Background

In the early 1970s, BIA began giving the tribes more training, involvement, and influence in the process of allocating TPA funds. TPA funds are used for programs such as law enforcement, social services, adult vocational training, child welfare, and natural resource management. Most tribes have placed all their available TPA base funding in only 5 or 6 of the more than 30 TPA base fund programs. All federally recognized tribes are eligible to receive TPA funds—either through contracts for operating tribal programs or through BIA-provided programs. As of October 1997, 556 tribes had been recognized by the federal government.
The Joint Tribal/BIA/DOI Advisory Task Force on Bureau of Indian Affairs Reorganization, which was created in 1990 to develop goals and plans for reorganizing BIA to strengthen its administration of Indian programs, recommended that all small tribes—those with service populations of 1,500 or less—be brought up to a minimum level of TPA base funding to allow them the opportunity to develop basic self-governance capability.The task force recommended that the small tribes in the lower 48 states have available at least $160,000 in TPA base funds and that the tribes in the state of Alaska have available $200,000. BIA identified 307 tribes as part of this “small tribes funding initiative” that were below the recommended minimum funding levels. As directed by the Congress, BIA used part of its appropriation for fiscal years 1995, 1997, and 1998 to raise all the small tribes up to $160,000 in available TPA base funding. About two-thirds of the tribes included in the funding initiative are located in Alaska, and, for fiscal year 1999, BIA has requested an additional $3 million to move them closer to the recommended $200,000 funding level.
The Single Audit Act of 1984, as amended, requires reporting by nonfederal entities, including tribes, that meet certain federal assistance thresholds. Before fiscal year 1997, the threshold was the annual receipt of $100,000 or more in federal funds; in fiscal year 1997, the threshold became the annual expenditure of $300,000 or more in federal funds. Entities meeting the threshold must submit an audited financial statement and a schedule of federal financial assistance.

	Historical Funding Levels Drive the Distribution of TPA Base Funds

Of the $757 million appropriated for TPA in fiscal year 1998, about $507 million was for base funding, and about $250 million was for non-base funding. BIA distributes TPA base funds primarily on the basis of historical distribution levels. That is, the amount available to a particular tribe is generally the same as last year’s amount, without considering tribal needs or the tribes’ own revenues. Depending on annual appropriation levels, increases or decreases to a tribe’s base fund amount are made on a pro rata basis (e.g., a tribe that receives 0.2 percent of the total TPA base fund amount would receive 0.2 percent of any increase or decrease). In contrast, non-base TPA funds are distributed according to specific program criteria and, in some cases, the income levels of individual tribal members. BIA’s distribution of TPA base funds has been criticized over the last 20 years for, among other things, not being responsive to changes in the relative needs of the tribes. Nor has the distribution of TPA base funds been responsive to changes in the relative levels of the tribes’ own revenues.

		BIA’s Distribution of TPA Funds

The majority of the fiscal year 1998 TPA base funds was distributed on the basis of historical funding levels, as has been the case for decades. The funding process used today has remained essentially the same since the early 1970s, when BIA began allowing the tribes more input into budget decisions and priorities. TPA was created to further Indian self-determination by giving the tribes the opportunity to establish their own priorities and to move funds among programs accordingly, in consultation with BIA. BIA believes that a stable funding base enhances the tribes’ ability to plan and budget their funds.
Once a program is categorized as part of the TPA base funds, it loses any need-based identity it once had. Prior to their inclusion in TPA, some programs were funded according to specific program criteria. For example, funds provided under the Johnson O’Malley Act of 1934, as amended, are intended to provide supplementary financial assistance to meet the educational needs of Indian children attending public schools. These funds used to be distributed on the basis of education costs in each state and the number of students eligible for program services. Beginning in 1996, however, Johnson O’Malley funds were transferred into the tribes’ TPA base funds, using 1995 data on program costs and eligibility. Because both cost and eligibility may have changed since 1995, and because the tribes have the authority to move funds in and out of the program, the current distribution may bear little resemblance to the original, formula-driven one.
In contrast to the base funds, the non-base funds—used for such programs as road maintenance, housing improvement, welfare assistance, and contract support—are generally distributed according to specific program criteria that consider, in some cases, individual income. Eligibility for housing improvement funds, for example, is based on whether and to what degree the housing being considered for improvement is substandard, as well as on the applicant’s income level. Similarly, eligibility for welfare assistance is based on a determination that an individual’s income is insufficient to meet his or her essential needs. In general, the tribes may not shift non-base funds among programs without special authorization.

