Foreign Assistance: Impact of Funding Restrictions on USAID's Voluntary
Family Planning Program (Letter Report, 04/25/97, GAO/NSIAD-97-123).

Pursuant to a congressional request, GAO reviewed the impact of funding
restrictions on the U.S. Agency for International Development's (AID)
voluntary family planning program, focusing on: (1) the effect of the
fiscal year (FY) 1996 and 1997 funding limits and delayed release of
funds on AID's voluntary family planning program; (2) the effect of
current funding restrictions if they were imposed in FY 1998; and (3)
whether a relationship exists between AID's family planning program and
a reduction in abortions.

GAO noted that: (1) AID took steps to minimize the impact of FY 1996 and
1997 funding cuts and the delayed release of funds on its family
planning program; (2) it did not have to drop any countries from the
program or terminate any contracts, grants, or cooperative agreements;
(3) AID was able to maintain the structure and scope of its family
planning program because it consolidated programs and cut activities in
1995 in anticipation of FY 1996 governmentwide cuts, supplemented its FY
1996 appropriation with carryover funds, and drew funds from its
pipeline; (4) however, cooperating agencies and missions had to delay or
cut back some program elements and could not implement some planned
expansion; (5) the delay in releasing funds reduced AID's family
planning pipeline 44 percent; (6) during this time frame, the
development assistance pipeline increased about $500 million or 39
percent; (7) as a result, some centrally managed and bilateral projects
operated with pipelines close to levels considered disruptive by AID;
(8) with the release of FY 1997 funds in March 1997 rather than July
1997, AID should have sufficient resources to cover its FY 1997
requirements; (9) GAO's analysis shows that if the FY 1998 funding level
remains at $385 million, a 9-month delay in releasing funds occurs, and
funds are metered on a monthly basis, most of AID's bilateral projects
would be in serious jeopardy of running out of funds sometime during FY
1998 and the centrally managed projects would have minimal levels of
funding available by September 1998; (10) AID officials stated that
under this funding scenario, AID would not have access to sufficient
funds to satisfy program needs, and certain bilateral family planning
programs would have to be terminated; (11) on the other hand, GAO's
analysis shows that if FY 1998 funding is available in October 1997,
rather than July 1998, the current bilateral and centrally managed
programs will not be in jeopardy, even if the funds are metered; (12)
some studies have shown a correlation between increased use of modern
contraceptives and a reduction in abortion; (13) a recent Demographic
and Health Surveys project conducted by Macro International, Inc,
indicated that in countries where AID is the primary family planning
service funder and contraceptive use increases, fertility rates have
dropped significantly, and abortion rates have declined; and (14) howev*

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-97-123
     TITLE:  Foreign Assistance: Impact of Funding Restrictions on 
             USAID's Voluntary Family Planning Program
      DATE:  04/25/97
   SUBJECT:  Federal aid to foreign countries
             International relations
             Budget cuts
             Appropriation limitations
             Birth control services
             Funds management
             Unobligated budget balances
             Abortions
IDENTIFIER:  AID Voluntary Family Planning Program
             AID Development Assistance Program
             African Development Fund
             Economic Support Fund
             Support for East European Democracy Fund
             AID New Independent States of the former Soviet Union 
             Assistance Program
             AID Special Assistance Initiative
             Almaty (Kazakhstan)
             Mozambique
             Nepal
             Peru
             Nigeria
             Kenya
             Ukraine
             
**************************************************************************
* This file contains an ASCII representation of the text of a GAO        *
* report.  Delineations within the text indicating chapter titles,       *
* headings, and bullets are preserved.  Major divisions and subdivisions *
* of the text, such as Chapters, Sections, and Appendixes, are           *
* identified by double and single lines.  The numbers on the right end   *
* of these lines indicate the position of each of the subsections in the *
* document outline.  These numbers do NOT correspond with the page       *
* numbers of the printed product.                                        *
*                                                                        *
* No attempt has been made to display graphic images, although figure    *
* captions are reproduced. Tables are included, but may not resemble     *
* those in the printed version.                                          *
*                                                                        *
* A printed copy of this report may be obtained from the GAO Document    *
* Distribution Facility by calling (202) 512-6000, by faxing your        *
* request to (301) 258-4066, or by writing to P.O. Box 6015,             *
* Gaithersburg, MD 20884-6015. We are unable to accept electronic orders *
* for printed documents at this time.                                    *
**************************************************************************


