INDIAN AFFAIRS

Bureau of Indian 

Education Needs to 

Improve Oversight of 

School Spending

Report to the Chairman, Subcommittee 

on Interior, Environment, and Related 

Agencies, Committee on 

Appropriations, House of 

Representatives

November 2014

GAO-15-121

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-121, a report to the 

Chairman, Subcommittee on Interior, 

Environment, and Related Agencies, 

Committee on Appropriations, House of 

Representatives

November 2014

INDIAN AFFAIRS

Bureau of Indian Education Needs to Improve

Oversight of School Spending

Why GAO Did This Study

BIE, within Interior’s office of Indian 

Affairs, oversees 185 schools, serving

about 41,000 students on or near 

Indian reservations. BIE’s mission is to 

provide students with a quality 

education. However, BIE student 

performance has been consistently 

below that of public school students, 

including other Indian students. Given 

these challenges, GAO was asked to 

review BIE school funding and 

expenditures. 

This report examines how funding 

sources and expenditures of BIE 

schools compare to those of public 

schools; the extent to which BIE has 

the staff and expertise needed to 

oversee school expenditures; and the 

extent to which BIE’s processes for 

oversight adequately ensure that 

school funds are spent appropriately.

GAO reviewed relevant federal laws, 

regulations and agency documents, 

and analyzed BIE and public school 

expenditure data for school year 2009-

10, the most recent year for which data 

were available. GAO also visited select 

BIE schools and nearby public schools 

in four states based on location, school 

and tribal size, and other factors. 

What GAO Recommends

Among other things, GAO 

recommends that Indian Affairs 

develop a workforce plan to ensure 

that BIE has the staff to effectively 

oversee school spending and written 

procedures and a risk-based approach 

to guide BIE’s oversight of school 

spending. Indian Affairs generally 

agreed with GAO’s recommendations.

What GAO Found

Unlike public schools, Bureau of Indian Education (BIE) schools receive almost 

all of their funding from federal sources. BIE directly operates about a third of its 

schools, and tribes operate two-thirds. According to BIE data, all of the BIE 

schools received a total of about $830 million in fiscal year 2014: about 75 

percent from the Department of the Interior (Interior), 24 percent from the 

Department of Education (Education), and 1 percent from the Department of 

Agriculture and other agencies. Public schools nationwide receive about 9 

percent of their funding from federal sources and rely mostly on state and local 

funding. 

GAO found that some BIE schools spend substantially more per pupil than public 

schools nationwide. Specifically, GAO estimates that the average per pupil 

expenditures for BIE-operated schools—the only BIE schools for which detailed 

expenditure data are available—were about 56 percent higher than for public 

schools nationally in school year 2009-10, the most recent year for which data 

were available at the time of GAO’s review. Several factors may help explain the 

higher per pupil expenditures at BIE-operated schools, such as their student 

demographics, remote location, and small enrollment. 

BIE lacks sufficient staff with expertise to oversee school expenditures. Since 

2011, the number of BIE full-time administrators located on or near Indian 

reservations to oversee school expenditures decreased from 22 to 13, due partly

to budget cuts. As a result, the 13 administrators have many additional 

responsibilities and an increased workload, making it challenging for them to 

provide effective oversight of schools. Additionally, these administrators have 

received less training in recent years. Further, the three administrators GAO

spoke with said they do not have the expertise to fully understand the school 

audits they are responsible for reviewing. BIE’s staffing of these positions runs 

counter to federal internal controls standards and key principles for effective 

strategic workforce planning, such as having sufficient, adequately-trained staff. 

Without adequate staff and training, BIE will not be able to ensure that school 

funds are spent appropriately. 

BIE’s processes for oversight do not adequately ensure that funds are spent 

appropriately. BIE lacks written procedures for how and when staff should 

monitor school spending and does not use a risk-based approach to prioritize 

how it should use its limited resources for oversight. Instead, BIE told GAO that it 

relies primarily on ad hoc suggestions by staff regarding which schools to 

oversee more closely. Meanwhile, some schools have serious financial 

problems. Notably, external auditors identified $13.8 million in unallowable 

spending at 24 schools as of July 2014. Further, in March 2014, an audit found 

that one school lost about $1.2 million in federal funds that were improperly 

transferred to an off-shore account. Without written procedures and a risk-based 

approach to overseeing school spending—both integral to federal internal control 

standards—there is little assurance that federal funds are being used for their 

intended purpose to provide BIE students with needed instructional and other 

educational services.

View GAO-15-121. For more information, 

contact Melissa Emrey-Arras at (617) 788-

0534 or emreyarrasm@gao.gov. 
Page i GAO-15-121 Indian Education Expenditures

Letter 1 

Background 3

BIE Schools Receive Most of their Funding from Federal Sources, 

Unlike Public Schools 8

BIE-Operated Schools Spent Substantially More Per Student than 

Public Schools Nationwide Due to Several Factors 13

BIE Lacks Sufficient Staff with Expertise to Oversee School 

Expenditures 21

BIE’s Processes Are Not Adequate to Ensure that School Funds 

Are Spent Appropriately 26

Conclusions 33

Recommendations for Executive Action 34

Agency Comments and Our Evaluation 34

Appendix I Objectives, Scope, and Methodology 37

Appendix II Comments from the Department of the Interior 44

Appendix III GAO Contacts and Staff Acknowledgments 49

Tables

Table 1. Selected Characteristics of Bureau of Indian EducationOperated Day Schools and Public Schools Nationwide in 

School Year 2009-10 16

Table 2: Bureau of Indian Education (BIE) Procedures to Oversee 

its Largest Programs 29

Figures

Figure 1: Department of Interior Offices Responsible for Oversight 

of Bureau of Indian Education School Expenditures 7

Figure 2: Federal Funds to Operate Programs at Bureau of Indian 

Education (BIE) Schools for Grades K-12, Fiscal Year 

2014 9

Figure 3: Funding Sources for Public Schools Nationwide in 

School Year 2009-10 12

Contents
Page ii GAO-15-121 Indian Education Expenditures

Figure 4: Estimated Averages of Operating Expenditures Per Pupil 

at Bureau of Indian Education-Operated Day Schools and 

Public Schools Nationwide in School Year 2009-10, 

Excluding Capital Expenditures, Debt Service, and 

Certain Other Expenditures 14

Figure 5: Winter Road Conditions Near One Bureau of Indian 

Education School 19

Abbreviations

Administration Division of Administration 

BIE Bureau of Indian Education 

DOD Department of Defense

Education Department of Education 

ESEA Elementary and Secondary 

Education Act of 1965 

IDEA Individuals with Disabilities 

Education Act 

Indian Affairs Office of the Assistant SecretaryIndian Affairs 

Interior Department of the Interior 

ISEP Indian School Equalization Program 

Performance and Accountability Division of Performance and 

Accountability 

Recovery Act American Recovery and 

Reinvestment Act of 2009 

Title I Title I, Part A of the Elementary and 

Secondary Education Act of 1965 

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-15-121 Indian Education Expenditures

441 G St. N.W.

Washington, DC 20548

November 13, 2014

The Honorable Ken Calvert

Chairman

Subcommittee on Interior, Environment, and Related Agencies

Committee on Appropriations

House of Representatives

Dear Mr. Chairman:

In fiscal year 2014, the Departments of the Interior (Interior) and 

Education (Education) provided about $830 million to Bureau of Indian 

Education (BIE) schools. BIE, within Interior, administers 185 elementary 

and secondary schools that serve approximately 41,000 students on or 

near Indian reservations in 23 states. Of the 185 schools, 58 are directly 

operated by BIE (BIE-operated), and 127 are operated by tribes (triballyoperated) mostly through federal grants.1 These schools serve about 7 

percent of the Indian student population, mostly low-income students in 

rural communities.

Student performance at BIE schools has been consistently below that of 

public school students, including other Indian students attending public 

schools. In addition, high school graduation rates at BIE schools are 

lower than the national average. Given these longstanding challenges 

that BIE schools face, questions have been raised about the amount of 

resources available to them as compared to public schools. GAO was 

asked to review BIE school funding and expenditures. This report 

examines: (1) how sources of funding for BIE schools compare to those 

of public schools; (2) how BIE school expenditures compare to those of 

public schools; (3) the extent to which BIE has the staff and expertise 

needed to oversee school expenditures; and (4) the extent to which BIE’s 

processes are adequate for ensuring that school funds are spent 

appropriately.

To address these objectives, we used multiple data collection 

methodologies. For all four objectives, we reviewed relevant federal laws 

 

1

According to BIE officials, BIE provides grants for 124 of 127 tribally-operated schools 

and provides funds to the remaining three schools through contracts.
 

Page 2 GAO-15-121 Indian Education Expenditures

and regulations, and Interior, BIE, and Education documents, including 

guidance, internal correspondence, and reports. In addition, we 

interviewed officials from Interior and Education.

To compare the sources of BIE and public schools’ funding, we analyzed 

BIE budget documents and related information, and data from 

Education’s Common Core of Data, School District Finance Survey. To 

compare BIE school expenditures with those of public schools, we 

analyzed data from Interior, including the Federal Financial System, and 

BIE’s Native American Student Information System. Because BIE has 

very limited data on tribally-operated school expenditures and 

expenditures at boarding schools would not be comparable to those of 

typical public schools, we generally analyzed data for the 32 BIEoperated day schools. The expenditure data was for school year 2009-10, 

the most recent year for which Education data were available at the time 

of our analysis. To determine the extent to which BIE has the staff and

expertise needed to oversee school expenditures, we analyzed BIE data 

on the number and location of staff currently responsible for overseeing 

these expenditures as well as data on staff training. To determine the 

extent to which BIE’s processes are adequate for ensuring that school 

funds are spent appropriately, we reviewed available oversight 

procedures and protocols for BIE schools, and reviewed the summary 

results of all tribally-operated schools’ single audits and the single audits 

of select tribally-operated schools, selected based on audit opinions of 

their poor compliance with program requirements for a 3 year period 

(fiscal year 2010 to fiscal year 2012) and information from BIE officials. 

We assessed the reliability of Education’s Common Core of Data, 

Interior’s Federal Financial System, BIE’s Native American Student 

Information System, and the Federal Audit Clearinghouse audit data by, 

among other things, (1) reviewing existing information about the data and 

systems that produced them and (2) obtaining information from agency 

officials knowledgeable about the databases. We determined that these 

data were sufficiently reliable for the purposes of this report.

Additionally, we conducted site visits to 16 BIE-operated and triballyoperated schools that varied by school and tribal size, and location. For 

comparison, we also visited or spoke by telephone with officials from four 

public school districts that we selected based on their geographic 

proximity to the BIE schools and their student demographics. The views 

of the officials we spoke with at these locations are not generalizable to 

all administrators at BIE or public schools nationwide.
 

Page 3 GAO-15-121 Indian Education Expenditures

We compared BIE’s oversight of expenditures for all of its schools to the 

criteria on key practices for Standards for Internal Control in the Federal 

Government,2 and for strategic workforce planning.3 (See appendix I for 

more detail on the scope and methodology.)

We conducted this performance audit from January 2014 through 

November 2014 in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions.

BIE’s mission is to provide Indian students with quality education 

opportunities starting in early childhood. Its Indian education programs 

derive from the federal government’s trust relationship with Indian tribes, 

a responsibility established in federal statutes, treaties, and court 

decisions. Students attending BIE schools generally must be members of 

federally recognized Indian tribes, or descendants of members of such 

tribes, and reside on or near federal Indian reservations.4 About one-third 

of BIE schools serve students from the Navajo Nation.