		BIA’s Distribution of TPA Base Funds Has Been Criticized in the Past

BIA’s process for allocating base funds, while enhancing the tribes’ budget flexibility, has been criticized for, among other things, not being responsive to changes in the relative needs of the tribes. Although the tribes set priorities for their individual programs, no mechanism exists within TPA for identifying the tribes’ comparative needs and funding them accordingly. As the relative needs of the tribes have changed over time, no corresponding change has occurred in the distribution of TPA base funds, making the apparent funding discrepancies among the tribes more pronounced.
In 1978, we reported that BIA had been criticized by the Office of Management and Budget, the American Indian Policy Review Commission, and the tribes for its failure to develop a formula to ensure the equitable allocation of TPA funds among the tribes on the basis of need. We reiterate our belief, as stated in our 1978 report, that “accurate, current, and comparable comprehensive tribal needs analyses would provide BIA with a measurement to be considered in developing a formula on which to allocate Bureau [TPA] funds.” “Developing a system to measure the relative needs of Tribes with widely varying locations, mix of programs, size, and circumstances will be a monumental undertaking. The development will rely heavily on information which can be gathered only through a Tribal/BIA partnership. Much of this information is not currently available in a consistent and reliable form.”
Finally, in 1998, a task force—established pursuant to Interior’s 1998 appropriation bill and charged with deciding how to distribute a general increase in 1998 TPA funds—emphasized the importance of BIA’s developing a TPA funding allocation method that addressed funding inequities and unmet tribal needs. This task force recommended in its January 1998 report that funds be set aside to create a working group to develop a standard assessment methodology. Accordingly, BIA set aside $250,000 for this purpose. The working group, according to BIA’s fiscal year 1999 budget request, will develop a revised TPA allocation model that is based on tribal needs. BIA has requested an additional $250,000 for the working group in fiscal year 1999.
As long as it continues to use a funding distribution method that is relatively static, based largely on the initial division of funds among the tribes that was developed in the early 1970s, BIA has no assurance that its current TPA distribution is most effectively meeting the needs of the tribes. According to Interior officials, there is no clear documentation on how TPA base amounts for each tribe were initially determined. And even if those initial divisions were clearly documented, they may not support a distribution made in the early 1970s as the appropriate distribution today. At least two significant changes have occurred in the last 25 years that affect Indian tribes: The Indian population has more than doubled in size, and the revenues of some tribes have greatly increased since the approval of Indian gaming in 1988. In 1995, net income from Indian gaming operations was about $1.9 billion.

		Tribes’ Own Revenues Not a Factor in Distributing TPA Base Funds

Because the tribes’ own revenues are not considered in distributing TPA base funds, rich and poor tribes alike receive them. In fact, the tribes in our analysis that reported the highest amounts of their own revenues received more in TPA base funds, in total, than did those tribes that reported the lowest amounts of their own revenues. Furthermore, all the tribes covered by the small tribes funding initiative were brought up to about the same level of available TPA base funding, even though some reported substantial revenues of their own.
Of the 299 tribes included in our analysis, one reported having more than $300 million in revenues of its own in 1996. Yet that same year, this tribe received over $350,000 in TPA base funds. Similarly, the five other tribes that reported more than $100 million in revenues of their own in 1995 or 1996 received TPA base amounts ranging from about $500,000 to $40 million in the corresponding year. In contrast, three of the six tribes that reported a deficit in their own revenues each received less than $350,000 in TPA base funds.
Similarly, for the small tribes identified by BIA as being part of the small tribes funding initiative, the tribes’ own revenues did not affect the TPA base funds they received. Specifically, 72 of these tribes included in our analysis reported revenues that ranged from minus $1.4 million to over $30 million, with a median of about $92,000. Of the 72 tribes, 62 reported having revenues of their own, and 10 reported having no revenues or having losses. The small tribes that reported no revenues of their own and the one that reported having over $30 million in revenues, along with all the other tribes in the small tribes funding initiative whose revenues fell in between, were brought up to the same minimum level—$160,000—of available TPA base funding in 1998, at congressional direction.
BIA stated that “there are a number of statutes which specifically prohibit BIA from considering certain  revenue sources when making funding allocations.” BIA also said that comparing one tribe’s own revenues and TPA funding with those of another tribe is an “unfair comparison” because it does not take into consideration many other factors that may affect the level of TPA funding, such as a tribe’s land base and population. We agree that BIA is prohibited from considering certain tribal revenues in making funding allocations. The comparisons we present among tribes—regarding their own revenues and their TPA funding—are intended to illustrate the point that tribal revenues are currently not considered in the distribution of TPA funds. We agree that many other factors should be considered in determining an appropriate TPA distribution method.

