Foreign Relations: Better Accountability Needed Over U.S. Assistance to Micronesia and the Marshall Islands (Letter Report, 05/31/2000, GAO/RCED-00-67). Pursuant to a congressional request, GAO reviewed the federal assistance the United States provides to the Federated States of Micronesia and the Republic of the Marshall Islands, focusing on the: (1) cost to the United States of providing assistance to Micronesia and the Marshall Islands in accordance with the existing Compact of Free Association from fiscal year (FY) 1987 through FY 1999; (2) funds provided prior to the Compact (earlier than FY 1987) for the effects of nuclear weapons testing to what is now the Marshall Islands; and (3) accuracy and reliability of the data the Department of the Interior uses to monitor and supervise the federal assistance programs. GAO noted that: (1) since the implementation of the Compact of Free Association in 1986, the United States has provided more than $2.6 billion in financial and other assistance, of which more than $1.5 billion was provided to Micronesia and over $1.1 billion was provided to Marshall Islands during fiscal years 1987 through 1999; (2) Interior provided the majority of the assistance, about $2 billion, through quarterly payments to the islands' bank accounts to be used for such purposes as capital construction projects, energy production, communication capabilities, and current account costs, such as those for payroll, maintenance, and other governmental activities; (3) the remaining half billion dollars was provided by 19 federal agencies in the form of grants, loans, equipment, and technical assistance, such as weather forecasting support and airport training activities; (4) prior to the Compact, the United States provided about $250 million in funding and assistance to what is now Marshall Islands for the effects of the U.S. nuclear weapons testing program that took place in the Marshall Islands during the 1940s and 1950s; (5) the Department of Defense, the Department of Energy, and Interior provided direct payments to the Marshall Islands' governments and individuals, rehabilitation and resettlement services, and health care and monitoring of islanders exposed to radioactive fallout; (6) in gathering and verifying data on the cost of U.S. assistance provided to the Islands, GAO found inaccuracies and inconsistencies with the data being used by Interior to supervise and monitor federal assistance programs; (7) for example, Interior had a number of errors in the budget data it reported annually to Congress on direct payments to the Islands; (8) there were significant inconsistencies in Interior's data on the assistance provided by other agencies to the Islands and the data the agencies reported to GAO; (9) Interior had not used the annual audit information available from the Islands to corroborate its figures; and (10) collectively, therefore, Interior's ability to accurately report on assistance provided is called into question. --------------------------- Indexing Terms ----------------------------- REPORTNUM: RCED-00-67 TITLE: Foreign Relations: Better Accountability Needed Over U.S. Assistance to Micronesia and the Marshall Islands DATE: 05/31/2000 SUBJECT: Accountability Foreign economic assistance International relations Data integrity International agreements Foreign governments Financial management Internal controls Federal agency accounting systems IDENTIFIER: Compact of Free Association with Micronesia Marshall Islands Micronesia ****************************************************************** ** This file contains an ASCII representation of the text of a ** ** GAO Testimony. ** ** ** ** No attempt has been made to display graphic images, although ** ** figure captions are reproduced. Tables are included, but ** ** may not resemble those in the printed version. ** ** ** ** Please see the PDF (Portable Document Format) file, when ** ** available, for a complete electronic file of the printed ** ** document's contents. ** ** ** ****************************************************************** GAO/RCED-00-67 Appendix I: Financial Provisions of the Compact of Free Association 30 Appendix II: Agency Assistance Provided to the Federated States of Micronesia and the Marshall Islands 33 Appendix III: Comments From the Department of the Interior 56 Appendix IV: Comments From the Department of State 64 Appendix V: Comments From the Republic of the Marshall Islands 65 Appendix VI: Comments From the Federated States of Micronesia 78 Table 1: Assistance Provided to the Federated States of Micronesia by Agency, Fiscal Years 1987 Through 1999 14 Table 2: Types and Amounts of Assistance Provided to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 16 Table 3: Assistance and Compensation Provided to the Marshall Islands, Fiscal Years 1987 Through 1999 16 Table 4: Assistance and Compensation Provided to the Marshall Islands, Fiscal Years 1987 Through 1999 18 Table 5: Authorized Payments to the Marshall Islands for Effects of Nuclear Testing, Prior to the Compact 20 Table 6: Section 211 Annual Economic Self-Sufficiency Funding Provided by the United States 30 Table 7: Section 216 Direct Annual Payments 32 Table 8: USDA Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 33 Table 9: USDA's Assistance to the Marshall Islands, Fiscal Year 1987 Through 1999 34 Table 10: Department of Commerce's Assistance to the Federated States of Micronesia, Fiscal Year 1987 Through 1999 36 Table 11: Department of Commerce's Assistance to the Marshall Islands, Fiscal Year 1987 Through 1999 36 Table 12: Department of Defense's Assistance to the Federated States of Micronesia, Fiscal Year 1995 Through 1999 37 Table 13: Department of Education's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 37 Table 14: Department of Education's Assistance to the Marshall slands, Fiscal Years 1987 Through 1999 38 Table 15: DOE's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 40 Table 16: EPA's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 41 Table 17: EPA's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 41 Table 18: FEMA's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 42 Table 19: FEMA's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 42 Table 20: HHS' Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 44 Table 21: HHS' Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 44 Table 22: HUD's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1989 45 Table 23: HUD's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1989 45 Table 24: Institute of Museum and Library Services Assistance to the Federated States of Micronesia, Fiscal Years 1998 and 1999 46 Table 25: Institute of Museum and Library Services Assistance to the Marshall Islands, Fiscal Years 1998 and 1999 46 Table 26: Interior's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 47 Table 27: Interior's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 48 Table 28: Labor's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 49 Table 29: Labor's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 50 Table 30: Legal Services Corporation Assistance, Fiscal Years 1987 Through 1999 50 Table 31: NSF's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 51 Table 32: U.S. Postal Service's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1998 51 Table 33: U.S. Postal Service's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1998 52 Table 34: SBA's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 52 Table 35: SBA's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 53 Table 36: SSA's Assistance to the Federated States of Micronesia, Fiscal Years 1998 and 1999 53 Table 37: SSA's Assistance to the Marshall Islands, Fiscal Years 1998 and 1999 54 Table 38: Department of State Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 54 Table 39: Department of State Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 54 Table 40: Department of Transportation's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 55 Table 41: FAA's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 55 Figure 1: Location of the Federated States of Micronesia and the Marshall Islands 9 EPA Environmental Protection Agency FAA Federal Aviation Administration FEMA Federal Emergency Management Agency FNS Food and Nutrition Service HHS Health and Human Services HUD Housing and Urban Development NOAA National Oceanic Atmospheric Administration NSF National Science Foundation O&M Operation and Maintenance PCB polychlorinated biphenyl SBA Small Business Admoinistration SSA Social Security Administration USDA United States Department of Agriculture Resources, Community, and Economic Development Division B-284387 May 31, 2000 The Honorable Frank H. Murkowski Chairman, Committee on Energy and Natural Resources United States Senate The Honorable Doug Bereuter Chairman, Subcommittee on Asia and the Pacific Committee on International Relations House of Representatives The Honorable Larry E. Craig United States Senate In 1986, the U.S. government entered into a Compact of Free Association (Compact) with the Federated States of Micronesia and the Republic of the Marshall Islands. The Compact granted these former Trust Territory districts their independence and provided a framework for future governmental relations. The Compact provided for 15 years of direct U.S. payments made by the Department of the Interior to the bank accounts of the Federated States of Micronesia and the Republic of the Marshall Islands. The direct payments from Interior were to be used for such purposes as capital construction projects, energy production, communication capabilities, and recurring operational activities, such as infrastructure maintenance. The Compact and its enacting legislation also gave U.S. federal agencies the authority to provide other assistance such as grants, loans, equipment, and technical assistance. Under the Compact's enacting legislation and by executive order, Interior is designated as the agency responsible for supervising, coordinating, and monitoring the federal assistance programs being provided. Interior's Office of Insular Affairs is responsible for carrying out these responsibilities. In addition, the Compact provided for continuing financial compensation to the Republic of the Marshall Islands for effects from the tests of U.S. nuclear weapons in the islands during the 1940s and 1950s. In the fall of 1999, negotiations between the Department of State and the Islands began on the financial provisions of the Compact that expire in 2001. To assist the United States in its negotiations, you asked us to report on the (1) cost to the United States of providing assistance to the Federated States of Micronesia and to the Republic of the Marshall Islands in accordance with the existing Compact of Free Association from fiscal year 1987 through fiscal year 1999 and (2) funds provided prior to the Compact (earlier than fiscal year 1987) for the effects of nuclear weapons testing to what is now the Republic of the Marshall Islands. We are also providing information on the accuracy and reliability of the data Interior uses to monitor and supervise the federal assistance programs. In a separate review, you have asked us to report on the expenditures of Compact funds and accountability for those expenditures, the state of economic development and factors that affected development. To identify the cost of providing assistance to the Federated States of Micronesia and the Republic of the Marshall Islands, we obtained data from the Office of Insular Affairs to determine amounts provided in direct payments. We verified the amounts by examining the supporting documentation and identified errors needing correction. In addition, we obtained and examined the annual audits conducted in the Federated States of Micronesia and the Republic of the Marshall Islands. Furthermore, we