BIE schools are primarily funded through Interior, but like public schools, 

they also receive annual formula grants from Education. Like state 

educational agencies that oversee public schools in their respective 

states, BIE administers and oversees the operation of these Education 

grants, including grants through two Acts: the Elementary and Secondary 

 

2

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

3

GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

GAO-04-39 (Washington, D.C.: Dec. 11, 2003), and GAO, A Model of Strategic Human 

Capital Management, GAO-02-373SP (Washington, D.C.: Mar. 15, 2002).

4

Certain students who are not Indian may attend BIE schools, for example, children of 

school staff may generally attend BIE schools.

Background

Student Population

Federal Grants and Single 

Audits
 

Page 4 GAO-15-121 Indian Education Expenditures

Education Act of 1965 (ESEA) and the Individuals with Disabilities 

Education Act (IDEA). Title I, Part A of ESEA (Title I)—the largest funding 

source for kindergarten through grade 12 under ESEA—provides funding 

to expand and improve educational programs in schools with students 

from low-income families and may be used for supplemental services to 

improve student achievement, such as instruction in reading and 

mathematics. BIE schools receive IDEA funding for special education and 

related services, such as physical therapy or speech therapy, for children 

with disabilities.

BIE has access to some detailed, real-time expenditure data for BIEoperated schools since they are operated directly by BIE. For example, 

BIE has direct access to these schools’ costs for transportation, 

instruction, and operations. Access to these data enables BIE officials to 

closely track BIE-operated school spending. However, certain costs for 

administrative services to operate BIE schools, such as procurement or 

human resources, are not performed or tracked by BIE. As we reported in 

September 2013, BIE is part of the Office of the Assistant SecretaryIndian Affairs (Indian Affairs), and Indian Affairs performs many 

administrative functions to support BIE-operated schools that a school 

superintendent’s office or school district typically would.5 However, Indian 

Affairs does not currently identify all its costs to support BIE schools, 

despite our 2003 report in which we recommended that it do so, in 

accordance with federal accounting standards.6

Meanwhile, the Tribally Controlled Schools Act of 1988 limits the financial 

information that most tribally-operated schools are required to submit to 

BIE.7 Tribal school grantees must complete an annual report that 

 

5

GAO, Indian Affairs: Better Management and Accountability Needed to Improve Indian 

Education, GAO-13-774 (Washington, D.C.: Sept. 24, 2013).

6

GAO, Bureau of Indian Affairs Schools: Expenditures in Selected Schools Are 

Comparable to Similar Public Schools, but Data Are Insufficient to Judge Adequacy of 

Funding and Formulas, GAO-03-955 (Washington, D.C.: Sept. 4, 2003). Indian Affairs 

initially agreed with our 2003 recommendation, but subsequently reported that it would

defer action until Interior adopted a new integrated financial system with the ability to track 

these costs. In late 2012, Interior rolled out a new financial system to entities within Indian 

Affairs, including BIE, which has the capability to track these administrative costs. 

However, in April 2014, Indian Affairs reported that it would not be cost-effective to track 

the cost of administrative services it provides to BIE schools. However, Indian Affairs 

acknowledged that it has not analyzed or estimated the resources required to do so.

7

25 U.S.C. §§ 2505(b), 2503(b)(1).
 

Page 5 GAO-15-121 Indian Education Expenditures

includes, among other things, an annual financial statement reporting 

revenue and expenditures as well as a financial audit in accordance with 

the Single Audit Act of 1984.8 This law, as implemented by the Office of 

Management and Budget, requires a financial audit of grantees who 

expend at least $500,0009 in federal grants and other assistance in a 

fiscal year.10 These audits are commonly called “single audits.” The audits 

are carried out at the end of a school’s fiscal year and are conducted by 

independent auditors who are contracted by the grantee. They include 

both the entity’s financial statements and the records of spending of 

federal grant awards for each program.11 Auditors determine whether the 

grantee met the compliance requirements listed in the Office of 

Management and Budget’s Circular No. A-133 Compliance Supplement 

for each program.12 Auditors also report on the entity’s internal control 

over compliance for these programs and report identified control 

deficiencies or noncompliance in the single audit report. It is the grantee’s 

responsibility to follow up and take corrective actions on the audit 

findings. Auditors also must follow up on findings from past years’ audits, 

 

8

Throughout this report we use “Single Audit Act” to refer to the Act as amended. See 31 

U.S.C. §§ 7501-7507. The Single Audit Act is intended, among other things, to promote 

sound financial management, including effective internal controls regarding federal awards 

administered by nonfederal entities. A single audit consists of (1) an audit and opinions on 

the fair presentation of the financial statements and the Schedule of Expenditures of 

Federal Awards; (2) gaining an understanding of and testing internal control over financial 

reporting and the entity’s compliance with laws, regulations, and contract or grant 

provisions that have a direct and material effect on certain federal programs; and (3) an 

audit and an opinion on compliance with applicable program requirements for certain 

federal programs.

9

The Single Audit Act requires that the Director of the Office of Management and Budget 

undertake a bi-annual review of the threshold for the audit requirement. The current 

threshold is $500,000. This will increase to $750,000 generally starting in 2015. 78 Fed. 

Reg. 78,590 (Dec. 26, 2013).

10According to BIE officials, each of the tribally-operated schools spends at least $500,000 

in federal funds. 

11Auditees are required to establish and maintain internal control that can reasonably be 

expected to help ensure compliance with laws, regulations, and grant agreements.

12The Compliance Supplement provides auditors the information needed to understand 

federal programs’ objectives, procedures, and compliance requirements relevant to the 

single audit. It also provides the auditors with guidance for determining whether federal 

programs are compliant with these requirements (laws, regulations, and provisions of 

contract or grant management).There are multiple compliance requirements, which 

include allowable costs/cost principles, eligibility, and cash management. The auditor 

considers the applicability of the requirements to each major program and performs tests 

and other audit procedures where appropriate.
 

Page 6 GAO-15-121 Indian Education Expenditures

as reported by the grantee. According to Indian Affairs’ policy manual, 

BIE has several responsibilities that pertain to single audit reporting, 

including ensuring that audits are completed and reports submitted; 

providing technical advice and counsel to grantees as requested; and 

issuing a management decision on audit findings within six months after 

receipt of the audit report.

BIE is under Indian Affairs, and the BIE director is responsible for the 

direction and management of education functions, including the formation 

of policies and procedures, supervision of all program activities, and 

approval of the expenditure of funds for education purposes. BIE has a 

central office in Washington, D.C.; a major field service center in 

Albuquerque, New Mexico; three regional offices (one in the east and two 

in the west, including one serving only schools in the Navajo Nation); and 

22 education line offices located on or near Indian reservations, 17 of 

which currently have responsibilities for financial oversight.

On June 13, 2014, the Secretary of the Interior issued an Order 

restructuring BIE. The reorganization is to occur in two phases, with the 

first phase becoming operational before the start of the 2014-15 school 

year. The second phase is anticipated to be operational by the end of the 

2015-16 school year. Additionally, the Order states that Interior will 

strengthen and support the efforts of tribal nations to directly operate BIE 

schools.

At the time of our review, several offices were responsible for oversight of 

BIE school expenditures (see fig. 1).

• BIE’s local education line offices have been responsible for providing 

oversight and technical assistance to both BIE- and tribally-operated 

schools. Education line office administrators are the lead education 

administrators for these offices and have responsibilities similar to 

school district superintendents for BIE-operated schools.

Additionally, education line office administrators serve as grant 

officers to tribally-operated schools, allowing or disallowing costs 

questioned in BIE schools’ single audits.

• BIE’s Division of Performance and Accountability (Performance and 

Accountability), located in Albuquerque, administers and oversees 

Education-funded programs for BIE schools and develops strategies 

to improve academic achievement. Staff are responsible for 

overseeing BIE- and tribally-operated schools’ IDEA and ESEA 

programs.

Organization and 

Oversight
 

Page 7 GAO-15-121 Indian Education Expenditures

• BIE’s Division of Administration (Administration), also in Albuquerque, 

implements budget policies, procedures, processes, and systems for 

all fiscal and accounting functions for education programs and 

schools. According to senior BIE officials, Administration staff oversee 

expenditures for Interior and Education-funded programs for both BIEand tribally-operated schools, but their main focus is on BIE-operated 

schools.

• Indian Affairs’ Office of Internal Evaluation and Assessment—staffed 

mainly by accountants and auditors—is responsible for providing 

guidance and oversight to BIE to ensure that internal controls are 

established and maintained. The office maintains an automated 

tracking system to provide Administration and line office management 

with information on the status of tribally-operated schools’ single 

audits; notifies Administration and line office management when 

schools have failed to submit the audits; reviews all audits submitted 

to Administration; and is responsible for providing technical assistance 

to line office administrators. This office provides these and many other 

services to all Indian Affairs organizations. According to the office’s 

director, BIE represents a very small portion of the office’s overall 

portfolio.

Figure 1: Department of Interior Offices Responsible for Oversight of Bureau of Indian Education School Expenditures

a

As of April 2014, BIE operated 31 day schools, 26 boarding schools, and 1 dormitory (a residential 

site). This count reflects the transition of one school in July 2013, which changed from BIE-operated 

to tribally-operated. At the time of our analysis there were 32 BIE-operated day schools.
 

Page 8 GAO-15-121 Indian Education Expenditures

b

As of April 2014, tribes operated 89 day schools, 25 boarding schools, and 13 dormitories (primarily 

residential sites). This count reflects the transition of one school in July 2013, which changed from 

BIE-operated to tribally-operated.

All BIE schools—both BIE-operated and tribally-operated—receive almost 

all of their funding to operate from federal sources, namely, Interior and 

Education. Specifically, these elementary and secondary schools 

received approximately $830 million in fiscal year 2014—including about 

75 percent, or $622 million from Interior and about 24 percent, or 

approximately $197 million, from Education. BIE schools also received 

small amounts of funding from other federal agencies, mostly the 

Department of Agriculture (see fig. 2).

BIE Schools Receive 

Most of their Funding 

from Federal 

Sources, Unlike 

Public Schools

BIE Schools Receive 

Funding Mainly from 

Interior and Education
 

Page 9 GAO-15-121 Indian Education Expenditures

Figure 2: Federal Funds to Operate Programs at Bureau of Indian Education (BIE) Schools for Grades K-12, Fiscal Year 2014

Notes: Due to rounding, numbers may not sum to totals. Certain funding amounts are estimates for 

school year 2014-15 based on estimated amounts from the prior school year as of May 2014. For one 

program, we estimated school year 2014-15 funding based on actual amounts received as of May 

2014, which accounted for most of school year 2013-14. Funding for capital, debt service, and related 

programs are not shown, because they are not considered as funding for ongoing operations.

a BIE’s largest federal funding source other than Interior or Education was the Department of 

Agriculture, which administers the National School Lunch Program and the School Breakfast Program 

for school meals, including reduced-price or free meals for eligible low-income children. The estimate 

above of $9.2 million applies to BIE-operated schools. BIE officials did not know the amount of funds 

that tribally-operated schools received from the Department of Agriculture for school meals since 

these funds flow through states rather than BIE. Also, Education or other agencies may provide 

relatively small amounts directly to tribally-operated schools, such as through competitive grant 

programs, but these amounts would not be included in the figure above.

