Foreign Relations: Better Accountability Needed Over U.S. Assistance to
Micronesia and the Marshall Islands (Letter Report, 05/31/2000,
GAO/RCED-00-67).

Pursuant to a congressional request, GAO reviewed the federal assistance
the United States provides to the Federated States of Micronesia and the
Republic of the Marshall Islands, focusing on the: (1) cost to the
United States of providing assistance to Micronesia and the Marshall
Islands in accordance with the existing Compact of Free Association from
fiscal year (FY) 1987 through FY 1999; (2) funds provided prior to the
Compact (earlier than FY 1987) for the effects of nuclear weapons
testing to what is now the Marshall Islands; and (3) accuracy and
reliability of the data the Department of the Interior uses to monitor
and supervise the federal assistance programs.

GAO noted that: (1) since the implementation of the Compact of Free
Association in 1986, the United States has provided more than $2.6
billion in financial and other assistance, of which more than $1.5
billion was provided to Micronesia and over $1.1 billion was provided to
Marshall Islands during fiscal years 1987 through 1999; (2) Interior
provided the majority of the assistance, about $2 billion, through
quarterly payments to the islands' bank accounts to be used for such
purposes as capital construction projects, energy production,
communication capabilities, and current account costs, such as those for
payroll, maintenance, and other governmental activities; (3) the
remaining half billion dollars was provided by 19 federal agencies in
the form of grants, loans, equipment, and technical assistance, such as
weather forecasting support and airport training activities; (4) prior
to the Compact, the United States provided about $250 million in funding
and assistance to what is now Marshall Islands for the effects of the
U.S. nuclear weapons testing program that took place in the Marshall
Islands during the 1940s and 1950s; (5) the Department of Defense, the
Department of Energy, and Interior provided direct payments to the
Marshall Islands' governments and individuals, rehabilitation and
resettlement services, and health care and monitoring of islanders
exposed to radioactive fallout; (6) in gathering and verifying data on
the cost of U.S. assistance provided to the Islands, GAO found
inaccuracies and inconsistencies with the data being used by Interior to
supervise and monitor federal assistance programs; (7) for example,
Interior had a number of errors in the budget data it reported annually
to Congress on direct payments to the Islands; (8) there were
significant inconsistencies in Interior's data on the assistance
provided by other agencies to the Islands and the data the agencies
reported to GAO; (9) Interior had not used the annual audit information
available from the Islands to corroborate its figures; and (10)
collectively, therefore, Interior's ability to accurately report on
assistance provided is called into question.

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

 REPORTNUM:  RCED-00-67
     TITLE:  Foreign Relations: Better Accountability Needed Over U.S.
	     Assistance to Micronesia and the Marshall Islands
      DATE:  05/31/2000
   SUBJECT:  Accountability
	     Foreign economic assistance
	     International relations
	     Data integrity
	     International agreements
	     Foreign governments
	     Financial management
	     Internal controls
	     Federal agency accounting systems
IDENTIFIER:  Compact of Free Association with Micronesia
	     Marshall Islands
	     Micronesia

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GAO/RCED-00-67

Appendix I: Financial Provisions of the Compact of Free
Association

30

Appendix II: Agency Assistance Provided to the Federated
States of Micronesia and the Marshall Islands

33

Appendix III: Comments From the Department of the Interior

56

Appendix IV: Comments From the Department of State

64

Appendix V: Comments From the Republic of the Marshall
Islands

65

Appendix VI: Comments From the Federated States of
Micronesia

78

Table 1: Assistance Provided to the Federated States of
Micronesia by Agency, Fiscal Years 1987 Through 1999 14

Table 2: Types and Amounts of Assistance Provided to the
Federated States of Micronesia, Fiscal Years 1987 Through
1999 16

Table 3: Assistance and Compensation Provided to the Marshall
Islands, Fiscal Years 1987 Through 1999 16

Table 4: Assistance and Compensation Provided to the Marshall
Islands, Fiscal Years 1987 Through 1999 18

Table 5: Authorized Payments to the Marshall Islands for Effects of Nuclear
Testing, Prior to the Compact 20

Table 6: Section 211 Annual Economic Self-Sufficiency Funding
Provided by the United States 30

Table 7: Section 216 Direct Annual Payments 32

Table 8: USDA Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 33

Table 9: USDA's Assistance to the Marshall Islands, Fiscal Year 1987 Through
1999 34

Table 10: Department of Commerce's Assistance to the Federated
States of Micronesia, Fiscal Year 1987 Through 1999 36

Table 11: Department of Commerce's Assistance to the Marshall
Islands, Fiscal Year 1987 Through 1999 36

Table 12: Department of Defense's Assistance to the Federated
States of Micronesia, Fiscal Year 1995 Through 1999 37

Table 13: Department of Education's Assistance to the Federated
States of Micronesia, Fiscal Years 1987 Through 1999 37

Table 14: Department of Education's Assistance to the Marshall
slands, Fiscal Years 1987 Through 1999 38

Table 15: DOE's Assistance to the Marshall Islands, Fiscal Years
1987 Through 1999 40

Table 16: EPA's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 41

Table 17: EPA's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1999 41

Table 18: FEMA's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 42

Table 19: FEMA's Assistance to the Marshall Islands, Fiscal Years
1987 Through 1999 42

Table 20: HHS' Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 44

Table 21: HHS' Assistance to the Marshall Islands, Fiscal Years 1987 Through
1999 44

Table 22: HUD's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1989 45

Table 23: HUD's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1989 45

Table 24: Institute of Museum and Library Services Assistance to the
Federated States of Micronesia, Fiscal Years 1998 and 1999 46

Table 25: Institute of Museum and Library Services Assistance to the
Marshall Islands, Fiscal Years 1998 and 1999 46

Table 26: Interior's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 47

Table 27: Interior's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1999 48

Table 28: Labor's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 49

Table 29: Labor's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1999 50

Table 30: Legal Services Corporation Assistance, Fiscal Years 1987
Through 1999 50

Table 31: NSF's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 51

Table 32: U.S. Postal Service's Assistance to the Federated States of
Micronesia, Fiscal Years 1987 Through 1998 51

Table 33: U.S. Postal Service's Assistance to the Marshall Islands,
Fiscal Years 1987 Through 1998 52

Table 34: SBA's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 52

Table 35: SBA's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1999 53

Table 36: SSA's Assistance to the Federated States of Micronesia,
Fiscal Years 1998 and 1999 53

Table 37: SSA's Assistance to the Marshall Islands, Fiscal Years 1998
and 1999 54

Table 38: Department of State Assistance to the Federated States of
Micronesia, Fiscal Years 1987 Through 1999 54

Table 39: Department of State Assistance to the Marshall Islands,
Fiscal Years 1987 Through 1999 54

Table 40: Department of Transportation's Assistance to the
Federated States of Micronesia, Fiscal Years 1987
Through 1999 55

Table 41: FAA's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1999 55

Figure 1: Location of the Federated States of Micronesia and
the Marshall Islands 9

EPA Environmental Protection Agency

FAA Federal Aviation Administration

FEMA Federal Emergency Management Agency

FNS Food and Nutrition Service

HHS Health and Human Services

HUD Housing and Urban Development

NOAA National Oceanic Atmospheric Administration

NSF National Science Foundation

O&M Operation and Maintenance

PCB polychlorinated biphenyl

SBA Small Business Admoinistration

SSA Social Security Administration

USDA United States Department of Agriculture

Resources, Community, and
Economic Development Division

B-284387

May 31, 2000

The Honorable Frank H. Murkowski
Chairman, Committee on Energy
and Natural Resources
United States Senate

The Honorable Doug Bereuter
Chairman, Subcommittee on Asia
and the Pacific
Committee on International Relations
House of Representatives

The Honorable Larry E. Craig
United States Senate

In 1986, the U.S. government entered into a Compact of Free Association
(Compact) with the Federated States of Micronesia and the Republic of the
Marshall Islands. The Compact granted these former Trust Territory districts
their independence and provided a framework for future governmental
relations. The Compact provided for 15 years of direct U.S. payments made by
the Department of the Interior to the bank accounts of the Federated States
of Micronesia and the Republic of the Marshall Islands. The direct payments
from Interior were to be used for such purposes as capital construction
projects, energy production, communication capabilities, and recurring
operational activities, such as infrastructure maintenance. The Compact and
its enacting legislation also gave U.S. federal agencies the authority to
provide other assistance such as grants, loans, equipment, and technical
assistance. Under the Compact's enacting legislation and by executive order,
Interior is designated as the agency responsible for supervising,
coordinating, and monitoring the federal assistance programs being provided.
Interior's Office of Insular Affairs is responsible for carrying out these
responsibilities. In addition, the Compact provided for continuing financial
compensation to the Republic of the Marshall Islands for effects from the
tests of U.S. nuclear weapons in the islands during the 1940s and 1950s.

In the fall of 1999, negotiations between the Department of State and the
Islands began on the financial provisions of the Compact that expire in
2001. To assist the United States in its negotiations, you asked us to
report on the (1) cost to the United States of providing assistance to the
Federated States of Micronesia and to the Republic of the Marshall Islands
in accordance with the existing Compact of Free Association from fiscal year
1987 through fiscal year 1999 and (2) funds provided prior to the Compact
(earlier than fiscal year 1987) for the effects of nuclear weapons testing
to what is now the Republic of the Marshall Islands. We are also providing
information on the accuracy and reliability of the data Interior uses to
monitor and supervise the federal assistance programs. In a separate review,
you have asked us to report on the expenditures of Compact funds and
accountability for those expenditures, the state of economic development and
factors that affected development.

To identify the cost of providing assistance to the Federated States of
Micronesia and the Republic of the Marshall Islands, we obtained data from
the Office of Insular Affairs to determine amounts provided in direct
payments. We verified the amounts by examining the supporting documentation
and identified errors needing correction. In addition, we obtained and
examined the annual audits conducted in the Federated States of Micronesia
and the Republic of the Marshall Islands. Furthermore, we obtained data from
19 U.S. federal agencies on the assistance provided in the form of direct
payments, grants, loans, equipment, and technical assistance, which was the
best information available, according to agency officials. To determine the
amount of funding provided prior to the Compact for the effects of nuclear
weapons testing, we identified direct payments to or for the affected people
of the Marshall Islands, trust funds, health care and monitoring,
agricultural support, land rehabilitation and resettlement, and radiological
cleanup.