obtained data from 19 U.S. federal agencies on the assistance provided in the form of direct payments, grants, loans, equipment, and technical assistance, which was the best information available, according to agency officials. To determine the amount of funding provided prior to the Compact for the effects of nuclear weapons testing, we identified direct payments to or for the affected people of the Marshall Islands, trust funds, health care and monitoring, agricultural support, land rehabilitation and resettlement, and radiological cleanup. Since the implementation of the Compact of Free Association in 1986, the United States has provided more than $2.6 billion in financial and other assistance, of which more than $1.5 billion was provided to the Federated States of Micronesia and over $1.1 billion was provided to the Republic of the Marshall Islands during fiscal years 1987 through 1999. The Department of the Interior provided the majority of the assistance, about $2 billion, through quarterly payments to the Islands' bank accounts to be used for such purposes as capital construction projects, energy production, communication capabilities, and current account costs, such as those for payroll, maintenance, and other general government activities. The remaining half billion dollars was provided by 19 federal agencies in the form of grants, loans, equipment, and technical assistance, such as weather forecasting support and airport training activities. Prior to the Compact, the United States provided about $250 million in funding and assistance to what is now the Republic of the Marshall Islands for the effects of the U.S. nuclear weapons testing program that took place in the islands during the 1940s and 1950s. The departments of Defense, Energy, and the Interior provided direct payments to the Islands' governments and individuals, rehabilitation and resettlement services, and health care and monitoring of islanders exposed to radioactive fallout. In gathering and verifying data on the cost of U.S. assistance provided to the Islands, we found inaccuracies and inconsistencies with the data being used by Interior to supervise and monitor federal assistance programs. For example, Interior had a number of errors in the budget data it reported annually to the Congress on direct payments made to the Islands. In addition, there were significant inconsistencies in Interior's data on the assistance provided by other agencies to the Islands and the data the agencies reported to us. Furthermore, Interior's budget data showed that it reimbursed over $124 million to other agencies for federal services provided to the Islands. However, the other agencies reported to us that they received about $53 million. After discussions with Interior about the $71 million difference, Interior was unable to provide documentation for about $27 million. Finally, Interior had not used the annual audit information available from the Islands to corroborate its figures. Collectively, therefore, Interior's ability to accurately report on assistance provided is called into question. We are making recommendations to improve the reliability of Interior's data and accountability for the assistance provided under the Compact. We presented a draft of this report to the Department of the Interior, the Department of State, the Federated States of Micronesia, and the Republic of the Marshall Islands for comment. Interior raised several concerns, especially regarding our presentation of its monitoring and coordination roles. The State Department concurred with our recommendation calling for greater accountability of the assistance provided under the Compact. The Federated States of Micronesia did not comment on the draft report. The Republic of the Marshall Islands raised concerns about how much of the reported assistance provided for the effects of nuclear weapons testing is actually compensation. Collectively, in response to the comments that we received, we modified our recommendations and made some modest changes to the report's presentation. The Federated States of Micronesia is a grouping of 607 small islands in the Western Pacific about 2,500 miles southwest of Hawaii, lying just above the Equator. The Federated States of Micronesia has a total land area of about 270 square miles but occupies more than 1 million square miles of the Pacific Ocean. The Federated States of Micronesia comprises four states--Chuuk, Pohnpei, Yap, and Kosrae--with an estimated total population of 131,500.1 The Republic of the Marshall Islands is made up of more than 1,200 islands, islets, and atolls, with a total land area of about 70 square miles. The Marshall Islands are located in the Central Pacific about 2,100 miles southwest of Hawaii and about 2,300 miles southeast of Japan. The Marshall Islands occupy about 750,000 square miles of the Pacific Ocean and have a total population of approximately 50,500.2 Islands The U.S. Department of Navy began civil administration of Micronesia and the Marshall Islands on July 18, 1947, as part of the United Nations Trust Territory of the Pacific Islands.3 This responsibility transferred to Interior in July 1951. During the time that the Federated States of Micronesia and the Marshall Islands were districts of the Trust Territory, the United States aided them by, among other things, building roads, hospitals, and schools and providing support for government operations. In 1986, the United States entered into a Compact of Free Association with the Federated States of Micronesia and the Republic of the Marshall Islands. With the implementation of the Compact, the Federated States of Micronesia and the Marshall Islands became Freely Associated States. As Freely Associated States, which were subsequently granted admission to the United Nations, the governments could engage in world affairs as sovereign states with very limited restraint and operate their own fiscal systems. Their citizens are not U.S. citizens, but they may live, work, and study in the United States as resident aliens. According to State Department officials, this is unique under U.S. immigration law. Additionally, by law there is no requirement that these persons possess either a valid passport or visa to enter the United States. Under the agreement, the United States is obligated to defend the Freely Associated States and has, among other things, obtained military operating rights and the right to continue using the U.S. missile range on Kwajalein--a Marshall Islands atoll--until 2016. The governments of the Marshall Islands, the Federated States of Micronesia, and the United States established that through 2001 these Freely Associated States would refrain from actions that the U.S. government determines, after consultation with the other governments, to be incompatible with its authority and responsibility for security and defense of the Freely Associated States.4 Executive Order 12569 requires Interior to provide direct payments deposited in the Islands' bank accounts.5 In addition, the Compact provides that Interior and other U.S. federal agencies may provide program assistance. This other assistance includes � direct program assistance, which includes grants and loans provided by individual federal agencies; � indirect program assistance, which includes goods and services provided by federal agencies; and � guaranteed federal services, which are provided by specifically identified agencies and reimbursed by Interior. The Compact's authorizing statute gave Interior the responsibility for dispensing the majority of the funds, most of which are provided in direct payments. Of the direct payments for promoting self-sufficiency, both the Federated States of Micronesia and the Marshall Islands must dedicate an average over 15 years of no less than 40 percent to their capital accounts.6 In addition, Interior is responsible for supervising, coordinating, and monitoring federal program assistance being provided by other U.S. federal agencies. According to the Office of Territorial and Insular Affairs' Administrative Manual, in 1987, the Secretary of the Interior determined that the most effective method for U.S. federal agencies to provide continuing federal programs to the Freely Associated States was to create a direct grant relationship between the other agencies and the Island governments.7 As a result, the principal role of Interior has been to provide technical assistance and respond to assistance issues identified by either the federal agencies or the Freely Associated States. The Marshall Islands was the site of 67 U.S. nuclear weapons tests in the 1940s and 1950s. In order to conduct these tests, the United States moved 167 people from Bikini Atoll and 142 people from Enewetak Atoll to other locations. In addition, during one of the tests, called BRAVO, the residents of Rongelap and Utrik were exposed to radioactive fallout and subsequently were moved from their homes. The people of Bikini began to return to their atoll in 1969 but were removed again in 1978 after it was found that they were being exposed to too much radiation. After the cleanup and reconstruction was completed in 1980, the people of Enewetak returned.8 The people of Rongelap were returned to their homes after about 3 years, but in 1985 they moved from their homeland after they expressed concern about their exposure to radiation. The people of Utrik were returned a few months after being removed.9 At this time, most of the people of Bikini and Rongelap are not living on their home islands. Since the time of the testing, the United States has compensated the people of the Marshall Islands for hardships they experienced, such as being moved from their homeland and health problems due to exposure from fallout. Fiscal Years 1987 Through 1999 According to data reported by federal agency officials, the United States provided over $2.6 billion in assistance and compensation to the Federated States of Micronesia and the Republic of the Marshall Islands during fiscal years 1987 through 1999. The officials said that over $1.5 billion in assistance was provided to the Federated States of Micronesia and over $1.1 billion was provided to the Marshall Islands, almost $303 million of which was provided as compensation for the effects of nuclear weapons testing. Micronesia The United States provided over $1.5 billion in assistance to the Federated States of Micronesia during fiscal years 1987 through 1999. As shown in table 1, Interior provided approximately $1.2 billion, or about 78 percent of the funding, over the 13-year period. The departments of Agriculture and Education reported that they provided assistance totaling about $82 million and $79 million, respectively, with each agency providing about 5 percent of all assistance provided to the Federated States of Micronesia during that time period. Fifteen other agencies provided the remaining assistance. Appendix II provides additional details on the assistance each agency provided. Dollars in thousands Agency or Department Total Percent of total Interior $1,188,658 77.6 Agriculture (USDA)a 81,873 5.3 Educationb 78,954 5.2 Health and Human Services (HHS) 62,124 4.1 Federal Emergency Management Agency (FEMA)a 45,182 2.9 Commerce/National Oceanic Atmospheric Administration (NOAA) 28,915 1.9 Labor 18,539 1.2 Defense 10,557 0.7 Transportation/Federal Aviation Administration (FAA) 4,765 0.3 U.S. Postal Servicec 4,398 0.3 Environmental Protection Agency (EPA) 3,878 0.3 Small Business Administration (SBA)a 1,878 0.1 Housing and Urban Development (HUD) 1,256 0.1 State 1,079 0.1 Social Security Administration (SSA)d 240 0.0 Institute of Museum and Library Services 111 0.0 National Science Foundation (NSF) 100 0.0 Total Federated States of Micronesia assistancee $1,532,507 100.0 aIncludes loans of $61.615 million from USDA, $1.859 million from FEMA, and $1.878 