The largest source of funding for BIE schools is Interior’s Indian School 

Equalization Program (ISEP).13 ISEP provides funding for basic 

 

13This and certain other programs generally provide forward funding for the school year 

beginning in July of the federal fiscal year. For example, for funds appropriated for fiscal 

year 2009 (October 2008 to September 2009), funding for these programs would become 

available in July 2009, generally for school year 2009-10 (July 2009 to June 2010). For 

BIE-operated schools, these Interior funds are generally available for 15 months for the 

agency to obligate the funds, while certain Education funds are generally available for 

obligation for another fiscal year.
 

Page 10 GAO-15-121 Indian Education Expenditures

instruction; supplemental instruction, such as language development and 

gifted and talented programs; staffing to oversee student residences and 

dormitories; and food service, among other services.14 The second and 

third largest sources of funding for BIE schools are from Education’s Title 

I and IDEA programs, respectively. Funding under Title I accounted for 

about $93.2 million of the $120.9 million that BIE received in fiscal year 

2014 under ESEA programs.15

Except for a 2-year infusion of $149 million of funding in 2009 and 2010 

through the American Recovery and Reinvestment Act of 2009 (Recovery 

Act)16 and a related act,

17 according to BIE documents, total annual 

funding from Interior and Education fluctuated slightly from fiscal year 

2009 to fiscal year 2014.18 Excluding Recovery Act funding, annual 

funding for BIE schools increased overall from fiscal year 2009 to fiscal 

year 2014 by about 6 percent in nominal terms, which does not account 

for inflation. However, adjusting for inflation,19 we estimate that funding 

during that period actually decreased slightly, by about 1 percent.20

Meanwhile, for public schools, funding data from Education were 

generally not available for the full period from fiscal year 2009 to fiscal 

year 2014.

 

14An Interior regulation generally requires BIE schools to set aside 15 percent of their 

ISEP basic instruction funding for special education. 25 C.F.R. § 39.104.

15The remainder came from such ESEA grant programs as Teacher Quality Improvement 

under Title II, 21st Century Community Learning Centers under Title IV, and School 

Improvement Grants under Title I.

16Pub. L. No. 111-5, 123 Stat. 115. Enacted in February 2009, the Recovery Act provided 

about $800 billion in federal funds, including nearly $100 billion for education programs. 

Some of these education funds were also available for postsecondary education and noneducation purposes. The act’s federal funding was intended, among other things, to help 

states minimize and avoid reductions in state and local government services.

17Pub. L. No. 111-226, § 101, 124 Stat. 2389. This law was enacted in 2010, and provided 

an additional $10 billion for the Education Jobs Fund to create or retain education jobs 

nationwide, generally for school year 2010-11. 

18We analyzed BIE budget information for these funding amounts.

19The inflation factor for fiscal year 2014 is a forecast.

20BIE funding appeared to increase in fiscal year 2012, when the program for facilities 

maintenance became part of the budget of BIE rather than another agency in Indian 

Affairs. Unlike the Recovery Act, this change did not reflect an additional appropriation, 

but rather moved an existing program within Indian Affairs.
 

Page 11 GAO-15-121 Indian Education Expenditures

According to BIE officials, very little funding for BIE schools comes from 

non-federal sources. BIE-operated schools received very little tribal, state, 

or other revenue in fiscal year 2014, according to BIE. However, some 

tribally-operated schools received a small amount of revenue from other 

sources, such as tribes. Of the schools we visited that serve tribes in four 

states, officials from one tribe, which operated casinos, reported 

contributing a small amount of funding to its schools.21

Unlike BIE schools, the vast majority of funding for public schools 

nationwide comes from state and local sources, while a relatively small 

proportion comes from federal sources. For example, in school year 

2009-10, public schools nationwide received about 87 percent of their 

funding from state and local sources—43 percent from state sources and 

44 percent from local sources. In contrast to BIE schools, federal funding 

has generally comprised about 9 percent of public schools’ funding from 

school year 2002-03 to 2008-09. Subsequently, in school year 2009-10, 

federal funding for public schools comprised about 13 percent, which was 

slightly higher than in previous years due in part to the Recovery Act.22

(See fig. 3.) For public schools nationally, Education’s Title I and IDEA 

programs provide the largest amounts of federal funding.

 

21In 2014, we reported that slightly less than half of federally recognized tribes had 

gaming operations, and a few large operations accounted for a major portion of the 

gaming revenue. GAO, Indian Gaming: Preliminary Observations on the Regulation and 

Oversight of Indian Gaming, GAO-14-743T (Washington, D.C.: July 23, 2014).

22In the two school years before the Recovery Act, when the federal portion was about 9 

percent, total funding amounts were similar to the total amount in school year 2009-10, 

both in nominal and in real, or inflation-adjusted, terms.

Public Schools Receive 

Limited Federal Funding
 

Page 12 GAO-15-121 Indian Education Expenditures

Figure 3: Funding Sources for Public Schools Nationwide in School Year 2009-10

The percent of federal funding of public schools varies across states and 

local school districts. For example, in one district we visited, which was 

located near BIE schools, federal funding accounted for about 35 percent 

of its funding, and in another district about 68 percent. A key reason for 

the larger amount of federal funding for these districts was their funding 

from a federal formula grant program known as Impact Aid. Impact Aid is 

intended to compensate school districts for funding losses resulting from 

federal activities.23 These funds were in addition to the districts’ Title I and 

IDEA funding.

 

23Federal activities include the enrollment in school districts of children whose parents 

work or live on federal or other land (e.g., children living on Indian lands or military bases). 

The federal government provides compensation because these activities deprive school 

districts of the ability to collect property or other taxes from these individuals. BIE schools 

generally do not receive Impact Aid. For more information on Impact Aid, see, GAO, 

School Facilities: Physical Conditions in School Districts Receiving Impact Aid for

Students Residing on Indian Lands, GAO-10-32 (Washington, D.C.: Oct. 29, 2009).
 

Page 13 GAO-15-121 Indian Education Expenditures

Average per-pupil expenditures for the 32 BIE-operated day schools were 

at least 56 percent higher than in public schools nationally in school year 

2009-10, and were higher in the four categories of operating expenditures 

that we analyzed.24 According to our analysis, BIE-operated day schools 

spent an estimated average of at least $15,391 per pupil, while public 

schools nationwide spent an estimated average of $9,896, excluding food 

service.25,26 (See fig. 4). When Recovery Act spending was excluded, perpupil expenditures for these BIE-operated schools were at least 61 

percent greater than at public schools. Similarly, we found higher perpupil expenditures at BIE-operated day schools in the categories of 

instruction (the largest category), transportation, facilities operations and

maintenance, and administration. For example, transportation 

expenditures were more than twice as much at BIE-operated schools 

than at public schools nationwide.

 

24School year 2009-10 was the most recent year for which data were available at the time 

of our analysis.

25Estimated per-pupil expenditures including food service were $16,394 at BIE-operated 

day schools and $10,295 at public schools nationwide in school year 2009-10. Higher BIE 

school expenditures for food service may relate to the predominance of low-income 

students who qualify for free or reduced school lunch and other meals such as breakfast, 

according to an Indian Affairs report.

26We also explored the possibility of comparing BIE schools with a subset of public 

schools, such as schools receiving Title I funds for low-income children. However, data 

limitations hindered such an analysis. For example, Education data on expenditures were 

collected at the level of districts, but schools within the district may vary in the extent that 

they receive Title I funds.

BIE-Operated 

Schools Spent 

Substantially More 

Per Student than 

Public Schools 

Nationwide Due to 

Several Factors

BIE-Operated Day 

Schools Spent at Least 

50 Percent More Per Pupil 

than the National Average 

for Public Schools
 

Page 14 GAO-15-121 Indian Education Expenditures

Figure 4: Estimated Averages of Operating Expenditures Per Pupil at Bureau of Indian Education-Operated Day Schools and 

Public Schools Nationwide in School Year 2009-10, Excluding Capital Expenditures, Debt Service, and Certain Other 

Expenditures

Notes: Numbers may not sum to totals due to rounding, and include expenditures from the American 

Recovery and Reinvestment Act of 2009.

a

We derived our estimate of facilities operations and maintenance from 19 of the 32 BIE-operated day 

schools. We excluded 13 schools that appeared to spend less than $5 per pupil. These schools may 

not directly spend funds on facilities operations and maintenance, since other entities, such as the 

education line office, may be responsible for these expenses.

Unlike the national averages, per-pupil expenditures at 4 of the 16 BIE 

schools that we visited appeared similar to those at nearby public school 

districts. Like the BIE schools we visited, these nearby rural public school 

districts served students who were mostly Indian and low-income. Thus, 

certain student demographics as well as the geographic location of the 

schools were comparable. In one state, two tribally-operated schools 

spent an estimated $17,066 per pupil, and the nearby public school 

district spent $17,239 per pupil. In another state, per-pupil expenditures, 

excluding facilities operations and maintenance, were $12,972 at two 

BIE-operated schools and $11,405 at the nearby public school district.27

However, the findings from this sample are not generalizable to all BIE 

and nearby public schools. Also, data limitations prevented us from 

comparing the other 12 BIE schools that we visited with nearby public 

schools.

28

 

27These expenditures exclude facilities operations and maintenance since the local 

education line office pays for such services for these and other BIE schools. BIE does not 

centrally collect data on these expenditures.

28These limitations included some BIE schools’ lack of responsiveness to our data 

requests and data from one nearby public school district that appeared unreliable. (See 

app. I for more information on our methodology and data limitations.)
 

Page 15 GAO-15-121 Indian Education Expenditures

Several factors help to explain higher per-pupil expenditures at the 32 

BIE-operated schools relative to public schools nationwide (see table 1).

• Student demographics. Students in BIE schools—both triballyoperated and BIE-operated—tend to have different demographic 

characteristics than students in public schools nationally. These 

characteristics, including higher poverty rates and a higher percent of 

students with special needs, are among the factors yielding higher 

per-pupil expenditures on average, as we have noted in previous 

reports.29 In BIE schools, students tend to be from lower income 

households than public school students. For example, all BIE schools 

were eligible for Title I funding on a school-wide basis because they 

all had at least 40 percent of children from low income households in 

school year 2009-10, according to an Education study.30 In contrast, 

half of all public schools were eligible for Title I funds on a school-wide 

basis. In addition, BIE-operated day schools have a higher 

percentage of students receiving special education services than 

public schools nationwide, according to BIE and Education data. 

Students in special education generally need additional services, such 

as physical, occupational or speech therapy, so expenditures tend to 

be higher for these students.

• Smaller enrollment and remote location. The smaller enrollment and 

isolated location of many BIE schools contribute to their higher 

expenditures. In school year 2009-10, BIE schools, including BIEoperated schools, generally had smaller average enrollment than 

public schools nationwide. For example, over 85 percent of BIEoperated day schools (28 of 32 schools) had fewer than 300 students 

according to our analysis, as compared to about 30 percent of public 

schools nationwide. Along with smaller size, the remote location of 

many BIE schools hinders their ability to benefit from economies of 

scale, as we have previously reported.31 For example, expenditures 

 

29See, for example, GAO, School Finance: Per-Pupil Spending Differences between 

Selected Inner City and Suburban Schools Varied by Metropolitan Area, GAO-03-234

(Washington, D.C.: Dec. 9, 2002).

30U.S. Department of Education, National Center on Education Statistics, Documentation 

to the NCES Common Core of Data Public Elementary/ Secondary School Universe 

Survey: School Year 2009–10. (Washington, D.C.: August 2012).

31GAO-03-955. In that report, we also found that per-pupil expenditures at BIE-operated 

schools were higher than at public schools nationwide, but were comparable for selected 

similar BIE and public schools.