	Additional Information That Could Be Useful in Distributing TPA Funds Is Not Readily Available

The question of how to ensure equity in the distribution of TPA funds among tribes is not an easy one. Among the key pieces of information that could prove useful in answering that question are (1) the economic status of each tribe, (2) its needs, and (3) the government’s responsibility to it. Much of this information, however, is not currently or readily available. Furthermore, the question of how to ensure equity in funding goes beyond TPA funds; it pertains as well to funding for many Indian programs provided by federal agencies other than BIA. Ultimately, however, the issues of how TPA and other federal funds are distributed and what information should be considered in that process are policy questions for the Congress and other federal decisionmakers to decide.
To obtain an understanding of the economic status of each tribe, complete and reliable information on its finances would be needed. Like all nonfederal entities that expend at least $300,000 annually in federal funds, tribes must file financial reports under the Single Audit Act to account for the expenditure of those funds. Although the purpose of the Single Audit Act is to safeguard federal funds, not to require complete financial reporting by Indian tribes, the financial information submitted by the tribes under the act is the information most readily available from the majority of tribes. Our analysis of that information showed that tribes reported widely varying amounts of their own revenues. Specifically, six tribes each reported that they had revenues of over $100 million, for a total of over $1.1 billion; at the other extreme, six tribes reported losses that totaled over $9 million. Another 128 tribes reported revenues of between $1 million and $100 million, totaling almost $1.6 billion, and 159 tribes reported that they had from $0 up to $1 million of their own revenues, totaling over $36 million.
However, the information reported by the tribes under the Single Audit Act does not always provide a complete picture of the tribes’ financial positions and, in some cases, is not reliable. Our examination of tribal financial statements filed under the act showed that the tribes frequently excluded financial information on business enterprises that do not involve the expenditure of federal funds. For example, in a previous review of Indian gaming revenues, we identified a tribe that reported over $100 million in net income from its gaming operations in 1995; yet the tribe’s financial statement for the same year (submitted under the Single Audit Act) reported only about $1.3 million in revenues of its own. Furthermore, the reliability of the data contained in the financial statements we reviewed was, in some cases, questionable. About half of these financial statements received auditors’ opinions indicating that the statement was deficient in some way and did not fairly represent the financial position of the reporting entity. Deficiencies ranged from the use of a cost rather than an accrual basis of accounting for revenues and expenditures to the complete unreliability of the data the tribe used for its accounting system. Deficiencies commonly cited included the exclusion of proprietary funds and of the general fixed asset account group.
In addition, not all tribes are required to report under the Single Audit Act. Prior to fiscal year 1997, only those nonfederal entities (including Indian tribes) that received $100,000 or more in total federal assistance were subject to the reporting requirements in the Single Audit Act. Beginning in fiscal year 1997, the reporting requirement threshold under the Single Audit Act was increased to the expenditure of at least $300,000 in total federal assistance annually. In addition, tribes that rely on the federal government or some other entity to provide services for them, rather than expending the funds themselves, are not subject to the Single Audit Act.