million from SBA. Does not include about $18 million in assistance from USDA provided to the Federated States of Micronesia, the Marshall Islands, and the Republic of Palau because USDA could not identify the amount of funding that went to each individual country. bDoes not include about $10.1 million that Education provided to the Federated States of Micronesia and the Marshall Islands for supplemental education opportunity grants, federal work study, and additional Pell grants, because it could not identify the amount of funding that went to each individual country. cThe Postal Service did not report data for fiscal year 1999. dThe amount reported for SSA includes only fiscal years 1998 and 1999 and excludes 3 months of data. Additional amounts are included in the total for HHS, where the SSA existed before becoming an independent agency in 1995. eIncludes direct payments, grants, loans, indirect assistance, and guaranteed federal services. Legal Services Corporation provided about $16 million in assistance to the Federated States of Micronesia, the Marshall Islands, the Commonwealth of the Northern Marianas Islands, and the Republic of Palau, but Legal Services could not identify the amount of funding that went to each individual country. Source: Prepared by GAO using data provided by agencies. Assistance provided by U.S. agencies was disbursed in a variety of ways: direct payments, direct program assistance, indirect program assistance, and guaranteed federal services. Interior provided almost $1.2 billion in direct payments. These funds were deposited into the Federated States of Micronesia's bank account and were to be used for such purposes as capital construction projects; energy production; communication capabilities; and recurring operational activities, including infrastructure maintenance. Direct program assistance was provided by agencies in the form of grants, loans, and payments. For example, HHS provided over 200 grants amounting to $62.1 million for such programs as childhood immunization, Head Start, substance abuse and mental health services, and tuberculosis control. Agency officials also reported providing a variety of indirect program assistance, such as technical support and equipment. Interior reimbursed four federal agencies--the Department of State, Transportation's FAA, Commerce's NOAA, and the U.S. Postal Service--for services provided. The reimbursements were for services such as Foreign Service training and weather forecasting support. Types of assistance and the reported amounts of funding provided during fiscal years 1987 through 1999 are shown in table 2. Dollars in thousands Type of assistance Amount Direct payments from Interior $1,185,411 Direct program assistance Grants 192,757 Loans 65,352 Other 15,600 Indirect program assistance 34,244 Guaranteed federal service 39,143 Total Federated States of Micronesia assistance $1,532,507 Source: Prepared by GAO using data provided by agencies. Republic of the Marshall Islands Agency officials reported that more than $1.1 billion in assistance and compensation was provided to the Marshall Islands during fiscal years 1987 through 1999. As shown in table 3, Interior provided about $864 million, or approximately 78 percent of the funding. Officials from five other agencies, including FEMA, USDA, HHS, and the departments of Education and Energy, reported providing between $25 million and $75 million in assistance. Ten other agencies provided the remaining assistance. Appendix II provides additional information on the assistance each agency reported. Dollars in thousands Agency or Department Total Percent of total Interior $864,202 77.7 Energy 75,425 6.8 USDAa 50,386 4.5 HHS 34,572 3.1 Educationb 31,924 2.9 FEMAa 26,041 2.3 Agency or Department Total Percent of total Commerce/NOAA 10,621 1.0 Labor 10,547 0.9 EPA 1,864 0.2 SBAa 1,621 0.1 U.S. Postal Servicec 1,466 0.1 SSAd 1,129 0.1 State 1,097 0.1 Transportation/FAA 881 0.1 HUD 275 0.0 Institute of Museum and Library Services 94 0.0 Total Marshall Islands assistancee $1,112,145 100.0 aIncludes loans of $37.366 million from USDA, $0.689 million FEMA, and $1.621 million from SBA. Does not include about $18 million in assistance provided to the Federated States of Micronesia, the Marshall Islands, and the Republic of Palau because USDA could not identify the amount of funding that went to each individual country. bDoes not include about $10.1 million that Education provided to the Federated States of Micronesia and the Marshall Islands for supplemental education opportunity grants, federal work study, and additional Pell grants because it could not identify the amount of funding that went to each individual country. cThe Postal Service did not report data for fiscal year 1999. dThe amount reported for the SSA includes only fiscal years 1998 and 1999 and excludes 3 months of data. eIncludes direct payments, grants, loans, indirect assistance, and guaranteed federal services. Legal Services Corporation provided about $16 million in assistance to the Federated States of Micronesia, the Marshall Islands, the Commonwealth of the Northern Marianas Islands, and the Republic of Palau, but Legal Services could not identify the amount of funding that went to each individual country. Source: Prepared by GAO using data provided by agencies. As they did with the Federated States of Micronesia, U.S. agencies provided assistance to the Marshall Islands through direct payments, direct program assistance, indirect program assistance, and guaranteed federal services. Interior provided almost $861 million in direct payments, which includes almost $303 million provided as compensation to the people of Bikini, Rongelap, Utrik, and Enewetak for the effects of nuclear weapons testing. In addition, federal agencies reported that they provided a total of over $137 million in direct program assistance in the form of grants, loans, and payments. For example, Education reported providing over 70 grants under 17 programs totaling about $27.3 million, which were used for such assistance as special education, federal work study, and school improvement. Agency officials also reported providing a variety of indirect assistance, such as technical assistance and equipment. The Department of State, FAA, NOAA, and the U.S. Postal Service reported providing federal services that were reimbursed by Interior. Types of assistance and the reported amounts of funding provided during fiscal years 1987 through 1999 are shown in table 4. Dollars in thousands Type of assistance Amount Direct payments from Interiora $860,955 Direct program assistance Grants 96,160 Loans 39,686 Other 1,889 Indirect program assistance 95,323 Guaranteed federal service 14,065 Nuclear testing compensationb 4,067 Total Marshall Islands assistance $1,112,145 aDirect payments from Interior include almost $303 million provided as compensation for the effects from nuclear weapons testing. bNuclear testing compensation was provided by USDA and does not include almost $303 million in direct payments made by Interior as compensation for the effects from nuclear weapons testing. Source: Prepared by GAO using data provided by agencies. Compact to the Marshall Islands In addition to compensation provided under the Compact for the 67 nuclear weapons tests on the Marshall Islands' Bikini and Enewetak atolls, the United States provided about $250 million prior to the Compact for the effects of nuclear weapons testing. The departments of Defense, Energy, and the Interior provided this funding and assistance in a variety of forms, including payments to affected people; trust funds; health care and monitoring; agricultural support; remediation, rehabilitation, and resettlement of land; and radiological cleanup. Defense provided about $134 million prior to the Compact for radiological cleanup, equipment, building construction, and logistical support. For example, on Enewetak Atoll, Defense planned the cleanup approach, removed debris and about 100,000 cubic yards of contaminated soils, and provided support for the construction of new homes and other facilities. The Department also constructed a disposal site in a bomb crater on Runit where contaminated materials and soils were mixed with cement, and a concrete cap was installed. During its work, Defense had about 8,000 workers involved in the cleanup. Prior to the Compact, Energy and its predecessor agencies (the Energy Research and Development Administration and the Atomic Energy Commission) provided about $52 million to what is now the Republic of the Marshall Islands, primarily in the form of radiological monitoring and health care. Energy's Brookhaven National Laboratory and Lawrence Livermore National Laboratory conducted radiological surveys of the area, periodically tested those exposed, and provided medical care to the people of the four affected atolls of Bikini, Rongelap, Utrik, and Enewetak. We were able to identify over $66 million that Interior provided prior to the Compact. Authorized payments to those affected totaled about $15 million, as shown in table 5. About 36 percent of these funds was to be paid directly to the affected people or to their communities, while the remaining 64 percent was placed in trust, and the individuals received payments from the interest. Interior also provided more than $9 million in supplemental food for Enewetak from 1980 through 1986.10 In addition, Interior funded rehabilitation and resettlement efforts totaling about $42 million.11 Fiscal year Purpose Amount 1956 Displacement assistance to the people of Bikini; $325,000 $25,000 authorized payment and $300,000 in trust Displacement assistance to the people of 1956 Enewetak; $25,000 authorized payment and $150,000 175,000 in trust 1964 Authorized payment to the people of Rongelap for 950,000 accidental exposure to nuclear fallout 1969 Authorized payment made to the people of 1,020,000 Enewetak, placed in trust 1975 Authorized payment for displacement hardship to 3,000,000 people of Bikini, placed in trust 1977 Authorized payment to Rongelap, Bikini, and Utrik 300,000 communities Authorized payment for displacement hardship to 1978 the people of Bikini, which increased the Bikini 3,000,000 trust fund 1978-1980 Authorized payments to the people of Rongelap and 1,700,000 Utrik 1979 Authorized payment to the people of Bikini 1,400,000 1982 Immediate authorized payment of $1 million to the 3,000,000 people of Bikini and $2 million placed in trust Totala $14,870,000 aThe total reflects direct payments and the amount placed in the trust funds. The total does not reflect any interest accrued on the accounts. Micronesia and the Marshall Islands Are Not Accurate nor Reliable While the Compact assigns Interior responsibility for coordinating and monitoring the federal assistance programs and activities provided to the Federated States of Micronesia and the Marshall Islands, we identified a number of inaccuracies and inconsistencies with Interior's data on the amount of assistance provided. For example, we found that errors or inconsistencies existed (1) in the data that Interior included in its annual budget justification submittals to the Congress on the direct payments made to the Federated States of Micronesia and the Marshall Islands; (2) between Interior's data on assistance provided by other agencies to the Islands and the data provided to us by those agencies; (3) in Interior's $124 million "Federal Services" account, which it uses to reimburse some of the other agencies for their assistance to the Islands; and (4) between Interior's records of direct payments and figures contained in the Federated States of Micronesia's and the Marshall Islands' audited financial statements. When we asked Interior for information on how much funding it provided to the Federated States of Micronesia and the Marshall Islands, officials responsible