Since the implementation of the Compact of Free Association in 1986, the
United States has provided more than $2.6 billion in financial and other
assistance, of which more than $1.5 billion was provided to the Federated
States of Micronesia and over $1.1 billion was provided to the Republic of
the Marshall Islands during fiscal years 1987 through 1999. The Department
of the Interior provided the majority of the assistance, about $2 billion,
through quarterly payments to the Islands' bank accounts to be used for such
purposes as capital construction projects, energy production, communication
capabilities, and current account costs, such as those for payroll,
maintenance, and other general government activities. The remaining half
billion dollars was provided by 19 federal agencies in the form of grants,
loans, equipment, and technical assistance, such as weather forecasting
support and airport training activities.

Prior to the Compact, the United States provided about $250 million in
funding and assistance to what is now the Republic of the Marshall Islands
for the effects of the U.S. nuclear weapons testing program that took place
in the islands during the 1940s and 1950s. The departments of Defense,
Energy, and the Interior provided direct payments to the Islands'
governments and individuals, rehabilitation and resettlement services, and
health care and monitoring of islanders exposed to radioactive fallout.

In gathering and verifying data on the cost of U.S. assistance provided to
the Islands, we found inaccuracies and inconsistencies with the data being
used by Interior to supervise and monitor federal assistance programs. For
example, Interior had a number of errors in the budget data it reported
annually to the Congress on direct payments made to the Islands. In
addition, there were significant inconsistencies in Interior's data on the
assistance provided by other agencies to the Islands and the data the
agencies reported to us. Furthermore, Interior's budget data showed that it
reimbursed over $124 million to other agencies for federal services provided
to the Islands. However, the other agencies reported to us that they
received about $53 million. After discussions with Interior about the $71
million difference, Interior was unable to provide documentation for about
$27 million. Finally, Interior had not used the annual audit information
available from the Islands to corroborate its figures. Collectively,
therefore, Interior's ability to accurately report on assistance provided is
called into question. We are making recommendations to improve the
reliability of Interior's data and accountability for the assistance
provided under the Compact.

We presented a draft of this report to the Department of the Interior, the
Department of State, the Federated States of Micronesia, and the Republic of
the Marshall Islands for comment. Interior raised several concerns,
especially regarding our presentation of its monitoring and coordination
roles. The State Department concurred with our recommendation calling for
greater accountability of the assistance provided under the Compact. The
Federated States of Micronesia did not comment on the draft report. The
Republic of the Marshall Islands raised concerns about how much of the
reported assistance provided for the effects of nuclear weapons testing is
actually compensation. Collectively, in response to the comments that we
received, we modified our recommendations and made some modest changes to
the report's presentation.

The Federated States of Micronesia is a grouping of 607 small islands in the
Western Pacific about 2,500 miles southwest of Hawaii, lying just above the
Equator. The Federated States of Micronesia has a total land area of about
270 square miles but occupies more than 1 million square miles of the
Pacific Ocean. The Federated States of Micronesia comprises four
states--Chuuk, Pohnpei, Yap, and Kosrae--with an estimated total population
of 131,500.1 The Republic of the Marshall Islands is made up of more than
1,200 islands, islets, and atolls, with a total land area of about 70 square
miles. The Marshall Islands are located in the Central Pacific about 2,100
miles southwest of Hawaii and about 2,300 miles southeast of Japan. The
Marshall Islands occupy about 750,000 square miles of the Pacific Ocean and
have a total population of approximately 50,500.2

Islands

The U.S. Department of Navy began civil administration of Micronesia and the
Marshall Islands on July 18, 1947, as part of the United Nations Trust
Territory of the Pacific Islands.3 This responsibility transferred to
Interior in July 1951. During the time that the Federated States of
Micronesia and the Marshall Islands were districts of the Trust Territory,
the United States aided them by, among other things, building roads,
hospitals, and schools and providing support for government operations. In
1986, the United States entered into a Compact of Free Association with the
Federated States of Micronesia and the Republic of the Marshall Islands.
With the implementation of the Compact, the Federated States of Micronesia
and the Marshall Islands became Freely Associated States. As Freely
Associated States, which were subsequently granted admission to the United
Nations, the governments could engage in world affairs as sovereign states
with very limited restraint and operate their own fiscal systems. Their
citizens are not U.S. citizens, but they may live, work, and study in the
United States as resident aliens. According to State Department officials,
this is unique under U.S. immigration law. Additionally, by law there is no
requirement that these persons possess either a valid passport or visa to
enter the United States. Under the agreement, the United States is obligated
to defend the Freely Associated States and has, among other things, obtained
military operating rights and the right to continue using the U.S. missile
range on Kwajalein--a Marshall Islands atoll--until 2016. The governments of
the Marshall Islands, the Federated States of Micronesia, and the United
States established that through 2001 these Freely Associated States would
refrain from actions that the U.S. government determines, after consultation
with the other governments, to be incompatible with its authority and
responsibility for security and defense of the Freely Associated States.4

Executive Order 12569 requires Interior to provide direct payments deposited
in the Islands' bank accounts.5 In addition, the Compact provides that
Interior and other U.S. federal agencies may provide program assistance.
This other assistance includes

ï¿½ direct program assistance, which includes grants and loans provided by
individual federal agencies;

ï¿½ indirect program assistance, which includes goods and services provided by
federal agencies; and

ï¿½ guaranteed federal services, which are provided by specifically identified
agencies and reimbursed by Interior.

The Compact's authorizing statute gave Interior the responsibility for
dispensing the majority of the funds, most of which are provided in direct
payments. Of the direct payments for promoting self-sufficiency, both the
Federated States of Micronesia and the Marshall Islands must dedicate an
average over 15 years of no less than 40 percent to their capital accounts.6
In addition, Interior is responsible for supervising, coordinating, and
monitoring federal program assistance being provided by other U.S. federal
agencies. According to the Office of Territorial and Insular Affairs'
Administrative Manual, in 1987, the Secretary of the Interior determined
that the most effective method for U.S. federal agencies to provide
continuing federal programs to the Freely Associated States was to create a
direct grant relationship between the other agencies and the Island
governments.7 As a result, the principal role of Interior has been to
provide technical assistance and respond to assistance issues identified by
either the federal agencies or the Freely Associated States.

The Marshall Islands was the site of 67 U.S. nuclear weapons tests in the
1940s and 1950s. In order to conduct these tests, the United States moved
167 people from Bikini Atoll and 142 people from Enewetak Atoll to other
locations. In addition, during one of the tests, called BRAVO, the residents
of Rongelap and Utrik were exposed to radioactive fallout and subsequently
were moved from their homes. The people of Bikini began to return to their
atoll in 1969 but were removed again in 1978 after it was found that they
were being exposed to too much radiation. After the cleanup and
reconstruction was completed in 1980, the people of Enewetak returned.8 The
people of Rongelap were returned to their homes after about 3 years, but in
1985 they moved from their homeland after they expressed concern about their
exposure to radiation. The people of Utrik were returned a few months after
being removed.9 At this time, most of the people of Bikini and Rongelap are
not living on their home islands. Since the time of the testing, the United
States has compensated the people of the Marshall Islands for hardships they
experienced, such as being moved from their homeland and health problems due
to exposure from fallout.

Fiscal Years 1987 Through 1999

According to data reported by federal agency officials, the United States
provided over $2.6 billion in assistance and compensation to the Federated
States of Micronesia and the Republic of the Marshall Islands during fiscal
years 1987 through 1999. The officials said that over $1.5 billion in
assistance was provided to the Federated States of Micronesia and over $1.1
billion was provided to the Marshall Islands, almost $303 million of which
was provided as compensation for the effects of nuclear weapons testing.

Micronesia

The United States provided over $1.5 billion in assistance to the Federated
States of Micronesia during fiscal years 1987 through 1999. As shown in
table 1, Interior provided approximately $1.2 billion, or about 78 percent
of the funding, over the 13-year period. The departments of Agriculture and
Education reported that they provided assistance totaling about $82 million
and $79 million, respectively, with each agency providing about 5 percent of
all assistance provided to the Federated States of Micronesia during that
time period. Fifteen other agencies provided the remaining assistance.
Appendix II provides additional details on the assistance each agency
provided.

 Dollars in thousands

 Agency or Department                            Total       Percent of
                                                             total
 Interior                                        $1,188,658  77.6
 Agriculture (USDA)a                             81,873      5.3
 Educationb                                      78,954      5.2
 Health and Human Services (HHS)                 62,124      4.1
 Federal Emergency Management Agency (FEMA)a     45,182      2.9
 Commerce/National Oceanic Atmospheric
 Administration (NOAA)                           28,915      1.9
 Labor                                           18,539      1.2
 Defense                                         10,557      0.7
 Transportation/Federal Aviation Administration
 (FAA)                                           4,765       0.3
 U.S. Postal Servicec                            4,398       0.3
 Environmental Protection Agency (EPA)           3,878       0.3
 Small Business Administration (SBA)a            1,878       0.1
 Housing and Urban Development (HUD)             1,256       0.1
 State                                           1,079       0.1
 Social Security Administration (SSA)d           240         0.0
 Institute of Museum and Library Services        111         0.0
 National Science Foundation (NSF)               100         0.0
 Total Federated States of Micronesia
 assistancee                                     $1,532,507  100.0

aIncludes loans of $61.615 million from USDA, $1.859 million from FEMA, and
$1.878 million from SBA. Does not include about $18 million in assistance
from USDA provided to the Federated States of Micronesia, the Marshall
Islands, and the Republic of Palau because USDA could not identify the
amount of funding that went to each individual country.

bDoes not include about $10.1 million that Education provided to the
Federated States of Micronesia and the Marshall Islands for supplemental
education opportunity grants, federal work study, and additional Pell
grants, because it could not identify the amount of funding that went to
each individual country.

cThe Postal Service did not report data for fiscal year 1999.

dThe amount reported for SSA includes only fiscal years 1998 and 1999 and
excludes 3 months of data. Additional amounts are included in the total for
HHS, where the SSA existed before becoming an independent agency in 1995.

eIncludes direct payments, grants, loans, indirect assistance, and
guaranteed federal services. Legal Services Corporation provided about $16
million in assistance to the Federated States of Micronesia, the Marshall
Islands, the Commonwealth of the Northern Marianas Islands, and the Republic
of Palau, but Legal Services could not identify the amount of funding that
went to each individual country.

