Global Health: Spending Requirement Presents Challenges for	 
Allocating Prevention Funding under the President's Emergency	 
Plan for AIDS Relief (06-SEP-06, GAO-06-1089T). 		 
                                                                 
The U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria  
Act of 2003 authorizes the President's Emergency Plan for AIDS	 
Relief (PEPFAR). It promotes the ABC model (Abstain, be faithful,
or use Condoms); recommends that 20 percent of funds appropriated
pursuant to the act be spent on prevention; and requires that,	 
starting in fiscal year 2006, 33 percent of prevention funds	 
appropriated pursuant to the act be spent on			 
abstinence-until-marriage activities. The Office of the U.S.	 
Global AIDS Coordinator (OGAC) oversees PEPFAR and administers	 
the Global HIV/AIDS Initiative (GHAI) account, the main 	 
repository for PEPFAR funds. For our April 2006 report, GAO	 
reviewed PEPFAR prevention funding trends; described the PEPFAR  
strategy to prevent sexual transmission of HIV; and examined	 
related challenges. The report recommended that the Coordinator  
collect and report information on the effects of the		 
abstinence-until-marriage spending requirement and use it to,	 
among other things, assess whether the requirement should apply  
only to the GHAI account. OGAC agreed to collect information but 
disagreed with applying the requirement only to certain funds;	 
GAO modified the recommendation. GAO also suggested Congress use 
the information to assess how well the requirement supports the  
Leadership Act's endorsement of both the ABC model and strong	 
abstinence programs.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-1089T					        
    ACCNO:   A60333						        
  TITLE:     Global Health: Spending Requirement Presents Challenges  
for Allocating Prevention Funding under the President's Emergency
Plan for AIDS Relief						 
     DATE:   09/06/2006 
  SUBJECT:   Accountability					 
	     Acquired immunodeficiency syndrome 		 
	     Appropriated funds 				 
	     Disease control					 
	     Disease detection or diagnosis			 
	     Funds management					 
	     Health care programs				 
	     Program evaluation 				 
	     Risk management					 
	     Sexually transmitted diseases			 
	     Strategic planning 				 
	     Global HIV/AIDS Initiative 			 
	     President's Emergency Plan for AIDS		 
	     Relief						 
                                                                 

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GAO-06-1089T

     

     * Summary
     * Background
     * PEPFAR Prevention Funding in the Focus Countries Grew Signif
     * PEPFAR Sexual Transmission Prevention Strategy Is Driven by
     * ABC Guidance and Abstinence-Until-Marriage Spending Requirem
          * Challenges Related to ABC Guidance
          * Challenges Related to Abstinence-until-Marriage Spending Req
     * Concluding Observations
     * Matters for Congressional Consideration
     * Contacts and Acknowledgments
     * GAO's Mission
     * Obtaining Copies of GAO Reports and Testimony
          * Order by Mail or Phone
     * To Report Fraud, Waste, and Abuse in Federal Programs
     * Congressional Relations
     * Public Affairs

Testimony

Before the Subcommittee on National Security, Emerging Threats, and
International Relations, Committee on Government Reform, House of
Representatives

United States Government Accountability Office

GAO

For Release on Delivery Expected at 1 p.m. EDT/EST

September 6, 2006

GLOBAL HEALTH

Spending Requirement Presents Challenges for Allocating Prevention Funding
under the President's Emergency Plan for AIDS Relief

Statement of David Gootnick, Director International Affairs and Trade

GAO-06-1089T

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss HIV prevention efforts funded
under the President's Emergency Plan for AIDS Relief (PEPFAR).

In January 2003, citing the need "to meet a severe and urgent crisis
abroad," President Bush announced PEPFAR, a $15 billion, 5-year initiative
to combat the global HIV/AIDS epidemic through prevention, treatment, and
care interventions. The U.S. Leadership Against HIV/AIDS, Tuberculosis,
and Malaria Act of 20031 (Leadership Act), which authorizes PEPFAR,
endorses using the "ABC model" (Abstain, Be faithful, or use Condoms) to
prevent the sexual transmission of HIV. The act also provides for the
establishment of an HIV/AIDS coordinator within the Department of State
(State) to lead the U.S. response to the HIVAIDS epidemic and oversee all
U.S. efforts to combat HIV/AIDS abroad, including administering an
account-known as the Global HIV/AIDS Initiative (GHAI) account-containing
funds appropriated pursuant to the act. The act recommends that 20 percent
of the appropriated funds be dedicated to HIV/AIDS prevention and requires
that, beginning in fiscal year 2006, at least 33 percent of these
prevention funds be spent on abstinence-until-marriage programs. State's
Office of the U.S. Global AIDS Coordinator (OGAC) has defined five
HIV/AIDS prevention program areas-abstinence/faithfulness (AB), "other
prevention," prevention of mother-to-child transmission (PMTCT), safe
medical injections, and blood safety-and defined abstinence-until-marriage
programs as AB activities.

My remarks will focus on three areas, as discussed in our report issued on
April 4, 2006:2 (1) trends and allocation of PEPFAR prevention funding,
(2) the PEPFAR strategy for preventing the sexual transmission of HIV, and
(3) key challenges associated with applying this strategy.