A second key piece of information that could prove useful in answering the question of how to ensure equity in the distribution of TPA funds is information on tribes’ needs. Over the last 20 years, we and others have commented that BIA should develop measurements of the relative needs of each tribe for each BIA program. This recommendation was repeated in January 1998 by a joint BIA/tribal task force. An assessment of a tribe’s needs is crucial to determining the extent to which a tribe’s own revenues foster its self-sufficiency. In and of themselves, a tribe’s financial resources do not serve as a measure of its needs. For example, one tribe in our analysis, which reported having more than $100 million of its own revenues in 1996, also reported receiving over $300 million in federal assistance that year. Although the receipt of such a large amount of federal assistance might indicate that the tribe’s needs far exceed its own revenues, many other factors could negate or support such a conclusion.
Among the many factors that may come into play in assessing need are the size and composition of a tribe’s population and land base, the type and extent of its natural resources and governance experience, as well as various program-specific criteria. As reported in 1994 by the Joint Tribal/BIA/DOI Task Force, gathering the information necessary to assess tribes’ needs would be a “monumental undertaking.” There are over 550 federally recognized tribes located throughout the United States. Their reported populations range from 0 to over 225,000, and their reservations vary in size from a few acres for some rancherias in California to 17.5 million acres for the Navajo reservation in Arizona, New Mexico, and Utah.
And finally, to obtain an understanding of the federal government’s responsibility to each tribe, the provisions of applicable treaties, laws, executive orders, and court decisions would need to be reviewed. There are over 360 ratified Indian treaties, dating back to 1778, as well as hundreds of relevant executive orders, court decisions, and laws.
In developing Interior’s appropriations for fiscal year 1998, the Senate Committee on Appropriations inserted a provision that would have required BIA to develop a formula to allocate TPA funds on the basis of need, taking into account the tribes’ own revenues. The provision also would have required the tribes to report their complete financial information to BIA as a precondition of receiving TPA funding. Much of the debate over this provision focused on whether the federal government had an overriding legal responsibility to provide TPA funding regardless of the tribes’ own revenues. Although this provision was not retained in the final version of the bill approved by the Senate, or in the version enacted, we expect that questions regarding BIA’s distribution of TPA funds will continue. Whether comprehensive financial reporting should be required for the tribes and how that information should be used in determining the distribution of TPA funds are policy questions for the Congress and other federal decisionmakers to address.
Furthermore, our review addressed only the distribution of TPA funding, which is just a small part of the overall federal funding for Indian programs. Although TPA was nearly half of BIA’s 1998 appropriation, it represented just 10 percent of the $7.5 billion in federal funding appropriated for Indian programs in 1998. Such funding comes from various federal agencies: the Department of Health and Human Services (HHS), which provides funding for Indian health programs, accounted for about 37 percent of the federal funding for Indian programs; DOI (including BIA), about 26 percent; the Department of Education, which provides funding for Indian education programs, about 18 percent; the Department of Housing and Urban Development, which provides funding for Indian housing programs, about 9 percent; and other agencies, the remaining 10 percent.
Given the extent and the amount of federal funding, it is clear that the question of whether federal funds target the greatest needs among tribes extends beyond TPA and BIA; the question of equity might also be asked about funds provided by other federal agencies. In our analysis, for example, the tribe with the most revenues of its own received more than twice as much funding from HHS as it did from BIA. In several previous reviews, we have questioned whether HHS’ funding distributions are appropriate.