Source: Prepared by GAO using data provided by agencies.

Assistance provided by U.S. agencies was disbursed in a variety of ways:
direct payments, direct program assistance, indirect program assistance, and
guaranteed federal services. Interior provided almost $1.2 billion in direct
payments. These funds were deposited into the Federated States of
Micronesia's bank account and were to be used for such purposes as capital
construction projects; energy production; communication capabilities; and
recurring operational activities, including infrastructure maintenance.
Direct program assistance was provided by agencies in the form of grants,
loans, and payments. For example, HHS provided over 200 grants amounting to
$62.1 million for such programs as childhood immunization, Head Start,
substance abuse and mental health services, and tuberculosis control. Agency
officials also reported providing a variety of indirect program assistance,
such as technical support and equipment. Interior reimbursed four federal
agencies--the Department of State, Transportation's FAA, Commerce's NOAA,
and the U.S. Postal Service--for services provided. The reimbursements were
for services such as Foreign Service training and weather forecasting
support. Types of assistance and the reported amounts of funding provided
during fiscal years 1987 through 1999 are shown in table 2.

              Dollars in thousands
               Type of assistance                  Amount
 Direct payments from Interior                   $1,185,411
 Direct program assistance
 Grants                                          192,757
 Loans                                           65,352
 Other                                           15,600
 Indirect program assistance                     34,244
 Guaranteed federal service                      39,143
 Total Federated States of Micronesia assistance $1,532,507

Source: Prepared by GAO using data provided by agencies.

Republic of the Marshall Islands

Agency officials reported that more than $1.1 billion in assistance and
compensation was provided to the Marshall Islands during fiscal years 1987
through 1999. As shown in table 3, Interior provided about $864 million, or
approximately 78 percent of the funding. Officials from five other agencies,
including FEMA, USDA, HHS, and the departments of Education and Energy,
reported providing between $25 million and $75 million in assistance. Ten
other agencies provided the remaining assistance. Appendix II provides
additional information on the assistance each agency reported.

 Dollars in thousands
 Agency or Department                     Total       Percent of total
 Interior                                 $864,202    77.7
 Energy                                   75,425      6.8
 USDAa                                    50,386      4.5
 HHS                                      34,572      3.1
 Educationb                               31,924      2.9
 FEMAa                                    26,041      2.3
 Agency or Department                     Total       Percent of total
 Commerce/NOAA                            10,621      1.0
 Labor                                    10,547      0.9
 EPA                                      1,864       0.2
 SBAa                                     1,621       0.1
 U.S. Postal Servicec                     1,466       0.1
 SSAd                                     1,129       0.1
 State                                    1,097       0.1
 Transportation/FAA                       881         0.1
 HUD                                      275         0.0
 Institute of Museum and Library Services 94          0.0
 Total Marshall Islands assistancee       $1,112,145  100.0

aIncludes loans of $37.366 million from USDA, $0.689 million FEMA, and
$1.621 million from SBA. Does not include about $18 million in assistance
provided to the Federated States of Micronesia, the Marshall Islands, and
the Republic of Palau because USDA could not identify the amount of funding
that went to each individual country.

bDoes not include about $10.1 million that Education provided to the
Federated States of Micronesia and the Marshall Islands for supplemental
education opportunity grants, federal work study, and additional Pell grants
because it could not identify the amount of funding that went to each
individual country.

cThe Postal Service did not report data for fiscal year 1999.

dThe amount reported for the SSA includes only fiscal years 1998 and 1999
and excludes 3 months of data.

eIncludes direct payments, grants, loans, indirect assistance, and
guaranteed federal services. Legal Services Corporation provided about $16
million in assistance to the Federated States of Micronesia, the Marshall
Islands, the Commonwealth of the Northern Marianas Islands, and the Republic
of Palau, but Legal Services could not identify the amount of funding that
went to each individual country.

Source: Prepared by GAO using data provided by agencies.

As they did with the Federated States of Micronesia, U.S. agencies provided
assistance to the Marshall Islands through direct payments, direct program
assistance, indirect program assistance, and guaranteed federal services.
Interior provided almost $861 million in direct payments, which includes
almost $303 million provided as compensation to the people of Bikini,
Rongelap, Utrik, and Enewetak for the effects of nuclear weapons testing. In
addition, federal agencies reported that they provided a total of over $137
million in direct program assistance in the form of grants, loans, and
payments. For example, Education reported providing over 70 grants under 17
programs totaling about $27.3 million, which were used for such assistance
as special education, federal work study, and school improvement. Agency
officials also reported providing a variety of indirect assistance, such as
technical assistance and equipment. The Department of State, FAA, NOAA, and
the U.S. Postal Service reported providing federal services that were
reimbursed by Interior. Types of assistance and the reported amounts of
funding provided during fiscal years 1987 through 1999 are shown in table 4.

 Dollars in thousands
 Type of assistance                Amount
 Direct payments from Interiora    $860,955
 Direct program assistance
 Grants                            96,160
 Loans                             39,686
 Other                             1,889
 Indirect program assistance       95,323
 Guaranteed federal service        14,065
 Nuclear testing compensationb     4,067
 Total Marshall Islands assistance $1,112,145

aDirect payments from Interior include almost $303 million provided as
compensation for the effects from nuclear weapons testing.

bNuclear testing compensation was provided by USDA and does not include
almost $303 million in direct payments made by Interior as compensation for
the effects from nuclear weapons testing.

Source: Prepared by GAO using data provided by agencies.

Compact to the Marshall Islands

In addition to compensation provided under the Compact for the 67 nuclear
weapons tests on the Marshall Islands' Bikini and Enewetak atolls, the
United States provided about $250 million prior to the Compact for the
effects of nuclear weapons testing. The departments of Defense, Energy, and
the Interior provided this funding and assistance in a variety of forms,
including payments to affected people; trust funds; health care and
monitoring; agricultural support; remediation, rehabilitation, and
resettlement of land; and radiological cleanup.

Defense provided about $134 million prior to the Compact for radiological
cleanup, equipment, building construction, and logistical support. For
example, on Enewetak Atoll, Defense planned the cleanup approach, removed
debris and about 100,000 cubic yards of contaminated soils, and provided
support for the construction of new homes and other facilities. The
Department also constructed a disposal site in a bomb crater on Runit where
contaminated materials and soils were mixed with cement, and a concrete cap
was installed. During its work, Defense had about 8,000 workers involved in
the cleanup.

Prior to the Compact, Energy and its predecessor agencies (the Energy
Research and Development Administration and the Atomic Energy Commission)
provided about $52 million to what is now the Republic of the Marshall
Islands, primarily in the form of radiological monitoring and health care.
Energy's Brookhaven National Laboratory and Lawrence Livermore National
Laboratory conducted radiological surveys of the area, periodically tested
those exposed, and provided medical care to the people of the four affected
atolls of Bikini, Rongelap, Utrik, and Enewetak.

We were able to identify over $66 million that Interior provided prior to
the Compact. Authorized payments to those affected totaled about $15
million, as shown in table 5. About 36 percent of these funds was to be paid
directly to the affected people or to their communities, while the remaining
64 percent was placed in trust, and the individuals received payments from
the interest. Interior also provided more than $9 million in supplemental
food for Enewetak from 1980 through 1986.10 In addition, Interior funded
rehabilitation and resettlement efforts totaling about $42 million.11

 Fiscal year Purpose                                           Amount

 1956        Displacement assistance to the people of Bikini;  $325,000
             $25,000 authorized payment and $300,000 in trust
             Displacement assistance to the people of
 1956        Enewetak; $25,000 authorized payment and $150,000 175,000
             in trust

 1964        Authorized payment to the people of Rongelap for  950,000
             accidental exposure to nuclear fallout

 1969        Authorized payment made to the people of          1,020,000
             Enewetak, placed in trust

 1975        Authorized payment for displacement hardship to   3,000,000
             people of Bikini, placed in trust

 1977        Authorized payment to Rongelap, Bikini, and Utrik 300,000
             communities
             Authorized payment for displacement hardship to
 1978        the people of Bikini, which increased the Bikini  3,000,000
             trust fund

 1978-1980   Authorized payments to the people of Rongelap and 1,700,000
             Utrik
 1979        Authorized payment to the people of Bikini        1,400,000

 1982        Immediate authorized payment of $1 million to the 3,000,000
             people of Bikini and $2 million placed in trust
 Totala                                                        $14,870,000

aThe total reflects direct payments and the amount placed in the trust
funds. The total does not reflect any interest accrued on the accounts.

Micronesia and the Marshall Islands Are Not Accurate nor Reliable

While the Compact assigns Interior responsibility for coordinating and
monitoring the federal assistance programs and activities provided to the
Federated States of Micronesia and the Marshall Islands, we identified a
number of inaccuracies and inconsistencies with Interior's data on the
amount of assistance provided. For example, we found that errors or
inconsistencies existed (1) in the data that Interior included in its annual
budget justification submittals to the Congress on the direct payments made
to the Federated States of Micronesia and the Marshall Islands; (2) between
Interior's data on assistance provided by other agencies to the Islands and
the data provided to us by those agencies; (3) in Interior's $124 million
"Federal Services" account, which it uses to reimburse some of the other
agencies for their assistance to the Islands; and (4) between Interior's
records of direct payments and figures contained in the Federated States of
Micronesia's and the Marshall Islands' audited financial statements.