My observations are based on the work of our GAO team over the previous
year. For this project, our team conducted structured interviews with U.S.
agency officials responsible for managing PEPFAR in all 15 PEPFAR focus
countries3 (focus country teams). This structured interview tool was
designed, tested, and reviewed in consultation with our methodologist to
ensure the validity and reliability of our analysis. Our team also
reviewed key PEPFAR documents, such as country teams' operational plans,
and interviewed U.S. based officials from the key agencies responsible for
implementing PEPFAR-State, the U.S. Agency for International Development
(USAID), and the Centers for Disease Control and Prevention (CDC)-as well
as representatives of several nongovernmental organizations based in
Washington, D.C. In July 2005, the team visited four PEPFAR focus
countries-Botswana, Ethiopia, South Africa, and Zambia-that it had
selected using a set of objective criteria, such as level and focus of
PEPFAR funding. Finally, the team reviewed information from five
additional PEPFAR country teams that receive at least $10 million in U.S.
government funding for HIV/AIDS.4 We conducted this work in accordance
with generally accepted government auditing standards.

1Pub. L. No. 108-25.

2GAO, Global Health: Spending Requirement Presents Challenges for
Allocating Prevention Funding under the President's Emergency Plan for
AIDS Relief, GAO-06-395 (Washington, D.C.: April 4, 2006).

                                    Summary

As we reported in April 2006, PEPFAR prevention funding5 in the 15 focus
countries rose significantly between fiscal years 2004 and 2006, while the
proportion of total PEPFAR funding dedicated to prevention declined.
PEPFAR funding in these 15 countries rose from $207 million in fiscal year
2004 to $322 million fiscal year 2006.6 At the same time, prevention
funding as a share of total PEPFAR funding in the 15 focus countries
declined from 33 to 20 percent, consistent with the Leadership Act's
recommendation that 20 percent of funds appropriated pursuant to the act
be spent on prevention. For fiscal year 2005, focus country teams reported
allocating varying amounts for prevention programs, including those
designed to prevent sexual transmission of HIV-AB and "other prevention."
We found that challenges and inconsistencies in country teams'
categorization of funding for certain ABC programs and some broad sexual
transmission prevention activities, such as programs aimed at reducing
stigma associated with HIV, result in some limitations in the reliability
of reported allocations for sexual transmission prevention.

3The 15 PEPFAR focus countries are Botswana, Cote d'Ivoire, Ethiopia,
Guyana, Haiti, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa,
Tanzania, Uganda, Vietnam, and Zambia. Officials in these countries spoke
with us with the understanding that individual respondents and the
countries where they serve would not be named in our discussion of the
structured interviews.

4These countries are Cambodia, India, Malawi, Russia, and Zimbabwe. Each
of these teams is required to submit an operational plan to OGAC each
fiscal year, starting in fiscal year 2006.

5For the purposes of this testimony, and in our April 2006 report, PEPFAR
prevention funding is defined as funding appropriated to four accounts in
the 15 PEPFAR focus countries, as well as bilateral HIV/AIDS funding in
the five additional PEPFAR countries. Funding data for fiscal years 2004
and 2005 are actual, while funding data for fiscal year 2006 are planned
funding as of March 15, 2006.

6Data that OGAC reported to Congress in April 2006 regarding fiscal year
2006 planned PEPFAR prevention funding differ from these figures,
primarily because OGAC's reported prevention funding included costs not
reported in previous fiscal years as program area funds. These costs
include, in part, certain strategic information and management and
staffing costs.

The PEPFAR strategy for preventing sexual transmission of HIV is largely
shaped by three elements-the ABC model, endorsed by the Leadership Act;
the Leadership Act's abstinence-until-marriage spending requirement; and
local prevention needs in the PEPFAR countries.

           o  ABC model. OGAC adopted the model and identified key principles
           to guide country teams' implementation of it-stating, for example,
           that prevention interventions should be responsive to
           characteristics of the epidemic of the country. OGAC's guidance
           regarding the ABC model also outlined the types of activities that
           can be funded through PEPFAR and directed country teams to
           emphasize different components of the ABC model for various target
           populations.
           o  Abstinence-until-marriage spending requirement. The PEPFAR
           sexual transmission prevention strategy reflects the Leadership
           Act's requirement to reserve at least 33 percent of prevention
           funds appropriated pursuant to the act-starting in fiscal year
           2006-for abstinence-until-marriage programs. To ensure compliance,
           OGAC established policies in August 2005 directing 20 PEPFAR
           country teams7 to dedicate at least 50 percent of prevention
           funding to sexual transmission prevention activities (50 percent
           policy) and 66 percent of that amount to AB activities (66 percent
           policy). OGAC also allowed country teams, especially those with
           smaller budgets or more concentrated epidemics, to request
           exemption from these policies. Finally, OGAC applied the spending
           requirement to all PEPFAR prevention funding as a matter of
           policy, although it determined that, as a matter of law, the
           requirement applies only to funds appropriated to the GHAI
           account.
           o  Local prevention needs. Working within the parameters of the
           ABC model and the abstinence-until-marriage spending requirement,
           country teams design prevention programs that respond to the
           countries' prevention needs.

           OGAC's ABC guidance and the Leadership Act's
           abstinence-until-marriage spending requirement have presented
           several challenges to country teams.