	Agency Comments and Our Evaluation

We provided a copy of a draft of this report to BIA for its review and comment. Concerning the distribution of TPA funds, BIA commented that there is no statutory or regulatory basis for adjusting TPA distributions on the basis of tribal revenues. Furthermore, BIA said that in some cases it is specifically prohibited from taking into account certain types of tribal revenues in deciding how to distribute TPA funds. We agree with those comments. But we disagree with BIA’s characterization as “meaningless” our statement that, under the current method for distributing TPA funds, there is no assurance that the funds are effectively targeting the most pressing needs among tribes. Without assessing the relative needs of the tribes, BIA cannot know if the most pressing needs are effectively being met. And while the relative needs of the tribes have changed over time, BIA’s distribution of TPA base funds—which is based on historical levels—has not changed to accommodate them. We continue to believe that tribal needs assessments would assist BIA in developing criteria by which to equitably allocate TPA funds. Our report recognizes that a tribe’s revenues do not, in and of themselves, serve as the only measure of its needs. The information on tribal revenues is presented to illustrate one of the changing factors that is currently not being addressed in the distribution of TPA funds and to provide information for the policy debate on this issue currently before the Congress.
Setting aside the policy question of whether tribal revenues should be considered in the distribution of TPA funds, the underlying issue remains: whether TPA funds are appropriately distributed among the tribes under existing Indian policy. Even without considering tribal revenues, improvements in the distribution of TPA funds could be made under existing Indian policy. Much of the criticism of TPA distributions over the last 20 years has been that relying on historical distribution levels has resulted in inequitable funding among the tribes. BIA acknowledged that the TPA process has been faulted in many areas over the years, including the inequities in the historical distribution method. In response to these criticisms, BIA has made a number of key improvements in the TPA process but, after repeated attempts, has yet to implement a more equitable TPA distribution method. As noted in the report and in BIA’s comments, BIA has created another working group to address this issue.
Regarding the additional information that could be helpful in determining a revised distribution method, BIA emphasized that the purpose of the Single Audit Act was to safeguard federal funds, not to require complete financial reporting on tribal businesses. We agree that, if the Congress wishes to consider the tribes’ own revenues in distributing TPA funds, more complete and reliable financial information on the tribes would be required than that currently available in the reports filed under the Single Audit Act. Furthermore, BIA commented that there would be costs associated with “compiling, reporting, analyzing, and making funding decisions” on the basis of the additional types of information discussed in this report. We agree that the costs associated with implementing and maintaining a revised TPA distribution method would be an important factor to consider in developing a new approach. However, BIA has not yet developed a revised approach, so it is not possible to estimate what those costs would be.
BIA also provided several technical clarifications, which we incorporated into the report where appropriate. BIA’s comments and our specific responses appear in appendix III.
We performed our review from November 1997 through May 1998 in accordance with generally accepted government auditing standards. A detailed discussion of our scope and methodology is contained in appendix IV.
We are sending copies of this report to the appropriate congressional committees, the Secretary of the Interior, and other interested parties. We will also make copies available to others upon request.
If you or your staff have any questions, please call me at (202) 512-3841. Major contributors to this report are listed in appendix V.

Distribution of Fiscal Year 1998 TPA Funds, as of March 25, 1998

The following table shows the fiscal year 1998 distribution of Tribal Priority Allocations (TPA) base funds among the Bureau of Indian Affairs (BIA) 12 area offices and our per capita analysis of that distribution. Our per capita analysis is for informational purposes only; BIA does not distribute TPA funds on a per capita basis, nor does BIA recommend that such a distribution method be used. Interior officials noted that they do not consider the service population figures, which BIA last reported in 1995, to be reliable. They also noted that TPA funds are distributed to tribes, rather than individuals, and that a lower per capita figure may reflect that tribes in one area have larger memberships but smaller land bases than tribes in another area. We did not independently verify the distribution amounts or population estimates.
Non-base and other self-governance TPA funds Includes base funds for only those tribes without self-governance agreements.
Funds not distributed include TPA funds for other BIA offices or nontribal entities (e.g., funds for BIA’s central office, funds for employees displaced because of tribal contracting, and education funds for nontribal entities), as well as funds that will be but have not yet been distributed to tribes or area/agency offices (e.g., funds for contract support and welfare assistance). Because not all of these funds have been distributed, a per capita analysis is not applicable.

TPA Base Funds Distributed and Per Capita Analysis for Tribes in BIA’s 12 Area Offices, Fiscal Year 1998

The following tables show the fiscal year 1998 distribution of TPA base funds among tribes, by area and agency office, and our per capita analysis of that distribution. Our per capita analysis is for informational purposes only; BIA does not distribute TPA funds on a per capita basis, nor does BIA recommend that such a distribution method be used. According to Interior officials, there are reasons for differences in TPA distributions. For example, BIA is required to fund law enforcement and detention in states that do not have jurisdiction over crimes occurring on Indian lands, so tribes located in those states may receive more TPA funds for these purposes than tribes located in other states. Similarly, BIA has a trust responsibility for natural resources on reservations, so tribes that have large land bases may receive more TPA funds for this purpose than tribes with small land bases.
Interior officials also noted that they do not consider the service population figures, which BIA last reported in 1995, to be reliable. They also noted that TPA funds are distributed to the tribes, rather than individuals, and that a lower per capita figure may reflect that tribes in one area have larger memberships but smaller land bases than tribes in another area. We did not independently verify the distribution amounts or population estimates.
Includes TPA funds and service population for the Trenton, North Dakota, location of the Turtle Mountain Chippewa.
Tribe not affiliated with an agency office.
These area office funds are used to provide services to some or all tribes in the area. They are included in the per capita analysis for the area total.

