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OAS Financial Management Challenges and Program-Budget Implications

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SECRETARIAT FOR ADMINISTRATION AND FINANCEOctober 2008

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What is covered in this presentation?

I. General Assembly Mandates

II. Program - Budget Elements

III. Financial Challenges

IV. Bottom Line…

V. OAS Annual Management Cycle

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IGeneral Assembly Mandates

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Paragraph III.2.c.(iii)

■ “To request to the Permanent Council to consider, in a special session to be held prior to December 15, 2008:”

▪ The recommendations of the Board of External Auditors with regards to periodic quota adjustments.

▪ Reports of the General Secretariat:

▪ A comprehensive plan for implementing austerity measures and expenditure rationalization.

▪ Actual disbursement for statutory adjustments resulting from “smart parity.”

▪ Variations between actual and estimated statutory adjustments, and

▪ Suggestions to regularly address the financing of the variations between actual and estimated costs.

■ “ … and to convoke, prior to January 31, 2009, a special session of the General Assembly to adopt, if appropriate, those decisions that may be required.”

General Assembly Mandates AG/RES 1 (XXXVI-E/08)

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General Assembly Mandates AG/RES 1 (XXXVI-E/08) (Cont.)

Paragraph III.2.d

■ “To instruct the Permanent Council to conduct, beginning October 2008, a thorough review of all resources and expenditures of the Organization in the context of existing mandates, in order to prioritize and optimize the use of resources for future program-budgets, within the capacity of the member states to finance them, and to provide a report to the General Assembly at the special session to be held prior to January 31, 2009.”

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IIProgram-Budget Elements

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* Balance excludes Tax Reimbursement receivable of $3.6 million.

Program-Budget ElementsAudited Fund Balances as of December 31, 2007(in millions)

Regular Fund 15.8$

Voluntary Fund (FEMCIDI) 11.6

Specific Funds 70.1

Trust Funds

Retirement and Pension Fund 302.5 Medical Benefits 22.5 Leo Rowe 14.7

339.7

Revolving Funds (Internal Accounts) Administrative and Service Funds 4.1 Treasury Fund -

4.1 *

Fund Balance 441.3$

Funds

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Program-Budget Elements2008 Approved Program-Budget – Grouped by Theme(in millions)

Democracy and Governance

$24.2 15%M ultidimensional

Security $23.8 15%

Support for the M ember States

$23.0 15%

Administration $18.2 12%

P olicy Direction $8.9 6%

Human Rights $9.4 6%

Integral Development $50.2 31%

Regular Fund:Specific Funds: Voluntary Fund: Total:

$ 87.5$ 63.8$ 6.4$ 157.7

The total amount of Basic Infrastructure and Common Costs of $12.1 million from the Regular Fund was proportionally distributed into all areas based on personnel in the 2009 Approved P rogram-Budget.

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Program-Budget Elements2008 Approved Program-Budget – Grouped by Theme and Fund(in millions)

22.9

6.4

20.9

$50.2

7.1

17.1

$24.2

5.8

18.0

$23.8

21.4

1.7

$23.0

15.8

2.4

$18.2

6.0

3.4

$9.4

8.5

0.3

$8.9

0.0

10.0

20.0

30.0

40.0

50.0

60.0

IntegralDevelopment

Democracy andGovernance

MultidimensionalSecurity

Support for theMember States

Administration Human Rights Policy Direction

Regular Voluntary Specific

Regular Fund:Specific Fund: Voluntary Fund: Total:

$ 87.5$ 63.8$ 6.4$ 157.7

The total amount of Basic Infrastructure and Common Costs of $12.1 million from the Regular Fund was proportionally distributed into all areas based on personnel in the 2009 Approved Program-Budget . Support for the Member States is the most affected Area because it includes personnel in National Offices.

The total amount of Basic Infrastructure and Common Costs of $12.1 million from the Regular Fund was proportionally distributed into all areas based on personnel in the 2009 Approved P rogram-Budget.

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Program-Budget Elements 2008 Approved Program-Budget - Grouped by Theme and Object of Expenditure (in millions)

$13.2

$34.7

$2.3

$50.2

$5.4

$17.8

$1.0

$24.2

$6.7

$16.5

$0.6

$23.8

$14.8

$4.5

$3.7

$23.0

$14.1

$1.3$2.8

$18.2

$6.3

$1.5$1.1

$8.9

$4.6

$4.2

$0.6

$9.4

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

IntegralDevelopment

Democracy andGovernance

MultidimensionalSecurity

Support for theMember States

Administration Policy Direction Human Rights

Personnel Costs Other Program Costs Basic Infrastructure and Common Costs

Regular Fund:Specific Fund: Voluntary Fund: Total:

$ 87.5$ 63.8$ 6.4$ 157.7

The total amount of Basic Infrastructure and Common Costs of $12.1 million from the Regular Fund was proportionally distributed into all areas based on personnel in the 2009 Approved Program-Budget . Support for the Member States is the most affected Area because it includes personnel in National Offices.