           o  Lack of clarity in the ABC guidance has created challenges for
           a majority of focus country teams. Although a number of teams told
           us that they found the guidance clear or easy to implement, 10 of
           the 15 focus teams cited instances where elements of the guidance
           were ambiguous and confusing, leading to difficulties in its
           interpretation and implementation. We reported in April that OGAC
           officials told us they were working to clarify confusing
           components of the guidance, including distributing to country
           teams a document to address concerns teams had identified.
           o  Satisfying the Leadership Act's abstinence-until-marriage
           spending requirement presents challenges to most country teams.
           Several focus country teams indicated that they value the ABC
           model as an HIV/AIDS prevention tool and noted the importance of
           AB messages, particularly for certain populations. However, about
           half of the focus country teams told us that meeting the spending
           requirement can undermine the integration of prevention programs.
           Further, 17 of the 20 PEPFAR teams required to meet the
           requirement, absent exemptions, reported either in structured
           interviews or exemption requests that it presents challenges to
           their ability to respond to local epidemiology and cultural and
           social norms. Ten of these 17 teams (including 7 focus country
           teams) requested and received exemptions, citing a variety of
           constraints related to meeting the requirement, such as reduced
           PMTCT spending and limited funding for prevention messages to
           high-risk groups. The remaining 7 teams, which did not meet OGAC's
           proposed criteria for submitting exemption requests, also
           identified specific program constraints related to meeting the
           requirement, such as reduced funding for prevention programs aimed
           at HIV-positive individuals. Having approved 10 requests for
           exemption, OGAC should just meet the Leadership Act's 33 percent
           requirement for fiscal year 2006 by effectively requiring teams
           that do not request exemptions to, in most cases, spend more than
           33 percent of prevention funds on AB activities. However, these
           teams must sometimes reduce or cut funding for certain prevention
           programs, such as programs to deliver comprehensive ABC messages
           to populations at risk of contracting HIV. The analysis in our
           April report showed that nonexempted country teams' allocations of
           planned prevention funds to "other prevention" declined by
           approximately $5 million-from about 23 percent in fiscal year 2005
           to about 18 percent in fiscal year 2006. At the same time,
           exempted country teams' allocations of planned prevention funds to
           "other prevention" increased by approximately $700,000 between
           fiscal years 2005 and 2006, remaining at about 21 percent of their
           total prevention funding in each fiscal year. Finally, OGAC's
           decision to apply the spending requirement to all PEPFAR
           prevention funding, rather than only to prevention funding in the
           GHAI account, may further constrain some country teams' ability to
           respond to local prevention needs.

           In our April 2006 report, we recommended that the Secretary of
           State direct the U.S. Global AIDS Coordinator to collect and
           report to Congress information from the country teams about the
           spending requirement's effect on their prevention programming and
           use that information to, among other things, consider whether the
           Leadership Act's abstinence-until-marriage spending requirement
           should be applied only to funds appropriated to the GHAI account.
           We also suggested that, in light of this information, Congress
           should assess the extent to which the spending requirement
           supports the Leadership Act's endorsement of both the ABC model
           and strong abstinence-until-marriage programs. In responding
           jointly to a draft of our report, State, USAID, and the Department
           of Health and Human Services accepted our recommendation to
           collect information from the country teams regarding the spending
           requirement's effects on their HIV sexual transmission prevention
           programming. They disagreed with our draft recommendation to
           consider whether the Leadership Act's spending requirement should
           be applied solely to funds appropriated to the GHAI account. We
           modified the second recommendation to recommend that they consider
           this policy change after collecting information on the effect of
           the spending requirement.

           Background
			  
			  Each day, an estimated 13,400 people worldwide are newly infected
           with HIV; more than 20 million have died from AIDS since 1981. HIV
           is transmitted both sexually (through sexual intercourse with an
           infected person) and nonsexually (through the sharing of needles
           or syringes with an infected person; unsafe blood transfusions; or
           the passing of the virus from mother to child through pregnancy,
           childbirth, or breastfeeding). The majority of HIV infections
           worldwide are transmitted sexually. About two-thirds of the
           estimated 40 million people currently living with HIV/AIDS are in
           sub-Saharan Africa where, according to the Joint United Nations
           Programme on HIV/AIDS, adult HIV prevalence averaged 7.4 percent
           in 2004.8

           As the entity responsible for developing the U.S. global HIV/AIDS
           strategy and administering PEPFAR, OGAC has defined five
           prevention program areas-abstinence/faithfulness (AB), "other
           prevention," prevention of mother-to-child transmission (PMTCT),
           blood safety, and safe medical injections. These areas are divided
           into two groups: those aimed at preventing sexual transmission-AB
           and "other prevention"9-and those aimed at preventing nonsexual
           transmission-PMTCT, blood safety, and safe medical injections.
           (See fig. 1.)

           Figure 1: PEPFAR Prevention Program Areas

           AB activities encourage abstinence until marriage, delay of first
           sexual activity, secondary abstinence,10 faithfulness in marriage
           and monogamous relationships, reduction of sexual partners among
           sexually active unmarried persons, and social and community norms
           related to the above practices. "Other prevention" activities
           include the purchase and promotion of condoms, management of
           sexually transmitted infections (if not in a palliative care
           setting), and messages or programs to reduce injection drug use
           and related risks.

           In fiscal year 2004, the U.S. Congress appropriated $2.4 billion
           for global HIV/AIDS efforts, directing $865 million of this amount
           to four accounts: (1) the GHAI account, which received most of the
           funding; (2) the Child Survival and Health account; (3) the
           Prevention of Mother to Child Transmission account; and (4) CDC's
           Global AIDS Program.11 In our April 2006 report, PEPFAR funding
           refers to funds appropriated to these four accounts12 for the 15
           focus countries, as well as bilateral HIV/AIDS funding for the
           five additional countries that receive at least $10 million in
           U.S. government HIV/AIDS funding. Each year, to receive
           country-level funding for the coming fiscal year, country teams
           submit budgets, or "operational plans," to OGAC outlining planned
           activities and the organizations that will implement them
           (implementing partners). These plans are subject to OGAC's review
           and approval. Focus country teams also receive central
           funding-multicountry awards that are managed by U.S. agency
           headquarters in Washington, D.C. For fiscal years 2004 and 2005,
           PEPFAR funding figures are central and country-level
           appropriations allocated by OGAC. For fiscal year 2006, PEPFAR
           funding consists of planned allocations of central and
           country-level appropriations.13

           The Leadership Act specifies the percentage of PEPFAR funds to be
           allocated for HIV/AIDS prevention, treatment, and care for fiscal
           years 2006-2008. The act recommends that 20 percent of funds
           appropriated pursuant to the act be spent on prevention and 15
           percent on palliative care for those living with the disease. The
           act also requires that, beginning in fiscal year 2006, at least 55
           percent of funds appropriated pursuant to the act be spent on
           treatment and at least 10 percent on orphans and vulnerable
           children. (See fig. 2).

