This is the accessible text file for GAO report number GAO-03-565R 
entitled 'Status of Reforms and Budgets of the United Nations 
Educational, Scientific, and Cultural Organization' which was released 
on March 28, 2003.



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March 28, 2003:



The Honorable Henry J. Hyde:



Chairman:



Committee on International Relations:



House of Representatives:



Subject: Status of Reforms and Budgets of the United Nations 

Educational, Scientific, and Cultural Organization:



Dear Mr. Chairman:



In 1945, the United States helped establish the United Nations 

Educational, Scientific, and Cultural Organization (UNESCO) as a means 

to promote international peace. During the 1970s, UNESCO was criticized 

for becoming too politicized. In 1984, the United States left the 

organization, contending that it was poorly managed and had failed to 

restrain budget growth. At that time, the United States urged UNESCO to 

reform its management practices and adopt zero real growth budgets. In 

2002, the United States announced that UNESCO had made progress in 

adopting reforms and that the United States would rejoin UNESCO to help 

advance the organization’s mission. The United States plans to rejoin 

UNESCO on October 1, 2003.



To facilitate your committee’s oversight of U.S. reentry into UNESCO, 

you asked us to review the organization’s reform efforts and budget 

trends, as well as issues associated with the U.S. reentry. On February 

26, 2003, we briefed your staff on our findings. Enclosure I documents 

the information we provided to your staff. UNESCO and the Department of 

State provided comments on a draft of our briefing, which we 

incorporated as appropriate. ‘:



Background:



UNESCO employs more than 2,200 staff[Footnote 1] at its headquarters in 

Paris, 48 field offices, 2 liaison offices, and 10 affiliated 

institutes and centers. The 188 nations that are members of UNESCO 

comprise the General Conference, which is UNESCO’s governing body. The 

General Conference generally meets every 2 years to approve UNESCO’s 

program and budget. A 58-member executive board is responsible for the

execution of conference decisions. The Director General implements 

policy and manages the organization’s day-to-day operations.



UNESCO has five major programming areas: Education, Natural Sciences, 

Social and Human Sciences, Culture, and Communication and Information. 

These programs include efforts to provide basic education through the 

Education for All Initiative, preserve 730 cultural and natural 

heritage sites worldwide, and promote policy decisions for sustainable 

use of freshwater resources.



Summary:



While UNESCO has launched several efforts to reform its management 

practices, these reforms are in their early phases and will succeed 

only with the sustained efforts of UNESCO’s Director General and member 

states. In the late 1990s, UNESCO’s auditors and top officials 

identified numerous management problems, including violations of 

personnel and hiring rules, and widespread weaknesses in financial 

rules and procedures. Other problems included an insufficient focus on 

program results, an over-extended network of field offices, and 

fragmented internal oversight functions. In response, UNESCO began 

efforts to enforce and strengthen its personnel rules, create new 

automated financial and program management systems, close unnecessary 

field offices, and establish an integrated internal oversight and 

evaluation office. While the Director General has made reform a high 

priority, these efforts are not yet complete. According to UNESCO, the 

organization plans to implement a new personnel appraisal system, train 

staff on new financial systems, develop measures for evaluating program 

results, provide field staff with access to the new systems, and close 

additional field offices.



Over the past 6 years, UNESCO’s biennial regular budget has remained at 

its current level of $544 million.[Footnote 2] When adjusted for 

inflation, UNESCO’s 2000-2001 regular budget is almost equivalent to 

its 1984-1985 budget. However, UNESCO’s total resources grew 

significantly during this period due to an eight-fold increase in 

UNESCO’s extra-budgetary funds[Footnote 3]. Extra-budgetary funds 

constituted about one half of the resources UNESCO had available for 

its 2000-2001 programs. While the infusion of extra-budgetary funds has 

allowed UNESCO to fund more projects, representatives of some member 

states that we interviewed stated that extra-budgetary resources may 

not support the priorities set by the General Conference.