The total amount of Basic Infrastructure and Common Costs of $12.1 million from the Regular Fund was proportionally distributed into all areas based on personnel in the 2009 Approved P rogram-Budget.

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Program-Budget Elements Theme composition by sub-program

Human RightsInter-American Court of Human RightsInter-American Commission on Human Rights and its Executive Secretariat

Integral DevelopmentPermanent Secretariat of the Inter-American Commission of Women (CIM)Secretariat of the Inter-American Committee on Ports (CIP)Panamerican Development FoundationExecutive Secretariat for Integral DevelopmentDepartment of Education and CultureDepartment of Trade and TourismDepartment of Sustainable DevelopmentDepartment of Social Development and EmploymentDepartment of Science and TechnologyDepartment of Human DevelopmentCIDI Mtgs., Ministeries & IA Committees Meetings

Multidimensional SecurityInter-American Defense BoardSecretariat for Multidimensional SecurityDepartment for the Coordination of Policies and ProgramsSecretariat of the Inter-American Drug Abuse Control Commission (CICAD)Secretariat for the Inter-American Committee against Terrorism (CICTE)Department of Public Security

Policy Direction

Office of the Secretary GeneralPress DepartmentDepartment of Planning, Control and EvaluationOffice of the Assistant Secretary GeneralOAS Administrative Tribunal and its SecretariatBoard of External AuditorsSecretariat for External RelationsDepartment of Communications and Institutional ImageDepartment of Relations with Observers, Multilateral Organizations, and the Host Country

Democracy and Governance

Secretariat for Legal AffairsDepartment of International Law Department of Legal CooperationDepartment of Special Legal ProgramsSecretariat for Political AffairsDepartment of Electoral Cooperation and ObservationDepartment of Sustainable Democracy and Special MissionsDepartment of State Modernization and Good Governance

Support for the Member StatesSummits SecretariatOffice of ProtocolOffice of the Secretariat to the General Assembly, the Meeting of Consultation, the Permanent Council , and Subsidiary OrgansDepartment of Conferences and MeetingsCoordinating Office for the Offices and Units of the General Secretariat in the Member StatesColumbus Memorial LibraryGeneral AssemblyOAS Unprogrammed MeetingsDepartment of Cultural Affairs

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Program-Budget Elements Theme composition by sub-program (cont.)

AdministrationDepartment of Legal ServicesOffice of the Inspector GeneralSecretariat for Administration and FinanceDepartment of Human ResourcesDepartment of Budgetary and Financial ServicesDepartment of Information and Technology ServicesOffice of Procurement ServicesOffice of General Services

Infrastructure and Common Costs

Equipment and Supplies - Computers Office Equipment and Supplies OASES System Building Management and Maintenance General Insurance Post Audits Recruitment and Transfers Terminations and Repatriations Home Leave Education and Language Allowance, Medical Examinations Pension for Retired Executives and Health and Life Insurance for Retired Employees Human Resources Development Contribution to the Staff Association Contribution to the AROAS

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Program-Budget Elements2009 Approved Program-Budget

Comparative summary of appropriations (by Fund):(in millions)

2009 Program-Budget percentage contribution by each Fund:(in millions)

* Revised estimates for Specific Funds as of October 1, 2008.

** Actual Pledges received in 2008.

Regular Fund90.156%

Voluntary Fund6.24%

Specific Funds65.040%

Regular Fund Specific Funds Voluntary Fund

2008 2009 Amount %

Regular Fund 87.5$ 90.1$ 2.6$ 3.0%Specific Funds 63.8 65.0 1.2 1.8%Voluntary Fund 6.4 6.2 (0.2) -3.1%Total 157.7$ 161.3$ 3.6$ 2.3%

Variance

***

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Program-Budget Elements2009 Regular Fund Approved Program-Budget – Grouped by Theme($ in millions)