           Figure 2: Selected Spending Requirements and Recommendations for
           Fiscal Years 2006-2008 Contained in the 2003 Leadership Act

           The Leadership Act further requires that at least one-third of
           prevention funding appropriated pursuant to the act be spent on
           abstinence-until-marriage programs, starting in fiscal year 2006.
           (The act also recommended this spending distribution for fiscal
           years 2004 and 2005.) In June 2004, OGAC notified Congress that it
           defines abstinence-until-marriage activities as programs that
           address both abstinence and faithfulness.14

           The Leadership Act states that "behavior change, through the use
           of the ABC model, is a very successful way to prevent the spread
           of HIV." The model, which the Leadership Act defines as "`Abstain,
           Be faithful, and use Condoms,' in order of priority," is based in
           part on the experience of Uganda, which implemented an ABC
           campaign in the 1980s and observed a decline in HIV/AIDS
           prevalence by 2001.15 Although substantial debate exists about the
           extent to which each component of the model is responsible for
           reducing HIV prevalence in individual countries, there is general
           consensus that using the ABC model can have a positive impact in
           combating HIV/AIDS. In November 2004, a key consensus statement
           authored by leading public health experts and endorsed by more
           than 125 prominent figures and world leaders observed that "all
           three elements of [the ABC model] are essential to reducing HIV
           incidence, although the emphasis placed on individual elements
           needs to vary according to the target population."16

           The PEPFAR prevention goal is to avert 7 million infections in the
           15 focus countries by the year 2010. This goal is cumulative; that
           is, infections averted in 2004 through 2009 will count toward the
           final total of infections averted by 2010. In addition, this goal
           is to be reached both through PEPFAR activities and through
           interventions by other donors and host nations. OGAC plans, over
           time, to estimate progress toward this goal by using a statistical
           model of epidemiological trends developed by the U.S. Census
           Bureau. This analysis will compare "expected" HIV incidence rates
           in particular countries with "actual" incidence rates, using those
           comparisons to estimate the number of infections that have been
           averted through PEPFAR and other prevention programs. However, it
           cannot attribute this change to any specific intervention or to
           the success of particular types of programs. The approach involves
           substantial challenges and the reliability of the estimates is not
           known, according to Census officials. Key challenges include a
           lack of data on prevalence rates in many developing countries and
           the fact that impacts of behavioral change programs can occur over
           a period of time. OGAC initially considered using a different
           methodology-the Goals model17-that links estimates of infections
           averted to specific types of prevention programs carried out under
           PEPFAR and their spending levels. However, OGAC concluded that
           this model could yield misleading results and was not the best
           method to adopt. To acquire information about the effectiveness of
           specific PEPFAR prevention programs, especially in the AB area,
           OGAC plans to fund targeted evaluations on a very limited scale.

           PEPFAR Prevention Funding in the Focus Countries Grew Significantly
			  during First 3 Years
			  
			  PEPFAR prevention funding increased significantly between fiscal
           years 2004 and 2006, while the proportion of total PEPFAR funding
           dedicated to prevention declined. Country teams reported varying
           allocations among the five prevention program areas. We found that
           challenges and inconsistencies in country teams' categorization of
           funding for certain ABC programs and broad sexual transmission
           prevention activities resulted in some limitations in the
           reliability of reported allocations for sexual transmission
           prevention.

           PEPFAR prevention funding18 in the 15 focus countries increased by
           more than 40 percent, from $207 million in fiscal year 2004 to
           $294 million in fiscal year 2005. It further increased by about 10
           percent, to $322 million, in fiscal year 2006. (See fig. 3.)

           Figure 3: Total PEPFAR Prevention Funding in the 15 Focus
           Countries, Fiscal Years 2004-2006

           Note: Fiscal year 2006 funding is planned funding as of March 15,
           2006. Data that OGAC reported to Congress in April 2006 regarding
           fiscal year 2006 planned PEPFAR prevention funding differ from
           these figures, primarily because OGAC's reported prevention
           funding included costs not reported in previous fiscal years as
           program area funds.

           At the same time, the proportion of PEPFAR funding dedicated to
           prevention in the 15 focus countries declined from 33 percent in
           fiscal year 2004 to 20 percent in fiscal year 2006, consistent
           with the Leadership Act's recommendation that one-fifth of funds
           appropriated pursuant to the act be spent on prevention. (See fig.
           4.) OGAC's fiscal year 2004 operational plan predicted this
           decline, noting that the proportion of total PEPFAR funding
           allocated to prevention would likely begin to decrease relative to
           the proportion allocated to care and treatment.

           Figure 4: Share of PEPFAR Funding Dedicated to Prevention in the
           15 Focus Countries, Fiscal Years 2004-2006

           Note: Fiscal year 2006 funding is planned funding as of March 15,
           2006. Data that OGAC reported to Congress in April 2006 regarding
           fiscal year 2006 planned PEPFAR prevention funding differ from
           these figures, primarily because OGAC's reported prevention
           funding included costs not reported in previous fiscal years as
           program area funds.

           The total proportion of PEPFAR prevention funding that the 15
           focus country teams reported allocating to each of the five
           prevention programs varied to some extent across fiscal years
           2004-2006. (See fig. 5.)

