The White House is slowly releasing its previous hold on State Department and U.S. Agency for International Development funds that lapse after Sept. 30, according to sources familiar with the move. But the agencies still could face difficulty spending it all before the deadline.
The Office of Management and Budget has required that the remaining funds in 10 accounts be “apportioned,” or parceled out, in one-quarter increments on the first four Sundays in September. Last month, the White House considered permanently canceling the funding, but President Donald Trump balked after pushback from top GOP officials on Capitol Hill as well as Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin.
The new apportionment is a change requested by State officials, according to a senior administration official. It provides more flexibility than an earlier apportionment allowing State and USAID to obligate roughly 2 percent of the remaining funds per day for the remainder of the fiscal year.
But sources said it was still unprecedented for the White House budget office to parcel out the funding like this. A Democratic aide said the apportionment appears “designed to frustrate the agencies’ ability to use the money before it expires.”
Trump in August declined to move ahead with the so-called funding rescissions, totaling roughly $4 billion at the time in unspent balances at State and USAID. Administration officials had been targeting unobligated balances in programs ranging from international peacekeeping operations to financing for foreign countries to purchase U.S. defense equipment and training, but not global health funding and a smattering of smaller programs.
The rationale of some White House officials involved in planning the prior rescissions request, as well as the temporary freeze and subsequent slow apportionment of the foreign aid funds, has been that State and USAID have had a tendency to spend on items deemed frivolous. Such moves have often come at the very end of the fiscal year to beat the Sept. 30 deadline, the argument goes.
A House Democratic aide estimated the remaining funds now total between $2 billion and $3 billion. If the money is not obligated by Sept. 30, it would be lost.
Democratic lawmakers generally opposed the earlier daily apportionment, saying it made it hard for agencies to spend money in an effective manner. “The daily apportionment is bad for the agencies because funding is almost always spent in larger quantities — thus this move effectively freezes the funding and creates an unofficial rescission,” a Democratic aide said.
The aide said a weekly apportionment might be slightly better than a daily apportionment, but still not good. “Typically, funds are apportioned either for the full year, or on a quarterly basis,” the aide said. Republican and Democratic staff said they are unaware of OMB apportioning funds on a daily or weekly basis in the past.
Democratic aides said they are “evaluating all options to ensure that appropriated foreign assistance funding is spent on schedule by the end of the fiscal year.” But it is unclear what if any action is open to them to oppose the apportionment at this late date on the calendar.
One aide said the action raises concerns about “unlawful impoundment,” or the withholding of funds that have been appropriated by Congress. The aide said the action also raises questions about “the parameters of OMB’s delegated apportionment authority. . . . We’re concerned that this is a test balloon of sorts, because we continue to see more actions taken by OMB even since” prior moves to hold back the funds’ release came to light last month.
On Aug. 3, OMB temporarily froze tens of billions of dollars in the 10 foreign aid accounts in preparation for a Trump request to cancel the funds. The agency lifted the freeze on Aug. 9, while also issuing the new apportionment order that allowed about 2 percent of the funds to be released for obligation each day to the end of the fiscal year.
Legal questions also arose last month over the president’s authority to issue the rescissions request, since the move would trigger a 45-day holding period during which time the targeted agencies couldn’t obligate the funds.
With the Sept. 30 end of fiscal year deadline falling within that window, contractors, nongovernmental foreign aid organizations and lawmakers on both sides of the aisle said the White House would be violating the 1974 law establishing presidential rescissions authority. That’s because the law stipulates Congress must pass legislation granting a president’s request to cancel the funds.
While Trump ultimately backed off from such a move, critics say the OMB apportionment move could have the same effect, although in more limited fashion.