Several Factors Contribute 

to Higher Per-Pupil 

Expenditures at BIEOperated Schools
 

Page 16 GAO-15-121 Indian Education Expenditures

for facilities operations and maintenance may be higher, to the extent 

that many schools are geographically dispersed and unable to share 

facilities personnel, supplies, or services.

Table 1. Selected Characteristics of Bureau of Indian Education-Operated Day Schools and Public Schools Nationwide in 

School Year 2009-10

Percentage of schools with large number of lowincome students, as measured by schools’ 

eligibility for school-wide Title I programsa

Percentage of 

students in special 

education

Average student 

enrollment

BIE-operated day schools 100 18b 173c

Public schools 50 13d 546

Source: GAO analysis of BIE and Education data. | GAO-15-121

Notes:

a For schools to be eligible school-wide for Title I programs under the Elementary and Secondary 

Education Act, at least 40 percent of children must qualify as low income. In school year 2009-10, all 

BIE schools were eligible on a school-wide basis. U.S. Department of Education, National Center on 

Education Statistics, Documentation to the NCES Common Core of Data Public Elementary/ 

Secondary School Universe Survey: School Year 2009–10. (Washington, D.C.: August 2012).

b The percentage for tribally-operated day schools was about 20 percent. The percentage for all 

boarding schools—both BIE-operated and tribally-operated—was about 14 percent, and the overall 

percentage for all BIE day and boarding schools was about 18 percent.

c The average for tribally-operated day schools was about 234 students. For all BIE boarding schools, 

the average enrollment in school year 2009-10 was about 292 students. For all BIE day and boarding 

schools, the average enrollment was about 240 students.

d This percentage applies to children and youth ages 3-21 in the 50 states, the District of Columbia, 

and BIE schools.

Other factors may help explain higher per-pupil expenditures at BIEoperated schools, including the higher costs of instruction, transportation, 

facilities operations and maintenance, and administration.

Instructional expenditures were greater at BIE-operated schools than at 

public schools nationwide, due partly to teacher salaries. Teacher salaries 

were typically higher in BIE-operated schools than in public schools, 

according to BIE salary schedules and an Education study of school year 

2011-12.32 For example, in school year 2011-12, the yearly base salary 

for a teacher with a bachelor’s degree and no experience at BIE-operated

schools was $39,775, compared to averages of $35,500 at public schools 

 

32Education’s study of school year 2011-12 currently has the most recent data available 

for public schools on teacher salaries. U.S. Department of Education, National Center for 

Education Statistics, Characteristics of Public School Districts in the United States: 

Results From the 2011–12 Schools and Staffing Survey, First Look, NCES 2013-311 

(Washington, D.C.: July 2013).

Instruction
 

Page 17 GAO-15-121 Indian Education Expenditures

nationwide and $33,200 at rural public schools nationwide.33 The higher 

salaries at BIE-operated schools are mainly due to a federal law which 

requires BIE to pay teachers using the same pay scale as teachers at 

Department of Defense schools located overseas.34 The law requires 

similar pay, in part, to help recruit and retain teachers at BIE-operated 

schools.

Although our analysis of per-pupil expenditures focused on BIE-operated 

schools, teacher salaries at tribally-operated schools—which set their 

own salary amounts—generally were lower than teacher salaries at public 

schools. According to an Education study of school year 2007-08 (the 

most recent study that included tribally-operated schools), all BIE 

schools—two-thirds of which were tribally-operated—paid teachers, on 

average, an estimated base salary of $41,500. By contrast, public schools 

nationwide paid, on average, an estimated base salary of $49,600, 

including an average of $44,000 in rural public schools.35 According to 

Education’s study of school year 2007-08, teachers at BIE schools and 

public schools nationwide generally appeared to have similar years of 

experience, but a slightly lower percentage of teachers at BIE schools 

had a master’s degree as their highest degree compared to public school 

teachers nationally.

In addition, BIE schools had lower median student-teacher ratios than 

public schools in school year 2009-10, which makes per-pupil spending 

higher.36 The median ratio was 11.4 students per teacher at all BIE 

 

33For public schools nationwide, the 95 percent confidence interval for this estimate was 

$35,284 to $35,716. For rural public schools nationwide, the 95 percent confidence 

interval for this estimate was $33,004 to $33,396. 

3425 U.S.C. § 2012(g)(1)(B).

35The estimate for the average base salary at BIE schools has a 95 percent confidence 

interval from $40,500 to $42,450. The estimate for average base salary at public schools 

nationwide has a 95 percent confidence interval from $49,208 to $49,992, and the 

estimate for rural public schools has a 95 percent confidence interval from $43,373 to 

$44,627. U.S. Department of Education, National Center for Education Statistics, 

Characteristics of Public, Private, and Bureau of Indian Education Elementary and 

Secondary School Teachers in the United States: Results from the 2007-08 Schools and 

Staffing Survey, First Look, NCES 2009-324 (Washington, D.C.: June 2009).

36Student-teacher ratio is distinct from class size, as these measures are calculated

differently. We cited student-teacher ratio due to our prior work in a 2002 report, when we 

found that this measure was a significant determinant of per-pupil expenditures in select 

urban and suburban schools. GAO-03-234. 
 

Page 18 GAO-15-121 Indian Education Expenditures

schools and 15.5 students per teacher at public schools, according to an 

Education study.37 This lower ratio mainly relates to the smaller average 

enrollment at BIE schools than at public schools, which limits BIE schools’ 

ability to benefit from economies of scale.

BIE reported that the remote locations of its schools and poor road 

conditions contributed to higher transportation expenditures than those of 

public schools, among other factors. For example, daily round-trip bus 

routes averaged about 80 miles for all BIE schools and ranged from a few 

miles to more than 320 miles, according to BIE officials. Also, the poor 

road conditions, including dirt or unimproved roads, lead to wear and tear 

on vehicles transporting students, according to BIE budget documents 

and administrators at schools we visited (see fig. 5). By contrast, slightly 

more than half of public schools are located in cities or suburbs, and 

therefore may be unlikely to face such long bus routes or poor road 

conditions. As transportation expenditures increase, BIE reported that 

schools are trying to contain costs in various ways, such as combining or 

reducing bus routes or using more appropriate vehicles for the number of 

students or road conditions.

 

37U.S. Department of Education, National Center for Education Statistics, Documentation 

to the NCES Common Core of Data Public Elementary/Secondary School Universe 

Survey: School Year 2009-10, Version Provisional 2a, NCES 2011-348rev (Washington, 

D.C.: August 2012).

Transportation
 

Page 19 GAO-15-121 Indian Education Expenditures

Figure 5: Winter Road Conditions Near One Bureau of Indian Education School

Facilities-related expenditures may be higher at BIE-operated schools 

than public schools because a greater proportion of schools that BIE 

manages are in poor condition than public schools. BIE reported that 

about one-third of its schools were in poor condition as of the end of 

school year 2012-13, while two-thirds were in fair or good condition. At 

one school we visited that BIE identified as in poor condition, the main 

classroom building was built in the 1930s, and several other school 

buildings no longer had functioning heat. Conversely, an estimated 3 

percent of public schools nationwide with permanent buildings reported 

that they were in poor condition in school year 2012-13, excluding 

temporary, or portable, buildings.38,39

 

38The 95 percent confidence interval for this estimate was 2 percent to 4 percent. 

However, public school officials self-reported the condition of their schools without 

necessarily having an inspection, while BIE noted that its assessment is based partly on 

inspections that are supposed to be done on a 3-year cycle. U.S. Department of 

Education, National Center on Education Statistics, Condition of America’s Public School 

Facilities: 2012-13, First Look, NCES 2014-022 (Washington, D.C.: March 2014).

Facilities Operations and 

Maintenance
 

Page 20 GAO-15-121 Indian Education Expenditures

BIE-operated schools may also have higher facilities-related expenditures 

than public schools because some BIE schools are responsible for 

funding the operations and maintenance of many services that public 

school districts typically are not, such as water and sewer service or trash 

and snow removal. For example, at another BIE school we visited in poor 

condition, the 50-year old building lacked a sprinkler system and was 

located in a remote area. As a result, school officials said that they 

provide a fire truck and supplies for the school as well as for the local 

vicinity, contributing to higher operations and maintenance expenditures.

As with other categories of spending, higher per-pupil spending on 

administration at the 32 BIE-operated day schools relates partly to their 

smaller average enrollment than enrollment at public schools. As we 

reported in 2003, expenditure categories for administration are not 

comparable for BIE and public schools in light of their different 

organizational structures.40 At BIE-operated day schools in school year 

2009-10, about $1,502 of the $15,391 in per-pupil expenditures, or about 

10 percent, was for administration. Of the $1,502 per pupil for 

administration, $1,149 was spent on school-level administration, such as 

principals’ salaries; $47 was allotted for the school board; and an 

estimated $306 was spent by BIE education line offices. These offices 

provide academic and financial guidance, similar to a school district’s 

office of the superintendent. Meanwhile, public schools in school year 

2009-10 spent per pupil, on average, $1,088, or about 10 percent, for 

administration: about $568 for school-level administration, $186 for the 

school board and the office of the superintendent, and $334 for additional 

administration, such as procurement, finance, and payroll.

However, the costs for administering BIE-operated schools are greater 

than $1,502 per pupil since our estimate excludes the costs of the 

administrative services that Indian Affairs provides to BIE. Indian Affairs 

performs many administrative functions to support BIE-operated schools 

that a school or school district typically would, such as procurement, 

finance, and human resources. However, Indian Affairs does not currently 

 

39For public schools on or near Indian lands, we found in 2009 that limited nationwide 

data were available on the physical condition of public school facilities in districts that 

received Impact Aid funding for students living on Indian lands. GAO-10-32. 

40GAO-03-955. 

Administration
 

Page 21 GAO-15-121 Indian Education Expenditures

identify all the costs associated with supporting these schools.41 These 

costs and services are to shift from Indian Affairs to BIE by the end of 

school year 2015-16, according to a June 2014 Order from the Secretary 

of the Interior.42

Line office administrators are integral to overseeing school expenditures, 

but the number of full-time administrators who oversee school 

expenditures decreased from a total of 22 in 2011 to 13 in 2014, 6 

permanent and 7 acting. The workload of the vacant administrator 

positions has been absorbed by the remaining administrators.

Besides key responsibilities in academic and other aspects of school 

administration,43 line office administrators’ responsibilities include:

• overseeing and evaluating schools’ expenditures;

• ensuring that tribally-operated schools submit their annual single 

audits and providing them to the Federal Audit Clearinghouse and 

BIE’s Administration office;

• approving or disapproving costs that are questioned in triballyoperated schools’ single audits, and working with tribes and schools 

to ensure that any single audit findings are resolved; and

• collaborating with BIE’s Performance and Accountability officials to 

identify schools that may need additional oversight because of failure 

to comply with Education program requirements, such as Title I and 

IDEA fiscal requirements.

 

41Unlike BIE-operated schools, tribally-operated schools are generally responsible for 

providing many administrative support services, such as procurement, payroll, and human 

resources. Tribally-operated schools are eligible to receive Tribal Grant Support Costs, 

formerly known as Administrative Cost Grants, to help pay for these services. In school 

year 2013-14, these grants amounted to about 63 percent of the total amount needed for 

tribally-operated schools’ administrative expenses, according to BIE’s estimate.

42It is not clear how the changes in the Secretary’s June 2014 Order would provide 

tracking of such costs or how Indian Affairs would transfer an appropriate level of 

administrative services to BIE.