Cover
================================================================ COVER


Report to Congressional Requesters

April 1997

FOREIGN ASSISTANCE - IMPACT OF
FUNDING RESTRICTIONS ON USAID'S
VOLUNTARY FAMILY PLANNING PROGRAM

GAO/NSIAD-97-123

Foreign Assistance

(711240)


Abbreviations
=============================================================== ABBREV

  USAID - U.  S.  Agency for International Development

Letter
=============================================================== LETTER


B-276613

April 25, 1997

The Honorable Benjamin A.  Gilman
Chairman
The Honorable Lee H.  Hamilton
Ranking Minority Member
Committee on International Relations
House of Representatives

For fiscal year 1996, Congress placed funding restrictions on the
U.S.  Agency for International Development's (USAID) voluntary family
planning program that (1) reduced its appropriation from the previous
year, (2) delayed the release of funds for 9 months, and (3) required
that funds be apportioned over 15 months.  For fiscal year 1997,
Congress also delayed the release of funds and required that they be
apportioned at a rate not to exceed 8 percent per month.\1

As you requested, we have reviewed the impact these restrictions have
had on USAID's family planning program and are likely to have in
fiscal year 1998.  Specifically, we sought to determine

  what has been the effect of the fiscal year 1996 and 1997 funding
     limits and delayed release of funds on USAID's voluntary family
     planning program,

  what would be the effect of current funding restrictions if they
     were imposed in fiscal year 1998, and

  whether a relationship exists between USAID's family planning
     program and a reduction in abortions. 


--------------------
\1 Section 518A of the fiscal year 1996 Foreign Operations
Appropriations Act (P.L.  104-107, Feb.  12, 1996) and section 518A
of the fiscal year 1997 Foreign Operations Appropriations Act (P.L. 
104-208, Sept.  30, 1996). 


   BACKGROUND
------------------------------------------------------------ Letter :1

Since 1965, the United States has provided voluntary family planning
services to (1) support the right of couples to determine the number
and spacing of their children, (2) reduce unintended pregnancies, (3)
promote maternal and child health, and (4) stabilize world
population.  The United States contributes almost one half of all
donor funding to family planning programs in more than 60 countries
with a combined population of 2.7 billion people.  The Congressional
Research Service reported that USAID has expended over $5 billion on
international family planning during the past 30 years.  Since the
1970s, legislation has prohibited the use of USAID funds to perform
abortions as a method of family planning and to motivate or coerce
anyone to have an abortion.\2

USAID's Office of Population manages a substantial portion of the
Agency's family planning program.  USAID awarded about 65 percent of
its annual family planning funding through contracts, grants, and
cooperative agreements to about 30 cooperating agencies that work
primarily with USAID field staff and host government agencies on
centrally managed family planning programs.  USAID overseas missions
and regional bureaus manage the remaining 35 percent of annual funds
in bilateral or government-to-government programs, often using the
centrally managed programs in support of their country-specific
programs.\3 See appendix I for a list of countries receiving family
planning assistance and participating cooperating agencies. 

Appropriations to the family planning program generally increased
from the start of the program in 1965 through fiscal year 1995. 
Congress appropriated $356 million in fiscal year 1996, a 35-percent
decrease from the $545 million appropriated in fiscal year 1995.  In
addition, Congress imposed funding restrictions that (1) delayed
release of fiscal year 1996 funds until July 1, 1996 (9 months into
the fiscal year), and (2) required that the funds be evenly
apportioned over a 15-month period at a rate not to exceed 6.7
percent of the appropriated amount in fiscal year 1996 ($23.7 million
per month).  Congress appropriated $385 million in fiscal year 1997,
an 8-percent increase from fiscal year 1996, but continued to include
funding restrictions.  The 1997 appropriations act delays the release
of funds until July 1, 1997, and requires that they be apportioned at
a rate not to exceed 8 percent per month, unless the President
determines that the delay is having a negative impact on the proper
functioning of the family planning program and Congress approves the
determination.  In that event, the funds may be released on March 1,
1997, at 8 percent per month ($30.8 million per month).\4

The President submitted a Presidential Determination to Congress on
January 31, 1997, certifying that the funding delay from October 1996
to July 1997 was having a negative impact on the proper functioning
of the family planning programs.  In February 1997, Congress approved
the determination that allowed for the release of the funds on March
1, 1997. 