           Figure 5: Reported PEPFAR Prevention Funding in Focus Countries,
           by Program Area, Fiscal Years 2004-2006

           Note: Fiscal year 2006 funding is planned funding as of March 15,
           2006. Data that OGAC reported to Congress in April 2006 regarding
           fiscal year 2006 planned PEPFAR prevention funding differ from
           these figures, primarily because OGAC's reported prevention
           funding included costs not reported in previous fiscal years as
           program area funds.

           Challenges and inconsistencies in country teams' categorization of
           funding for certain integrated ABC activities and some broad
           sexual transmission prevention activities cause some limitations
           in the reliability of the allocations reported for AB and "other
           prevention." For example, in their country operational plans, some
           teams categorized integrated ABC programs entirely as "other
           prevention," while others divided some or all of these programs
           between the AB and "other prevention" categories. In addition,
           certain broader components of sexual transmission prevention
           programs that are not clearly defined as AB or "other prevention,"
           such as activities to prevent substance abuse, may appear in
           either program area in the teams' operational plans. The lack of a
           standardized method for categorizing these programs means that, to
           some extent, the varied numbers of funding reported across fiscal
           years may reflect the variations in categorization methods rather
           than actual differences.

           PEPFAR Sexual Transmission Prevention Strategy Is Driven by ABC
			  Approach, Abstinence-Until-Marriage Spending Requirement, and Local
			  Prevention Needs
			  
			  The PEPFAR strategy for preventing sexual transmission of HIV is
           shaped largely by three components: the ABC model, the
           abstinence-until-marriage spending requirement, and local
           prevention needs.

           In adopting the ABC model, OGAC identified the following key
           principles that country teams should consider in developing and
           implementing ABC programs:

                        o  The model should be applied in accordance with
                        local prevention needs.
                        o  Prevention activities should be integrated.
                        o  Prevention activities should be coordinated with
                        the HIV/AIDS strategies of host governments.
                        o  Prevention interventions should be driven by best
                        practices.

           OGAC's guidance to the field states that "the optimal balance of
           ABC activities will vary across countries according to the
           patterns of disease transmission, the identification of core
           transmitters (i.e., those at highest risk of transmitting HIV),
           cultural and social norms, and other contextual factors."19 The
           ABC guidance also specifies the components of the ABC model that
           should be targeted to certain populations and sets parameters on
           the prevention messages that may be delivered to youths. For
           example, although PEPFAR funds may be used to deliver
           age-appropriate AB information to in-school youths aged 10 to 14
           years, the funds may not be used to provide information on condoms
           to these youths. When students are identified as being at risk,
           they may be referred to out-of-school programs that provide
           integrated ABC information and that provide condoms. Under these
           rules, PEPFAR funds may be used to give integrated ABC information
           to youths older than 14. Other rules include the following:
           o  PEPFAR funds may not be used in schools for marketing efforts
           to promote condoms to youths.
           o  PEPFAR funds may not be used in any setting for marketing
           campaigns that target youths and encourage condom use as the
           primary intervention for HIV prevention.
           o  PEPFAR funds may be used to target at-risk populations with
           specific outreach, services, comprehensive prevention messages,
           and condom information and provision. At-risk groups include,
           among others, sexually active discordant couples and those who
           have sex with one whose HIV status is unknown.

           To meet the 33 percent abstinence-until-marriage spending
           requirement, OGAC issued policies in late August 2005 instructing
           each of the 15 focus country teams and 5 additional teams to spend
           at least 50 percent of their prevention funding on sexual
           transmission prevention and at least 66 percent of that amount on
           AB activities. To show compliance with the spending requirement,
           country teams' operational plans must isolate the amount of
           funding dedicated to AB activities. OGAC allows country teams to
           request exemption from its 50 percent and 66 percent policies.
           However, the guidance cautions that, in a generalized epidemic, a
           very strong justification is required for not meeting the 66
           percent policy and adds that OGAC expects all focus country teams,
           particularly those with total PEPFAR funding exceeding $75
           million, to adhere to the policies.20 Finally, OGAC directed
           country teams to apply the spending requirement to all PEPFAR
           prevention funding (about $357 million in fiscal year 2006),
           although it determined that, as a matter of law, the requirement
           applies only to funds appropriated to the GHAI account (about $322
           million in fiscal year 2006).

           ABC Guidance and Abstinence-Until-Marriage Spending Requirement
			  Present Challenges for Country Teams
			  
			  As our April 2006 report discusses, country teams face challenges
           related to both the ABC guidance and the Leadership Act's
           abstinence-until-marriage spending requirement. Two-thirds of
           focus country teams reported that a lack of clarity in aspects of
           the ABC guidance has led to interpretation and implementation
           challenges. About half of the country teams indicated that
           adherence to the spending requirement can undermine the integrated
           nature of HIV/AIDS prevention programs. In addition, most country
           teams required to meet the requirement, absent exemptions,
           reported either in structured interviews or exemption requests
           that the requirement challenges their ability to allocate
           prevention resources in accordance with local HIV/AIDS prevention
           needs. Finally, OGAC's policy of applying the spending requirement
           to all PEPFAR prevention funding, including funds not appropriated
           to the GHAI account, may further constrain country teams' ability
           to address local prevention needs.

           Challenges Related to ABC Guidance
			  
			  We reported in April 2006 that, although many focus country teams
           told us that they generally found the ABC guidance to be clear and
           several said that it did not present implementation challenges, 10
           of the 15 focus teams cited instances where components of the
           guidance were ambiguous and caused confusion. First, 6 focus
           country teams expressed uncertainty regarding the populations that
           should be considered at-risk in accordance with the guidance, and
           5 of these teams expressed concern that certain populations that
           need ABC messages in their countries might not receive them
           because they do not fit the ABC guidance definition of at-risk.
           Second, teams reported that the ABC guidance does not clearly
           delineate permissible condom-related activities, causing confusion
           about proper use of PEPFAR funds. For example, 5 focus country
           teams reported that, in their understanding, PEPFAR funds may not
           be used for broad condom social marketing, even to adults in a
           generalized epidemic. Third, the ABC guidance does not discuss how
           the age cutoff for providing condom information should be applied
           to groups that include youths younger and older than 15. We
           reported in April that OGAC officials told us they were working to
           clarify confusing components of the guidance, including
           distributing to country teams a document with some additional
           clarification on how to apply the ABC guidance.