43Line office administrators’ other responsibilities include making personnel and 

curriculum decisions at BIE-operated schools, developing school safety policies and 

procedures, meeting with school boards, tribes, and parents, managing BIE-operated 

facilities, and supervising other line office staff.

BIE Lacks Sufficient 

Staff with Expertise to 

Oversee School 

Expenditures
 

Page 22 GAO-15-121 Indian Education Expenditures

Beginning in 2012, when BIE officials announced plans to reorganize and 

possibly close line offices, staff began resigning and retiring. Staff 

departures increased further when Indian Affairs announced Voluntary 

Early Retirement Authority and Voluntary Separation Incentive Payments 

in 2013. From fiscal years 2011 to 2014, funding for management of BIE 

schools, including for line office staff, decreased by about 38 percent.44

As a result of having fewer line office administrators, the remaining 

administrators have been assigned additional responsibilities and their 

workload has increased, making it challenging for them to conduct 

needed oversight. For example, administrators in two of the three line 

offices we interviewed reported that over the last 2 years their 

responsibilities have increased significantly, and they are now overseeing 

and providing technical assistance to a greater number of schools. One 

official told us that in addition to the 7 schools he usually monitors, he is 

responsible for 11 additional schools that two other line offices had been 

responsible for overseeing. According to an administrator in a third line 

office, located in the Navajo Nation, responsibilities in that office have 

also changed significantly, and currently one line office administrator is 

responsible for overseeing 65 Navajo schools’ financial matters, including 

the tribally-operated schools’ annual single audits.45

With increased responsibilities and travel budgets constraints, line office 

administrators in all three BIE regions reported that conducting site visits 

and maintaining regular interaction with school personnel is difficult. In 

particular, line office administrators said, among other things, it is 

challenging to obtain and review school documents, develop working 

relationships with school officials, and provide technical assistance to 

schools, all of which are activities that contribute to oversight. For 

example, one line office administrator reported that she reviews hardcopy special education files during site visits to ensure that funding is 

used to provide students with needed services. She explained that she is 

only able to access these files when visiting schools.

 

44These funds pay for the central office in Washington, D.C.; a major field service center 

in Albuquerque, New Mexico; 3 regional offices and the 22 education line offices, but not 

individual school level administrators. 

45These changing responsibilities are due to BIE’s efforts to restructure management of its 

schools in the Navajo Nation. The Navajo Nation is currently studying the feasibility of 

converting its 31 remaining BIE-operated schools to tribally-operated schools. 
 

Page 23 GAO-15-121 Indian Education Expenditures

According to a high-ranking BIE official, increased line office 

responsibilities can include working outside of one’s assigned region in 

geographically dispersed areas. For example, a line office administrator in 

North Dakota also serves as the acting administrator for a line office in 

Tennessee and is responsible for overseeing and providing technical 

assistance to schools in five states—Florida, Louisiana, Maine, 

Mississippi, and North Carolina. Similarly, a line office administrator in 

New Mexico and another in Arizona are responsible for overseeing school 

expenditures to schools in Montana.

The challenges line office administrators confront in overseeing school 

expenditures are further exacerbated by a lack of financial expertise and 

training. For example, although line office administrators make key 

decisions about single audit report findings, such as whether funds are 

being spent appropriately, they are not auditors or accountants. 

Additionally, the administrators responsible for the three line offices we 

visited said that they did not have the financial expertise to understand 

the content of single audits. Although Indian Affairs has offered 

occasional webinars pertaining to single audits in the last two years, 

some line office administrators have not received this training. In fact, the 

majority of BIE’s acting line office administrators (4 out of 7), have not 

attended these webinars, though they may especially need training on 

their new job responsibilities. Additionally, no BIE staff have attended any 

in-person single audit training since at least 2011.

Although BIE officials reported in September 2013 that eliminating line 

office positions would create problems if appropriate plans are not 

developed and implemented, the agency has not developed a plan for 

meeting its workforce needs. According to BIE officials, they have not 

hired new line office administrators for 4 years due to budget cuts. As a 

result of these cuts, Interior had a hiring freeze for about 1.5 years and 

currently has a cap on hiring. Although BIE can request waivers to hire 

additional staff, it has not done so for line office positions in this fiscal 

environment.

BIE has a responsibility to employ the staff needed to adequately oversee 

school expenditures. To the extent that line office administrators are 

currently stretched thin without an effective plan for realigning staff 

responsibilities, BIE’s efforts to fulfill its mission of educating Indian 

students are impaired. BIE’s approach to staffing line offices runs counter 

to federal internal control standards and key principles for effective 

strategic workforce planning. Federal internal control standards state that 

staff need to possess and maintain a level of competence that allows 
 

Page 24 GAO-15-121 Indian Education Expenditures

them to accomplish their assigned duties. Additionally, key principles for 

workforce planning include: (1) aligning an organization’s human capital 

program with its current and emerging mission and programmatic goals 

and (2) developing long-term strategies for acquiring, developing, and 

retaining staff to achieve programmatic goals.46 The appropriate number 

and geographic distribution of employees can further support 

organizational goals and strategies and enable an organization to have 

sufficient, adequately trained staff. Absent a comprehensive workforce 

plan that responds to staff shortages, BIE is jeopardizing its ability to 

oversee both BIE-operated and tribally-operated schools to ensure their 

funds are being used for their intended purpose to provide students a 

quality education.

Strategic workforce planning for oversight of school expenditures is 

especially important for BIE as it implements a recently announced 

restructuring. On June 13, 2014, the Secretary of the Interior issued an 

Order to restructure BIE using existing resources for the 2014-15 school 

year. The Order emphasizes the importance of improving academic 

achievement at BIE schools and creates new offices in BIE as well as 

transferring responsibilities for certain school support services from other 

Indian Affairs offices to BIE. However, the Secretarial Order does not 

address any issues regarding the oversight of school expenditures. For 

example, although line offices are discussed within the context of 

restructuring and will still be responsible for providing technical assistance 

to schools, it is unclear whether they will continue to have a role in 

monitoring school expenditures. Further, the Order is silent on the status 

and roles of Performance and Accountability and the Administration 

office, the two other BIE entities currently involved in monitoring school 

expenditures. In addition, the Order does not address concerns about the 

shortage of staff responsible for overseeing school expenditures or gaps 

in their expertise and training.47 In late June 2014, a senior BIE official 

said that the status of Performance and Accountability is still unclear and 

 

46GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

GAO-04-39 (Washington, D.C.: Dec. 11, 2003). We developed the key principles of 

workforce planning by reviewing documents from organizations with expertise in workforce 

planning models and federal agencies recommended by several sources as having 

promising workforce planning practices, as well as our past work.

47Additionally, the Order is unclear on the impact restructuring will have on line offices in 

the Navajo Nation. As discussed earlier, line office administrators in this region are 

assigned different responsibilities than those of line administrators in other BIE regions.
 

Page 25 GAO-15-121 Indian Education Expenditures

that the Administration office will become BIE’s School Operations 

Division, responsible for acquisition and grants, among many other 

duties.

Although the Secretarial Order requires the Assistant Secretary-Indian 

Affairs to complete an analysis of new work functions and develop 

workforce plans, it is unclear if the workforce plans will address whether

BIE has an adequate number of staff with the required knowledge and 

skills to oversee BIE school spending. Moreover, the timeframe for 

completing these activities is limited. Specifically, the Order directs BIE 

and the Assistant Secretary-Indian Affairs to complete these activities in 

less than 3 months—from mid June through August 2014. As of midAugust, high-ranking officials reported that BIE was unlikely to meet these 

timeframes. This compressed timeframe makes it extremely challenging 

to conduct effective workforce planning. According to our prior work, as 

part of workforce planning an agency should first identify current and 

future needs, including the appropriate number of employees, the key 

competencies and skills for mission accomplishment, and the appropriate 

deployment of staff across the agency. After completing these activities, 

the agency should then create strategies for identifying and filling gaps.48

While BIE is restructuring to improve operational support to schools and 

enhance school performance, it must also ensure that federal funding to 

the schools is used for its intended purposes. Therefore, it is critical to 

ensure that there are sufficient staff assigned to oversee school 

expenditures and that they have the appropriate expertise and training to 

do so. If BIE does not develop a detailed workforce plan for staff 

overseeing school expenditures, its ability to effectively provide technical 

assistance to tribes and build tribal capacity to operate schools will be 

impaired.

 

48GAO, A Model of Strategic Human Capital Management, GAO-02-373SP (Washington, 

D.C.: March 15, 2002). This report describes a human capital model we developed that 

identifies eight critical success factors for managing human capital strategically. In 

developing this model, we built upon GAO’s Human Capital: A Self-Assessment Checklist 

for Agency Leaders, GAO/OCG-00-14G (Washington, D.C.: September 2000). Among 

other steps, we also considered lessons learned from GAO reports on public and private 

organizations that are viewed as leaders in strategic human capital management and 

managing for results.
 

Page 26 GAO-15-121 Indian Education Expenditures

BIE oversees tribally-operated school spending primarily through 

information provided in the schools’ annual single audits; however, it does 

not have a process in place for consistently documenting actions it takes 

to respond to audit findings. For example, when we requested documents 

describing actions BIE had taken in response to audit findings at six 

tribally-operated schools, BIE could only produce documents for one of 

the schools. BIE officials told us they could not produce documents for 

the remaining five schools because the line office staff assigned to 

oversee the schools’ spending had either retired or were unavailable. As 

a result of not having a process to document what steps BIE took to 

address the issues identified at the schools, BIE staff newly assigned to 

oversee these schools’ expenditures have no way to determine how their 

schools’ audit findings were resolved. Consequently, they must start 

anew when following up on future single audit findings and other 

oversight activities. Without a mechanism to ensure sustained oversight 

of school expenditures, BIE is not well-positioned to improve financial 

management at these schools and ensure they are spending Interior and 

Education funds to provide Indian students a quality education. According 

to internal control standards, oversight activities should ensure that the 

findings of audits are promptly resolved and they should be recorded in 

BIE’s Processes Are 

Not Adequate to 

Ensure that School 

Funds Are Spent 

Appropriately

BIE Lacks Consistent 

Processes for 

Documenting and Sharing 

Findings and Overseeing 

Major Programs

Single Audits
 

Page 27 GAO-15-121 Indian Education Expenditures

an accurate and timely manner. In addition, documents should be readily 

available for examination.49

Similarly, BIE does not have a mechanism in place to ensure that triballyoperated schools’ single audits are shared with all of the officials 

responsible for overseeing school expenditures. Specifically, officials from 

Performance and Accountability—who are tasked with overseeing 

schools’ spending for Education programs—reported they do not have 

access to schools’ single audits, which include information about their use 

of ESEA and IDEA funds. Performance and Accountability officials told us 

they have requested access to single audits from Administration officials 

in the past, but they told us their requests were not honored because of 

technological challenges related to BIE’s computer network. However, 

Indian Affairs staff said that if BIE sends them a list of individuals who 

should have access to the single audits, they can accommodate their 

requests.

Performance and Accountability officials reported that access to these 

audits would give them a more comprehensive view of tribally-operated 

schools’ finances. This would help them determine whether schools are 

complying with Education program requirements, such as whether IDEA 

funds are being used to provide special education services for students 

with disabilities. Additionally, the officials said the audits would help them 

identify tribally-operated schools that have large unexpended IDEA 

balances from year to year and may not be using funds to provide needed 

services to students.50 To the extent that Performance and Accountability 

staff do not have access to needed documents, it hinders BIE’s ability to 

hold others accountable for use of government resources. According to 

internal control standards, program managers need both operational and 

financial data to meet their goals for accountability for effective and 

efficient use of resources.51

BIE does not have written procedures for overseeing BIE-operated and 

tribally-operated schools’ Indian School Equalization Program (ISEP) 

 

49 GAO/AIMD-00-21.3.1.

50Federal law generally permits tribally-operated schools to keep funds, including 

Education funds, they receive through an Interior contract or grant until they are spent. 

