H. R. 1—608
‘‘(C) the student is a dependent of a Bureau, Indian
Health Service, or tribal government employee who lives
on or near the school site; or
‘‘(D) tuition is paid for the student that is not more
than the tuition charged by the nearest public school dis-
trict for out-of-district students and shall be in addition
to the school’s allocation under this section.
‘‘(3) ATTENDANCE OF NON-INDIAN STUDENTS AT CONTRACT
AND GRANT SCHOOLS.—The school board of a contract or grant
school may permit students who are not eligible Indian students
under this subsection to attend its contract school or grant
school. Any tuition collected for those students shall be in
addition to funding received under this section.
‘‘(h) FUNDS AVAILABLE WITHOUT FISCAL YEAR LIMITATION.—
Notwithstanding any other provision of law, at the election of
the school board of a Bureau school made at any time during
the fiscal year, a portion equal to not more than 15 percent of
the funds allocated with respect to a school under this section
for any fiscal year shall remain available to the school for expendi-
ture without fiscal year limitation. The Assistant Secretary shall
take such steps as are necessary to implement this subsection.
‘‘(i) STUDENTS AT RICHFIELD DORMITORY, RICHFIELD, UTAH.—
‘‘(1) IN GENERAL.—Tuition for the instruction of each out-
of-State Indian student in a home-living situation at the Rich-
field dormitory in Richfield, Utah, who attends Sevier County
high schools in Richfield, Utah, for an academic year, shall
be paid from Indian school equalization program funds author-
ized in this section and section 1129, at a rate not to exceed
the weighted amount provided for under subsection (b) for
a student for that year.
‘‘(2) NO
ADMINISTRATIVE
COST
FUNDS.—No additional
administrative cost funds shall be provided under this part
to pay for administrative costs relating to the instruction of
the students.
‘‘SEC. 1128. ADMINISTRATIVE COST GRANTS.
‘‘(a) DEFINITIONS.—In this section:
‘‘(1) ADMINISTRATIVE COST.—
‘‘(A) IN
GENERAL.—The term ‘administrative cost’
means the cost of necessary administrative functions
which—
‘‘(i) the tribe or tribal organization incurs as a
result of operating a tribal elementary or secondary
educational program;
‘‘(ii) are not customarily paid by comparable
Bureau-operated programs out of direct program funds;
and
‘‘(iii) are either—
‘‘(I) normally provided for comparable Bureau
programs by Federal officials using resources other
than Bureau direct program funds; or
‘‘(II) are otherwise required of tribal self-deter-
mination program operators by law or prudent
management practice.
‘‘(B) INCLUSIONS.—The term ‘administrative cost’ may
include—
H. R. 1—609
‘‘(i) contract or grant (or other agreement) adminis-
tration;
‘‘(ii) executive, policy, and corporate leadership and
decisionmaking;
‘‘(iii) program planning, development, and manage-
ment;
‘‘(iv) fiscal, personnel, property, and procurement
management;
‘‘(v) related office services and record keeping; and
‘‘(vi) costs of necessary insurance, auditing, legal,
safety and security services.
‘‘(2) BUREAU ELEMENTARY AND SECONDARY FUNCTIONS.—
The term ‘Bureau elementary and secondary functions’ means—
‘‘(A) all functions funded at Bureau schools by the
Office;
‘‘(B) all programs—
‘‘(i) funds for which are appropriated to other agen-
cies of the Federal Government; and
‘‘(ii) which are administered for the benefit of
Indians through Bureau schools; and
‘‘(C) all operation, maintenance, and repair funds for
facilities and Government quarters used in the operation
or support of elementary and secondary education functions
for the benefit of Indians, from whatever source derived.