           Challenges Related to Abstinence-until-Marriage Spending Requirement
			  
			  In several of our structured interviews, focus country teams
           endorsed the ABC model and noted the importance of AB messages.
           For example, one team told us that, because of the country's high
           HIV/AIDS prevalence rate, abstinence is an appropriate message for
           both youths and adults. However, the abstinence-until-marriage
           spending requirement presented challenges to country teams'
           ability to implement integrated prevention programs. Because the
           abstinence-until-marriage spending requirement requires them to
           segregate AB funding from funding for "other prevention," 8 of the
           15 focus country teams reported that the spending requirement can
           undermine their ability to design and implement programs that
           integrated the components of the ABC model. For example, one focus
           country team told us that artificially splitting programs for the
           military (traditionally considered an at-risk group) between AB
           and "other prevention" disaggregates activities that should be
           integrated and potentially lowers effectiveness.

           In addition, 17 of the 20 PEPFAR country teams required to meet
           the abstinence-until-marriage spending requirement, absent
           exemptions, reported that the requirement presents challenges to
           their efforts to respond to local prevention needs. Ten of these
           17 teams requested exemptions, citing a variety of concerns, such
           as reduced spending for PMTCT, limited funding to deliver
           appropriate prevention messaging to high-risk groups, lack of
           responsiveness to cultural and social norms, cuts in medical and
           blood safety activities, and elimination of care programs. The
           remaining 7 teams, which did not meet OGAC's proposed criteria for
           requesting exemptions, also identified a variety of constraints
           related to meeting the requirement, including difficulty in
           reaching certain populations with comprehensive ABC messages,
           limited or reduced funding for programs targeted at high-risk
           groups, reduced funding for PMTCT services, and difficulty in
           funding programs for condom procurement and condom social
           marketing.

           The analysis in our April 2006 report showed that, with the
           approval of all 10 exemption requests, OGAC should just meet the
           overall 33 percent target for AB activities for fiscal year 2006
           by effectively allowing exempted teams to spend less than 33
           percent on AB programs and requiring nonexempted teams to spend
           more than 33 percent. Our report found that all but one of the
           exempted teams planned to dedicate less than 33 percent of funds
           to AB activities-about 23 percent on average-while, on average,
           each of the nonexempted country teams planned to spend around 37
           percent.21

           In allocating funds to meet the spending requirement, country
           teams are primarily limited to shifting resources among three
           prevention program areas-AB, "other prevention," and PMTCT. (This
           limitation occurs because the overwhelming majority of funds spent
           on safe medical injections and blood safety are centrally awarded
           funds, over which the country teams have no budgetary control.)
           If, for example, a country team's planned funding has less than a
           2-to-1 ratio of AB funds to "other prevention" funds, the team can
           increase AB funding to reach the required ratio by reducing funds
           in "other prevention," PMTCT, or a combination of the two. The
           team can also consider taking funds from the treatment and care
           program areas and placing them in the AB category.

           Our analysis found that nonexempted country teams' allocations for
           "other prevention" funding declined between fiscal year 2005 and
           fiscal year 2006.22 For the nonexempted focus country teams, total
           funding for "other prevention" declined by about $5 million from
           fiscal year 2005 to fiscal year 2006, falling from about 23
           percent to about 18 percent of total prevention funding, while
           total funding for AB activities increased by about $25 million,
           rising from about 27 percent to about 36 percent of total
           prevention funding. By contrast, in the focus country teams that
           received exemptions, total prevention funding for "other
           prevention" increased slightly, by about $700,000, remaining at
           around 21 percent of total prevention funding, and total
           prevention funding for AB activities increased by about $7
           million, from about 23 percent to about 28 percent of total
           prevention funding. Figure 6 shows the allocation of prevention
           funds by nonexempted and exempted focus country teams for fiscal
           years 2005 (actual funds) and 2006 (planned funds).

           Figure 6: Prevention Allocations for Nonexempted and Exempted
           Focus Country Teams, Fiscal Years 2005 and 2006

           Note: Fiscal year 2006 funding is planned funding as of March 15,
           2006. Data that OGAC reported to Congress in April 2006 regarding
           fiscal year 2006 planned PEPFAR prevention funding differ from
           these figures, primarily because OGAC's reported prevention
           funding included costs not reported in previous fiscal years as
           program area funds. These percentages are reliable for
           understanding general trends in data rather than for precise
           percentage differences in program areas, because of potential
           differences in categorization methods.

           As figure 6 shows, overall levels of PMTCT funding stayed
           relatively constant for both nonexempted and exempted focus
           country teams. Overall, the proportion of funding dedicated to
           PMTCT in the focus countries was about 23 percent in fiscal year
           2005 and about 22 percent in fiscal year 2006. Focus countries'
           total PMTCT funding was $66.3 million in fiscal year 2005 and
           $67.5 million in fiscal year 2006.

           Finally, OGAC's decision to apply the spending requirement to all
           PEPFAR prevention funding-although OGAC had determined that, as a
           matter of law, the requirement applies only to funds appropriated
           to the GHAI account-may further challenge some teams' ability to
           address HIV prevention needs at the local level. For fiscal year
           2006, non-GHAI prevention funds amounted to about $35 million (10
           percent) of PEPFAR prevention funding-that is, about $6 million (2
           percent) of the focus country teams' planned PEPFAR prevention
           funds and about $29 million (82) percent of the five additional
           country teams' planned PEPFAR prevention funds. Because of OGAC's
           policy, some country teams are constrained from allocating
           non-GHAI funding to meet local needs if the allocations do not
           comply with the spending requirement.