for the program directed us to a table in the United States Department of the Interior Budget Justification, Fiscal Year 2000.12 The table contains Interior's appropriation allocation of funds provided for fiscal years 1987 through 1999 and projected allocations for fiscal years 2000 and 2001. The table includes a breakdown of the amounts in various subaccounts, such as ones labeled current, capital, inflation, energy production, and communication hardware.13 To determine whether the amounts shown were accurate and whether they represented actual payments to the Federated States of Micronesia and the Marshall Islands, we obtained documents showing the amounts transferred into the respective bank accounts. Additionally, we examined entries made to Interior's budgetary accounting system to determine how budget allocations were made for these funds to various subaccounts. We found that the total payments made to each country were generally accurate, with the exception of those made in 3 years for the Federated States of Micronesia and 2 years for the Marshall Islands. The five errors resulted in an overstatement of $404,000 in the total reported assistance provided of about $2 billion. In addition, there were 13 incorrect amounts shown in the table's subaccounts. For example, in fiscal year 1997, the table showed the current account for the Marshall Islands at $5,460,000 and the capital account at $13,640,000. These amounts, according to the budgetary accounting system entries, should have been $12 million and $7.1 million, respectively.14 The accuracy of the subaccounts is important since the Compact requires that at least 40 percent of the direct payments provided to promote self-sufficiency be used for capital account purposes and the accounts provide information on how the Federated States of Micronesia and the Marshall Islands may have used the funds. Interior corrected the table after we identified the errors. As specified in the Compact's enacting legislation, Interior is responsible for coordinating and monitoring federal assistance programs and activities provided to the Federated States of Micronesia and the Marshall Islands. Interior officials provided us with a schedule they had prepared for the Department of State showing the dollar amount of assistance being provided by other agencies. This was the only document they had available that provided such information. In examining the schedule, we found that Interior's data disagreed with the information we had collected from the individual agencies. For example, Interior's schedule showed that the Department of Education provided the Marshall Islands $17.5 million while data we obtained from Education showed that it provided about $31.9 million.15 Interior officials told us that while they have attempted to get better information from the other agencies on the assistance they provide, there is no requirement for them to report to Interior. As a result, Interior has had limited success in obtaining such information from the other agencies. Interior established a "Federal Services" account for reimbursing the cost of assistance provided by four agencies--NOAA, the Department of State, FAA, and the U.S. Postal Service. Interior's fiscal year 2000 budget justification table indicates that Interior made payments to other agencies from this account of $124,432,000 from fiscal year 1987 through fiscal year 1999. However, the agencies that receive these reimbursements told us that they had received $53 million from Interior.16 In attempting to explain the $71 million difference, Interior identified (1) a $20 million reprogramming from this account in fiscal year 1997 that was not accounted for in the table (thus overstating the amount of assistance provided in that year by $20 million), (2) about $9 million that it reimbursed to the Federated States of Micronesia and the Marshall Islands for annual audits required by the Compact and completed by the accounting firm Deloitte & Touche, (3) about $11.6 million in funds that was obligated but not yet expended (some dating back to 1989--Interior is now examining these funds to determine if they should be maintained), and (4) a balance available of $3.9 million. Interior officials were unable to provide documentation for the remaining $26.5 million difference, explaining that their data for the first 2 years of the program were not readily available due to a change in the Department's computer systems. In addition, the officials explained that Interior had reimbursed the Department of Education for some of the assistance it provided in the early years of the Compact, but Interior was not able to identify the amount it reimbursed Education during those years. The Compact requires that the Federated States of Micronesia and the Marshall Islands conduct an annual audit of the assistance provided. We planned to use the information contained in these audits to cross-check information we obtained from Interior. However, this could not be accomplished because the Federated States of Micronesia and the Marshall Islands did not always allocate the direct funding provided in the same way as Interior records show.17 For example, in the most recent audit of the Federated States of Micronesia, the capital account is shown as receiving $18,048,768, while Interior shows that it provided $16,000,000 in funds. We found that Interior had not used the audit data available from the Islands to corroborate its figures. While Interior is not required to use the audit data to reconcile its figures, it is important that Interior understand how the Islands have allocated the funding in order to determine whether the Islands are in compliance with Compact requirements regarding the use of the funds. While we found errors and inconsistencies in Interior's data on the financial and program assistance provided to the Islands, we took steps to ensure that the data provided in this report are as accurate as possible. We verified and corrected Interior's data on direct payments made to the Islands. In addition, while we did not verify the program assistance provided by the 19 agencies, we reviewed the data, followed up with agency officials in instances where questions existed, and received agency confirmation on the accuracy of the amounts reported. Although Interior is identified as the agency responsible for providing a majority of the funding as well as coordinating and monitoring the assistance programs and activities provided to the Federated States of Micronesia and the Marshall Islands, it has not maintained reliable data on the amount of assistance provided. Numerous inconsistencies exist in Interior's own records as well as between Interior's records and those of both other U.S. federal agencies that provided assistance and figures in the annual audits conducted by Deloitte & Touche. These inconsistencies call into question Interior's ability to accurately report on assistance provided and the effectiveness of its coordination and monitoring responsibilities. This lack of reliable information could impact the Department of State as it proceeds with negotiations on provisions of the Compact that expire in 2001. In the event Interior retains monitoring and coordination oversight as a result of the current negotiations, we recommend that the Secretary of the Interior direct the Office of Insular Affairs to develop a system to obtain and maintain data on all U.S. financial and program assistance provided to the Federated States of Micronesia and the Republic of the Marshall Islands. Such a system might include making agreements with other agencies to regularly report assistance provided and making use of the annual audit reports from the Federated States of Micronesia and the Marshall Islands to help identify how funds are allocated. In addition, we recommend that the Secretary direct the Office of Insular Affairs to reconcile the amounts reimbursed to other agencies shown in the budget justification table to the amounts reported by the agencies that receive reimbursements from Interior. Given that negotiations are currently under way on provisions of the Compact of Free Association that expire in 2001, we recommend that the Secretary of State negotiate provisions that require that reliable data be maintained to ensure better accountability of the assistance provided. Requiring periodic reconciliation of accounts between Interior, the other agencies providing assistance, and the Islands is one means to achieve this objective. We provided a draft of this report to the Department of the Interior, the Department of State, the Republic of the Marshall Islands, and the Federated States of Micronesia for their review and comment. Interior's comments fall into two general categories. First, Interior said that while it has a coordinating and monitoring role with respect to grants from other agencies, it does not have the authority to affect the manner, amount, and use of these funds because the entire system has been designed to be decentralized. Our draft report did not suggest that Interior affect the manner, amount, or use of the grants and other program assistance provided by other agencies. However, Interior is identified in the Compact's enacting legislation and by executive order as the agency responsible for coordinating and monitoring federal programs being provided. In fulfilling that role, it is important that Interior know the type and amount of grants and other program assistance provided by other federal agencies. Second, Interior believes that we have misrepresented the financial information it provided. We disagree. Interior did not have accurate data on the direct grants it provided, the amounts other agencies provided, or the reimbursements it made to other agencies. Given that Interior is the agency responsible for providing oversight and monitoring of U.S. assistance to the Islands, we expected the agency to maintain accurate information on such assistance. Instead, to develop this information, we had to, among other things, examine Interior office files and request data from 19 agencies on the assistance that they provided to the Federated States of Micronesia and to the Marshall Islands and the amounts of the reimbursements they received from Interior. Finally, Interior also believes that the draft report recommendations make sense only if federal programs are extended in the next Compact term, if it is determined that one agency should account for all grant funding and if necessary legislation is enacted to create and enforce such a central grant authority. We agree with Interior and have modified the recommendations to make them applicable to the agency or agencies deemed responsible for monitoring and supervising assistance in the next term of the Compact. Interior's comments and our detailed response are in appendix III. Interior also provided technical clarifications, which we incorporated as appropriate. The Department of State concurred with our recommendation calling for greater accountability for assistance provided under the Compact. However, the agency did not concur with our recommendation regarding funds not included in Interior's budget. The agency said that new policies and procedures are being considered that would relieve Interior of the responsibility to monitor and supervise assistance not included in Interior's budget. As noted previously, we have modified our recommendation accordingly. The Department of State's comments are in appendix IV. State also provided technical clarifications, which we incorporated as appropriate. The Republic of the Marshall Islands said that it had serious concerns that the draft report misrepresented the unique history of U.S. financial assistance to the Islands and that some of the assistance provided also benefits the United States. We provided additional information