--------------------
\2 The current restriction, included in section 518 of the fiscal
year 1997 Foreign Operations Appropriations Act, prohibits (1) using
funds to pay for the performance of abortion or involuntary
sterilization as a method of family planning or to motivate or coerce
any person to practice abortions or undergo sterilization and (2)
funding any research that relates to the methods or performance of
abortion or involuntary sterilization as a means of family planning. 

\3 Congress legislated this split of family planning funds beginning
with the fiscal year 1996 Foreign Operations Appropriations Act and
continued it in the fiscal year 1997 Foreign Operations
Appropriations Act. 

\4 See section 518A of the fiscal year 1996 Foreign Operations
Appropriations Act and section 518A of the fiscal year 1997 Foreign
Operations Appropriations Act.  This monthly apportionment is known
as "metering."


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

USAID took steps to minimize the impact of fiscal year 1996 and 1997
funding cuts and the delayed release of funds on its family planning
program.  It did not have to drop any countries from the program or
terminate any contracts, grants, or cooperative agreements.  USAID
was able to maintain the structure and scope of its family planning
program because it (1) consolidated programs and cut activities in
1995 in anticipation of fiscal year 1996 governmentwide cuts, (2)
supplemented its fiscal year 1996 appropriation with carryover funds,
and (3) drew funds from its family planning pipeline.\5 For the first
5 months of fiscal year 1997, USAID managed its program with fiscal
year 1996 funds and pipeline funds.  However, to maintain the scope
of its current programs, cooperating agencies and missions had to
delay or cut back some program elements and could not implement some
planned expansion. 

The delay in releasing funds reduced USAID's family planning pipeline
44 percent, from an estimated $745 million as of October 1, 1995, to
an estimated $414 million as of October 1, 1996.  During this time
frame, the development assistance pipeline, which includes such
programs as child survival and democracy, increased about $500
million, or 39 percent.\6 As a result, some centrally managed and
bilateral projects operated with pipelines close to levels considered
disruptive by USAID.\7 With the release of fiscal year 1997 funds in
March 1997 rather than July 1997, USAID should have sufficient
resources to cover its fiscal year 1997 requirements. 

Our analysis shows that if the fiscal year 1998 funding level remains
at $385 million, a 9-month delay (until July 1998) in releasing funds
occurs, and funds are metered on a monthly basis, most of USAID's
bilateral projects would be in serious jeopardy of running out of
funds sometime during fiscal year 1998 and the centrally managed
projects would have minimal levels of funding available by September
1998.  For example, by September 1998, the average bilateral pipeline
would have no funds and the centrally managed pipeline would have an
average of 6 months of funding in contrast with the 12- to 18-month
level recommended in Agency forward-funding guidelines.  USAID
officials stated that under this funding scenario, USAID would not
have access to sufficient funds to satisfy program needs, and certain
bilateral family planning programs would have to be terminated.  On
the other hand, our analysis shows that if fiscal year 1998 funding
is available in October 1997, rather than July 1998, the current
bilateral and centrally managed programs will not be in jeopardy,
even if the funds are metered. 

Some studies have shown a correlation between increased use of modern
contraceptives and a reduction in abortion.  A recent Demographic and
Health Surveys project conducted by Macro International, Inc.,
indicated that in countries where USAID is the primary family
planning service funder and contraceptive use increases, fertility
rates have dropped significantly, and abortion rates have declined. 
For example, in Almaty, Kazakstan, contraceptive use increased at
USAID-supported clinics by 59 percent from 1993 to 1994, while
abortions declined by 41 percent over the same period.  However,
because of the lack of accurate and reliable data, researchers have
been unable to prove conclusively that a statistically based causal
relationship exists between increases in the use of modern family
planning methods and decreases in abortion in developing countries. 


--------------------
\5 Carryover funds are unobligated balances brought forward from
prior years.  USAID family planning funds are 2-year monies; that is,
they can be obligated over a 2-year period rather than the standard 1
year in which they are appropriated.  The pipeline is the difference
between the funds that USAID obligates to its various activities and
the amount it has spent on them.  A USAID official told us that as of
December 31, 1996, USAID's aggregate pipeline totaled $6.4 billion,
consisting of funds for Development Assistance (including family
planning), the Development Fund for Africa, the Economic Suport Fund,
Support for East European Democracy, assistance for the New
Independent States of the former Soviet Union, and Special Assistance
Initiatives. 