‘‘(3) DIRECT COST BASE.—
‘‘(A) IN
GENERAL.—Except as otherwise provided in
subparagraph (B), the direct cost base of a tribe or tribal
organization for the fiscal year is the aggregate direct
cost program funding for all tribal elementary or secondary
educational programs operated by the tribe or tribal
organization during—
‘‘(i) the second fiscal year preceding such fiscal
year; or
‘‘(ii) if such programs have not been operated by
the tribe or tribal organization during the 2 preceding
fiscal years, the first fiscal year preceding such fiscal
year.
‘‘(B) FUNCTIONS NOT PREVIOUSLY OPERATED.—In the
case of Bureau elementary or secondary education functions
which have not previously been operated by a tribe or
tribal organization under contract, grant, or agreement
with the Bureau, the direct cost base for the initial year
shall be the projected aggregate direct cost program funding
for all Bureau elementary and secondary functions to be
operated by the tribe or tribal organization during that
fiscal year.
‘‘(4) MAXIMUM BASE RATE.—The term ‘maximum base rate’
means 50 percent.
‘‘(5) MINIMUM BASE RATE.—The term ‘minimum base rate’
means 11 percent.
‘‘(6) STANDARD
DIRECT
COST
BASE.—The term ‘standard
direct cost base’ means $600,000.
‘‘(7) TRIBAL ELEMENTARY OR SECONDARY EDUCATIONAL PRO-
GRAMS.—The term ‘tribal elementary or secondary educational
programs’ means all Bureau elementary and secondary func-
tions, together with any other Bureau programs or portions
H. R. 1—610
of programs (excluding funds for social services that are appro-
priated to agencies other than the Bureau and are funded
through the Bureau, funds for major subcontracts, construction,
and other major capital expenditures, and unexpended funds
carried over from prior years) which share common administra-
tive cost functions, that are operated directly by a tribe or
tribal organization under a contract, grant, or agreement with
the Bureau.
‘‘(b) GRANTS; EFFECT UPON APPROPRIATED AMOUNTS.—
‘‘(1) GRANTS.—Subject to the availability of funds, the Sec-
retary shall provide grants to each tribe or tribal organization
operating a contract school or grant school in the amount
determined under this section with respect to the tribe or
tribal organization for the purpose of paying the administrative
and indirect costs incurred in operating contract or grant
schools, provided that no school operated as a stand-alone
institution shall receive less than $200,000 per year for these
purposes, in order to—
‘‘(A) enable tribes and tribal organizations operating
such schools, without reducing direct program services to
the beneficiaries of the program, to provide all related
administrative overhead services and operations necessary
to meet the requirements of law and prudent management
practice; and
‘‘(B) carry out other necessary support functions which
would otherwise be provided by the Secretary or other
Federal officers or employees, from resources other than
direct program funds, in support of comparable Bureau-
operated programs.
‘‘(2) EFFECT
UPON
APPROPRIATED
AMOUNTS.—Amounts
appropriated to fund the grants provided under this section
shall be in addition to, and shall not reduce, the amounts
appropriated for the program being administered by the con-
tract or grant school.
‘‘(c) DETERMINATION OF GRANT AMOUNT.—
‘‘(1) IN GENERAL.—The amount of the grant provided to
each tribe or tribal organization under this section for each
fiscal year shall be determined by applying the administrative
cost percentage rate of the tribe or tribal organization to the
aggregate of the Bureau elementary and secondary functions
operated by the tribe or tribal organization for which funds
are received from or through the Bureau.
‘‘(2) DIRECT COST BASE FUNDS.—The Secretary shall—
‘‘(A) reduce the amount of the grant determined under
paragraph (1) to the extent that payments for administra-
tive costs are actually received by an Indian tribe or tribal
organization 
under 
any 
Federal 
education 
program
included in the direct cost base of the tribe or tribal
organization; and
‘‘(B) take such actions as may be necessary to be
reimbursed by any other department or agency of the Fed-
eral Government for the portion of grants made under
this section for the costs of administering any program
for Indians that is funded by appropriations made to such
other department or agency.