to the report to put the discussion of Compact funding in an historical context. Most of the Republic of the Marshall Islands' comments however, focused on the use of the term "compensation." The Marshall Islands viewed our use of this term as being too broad and said that the only true form of compensation was the direct payments made to the people who were affected by nuclear weapons testing. We recognize that there can be differing views on what constitutes compensation. As a result, we have modified the report so that funding provided prior to the Compact in connection with the effects of nuclear weapons testing is no longer characterized as compensation. The Republic of the Marshall Islands' comments and our response are included as appendix V. The Federated States of Micronesia said that it did not have comments on the draft because they did not have access to Interior's or other U.S. federal agencies' accounting records. The officials pointed out that without the records, they were unable to respond to our findings. The Federated States of Micronesia's letter is in appendix VI. To obtain information on the cost to the United States in providing assistance to the Federated States of Micronesia and the Republic of the Marshall Islands, we reviewed the Compact of Free Association and subsequent agreements, applicable U.S. laws, reports of congressional hearings, and annual audit reports from the Federated States of Micronesia and the Marshall Islands. We also obtained data and interviewed officials from 19 federal agencies: the departments of the Interior, State, Agriculture, Commerce, Defense, Education, Energy, HHS, HUD, Labor, and Transportation as well as EPA, SSA, FEMA, the Institute of Museum and Library Services, Legal Services Corporation, NSF, the U.S. Postal Service, and SBA. We provided the financial data reported in appendix II to 17 agencies that confirmed the accuracy of the data. In addition, we met with representatives from the Federated States of Micronesia and the Marshall Islands. We performed several steps to verify the data we obtained from the agencies. We compared Interior figures for direct payments with records of payments made to the Federated States of Micronesia's and the Marshall Islands' bank accounts. Furthermore, to the extent possible, we compared figures for grant assistance that we obtained from various agencies with data in the Deloitte & Touche single audit reports from the Federated States of Micronesia and the Marshall Islands and discussed some of the differences with agency officials. In performing the audit work to determine the costs to the United States of providing assistance in accordance with the Compact, we were faced with several limitations. For instance, Department of Justice officials were not able to identify any individuals within the department who were knowledgeable of the subject matter. Likewise, the U.S. Coast Guard could not identify an individual who could provide us with information on the amount of assistance provided to the Federated States of Micronesia and the Marshall Islands. In addition, some agencies, for example, SSA and the Postal Service, were not able to provide the information for all years. Furthermore, USDA, Education, and the Legal Services Corporation were not always able to allocate the assistance provided to each individual country. We also identified discrepancies between data received from federal agencies and figures in the single audit reports from the Federated States of Micronesia and the Marshall Islands. We were not able to resolve all the differences. Furthermore, we were not able to verify all direct payments made through Interior because of missing records. Finally, while we identified loans provided by the agencies, we did not evaluate the value of any debts that were forgiven under authority of the Compact. To determine the amount of funding and assistance provided prior to the Compact for the effects of nuclear weapons testing to what is now the Republic of the Marshall Islands, we reviewed applicable U.S. laws and reports of congressional hearings. As part of this effort, we included such funding and assistance as direct payments to the affected people of the Marshall Islands, trust funds, health care and monitoring, agricultural support, land rehabilitation and resettlement, and radiological cleanup. In addition, we reviewed 68 reports from 1947 through 1986 by the Islands' High Commissioner and the Department of State on the activities of the Trust Territory of the Pacific Islands, and we examined selected archived microfilm records at the National Archives. We also interviewed departments of Defense, Energy, and Interior officials. The departments of Defense and Energy provided estimates of the amount of funding that they provided prior to the Compact but had limited documentation for their estimates. Interior did not provide an estimate. Agency officials said that they faced difficulties identifying funding amounts because all records had not been retained for the period in question, and personnel who were involved were no longer available. All dollar figures in this report are presented in nominal terms, with no adjustment for inflation. We were not able to present total assistance and compensation provided over the years in 1999 constant dollars, which would adjust for inflation, because the data available did not always identify the specific year in which the funds or assistance was provided. If we could have converted all figures to 1999 dollars, the amounts for total assistance and compensation provided would have been higher. We conducted our work from August 1999 through April 2000 in accordance with generally accepted government auditing standards. Copies of this report are being sent to the Honorable Bruce Babbitt, the Secretary of the Interior; the Honorable Madeleine K. Albright, the Secretary of State; His Excellency Leo A. Falcam, President of the Federated States of Micronesia; His Excellency Kessai Note, President of the Republic of the Marshall Islands; and other interested parties. We will also make copies available to others upon request. If you or your staff have any questions about this report, please call me at (202) 512-3841. Key contributors to this report were A. Don Cowan, Jessica Martinson, Barbara Scharl, and Glen Trochelman. (Ms.) Gary L. Jones Associate Director, Energy, Resources, and Science Issues Financial Provisions of the Compact of Free Association The Compact of Free Association contains a number of financial provisions, many of which will expire on October 1, 2001, its 15th year.18 These provisions involve direct financial payments for such items as economic self-sufficiency, U.S. military Civic Action Teams, energy production, operation and maintenance of communication facilities, and other assistance, such as surveillance and enforcement of maritime zones, health and medical assistance, and post-secondary education. The following provides additional information on the financial provisions in title II, articles I and II of the Compact. This section provides direct grant payments to the Federated States of Micronesia and the Republic of Marshall Islands to advance the economic self-sufficiency of their people.19 Of these funds, both the Federated States of Micronesia and the Marshall Islands must dedicate an average over 15 years of no less than 40 percent to the capital account. This account is to be used for purposes that include funding construction or major repair of capital infrastructure or for financing public and private sector projects identified in the 5-year economic development plan. Up to 60 percent of section 211 funds may be used for general government operations. Table 6 shows the assistance to be provided during the 15 years this provision is in effect. Dollars in millions The Federated States of Micronesia Marshall Islands First 5 Years $60 $26.1 Second 5 Years $51 $22.1 Last 5 Years $40 $19.1 The Compact provides the Federated States of Micronesia $1 million annually for 14 years, commencing on the first anniversary of the Compact, to defray costs associated with U.S. military Civic Action Teams.20 Civic Action Teams are comprised of such members as engineers, construction specialists, equipment operators, carpenters, masons, welders, mechanics, and plumbers. Similar funds were not provided to the Marshall Islands. This section of the Compact provides $1.9 million annually, not adjusted for inflation, to the Marshall Islands specifically to take into account the impact of the activities of the United States in the Kwajalein Atoll area. It also provided $160,000 in the first year of the Compact to the Federated States of Micronesia specifically to take into account the impact of the activities of the United States in the State of Yap. This section provides the Federated States of Micronesia $3 million and the Marshall Islands $2 million annually for 14 years, commencing on the first anniversary of the Compact, to help achieve increased self-sufficiency in energy production. This section provides the Federated States of Micronesia $600,000 and the Marshall Islands $300,000 annually for 15 years, commencing on the effective date of the Compact, for the operation and maintenance of communications systems. In addition, section 215 provided one-time payments of $6 million to the Federated States of Micronesia and $3 million to the Marshall Islands to acquire communication hardware during the first year. This section provides $5.369 million annually for 15 years, commencing on the effective date of the Compact, for a variety of purposes. These funds are to be split between the Federated States of Micronesia and the Marshall Islands in accordance with a distribution agreement between them. Table 7 shows the purposes and annual payments set forth in the Compact. Purpose of assistance Annual payments Surveillance and enforcement of maritime zones $890,000 Health and medical programs $1.791 million Post secondary education support $2.687 million The Compact also provided for a one-time payment of $1.333 million to help begin the surveillance and enforcement of maritime zones. This section provides inflation adjustments for each fiscal year for payments under section 211, 212, 214, and 215 as well as for extension payments required under section 231. This adjustment is based on the percent which equals two thirds of the percentage change in the U.S. Gross National Product Implicit Price Deflator, or 7 percent, whichever is less in any one year, using the beginning of the fiscal year 1981 as the base. The Department of the Interior estimates inflation adjustments provided over the life of the Compact will be about $485 million. This section provides the Federated States of Micronesia and the Republic of the Marshall Islands $10 million annually to be used for education and health care. Of this amount, the Federated States of Micronesia receives $7 million, while the Marshall Islands receives $3 million. Agency Assistance Provided to the Federated States of Micronesia and the Marshall Islands We identified 19 U.S. federal agencies that have provided assistance to the Federated States of Micronesia and the Marshall Islands. This assistance came in the form of direct payments, grants, loans, indirect assistance, and guaranteed federal services. The Department of Agriculture (USDA) provided assistance to the Federated States of Micronesia and the Marshall Islands through the Food and Nutrition Service (FNS); Rural Housing Service; Rural Utilities Service; Forest Service; Cooperative State Research, Education, and Extension Service; and Natural Resources Conservation Service. During fiscal years 1987 through 1999, USDA provided grants, loans, and indirect assistance of over $81.8 million to the Federated States of Micronesia and over $50.3 million to the Marshall