flat with a very slight decline for the last few years.

Other IT budget observations include:

• Several of the largest infrastructure and modernization initiatives that saw increases in FY 2016 plateaued in FY 2017 and have reductions for FY 2018.
• High-priority initiatives supporting cybersecurity and smaller consular and enterprise operations support initiatives receive increases.
• State’s DME funding in FY 2018 decreases $46.7M, or -11.3%, from FY 2017, after having received a $34 million (+9%) increase from FY 2016. Overall, the FY 2018 DME budget is $13.3 million (3.5%) less than the FY 2016 level.
• DME reductions primarily hit the larger programs, whereas many smaller programs receive double-digit percentage increases.
• O&M funding in FY 2018 increases just $1.8 million (0.1%) from FY 2017 but is $33.9 million (2.2%) below FY 2016.
• USAID's FY 2018 IT budget is $141M, a $6 million (-4.3%) decrease from FY 2017, making it effectively flat with the FY 2016 level. DME for FY 2018 is projected to have a very modest $162 thousand increase while O&M declines nearly $14 million.

Most of State's largest IT budget lines are familiar multi-year initiatives, including Enterprise Infrastructure & Operations, Bureau IT Support, Enterprise Network and Bandwidth Services, Consular Systems Modernization, and Security/Cyber Security Services.