\6 Family planning funds were subtracted from the development
assistance account for purpose of this pipeline comparison. 

\7 USAID officials believe that 4 months of pipeline funding is the
minimum level at which missions and cooperating agencies can satisfy
existing commitments without disrupting program implementation.  They
also stated that mission and cooperating agency subagreements with U. 
S.-based and host country institutions; research subcontracts;
materials, supplies, and bulk purchase contracts; and staffing
contracts are usually premised on long-term funding availability.  As
pipelines decrease to the 4-month level, these officials stated that
missions or cooperating agencies must end or renegotiate the terms of
their agreements, limit bulk purchases, distribute layoff notices,
and arrange for employee repatriation. 


   IMPACT OF FUNDING CUTS
------------------------------------------------------------ Letter :3

USAID minimized the impact of funding cuts on its family planning
program by consolidating programs and cutting activities in 1995 in
anticipation of governmentwide fiscal year 1996 budget reductions. 
USAID's Office of Population directed its field support staff,
missions, and cooperating agencies to plan for a 35-percent reduction
in funding.  USAID reported that its downsizing activities included

  a consolidation of worldwide programs such as training, policy
     development, breastfeeding, and data collection and evaluation;

  cuts in social science research, contraceptive development,
     publications, and regional activities; and

  reductions in staff and freezes in hiring by cooperating agencies. 

The January 1997 Presidential Determination reported that funding for
multilateral programs was cut, and smaller projects were designated
for phaseout without renewal.  However, USAID placed a high priority
on service delivery programs and worldwide contracts for
contraceptives and protected them relative to other program
components.  USAID staff stated that the advance planning for funding
cuts, the metering of fiscal year 1996 funds for 3 months, the
availability of fiscal year 1995 carryover funds, and unexpended
pipeline funds enabled USAID to preserve the structure and scope of
the family planning program in fiscal year 1996.  During fiscal year
1997, USAID will use the fiscal year 1996 funds available and the 7
months of fiscal year 1997 funds metered from March through September
to cover expenditures.  The pipeline will recover $21 million of the
$328 million depleted in fiscal year 1996 by September 30, 1997,
because available funds will exceed estimated expenditures.  (See
fig.  1.)

   Figure 1:  USAID Family
   Planning Program by Funding
   Source (dollars in millions)

   (See figure in printed
   edition.)

Source:  USAID and GAO. 

USAID did not drop any countries from the program or terminate any
contracts, grants, or cooperative agreements during fiscal year 1996
or the first 5 months of fiscal year 1997.  However, cooperating
agencies and missions had to delay or limit some program elements to
maintain their current scope and could not implement some planned
expansion.  For example, a USAID official stated that successful
educational pilot projects for birth spacing, maternal health, and
the use of contraceptives were not expanded into countrywide
activities.  Further, the USAID mission in Mozambique reported that a
cooperating agency would not be able to initiate a child-spacing
project in additional districts as planned. 


   IMPACT OF DELAYED FUNDING AND
   METERING
------------------------------------------------------------ Letter :4

The 9-month delay in releasing fiscal year 1996 family planning funds
reduced bilateral and centrally managed pipelines.  For example, the
combined bilateral-centrally managed pipeline declined from an
average of 19 months as of September 30, 1995, to 10 months as of
September 30, 1996--a decrease of 47 percent.  In contrast, the
pipeline for the development assistance account increased from 17
months as of September 30, 1995, to 21.9 months as of September 30,
1996--an increase of about 29 percent.  (See fig.  2.)

   Figure 2:  Comparison of
   USAID's Development Assistance
   and Family Planning Pipelines
   (1995-1996)

   (See figure in printed
   edition.)

Note:  The development assistance account includes programs such as
child survival, democracy, and the environment.  We subtracted family
planning funds from the development assistance account for the
purposes of this comparison.  Projections for the development
assistance account were not available for 1997 and 1998. 

Source:  USAID and GAO. 

