| (in millions of $) | FY 2015 Enacted* | FY 2016 Enacted | FY 2017 Request |
|---|---|---|---|
| Total Appropriation | 899.5 | 901.0 | 1,000.0 |
| Administrative Expenses Enacted/Request | 105.0 | 105.0 | 108.4 |
| Total Administrative Expenses | 109.3 | 105.0 | 108.4 |
| Human Capital | 49.8 | 54.4 | 59.4 |
| Training | 1.6 | 1.6 | 1.6 |
| Overseas Operations | 9.2 | 13.8 | 14.6 |
| Contracted Services | 14.2 | 12.7 | 11.1 |
| Information Technology | 18.5 | 12.8 | 10.7 |
| Rent, Leasehold & Improvements | 9.0 | 2.2 | 3.5 |
| Travel | 6.5 | 7.0 | 7.0 |
| Other Admin | 0.5 | 0.5 | 0.5 |
* The FY 2015 column Total Administrative Expenses adds to $109.3 million due to use of prior year funding primarily to support the move to the new Franklin Court headquarters.
MCC employs a lean and efficient staff both in Washington and in partner countries. For FY 2017, the President’s Budget requests $108.4 million for administrative expenses, a modest 3.2 percent increase from the administrative funding cap that has been in place for five fiscal years. The small increase is driven largely by: (1) MCC’s greater staffing needs, due in part to the pace of compact signings; and (2) the growing cost of overseas operational support charges, including higher State Department-mandated ICASS costs and CSCS expenses required to maintain staff overseas. A detailed breakout of cost areas exerting upward pressure on the administrative expenses budget are discussed below.
Human Capital
MCC plans to use $59.4 million in FY 2017 for human capital, a $5.0 million or 9.2 percent increase from the FY 2016 level. The increase will enable MCC to: (1) keep pace with in-country staffing needs based on anticipated compact and threshold program development; (2) maintain its performance-based compensation system; and (3) optimize staffing levels for effective compact and threshold development and oversight and efficient use of taxpayer dollars.
| Budgeted Full-Time Equivalents (FTE)* | FY 2015 | FY 2016 | FY 2017 |
|---|---|---|---|
| Washington, D.C. Headquarters | 300 | 315 | 330 |
| Overseas | 22 | 26 | 33 |
| Total | 322 | 341 | 363 |
* MCC estimates that up to 10 percent of the authorized positions above will be vacant at any given time due to turnover and budgets accordingly.
Overseas Operations
MCC plans to use $14.6 million for overseas operations in FY 2017. As discussed in the Human Capital section, MCC will support new in-country presences for 13 compacts and threshold programs during FY 2016 and FY 2017, driving much of the increase in Overseas Operations costs relative to the $9.2 million spent in FY 2015.
Starting-up such in-country presences means incurring costs for relocation travel, shipping, office furniture and equipment, residential furniture, official vehicles, and transfer allowances, among other expenses. As part of MCC’s post-compact closeout process, MCC will be winding down only two sites (Moldova and Senegal) during FY 2016 and at least one site (Jordan) during FY 2017. The closings also will entail certain one-time costs, such as relocation charges for travel and shipping.
While MCC maintains a small in-country footprint of U.S. direct hire staff and three locally engaged staff for compacts, the cost of maintaining this staff continues to face upward pressure. ICASS and CSCS costs to support overseas staff are expected to face upward pressure, in part, due to the Department of State’s need to maintain and operate newer embassy compounds. In FY 2015, the Department of State implemented its new Furniture and Appliance Pool Policy. Participation in overseas posts’ furniture pools face significantly higher furniture buy-in costs and subsequently higher ICASS charges for MCC. However, MCC has successfully argued to date for an exemption of the annual assessment fee because of its short-term (less than seven years) presence in-country.