‘‘(d) ADMINISTRATIVE COST PERCENTAGE RATE.—
H. R. 1—611
‘‘(1) IN GENERAL.—For purposes of this section, the adminis-
trative cost percentage rate for a contract or grant school for
a fiscal year is equal to the percentage determined by dividing—
‘‘(A) the sum of—
‘‘(i) the amount equal to—
‘‘(I) the direct cost base of the tribe or tribal
organization for the fiscal year, multiplied by
‘‘(II) the minimum base rate; plus
‘‘(ii) the amount equal to—
‘‘(I) the standard direct cost base; multiplied
by
‘‘(II) the maximum base rate; by
‘‘(B) the sum of—
‘‘(i) the direct cost base of the tribe or tribal
organization for the fiscal year; plus
‘‘(ii) the standard direct cost base.
‘‘(2) ROUNDING.—The administrative cost percentage rate
shall be determined to the 1⁄100 of a decimal point.
‘‘(3) APPLICABILITY.—The administrative cost percentage
rate determined under this subsection shall not apply to other
programs operated by the tribe or tribal organization.
‘‘(e) COMBINING FUNDS.—
‘‘(1) IN GENERAL.—Funds received by a tribe or contract
or grant school as grants under this section for tribal
elementary or secondary educational programs may be com-
bined by the tribe or contract or grant school into a single
administrative 
cost 
account 
without 
the 
necessity 
of
maintaining separate funding source accounting.
‘‘(2) INDIRECT COST FUNDS.—Indirect cost funds for pro-
grams at the school which share common administrative serv-
ices with tribal elementary or secondary educational programs
may be included in the administrative cost account described
in paragraph (1).
‘‘(f) AVAILABILITY OF FUNDS.—Funds received as grants under
this section with respect to tribal elementary or secondary education
programs shall remain available to the contract or grant school
without fiscal year limitation and without diminishing the amount
of any grants otherwise payable to the school under this section
for any fiscal year beginning after the fiscal year for which the
grant is provided.
‘‘(g) TREATMENT OF FUNDS.—Funds received as grants under
this section for Bureau-funded programs operated by a tribe or
tribal organization under a contract or agreement shall not be
taken into consideration for purposes of indirect cost underrecovery
and overrecovery determinations by any Federal agency for any
other funds, from whatever source derived.
‘‘(h) TREATMENT OF ENTITY OPERATING OTHER PROGRAMS.—
In applying this section and section 106 of the Indian Self-Deter-
mination and Education Assistance Act with respect to an Indian
tribe or tribal organization that—
‘‘(1) receives funds under this section for administrative
costs incurred in operating a contract or grant school or a
school operated under the Tribally Controlled Schools Act of
1988; and
‘‘(2) operates one or more other programs under a contract
or grant provided under the Indian Self-Determination and
Education Assistance Act,
H. R. 1—612
the Secretary shall ensure that the Indian tribe or tribal organiza-
tion is provided with the full amount of the administrative costs
that are associated with operating the contract or grant school,
and of the indirect costs, that are associated with all of such
other programs, except that funds appropriated for implementation
of this section shall be used only to supply the amount of the
grant required to be provided by this section.
‘‘(i) STUDIES
FOR
DETERMINATION
OF
FACTORS
AFFECTING
COSTS; BASE RATES LIMITS; STANDARD DIRECT COST BASE; REPORT
TO CONGRESS.—
‘‘(1) STUDIES.—Not later than 120 days after the date of
enactment of the Native American Education Improvement Act
of 2001, the Director of the Office of Indian Education Programs
shall—
‘‘(A) conduct such studies as may be needed to establish
an empirical basis for determining relevant factors substan-
tially affecting required administrative costs of tribal
elementary and secondary education programs, using the
formula set forth in subsection (c); and
‘‘(B) conduct a study to determine—
‘‘(i) a maximum base rate which ensures that the
amount of the grants provided under this section will pro-
vide adequate (but not excessive) funding of the administra-
tive costs of the smallest tribal elementary or secondary
educational programs;
‘‘(ii) a minimum base rate which ensures that the
amount of the grants provided under this section will pro-
vide adequate (but not excessive) funding of the administra-
tive costs of the largest tribal elementary or secondary
educational programs; and
‘‘(iii) a standard direct cost base which is the aggregate
direct cost funding level for which the percentage deter-
mined under subsection (d) will—
‘‘(I) be equal to the median between the maximum
base rate and the minimum base rate; and
‘‘(II) ensure that the amount of the grants provided
under this section will provide adequate (but not exces-
sive) funding of the administrative costs of tribal
elementary or secondary educational programs closest
to the size of the program.