USAID attempted to minimize the impact of delayed funding and
metering on the family planning projects by developing a metering
plan.  The plan incorporated program priorities and project funding
needs into a timing schedule for each project so that funds were
provided in the month that the project was calculated to fall close
to or below a 4-month minimum level.\8

According to USAID officials, these actions, along with those
associated with funding cuts, carried the bilateral and centrally
managed projects through fiscal year 1996 and minimized the impact of
the funding delays.  A Deputy Director of the Office of Population
told us that the delayed release of fiscal year 1996 funds, in
combination with metering, had the most significant adverse impact on
the bilateral and centrally managed pipelines.  USAID missions and
cooperating agencies reported some incidents of program delays or
cuts.  For example, the mission in Mozambique reduced its level of
contraceptive commodities, and the mission in Nepal reported that it
was unable to work with a nongovernmental organization to establish a
new family planning and maternal health facility.  In addition, a
USAID official indicated that up to 19 research contracts, including
clinical trials of new contraceptives, were delayed or interrupted
because of the delayed release of funds. 

Pipelines were further reduced by the 5-month funding delay and the
$385 million appropriated for fiscal year 1997.  USAID projected that
without an early release of funds, the pipeline would average 6
months for centrally managed projects and 6 months for bilateral
projects by June 30, 1997.  USAID further projected that 12 centrally
managed and 8 bilateral projects were in urgent need of funds.\9

For example, Pathfinder International, a participating cooperating
agency, reported that if available funds were stretched past March
1997, it would have to cut its nurse/midwife training programs in
Uganda.  Additionally, CARE, another cooperating agency, reported
that it would have to phase out its medical training program in
maternal and reproductive health in Peru if funds were delayed until
July 1997.  USAID projected that without the March release of funds,
it would have been about $40 million short in meeting its urgent
funding requirements between March and June 1997. 

Because funds were released in March 1997 rather than July 1997,
USAID said it will be able to meet its urgent requirements during
this time frame.  USAID will have $123 million in fiscal year 1997
funds and $95 million in fiscal year 1996 funds available to support
its urgent needs between March and June 1997 as well as other
projects approaching the 4-month minimum level.  USAID officials
indicated that while the funding release in March is beneficial,
USAID must develop a fiscal year 1997 metering plan.\10 The Director
of the Office of Population also said that continued metering will
adversely impact programs because it reduces USAID's flexibility and
its ability to respond to emergency needs. 

USAID staff also stated that the current funding restrictions have
associated administrative and program costs.  They provided
information showing that designing and implementing the metering plan
for the legislated delay in funding cost $1.5 million and involved up
to 143 people on a part-time basis in Washington and the missions. 
In addition, the Presidential Determination stated that the number of
separate actions to fund USAID family planning programs is nearly
triple what would be required without the metering. 

Cooperating agencies have also cited the increased administrative
costs incurred as a result of the funding restrictions.  For example,
AVSC International, USAID's second largest cooperating agency, stated
that the legislatively mandated delays and metering "required us to
increase the paperwork, staff time, and administrative expense
associated with providing family planning and reproductive health
services overseas.  For every dollar intended to provide access to
these services last year, a smaller quantity of services was actually
provided."


--------------------
\8 USAID officials stated that they did not anticipate that funding
restrictions would continue in fiscal year 1997.  Such knowledge
might have changed their input into the development of the fiscal
year 1996 metering plan, resulting in different funding levels and
timing for each project. 

\9 A USAID official stated that the questionable accuracy of
bilateral pipeline data (due to delayed posting of expenditures) led
USAID to do a detailed pipeline review and, more importantly, to
obtain information from the missions and cooperating agencies about
their projects' funding levels.  As a result, USAID identified the 20
projects in urgent need of funds. 

\10 USAID expects to complete the plan by May 1997. 


   IMPACT OF FUNDING RESTRICTIONS
   ON USAID'S FISCAL YEAR 1998
   NEEDS
------------------------------------------------------------ Letter :5

Our analysis shows that if fiscal year 1998 funding parallels the
fiscal year 1997 level of $385 million, Congress delays the release
of funds for
9 months, and funds are metered, USAID's family planning program will
have an average 3-month pipeline as of September 1998, 1 month below
the 4-month minimum level.  The bilateral programs will have no funds
in the pipeline, and the centrally managed programs will have about a
6-month pipeline on average.  (See fig.  3.)

   Figure 3:  USAID's Projected
   Pipeline (June 30, 1997,
   through Sept.  30, 1998)

   (See figure in printed
   edition.)

Source:  USAID and GAO. 

If actual expenditures vary significantly from the estimates,
pipelines will expand or contract accordingly.  USAID staff noted
that actual expenditure rates can vary significantly from month to
month, depending on a variety of factors, including the stage and
type of a family planning project.  In addition, missions such as
Nigeria reported that USAID's financial management information
systems do not always accurately report all actual mission
expenditures on a timely basis. 