When we asked Interior for information on how much funding it provided to
the Federated States of Micronesia and the Marshall Islands, officials
responsible for the program directed us to a table in the United States
Department of the Interior Budget Justification, Fiscal Year 2000.12 The
table contains Interior's appropriation allocation of funds provided for
fiscal years 1987 through 1999 and projected allocations for fiscal years
2000 and 2001. The table includes a breakdown of the amounts in various
subaccounts, such as ones labeled current, capital, inflation, energy
production, and communication hardware.13 To determine whether the amounts
shown were accurate and whether they represented actual payments to the
Federated States of Micronesia and the Marshall Islands, we obtained
documents showing the amounts transferred into the respective bank accounts.
Additionally, we examined entries made to Interior's budgetary accounting
system to determine how budget allocations were made for these funds to
various subaccounts. We found that the total payments made to each country
were generally accurate, with the exception of those made in 3 years for the
Federated States of Micronesia and 2 years for the Marshall Islands. The
five errors resulted in an overstatement of $404,000 in the total reported
assistance provided of about $2 billion. In addition, there were 13
incorrect amounts shown in the table's subaccounts. For example, in fiscal
year 1997, the table showed the current account for the Marshall Islands at
$5,460,000 and the capital account at $13,640,000. These amounts, according
to the budgetary accounting system entries, should have been $12 million and
$7.1 million, respectively.14 The accuracy of the subaccounts is important
since the Compact requires that at least 40 percent of the direct payments
provided to promote self-sufficiency be used for capital account purposes
and the accounts provide information on how the Federated States of
Micronesia and the Marshall Islands may have used the funds. Interior
corrected the table after we identified the errors.

As specified in the Compact's enacting legislation, Interior is responsible
for coordinating and monitoring federal assistance programs and activities
provided to the Federated States of Micronesia and the Marshall Islands.
Interior officials provided us with a schedule they had prepared for the
Department of State showing the dollar amount of assistance being provided
by other agencies. This was the only document they had available that
provided such information. In examining the schedule, we found that
Interior's data disagreed with the information we had collected from the
individual agencies. For example, Interior's schedule showed that the
Department of Education provided the Marshall Islands $17.5 million while
data we obtained from Education showed that it provided about $31.9
million.15 Interior officials told us that while they have attempted to get
better information from the other agencies on the assistance they provide,
there is no requirement for them to report to Interior. As a result,
Interior has had limited success in obtaining such information from the
other agencies.

Interior established a "Federal Services" account for reimbursing the cost
of assistance provided by four agencies--NOAA, the Department of State, FAA,
and the U.S. Postal Service. Interior's fiscal year 2000 budget
justification table indicates that Interior made payments to other agencies
from this account of $124,432,000 from fiscal year 1987 through fiscal year
1999. However, the agencies that receive these reimbursements told us that
they had received $53 million from Interior.16 In attempting to explain the
$71 million difference, Interior identified (1) a $20 million reprogramming
from this account in fiscal year 1997 that was not accounted for in the
table (thus overstating the amount of assistance provided in that year by
$20 million), (2) about $9 million that it reimbursed to the Federated
States of Micronesia and the Marshall Islands for annual audits required by
the Compact and completed by the accounting firm Deloitte & Touche, (3)
about $11.6 million in funds that was obligated but not yet expended (some
dating back to 1989--Interior is now examining these funds to determine if
they should be maintained), and (4) a balance available of $3.9 million.
Interior officials were unable to provide documentation for the remaining
$26.5 million difference, explaining that their data for the first 2 years
of the program were not readily available due to a change in the
Department's computer systems. In addition, the officials explained that
Interior had reimbursed the Department of Education for some of the
assistance it provided in the early years of the Compact, but Interior was
not able to identify the amount it reimbursed Education during those years.

The Compact requires that the Federated States of Micronesia and the
Marshall Islands conduct an annual audit of the assistance provided. We
planned to use the information contained in these audits to cross-check
information we obtained from Interior. However, this could not be
accomplished because the Federated States of Micronesia and the Marshall
Islands did not always allocate the direct funding provided in the same way
as Interior records show.17 For example, in the most recent audit of the
Federated States of Micronesia, the capital account is shown as receiving
$18,048,768, while Interior shows that it provided $16,000,000 in funds. We
found that Interior had not used the audit data available from the Islands
to corroborate its figures. While Interior is not required to use the audit
data to reconcile its figures, it is important that Interior understand how
the Islands have allocated the funding in order to determine whether the
Islands are in compliance with Compact requirements regarding the use of the
funds.

While we found errors and inconsistencies in Interior's data on the
financial and program assistance provided to the Islands, we took steps to
ensure that the data provided in this report are as accurate as possible. We
verified and corrected Interior's data on direct payments made to the
Islands. In addition, while we did not verify the program assistance
provided by the 19 agencies, we reviewed the data, followed up with agency
officials in instances where questions existed, and received agency
confirmation on the accuracy of the amounts reported.

Although Interior is identified as the agency responsible for providing a
majority of the funding as well as coordinating and monitoring the
assistance programs and activities provided to the Federated States of
Micronesia and the Marshall Islands, it has not maintained reliable data on
the amount of assistance provided. Numerous inconsistencies exist in
Interior's own records as well as between Interior's records and those of
both other U.S. federal agencies that provided assistance and figures in the
annual audits conducted by Deloitte & Touche. These inconsistencies call
into question Interior's ability to accurately report on assistance provided
and the effectiveness of its coordination and monitoring responsibilities.
This lack of reliable information could impact the Department of State as it
proceeds with negotiations on provisions of the Compact that expire in 2001.

In the event Interior retains monitoring and coordination oversight as a
result of the current negotiations, we recommend that the Secretary of the
Interior direct the Office of Insular Affairs to develop a system to obtain
and maintain data on all U.S. financial and program assistance provided to
the Federated States of Micronesia and the Republic of the Marshall Islands.
Such a system might include making agreements with other agencies to
regularly report assistance provided and making use of the annual audit
reports from the Federated States of Micronesia and the Marshall Islands to
help identify how funds are allocated. In addition, we recommend that the
Secretary direct the Office of Insular Affairs to reconcile the amounts
reimbursed to other agencies shown in the budget justification table to the
amounts reported by the agencies that receive reimbursements from Interior.

Given that negotiations are currently under way on provisions of the Compact
of Free Association that expire in 2001, we recommend that the Secretary of
State negotiate provisions that require that reliable data be maintained to
ensure better accountability of the assistance provided. Requiring periodic
reconciliation of accounts between Interior, the other agencies providing
assistance, and the Islands is one means to achieve this objective.

We provided a draft of this report to the Department of the Interior, the
Department of State, the Republic of the Marshall Islands, and the Federated
States of Micronesia for their review and comment.

Interior's comments fall into two general categories. First, Interior said
that while it has a coordinating and monitoring role with respect to grants
from other agencies, it does not have the authority to affect the manner,
amount, and use of these funds because the entire system has been designed
to be decentralized. Our draft report did not suggest that Interior affect
the manner, amount, or use of the grants and other program assistance
provided by other agencies. However, Interior is identified in the Compact's
enacting legislation and by executive order as the agency responsible for
coordinating and monitoring federal programs being provided. In fulfilling
that role, it is important that Interior know the type and amount of grants
and other program assistance provided by other federal agencies. Second,
Interior believes that we have misrepresented the financial information it
provided. We disagree. Interior did not have accurate data on the direct
grants it provided, the amounts other agencies provided, or the
reimbursements it made to other agencies. Given that Interior is the agency
responsible for providing oversight and monitoring of U.S. assistance to the
Islands, we expected the agency to maintain accurate information on such
assistance. Instead, to develop this information, we had to, among other
things, examine Interior office files and request data from 19 agencies on
the assistance that they provided to the Federated States of Micronesia and
to the Marshall Islands and the amounts of the reimbursements they received
from Interior. Finally, Interior also believes that the draft report
recommendations make sense only if federal programs are extended in the next
Compact term, if it is determined that one agency should account for all
grant funding and if necessary legislation is enacted to create and enforce
such a central grant authority. We agree with Interior and have modified the
recommendations to make them applicable to the agency or agencies deemed
responsible for monitoring and supervising assistance in the next term of
the Compact. Interior's comments and our detailed response are in appendix
III. Interior also provided technical clarifications, which we incorporated
as appropriate.

The Department of State concurred with our recommendation calling for
greater accountability for assistance provided under the Compact. However,
the agency did not concur with our recommendation regarding funds not
included in Interior's budget. The agency said that new policies and
procedures are being considered that would relieve Interior of the
responsibility to monitor and supervise assistance not included in
Interior's budget. As noted previously, we have modified our recommendation
accordingly. The Department of State's comments are in appendix IV. State
also provided technical clarifications, which we incorporated as
appropriate.

The Republic of the Marshall Islands said that it had serious concerns that
the draft report misrepresented the unique history of U.S. financial
assistance to the Islands and that some of the assistance provided also
benefits the United States. We provided additional information to the report
to put the discussion of Compact funding in an historical context. Most of
the Republic of the Marshall Islands' comments however, focused on the use
of the term "compensation." The Marshall Islands viewed our use of this term
as being too broad and said that the only true form of compensation was the
direct payments made to the people who were affected by nuclear weapons
testing. We recognize that there can be differing views on what constitutes
compensation. As a result, we have modified the report so that funding
provided prior to the Compact in connection with the effects of nuclear
weapons testing is no longer characterized as compensation. The Republic of
the Marshall Islands' comments and our response are included as appendix V.

The Federated States of Micronesia said that it did not have comments on the
draft because they did not have access to Interior's or other U.S. federal
agencies' accounting records. The officials pointed out that without the
records, they were unable to respond to our findings. The Federated States
of Micronesia's letter is in appendix VI.

To obtain information on the cost to the United States in providing
assistance to the Federated States of Micronesia and the Republic of the
Marshall Islands, we reviewed the Compact of Free Association and subsequent
agreements, applicable U.S. laws, reports of congressional hearings, and
annual audit reports from the Federated States of Micronesia and the
Marshall Islands. We also obtained data and interviewed officials from 19
federal agencies: the departments of the Interior, State, Agriculture,
Commerce, Defense, Education, Energy, HHS, HUD, Labor, and Transportation as
well as EPA, SSA, FEMA, the Institute of Museum and Library Services, Legal
Services Corporation, NSF, the U.S. Postal Service, and SBA. We provided the
financial data reported in appendix II to 17 agencies that confirmed the
accuracy of the data. In addition, we met with representatives from the
Federated States of Micronesia and the Marshall Islands.

