Congressional Budget Justification (CBJ): Congressional Budget Justification, FY 2021 | February 2020

Administrative Expenses

Administrative Expenses
(in millions of $) FY 2019 Enacted FY 2020 Enacted FY 2021 Request
Total Appropriation/Request 905.0 905.0 800.0
  Total Administrative Expenses 105.0 105.0 112.0
    Human Capital 60.3 61.8 63.2
    Training 1.0 1.0 1.0
    Overseas Operations 8.0 8.2 11
    Contracted Services 7.2 5.8 7.4
    Information Technology 15.0 15.0 15.2
    Rent, Leasehold & Improvements 6.3 6.3 6.4
    Travel 6.8 6.5 7.4
    Other Administrative Expenses 0.4 0.4 0.4

MCC’s FY 2021 request for Administrative Expenses seeks an increase of $7 million over its FY 2020 enacted level of $105 million. MCC has received a flat-line administrative expense cap in the appropriations for the last nine years, with no adjustment for inflation, and the agency has worked to keep its administrative expenses in line with upward inflationary pressures, largely from existing personnel costs, rent, and overseas operating costs. The FY 2021 budget level of $112 million will provide MCC with additional resources to support the mission while balancing compounded inflationary pressures. In FY 2021, it is projected that MCC will be managing the oversight and development of roughly $7 billion in its program portfolio. As such, associated administrative support is needed to continue MCC’s high quality and effective programs. Additionally, the increased funding would provide for the additional requirements in support of concurrent regional integration compacts and MCC’s new accountable entity audit program; including fully staffing these programs, administrative support, travel, and overseas operational costs.

Human Capital

MCC’s flat-lined administrative expense budget has required MCC to absorb inflationary costs associated with existing staff within its baseline budget, including annual federal pay raises in order to remain competitive across the federal marketplace, overseas hardship pay, and cost of living inflationary pay adjustments, including federal benefits, common across the federal government. In addition, the human capital funding requested includes an increase to support full-time equivalents (FTEs ) occurring in FY 2019 and FY 2020 associated with MCC’s Accountable Entity Audit Program and MCC’s regional integration programs.

Accountable Entity Audit Program

After MCC establishes a partnership with a country, the partner country sets up a local accountable entity that is responsible for compact, threshold program, or grant implementation overseen by MCC. Due to MCC’s heavy reliance on financial reporting from accountable entities to produce its annual financial statements and Agency Financial Report (AFR), MCC must have reasonable assurance that accountable entity financial reporting is reliable and accurate. Sufficiently robust audits of that financial reporting by qualified Independent Public Accounting firms (IPA) are a central component of building that assurance. Oversight for those audits was previously performed by USAID OIG. In FY 2019, MCC established its own Accountable Entity Audit Program to assume audit oversight functions. The associated costs have been included in this budget request to relieve some of the funding pressures MCC faces within the current administrative expense cap.

Overseas Operations

MCC is planning to expend $11 million in FY 2021 to continue supporting overseas administrative operations, including locally-engaged staff salaries and benefits, rent, residential allowance, relocation expenses, travel, shipping, office and residential furniture, IT equipment, official vehicles, and International Cooperative Administrative Support Services (ICASS). Although MCC maintains a small footprint overseas, it continually faces the pressure associated with ICASS and Capital Security Cost-Sharing (CSCS) burden sharing and cost arrangements established by the Department of State to maintain and operate embassy compounds. Likewise, MCC anticipates growing overseas costs in FY 2021 related to the addition of FTEs to support regional compacts as well as an increasing number of compact and threshold programs in the pipeline expected to reach a stage of development requiring an overseas direct-hire presence. While MCC continuously reviews the costs related to overseas operations in order to maximize the use of funding, additional funding is required in FY 2021 to appropriately support these efforts.

Information Technology (IT)

Information technology plays an integral role in supporting agency-wide initiatives, including a knowledge management system, learning and performance management systems, and ongoing improvements towards management information systems in support of MCC’s country partners. Rising IT costs continue to be offset through reinvestment of any savings, allowing MCC to maintain quality IT service without large increases toward baseline resources. While IT support in the previous President’s Budget reflected a concerted effort to minimize the request level based on available funding from prior years, this budget request reflects the actual need for IT support in FY 2021 as well as cyber-security risk mitigation. MCC continues to leverage efficiencies in IT services and has consolidated IT service contracts over the past two fiscal years to reduce the duplicate overhead costs resulting from contracting with multiple service providers. MCC also continues to leverage government-wide umbrella agreements to staff its initiatives and implement IT upgrades, rather than administering multiple contracts or using employees for special limited projects.

Rent

The FY 2021 budget request reflects the nominal percentage increase within the occupancy agreement. As in the prior fiscal years, MCC continues to maximize the use of its headquarters space, proactively using space-planning technology for seat management as well as conference and meeting space requirements. This has enabled MCC to maintain an efficient space footprint.