‘‘(2) GUIDELINES.—The studies required under paragraph
(1) shall—
‘‘(A) be conducted in full consultation (in accordance
with section 1131) with—
‘‘(i) the tribes and tribal organizations that are
affected by the application of the formula set forth
in subsection (c); and
‘‘(ii) all national and regional Indian organizations
of which such tribes and tribal organizations are typi-
cally members;
‘‘(B) be conducted onsite with a representative statis-
tical sample of the tribal elementary or secondary edu-
cational programs under a contract entered into with a
nationally reputable public accounting and business con-
sulting firm;
H. R. 1—613
‘‘(C) take into account the availability of skilled labor
commodities, business and automatic data processing serv-
ices, related Indian preference and Indian control of edu-
cation requirements, and any other market factors found
to substantially affect the administrative costs and effi-
ciency of each such tribal elementary or secondary edu-
cational program studied in order to ensure that all
required administrative activities can reasonably be deliv-
ered in a cost effective manner for each such program,
given an administrative cost allowance generated by the
values, percentages, or other factors found in the studies
to be relevant in such formula;
‘‘(D) identify, and quantify in terms of percentages
of direct program costs, any general factors arising from
geographic isolation, or numbers of programs administered,
independent of program size factors used to compute a
base administrative cost percentage in such formula; and
‘‘(E) identify any other incremental cost factors
substantially affecting the costs of required administrative
cost functions at any of the tribal elementary or secondary
educational programs studied and determine whether the
factors are of general applicability to other such programs,
and (if so) how the factors may effectively be incorporated
into such formula.
‘‘(3) CONSULTATION WITH INSPECTOR GENERAL.—In carrying
out the studies required under this subsection, the Director
shall obtain the input of, and afford an opportunity to partici-
pate to, the Inspector General of the Department of the Interior.
‘‘(4) CONSIDERATION OF DELIVERY OF ADMINISTRATIVE SERV-
ICES.—Determinations described in paragraph (2)(C) shall be
based on what is practicable at each location studied, given
prudent management practice, irrespective of whether required
administrative services were actually or fully delivered at these
sites, or whether other services were delivered instead, during
the period of the study.
‘‘(5) REPORT.—Upon completion of the studies conducted
under paragraph (1), the Director shall submit to Congress
a report on the findings of the studies, together with determina-
tions based upon such studies that would affect the definitions
set forth under subsection (e) that are used in the formula
set forth in subsection (c).
‘‘(6) PROJECTION OF COSTS.—The Secretary shall include
in the Bureau’s justification for each appropriations request
beginning in the first fiscal year after the completion of the
studies conducted under paragraph (1), a projection of the
overall costs associated with the formula set forth in subsection
(c) for all tribal elementary or secondary education programs
which the Secretary expects to be funded in the fiscal year
for which the appropriations are sought.
‘‘(7) DETERMINATION OF PROGRAM SIZE.—For purposes of
this subsection, the size of tribal elementary or secondary edu-
cational programs is determined by the aggregate direct cost
program funding level for all Bureau-funded programs which
share common administrative cost functions.
‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) IN GENERAL.—There are authorized to be appropriated
to carry out this section such sums as may be necessary.