See 25 U.S.C. §§ 450l(c), 2507(a)(11).

51 GAO/AIMD-00-21.3.1. 

Indian School Equalization 

Program
 

Page 28 GAO-15-121 Indian Education Expenditures

expenditures, which is particularly significant since ISEP is the schools’ 

largest source of funding—about $402 million in fiscal year 2014. 

Although BIE Administration and line office staff are responsible for 

overseeing these expenditures, they do not have complete or detailed 

procedures to guide their work.52 For example, they do not have a specific 

procedure for how and when they should conduct desk audits of schools 

or on-site monitoring visits. Further, the staff lack written procedures—

such as a uniform list of documents and other items to review—to help 

guide their oversight efforts and ensure they are consistent across 

schools. According to federal internal control standards, management is 

responsible for developing the detailed policies, procedures, and 

practices to fit their agency’s operations and to ensure they are built into 

and an integral part of operations.

Instead of using written procedures to oversee expenditures, 

Administration officials told us they use a case-by-case approach and rely 

on the “practice history” of staff. Absent written oversight procedures, BIE 

is at risk of obtaining and relying on varied and incomplete information to 

determine whether its schools are using funds as intended. Written 

procedures are particularly important for BIE’s oversight of triballyoperated schools since BIE plans to increase their number in coming 

years and the Tribally Controlled Schools Act limits the amount of 

information that tribes must submit to BIE. If funds are not used for their 

intended purpose, students in BIE schools may not receive the services 

they need, such as tutoring and other forms of instruction.

In contrast to the lack of written procedures for overseeing ISEP 

expenditures, Performance and Accountability staff have developed draft 

procedures for overseeing schools’ IDEA spending and are in the process 

of developing them for ESEA-funded programs (see table 2). The draft 

procedures for overseeing IDEA funds include detailed written 

instructions for conducting both fiscal desk audits of schools and on-site 

oversight reviews. For example, the desk audit instructions include a list 

of all the financial documents that staff will review, outline a detailed 

process for determining the risk level of each school for meeting IDEA 

 

52BIE Administration officials do have a written oversight procedure to use when visiting 

the three tribally-operated contract schools. BIE also provided us with a 2007 ISEP 

monitoring manual. However, all three of the line office administrators we spoke with were 

unfamiliar with this document, and BIE could not confirm that this document is currently in 

use. 
 

Page 29 GAO-15-121 Indian Education Expenditures

fiscal requirements, and describe follow-up actions to be taken depending 

on the schools’ level of risk.

Table 2: Bureau of Indian Education (BIE) Procedures to Oversee its Largest 

Programs

Program Name

Fiscal Year 2014 total 

funding*

Written procedures for 

financial oversight?

Indian School Equalization 

Program (ISEP)

$401.8 million No

Title I, Part A (Title I) $93.2 million Yes, in pilot phase 

Individuals with Disabilities 

Education Act (IDEA)

$75.0 million Yes, in draft form 

Source: BIE budget data and interviews with BIE officials. | GAO-15-121

*For Title I and IDEA, these totals represent the amount of funds BIE received, not the total amount 

for the program as a whole.

In addition to not having comprehensive written procedures for oversight, 

Administration officials reported they do not consistently document the 

results of monitoring, including on-site visits, which is particularly 

important given recent staff departures. In addition, BIE officials reported 

that a line office administrator had solely conducted monitoring activities 

in fiscal years 2010 through 2012 at a school with a history of poor 

management of ISEP funds. When we asked BIE for documentation of 

the administrator’s activities, we were told that he had retired and that no 

records were available. In addition, BIE does not have a standard form or 

template for their staff to document their monitoring activities.

Further, when we asked about recent site visits they conducted, 

Administration officials provided conflicting information. In a May 1, 2014 

written response to a question that we posed, Administration officials 

reported that they had not conducted any recent site visits. However, in 

an interview on May 2, they stated that a visit had occurred within the 

previous month. If the Administration office had a process in place to 

consistently document site visits, the office would have had definitive 

information on the recent visits that they conducted.

BIE also lacks a process to prioritize oversight activities based on a 

school’s risk of misusing ISEP funds. Rather than using a risk-based 

approach to guide how it uses limited monitoring resources, BIE officials 

use an ad hoc approach. BIE officials said they typically wait for 

suggestions from line office staff to determine which schools to monitor 

BIE Lacks a Risk-Based 

Approach to Oversee 

School Expenditures
 

Page 30 GAO-15-121 Indian Education Expenditures

on-site, and they typically visit schools in close proximity to their offices. 

This approach is consistent with BIE’s tendency to rely on its practice 

history, rather than standard oversight processes. While this approach 

may, in isolation, allow BIE to identify some schools that need additional 

oversight or assistance, federal internal control standards call for a more 

comprehensive analysis, and they state that management needs to 

comprehensively identify risks.53

A line office administrator we interviewed reported that given his 

increased workload in recent years and travel budget constraints he has 

been unable to visit schools for which he is responsible and whose single 

audits have identified serious financial weaknesses. For example, he has 

been unable to visit one school—which is at a significant distance from 

his office—whose audit found $1 million or more in questioned costs over 

multiple years.

According to written responses to questions we posed, BIE indicated that 

monitoring visits to all schools have been infrequent over the past few 

years due to budget constraints and travel restrictions. Given these 

budget constraints as well as staff shortages, it is critical for BIE to use its 

existing resources to target schools for monitoring that have been 

identified in their single audits as at high risk of misusing federal funds. 

Internal control standards state that the scope and frequency of 

monitoring should depend primarily on the assessment of risks and the 

effectiveness of ongoing monitoring procedures.54

Absent a risk-based approach, federal funds may continue to be provided 

to schools with a history of financial weaknesses. For example, as of July 

2014, single audits of tribally-operated schools identified $13.8 million in 

costs that were not allowable at 24 schools, but we found minimal followup by BIE with the schools that had misused funds or did not adhere to 

program or legal requirements. Further, it appeared that BIE took little 

action to incentivize schools to adhere to financial and program 

requirements. According to Circular A-133, issued pursuant to the Single 

Audit Act, if an auditee, such as a tribally-operated school, has not 

completed corrective action, the agency awarding the auditee’s grant 

should give it a timetable for follow-up. Further, according to Indian 

 

53GAO/AIMD-00-21.3.1. 

54GAO/AIMD-00-21.3.1. 
 

Page 31 GAO-15-121 Indian Education Expenditures

Affairs’ policy manual, if a tribally-operated school fails to take the action 

necessary to resolve findings in its single audit, BIE should offer technical 

assistance to the school if the audit findings remain unresolved. In serious 

situations, BIE may also designate the school as “high risk,” which 

subjects the school to additional monitoring and restricted payments. If 

BIE determines that there has been gross negligence or mismanagement 

in the handling or use of funds, it may initiate procedures to assume 

control of the school.

In our review of single audits of six tribally-operated schools whose audits 

in fiscal years 2010 through 2012 identified poor financial management of 

major program funds, we found some occasions where BIE took little 

follow up action to address serious financial problems that auditors 

identified at the schools. For example:

• In 2010, auditors found that one school used $1.2 million of its ISEP 

funds to provide a no-interest loan to a local public school district, 

which the auditors found is not permitted by law. In 2011 BIE asked 

the school to repay the more than $1 million and is still negotiating 

with the school to recoup the funds. Nevertheless, BIE could not 

provide us with records that line office staff visited the school or 

provided additional oversight of school expenditures or technical 

assistance during the past 3 years. In the meantime, a subsequent 

audit found that the school has not taken any steps to ensure that its 

funds are not misused again and that it is still at risk of comingling 

federal funds with the local school district funds. However, BIE has 

continued to provide the school its full ISEP funding without additional 

monitoring or restrictions on those payments.

• At another school that received an adverse audit opinion 3 years in a 

row (fiscal years 2010 to 2012), auditors found that the school’s 

financial statements had to be materially adjusted by as much as 

nearly $1.9 million.55 As a result, they found that the financial reports 

that the school submitted to BIE for those 3 years were unreliable. 

Despite these problems, BIE was unable to provide any evidence that 

it took action to increase oversight of the school’s expenditures to 

ensure that it could accurately account for the federal funds it spends.

 

55An adverse audit opinion states that an entity’s financial statements taken as a whole 

are not presented fairly, in all material respects, in conformity with U.S. generally accepted 

accounting principles.
 

Page 32 GAO-15-121 Indian Education Expenditures

More recent examples of financial issues at BIE schools include:

• In February 2014, during our review of the Federal Audit 

Clearinghouse database, we found that one school had not submitted 

its required single audits since fiscal year 2010. Officials with BIE and 

the Office of Internal Evaluation and Assessment were not aware of 

this, and acknowledged that it was an oversight on their part when we 

brought it to their attention. According to Indian Affairs, the Office of 

Internal Evaluation and Assessment subsequently updated this 

information in its system. However, despite a legal requirement for 

tribally-operated schools to submit annual single audits, BIE has not 

imposed sanctions on this school.56

• A March 2014 single audit found that a tribally-operated school lost 

$1.7 million in federal funds that were illegally transferred to an offshore bank account. According to the school’s audit, about $500,000 

of these funds were subsequently returned to the school’s account, 

making the net loss around $1.2 million. Interior reported in October 

2014 that this incident was “...a result of cybercrimes committed by 

computer hackers and/or other causes” and that the school is working 

with tribal authorities to investigate the incident. Nevertheless, the 

school’s single audit stated that its inadequate cash management and 

risk assessment procedures contributed to the incident and stated that 

the school must strengthen these procedures. Additionally, a school 

administrator reported that the school held at least another $6 million 

in federal funds in a U.S. bank account. As of June 2014, BIE had not 

yet determined how the tribe accrued that much in unspent federal 

funds.

• Several BIE officials told us that some tribes operating schools have a 

history of placing Interior and Education funds in savings accounts 

rather than using them to provide educational services as intended. 

One official cited an instance of a school accumulating over $900,000 

in unspent IDEA funds that were intended to be used to provide 

special education services to students with disabilities.

 

56According to Indian Affairs’ policy manual, if a tribally-operated school does not submit 

its single audit within 9 months of the end of the fiscal year, BIE has three levels of 

sanctions it can impose until the school submits the audit. First, if the school does not 

submit its audit by the due date, BIE stops giving the school its funds in an annual lump 

sum and instead provides funds on a monthly basis. Second, if the school does not submit 

its audit by the end of the following fiscal year, BIE continues to fund the school through 

monthly instead of annual payments but withholds grant support payments to the school. 

Third, if the school does not submit its audit after an additional year, BIE will take control 

of the school.
 

Page 33 GAO-15-121 Indian Education Expenditures

According to a June 2014 study commissioned by the Secretaries of the 

Interior and Education, the Tribally Controlled Schools Act provides an 

incentive for schools not to spend funds they receive from Interior and 

Education because schools are permitted to retain certain unspent federal 

funds, and they can also place any current or unspent funds in interestbearing accounts before they are spent.57 Based on certain audit 

information that was available, the study found that approximately 80 

tribally-operated schools have retained a total of about $125 million in 

unspent funds that have accumulated over time. According to the study, 

BIE has contributed to this problem by not implementing policies that 

encourage schools to fully utilize their funding and discourage them from 

planning to have unspent funds. The study stated that BIE and Education 

should provide tribes with technical assistance and practical guidance 

about the activities for which federal funds are allowed to be spent under 

current laws. Education is currently developing this type of guidance and, 

according to Indian Affairs, it is working with Education to develop this 

type of guidance.