Islands, as shown in tables 8 and 9. FNS provided food assistance, transitional assistance, bonus commodities, and nuclear compensation. Rural Housing Service funding was provided for community programs and home repair and Rural Utilities Service assistance was provided for water and waste systems and telecommunications improvement. Examples of assistance provided by the Forest Service include research grants, technical assistance, fire and forestry assistance, and fire fighting equipment. Examples of assistance provided by the Cooperative State Research, Education, and Extension Service include grants to reduce foodborne illness and waterborne disease. The Natural Resources Conservation Service provided financial assistance to the Federated States of Micronesia and technical assistance to both the Federated States of Micronesia and the Marshall Islands. Dollars in thousands Amount Grants Home repair and preservation $4,778 Water and wastewater systems 1,843 Forestry and fire assistance 1,065 Transitional assistance 161 Other 318 Totala $8,166 Amount Loans Telecommunications corporation $39,960 Home repair 16,039 Single-family housing 4,156 Loan servicing, nonsubsidized 964 School improvements 248 Community facilities loan 248 Total $61,616 Indirect assistance Food- disaster assistance $9,637 Estimate: technical assistance 1,779 Estimate: program management 483 Fire trucks and engines 144 Forestry- technical assistance, formal training, or meeting 50 Totala $12,092 Total Federated States of Micronesia assistance b $81,873 a Total does not add due to rounding. b Total does not include approximately $18 million of assistance provided through the Cooperative State Research, Education, and Extension Service to the Federated States of Micronesia, the Marshall Islands, and the Republic of Palau. The amount of funding provided to the individual countries was not available. Total does not add due to rounding. Source: Prepared by GAO from USDA's data. Dollars in thousands Amount Grants Home repair and preservation $1,265 Transitional assistance 459 Fire and forestry assistance 280 Reducing waterborne disease 24 Total $2,028 Loans Telecommunication authority $22,799 Marshalls Energy Company, Inc. 12,500 Amount Home repair 2,067 Total $37,366 Indirect assistance Food disaster assistance $6,365 Estimate: program management 230 Forestry- technical assistance, formal training, or meetings 106 Fire engines 84 Bonus commodities 76 Estimate: technical assistance 63 Total $6,924 Compensation Nuclear testing compensation $4,067 Total Marshall Islands assistancea $50,386 a Total does not include approximately $18 million of assistance provided through the Cooperative State Research, Education, and Extension Service to the Federated States of Micronesia, the Marshall Islands, and the Republic of Palau. The amount of funding provided to the individual countries was not available. Total does not add due to rounding. Source: Prepared by GAO from USDA's data. The National Oceanic Atmospheric Administration (NOAA), which oversees the National Weather Service, established upper air weather observation offices in the Federated States of Micronesia and the Marshall Islands in the mid-1950s. Since the implementation of the Compact, funds to support the weather offices were transferred to Interior, which now reimburses NOAA (see tables 10 and 11). The reimbursements include costs incurred by the Federated States of Micronesia and the Marshall Islands and the National Weather Service/Pacific Region to manage, supervise, operate, and maintain the offices. In addition to weather service support, NOAA provided a grant to the Federated States of Micronesia for snail reseeding that took place in the outer islands of Yap state. Dollars in thousands Amount Grants Snail reseeding in the outer islands of Yap state $14 Guaranteed federal service Weather service support $28,901 Total Federated States of Micronesia assistance $28,915 Dollars in thousands Amount Guaranteed federal service Weather service support $10,621 Source: Prepared by GAO from the Department of Commerce's data. The Department of Defense provided indirect assistance to the Federated States of Micronesia through U.S. military Civic Action Teams that assisted in national development projects. Costs for providing the assistance included per diem and travel, equipment, facilities, and maintenance. During fiscal years 1995 through 1999, the Department of Defense spent approximately $10.6 million to provide Civic Actions Teams to the Federated States of Micronesia, as shown in table 12. The Department provided teams prior to fiscal year 1995, but according to an agency official, records containing cost information for that period were destroyed in a hurricane. The Department did not report any assistance provided to the Marshall Islands in response to our request. Dollars in thousands Amount Indirect assistance Civic Action Teams $10,557 Source: Prepared by GAO from the Department of Defense's data. The Department of Education provided assistance to the Federated States of Micronesia and the Marshall Islands during fiscal years 1987 through 1999. During this period, Education provided over $78.9 million to the Federated States of Micronesia and over $31.9 million to the Marshall Islands in both grants and indirect assistance, as shown in tables 13 and 14. The Department of Education provided grant funding for a variety of programs, including adult education, honors scholarships, client assistance, special education, vocational education, federal work study, and Pell Grants.21 In addition, technical assistance and research, provided by Pacific Resources for Education and Learning, was funded by the Department of Education. Dollars in thousands Amount Grants Pell Grantsa $19,282 Special education grants to states and preschool grants 23,729 Chapter 1/title I grants to local educational agencies 9,058 Freely Associated States- education grant program 8,345 School improvement state grants 3,510 Amount Vocational education 3,235 Territorial teacher training 1,367 Vocational rehabilitation state grants 1,350 Federal work-studyb 1,122 Bilingual education 1,034 Goals 2000 969 Adult education 666 Supplemental educational opportunity grantsc 486 Byrd honors scholarships 182 Client assistance 30 Total $74,365 Indirect assistance Technical assistance and research $4,589 Total Federated States of Micronesia assistance $78,954 a The Department of Education provided an additional $6 million for Pell Grants to the Federated States of Micronesia and the Marshall Islands from fiscal year 1987 through 1991. The Department was not able to report the amount by country. According to Education, these costs were reimbursed by Interior. b Education provided an additional $2 million for federal work study to the Federated States of Micronesia and the Marshall Islands from fiscal years 1987 through 1991. The Department was not able to report the amount by country. According to Education, the costs were reimbursed by Interior. c The Department of Education provided an additional $2.1 million for supplemental educational opportunity grants to the Federated States of Micronesia and the Marshall Islands between fiscal years 1987 through 1991. The Department was not able to report the amount by country. According to Education, the costs were reimbursed by Interior. Source: Prepared by GAO from the Department of Education's data. Dollars in thousands Amount Grants Pell Grantsa $6,562 Special education grants to states and preschool grants 9,484 Chapter 1/title I grants to local educational agencies 3,513 Freely Associated States grant program 2,424 School improvement state grants 1,287 Amount Territorial teacher training 839 Adult education 774 Vocational education 715 Goals 2000 487 Upward Bound 381 Federal work studyb 350 Vocational rehabilitation state grants 161 Supplemental educational opportunity grantsc 149 Byrd honors scholarship 117 Bilingual education 75 Client assistance 17 Total $27,335 Indirect assistance Technical assistance and research $4,589 Total Marshall Islands assistance $31,924 a The Department of Education provided an additional $6 million for Pell Grants to the Federated States of Micronesia and the Marshall Islands from fiscal year 1987 through 1991. The Department was not able to report the amount by country. According to Education, these costs were reimbursed by Interior. b Education provided an additional $2 million for federal work study to the Federated States of Micronesia and the Marshall Islands from fiscal years 1987 through 1991. The Department was not able to report the amount by country. According to Education, the costs were reimbursed by Interior. c The Department of Education provided an additional $2.1 million for supplemental educational opportunity grants to the Federated States of Micronesia and the Marshall Islands between fiscal years 1987 through 1991. The Department was not able to report the amount by country. According to Education, the costs were reimbursed by Interior. Source: Prepared by GAO from the Department of Education's data. The Department of Energy (DOE) provided indirect assistance to the Marshall Islands in the form of medical care and environmental monitoring and research. DOE provided over $75 million to the Marshall Islands from fiscal year 1987 through 1999, as shown in table 15. The assistance included mandated health care to approximately 230 people, environmental monitoring services, and operational support, such as procuring equipment and transporting individuals. DOE officials said that they did not provide assistance to the Federated States of Micronesia during this time period. Dollars in thousands Amount Indirect assistance Special medical care and radiological monitoring $73,639 Medical and environmental monitoring equipment 1,786 Total $75,425 Source: Prepared by GAO from DOE's data. The Environmental Protection Agency (EPA) provided direct grant assistance and indirect assistance to both the Federated States of Micronesia and the Marshall Islands during the Compact time period, totaling about $5.7 million (see tables 16 and 17). EPA provided grants for wastewater construction and environmental program assistance to the Federated States of Micronesia and the Marshall Islands during a 3-year phaseout beginning with the implementation of the Compact in 1987. In addition to grants, EPA provided cleanup of hazardous chemical sites in the Marshall Islands during the early 1990s at an approximate cost of $750,000. Furthermore, EPA's region IX (in San Francisco) provided, and continues to provide, ad hoc technical assistance to citizens of the Federated States of Micronesia and the Marshall Islands in response to requests for information received via telephone or e-mail. EPA provided additional indirect assistance through a 1994 preliminary assessment of polychlorinated biphenyl (PCB) contamination in the Federated States of Micronesia and the preparation of a conceptual solid waste management plan in the Marshall Islands in 1996. According to an agency official, the costs of performing the PCB assessment and the waste management plan were relatively small, consisting of the travel cost and 3 weeks time for three individuals. Dollars in thousands Amount Grants Construction wastewater system $3,328 Consolidated environmental program 550 Total $3,878 Dollars in thousands Amount Grants Construction wastewater system $871 Consolidated environmental program 243 Total $1,114 Indirect assistance Cleanup of PCB contaminated sites $750 Total Marshall Islands assistance $1,864 Source: Prepared by GAO from EPA's data. The Federal Emergency Management Agency (FEMA) provided assistance to the Federated States of Micronesia and the Marshall Islands in the form of disaster assistance, loans, and performance partnership agreements. During fiscal years 1987 