	Table II.2: Albuquerque Area: TPA Base Funds Distributed and Per Capita Analysis, Fiscal Year 1998

Tribe(s) served by agency office Pueblo of Nambe Pueblo of Picuris Pueblo of Pojoaque Pueblo of San Ildefonso Pueblo of San Juan Pueblo of Santa ClaraPueblo of Taos Pueblo of Tesuque Part of the Navajo Nation Pueblo of Acoma Pueblo of Cochiti Pueblo of Isleta Pueblo of Jemez Pueblo of San Felipe Pueblo of Sandia Pueblo of Santa Ana Pueblo of Santo Domingo Pueblo of Zia Ysleta del Sur Pueblo (Table notes on next page)
These area office funds are used to provide services to some or all the tribes in the area. They are included in the per capita analysis for the area total.

	Table II.3: Anadarko Area: TPA Base Funds Distributed and Per Capita Analysis, Fiscal Year 1998

Tribe(s) served by agency office Apache Caddo Comanche Delaware of Western Oklahoma Fort Sill Apache Kiowa Wichita and Affiliated Tribes Iowa Tribe of Kansas and Nebraska Kickapoo Tribe of Indians of the Kickapoo Reservation in Kansas Prairie Band of Potawatomi Sac & Fox Nation of Missouri in Kansas and Nebraska Kaw NationOtoe-Missouria Pawnee Ponca Tribe of Oklahoma Tonkawa Absentee-ShawneeCitizen Potawatomi Nation Iowa of Oklahoma Kickapoo of OklahomaKickapoo Traditional of Texas Sac & Fox Nation, Oklahoma(Table notes on next page)
Tribe not affiliated with an agency office.
These area office funds are used to provide services to some or all tribes in the area. They are included in the per capita analysis for the area total.

	Table II.4: Billings Area: TPA Base Funds Distributed and Per Capita Analysis, Fiscal Year 1998

These area office funds are used to provide services to some or all tribes in the area. They are included in the per capita analysis for the area total.

	Table II.5: Eastern Area: TPA Base Funds Distributed and Per Capita Analysis, Fiscal Year 1998

Tribe(s) served by agency office Cayuga NationOneida Nation of New York Onondaga NationSeneca Nation of New York St. Regis Band of Mohawk Tonawanda Band of SenecaTuscarora NationPoarch Band of Creek Indians Wampanoag Tribe of Gay Head (Table notes on next page)
Tribe not affiliated with an agency office.
These area office funds are used to provide services to some or all the tribes in the area. They are included in the per capita analysis for the area total.

	Table II.6: Juneau Area: TPA Base Funds Distributed and Per Capita Analysis, Fiscal Year 1998

These area office funds are used to provide services to some or all the tribes in the area. They are included in the per capita analysis for the area total.

	Table II.7: Minneapolis Area: TPA Base Funds Distributed and Per Capita Analysis, Fiscal Year 1998

Tribe(s) served by agency office Bad River Band of Lake Superior Chippewa Indians Forest County Potawatomi Community of Wisconsin Potawatomi IndiansHo-Chunk Nation Lac Courte Oreilles Band of Lake Superior Chippewa Indians Lac du Flambeau Band of Lake Superior Chippewa Indians Oneida Tribe of WisconsinRed Cliff Band of Lake Superior Chippewa Indians St. Croix Chippewa Sokaogon Chippewa Community of the Mole Lake Band of Chippewa IndiansStockbridge-Munsee Community of Wisconsin Bay Mills Indian Community Grand Traverse Band of Ottawa & Chippewa IndiansHannahville Indian Community Huron Potawatomi, Inc. Keweenaw Bay Indian Community Lac Vieux Desert Band of Lake Superior Chippewa Indians Little River Band of Ottawa Indians Little Traverse Bay Bands of Odawa Indians Pokagon Band of Potawatomi Indians Saginaw Chippewa Indian Tribe Sault Ste. Marie Tribe of Chippewa IndiansMinnesota Chippewa Tribe - Bois Forte Band (Nett Lake)Grand Portage BandLeech Lake BandMille Lacs BandWhite Earth Band Lower Sioux Indian CommunityPrairie Island Indian CommunityShakopee Mdewakanton Sioux CommunityUpper Sioux Indian Community Red Lake Band of Chippewa IndiansSac & Fox Tribe of the Mississippi in Iowa (Table notes on next page)
These area office funds are used to provide services to some or all tribes in the area. They are included in the per capita analysis for the area total.