We performed several steps to verify the data we obtained from the agencies.
We compared Interior figures for direct payments with records of payments
made to the Federated States of Micronesia's and the Marshall Islands' bank
accounts. Furthermore, to the extent possible, we compared figures for grant
assistance that we obtained from various agencies with data in the Deloitte
& Touche single audit reports from the Federated States of Micronesia and
the Marshall Islands and discussed some of the differences with agency
officials.

In performing the audit work to determine the costs to the United States of
providing assistance in accordance with the Compact, we were faced with
several limitations. For instance, Department of Justice officials were not
able to identify any individuals within the department who were
knowledgeable of the subject matter. Likewise, the U.S. Coast Guard could
not identify an individual who could provide us with information on the
amount of assistance provided to the Federated States of Micronesia and the
Marshall Islands. In addition, some agencies, for example, SSA and the
Postal Service, were not able to provide the information for all years.
Furthermore, USDA, Education, and the Legal Services Corporation were not
always able to allocate the assistance provided to each individual country.
We also identified discrepancies between data received from federal agencies
and figures in the single audit reports from the Federated States of
Micronesia and the Marshall Islands. We were not able to resolve all the
differences. Furthermore, we were not able to verify all direct payments
made through Interior because of missing records. Finally, while we
identified loans provided by the agencies, we did not evaluate the value of
any debts that were forgiven under authority of the Compact.

To determine the amount of funding and assistance provided prior to the
Compact for the effects of nuclear weapons testing to what is now the
Republic of the Marshall Islands, we reviewed applicable U.S. laws and
reports of congressional hearings. As part of this effort, we included such
funding and assistance as direct payments to the affected people of the
Marshall Islands, trust funds, health care and monitoring, agricultural
support, land rehabilitation and resettlement, and radiological cleanup. In
addition, we reviewed 68 reports from 1947 through 1986 by the Islands' High
Commissioner and the Department of State on the activities of the Trust
Territory of the Pacific Islands, and we examined selected archived
microfilm records at the National Archives. We also interviewed departments
of Defense, Energy, and Interior officials.

The departments of Defense and Energy provided estimates of the amount of
funding that they provided prior to the Compact but had limited
documentation for their estimates. Interior did not provide an estimate.
Agency officials said that they faced difficulties identifying funding
amounts because all records had not been retained for the period in
question, and personnel who were involved were no longer available.

All dollar figures in this report are presented in nominal terms, with no
adjustment for inflation. We were not able to present total assistance and
compensation provided over the years in 1999 constant dollars, which would
adjust for inflation, because the data available did not always identify the
specific year in which the funds or assistance was provided. If we could
have converted all figures to 1999 dollars, the amounts for total assistance
and compensation provided would have been higher.

We conducted our work from August 1999 through April 2000 in accordance with
generally accepted government auditing standards.

Copies of this report are being sent to the Honorable Bruce Babbitt, the
Secretary of the Interior; the Honorable Madeleine K. Albright, the
Secretary of State; His Excellency Leo A. Falcam, President of the Federated
States of Micronesia; His Excellency Kessai Note, President of the Republic
of the Marshall Islands; and other interested parties. We will also make
copies available to others upon request.

If you or your staff have any questions about this report, please call me at
(202) 512-3841. Key contributors to this report were A. Don Cowan, Jessica
Martinson, Barbara Scharl, and Glen Trochelman.
(Ms.) Gary L. Jones
Associate Director, Energy,
Resources, and Science Issues

Financial Provisions of the Compact of Free Association

The Compact of Free Association contains a number of financial provisions,
many of which will expire on October 1, 2001, its 15th year.18 These
provisions involve direct financial payments for such items as economic
self-sufficiency, U.S. military Civic Action Teams, energy production,
operation and maintenance of communication facilities, and other assistance,
such as surveillance and enforcement of maritime zones, health and medical
assistance, and post-secondary education. The following provides additional
information on the financial provisions in title II, articles I and II of
the Compact.

This section provides direct grant payments to the Federated States of
Micronesia and the Republic of Marshall Islands to advance the economic
self-sufficiency of their people.19 Of these funds, both the Federated
States of Micronesia and the Marshall Islands must dedicate an average over
15 years of no less than 40 percent to the capital account. This account is
to be used for purposes that include funding construction or major repair of
capital infrastructure or for financing public and private sector projects
identified in the 5-year economic development plan. Up to 60 percent of
section 211 funds may be used for general government operations. Table 6
shows the assistance to be provided during the 15 years this provision is in
effect.

 Dollars in millions
                     The Federated States of Micronesia  Marshall Islands
 First 5 Years       $60                                 $26.1
 Second 5 Years      $51                                 $22.1
 Last 5 Years        $40                                 $19.1

The Compact provides the Federated States of Micronesia $1 million annually
for 14 years, commencing on the first anniversary of the Compact, to defray
costs associated with U.S. military Civic Action Teams.20 Civic Action Teams
are comprised of such members as engineers, construction specialists,
equipment operators, carpenters, masons, welders, mechanics, and plumbers.
Similar funds were not provided to the Marshall Islands.

This section of the Compact provides $1.9 million annually, not adjusted for
inflation, to the Marshall Islands specifically to take into account the
impact of the activities of the United States in the Kwajalein Atoll area.
It also provided $160,000 in the first year of the Compact to the Federated
States of Micronesia specifically to take into account the impact of the
activities of the United States in the State of Yap.

This section provides the Federated States of Micronesia $3 million and the
Marshall Islands $2 million annually for 14 years, commencing on the first
anniversary of the Compact, to help achieve increased self-sufficiency in
energy production.

This section provides the Federated States of Micronesia $600,000 and the
Marshall Islands $300,000 annually for 15 years, commencing on the effective
date of the Compact, for the operation and maintenance of communications
systems. In addition, section 215 provided one-time payments of $6 million
to the Federated States of Micronesia and $3 million to the Marshall Islands
to acquire communication hardware during the first year.

This section provides $5.369 million annually for 15 years, commencing on
the effective date of the Compact, for a variety of purposes. These funds
are to be split between the Federated States of Micronesia and the Marshall
Islands in accordance with a distribution agreement between them. Table 7
shows the purposes and annual payments set forth in the Compact.

 Purpose of assistance                          Annual payments
 Surveillance and enforcement of maritime zones $890,000
 Health and medical programs                     $1.791 million
 Post secondary education support               $2.687 million

The Compact also provided for a one-time payment of $1.333 million to help
begin the surveillance and enforcement of maritime zones.

This section provides inflation adjustments for each fiscal year for
payments under section 211, 212, 214, and 215 as well as for extension
payments required under section 231. This adjustment is based on the percent
which equals two thirds of the percentage change in the U.S. Gross National
Product Implicit Price Deflator, or 7 percent, whichever is less in any one
year, using the beginning of the fiscal year 1981 as the base. The
Department of the Interior estimates inflation adjustments provided over the
life of the Compact will be about $485 million.

This section provides the Federated States of Micronesia and the Republic of
the Marshall Islands $10 million annually to be used for education and health
care. Of this amount, the Federated States of Micronesia receives $7
million, while the Marshall Islands receives $3 million.

Agency Assistance Provided to the Federated States of Micronesia and the
Marshall Islands

We identified 19 U.S. federal agencies that have provided assistance to the
Federated States of Micronesia and the Marshall Islands. This assistance
came in the form of direct payments, grants, loans, indirect assistance, and
guaranteed federal services.

The Department of Agriculture (USDA) provided assistance to the Federated
States of Micronesia and the Marshall Islands through the Food and Nutrition
Service (FNS); Rural Housing Service; Rural Utilities Service; Forest
Service; Cooperative State Research, Education, and Extension Service; and
Natural Resources Conservation Service. During fiscal years 1987 through
1999, USDA provided grants, loans, and indirect assistance of over $81.8
million to the Federated States of Micronesia and over $50.3 million to the
Marshall Islands, as shown in tables 8 and 9. FNS provided food assistance,
transitional assistance, bonus commodities, and nuclear compensation. Rural
Housing Service funding was provided for community programs and home repair
and Rural Utilities Service assistance was provided for water and waste
systems and telecommunications improvement. Examples of assistance provided
by the Forest Service include research grants, technical assistance, fire
and forestry assistance, and fire fighting equipment. Examples of assistance
provided by the Cooperative State Research, Education, and Extension Service
include grants to reduce foodborne illness and waterborne disease. The
Natural Resources Conservation Service provided financial assistance to the
Federated States of Micronesia and technical assistance to both the
Federated States of Micronesia and the Marshall Islands.

 Dollars in thousands
                                                             Amount
 Grants
 Home repair and preservation                                $4,778
 Water and wastewater systems                                1,843
 Forestry and fire assistance                                1,065
 Transitional assistance                                     161
 Other                                                       318
 Totala                                                      $8,166
                                                             Amount
 Loans
 Telecommunications corporation                              $39,960
 Home repair                                                 16,039
 Single-family housing                                       4,156
 Loan servicing, nonsubsidized                               964
 School improvements                                         248
 Community facilities loan                                   248
 Total                                                       $61,616
 Indirect assistance
 Food- disaster assistance                                   $9,637
 Estimate: technical assistance                              1,779
 Estimate: program management                                483
 Fire trucks and engines                                     144
 Forestry- technical assistance, formal training, or meeting 50
 Totala                                                      $12,092
 Total Federated States of Micronesia assistance b           $81,873

a Total does not add due to rounding.

b Total does not include approximately $18 million of assistance provided
through the Cooperative State Research, Education, and Extension Service to
the Federated States of Micronesia, the Marshall Islands, and the Republic
of Palau. The amount of funding provided to the individual countries was not
available. Total does not add due to rounding.

Source: Prepared by GAO from USDA's data.

 Dollars in thousands
                                                              Amount
 Grants
 Home repair and preservation                                 $1,265
 Transitional assistance                                      459
 Fire and forestry assistance                                 280
 Reducing waterborne disease                                  24
 Total                                                        $2,028
 Loans
 Telecommunication authority                                  $22,799
 Marshalls Energy Company, Inc.                               12,500
                                                              Amount
 Home repair                                                  2,067
 Total                                                        $37,366
 Indirect assistance
 Food disaster assistance                                     $6,365
 Estimate: program management                                 230
 Forestry- technical assistance, formal training, or meetings 106
 Fire engines                                                 84
 Bonus commodities                                            76
 Estimate: technical assistance                               63
 Total                                                        $6,924
 Compensation
 Nuclear testing compensation                                 $4,067
 Total Marshall Islands assistancea                           $50,386

a Total does not include approximately $18 million of assistance provided
through the Cooperative State Research, Education, and Extension Service to
the Federated States of Micronesia, the Marshall Islands, and the Republic
of Palau. The amount of funding provided to the individual countries was not
available. Total does not add due to rounding.