           Concluding Observations
			  
			  In conclusion, our analysis of HIV/AIDS prevention efforts funded
           under PEPFAR reported in our April 2006 report showed that,
           although country teams consistently value the ABC model as a
           useful tool for preventing HIV, the Leadership Act's 33 percent
           abstinence-until-marriage spending requirement has presented
           challenges to their ability to adhere to the PEPFAR sexual
           transmission prevention strategy. In particular, it has challenged
           their ability to integrate the components of the ABC model and
           respond to local needs, local epidemiology, and distinctive social
           and cultural patterns. OGAC's application of the spending
           requirement to $35 million in funds not appropriated to the GHAI
           account may further hamper some country teams' ability to develop
           locally responsive prevention programs. OGAC may be able to
           address some of the constraints country teams face by
           reconsidering this policy, but the amount of non-GHAI funding is
           relatively small and the underlying challenges that country teams
           face in having to reserve a specific percentage of their
           prevention funds for abstinence-until-marriage programs would
           remain.

           Because meeting the 33 percent abstinence-until-marriage spending
           requirement can challenge country teams' ability to allocate
           prevention resources in a manner consistent with the PEPFAR sexual
           transmission prevention strategy, our April 2006 report
           recommended that the Secretary of State direct the U.S. Global
           AIDS Coordinator to take the following actions:

           o  Collect information from the country teams each fiscal year on
           the spending requirement's effects on their HIV sexual
           transmission prevention programming. This information should
           include, for example, the justifications submitted by country
           teams requesting exemption from the spending requirement.

           o  Provide this information in an annual report to Congress.
           o  Use the information collected to, among other things, assess
           whether the spending requirement should be applied solely to funds
           appropriated to the Global HIV/AIDS Initiative account, in line
           with OGAC's legal determination that the requirement applies only
           to these funds.

           In commenting jointly on a draft of our April 2006 report, the
           Department of State/OGAC, HHS, and USAID reiterated their strong
           commitment to fight HIV/AIDS and also noted the importance of the
           ABC model in preventing sexual transmission of HIV. The agencies
           agreed with our recommendation to collect information regarding
           the effects of the Leadership Act's abstinence-until-marriage
           spending requirement. They disagreed with a draft recommendation
           regarding applying the abstinence-until-marriage spending
           requirement only to funds appropriated to the GHAI account, citing
           concerns about the effect on a unified budget approach and noting
           the small amount of non-GHAI funding that the focus countries
           receive. We modified our recommendation to recommend that they
           consider this policy change after collecting information on the
           effect of the spending requirement. However, we noted that the
           five additional countries required, absent exemptions, to meet the
           spending requirement received more than 80 percent of their funds
           through non-GHAI accounts.

           Matters for Congressional Consideration
			  
			  Given the challenges that meeting the abstinence-until-marriage
           spending requirement presents to country teams attempting to
           implement locally responsive and integrated HIV/AIDS prevention
           programs, our April 2006 report also suggested that Congress, in
           its ongoing oversight of PEFAR, should review and consider the
           information provided by OGAC regarding the spending requirement's
           effect on country teams' efforts to prevent the sexual
           transmission of HIV and use this information to assess the extent
           to which the spending requirement supports the Leadership Act's
           endorsement of both the ABC model and strong
           abstinence-until-marriage programs.

           Mr. Chairman and members of the committee, this concludes my
           prepared statement. I will be happy to answer any questions you
           may have at this time.

           Contacts and Acknowledgments
			  
			  For information on this statement, please contact David Gootnick,
           Director, International Affairs and Trade, at (202) 512-3149. You
           may also reach him by email at [email protected] . Other
           individuals who made key contributions to this testimony include
           Celia Thomas (Assistant Director), Elizabeth Singer, Chad
           Davenport, and Reid Lowe.

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7These 20 teams are the 15 focus country teams and the 5 additional teams
that receive at least $10 million annually in U.S. government HIV/AIDS
funding.

8HIV prevalence represents the percentage of the adult population that is
estimated to be HIV positive. Estimates of HIV prevalence are often based
on surveillance of pregnant women in prenatal clinics or population-based
surveys.

9In its Second Annual Report, released to Congress in February 2006, OGAC
began referring to these activities as "condoms and related prevention
activities."

10According to OGAC, secondary abstinence activities encourage abstinence
for youths who have already engaged in sexual intercourse.

11The remaining $1.5 billion was appropriated for, among other
initiatives, the Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria-a
multilateral public-private mechanism-and international HIV/AIDS research
through the National Institutes of Health.

12The Prevention of Mother to Child Transmission account expired at the
end of fiscal year 2004, but some country teams carried over funds from
this account from fiscal year 2004 to fiscal year 2005. Therefore, for
fiscal year 2006, PEPFAR funding is defined as funds appropriated to the
remaining three accounts.

13Fiscal year 2006 funding figures change slightly throughout the fiscal
year, as country teams make adjustments to their funding allocations.

14Office of the U.S. Global AIDS Coordinator, Appendix 2: The Emergency
Plan for AIDS Relief: Fiscal Year 2004 Prevention Expenditures and Program
Classification Criteria (Washington, D.C.: U.S. Department of State,
2004).

15In 1986, the Ugandan government launched a nationwide information,
education, and communication tour to encourage Ugandans to abstain from
sex until marriage, remain faithful to one partner (termed
"zero-grazing"), and use condoms when necessary. According to the U.S.
Census Bureau and UNAIDS, national HIV/AIDS prevalence in Uganda fell from
about 15 percent in the early 1990s to 5 percent in 2001.