USAID officials stated that with the funding scenario shown in figure
3, some bilateral programs would be delayed or shut down.  For
example, the mission in Indonesia reported that if the funding
restrictions were to continue in fiscal year 1998, it would be forced
to suspend its integrated family planning and reproductive health
activities midway through completion, jeopardizing maternal health
and child health programs as well.  Moreover, the Kenyan mission
reported that it may have to delay implementation of family planning
programs and concentrate instead on sexually transmitted disease
programs.  USAID staff also stated that the U.S.  government would
lose the long-standing confidence of other donor countries,
cooperating agencies, and host governments if bilateral and
contractual agreements are compromised.  Although other donors have
increased their level of funding for family planning programs, USAID
officials told us that these donors are not able to provide the full
range of program support, such as contraceptive development and
operations research; logistics management; training; demographic and
health surveys; and the provision of contraceptives, which is unique
to USAID's family planning program. 

USAID staff also stated that if fiscal year 1998 funding levels
parallel fiscal year 1997, the release of funds is delayed, and funds
must be metered, many of the adverse program impacts that would have
occurred with a July 1997 release of funds, as cited in the January
1997 Presidential Determination, would be realized in fiscal year
1998.  Likely consequences include the indefinite deferral of
training programs and the suspension of a range of service delivery
programs.  They also indicated that they would have to implement
alternative funding strategies, such as shifting funds on a temporary
basis among selected family planning and other development programs,
terminating programs, and asking other donors to meet urgent program
needs.  USAID officials believe that all mitigating measures carry
risks that are unacceptable or undesirable for proper program
management.  For example, they believe that shifting funds from
selected programs on a temporary basis to those with a "dangerously
low" pipeline is not prudent management and would only exacerbate the
problem when the programs "borrowed from" need funds. 

Our analysis shows that if the release of funds is not delayed and
funds are made available in October 1997, USAID would not be forced
to curtail projects and other activities within its family planning
program and project pipelines would exceed USAID's 4-month minimum
level.  The bilateral pipeline would average 6 months, and the
centrally managed pipeline would average 14 months as of September
30, 1998.  According to a Deputy Director of the Office of
Population, an October 1997 release of funds, rather than a delayed
release, is preferable, even if the funds are metered on a monthly
basis. 


   FAMILY PLANNING AND ABORTION
------------------------------------------------------------ Letter :6

USAID believes that its family planning programs have been a primary
factor in reducing abortion rates among its clients.  A recent
Demographic and Health Surveys project conducted by Macro
International, Inc., indicated that where USAID is the primary family
planning provider and contraceptive use increases, fertility rates
have dropped significantly, and abortion rates have declined.  For
example, it reported that in Almaty, Kazakstan, where USAID has
provided assistance to train doctors and nurses and to increase
contraceptive supplies, contraceptive use increased by 59 percent
from 1993 to 1994; at the same time, abortions declined by 41
percent.  In addition, the Ministry of Health in Ukraine reported an
8.6-percent decrease in abortions between January and June 1996,
which it directly attributed to the women's reproductive health
program that began in 1995 with USAID funding. 

The researchers we spoke with stated that a statistically based
causal relationship between increases in the use of modern family
planning contraceptives and decreases in abortions cannot be
conclusively proven in developing countries.  Representatives of the
Alan Guttmacher Institute, Princeton University, and the University
of North Carolina have reported that the inability to obtain accurate
data on the incidence of abortion is the primary difficulty in
assessing the impact of modern family planning and contraceptive use
on abortion.  Data is considered most reliable in countries where
abortion is legal and medical organizations maintain records.  Data
is also considered reliable in countries where abortion has been used
as a means of contraception, for example, in the former Soviet Union
and Eastern Europe.  Data is more suspect in developing countries,
where few resources exist to collect and analyze statistics, and in
countries where most, if not all, abortions are illegal and not
reported. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

In commenting on a draft of this report, USAID indicated that it
agreed with the report's conclusion that USAID's management actions,
combined with congressional action to release fiscal year 1997 funds
in March rather than July 1997, had minimized the negative impact of
funding cuts and other congressional restrictions on its family
planning program to date.  USAID also indicated that its family
planning program would be in "serious jeopardy of running out of
funds" if there is a repetition of the fiscal year 1996 and 1997
restrictions in fiscal year 1998.  USAID also provided additional
examples of program impact that we did not verify.  Appendix III
contains the full text of USAID's comments. 