	Table II.8: Muskogee Area: TPA Base Funds Distributed and Per Capita Analysis, Fiscal Year 1998

Tribes not affilated with an agency office.
These area office funds are used to provide services to some or all tribes in the area. They are included in the per capita analysis for the area total.

	Table II.9: Navajo Area: TPA Base Funds Distributed and Per Capita Analysis, Fiscal Year 1998

These area office funds are used to provide services in the area. They are included in the per capita analysis for the area total.

	Table II.10: Phoenix Area: TPA Base Funds Distributed and Per Capita Analysis, Fiscal Year 1998

Tribe(s) served by agency office Chemehuevi  Colorado River Indian Tribes Fort Mojave Confederated Tribes of the Goshute Reservation Duckwater ShoshoneEly ShoshoneShoshone-Paiute Tribes of the Duck Valley ReservationTe-Moak Tribe of Western Shoshone Indians Tohono O’odham Nation Ak Chin Indian Community Gila River Pima-Maricopa Indian Community Fort McDowell Mohave-Apache Indian Community Pascua Yaqui Salt River Pima-Maricopa Indian CommunityKaibab Band of Paiute Indians Las Vegas Tribe of Paiute Indians Moapa Band of Paiute Indians Paiute Tribe of Utah San Juan Southern Paiute Havasupai Hualapai Tonto Apache Yavapai-Apache Nation Yavapai-Prescott Skull Valley Band of Goshute IndiansUte Indian Tribe Fort McDermitt Paiute and Shoshone Tribes Lovelock PaiutePaiute-Shoshone Tribe of the Fallon Reservation and Colony Pyramid Lake Paiute Tribe Reno-Sparks Indian Colony Summit Lake PaiuteWalker River Paiute Washoe Winnemucca Indian ColonyYerington Paiute Yomba Shoshone(continued)
These area office funds are used to provide services to some or all tribes in the area. They are included in the per capita analysis for the area total.

	Table II.11: Portland Area: TPA Base Funds Distributed and Per Capita Analysis, Fiscal Year 1998

Tribe(s) served by agency office Confederated Tribes of the Colville Reservation Confederated Salish and Kootenai Tribes of the Flathead ReservationNorthwestern Band of Shoshoni Nation of Utah Shoshone-Bannock Tribes of the Fort Hall Reservation Metlakatla Indian Community, Annette Island ReserveCoeur D’Alene Kootenai Tribe of IdahoNez Perce Confederated Tribe of the Chehalis Reservation Hoh Jamestown S’Klallam TribeLower Elwha Tribal CommunityMakahQuileute QuinaultShoalwater BaySkokomishSquaxin IslandLummiMuckleshootNisquallyNooksack Port Gamble Indian CommunityPuyallup SamishSauk-Suiattle Stillaguamish SuquamishSwinomishTulalip Upper Skagit Confederated Tribes of the Coos, Lower Umpqua and Siuslaw Indians Confederated Tribes of the Grand Ronde CommunityConfederated Tribes of the Siletz ReservationCoquille Cow Creek Band of Umpqua Indians Confederated Tribe of the Umatilla Reservation Burns Paiute Confederated Tribes of the Warm Springs Reservation Klamath Confederated Tribes and Bands of the Yakama Indian Nation (continued)
These area office funds are used to provide services to some or all tribes in the area. They are included in the per capita analysis for the area total.

	Table II.12: Sacramento Area: TPA Base Funds Distributed and Per Capita Analysis, Fiscal Year 1998

These funds are used to provide services to some or all tribes in the field office or area. They are included in the per capita analysis for the area total.

Comments From the Bureau of Indian Affairs

	GAO Comments

1. Our earlier report entitled Tax Policy: A Profile of the Indian Gaming Industry (GAO/GGD-97-91, May 5, 1997) stated that the total revenues reported from Indian gaming operations during 1995 were $4.5 billion, with a total net income of $1.9 billion. About 40 percent ($1.85 billion) of all gaming revenues was generated by eight tribes. In its comments, BIA incorrectly compared the revenue figure for these eight tribes ($1.8 billion) with the total net income figure for all the gaming tribes ($1.9 billion). Nevertheless, we agree with BIA’s overall point that these eight tribes account for a substantial portion of the gaming revenues and that these eight tribes receive only a small fraction of the overall TPA funds. 2. The data on tribal revenues presented in this report are provided for informational purposes only, for the policy debate currently before the Congress. We chose to include the complete range of tribal revenue figures, from negative to positive, to provide a balanced picture of the financial position of as many tribes as possible. Some tribes reported substantial revenues, while others reported losses from their business enterprises. We understand BIA’s concern, and we caution that no inference should be drawn from the presentation of these data that tribes with failing business enterprises should receive increased federal assistance.