16Cates, Willard,et.al. "The Time Has Come for Common Ground on Preventing
Sexual Transmission of HIV," Lancet, vol. 364 (Nov. 27, 2004).

17The Goals model is based on published research studies of the
effectiveness of various prevention strategies and on conversion factors
that translate dollars spent on a given prevention intervention into the
number of infections averted. The model was developed by the Futures
Group-a privately held company that designs and implements public health
and social programs for developing countries.

18OGAC officials were unable to provide data on PMTCT central funding for
prevention. While they estimated that $6.5 million in central PMTCT
funding went to prevention in fiscal years 2004 and 2005, these rough
estimates are not included in our funding figures.

19Office of the U.S. Global AIDS Coordinator, Guidance to In-Country Staff
and Implementing Partners Applying the ABC Approach to Preventing
Sexually-Transmitted HIV Infections within the President's Emergency Plan
for AIDS Relief (Washington, D.C.: U.S. Department of State, March 2005).

20In its fiscal year 2007 Country Operational Plan Guidance, OGAC dropped
the language regarding focus teams, particularly those with total PEPFAR
funding exceeding $75 million.

21Because of challenges and inconsistencies in country teams'
categorization of funding for certain integrated ABC programs and some
broad sexual transmission prevention activities, data on prevention
allocations may reflect the variation in categorization methods rather
than actual differences.

22Some of the decline in "other prevention" funding may be due to varying
methods of categorizing sexual transmission prevention programs and
changes in categorization methods across fiscal years. However, the data
demonstrate a common trend across the nonexempted country teams.

(320448)

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Highlights of GAO-06-1089T, testimony before the Subcommittee on National
Security, Emerging Threats, and International Relations, House Committee
on Government Reform

GLOBAL HEALTH

Spending Requirement Presents Challenges for Allocating Prevention Funding
under the President's Emergency Plan for AIDS Relief

The U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of
2003 authorizes the President's Emergency Plan for AIDS Relief (PEPFAR).
It promotes the ABC model (Abstain, be faithful, or use Condoms);
recommends that 20 percent of funds appropriated pursuant to the act be
spent on prevention; and requires that, starting in fiscal year 2006, 33
percent of prevention funds appropriated pursuant to the act be spent on
abstinence-until-marriage activities. The Office of the U.S. Global AIDS
Coordinator (OGAC) oversees PEPFAR and administers the Global HIV/AIDS
Initiative (GHAI) account, the main repository for PEPFAR funds. For our
April 2006 report, GAO reviewed PEPFAR prevention funding trends;
described the PEPFAR strategy to prevent sexual transmission of HIV; and
examined related challenges.

The report recommended that the Coordinator collect and report information
on the effects of the abstinence-until-marriage spending requirement and
use it to, among other things, assess whether the requirement should apply
only to the GHAI account. OGAC agreed to collect information but disagreed
with applying the requirement only to certain funds; GAO modified the
recommendation. GAO also suggested Congress use the information to assess
how well the requirement supports the Leadership Act's endorsement of both
the ABC model and strong abstinence programs.

As GAO reported in April 2006, PEPFAR prevention funding in 15 focus
countries increased by 55 percent between fiscal years 2004 and 2006,
rising from about $207 million to $322 million. During this time, the
prevention share of PEPFAR funding in these countries fell by about
one-third, in accordance with the Leadership Act's recommendation that 20
percent of funds appropriated pursuant to the act support prevention.

The PEPFAR strategy for preventing sexual transmission of HIV/AIDS is
largely shaped by three elements-the ABC model, the
abstinence-until-marriage spending requirement, and local prevention
needs. In addition to adopting the ABC model, OGAC developed guidance for
applying it-for instance, that prevention interventions should be
integrated and responsive to local needs and cultural norms. To meet the
33 percent spending requirement, OGAC mandated that country teams (PEPFAR
officials in the field) spend at least half of prevention funds on sexual
prevention and two-thirds of those funds on abstinence/faithfulness (AB)
activities. OGAC permitted certain country teams to seek exemptions from
this policy. OGAC also applied the spending requirement to all PEPFAR
prevention funding as a matter of policy, although it determined that as a
matter of law it applies only to funds appropriated to the Global HIV/AIDS
Initiative account.

GAO also reported in April 2006 that OGAC's ABC guidance and the
abstinence-until-marriage spending requirement, while valued by country
teams, have presented challenges to most teams. First, two-thirds of focus
country teams told us that ambiguities in some parts of the guidance led
to uncertainty about implementing the model; OGAC officials commented they
were clarifying the guidance for country teams. Second, although several
teams indicated that they value the ABC model and noted the importance of
AB messages, some teams also reported that the spending requirement can
limit their ability to design programs that are integrated and responsive
to local prevention needs. Most country teams reported, either in
structured interviews or exemption requests, that fulfilling the spending
requirement, including OGAC's policies implementing it, presents
challenges to their ability to respond to local needs. Seven focus country
teams-primarily those with smaller PEPFAR budgets-received exemptions from
the requirement, allowing them to dedicate less than 33 percent of
prevention funds to AB activities. In general, the nonexempted teams are
spending more than 33 percent of prevention funds on AB activities, and
OGAC should just meet the overall spending requirement for fiscal year
2006. However, to meet the abstinence-until-marriage spending requirement,
teams have in some cases reduced or cut funding for certain prevention
programs, such as those to deliver comprehensive messages to certain
populations. OGAC's decision to apply the spending requirement to all
PEPFAR prevention funds may further challenge country teams' ability to
address local prevention needs.
*** End of document. ***