---------------------------------------------------------- Letter :7.1

See appendix II for information on our scope and methodology.  We
performed our work from December 1996 to March 1997 in accordance
with generally accepted government auditing standards. 

As arranged with your office, unless you publicly announce its
contents earlier, we plan no distribution of this report until 30
days after the date of this letter.  We will then send copies of this
report to the Administrator of USAID and other appropriate
congressional committees.  We will provide copies to others upon
request. 

Major contributors to this report were Ron Kushner, Barbara Schmitt,
Michael Zola, Joan Slowitsky, Jose Pena, and Thomas Melito.  Please
contact me on (202) 512-4128 if you have any questions on the
information in this report. 

Jess T.  Ford, Associate Director
International Relations and
 Trade Issues


RECIPIENTS OF FAMILY PLANNING
ASSISTANCE AND PARTICIPATING
COOPERATING AGENCIES
=========================================================== Appendix I


   RECIPIENTS OF USAID FAMILY
   PLANNING ASSISTANCE IN FISCAL
   YEAR 1997
--------------------------------------------------------- Appendix I:1

Albania
Armenia
Bangladesh\a
Belarus
Benin
Bolivia\a
Botswana
Brazil
Cambodia\a
Colombia
Cote d'Ivoire
Dominican Republic\a
Ecuador\a
El Salvador\a
Egypt\a
Eritrea\a
Ethiopia\a
Georgia
Ghana\a
Guatemala\a
Guinea
Guinea-Bissau
Haiti\a
Honduras\a
India\a
Indonesia\a
Jamaica\a
Jordan\a
Kazakstan
Kenya\a
Kyrgyzstan
Madagascar\a
Malawi\a
Mali\a
Mexico
Moldova
Morocco\a
Mozambique\a
Nepal\a
Nicaragua\a

Niger\a
Nigeria
Oman
Paraguay\a
Peru
Philippines\a
Romania
Russia
Senegal\a
South Africa\a
Sri Lanka
Tajikistan
Tanzania\a
Turkmenistan
Turkey
Uganda\a
Ukraine
Uzbekistan
Yemen\a
Zambia\a
Zimbabwe\a

\a Denotes country with bilateral program; remaining countries
receive assistance through centrally managed program. 


   PARTICIPATING COOPERATING
   AGENCIES IN FISCAL YEAR 1997
--------------------------------------------------------- Appendix I:2

AVSC International (Access to Voluntary and Safe Contraception)
Basic Health Management International
CARE
Center for Development Activities
Centers for Disease Control
Deloitte and Touche
Durex International (formerly known as Aladan, Inc.)
East-West Center
Eastern Virginia Medical School
Family Health International
Finishing Enterprises, Inc.
The Futures Group International
Georgetown University
International Planned Parenthood Federation/London
International Planned Parenthood Federation/Western Hemisphere Region
Johns Hopkins University

John Snow International
Leiras Oy
Macro International
Management Sciences for Health
National Academy of Sciences
Ortho Pharmaceuticals
Pathfinder International
Panalpina, Inc.
Pharmacia & Upjohn
Planning and Learning Technologies
Population Reference Bureau
The Population Council
University of Michigan School of Public Health
University of North Carolina
Western Consortium for Public Health
U.S.  Bureau of the Census
Wyeth-Ayerst International


SCOPE AND METHODOLOGY
========================================================== Appendix II

To obtain information on the impact of funding cuts, delays, and
metering on USAID's family planning programs, we interviewed and
obtained documents from officials in USAID's Center for Population,
Health, and Nutrition, including the Office of Population, Office of
Field and Program Support, Division for Policy and Evaluation, and
Division for Contraceptives and Logistics Management; the Bureau for
Management, including the Office of Budget and the Office of
Procurement; the Bureau for Latin America and the Caribbean; the
Bureau for Europe and the New Independent States; and the Bureau for
Asia and the Near East.  We analyzed USAID's fiscal year 1995-98
family planning pipeline data, the metering plan, and the
contraceptives procurement plan and reviewed its studies and analyses
of program performance. 