H. R. 1—614
‘‘(2) REDUCTIONS.—If the total amount of funds necessary
to provide grants to tribes and tribal organizations in the
amounts determined under subsection (c) for a fiscal year
exceeds the amount of funds appropriated to carry out this
section for such fiscal year, the Secretary shall reduce the
amount of each grant determined under subsection (c) for such
fiscal year by an amount that bears the same relationship
to such excess as the amount of such grants determined under
subsection (c) bears to the total of all grants determined under
subsection (c) section for all tribes and tribal organizations
for such fiscal year.
‘‘(k) APPLICABILITY TO SCHOOLS OPERATING UNDER TRIBALLY
CONTROLLED SCHOOLS ACT OF 1988.—The provisions of this section
shall apply to schools operating under the Tribally Controlled
Schools Act of 1988.
‘‘(l) ADMINISTRATIVE COST GRANT BUDGET REQUESTS.—
‘‘(1) IN
GENERAL.—Beginning with President’s annual
budget request under section 1105 of title 31, United States
Code for fiscal year 2002, and with respect to each succeeding
budget request, at the discretion of the Secretary, the Secretary
shall submit to the appropriate committees of Congress
information and funding requests for the full funding of
administrative costs grants required to be paid under this
section.
‘‘(2) REQUIREMENTS.—
‘‘(A) FUNDING FOR NEW CONVERSIONS TO CONTRACT OR
GRANT
SCHOOL
OPERATIONS.—With respect to a budget
request under paragraph (1), the amount required to pro-
vide full funding for an administrative cost grant for each
tribe or tribal organization expected to begin operation
of a Bureau-funded school as contract or grant school in
the academic year funded by such annual budget request,
the amount so required shall not be less than 10 percent
of the amount required for subparagraph (B).
‘‘(B) FUNDING FOR CONTINUING CONTRACT AND GRANT
SCHOOL
OPERATIONS.—With respect to a budget request
under paragraph (1), the amount required to provide full
funding for an administrative cost grant for each tribe
or tribal organization operating a contract or grant school
at the time the annual budget request is submitted, which
amount shall include the amount of funds required to pro-
vide full funding for an administrative cost grant for each
tribe or tribal organization which began operation of a
contract or grant school with administrative cost grant
funds supplied from the amount described in subparagraph
(A).
‘‘SEC. 1129. DIVISION OF BUDGET ANALYSIS.
‘‘(a) ESTABLISHMENT.—Not later than 1 year after the date
of enactment of the Native American Education Improvement Act
of 2001, the Secretary shall establish within the Office of Indian
Education Programs a Division of Budget Analysis (hereafter in
this section referred to as the ‘Division’). Such Division shall be
under the direct supervision and control of the Director of the
Office.
‘‘(b) FUNCTIONS.—In consultation with the tribal governing
bodies and tribal school boards, the Director of the Office, through
H. R. 1—615
the Division, shall conduct studies, surveys, or other activities to
gather demographic information on Bureau-funded schools and
project the amount necessary to provide Indian students in such
schools the educational program set forth in this part.
‘‘(c) ANNUAL REPORTS.—Not later than the date on which the
Assistant Secretary for Indian Affairs makes the annual budget
submission, for each fiscal year after the date of enactment of
the Native American Education Improvement Act of 2001, the
Director of the Office shall submit to the appropriate committees
of Congress (including the Appropriations committees), all Bureau-
funded schools, and the tribal governing bodies of such schools,
a report that contains—
‘‘(1) projections, based upon the information gathered
pursuant to subsection (b) and any other relevant information,
of amounts necessary to provide Indian students in Bureau-
funded schools the educational program set forth in this part;
‘‘(2) a description of the methods and formulas used to
calculate the amounts projected pursuant to paragraph (1);
and
‘‘(3) such other information as the Director of the Office
considers appropriate.
‘‘(d) USE
OF REPORTS.—The Director of the Office and the
Assistant Secretary for Indian Affairs shall use the annual report
required by subsection (c) when preparing annual budget submis-
sions.