through 1999, FEMA provided over $45.2 million to the Federated States of Micronesia and over $26.0 million to the Marshall Islands, as shown in tables 18 and 19. Disaster assistance grants were provided on a cost-share basis, with the foreign government responsible for providing a percentage of the funding. When the foreign government is unable to provide its share of the funding, FEMA may provide loans to cover that share. The amount of assistance provided in a given year was largely dependent on extreme weather events that may have taken place. FEMA also provides annual grants not to exceed $50,000 to cover up to 50 percent of the cost of improving, maintaining, and updating disaster assistance plans. Dollars in thousands Amount Grants Typhoons- public assistance, hazard mitigation, and individuals and families $18,766 Severe drought- public assistance and hazard mitigation 1,613 Disaster preparedness improvement 338 Totala $20,716 Loans Typhoon- public assistance and individuals and families $1,859 Other direct assistance Temporary housing payments $15,600 Indirect assistance Typhoons and severe drought- mission assignments, technical assistance, and inspection services $7,006 Total Federated States of Micronesia assistancea $45,182 a Total does not add due to rounding. Dollars in thousands Amount Grants Severe drought- public assistance and hazard mitigation $7,576 Typhoons- public assistance, hazard mitigation, and individuals and families 3,001 Tropical storms- public assistance, hazard mitigation, and individuals and families 2,867 High surf and wave action- public assistance and hazard mitigation1,906 Amount Disaster preparedness improvement $290 Fire- public assistance 178 Total $15,818 Loans Typhoon and tropical storm- public assistance and individuals and families $699 Other direct assistance Temporary housing payments $1,889 Indirect assistance Typhoons, tropical storms, high surf and wave action, and severe drought- mission assignments, technical assistance, and inspection$7,635 services Total Marshall Islands assistance $26,041 Source: Prepared by GAO from FEMA's data. The Department of Health and Human Services (HHS) provided program and technical assistance to the Federated States of Micronesia and the Marshall Islands during fiscal years 1987 through 1999. A variety of agencies within HHS provided the assistance, including the Centers for Disease Control and Prevention, the Administration for Children and Families, the Health Resources and Services Administration, and the Substance Abuse and Mental Health Services Administration. The Social Security Association (SSA) also provided assistance before it became an independent agency in 1995, however because of data availability problems for this period, the agency reported only partial information for the Federated States of Micronesia and no data for the Marshall Islands. During fiscal years 1987 through 1999, the HHS provided over $62.1 million to the Federated States of Micronesia and over $34.5 million to the Marshall Islands, as shown in tables 20 and 21. HHS provided funding for a variety of programs including Head Start, family planning, childhood immunizations, and tuberculosis control. Dollars in thousands Amount Grants Head Start $12,763 Social security- disability, retirement, and survivors insurance 12,735 Maternal and child health programs and services 7,048 Supplemental security income 6,742 Childhood immunization grants 5,821 Substance abuse and mental health services 5,487 Preventive health and health services 2,649 Community health centers and services 1,920 Programs and services for aging 1,545 Family planning services 1,260 Community services and youth activity program 992 Tuberculosis control 911 HIV/AIDS surveillance and prevention activities 763 Developmental disabilities- basic support and advocacy 398 Diabetes control program 305 Other 785 Total $62,124 Dollars in thousands Amount Grants Head Start $17,626 Maternal and child health programs and services 3,869 Community health centers and services and youth activity program 3,060 Substance abuse and mental health services 2,386 Preventive health and health services 1,751 Childhood immunization grants 1,730 HIV/AIDS surveillance and prevention activities 998 Family planning services 787 Programs and services for aging 621 CDC - Investigations Technical Assistance 551 Developmental disabilities- basic support and advocacy 469 Tuberculosis control 357 Diabetes control program 227 Other 139 Total $34,572 Source: Prepared by GAO from HHS' data. The Department of Housing and Urban Development (HUD) provided assistance for infrastructure and utility development to the Federated States of Micronesia and the Marshall Islands during a 3-year phase-out period that began with the implementation of the Compact in fiscal year 1987. During fiscal years 1987 through 1989, HUD provided over $1.2 million to the Federated States of Micronesia and over $275,000 to the Marshall Islands, as shown in tables 22 and 23. The assistance was provided for a variety of purposes, including constructing water systems, renovating housing, and building recreational facilities. Dollars in thousands Amount Grants Infrastructure and utility development $1,256 Dollars in thousands Amount Grants Infrastructure and utility development $275 Source: Prepared by GAO from HUD's data. The Institute of Museum and Library Services provided grants for library services to the Federated States of Micronesia and the Marshall Islands in fiscal years 1998 and 1999. The Institute provided about $111,000 to the Federated States of Micronesia and about $94,000 to the Marshall Islands during fiscal years 1998 and 1999, as shown in tables 24 and 25. The Institute uses an application and review process administered by the Pacific Resources for Education and Learning to allocate the funding. The Federated States of Micronesia, the Marshall Islands, Palau, Guam, American Samoa, and the Commonwealth of the Northern Marianas Islands all compete for the funds derived from the allotments of the three Freely Associated States. Dollars in thousands Amount Grants Library services $111 Dollars in thousands Amount Grants Library services $94 Source: Prepared by GAO from the Institute of Museum and Library Services' data. The Department of the Interior funded a majority of the assistance provided to the Federated States of Micronesia and the Marshall Islands--approximately 77 percent of the total financial assistance provided to the Federated States of Micronesia and approximately 78 percent to the Marshall Islands. During fiscal years 1987 through 1999, the Interior provided approximately $1.2 billion to the Federated States of Micronesia and about $864.2 million to the Marshall Islands, as shown in tables 26 and 27. Interior is required by the Compact to provide specified dollar amounts in direct payments for various development efforts, such as communications, marine surveillance, and energy production. In addition to direct payments, Interior provided grant assistance for a variety of purposes, including providing advisors and consultants, performing studies and surveys, and conducting workshops and conferences. Dollars in thousands Amount Direct payments Current $405,000 Capital 270,000 Inflation 279,171 Energy production 36,000 Communication O&M 7,800 Communication hardware 6,000 Yap impact 160 Tax and trade compensation 20,000 Maritime surveillance/med. ref/scholarship 48,354 Health and education block grant 91,000 Other construction 9,926 Civic action teams 12,000 Total $1,185,411 Grants Advisors/consultants $766 Studies/survey/needs assessment 589 Comprehensive education needs 379 Newsletters/quarterlys 368 Training, workshops, conferences 305 Multiagency, antifraud project 141 National health care and health related activities 134 Amount Pohnpei utilities corporation 110 Accounting/computer interns and staff 91 Office equipment 68 Other 296 Total $3,247 Total Federated States of Micronesia assistance $1,188,658 Dollars in thousands Amount Direct Payments Current $151,525 Capital 146,775 Inflation 125,460 Kwajalein impact 24,700 Energy production 24,000 Communication O&M 3,900 Communication hardware 3,000 Tax and trade compensation 10,000 Maritime surveillance/med. ref/scholarship 22,767 Health and education block grant 39,000 Other construction 6,888 Nuclear compensation 302,940 Total $860,955 Grants Rongelap resettlement and professional services $1,025 Training, workshops, conferences 345 Advisors, consultants 341 Historic preservation/tourism 312 Municipal management and administration improvement 198 Water monitoring 124 Canoes 113 Study, survey, census 108 Privatization of public works 100 Amount Reverse osmosis system for Ejit island 85 Youth to Youth in Health 79 Investment development fund 70 Enewetak transshipment and fishing base 51 Other 295 Total $3,247 Total Marshall Islands assistance $864,202 Source: Prepared by GAO from Interior's data. The Department of Labor provided assistance to the Federated States of Micronesia and the Marshall Islands during fiscal years 1987 through 1999. During that time, Labor provided over $18.5 million to the Federated States of Micronesia and over $10.5 million to the Marshall Islands in grants for adult and youth training programs, summer youth programs, dislocated workers, and older Americans, as shown in tables 28 and 29. Dollars in thousands Amount Grants JTPA II-A, Adult Training $10,890 JTPA III, Dislocated Workers (formula and discretionary) 5,355 JTPA-C, Youth Training 1,158 JTPA II-B, Summer Youth 633 Older Americans 504 Totala $18,539 aTotal does not add due to rounding. Dollars in thousands Amount Grants JTPA II-A, Adult Training $5,465 JTPA III, Dislocated Workers (formula and discretionary) 3,929 JTPA-C, Youth Training 695 JTPA II-B, Summer Youth 267 Older Americans 191 Total $10,547 Source: Prepared by GAO from Labor's data. Legal Services Corporation provided assistance to the Federated States of Micronesia and the Marshall Islands during fiscal years 1987 through 1999. During that time, the Corporation provided about $16 million in grants for legal services to individuals living below the poverty level in the Federated States of Micronesia, the Marshall Islands, the Commonwealth of the Northern Marianas Islands, and the Republic of Palau. While Legal Services Corporation was able to identify the total amount of funding provided, it was not able to identify the amounts that went to the individual countries of the area. Dollars in thousands Amount Legal assistance $15,997 Source: Prepared by GAO from Legal Services Corporation data. The National Science Foundation (NSF) provided grant assistance to the Federated States of Micronesia during fiscal years 1987 through 1999. A total of two grants amounting to about $100,000 were provided to the College of Micronesia for Internet access of the four branch campuses (see table 31). Dollars in thousands Amount Grants Internet access $100 Source: Prepared by GAO from NSF's data. The U.S. Postal Service provides mail service in the Federated States of the Federated States of Micronesia and the Republic of the Marshall Islands. The Postal Service spent almost $5.9 million in transportation, administration, and technical assistance costs during fiscal years 1987 through 1998, as seen in tables 32 and 33. The Postal Service was reimbursed for the cost of providing the mail service through the Department of the Interior. The Postal Service was not able to provide data for fiscal year 1999 because the billed costs to the Department of the Interior are currently undergoing approval. Dollars in thousands Amount Guaranteed federal service Postal services $4,398 Dollars in thousands Amount Guaranteed federal service Postal services $1,466 Source: Prepared by GAO from the Postal Service's data. During fiscal years 1987 through 1999, the