We also interviewed and obtained studies and analyses from officials
of the following organizations:  AVSC International; Durex, a
subsidiary of London International Corporation (formerly known as
Aladan, Inc.); Centers for Disease Control; Carolina Population
Center; Christian Coalition; International Planned Parenthood
Federation; Population Action International; Population Council;
Population Reference Bureau; and the Rockefeller Foundation.  We were
unsuccessful in our attempts to obtain the views of the National
Right to Life Committee and the Population Research Institute. 

We did not conduct field visits to overseas locations for this
review; rather, we relied on USAID's and other organizations' studies
and analyses and our interviews. 

To project the impact of continued funding restrictions in fiscal
year 1998, we evaluated family planning project pipelines to
determine when these pipelines would fall below the USAID-determined
4-month minimum level.\1 We assumed that the fiscal year 1998 funding
restrictions would be the same as those that Congress imposed in
1997; that is, a $385 million funding level, a 9-month delay in
release of funds,\2 and metering at 8 percent per month.  We also
assumed that expenditure and obligation patterns would remain
constant over time.  Based on these assumptions, we used USAID
pipeline projections at June 30, 1997, to establish a baseline for
our projections through September 30, 1998. 

The June 30, 1997, baseline was based on pipeline levels that
represent USAID's bilateral projects and centrally managed projects,
including their respective monthly expenditure rates.  Bilateral
pipeline levels were based on PIPE data, one of USAID's financial
management information systems, as of September 30, 1996.  The data
was then projected forward by adding planned fiscal year 1996 family
planning funding and subtracting expenditures based on recent monthly
expenditure rates from Mission Accounting and Control System data. 
USAID provided us with centrally managed project pipeline levels that
were obtained directly from each cooperating agency during USAID's
semiannual portfolio review process and verified against vouchering
data.  USAID's Contraceptives and Logistics Management Division
provided us with pipeline levels and expenditure rates for
contraceptives procurement. 

To adjust the June 30, 1997, baseline to reflect the March 1997
release of funds approved by Congress in February 1997, we added 4
months of fiscal year 1997 funding--March 1 through June 30--and
subtracted 4 months of estimated expenditures based on USAID's
determination of urgent needs.  We then added the remaining fiscal
year 1996 funds and fiscal year 1997 funds through September 30,
1997, and subtracted estimated expenditures to project pipelines to
the end of fiscal year 1997.  Finally, we added the remaining fiscal
year 1997 and fiscal year 1998 funds through September 30, 1998, to
project pipelines at the end of fiscal year 1998. 

We attempted to verify bilateral pipeline data with each USAID
mission that reported pipeline deficits.  This exercise revealed
inconsistencies between the bilateral pipeline data provided by
USAID's Management Bureau Budget Office and data provided by overseas
missions due to delayed posting of expenditures.  As a result, some
bilateral projects appeared to be running deficits, when in fact the
pipeline exceeded USAID's 4-month threshold.  We also requested that
these missions and cooperating agencies provide information on the
projected impact of funding restrictions on programs in fiscal year
1998. 

To determine the relationship between USAID's family planning
programs and reductions in abortions, we interviewed and obtained
documentation and studies from officials of the Alan Guttmacher
Institute and Princeton University, in addition to the USAID offices
and organizations previously mentioned. 



(See figure in printed edition.)Appendix III

--------------------
\1 USAID officials stated that their current reporting systems
include pipeline information by funding account (economic support
fund, development assistance, etc.) and country.  They indicated that
their reporting systems are currently not capable of computing
pipeline amounts at the program level--the pipeline for the family
planning program was manually computed.  USAID officials indicated
that when the new management system is fully operational it will be
capable of readily identifying program financial data, such as rate
of obligations and expenditures, and level of pipeline. 

\2 We assumed a July 1998 release of funds in fiscal year 1998. 


COMMENTS FROM THE AGENCY FOR
INTERNATIONAL DEVELOPMENT
========================================================== Appendix II



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on USAID's letter dated March 24,
1997. 

GAO COMMENTS

1.  While we recognize that USAID minimized negative impacts on the
family planning program, USAID did not provide additional data to
demonstrate that these types of consequences will occur. 

2.  The report text has been modified to reflect this information. 

3.  We noted in our report that release of funds in October 1997
rather than July 1998, even though metered, will enable USAID to
continue funding family planning projects and that pipelines will
exceed the 4-month minimum level.  Nonetheless, it is likely that
USAID will have to deal with the administrative burden of metering. 


*** End of document. ***