Scope and Methodology

We obtained information on BIA’s basis for distributing 1998 TPA funds and on the tribes’ own self-reported revenues under the Single Audit Act. We contacted officials of the Department of the Interior’s Bureau of Indian Affairs, Office of Audit and Evaluation, and Office of Self-Governance in Washington, D.C., and its Office of Audit and Evaluation in Lakewood, Colorado. We analyzed distribution data provided by BIA and the Office of Self-Governance to determine the amounts distributed to BIA area and agency offices and to tribes in fiscal year 1998.
At Interior’s Office of Audit and Evaluation in Washington, D.C., and Lakewood, Colorado, we examined all 326 of the most recent financial statements that were submitted as of March 1998 under the Single Audit Act by tribes, tribal associations, and tribal enterprises. These statements generally covered 1995 or 1996. We did not examine statements submitted for some entities, such as tribal housing authorities and community colleges, because these entities are financially separate from the tribes. From each of the financial statements we examined, we obtained information about the independent auditor’s opinion, revenues for all fund types reported, and operating income for the tribes that included tribal business information in their statements.
Our analyses of 299 tribes’ own revenues were derived from the information contained in the financial statements. Of the 326 financial statements we reviewed, 299 were for tribes (2 of which were not federally recognized). Another 13 were for tribal businesses or components of tribes, and we merged their financial information into that of the cognizant tribes for analysis. The remaining 14 financial statements were for consortia or associations representing multiple tribes, primarily those in Alaska; we excluded the financial information from these statements from our analysis of tribes’ own revenues.
We performed our review from November 1997 through May 1998 in accordance with generally accepted government auditing standards.

Major Contributors to This Report

	Resources, Community, and Economic Development Division

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Summary:
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on the: (1) Bureau of Indian Affairs' (BIA) method for distributing Tribal Priority Allocation (TPA) funds; and (2) other revenues available to the tribes.

What GAO Found

GAO noted that: (1) under the current method for distributing TPA funds, there is no assurance that the funds are effectively targeting the most pressing needs among the tribes; (2) currently, BIA distributes two-thirds of TPA funds, referred to as base funds, largely on the basis of historical funding levels; (3) in distributing these base funds, BIA does not take into consideration changing conditions, such as the tribes' levels of need or the tribes' own revenues from nongovernmental sources; (4) the remaining one-third of TPA funds, known as non-base funds, are used for such activities as road maintenance and housing improvement and are generally distributed on the basis of specific program criteria; (5) BIA's distribution of TPA base funds has been widely criticized over the last 20 years for, among other things, not being responsive to changes in the relative needs of the tribes; (6) furthermore, because the tribes' own revenues are not considered in the distribution of TPA base funds, the tribes with the highest revenues receive TPA base funds just as the tribes with the lowest revenues do; (7) GAO's analysis showed that each of the 6 tribes with the highest reported revenues received more TPA base funds than did each of the 16 tribes with no reported revenues or with losses; (8) in addition, 62 small tribes reported having revenues of their own yet received the same amount of TPA base funds as small tribes that reported no revenues of their own; (9) a decision about whether and in what way to redistribute TPA funds is as complex as it is controversial; (10) as long as BIA continues to distribute TPA base funds on a historical basis, it cannot be certain that the distribution accommodates the changing needs of the tribes; (11) to determine an equitable distribution among the tribes, several types of data may be considered, however, much of this information is not currently or readily available in a consistent and reliable form; (12) furthermore, questions of equity in federal financial assistance extend beyond BIA and TPA funds; (13) although TPA was nearly half of BIA's 1998 appropriation, it represented just 10 percent of the $7.5 billion in federal funding appropriated for Indian programs in 1998; and (14) ultimately, however, the issues of how TPA and other federal funds should be distributed and what information should be considered in that process are policy questions for Congress and other federal decisionmakers to address.