Without using a risk-based approach to monitoring and having written 

procedures in place to oversee school expenditures, the amount of 

misused and unspent funds at BIE schools is likely to grow.

BIE’s mission is to provide the students attending its schools a quality 

education. Most of these students are low-income, many have special 

needs, and their performance and graduation rates are below those of 

public school students nationwide. These students are in need of 

instructional, supplemental, and special education services. To ensure 

that students have access to these services, it is imperative that BIE 

accurately track and oversee school expenditures to make sure that 

federal funds are used for their intended purposes. However, BIE staff 

responsible for oversight currently face multiple challenges, and their 

monitoring of expenditures is weak. High staff turnover and reductions in 

the number of education line office administrators as well as their lack of 

expertise and training have left them struggling to adequately monitor 

school expenses. In addition, the limited information that BIE officials 

have about tribally-operated school expenditures is not shared with the 

 

57Bureau of Indian Education Study Group, Findings and Recommendations Prepared by 

the Bureau of Indian Education Study Group Submitted to the Secretaries of the 

Departments of the Interior and Education (Washington, DC: June 11, 2014). 

Conclusions
 

Page 34 GAO-15-121 Indian Education Expenditures

BIE staff responsible for overseeing schools’ use of Education funds. 

Further, BIE does not utilize tools, such as written procedures and a riskbased approach to monitor school expenditures that would help improve 

the effectiveness of its oversight. Within this environment, BIE is not well 

positioned to oversee schools that may be at high risk for misusing 

federal funds. Strong oversight of school expenditures is especially critical 

since the number of tribally-operated schools is likely to increase over the 

next several years and limited expenditure information is available from 

these schools. To this end, BIE’s current restructuring efforts provide 

officials with a unique opportunity to develop a workforce plan and adopt

processes and procedures that create an improved control environment. 

These actions will help ensure that students receive the quality education 

and services they deserve.

We recommend that the Secretary of the Interior direct the Assistant 

Secretary-Indian Affairs to take the following four actions:

• Develop a comprehensive workforce plan to ensure that BIE has an 

adequate number of staff with the requisite knowledge and skills to 

effectively oversee BIE school expenditures.

• Develop a process to share relevant information, such as single audit 

reports, with all BIE staff responsible for overseeing school 

expenditures to ensure they have the necessary information to identify 

schools at risk for misusing funds.

• Develop written procedures for BIE to oversee expenditures for major 

programs, including Interior’s Indian School Equalization Program. 

These procedures should include requirements for staff to consistently 

document their monitoring activities and actions they have taken to 

resolve financial weaknesses identified at schools.

• Develop a risk-based approach to oversee BIE school expenditures to 

focus BIE’s monitoring activities on schools that auditors have found 

to be at the greatest risk of misusing federal funds.

We provided a draft copy of this report to the Departments of the Interior 

and Education for review and comment. Education chose not to provide 

comments. Interior’s comments are reproduced in appendix II. Interior 

also provided technical comments that we incorporated in the report as 

appropriate.

In its overall comments, Interior stated that our report’s findings and 

recommendations will be beneficial as the Department moves forward 

with facilitating improvements in BIE schools and improving the oversight 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 35 GAO-15-121 Indian Education Expenditures

of school spending. For example, Interior noted that strong financial 

stewardship is essential to achieving its goal to transform BIE into an 

organization that provides direction and services to tribes to help them 

attain high levels of student achievement.

Interior concurred with our recommendation to develop a workforce plan 

to ensure that BIE has an adequate number of staff to effectively oversee 

BIE school expenditures. Interior said that as part of BIE’s restructuring, it 

plans to increase the number of staff whose main responsibility is to 

oversee school expenditures. Additionally, the Department stated that 

new training will be developed for current BIE staff, including line office 

administrators, mainly in areas related to budget and finance issues. 

While these are positive steps, we believe it is important for Interior to 

monitor the manner in which BIE implements these plans to ensure it has 

staff with the skills needed to provide appropriate oversight of school 

expenditures. 

Interior also concurred with our recommendation to develop a process to 

share relevant information with all BIE staff responsible for overseeing 

school expenditures. According to Interior, BIE has implemented a 

process to ensure that relevant information is made available via email to 

all cognizant officials, including information on schools’ questioned costs 

and cash deficits. The Department also stated that BIE will convene 

monthly meetings with high level officials to discuss these issues. While 

we believe that these are all positive actions, it is important for Interior to 

ensure that BIE periodically review its approach to disseminating 

information to make sure that its practices are effective.

Interior partially concurred with our recommendation to develop written 

procedures for BIE to oversee expenditures for its major programs. 

Interior stated that, in addition to draft Title I and IDEA oversight 

procedures, BIE also has written procedures in place related to the Indian 

School Equalization Program (ISEP). Specifically, Interior said that BIE’s 

newly established School Operations Division has a standard review 

process in place that is currently being utilized, referred to as the 

Education Management Assessment Tool. We reviewed this document 

and found that its main focus is on reviewing Education Line Offices’ 

operations, management, and program functions. However, none of the 

BIE officials we interviewed were aware of the document. While oversight 

of line offices’ operations is important, the specific focus of our 

recommendation is on BIE’s oversight of school expenditures, including 

for ISEP, its largest program. As we noted in our report, although BIE 

Administration and line office staff are responsible for overseeing these 
 

Page 36 GAO-15-121 Indian Education Expenditures

expenditures, they do not have complete or detailed procedures to guide 

their work. For example, they do not have a schedule for conducting 

audits, a uniform list of documents to review, or procedures for staff to 

document the actions they have taken to resolve financial weaknesses 

identified at schools. We believe that rigorous oversight of school 

expenditures is critical to ensure that schools are spending federal funds 

for their intended purposes.

Lastly, Interior concurred with our recommendation on the need to 

develop a risk-based approach to oversee BIE school expenditures. To 

that end, Interior said that BIE, once its restructuring has been fully 

implemented, will improve coordination with the Office of Internal 

Evaluation and Assessment on matters regarding financial accountability. 

In addition, Interior stated that BIE will assign appropriate grant 

monitoring protocols to schools and tribal grantees based on questioned 

costs and other risk factors identified in their single audits. The 

Department further stated that it will use single audits to designate certain 

schools and tribes as high risk, along with those that are unresponsive to 

repeated requests for corrective action plans. While we believe that these 

are all positive steps, it is critical that Interior ensure that BIE follow 

through to effectively implement these changes.

We are sending copies of this report to relevant congressional 

committees, the Secretaries of the Interior and Education, and other 

interested parties. In addition, this report will be available at no charge on 

GAO’s website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (617) 788-0534 or emreyarrasm@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix III. 

Sincerely yours,

Melissa Emrey-Arras, Director

Education, Workforce, and Income Security Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-15-121 Indian Education Expenditures

Our objectives were to assess (1) how sources of funding for Bureau of 

Indian Education (BIE) schools compare to those of public schools; (2) 

how BIE school expenditures compare to those of public schools; (3) the 

extent to which BIE has the staff and expertise needed to oversee school 

expenditures; and (4) the extent to which BIE’s processes are adequate 

for ensuring that school funds are spent appropriately.

To address these objectives, we used multiple methodologies. We 

reviewed relevant federal laws and regulations. Additionally, we reviewed 

agency documents from BIE, the Office of the Assistant Secretary-Indian 

Affairs (Indian Affairs), and the Department of Education (Education), 

including budget justifications, published reports, annual financial audit 

reports, and other documents. We also conducted interviews with officials 

at the Department of the Interior (Interior) in Indian Affairs, which includes 

BIE, as well as with officials at Education.

A key component of our methodology was a quantitative analysis of data 

from various federal sources. For sources of funding, we reviewed budget 

justifications as well as other financial information. For expenditures, we 

analyzed agency data systems and followed a methodology similar to our 

approach in our 2003 report on this topic.1 Further, we conducted site 

visits to select BIE schools and nearby public school districts. For BIE 

oversight of school expenditures, we additionally analyzed data from a 

federal database on results of annual financial audits. Our methodology is 

described below in further detail.

We conducted this performance audit from January 2014 through 

November 2014 in accordance with generally accepted government 

auditing standards. These standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.

 

1

GAO, Bureau of Indian Affairs Schools: Expenditures in Selected Schools are 

Comparable to Similar Public Schools, But Data Are Insufficient to Judge Adequacy of 

Funding and Formulas, GAO-03-955 (Washington, D.C.: Sept. 4, 2003).

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 38 GAO-15-121 Indian Education Expenditures

To address how sources of funding for BIE schools compare to those of 

public schools, we analyzed the federal funding sources of BIE schools 

as well as the various sources of funding for public schools. For BIE 

schools, we reviewed budget justifications of Indian Affairs—which 

includes BIE—and related information. For public schools, we reviewed 

data from Education’s National Center for Education Statistics, which 

maintains the Common Core of Data, including the School District 

Finance Survey’s final F-33 data. This survey collects financial data from 

all school districts in the 50 states and the District of Columbia. School 

districts provide information on funding, expenditures, and enrollment for 

a particular school year. The data that we analyzed generally applied to 

school year 2009-10, consistent with our analysis of expenditures, for 

which the data were from the most recent year available at the time of our 

analysis. According to Education documents, Education conducted 

several tests of the data and performed follow-up to ensure that data 

were complete and accurate. In addition, we performed tests and 

removed a few additional districts from our analysis to increase the 

reliability of the data. Thus, we reviewed Education’s data through (1) 

electronic data tests; (2) a review of related documents about the data 

and the systems; and (3) interviews with knowledgeable agency officials, 

and we found that the data were sufficiently reliable for the purposes of 

this report. We also interviewed officials from BIE, Indian Affairs, and 

Education.

To examine how BIE school expenditures compare to those of public 

schools, we analyzed expenditures of BIE schools and those of public 

schools. We began by assessing the reliability of three databases:

• Interior’s Federal Financial System was the source of expenditure 

data for BIE schools;

• BIE’s Native American Student Information System provided 

enrollment data for BIE schools; and

• Education’s Common Core of Data, School District Finance Survey’s 

final F-33 data was the source of data on expenditure and enrollment 

for public school districts.

We focused on school year 2009-10, since it was the most recent year for 

which data were available from Education at the time of our analysis. We 

assessed the reliability of data for this school year from these systems in 

several ways, including (1) electronic data tests, (2) reviews of related 

Objective 1: Sources of 

Funding

Objective 2: Expenditures

Data Reliability
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-15-121 Indian Education Expenditures

documentation about the data and the system, and (3) interviews with 

knowledgeable agency officials. Based on our assessment, we 

determined that the relevant data were sufficiently reliable for our 

purposes.