Source: Prepared by GAO from USDA's data.

The National Oceanic Atmospheric Administration (NOAA), which oversees the
National Weather Service, established upper air weather observation offices
in the Federated States of Micronesia and the Marshall Islands in the
mid-1950s. Since the implementation of the Compact, funds to support the
weather offices were transferred to Interior, which now reimburses NOAA (see
tables 10 and 11). The reimbursements include costs incurred by the
Federated States of Micronesia and the Marshall Islands and the National
Weather Service/Pacific Region to manage, supervise, operate, and maintain
the offices. In addition to weather service support, NOAA provided a grant
to the Federated States of Micronesia for snail reseeding that took place in
the outer islands of Yap state.

 Dollars in thousands
                                                   Amount
 Grants
 Snail reseeding in the outer islands of Yap state $14
 Guaranteed federal service
 Weather service support                           $28,901
 Total Federated States of Micronesia assistance   $28,915

 Dollars in thousands
                            Amount
 Guaranteed federal service
 Weather service support    $10,621

Source: Prepared by GAO from the Department of Commerce's data.

The Department of Defense provided indirect assistance to the Federated
States of Micronesia through U.S. military Civic Action Teams that assisted
in national development projects. Costs for providing the assistance
included per diem and travel, equipment, facilities, and maintenance. During
fiscal years 1995 through 1999, the Department of Defense spent
approximately $10.6 million to provide Civic Actions Teams to the Federated
States of Micronesia, as shown in table 12. The Department provided teams
prior to fiscal year 1995, but according to an agency official, records
containing cost information for that period were destroyed in a hurricane.
The Department did not report any assistance provided to the Marshall
Islands in response to our request.

 Dollars in thousands
                      Amount
 Indirect assistance
 Civic Action Teams   $10,557

Source: Prepared by GAO from the Department of Defense's data.

The Department of Education provided assistance to the Federated States of
Micronesia and the Marshall Islands during fiscal years 1987 through 1999.
During this period, Education provided over $78.9 million to the Federated
States of Micronesia and over $31.9 million to the Marshall Islands in both
grants and indirect assistance, as shown in tables 13 and 14. The Department
of Education provided grant funding for a variety of programs, including
adult education, honors scholarships, client assistance, special education,
vocational education, federal work study, and Pell Grants.21 In addition,
technical assistance and research, provided by Pacific Resources for
Education and Learning, was funded by the Department of Education.

 Dollars in thousands
                                                         Amount
 Grants
 Pell Grantsa                                            $19,282
 Special education grants to states and preschool grants 23,729
 Chapter 1/title I grants to local educational agencies  9,058
 Freely Associated States- education grant program       8,345
 School improvement state grants                         3,510
                                                         Amount
 Vocational education                                    3,235
 Territorial teacher training                            1,367
 Vocational rehabilitation state grants                  1,350
 Federal work-studyb                                     1,122
 Bilingual education                                     1,034
 Goals 2000                                              969
 Adult education                                         666
 Supplemental educational opportunity grantsc            486
 Byrd honors scholarships                                182
 Client assistance                                       30
 Total                                                   $74,365
 Indirect assistance
 Technical assistance and research                       $4,589
 Total Federated States of Micronesia assistance         $78,954

a The Department of Education provided an additional $6 million for Pell
Grants to the Federated States of Micronesia and the Marshall Islands from
fiscal year 1987 through 1991. The Department was not able to report the
amount by country. According to Education, these costs were reimbursed by
Interior.

b Education provided an additional $2 million for federal work study to the
Federated States of Micronesia and the Marshall Islands from fiscal years
1987 through 1991. The Department was not able to report the amount by
country. According to Education, the costs were reimbursed by Interior.

c The Department of Education provided an additional $2.1 million for
supplemental educational opportunity grants to the Federated States of
Micronesia and the Marshall Islands between fiscal years 1987 through 1991.
The Department was not able to report the amount by country. According to
Education, the costs were reimbursed by Interior.

Source: Prepared by GAO from the Department of Education's data.

 Dollars in thousands
                                                         Amount
 Grants
 Pell Grantsa                                            $6,562
 Special education grants to states and preschool grants 9,484
 Chapter 1/title I grants to local educational agencies  3,513
 Freely Associated States grant program                  2,424
 School improvement state grants                         1,287
                                                         Amount
 Territorial teacher training                            839
 Adult education                                         774
 Vocational education                                    715
 Goals 2000                                              487
 Upward Bound                                            381
 Federal work studyb                                     350
 Vocational rehabilitation state grants                  161
 Supplemental educational opportunity grantsc            149
 Byrd honors scholarship                                 117
 Bilingual education                                     75
 Client assistance                                       17
 Total                                                   $27,335
 Indirect assistance
 Technical assistance and research                       $4,589
 Total Marshall Islands assistance                       $31,924

a The Department of Education provided an additional $6 million for Pell
Grants to the Federated States of Micronesia and the Marshall Islands from
fiscal year 1987 through 1991. The Department was not able to report the
amount by country. According to Education, these costs were reimbursed by
Interior.

b Education provided an additional $2 million for federal work study to the
Federated States of Micronesia and the Marshall Islands from fiscal years
1987 through 1991. The Department was not able to report the amount by
country. According to Education, the costs were reimbursed by Interior.

c The Department of Education provided an additional $2.1 million for
supplemental educational opportunity grants to the Federated States of
Micronesia and the Marshall Islands between fiscal years 1987 through 1991.
The Department was not able to report the amount by country. According to
Education, the costs were reimbursed by Interior.

Source: Prepared by GAO from the Department of Education's data.

The Department of Energy (DOE) provided indirect assistance to the Marshall
Islands in the form of medical care and environmental monitoring and
research. DOE provided over $75 million to the Marshall Islands from fiscal
year 1987 through 1999, as shown in table 15. The assistance included
mandated health care to approximately 230 people, environmental monitoring
services, and operational support, such as procuring equipment and
transporting individuals. DOE officials said that they did not provide
assistance to the Federated States of Micronesia during this time period.

 Dollars in thousands
                                                  Amount
 Indirect assistance
 Special medical care and radiological monitoring $73,639
 Medical and environmental monitoring equipment   1,786
 Total                                            $75,425

Source: Prepared by GAO from DOE's data.

The Environmental Protection Agency (EPA) provided direct grant assistance
and indirect assistance to both the Federated States of Micronesia and the
Marshall Islands during the Compact time period, totaling about $5.7 million
(see tables 16 and 17). EPA provided grants for wastewater construction and
environmental program assistance to the Federated States of Micronesia and
the Marshall Islands during a 3-year phaseout beginning with the
implementation of the Compact in 1987. In addition to grants, EPA provided
cleanup of hazardous chemical sites in the Marshall Islands during the early
1990s at an approximate cost of $750,000.

Furthermore, EPA's region IX (in San Francisco) provided, and continues to
provide, ad hoc technical assistance to citizens of the Federated States of
Micronesia and the Marshall Islands in response to requests for information
received via telephone or e-mail. EPA provided additional indirect
assistance through a 1994 preliminary assessment of polychlorinated biphenyl
(PCB) contamination in the Federated States of Micronesia and the
preparation of a conceptual solid waste management plan in the Marshall
Islands in 1996. According to an agency official, the costs of performing
the PCB assessment and the waste management plan were relatively small,
consisting of the travel cost and 3 weeks time for three individuals.

 Dollars in thousands
                                    Amount
 Grants
 Construction wastewater system     $3,328
 Consolidated environmental program 550
 Total                              $3,878

 Dollars in thousands
                                    Amount
 Grants
 Construction wastewater system     $871
 Consolidated environmental program 243
 Total                              $1,114
 Indirect assistance
 Cleanup of PCB contaminated sites  $750
 Total Marshall Islands assistance  $1,864

Source: Prepared by GAO from EPA's data.

The Federal Emergency Management Agency (FEMA) provided assistance to the
Federated States of Micronesia and the Marshall Islands in the form of
disaster assistance, loans, and performance partnership agreements. During
fiscal years 1987 through 1999, FEMA provided over $45.2 million to the
Federated States of Micronesia and over $26.0 million to the Marshall
Islands, as shown in tables 18 and 19. Disaster assistance grants were
provided on a cost-share basis, with the foreign government responsible for
providing a percentage of the funding. When the foreign government is unable
to provide its share of the funding, FEMA may provide loans to cover that
share. The amount of assistance provided in a given year was largely
dependent on extreme weather events that may have taken place. FEMA also
provides annual grants not to exceed $50,000 to cover up to 50 percent of
the cost of improving, maintaining, and updating disaster assistance plans.

 Dollars in thousands
                                                                   Amount
 Grants
 Typhoons- public assistance, hazard mitigation, and individuals
 and families                                                      $18,766
 Severe drought- public assistance and hazard mitigation           1,613
 Disaster preparedness improvement                                 338
 Totala                                                            $20,716
 Loans
 Typhoon- public assistance and individuals and families           $1,859
 Other direct assistance
 Temporary housing payments                                        $15,600
 Indirect assistance
 Typhoons and severe drought- mission assignments, technical
 assistance, and inspection services                               $7,006
 Total Federated States of Micronesia assistancea                  $45,182

a Total does not add due to rounding.

 Dollars in thousands
                                                                   Amount
 Grants
 Severe drought- public assistance and hazard mitigation           $7,576
 Typhoons- public assistance, hazard mitigation, and individuals
 and families                                                      3,001
 Tropical storms- public assistance, hazard mitigation, and
 individuals and families                                          2,867
 High surf and wave action- public assistance and hazard mitigation1,906
                                                                   Amount
 Disaster preparedness improvement                                 $290
 Fire- public assistance                                           178
 Total                                                             $15,818
 Loans
 Typhoon and tropical storm- public assistance and individuals and
 families                                                          $699
 Other direct assistance
 Temporary housing payments                                        $1,889
 Indirect assistance
 Typhoons, tropical storms, high surf and wave action, and severe
 drought- mission assignments, technical assistance, and inspection$7,635
 services
 Total Marshall Islands assistance                                 $26,041

Source: Prepared by GAO from FEMA's data.