Regular Fund Total: $90.1

Multidimensional Security

$5.7 6%

Democracy and Governance

$7.6 8%Support for the

Member States $17.9 20%

Administration $13.2 15%

Infrastructure and Common Costs

$12.2 14%

Human Rights $5.5 6%

Integral Development

$19.6 22%

Policy Direction $8.4 9%

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IIIFinancial Challenges

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Financial Challenges1999-2009 Program-Budgets. Approved levels in constant 1999 dollars (in millions)

$81.8

$78.0

$76.0 $76.0 $76.0 $76.6 $76.3

$87.5

$84.5

$87.0$88.3

$90.3

$92.7

$95.9

$99.0

$101.8

$104.4

$84.4

$81.5

$90.1

$107.2 *

$75

$80

$85

$90

$95

$100

$105

$110

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Nominal

Target value of 1999 Program-Budget had it been adjusted for inflation

* Projected

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Financial Challenges Quota Assesments 1999-2009. Approved levels in constant 1999 dollars (in millions)

$73.7 $73.7 $73.7 $73.7 $73.7 $73.7 $73.7 $73.7

$77.4 $77.4

$73.7

$77.9

$80.1$81.3

$83.2

$85.4

$88.3

$91.2

$93.7

$96.2

$78.6

$98.7*

$70

$75

$80

$85

$90

$95

$100

$105

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Nominal Target value of 1999 quota had it been adjusted for inflation* Projected

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Financial Challenges Approved Posts for the Regular Fund 1999 - 2009 Personnel Levels and Expenditures

(In millions)

$44.7 $44.9 $44.5$46.9 $46.4

$49.2 $49.5 $49.0

$53.2$55.8

$58.0* 587 587582 582 582

552

528

506

522

539

547*

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009460

480

500

520

540

560

580

600

Budgetary Evolution of Approved Posts Personnel Count

Annual Average (in thousands)

$76.1 $76.5 $76.5 $80.6 $79.7 $89.1 $93.8 $96.8 $101.9 $103.5 $106.0*

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* P rojected

*

*

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Financial Challenges Headcount as of June 30, 2008

M F T M F T M F T M F T

ALL PROGRAMS

Secretary General (SG) 1 - 1 - - - - - - 1 - 1

Assistant Secretary General (ASG) 1 - 1 - - - - - - 1 - 1

Senior Executive (D's) 9 5 14 - - - 1 - 1 10 5 15

Professional (P's) 154 157 311 55 54 109 16 18 34 225 229 454

General Services (G's) 75 131 206 1 8 9 8 25 33 84 164 248

240 293 533 56 62 118 25 43 68 321 398 719

Headcount as of December 31, 1996 657 84 Active CPRs (Natural) 429

Interns 103

Associates 21

1,272

Regular Fund TOTALSpecific FundsService, Revolving and Other Funds

Active CPRs (Natural)

33.7%

General Services (G's)

19.5%

Professional (P's)35.7%

Senior Executive (D's)1.2%

Associates1.6%

Secretary General (SG)0.1%

Assistant Secretary General

(ASG)0.1%

Interns8.1%

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Financial Challenges OAS Real Property Estimated Structural Repairs and Upgrades of OAS Properties

From “Existing Conditions Report”

■ Main Building $18.4 million■ Grounds $ 2.2■ Museum $ 3.2■ “La Casita” $ 0.6■ Administration Building $13.6

Budget Required $38.1

From “Structural Surveys”

■ Pink Palace (“Casa del Soldado”) $ 1.8 million■ General Secretariat Building Garage $ 0.6

Budget Required $ 2.4

TOTAL ESTIMATED STRUCTURAL REPAIRS: $40.5 million (in 2007 dollars)

MEDIUM TERM STRUCTURAL UPGRADES: $30.0 million

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Financial Challenges Reserve Subfund

2007 2008 2009Executed a) Approved b) Projected b)

I ncome 82.4 87.5 90.1

Expenses and Obligations 80.5 87.5 90.1

Operative Balance 1.9 0.0 0.0

Reserve Subfund Opening Balance (as of J anuary 1) 13.9 17.3 10.515.8 17.3 10.5

DecreasesRestricted for Fellowships (2006) (1.8) - - Restricted for Fellowships (2007) (2.2) - - Restricted for financing of Regular Fund per AG/RES. 1 (XXXII I -E/07)

(5.4) - -

Approved 2009 Program Budget per AG/RES. 1 (XXXVI-E/08) - (6.8) - 6.4 10.5 10.5

Quotas in Arrears as of December 31 10.9 - -

Reserve Subfund as of December 31 17.3 10.5 10.5

Note

a) 2007 Operative Results from Resrve Subfund.b) Assumes all income from 2008 and 2009 will be expended.

