$113 MILLION+ awarded to Minnesota Indian tribes

Federal single audits show $113,841,024 awarded to Minnesota Indian tribes

by Bill Lawrence and Clara NiiSka

$113,841,024.

According to information provided by the General Accounting Office (GAO), the most recent audits of federal funds awarded to Indian tribal governments and reservation housing authorities in Minnesota detail federal grants and contracts in excess of $113 million annually.

How much money is a hundred and thirteen million dollars?

More than the entire annual full-time earnings of every adult reservation Indian at the minimum wage.

Or…a mere fraction of the $7.5 billion in federal funding which the General Accounting Office calculates was appropriated for Indian programs in 1998, and slightly less than two thirds of Minnesota’s “fair share” of federal Indian expenditures per capita, calculated in terms of the BIA’s “service population” of 30,827 Minnesota “Indians eligible to receive services from the BIA.”

[In 1995, the BIA claimed a service population of: 21,446 eligible Indians in the Minnesota Chippewa Tribe, 1,270 Minnesota Sioux, and 8,111 Red Lake Indians; and a nationwide total of 1,260,206. Press/ON adjusted the BIA’s figures for accuracy, and estimates that there are approximately 1.2 million people enrolled in federally-recognized tribes with an “Indian blood quantum” of more than ¼ (the cutoff for federal Indian service eligibility), and that less than 50,000 of these federally-recognized Indians are residing on reservations in the U.S. The number of enrolled Indians residing on their own reservation in Minnesota is about 13,000.]

Press/ON has provided you, the reader, with details of the audits as a part of this newspaper’s ongoing project of informing the Indian tribal councils so that you can make up your own mind about governments’ responsible use of this money. Tribal elections are coming up next year, and tribal members may like to examine their tribal governments’ annual spending: more than a billion dollars in federal, state, foundation and casino funds.

The audited $113 million tribal expenditures of federal funds is only part of the total. The Single Audit Act of 1984, as amended, requires reporting by “nonfederal entities” which spend at least $300,000 in federal funds each year. Each “tribal enterprise” incorporated a separate “entity,” so, far example, if “Red Lake Industries” or the “Northern Winds Primary Treatment Facility” spent less than thirty thousand dollars in directly appropriated federal money, no audit would be filed with the federal government. The money spent by such tribal enterprises is not included in the audits filed by the tribal council or the reservation housing authority.

The federal Single Audit Act does not require tribal accounting of state, county, or private foundation grants—even though state education funding and county welfare payments, for example, are heavily subsidized by federal dollars. The federal single audits do not include income generated by tribal enterprises, such as the casinos.

Federally-funded services provided to tribal governments and/or tribal members are also not reflected in the federal Single Audits. Thus, for example, the $2.6 billion budget for the Indian Health Service is a “federal” expenditure, even though the IHS provides health care exclusively to tribal members. Similarly, the money specifically intended for reservation Indian programs and expanded by the Justice Department and other federal agencies is not included in the audits published this week in Press/ON.

Staff at the Senate Committee on Indian Affairs informed Press/ON that there is no comprehensive overview of Indian program maintained by Congress. The General Accounting Office, in its 1998 report, “Indian Programs: Tribal Priority Allocations Do Not Target the Neediest Tribes,” notes that determining the “economic status” and needs of each tribe involves information which “is not currently or readily available.” Although the purpose of the Single Audit Act is to safeguard federal funds, the GAO continues, “the financial information submitted by the tribes under the act is the most readily available from the majority of tribes…does not always provide a complete picture of the tribes’ financial positions and, in some cases, is not reliable… About half of these financial statement received auditors’ opinions indicating that the statement was deficient in some way and did not fairly represent the financial position of the reporting entity.”

There are a number of reasons why a tribal council or reservation housing authority might believe incomplete financial reporting to be advisable, among them concern that an accurate account of gambling revenues might have—as the Red Lake Gaming Board put it during their February 7, 2001 discussion of Press/ON publisher Bill Lawrence’s formal request for certain Red Lake gambling audits— “…potential effects on future grants and funding.”

