THE DEPARTMENT OF THE INTERIOR OFFICE OF INSULAR AFFAIRS
Bush Administration Proposes FY 2005 for Islands
The Republic of the Marshall Islands to receive $61.1 million in grants including $7.6 million to Trust Fund
The President has proposed a budget of $384 million for insular area programs administered through the Office of Insular Affairs. This includes $305.1 million in permanent funding that reflects long-term commitments made to the insular areas that are guaranteed in law.
The President is proposing $78.9 million in current funding, which includes a $1.0 million increase to strengthen core performance measurement and program assessment activities, and $379,000 to expand brown tree snake research, control and rapid response activities.
"The OIA budget aims to fulfill U.S. responsibilities to the insular areas while promoting sound financial management practices in the insular governments, increasing economic development and self-sufficiency, and increasing federal responsiveness to the unique needs of island communities," said David Cohen, Deputy Assistant Secretary of the Interior for Insular Affairs.
The fiscal year 2005 budget reflects the recent enactment of amendments to the Compacts of Free Association for the Republic of the Marshall Islands and the Federated States of Micronesia that will continue guaranteed financial assistance for the next twenty years. The Compact amendments substantially increase accountability requirements and impose a cooperative system of performance review. The Republic of the Marshall Islands is scheduled to receive $61.1 million in grant assistance during fiscal year 2005 including a $7.6 million contribution to a trust fund that will provide a source of revenues upon conclusion of the twenty-year period of direct assistance. The Federated States of Micronesia will receive $93.2 million in grant assistance, including a $16.1 million contribution to their trust fund.
A major change in the amended Compact legislation is a provision for a $30 million fund to address the impact of the Compact on U.S. insular territories and states. Distribution of the fund is based on a census of Micronesians who have immigrated to the insular areas or states. Under the current formula, the State of Hawaii will receive $10.6 million in 2005, Guam will receive $14.2 million and the Commonwealth of the Northern Mariana Islands will receive $5.1 million.
Fiscal year 2005 marks the eleventh year of the Compact of Free Association with the Republic of Palau. Under the Compact provisions, Palau will receive a total of $12.8 million in direct fiscal year 2005 assistance.
Federal services provided to the freely associated states are estimated to cost $3.9 million in fiscal year 2005, an increase of $1.2 million over the previous year. The increase is due to rising costs of guaranteed postal services and additional costs associated with the conduct of annual audits in the freely associated states.
The original compact provided the freely associated states (FAS) governments with maximum flexibility in the use of hundreds of millions of dollars of federal financial assistance, without providing for adequate accountability, controls, and monitoring of federal funds. The original Compact also did not allow for a meaningful oversight role on the part of the federal government.
Legislation signed by President Bush in December 2003 modified the Compact dramatically to improve the accountability requirements on the part of the FAS governments and to increase on-site monitoring of the grant funding provided by the federal government. To fulfill these new requirements, OIA has established and staffed a Compact Office in the Pacific to monitor the grant funding provided to the FAS.
"Financial accountability is fundamental to the success of the insular governments in improving their economic situation," said Cohen. Internal assessments by OIA, the General Accounting Office, and the Department's Office of Inspector General have noted the linkage between poor accountability and poor economic improvement. The financial crises in both the U.S. Virgin Islands and American Samoa have led to the implementation of memoranda of agreement between the Department and the local governments, implementing mechanisms for improved financial management and long-term fiscal recovery plans.
These program increases ultimately will help the insular governments assume an increasing share of the financial responsibility for priority operational and capital needs. The proposed funding will be used by OIA to support integrated budget and performance
decision-making for capital, and technical assistance projects where small amounts of federal funding can be leveraged to increase economic development in the U.S. territories.
The amended Compacts also include $1 million in estimated costs for mandatory annual audits, $1.3 million for the Enewetak program, $300,000 for Judicial training, and FEMA reimbursement funding at $400,000 per year are also included through 2023.
Other than impact aid, funding for the U.S. territories is included in the Assistance to Territories appropriation. Total funding for assistance to territories for fiscal year 2005 is $72.9 million, a decrease of $2.8 million from fiscal year 2004. The difference is due primarily to one-time increases contained in the fiscal year 2004 appropriation for water system projects in the Commonwealth of the Northern Mariana Islands and special technical assistance needs.
American Samoa will continue to receive $23.1 million to support government operations and the budget will continue to include mandatory funding of $27.7 million for capital investment in the U.S. territories. Total technical assistance funding for the territories proposed for fiscal year 2005 is $15.6 million
The Office of Insular Affairs is the Executive Branch's liaison organization with the four U.S. insular areas. These include Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands and American Samoa. OIA also works with the three freely associated states: the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau.