‘‘SEC. 1130. UNIFORM DIRECT FUNDING AND SUPPORT.
‘‘(a) ESTABLISHMENT OF SYSTEM AND FORWARD FUNDING.—
‘‘(1) IN GENERAL.—The Secretary shall establish, by regula-
tion adopted in accordance with section 1136, a system for
the direct funding and support of all Bureau-funded schools.
Such system shall allot funds in accordance with section 1127.
All amounts appropriated for distribution in accordance with
this section shall be made available in accordance with para-
graph (2).
‘‘(2) TIMING FOR USE OF FUNDS.—
‘‘(A) AVAILABILITY.—For the purposes of affording ade-
quate notice of funding available pursuant to the allotments
made under section 1127 and the allotments of funds for
operation and maintenance of facilities, amounts appro-
priated in an appropriations Act for any fiscal year for
such allotments—
‘‘(i) shall become available for obligation by the
affected schools on July 1 of the fiscal year for which
such allotments are appropriated without further
action by the Secretary; and
‘‘(ii) shall remain available for obligation through
the succeeding fiscal year.
‘‘(B) PUBLICATIONS.—The Secretary shall, on the basis
of the amounts appropriated as described in this
paragraph—
‘‘(i) publish, not later than July 1 of the fiscal
year for which the amounts are appropriated, informa-
tion indicating the amount of the allotments to be
made to each affected school under section 1127, of
80 percent of such appropriated amounts; and
H. R. 1—616
‘‘(ii) publish, not later than September 30 of such
fiscal year, information indicating the amount of the
allotments to be made under section 1127, from the
remaining 20 percent of such appropriated amounts,
adjusted to reflect the actual student attendance.
‘‘(C) OVERPAYMENTS.—Any overpayments made to
tribal schools shall be returned to the Secretary not later
than 30 days after the final determination that the school
was overpaid pursuant to this section.
‘‘(3) LIMITATION.—
‘‘(A) EXPENDITURES.—Notwithstanding any other provi-
sion of law (including a regulation), the supervisor of a
Bureau-operated school may expend an aggregate of not
more than $50,000 of the amount allotted to the school
under section 1127 to acquire materials, supplies, equip-
ment, operation services, maintenance services, and other
services for the school, and amounts received as operations
and maintenance funds, funds received from the Depart-
ment of Education, or funds received from other Federal
sources, without competitive bidding if—
‘‘(i) the cost for any single item acquired does
not exceed $15,000;
‘‘(ii) the school board approves the acquisition;
‘‘(iii) the supervisor certifies that the cost is fair
and reasonable;
‘‘(iv) the documents relating to the acquisition
executed by the supervisor of the school or other school
staff cite this paragraph as authority for the acquisi-
tion; and
‘‘(v) the acquisition transaction is documented in
a journal maintained at the school that clearly identi-
fies when the transaction occurred, the item that was
acquired and from whom, the price paid, the quantities
acquired, and any other information the supervisor
or the school board considers to be relevant.
‘‘(B) NOTICE.—Not later than 6 months after the date
of enactment of the Native American Education Improve-
ment Act of 2001, the Secretary shall send notice of the
provisions of this paragraph to each supervisor of a Bureau
school and associated school board chairperson, the edu-
cation line officer of each agency and area, and the Bureau
division in charge of procurement, at both the local and
national levels.
‘‘(C) APPLICATION AND GUIDELINES.—The Director of
the Office shall be responsible for—
‘‘(i) determining the application of this paragraph,
including the authorization of specific individuals to
carry out this paragraph;
‘‘(ii) ensuring that there is at least one such indi-
vidual at each Bureau facility; and
‘‘(iii) the provision of guidelines on the use of this
paragraph and adequate training on such guidelines.
‘‘(4) EFFECT OF SEQUESTRATION ORDER.—If a sequestration
order issued under the Balanced Budget and Emergency Deficit
Control Act of 1985 reduces the amount of funds available
for allotment under section 1127 for any fiscal year by more