The United States faces several unresolved issues before it rejoins 

UNESCO in October 2003. First, the United States must decide which 

UNESCO budget proposal it will support for the 2004-2005 biennium. The 

Director General is considering two proposals that will breach the zero 

nominal growth budget of $544 million and:



increase UNESCO’s budget to as high as $610 million. The executive 

branch’s fiscal year 2004 budget request for UNESCO assumes that the 

UNESCO budget will remain at $544 million. At this level, the U.S. 

contribution of $60 million will essentially decrease the assessments 

of other member states by an equivalent amount. Second, since the 

United States has announced that it will stand for election to UNESCO’s 

executive board, it will need to campaign for support from other member 

states. Membership on the Executive Board would allow the United States 

to contribute to the reform efforts. Third, the United States will have 

to determine if it wants to target its assessment for the last quarter 

of 2003 to support U.S. priorities. UNESCO officials stated that they 

would support the establishment of a special account for the initial 

U.S. payment of $15 million, subject to the approval of the Executive 

Board and the General Conference. Without a special account, the $15 

million could be refunded to other member states. Fourth, until an 

ambassador to UNESCO is appointed, the United States must decide how 

best to convey U.S. interests and priorities. The current observer to 

UNESCO does not have the authority of an ambassador to help shape and 

convey U.S. priorities.



Scope and Methodology:



To review UNESCO’s reform efforts, we assessed reports prepared by 

UNESCO and United Nations audit groups. We also traveled to UNESCO 

headquarters in Paris, France, in January 2003, where we met with 

UNESCO’s Director General and the directors of UNESCO’s internal audit, 

strategic planning, and human resource offices. We also met with the 

assistant director generals for UNESCO’s five major programming areas 

of Education, Natural Sciences, Social and Human Sciences, Culture, and 

Communication and Information. To examine UNESCO budget trends, we met 

with the directors of budget and comptroller offices. We also reviewed 

budget data from these officials. We converted UNESCO budget data into 

constant dollars by using a weighted average gross domestic product 

deflator. We constructed the deflator using U.S. and French inflation 

rates (representing the currencies in which dues were assessed). To 

identify issues associated with U.S. reentry, we reviewed UNESCO 

documents pertaining to the return of former member states and met with 

U.S. and UNESCO officials. We also met with representatives from nine 

member states. During the course of our review, we met with U.S. State 

Department and National Security Council officials in Washington, D.C.



We performed our work from December 2002 through March 2003 in 

accordance with generally accepted government auditing standards.



We obtained comments on a draft of this letter and its enclosure from 

the Acting Director, International Organization Systems 

Administration, and the Director of UNESCO Affairs; Bureau of 

International Organization Affairs, Department of State; and UNESCO’s 

Director of Strategic Planning, Director of the Bureau of the Budget, 

the Comptroller, and the Director of Internal Oversight. In general, 

they concurred with our findings and provided technical comments that 

we incorporated where appropriate. In addition, Department of State 

officials stated that the United States has begun to actively campaign 

for Executive Board membership.



---------------:



We are sending copies of this report to the Honorable Colin Powell, 

Secretary of State, and to interested congressional committees. Copies 

will be made available to others upon request. In addition, this report 

will be available at no charge on our Web site at http://www.gao.gov.



If you or your staff have any further questions regarding this 

assessment, please contact me at (202) 512-8979. Phyllis Anderson, Beth 

Anne Hoffman León, Hynek Kalkus, Pierre Toureille, and Lynn Cothern 

also made key contributions to this report.



Sincerely yours,



Joseph Christoff:



Director, International Affairs and Trade:



Signed by Joseph Christoff:



Enclosure:



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FOOTNOTES



[1] This number does not include those staff working under limited 

duration contracts, special service agreements or contracts, and other 

additional staff.



[2] The past two biennial budgets, 2000-2001 and 2002-2003, have been 

approved at zero nominal growth.



[3] Extra-budgetary funds are voluntary contributions that other United 

Nations agencies, international organizations, educational 

institutions, and member states provide to UNESCO. One member state--

Brazil--has provided much of UNESCO’s extra-budgetary resources in 

recent years for programs conducted in that country.