Peace Corps battling expected budget shortfall

WASHINGTON – The Peace Corps, the popular service program that President Bush once promised to double in size, is preparing to cut back on new volunteers and consolidate recruiting offices as it pares other costs amid an increasingly tight budget, according to agency officials.

The program, which has a budget of $330.8 million, faces an anticipated shortfall of about $18 million this fiscal year and next, officials say. Much of the gap can be attributed to the declining value of the dollar overseas and the rising cost of energy and other commodities, officials said. That inflates expenses for overseas leases, volunteers’ living costs and salaries for staff abroad, most of whom are paid in local currencies.

The agency estimates its foreign-currency-related losses at $9.2 million for fiscal 2008 alone, spokeswoman Amanda Beck said last week.

In part, the program is caught in the political standoff between lawmakers and the president over the federal budget. If, as seems likely, Democrats delay final passage of the spending bills that fund the government until after Bush leaves office next year, programs such as the Peace Corps could be forced to operate at current funding levels indefinitely, administration officials said.

Beck said the agency could experience an additional $9 million in losses in fiscal 2009 in a “worst-case scenario” in which the agency has to operate under a year-long continuing resolution.

But that scenario is very unlikely, said Rep. Betty McCollum, D-Minn., a member of the House appropriations subcommittee that funds the program. She noted that her subcommittee has signed off on the agency’s $343.5 million budget request and its Senate counterpart has approved $337 million.

“It’s only going to be a short amount of time before a new budget gets through, and the Congress is committed to moving Peace Corps in an upward direction,” she said, adding that the agency should ask for short-term supplemental funding if it needs it.

Beck said the “best course of action” would be for Congress to approve the president’s full budget request.

In a July 21 letter to Peace Corps Director Ronald Tschetter, McCollum wrote that she had “serious doubts” about the agency’s plan to close regional recruiting offices in Minneapolis and Denver by Jan. 1.

Tschetter described the closures as “mergers” with other offices in Chicago and Dallas that are part of a move toward a “field-based recruiting model” expected to save $1.5 million. Thirteen people will be reassigned to other jobs in the agency, officials said.

The tight fiscal climate also means an anticipated scaling back in new volunteers next year by 400, wiping out planned growth and leaving the overall number of volunteers at about 8,000, according to Tschetter. Volunteers serve for 27 months and are paid a stipend of about $2,500 annually.

Managers at Peace Corps headquarters in Washington have been asked to cut their budgets by 15.5 percent. “Everything is under consideration, including the director’s travel,” Beck said.