The Department of Health and Human Services (HHS) provided program and
technical assistance to the Federated States of Micronesia and the Marshall
Islands during fiscal years 1987 through 1999. A variety of agencies within
HHS provided the assistance, including the Centers for Disease Control and
Prevention, the Administration for Children and Families, the Health
Resources and Services Administration, and the Substance Abuse and Mental
Health Services Administration. The Social Security Association (SSA) also
provided assistance before it became an independent agency in 1995, however
because of data availability problems for this period, the agency reported
only partial information for the Federated States of Micronesia and no data
for the Marshall Islands. During fiscal years 1987 through 1999, the HHS
provided over $62.1 million to the Federated States of Micronesia and over
$34.5 million to the Marshall Islands, as shown in tables 20 and 21. HHS
provided funding for a variety of programs including Head Start, family
planning, childhood immunizations, and tuberculosis control.

 Dollars in thousands
                                                                  Amount
 Grants
 Head Start                                                       $12,763
 Social security- disability, retirement, and survivors insurance 12,735
 Maternal and child health programs and services                  7,048
 Supplemental security income                                     6,742
 Childhood immunization grants                                    5,821
 Substance abuse and mental health services                       5,487
 Preventive health and health services                            2,649
 Community health centers and services                            1,920
 Programs and services for aging                                  1,545
 Family planning services                                         1,260
 Community services and youth activity program                    992
 Tuberculosis control                                             911
 HIV/AIDS surveillance and prevention activities                  763
 Developmental disabilities- basic support and advocacy           398
 Diabetes control program                                         305
 Other                                                            785
 Total                                                            $62,124

 Dollars in thousands
                                                                  Amount
 Grants
 Head Start                                                       $17,626
 Maternal and child health programs and services                  3,869
 Community health centers and services and youth activity program 3,060
 Substance abuse and mental health services                       2,386
 Preventive health and health services                            1,751
 Childhood immunization grants                                    1,730
 HIV/AIDS surveillance and prevention activities                  998
 Family planning services                                         787
 Programs and services for aging                                  621
 CDC - Investigations Technical Assistance                        551
 Developmental disabilities- basic support and advocacy           469
 Tuberculosis control                                             357
 Diabetes control program                                         227
 Other                                                            139
 Total                                                            $34,572

Source: Prepared by GAO from HHS' data.

The Department of Housing and Urban Development (HUD) provided assistance
for infrastructure and utility development to the Federated States of
Micronesia and the Marshall Islands during a 3-year phase-out period that
began with the implementation of the Compact in fiscal year 1987. During
fiscal years 1987 through 1989, HUD provided over $1.2 million to the
Federated States of Micronesia and over $275,000 to the Marshall Islands, as
shown in tables 22 and 23. The assistance was provided for a variety of
purposes, including constructing water systems, renovating housing, and
building recreational facilities.

 Dollars in thousands
                                        Amount
 Grants
 Infrastructure and utility development $1,256

 Dollars in thousands
                                        Amount
 Grants
 Infrastructure and utility development $275

Source: Prepared by GAO from HUD's data.

The Institute of Museum and Library Services provided grants for library
services to the Federated States of Micronesia and the Marshall Islands in
fiscal years 1998 and 1999. The Institute provided about $111,000 to the
Federated States of Micronesia and about $94,000 to the Marshall Islands
during fiscal years 1998 and 1999, as shown in tables 24 and 25. The
Institute uses an application and review process administered by the Pacific
Resources for Education and Learning to allocate the funding. The Federated
States of Micronesia, the Marshall Islands, Palau, Guam, American Samoa, and
the Commonwealth of the Northern Marianas Islands all compete for the funds
derived from the allotments of the three Freely Associated States.

 Dollars in thousands
                      Amount
 Grants
 Library services     $111

 Dollars in thousands
                      Amount
 Grants
 Library services     $94

Source: Prepared by GAO from the Institute of Museum and Library Services'
data.

The Department of the Interior funded a majority of the assistance provided
to the Federated States of Micronesia and the Marshall
Islands--approximately 77 percent of the total financial assistance provided
to the Federated States of Micronesia and approximately 78 percent to the
Marshall Islands. During fiscal years 1987 through 1999, the Interior
provided approximately $1.2 billion to the Federated States of Micronesia
and about $864.2 million to the Marshall Islands, as shown in tables 26 and
27. Interior is required by the Compact to provide specified dollar amounts
in direct payments for various development efforts, such as communications,
marine surveillance, and energy production. In addition to direct payments,
Interior provided grant assistance for a variety of purposes, including
providing advisors and consultants, performing studies and surveys, and
conducting workshops and conferences.

 Dollars in thousands
                                                    Amount
 Direct payments
 Current                                            $405,000
 Capital                                            270,000
 Inflation                                          279,171
 Energy production                                  36,000
 Communication O&M                                  7,800
 Communication hardware                             6,000
 Yap impact                                         160
 Tax and trade compensation                         20,000
 Maritime surveillance/med. ref/scholarship         48,354
 Health and education block grant                   91,000
 Other construction                                 9,926
 Civic action teams                                 12,000
 Total                                              $1,185,411
 Grants
 Advisors/consultants                               $766
 Studies/survey/needs assessment                    589
 Comprehensive education needs                      379
 Newsletters/quarterlys                             368
 Training, workshops, conferences                   305
 Multiagency, antifraud project                     141
 National health care and health related activities 134
                                                    Amount
 Pohnpei utilities corporation                      110
 Accounting/computer interns and staff              91
 Office equipment                                   68
 Other                                              296
 Total                                              $3,247
 Total Federated States of Micronesia assistance    $1,188,658

 Dollars in thousands
                                                     Amount
 Direct Payments
 Current                                             $151,525
 Capital                                             146,775
 Inflation                                           125,460
 Kwajalein impact                                    24,700
 Energy production                                   24,000
 Communication O&M                                   3,900
 Communication hardware                              3,000
 Tax and trade compensation                          10,000
 Maritime surveillance/med. ref/scholarship          22,767
 Health and education block grant                    39,000
 Other construction                                  6,888
 Nuclear compensation                                302,940
 Total                                               $860,955
 Grants
 Rongelap resettlement and professional services     $1,025
 Training, workshops, conferences                    345
 Advisors, consultants                               341
 Historic preservation/tourism                       312
 Municipal management and administration improvement 198
 Water monitoring                                    124
 Canoes                                              113
 Study, survey, census                               108
 Privatization of public works                       100
                                                     Amount
 Reverse osmosis system for Ejit island              85
 Youth to Youth in Health                            79
 Investment development fund                         70
 Enewetak transshipment and fishing base             51
 Other                                               295
 Total                                               $3,247
 Total Marshall Islands assistance                   $864,202

Source: Prepared by GAO from Interior's data.

The Department of Labor provided assistance to the Federated States of
Micronesia and the Marshall Islands during fiscal years 1987 through 1999.
During that time, Labor provided over $18.5 million to the Federated States
of Micronesia and over $10.5 million to the Marshall Islands in grants for
adult and youth training programs, summer youth programs, dislocated
workers, and older Americans, as shown in tables 28 and 29.

 Dollars in thousands
                                                          Amount
 Grants
 JTPA II-A, Adult Training                                $10,890
 JTPA III, Dislocated Workers (formula and discretionary) 5,355
 JTPA-C, Youth Training                                   1,158
 JTPA II-B, Summer Youth                                  633
 Older Americans                                          504
 Totala                                                   $18,539

aTotal does not add due to rounding.

 Dollars in thousands
                                                          Amount
 Grants
 JTPA II-A, Adult Training                                $5,465
 JTPA III, Dislocated Workers (formula and discretionary) 3,929
 JTPA-C, Youth Training                                   695
 JTPA II-B, Summer Youth                                  267
 Older Americans                                          191
 Total                                                    $10,547

Source: Prepared by GAO from Labor's data.

Legal Services Corporation provided assistance to the Federated States of
Micronesia and the Marshall Islands during fiscal years 1987 through 1999.
During that time, the Corporation provided about $16 million in grants for
legal services to individuals living below the poverty level in the
Federated States of Micronesia, the Marshall Islands, the Commonwealth of
the Northern Marianas Islands, and the Republic of Palau. While Legal
Services Corporation was able to identify the total amount of funding
provided, it was not able to identify the amounts that went to the
individual countries of the area.

 Dollars in thousands
                       Amount
 Legal assistance     $15,997

Source: Prepared by GAO from Legal Services Corporation data.

The National Science Foundation (NSF) provided grant assistance to the
Federated States of Micronesia during fiscal years 1987 through 1999. A
total of two grants amounting to about $100,000 were provided to the College
of Micronesia for Internet access of the four branch campuses (see table
31).

 Dollars in thousands
                      Amount
 Grants
 Internet access      $100

Source: Prepared by GAO from NSF's data.

The U.S. Postal Service provides mail service in the Federated States of the
Federated States of Micronesia and the Republic of the Marshall Islands. The
Postal Service spent almost $5.9 million in transportation, administration,
and technical assistance costs during fiscal years 1987 through 1998, as
seen in tables 32 and 33. The Postal Service was reimbursed for the cost of
providing the mail service through the Department of the Interior. The
Postal Service was not able to provide data for fiscal year 1999 because the
billed costs to the Department of the Interior are currently undergoing
approval.

 Dollars in thousands
                            Amount
 Guaranteed federal service
 Postal services            $4,398

 Dollars in thousands
                            Amount
 Guaranteed federal service
 Postal services            $1,466

Source: Prepared by GAO from the Postal Service's data.

During fiscal years 1987 through 1999, the Small Business Administration
(SBA) provided 171 loans, totaling about $1.9 million to the Federated
States of Micronesia, and 242 loans, totaling about $1.6 million to the
Marshall Islands, as shown in tables 34 and 35. Most of the loans were
provided as subsidized direct physical disaster loans for disaster victims
to repair, replace, or rehabilitate property damaged or destroyed by a
declared disaster. Loans were made directly to the victims, which included
individual homeowners, renters, businesses of all sizes, and nonprofit
organizations. In addition, SBA provided a small number of economic injury
disaster loans to small businesses without credit available elsewhere.
Generally, loans were made at an interest rate of 4 percent or lower, with a
maximum 30-year term.