From J anuary 1 to December 31(in millions)

Projections for the Reserve Subfund

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IVBottom Line…

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Key Challenge: Closing the Regular Fund Budget Gap

2009

Approved Quota : + 12% Quota : + 9% Quota : + 3% Quota : 0%Ceiling : + 3% Ceiling : 0% Ceiling : - 5% Ceiling : - 8%

Sources of FinancingQuota Assessments 78.6$ 88.0$ 85.3$ 81.0$ 78.6$ Indirect Cost Recovery (ICR) 2.5 2.5 2.5 2.5 2.5 Administrative and Technical Support (FEMCIDI) 0.8 0.8 0.8 0.8 0.8

Other Income (rent, interest and miscellaneous) 1.5 1.5 1.5 1.5 1.5 Reserve Subfund 6.8 - - - -

b) b) b) b)

Total Budget 90.1$ 92.8$ 90.1$ 85.8$ 83.4$

Budget Gap (1.3) * (4.0) (8.3) (10.7)

* Statutory increases and inflationary pressures for 2009 estimated at about $4 million. A 3% increase will still require belt-tightening adjustments of $1.3 million in 2010. Challenge grows with the other scenarios.

Regular Fund Program-BudgetFinancing Scenarios for Quota and/ or Ceiling to Close Gap in 2010

(Figures in Millions)

Scenario I V

2010

Scenario I Scenario I I Scenario I I I

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VOAS Annual Management Cycle

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OAS Annual Management Cycle:Annual Audit, RF Program-Budget and Quarterly Reports aligned to CAAP’s Agenda

Jun 30

Mar 31 1st Quarterly Report

2nd Quarterly Report

Sep 303rd Quarterly Report

Dec 31Jan 1

ORGANIZATION OF AMERICAN STATES GENERAL SECRETARIAT

REPORT TO THE PERMANENT COUNCIL

ANNUAL AUDIT OF ACCOUNTS AND FINANCIAL STATEMENTS

For the years ended December 31, 2006 and 2005

2006

By the Board of External Auditors ADM

Publication of Annual Audit of Accounts

Phase 2SAF inputs budgetInformation

Phase 1Program-Budget formulation and planning

Phase 6Publication and distribution of the Budget by no later than 60 days after approval

Phase 5(Jun 1st – Jun 6th)Approval of Program-Budget by the GA

Phase 4Discussion and review by CAAP and recommendation to the Preparatory Committee 15 days prior to GA

Phase 3(Mar 3rd) Budget analysis, preparation and presentation 90 days prior to GA

Publication ofRF Program-

Budget

Year-round financial

planning and performance assessment

Preliminary Audit of Accounts(SEP to OCT)

Audit of Accounts(JAN to APR)

Report from the Board of External

Auditors(end of MAR)

Legend

Annual Audit

RF Program-Budget

Quarterly Reports

Annual Report from SG

ORGANIZATION OF AMERICAN STATES GENERAL SECRETARIAT (GS/OAS) 1889 F Street, N.W., Washington, D.C. 20006, USA (202) 458-3000 / www.oas.org

EOSAF/101-07 Original: English

October 30, 2007

OAS QUARTERLY RESOURCE

MANAGEMENT REPORT SEPTEMBER 30, 2007

An overview of the financial position of the General Secretariat for the 3rd quarter (July—September) of 2007,

and a status report on other management activities

October 2007

Secretariat for Administration and Finance (SAF)

ORGANIZATION OF AMERICAN STATES GENERAL SECRETARIAT (GS/OAS) 1889 F Street, N.W., Washington, D.C. 20006, USA (202) 458-3000 / www.oas.org

EOSAF/101-07 Original: English

October 30, 2007

OAS QUARTERLY RESOURCE

MANAGEMENT REPORT SEPTEMBER 30, 2007

An overview of the financial position of the General Secretariat for the 3rd quarter (July—September) of 2007,

and a status report on other management activities

October 2007

Secretariat for Administration and Finance (SAF)

ORGANIZATION OF AMERICAN STATES GENERAL SECRETARIAT (GS/OAS) 1889 F Street, N.W., Washington, D.C. 20006, USA (202) 458-3000 / www.oas.org

EOSAF/101-07 Original: English

October 30, 2007

OAS QUARTERLY RESOURCE

MANAGEMENT REPORT SEPTEMBER 30, 2007

An overview of the financial position of the General Secretariat for the 3rd quarter (July—September) of 2007,

and a status report on other management activities

October 2007

Secretariat for Administration and Finance (SAF)

Annual Report from Secretary General