Press/ON estimates annual profits from Indian gambling enterprises in Minnesota at about one billion dollars, and Minnesota Indian gambling gross revenues at about four billion annually.

The BIA: “no attempt to target the funds”

In 1978, the GAO reported that, “the BIA had been criticized by the Officer of Management and Budget, the American Indian Policy Review Commission, and the tribes for its failure to…ensure the equitable allocation of TPA funds among the tribes on the basis of need.” Twenty, years later, in its July 1998 report on Indian Programs, the GAO reiterated its assessment that the BIA needed to complete and maintain “accurate, current and comparable comprehensive tribal needs analyses” which would be “considered” in allocating the TPA funds entrusted to the Bureau by Congress. That same year, the Senate Committee on Appropriations included a provision in its appropriations bill, which “would have required the tribes to report their complete financial information to the BIA as a precondition of receiving TPA funding.”

The Senate committee’s provision requiring tribal accountability was “not retained” in the final version of the bill. In its June 1998 “comments” to the GAO draft report, the BIA vigorously defended its funding policies, noting that, “at the present time, there is not statutory or regulatory basis for adjusting funding based upon tribal assets.” In a letter signed by Kevin Gover, Assistant Secretary, Indian Affairs, the BIA also explained that, “since there is no attempt to target the funds,” the GAO’s “statement that we’ lack assurance that funds are effectively targeted’ is meaningless.”

In September 1999, that Development of the Interior released its own report, “The Tribal Priority Allocation Study (TPA),” which found that “the level of funding across the board for all tribes was woefully short.” As Secretary of the Interior Bruce Babbitt explained, “The Tribes simply are not receiving the resources necessary to perform the essential functions of government in most cases, and that needs to be addressed adequately and quickly… The policy of the United States is to assist the Tribes in developing strong, stable tribal governments…” The BIA stressed its position by citation of the Congressional mandate in the Indian Self Determination Act of 1975, and observed that, “the tribes deserve a strong, functional Bureau of Indian Affairs.”

The General Accounting Office responded with another report, “Major management Challenges and Program Risks, Department of the Interior,” in January 2001. In that report, the GAO reiterated its concerns that BIA funding allocations are “largely based on historical factors…[and] did not consider a tribe’s changing needs.” The GAO writes that the “BIA acknowledged that funding inequities exist among tribes exist but decided—with the concurrence of the [sic] tribes—that current distribution of funds should not be changed…” The BIA urged that the problem be resolved by even “greater funding” levels; the GAO responded, “we believe BIA would have to develop criteria for determining tribes’ needs and to establish the factors that will determine funding levels. BIA has not done this, and until it does, funding inequities will persist.”

Jeff Malcolm, Senior Analyst and Indian specialist with the GAO, explained to Press/ON that the BIA’s concerns about revamping Tribal Priority Allocations included that there would be a “large disruption in tribal operations” if BIA funding levels were changed to reflect the actual needs of the tribes. He said that among the “challenges” identified by the GAO were that there has been no direction from Congress that distribution of Indian appropriations reflect tribal need, and that the BIA had cited “specific prohibitions” against such effectively targeted appropriations. He also commented that the GAO is “an organization that works for Congress—not in the business of making policy decisions.”

Malcolm told Press/ON that “about 12” tribes voluntarily return that BIA’s TPA funding allocations to the U.S. governments, but that there were “some impediments” to their doing that, including the tribes’ potential liability under the Federal Tort Claims Act. For example, he explained, “if the tribe gets money from the BIA for law enforcement” and then returns the money to the US government unexpended, the tribal council could conceivably be liable for not providing the services which would have been funded by the unspent money.
The tribal councils’ rationale, apparently made to the GAO as an explanation for the tribes’ disinclination to return unneeded funds to the US government are extremely well-protected by sovereign immunity, and are almost completely invulnerable to lawsuits under the Federal Tort Claims Act, and BIA-tribal government contracting very clearly requires the tribal government’s explicit agreement to provide specific services. Also, either the state or the federal government can—and does—provide law enforcement and other crucial governmental services, under Public Law 280 and/or the Indian Major Crimes Act