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U.S. Department of the Interior - Office of Insular Affairs
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President Proposes $ 426.3 Million In Fy 2007 For Assistance To U.S. Territories, Freely Associated States



EMBARGOED UNTIL: February 7, 2006 at 1 PM FOR FURTHER INFORMATION PLEASE CONTACT: Tom Bussanich 202-208-6971, Roger Stillwell 202-208-6974

(Washington, D.C.—President Bush has proposed a FY 2007 budget of $426.3 million to assist seven insular areas, including four U.S. territories and three island nations who enjoy the unique status of "free association" with the United States. The Department of the Interior's Office of Insular Affairs administers these program funds.

The total includes $347.1 in permanent funding that reflects long-term commitments made to the territories and the freely associated states as well as $79.2 million in current funding for assistance to the insular areas.

The President's current funding for the U.S. territories in FY 2007 includes $22.9 million to support the operations of the government of American Samoa; mandatory funding of $27.7 million for capital investment in the U.S. territories; and $8.2 million in technical assistance funding for the insular areas.

The 2007 request includes an increase of $103,000 to improve oversight of grants awarded under the Compacts of Free Association with each of the freely associated states, namely, the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau. This funding amount maintains the $500,000 provided by Congress in 2006 for the same purpose. The additional funding will be used to improve OIA's capacity to monitor and administer financial assistance and grants.

"OIA's top two priorities for the insular areas continue to be the promotion of private sector economic development and the effort to ensure that there is proper accountability for the use of Federal funds," said David B. Cohen, Deputy Assistant Secretary of the Interior for Insular Affairs. "When OIA funds critical infrastructure and invests in health and education, we are making the islands more attractive for private sector development. We also support private sector economic development more directly, through our ongoing programs to make businesses aware of opportunities that exist in the islands and through our efforts to identify ways in which the islands can improve their ability to attract investors. We will also continue to provide substantial assistance to the insular areas in their effort to improve their fiscal management capabilities."

The FY 2007 budget contains funding for the fourth year of the amended Compacts of Free Association with the Republic of the Marshall Islands and the Federated States of Micronesia. Under the amended Compacts, these freely associated states receive financial assistance over a 20-year period. The Republic of the Marshall Islands is scheduled to receive $63.9 million in grant assistance during fiscal year 2007, including a $9 million contribution to its trust fund. The Federated States of Micronesia will receive $97.6 million in grant assistance, including a $17.7 million contribution to its trust fund.

Fiscal year 2007 marks the twelfth year of the Compact of Free Association with the Republic of Palau. Under the provisions of its Compact, Palau will receive $10.7 million in direct FY 2007 assistance.

OIA's budget includes a provision under the amended Compact of Free Association for a $30 million fund to address the social impact of migrants from the freely associated states on certain U.S. territories and states. Under the current formula for FY 2007, the State of Hawaii will receive $10.6 million, Guam will receive $14.2 million, the Commonwealth of the Northern Mariana Islands will receive $5.2 million and American Samoa, which has very few migrants from the freely associated states, will receive $14,500.

The President's Budget request for FY 2007 continues to promote the Department's mission of assisting the insular areas to develop quality communities and economic self-sufficiency. Efforts for FY 2007 include continued implementation of improvements to financial management practices in the insular areas. Approaches include providing technical assistance to carry out specific plans for financial management improvements and to provide assistance to bolster and institutionalize improvements to local public auditors' offices. This is carried out through peer reviews, direct classroom training, membership and attendance at audit conferences and coordinated on-the-job training in the Department of the Interior's Inspector General's Office.

The Office of Insular Affairs is the Executive Branch's liaison organization with each of the U.S. territories other than Puerto Rico. OIA also administers the financial assistance to the three freely associated states under the Compacts of Free Association.