BIE and DOD are the only two federal entities that directly oversee the 

management and operation of elementary and secondary schools.2 For 

this review, we were unable to compare expenditures at schools operated 

by the Department of Defense (DOD) schools with those of BIE or public 

schools because DOD’s financial system containing school year 2009-10 

data was not sufficiently reliable for our purposes of comparing amounts 

across departments. Specifically, DOD’s Standard Accounting and 

Reporting System-Field Level data system contains expenditure data for 

DOD schools that we determined were not sufficiently reliable for our 

purposes, based on reviews of related documentation about the data and 

the system, as well as interviews with knowledgeable agency officials.3

To compare expenditures at BIE and public schools, we developed 

estimates of per-pupil expenditures at the national level.4 Although 

Interior’s Federal Financial System does not use categories that directly 

align with Education’s Common Core of Data, we were able to compare 

broad categories, based on reviews of documentation, professional 

judgment and interviews with agency officials. We focused our analysis 

on operating expenditures of elementary and secondary schools in a

typical year. We classified BIE expenditure data and Education 

expenditure data into four broad categories: (1) instruction, (2) 

transportation, (3) facilities operation and maintenance, and (4) 

 

2

According to DOD’s Student Management System, enrollment in school year 2009-10 

was 23,972 students for the 58 DOD schools located in the continental United States. The 

average school enrollment was about 413 students. In addition, about two-thirds of DOD 

schools are located overseas.

3

See, for example, GAO, DOD Financial Management: Ongoing Challenges with 

Reconciling Navy and Marine Corps Fund Balance with Treasury, GAO-12-132

(Washington, D.C.: Dec. 20, 2011); and Department of Defense Inspector General, 

Memorandum for Assistant Secretary of the Navy (Financial Management and 

Comptroller), (Arlington, VA: Nov. 9, 2010).

4

We also explored the possibility of comparing BIE schools with a subset of public 

schools, such as schools receiving Title I funds for low-income children. However, data 

limitations hindered such an analysis. For example, Education data on expenditures were 

collected at the level of districts, but schools within the district may vary in the extent that 

they receive Title I funds.

Nationwide Comparison
Appendix I: Objectives, Scope, and 

Methodology

Page 40 GAO-15-121 Indian Education Expenditures

administration. Then, we derived per-pupil expenditures by dividing 

expenditure amounts by student enrollment. Due to our focus on 

operating expenditures, we generally excluded certain amounts such as 

expenditures for food service, capital (i.e., construction), and debt service.

Student enrollment is measured differently by BIE and Education. BIE 

measures enrollment as an average daily membership, or an average 

over the course of the year.5 We derived student enrollment by adding 

average daily membership for students in school year 2009-10 who are 

eligible Indian students under the Indian School Equalization Program 

(ISEP) and those who are not eligible Indian students but still attend BIE 

schools, such as children of BIE staff. Because we used student 

enrollment in one particular year and we included students who are not 

eligible under ISEP but still attend BIE schools, our enrollment data may 

differ somewhat from published data from Interior. Meanwhile, 

Education’s Common Core of Data measures student enrollment by 

taking a head count at one point in time in the fall.

Consistent with the methodology of our 2003 report,6 we generally 

analyzed expenditures of BIE-operated day schools. Thus, we analyzed 

day schools and excluded boarding schools, which have a boarding as 

well as an academic component. We also limited our analysis to all 32 

day schools that were BIE-operated in school year 2009-10. Of 185 BIE 

schools and dormitories, BIE-operated day schools represent about 17 

percent of the schools and dormitories. As with our 2003 report and 

Education’s publication on its School District Finance Survey for school 

year 2009-10,7 we did not adjust expenditures for geographic variation.

 

5

Average daily membership for one year is based on an average of enrollment during the 

entire year. BIE uses a three-year measure of average daily membership as a factor in 

formulas to determine funding amounts for its schools. Another measure of enrollment at 

BIE schools is the head count, which reflects the number of students enrolled at a school 

for at least one day during the school year. Thus, head count represents a maximum 

measure of BIE enrollment that is greater than the typical daily enrollment, according to 

BIE officials.

6

GAO-03-955. 

7

U.S. Department of Education, National Center for Education Statistics, Revenues and 

Expenditures for Public Elementary and Secondary School Districts: School Year 2009-10 

(Fiscal Year 2010), First Look, NCES 2013-307 (Washington, D.C.: April 2013).
Appendix I: Objectives, Scope, and 

Methodology

Page 41 GAO-15-121 Indian Education Expenditures

We excluded schools that were tribally-operated because BIE has limited 

expenditure data for tribally-operated schools. In our 2003 report, we 

recommended, among other things, that the Secretary of the Interior 

should consider entering into negotiations with tribal entities to acquire 

detailed expenditure data for the schools they manage for comparison 

with public schools.8 However, Indian Affairs, in consultation with the 

school boards of tribally-operated schools, concluded that this 

recommendation would not be feasible with the school boards’ existing 

systems. BIE headquarters officials noted that current law limits the type 

or format of information that the agency can require from tribes, including 

data on expenditures. For example, one statutory provision requires a 

tribal grantee to submit an annual financial statement reporting revenue 

and expenditures and an annual financial audit, but the grantee has 

discretion on the specifications of the cost accounting of the statement.9

Additionally, we reviewed seven reports of Education data on the 

characteristics of public and BIE schools. These characteristics helped to 

explain differences in per-pupil expenditures between public and BIE 

schools. We generally reviewed the most recent version available of 

these studies. Estimates obtained from reports that used sample data 

collected using random probability samples are subject to sampling error. 

We present estimates along with 95 percent confidence intervals to show 

the precision of those estimates. Further, we interviewed officials at BIE, 

Indian Affairs, and Education, and reviewed agency documents, including 

guidance, internal correspondence, and agency-sponsored management 

studies.

We supplemented our analysis of nationwide data with site visits to BIE 

schools and nearby public school districts. The information from these 

site visits is not generalizable to all BIE schools or public school districts 

nationwide. For this and our prior report on BIE management 

challenges,10 we visited 16 BIE schools—6 BIE-operated and 10 triballyoperated—as well as 4 nearby public school districts.11 We conducted site 

 

8

GAO-03-955. 

9

25 U.S.C. § 2505(b).

10GAO, Indian Affairs: Better Management and Accountability Needed to Improve Indian 

Education, GAO-13-774 (Washington, D.C.: Sept. 24, 2013).

11For the public school districts, we visited three in person and contacted one by phone.

Site Visits
Appendix I: Objectives, Scope, and 

Methodology

Page 42 GAO-15-121 Indian Education Expenditures

visits to BIE schools that serve the Oglala Sioux Tribe in Pine Ridge, 

South Dakota; the Mississippi Band of Choctaw Indians; the Navajo 

Nation in Arizona, New Mexico, and Utah;12 and various Pueblo Indians in 

New Mexico, where we interviewed school administrators and observed 

school conditions. We also requested expenditure data from triballyoperated schools because BIE has limited expenditure data from schools 

operated by tribes. Further, we interviewed administrators at public school 

districts in close proximity to the BIE schools we visited. We selected 

locations to visit to reflect an array of BIE schools that varied in 

administration type, school and tribal size, and location. For the nearby 

public school districts, we selected school districts that were in close 

proximity and also had similar student demographics in terms of the 

percent of students who were Indian.

Our expenditure analysis of schools we visited was limited to four BIE 

schools—two BIE-operated and two tribally-operated schools—along with 

two public school districts, all of which were located in New Mexico and 

South Dakota. We compared expenditure data for the schools we visited 

with the amount of funding they received to assess the reliability of the 

expenditure data. We determined that the data for these four BIE schools 

and two public school districts were sufficiently reliable. We excluded data 

from the remaining 12 BIE schools and 2 public school districts we visited 

because we did not receive any expenditure data or were not able to 

obtain reliable expenditure data for both the BIE schools and the nearby 

public school districts. In addition, we excluded expenditure data for some 

BIE schools we visited because the schools were boarding schools and, 

therefore, their expenditures would not be comparable to those of nearby 

public schools.

To determine the extent to which BIE has the staff and expertise needed 

to oversee school expenditures, we analyzed BIE data on the number 

and location of staff currently responsible for overseeing these 

expenditures as compared to the number of staff in prior years and the 

location of schools for which they are responsible. We also reviewed BIE 

data on the types of positions that are currently vacant and interviewed 

cognizant BIE officials. In addition, we reviewed Indian Affairs records on 

 

12Navajo Nation is located in these three states, and we visited schools in New Mexico 

and Arizona.

Objective 3: Staff and 

Expertise to Oversee 

School Expenditures
Appendix I: Objectives, Scope, and 

Methodology

Page 43 GAO-15-121 Indian Education Expenditures

the training on single audits provided since 2012 to line office 

administrators and staff. We also interviewed officials at BIE and Indian 

Affairs who are responsible for overseeing school expenditures about 

their skill sets and the types of training they have received on overseeing 

federal grants.

To determine the extent to which BIE’s processes are adequate for 

ensuring that school funds are spent appropriately, we reviewed available 

oversight tools, including protocols for desk and onsite audits and tracking 

data. In addition, we reviewed the results of all tribally-operated schools’ 

single audits for a 3-year period (fiscal year 2010 to fiscal year 2012) in 

the Federal Audit Clearinghouse. For more analysis of single audit 

findings, we selected for further review the single audits of six recipients 

of Indian School Equalization Program (ISEP) funding, the largest funding 

source of BIE schools. We selected these recipients based on audit 

opinions of their compliance with program requirements. Specifically, we 

examined all the single audits in which the auditor found that the school’s 

records for ISEP compliance either contained significant departures from 

generally accepted auditing standards or were in a condition that made it 

impossible for them to be assessed in accordance with generally 

accepted auditing standards. We also examined the single audits of 

select tribally-operated schools based on information from BIE officials. 

Although our non-generalizable sample focused on schools with poor 

financial management, these schools may have needed the greatest 

oversight and technical assistance from BIE to correct the audit findings 

and improve their financial management. We assessed the reliability of 

the Federal Audit Clearinghouse data on single audits by (1) reviewing 

existing information about the data and systems that produced them, and 

(2) obtaining information from U.S. Census Bureau officials 

knowledgeable about the database. We determined that these data were 

sufficiently reliable for the purposes of this report. We also obtained 

documents about other select BIE schools. Additionally, we interviewed 

officials in Education, Indian Affairs’ Office of Internal Evaluation and 

Assessment, as well as BIE’s Division of Performance and Accountability, 

Office of Administration, and education line offices.

Objective 4: Oversight of 

School Expenditures
Appendix II: Comments from the Department 

of the Interior

Page 44 GAO-15-121 Indian Education Expenditures

Appendix II: Comments from the Department 

of the Interior
Appendix II: Comments from the Department 

of the Interior

Page 45 GAO-15-121 Indian Education Expenditures
Appendix II: Comments from the Department 

of the Interior

Page 46 GAO-15-121 Indian Education Expenditures
Appendix II: Comments from the Department 

of the Interior

Page 47 GAO-15-121 Indian Education Expenditures
Appendix II: Comments from the Department 

of the Interior

Page 48 GAO-15-121 Indian Education Expenditures
Appendix III: GAO Contacts and Staff 

Acknowledgments

Page 49 GAO-15-121 Indian Education Expenditures

Melissa Emrey-Arras, Director, (617) 788-0534 or emreyarrasm@gao.gov

In addition to the contact named above, Elizabeth Sirois (Assistant 

Director), Ramona L. Burton (Analyst-in-Charge), Lucas M. Alvarez, 

Kathleen M. Peyman, and Matthew Saradjian made key contributions to 

this report. In addition, key support was provided by Hiwotte Amare, 

James E. Bennett, Deborah Bland, Holly A. Dye, Alexander G. Galuten, 

LaToya Jeanita King, Ashley L. McCall, Sheila McCoy, Kimberly A. 

McGatlin, Jean L. McSween, Deborah A. Signer, and John S. Townes.

Appendix III: GAO Contacts and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(131291)
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