 Dollars in thousands
                                             Amount
 Loans
 Physical and economic injury disaster loans $1,878

 Dollars in thousands
                         Amount
 Loans
 Physical disaster loans $1,621

Source: Prepared by GAO from SBA's data.

The Social Security Administration (SSA) provided old age, survivors, and
disability insurance benefits to individuals in the Federated States of
Micronesia and the Marshall Islands since SSA separated from HHS to become
an independent agency in 1995. Some of the beneficiaries may include U.S.
citizens living in the Federated States of Micronesia and the Marshall
Islands. The SSA provided over $240,000 to the Federated States of
Micronesia and over $1.1 million to the Marshall Islands during fiscal years
1998 and 1999, as shown in tables 36 and 37. These amounts do not include
assistance payments for 1 month in fiscal year 1998 and 2 months in fiscal
year 1999 because SSA could not identify the amounts provided during those
months. In addition, SSA could not provide figures for fiscal years 1995
through 1997.

 Dollars in thousands
                                              Amount
 Grants
 Old age, survivors, and disability insurance $240

 Dollars in thousands
                                              Amount
 Grants
 Old age, survivors, and disability insurance $1,129

Source: Prepared by GAO from SSA's data.

The Department of State has provided the Foreign Service Institute
diplomatic training for the Federated States of Micronesia and the Marshall
Islands during fiscal years 1987 through 1999. Interior reimbursed the State
Department for the assistance provided−approximately $1.1 million for
each Island government, as shown in tables 38 and 39. In total, 54 students
from the Federated States of Micronesia and 53 students from the Marshall
Islands have attended the training.

 Dollars in thousands
                            Amount
 Guaranteed federal service
 Foreign service training   $1,079

 Dollars in thousands
                            Amount
 Guaranteed federal service
 Foreign service training   $1,097

Source: Prepared by GAO from Department of State's data.

The Department of Transportation's Federal Aviation Administration (FAA)
provided technical assistance to the Federated States of Micronesia and the
Marshall Islands during fiscal years 1987 through 1999 at a total cost of
about $4.8 million for the Federated States of Micronesia and about $0.9
million for the Marshall Islands, as shown in tables 40 and 41. Some of the
assistance was provided for the upgrade, modernization, and continuous
preventative maintenance and emergency repair of navigational aids and VHF
radio communications equipment, installation and maintenance of Aeronautical
Fixed Telecommunications flight data and weather reporting systems,
performance of flight inspections, control of enroute air traffic, onsight
aviation security training, and flight standards training. FAA personnel or
their contractors performed all assistance, and no funds were provided
directly to either government to pay for any project or program. Interior
reimbursed FAA for the cost of providing the assistance. The Coast Guard has
been unable to acquire records of its involvement in either the Federated
States of Micronesia or the Marshall Islands.

 Dollars in thousands
                            Amount
 Guaranteed federal service
 Technical assistance       $4,765

 Dollars in thousands
                            Amount
 Guaranteed federal service
 Technical assistance       $881

Source: Prepared by GAO from the Department of Transportation's data.

Comments From the Department of the Interior

Comments From the Department of State

Comments From the Republic of the Marshall Islands

Comments From the Federated States of Micronesia

(141368)

Table 1: Assistance Provided to the Federated States of
Micronesia by Agency, Fiscal Years 1987 Through 1999 14

Table 2: Types and Amounts of Assistance Provided to the
Federated States of Micronesia, Fiscal Years 1987 Through
1999 16

Table 3: Assistance and Compensation Provided to the Marshall
Islands, Fiscal Years 1987 Through 1999 16

Table 4: Assistance and Compensation Provided to the Marshall
Islands, Fiscal Years 1987 Through 1999 18

Table 5: Authorized Payments to the Marshall Islands for Effects of Nuclear
Testing, Prior to the Compact 20

Table 6: Section 211 Annual Economic Self-Sufficiency Funding
Provided by the United States 30

Table 7: Section 216 Direct Annual Payments 32

Table 8: USDA Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 33

Table 9: USDA's Assistance to the Marshall Islands, Fiscal Year 1987 Through
1999 34

Table 10: Department of Commerce's Assistance to the Federated
States of Micronesia, Fiscal Year 1987 Through 1999 36

Table 11: Department of Commerce's Assistance to the Marshall
Islands, Fiscal Year 1987 Through 1999 36

Table 12: Department of Defense's Assistance to the Federated
States of Micronesia, Fiscal Year 1995 Through 1999 37

Table 13: Department of Education's Assistance to the Federated
States of Micronesia, Fiscal Years 1987 Through 1999 37

Table 14: Department of Education's Assistance to the Marshall
slands, Fiscal Years 1987 Through 1999 38

Table 15: DOE's Assistance to the Marshall Islands, Fiscal Years
1987 Through 1999 40

Table 16: EPA's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 41

Table 17: EPA's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1999 41

Table 18: FEMA's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 42

Table 19: FEMA's Assistance to the Marshall Islands, Fiscal Years
1987 Through 1999 42

Table 20: HHS' Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 44

Table 21: HHS' Assistance to the Marshall Islands, Fiscal Years 1987 Through
1999 44

Table 22: HUD's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1989 45

Table 23: HUD's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1989 45

Table 24: Institute of Museum and Library Services Assistance to the
Federated States of Micronesia, Fiscal Years 1998 and 1999 46

Table 25: Institute of Museum and Library Services Assistance to the
Marshall Islands, Fiscal Years 1998 and 1999 46

Table 26: Interior's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 47

Table 27: Interior's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1999 48

Table 28: Labor's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 49

Table 29: Labor's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1999 50

Table 30: Legal Services Corporation Assistance, Fiscal Years 1987
Through 1999 50

Table 31: NSF's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 51

Table 32: U.S. Postal Service's Assistance to the Federated States of
Micronesia, Fiscal Years 1987 Through 1998 51

Table 33: U.S. Postal Service's Assistance to the Marshall Islands,
Fiscal Years 1987 Through 1998 52

Table 34: SBA's Assistance to the Federated States of Micronesia,
Fiscal Years 1987 Through 1999 52

Table 35: SBA's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1999 53

Table 36: SSA's Assistance to the Federated States of Micronesia,
Fiscal Years 1998 and 1999 53

Table 37: SSA's Assistance to the Marshall Islands, Fiscal Years 1998
and 1999 54

Table 38: Department of State Assistance to the Federated States of
Micronesia, Fiscal Years 1987 Through 1999 54

Table 39: Department of State Assistance to the Marshall Islands,
Fiscal Years 1987 Through 1999 54

Table 40: Department of Transportation's Assistance to the
Federated States of Micronesia, Fiscal Years 1987
Through 1999 55

Table 41: FAA's Assistance to the Marshall Islands, Fiscal Years 1987
Through 1999 55

Figure 1: Location of the Federated States of Micronesia and
the Marshall Islands 9
  

1. Population figure is from July 1999 estimates from the Central
Intelligence Agency's World Factbook 1999.

2. Population figure supplied by Marshall Islands based on recent census.

3. In addition to Micronesia and the Marshall Islands, the Trust Territory
included what are now the Republic of Palau and the Commonwealth of the
Northern Marianas Islands.

4. Marshall Islands officials said that this allows the United States to
veto any exercise of sovereignty by the Marshall Islands that the United
States determines unilaterally to be incompatible with U.S. security policy.

5. Payments are made quarterly. Appendix I provides additional information
on the Compact's financial provisions.

6. The capital account is to be used for, among other things, construction
or major repair of the capital infrastructure and selected public and
private sector projects.

7. The Office of Territorial and Insular Affairs is the predecessor to the
Office of Insular Affairs.

8. According to Marshall Islands officials, the people of Enewetak have
limited use of their atoll because of contamination in the northern islands
and environmental degradation that occurred as a result of cleanup
activities. They continue to pursue claims for their losses, according to
these officials.

9. According to Marshall Islands officials, the people of Utrik are deeply
concerned about health effects they attribute to living in a contaminated
environment.

10. This amount includes funding for the construction and delivery of the
Wetak II Motor Sailer.

11. P. L. 95-74, July 26, 1977, authorized $900,000 for a human development
project in the Marshall Islands that required that matching funds be
provided. This assistance is not included in the $42 milion because we were
unable to determine if the Marshall Islands received these funds.

12. U.S. Department of the Interior, Office of Insular Affairs, Compact of
Free Association, Marshall Islands and Federated States of Micronesia,
Estimated Payments 1987-2001. The table indicates estimated payments because
it includes future fiscal years, 2000 and 2001.

13. The capital account can generally be used for construction or repair of
infrastructure, debt service, and training activities while the current
account can be used to fund general operations.

14. The errors in these accounts appear to have resulted from a
misclassification of $6,540,000 between the accounts.

15. We did not verify the information provided by the Department of
Education.

16. Interior officials gave us a schedule showing that they had provided
about $40 million to these agencies but explained that their data were
incomplete because of a change in their computer systems in the first 2
years of the program.

17. The financial statements for Micronesia and the Marshall Islands
indicated that they were prepared on a modified accrual basis of accounting,
which also may cause difficulties in attempting to compare or cross-check
amounts. In addition, the reports contained qualifications related to
entities that were excluded from the financial statements, which would also
represent an impairment to comparing amounts.

18. The Compact allows for an extension of not more than 2 years if
negotiations have not been concluded by the end of the 15th year. Certain
affected financial assistance provisions would continue during the extension
at a level that is the average of the annual amounts granted during the
first 15 years, adjusted for inflation.

19. A portion of the funds provided to the Republic of the Marshall Islands
($7.1 million annually adjusted for inflation) is related to the U.S.
government's use of Kwajalein Atoll.

20. The Compact provides that these payments begin on the first anniversary
of the Compact and continue for 14 years.

21. A Pell Grant is a federal nonreimbursable grant awarded to undergraduate
students who have not earned a bachelor or professional degree.
*** End of document. ***