Summary: The State Department received appropriations of $2.695 billion for fiscal year 1995 and $2.671 billion for fiscal year 1996 to conduct foreign affairs. Although State has cut its staff and implemented cost reduction measures, it has been reluctant or unable to significantly reduce its overseas presence and the scope of its activities or to significantly change its business practices. Budgetary constraints make it highly unlikely that State will receive a level of funding that would allow it to maintain its current level of activities. The greatest opportunity to reduce costs is by closing, or reducing the size of, overseas posts, which cost about $1.9 billion annually--or nearly 70 percent of State's budget. State maintains a diplomatic presence in more than 250 locations overseas, including countries where the United States has limited interests. This structure has not changed significantly since the end of the Cold War. State could also reduce support costs by several hundred million dollars by accelerating changes to its business practices. State now spends nearly $1.8 billion on communications, real estate, and other support services for domestic and overseas operations. Prompt disposal of unneeded overseas real estate is just one example of how State could reduce its support costs.