Small Business Administration (SBA) provided 171 loans, totaling about $1.9 million to the Federated States of Micronesia, and 242 loans, totaling about $1.6 million to the Marshall Islands, as shown in tables 34 and 35. Most of the loans were provided as subsidized direct physical disaster loans for disaster victims to repair, replace, or rehabilitate property damaged or destroyed by a declared disaster. Loans were made directly to the victims, which included individual homeowners, renters, businesses of all sizes, and nonprofit organizations. In addition, SBA provided a small number of economic injury disaster loans to small businesses without credit available elsewhere. Generally, loans were made at an interest rate of 4 percent or lower, with a maximum 30-year term. Dollars in thousands Amount Loans Physical and economic injury disaster loans $1,878 Dollars in thousands Amount Loans Physical disaster loans $1,621 Source: Prepared by GAO from SBA's data. The Social Security Administration (SSA) provided old age, survivors, and disability insurance benefits to individuals in the Federated States of Micronesia and the Marshall Islands since SSA separated from HHS to become an independent agency in 1995. Some of the beneficiaries may include U.S. citizens living in the Federated States of Micronesia and the Marshall Islands. The SSA provided over $240,000 to the Federated States of Micronesia and over $1.1 million to the Marshall Islands during fiscal years 1998 and 1999, as shown in tables 36 and 37. These amounts do not include assistance payments for 1 month in fiscal year 1998 and 2 months in fiscal year 1999 because SSA could not identify the amounts provided during those months. In addition, SSA could not provide figures for fiscal years 1995 through 1997. Dollars in thousands Amount Grants Old age, survivors, and disability insurance $240 Dollars in thousands Amount Grants Old age, survivors, and disability insurance $1,129 Source: Prepared by GAO from SSA's data. The Department of State has provided the Foreign Service Institute diplomatic training for the Federated States of Micronesia and the Marshall Islands during fiscal years 1987 through 1999. Interior reimbursed the State Department for the assistance provided−approximately $1.1 million for each Island government, as shown in tables 38 and 39. In total, 54 students from the Federated States of Micronesia and 53 students from the Marshall Islands have attended the training. Dollars in thousands Amount Guaranteed federal service Foreign service training $1,079 Dollars in thousands Amount Guaranteed federal service Foreign service training $1,097 Source: Prepared by GAO from Department of State's data. The Department of Transportation's Federal Aviation Administration (FAA) provided technical assistance to the Federated States of Micronesia and the Marshall Islands during fiscal years 1987 through 1999 at a total cost of about $4.8 million for the Federated States of Micronesia and about $0.9 million for the Marshall Islands, as shown in tables 40 and 41. Some of the assistance was provided for the upgrade, modernization, and continuous preventative maintenance and emergency repair of navigational aids and VHF radio communications equipment, installation and maintenance of Aeronautical Fixed Telecommunications flight data and weather reporting systems, performance of flight inspections, control of enroute air traffic, onsight aviation security training, and flight standards training. FAA personnel or their contractors performed all assistance, and no funds were provided directly to either government to pay for any project or program. Interior reimbursed FAA for the cost of providing the assistance. The Coast Guard has been unable to acquire records of its involvement in either the Federated States of Micronesia or the Marshall Islands. Dollars in thousands Amount Guaranteed federal service Technical assistance $4,765 Dollars in thousands Amount Guaranteed federal service Technical assistance $881 Source: Prepared by GAO from the Department of Transportation's data. Comments From the Department of the Interior Comments From the Department of State Comments From the Republic of the Marshall Islands Comments From the Federated States of Micronesia (141368) Table 1: Assistance Provided to the Federated States of Micronesia by Agency, Fiscal Years 1987 Through 1999 14 Table 2: Types and Amounts of Assistance Provided to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 16 Table 3: Assistance and Compensation Provided to the Marshall Islands, Fiscal Years 1987 Through 1999 16 Table 4: Assistance and Compensation Provided to the Marshall Islands, Fiscal Years 1987 Through 1999 18 Table 5: Authorized Payments to the Marshall Islands for Effects of Nuclear Testing, Prior to the Compact 20 Table 6: Section 211 Annual Economic Self-Sufficiency Funding Provided by the United States 30 Table 7: Section 216 Direct Annual Payments 32 Table 8: USDA Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 33 Table 9: USDA's Assistance to the Marshall Islands, Fiscal Year 1987 Through 1999 34 Table 10: Department of Commerce's Assistance to the Federated States of Micronesia, Fiscal Year 1987 Through 1999 36 Table 11: Department of Commerce's Assistance to the Marshall Islands, Fiscal Year 1987 Through 1999 36 Table 12: Department of Defense's Assistance to the Federated States of Micronesia, Fiscal Year 1995 Through 1999 37 Table 13: Department of Education's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 37 Table 14: Department of Education's Assistance to the Marshall slands, Fiscal Years 1987 Through 1999 38 Table 15: DOE's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 40 Table 16: EPA's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 41 Table 17: EPA's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 41 Table 18: FEMA's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 42 Table 19: FEMA's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 42 Table 20: HHS' Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 44 Table 21: HHS' Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 44 Table 22: HUD's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1989 45 Table 23: HUD's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1989 45 Table 24: Institute of Museum and Library Services Assistance to the Federated States of Micronesia, Fiscal Years 1998 and 1999 46 Table 25: Institute of Museum and Library Services Assistance to the Marshall Islands, Fiscal Years 1998 and 1999 46 Table 26: Interior's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 47 Table 27: Interior's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 48 Table 28: Labor's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 49 Table 29: Labor's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 50 Table 30: Legal Services Corporation Assistance, Fiscal Years 1987 Through 1999 50 Table 31: NSF's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 51 Table 32: U.S. Postal Service's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1998 51 Table 33: U.S. Postal Service's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1998 52 Table 34: SBA's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 52 Table 35: SBA's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 53 Table 36: SSA's Assistance to the Federated States of Micronesia, Fiscal Years 1998 and 1999 53 Table 37: SSA's Assistance to the Marshall Islands, Fiscal Years 1998 and 1999 54 Table 38: Department of State Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 54 Table 39: Department of State Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 54 Table 40: Department of Transportation's Assistance to the Federated States of Micronesia, Fiscal Years 1987 Through 1999 55 Table 41: FAA's Assistance to the Marshall Islands, Fiscal Years 1987 Through 1999 55 Figure 1: Location of the Federated States of Micronesia and the Marshall Islands 9 1. Population figure is from July 1999 estimates from the Central Intelligence Agency's World Factbook 1999. 2. Population figure supplied by Marshall Islands based on recent census. 3. In addition to Micronesia and the Marshall Islands, the Trust Territory included what are now the Republic of Palau and the Commonwealth of the Northern Marianas Islands. 4. Marshall Islands officials said that this allows the United States to veto any exercise of sovereignty by the Marshall Islands that the United States determines unilaterally to be incompatible with U.S. security policy. 5. Payments are made quarterly. Appendix I provides additional information on the Compact's financial provisions. 6. The capital account is to be used for, among other things, construction or major repair of the capital infrastructure and selected public and private sector projects. 7. The Office of Territorial and Insular Affairs is the predecessor to the Office of Insular Affairs. 8. According to Marshall Islands officials, the people of Enewetak have limited use of their atoll because of contamination in the northern islands and environmental degradation that occurred as a result of cleanup activities. They continue to pursue claims for their losses, according to these officials. 9. According to Marshall Islands officials, the people of Utrik are deeply concerned about health effects they attribute to living in a contaminated environment. 10. This amount includes funding for the construction and delivery of the Wetak II Motor Sailer. 11. P. L. 95-74, July 26, 1977, authorized $900,000 for a human development project in the Marshall Islands that required that matching funds be provided. This assistance is not included in the $42 milion because we were unable to determine if the Marshall Islands received these funds. 12. U.S. Department of the Interior, Office of Insular Affairs, Compact of Free Association, Marshall Islands and Federated States of Micronesia, Estimated Payments 1987-2001. The table indicates estimated payments because it includes future fiscal years, 2000 and 2001. 13. The capital account can generally be used for construction or repair of infrastructure, debt service, and training activities while the current account can be used to fund general operations. 14. The errors in these accounts appear to have resulted from a misclassification of $6,540,000 between the accounts. 15. We did not verify the information provided by the Department of Education. 16. Interior officials gave us a schedule showing that they had provided about $40 million to these agencies but explained that their data were incomplete because of a change in their computer systems in the first 2 years of the program. 17. The financial statements for Micronesia and the Marshall Islands indicated that they were prepared on a modified accrual basis of accounting, which also may cause difficulties in attempting to compare or cross-check amounts. In addition, the reports contained qualifications related to entities that were excluded from the financial statements, which would also represent an impairment to comparing amounts. 18. The Compact allows for an extension of not more than 2 years if negotiations have not been concluded by the end of the 15th year. Certain affected financial assistance provisions would continue during the extension at a level that is the average of the annual amounts granted during the first 15 years, adjusted for inflation. 19. A portion of the funds provided to the Republic of the Marshall Islands ($7.1 million annually adjusted for inflation) is related to the U.S. government's use of Kwajalein Atoll. 20. The Compact provides that these payments begin on the first anniversary of the Compact and continue for 14 years. 21. A Pell Grant is a federal nonreimbursable grant awarded to undergraduate students who have not earned a bachelor or professional degree. *** End of document. ***