ICASS, CSCS, and other fixed overseas expenses result in an average annual cost of approximately $500,000 to maintain an MCC employee overseas at a U.S. Embassy. Such costs include office space, housing, support services, locally engaged staff, educational allowances and other family costs, home leave, in-country travel, consultation travel, medical evacuations, information technology support, relocation, storage of household effects, and security. That said, the lean MCC in-country presence is essential to successfully overseeing its investments in partner countries.
Rent
In the first quarter of FY 2016, MCC successfully moved headquarters staff into the Franklin Court property. The full-year rent payments for the new property are estimated to reach approximately $6.2 million in FY 2018.
- In-Country Staffing: Of the $5.0 million increase, $0.9 million is to keep pace with the in-country staffing needs based on anticipated compact and threshold program development.
- The increase will support an uptick of MCC’s in-country presences that will begin in FY 2016. In FY 2017, the requested funding will support the standard lean MCC in-country footprint of U.S. direct hires in new compacts with Lesotho, Mongolia, Nepal, and the Philippines, and will continue the overseas presences that will begin in FY 2016 for new compacts with Benin, Liberia, Morocco, Tanzania, and Niger. The requested funding also will continue one in-country MCC staffer each for the threshold programs with Guatemala and Sierra Leone and will begin in-country staffing for the threshold programs with Sri Lanka and Togo by the end of FY 2017.
- The human capital budget must absorb not only the salaries and benefits of new in-country staff, but also State Department-determined pay differentials for cost-of-living and hardship.
- Performance-Based Compensation System: Of the $5.0 million increase, $1.6 million will support appropriate adjustments in MCC’s performance-based compensation system, which MCC operates in lieu of the General Schedule system with its guaranteed cost-of-living and step increases. MCC is a performance-based organization, and MCC employees do not receive automatic pay raises when the General Schedule for pay overseen by the Office of Personnel Management is increased, nor do MCC employees receive step increases based on years of service. Employees must work at MCC at least 90 days before the end of the fiscal year to be eligible to receive performance merit increases based solely on the prior year’s performance. Additionally, MCC provides a standard package of benefits that is commensurate with other U.S. Government entities. Based on prior years’ actuals, total benefits for FY 2017 are expected to cost an average of 29 percent of salary.
- Optimizing Staffing: Of the $5.0 million increase, $2.5 million will support an additional 15 headquarters full time equivalents (FTE) as part of MCC’s efforts to strengthen its workforce, optimize staffing levels for effective compact and threshold development and implementation oversight. This upward adjustment has become essential due to the onerous workload allocation across FTEs and contract support.
- Emerging Priorities Staffing: MCC will increase FTE levels to: (1) be able to produce compacts faster and with consistent high quality; (2) pursue regional investments; and (3) bolster MCC’s technical expertise in growth areas for the agency’s portfolio, such as the power sector, leveraging of private finance, and resilience to climate change. Currently these emerging mission priorities are undertaken by staff in addition to their normal workloads, which is not sustainable.
- FTE/Contractor Rebalancing: In FY 2016 and FY 2017, MCC will rebalance its FTE/contractor workforce composition by reducing contractor staff and increasing FTE counts by an equivalent amount. MCC’s contract support plays an important role in carrying out critical mission functions. However, MCC analysis has found that certain contractor support is acquired at a premium relative to the cost of comparable federal employees (including benefits costs). A higher FTE level will allow the agency to in-source contractors that perform enduring functions and replace them with less expensive competitively-hired federal employees. Contractor positions will be considered for in-sourcing based on the timing of existing contracts and the agency’s ability to on-board replacement staff.
- Making Use of Term-Limited Hiring: MCC’s continuously shifting portfolio in terms of both geographic presence and the types of projects undertaken necessitates relying on a flexible workforce with changing skill sets. Accordingly, to supplement the increased FTE levels, MCC will make use of term-limited hiring to efficiently provide the necessary flexibility to meet changing portfolio demands. Hiring new term-limited staff when appropriate and based on the availability of funding will enable MCC to cost-effectively address emerging mission needs while not locking the costs of permanent FTEs into the budget.