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‘‘(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 fis-
cal 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 oper-
ated by the tribe or tribal organization during
the two preceding fiscal years, the first fiscal
year preceding such fiscal year.
‘‘(B) FUNCTIONS
NOT
PREVIOUSLY
OPER-
ATED.—In the case of Bureau elementary or sec-
ondary education functions which have not pre-
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viously been operated by a tribe or tribal organi-
zation 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 ‘max-
imum base rate’ means 50 percent.
‘‘(5) MINIMUM
BASE
RATE.—The term ‘min-
imum base rate’ means 11 percent.
‘‘(6) STANDARD DIRECT COST BASE.—The term
‘standard direct cost base’ means $600,000.
‘‘(7) TRIBAL ELEMENTARY OR SECONDARY EDU-
CATIONAL PROGRAMS.—The term ‘tribal elementary
or secondary educational programs’ means all Bureau
elementary and secondary functions, together with
any other Bureau programs or portions of programs
(excluding funds for social services that are appro-
priated to agencies other than the Bureau and are ex-
pended through the Bureau, funds for major sub-
contracts, construction, and other major capital ex-
penditures, and unexpended funds carried over from
prior years) which share common administrative cost
functions, that are operated directly by a tribe or
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tribal organization under a contract, grant, or agree-
ment with the Bureau.
‘‘(b) 
GRANTS; 
EFFECT
UPON
APPROPRIATED
AMOUNTS.—
‘‘(1) GRANTS.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide a grant to each tribe or tribal organiza-
tion operating a contract or grant school, in an
amount determined under this section, for the
purpose of paying the administrative and indi-
rect costs incurred in operating the contract or
grant school, in order to—
‘‘(i) enable the tribe or tribal organiza-
tion operating the school, without reducing
direct program services to the beneficiaries
of the program, to provide all related ad-
ministrative overhead services and oper-
ations necessary to meet the requirements of
law and prudent management practice; and
‘‘(ii) carry out other necessary support
functions that 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.
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‘‘(B) AMOUNT.—No school operated as a
stand-alone institution shall receive less than
$200,000 per year under this paragraph.
‘‘(2) EFFECT UPON APPROPRIATED AMOUNTS.—
Amounts appropriated to fund the grants provided for
under this section shall be in addition to, and shall
not reduce, the amounts appropriated for the program
being administered by the contract 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 de-
termined under subsection (d) of the tribe or tribal or-
ganization to the aggregate cost of the Bureau elemen-
tary and secondary functions operated by the tribe or
tribal organization for which funds are received from
or through the Bureau. The administrative cost per-
centage rate does not apply to programs not relating
to such functions that are operated by the tribe or
tribal organization.
‘‘(2) DIRECT COST BASE FUNDS.—The Secretary
shall—
‘‘(A) reduce the amount of the grant deter-
mined under paragraph (1) to the extent that
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payments for administrative costs are actually
received by a tribe or tribal organization under
any Federal education program that is included
in the direct cost base of the tribe or tribal orga-
nization; and
‘‘(B) take such actions as may be necessary
to be reimbursed by any other department or
agency of the Federal Government (other than
the Department of the Interior) 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 de-
partment or agency.
‘‘(3) REDUCTIONS.—If the total amount of funds
necessary to provide grants to tribes and tribal orga-
nizations in the amounts determined under para-
graph (1) and (2) 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 this sub-
section for such fiscal year by an amount that bears
the same relationship to such excess as the amount of
such grants determined under this subsection bears to
the total of all grants determined under this sub-
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section for all tribes and tribal organizations for such
fiscal year.
‘‘(d) ADMINISTRATIVE COST PERCENTAGE RATE.—
‘‘(1) IN GENERAL.—For purposes of this section,
the administrative cost percentage rate for a contract
or grant school for a fiscal year is equal to the per-
centage 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 fis-
cal 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; and
‘‘(ii) the standard direct cost base.
‘‘(2) ROUNDING.—The administrative cost per-
centage rate shall be determined to 1⁄100 of a percent.
‘‘(e) COMBINING FUNDS.—
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‘‘(1) IN GENERAL.—Funds received by a tribe,
tribal organization, or contract or grant school
through grants made under this section for tribal ele-
mentary or secondary educational programs may be
combined by the tribe, tribal organization, or contract
or grant school and placed into a single administra-
tive cost account without the necessity of maintaining
separate funding source accounting.
‘‘(2) INDIRECT COST FUNDS.—Indirect cost funds
for programs at the school that share common admin-
istrative services with the tribal elementary or sec-
ondary educational programs may be included in the
administrative cost account described in paragraph
(1).
‘‘(f) 
AVAILABILITY
OF
FUNDS.—Funds 
received
through a grant made under this section with respect to
tribal elementary or secondary educational programs at a
contract or grant school shall remain available to the con-
tract or grant school—
‘‘(1) without fiscal year limitation; and
‘‘(2) without reducing the amount of any grants
otherwise payable to the school under this section for
any fiscal year after the fiscal year for which the
grant is provided.
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‘‘(g) TREATMENT OF FUNDS.—Funds received through
a grant made under this section for Bureau funded pro-
grams operated by a tribe or tribal organization under a
contract or grant shall not be taken into consideration for
purposes of indirect cost underrecovery and overrecovery de-
terminations by any Federal agency for any other funds,
from whatever source derived.
‘‘(h) TREATMENT OF ENTITY OPERATING OTHER PRO-
GRAMS.—In applying this section and section 106 of the
Indian Self-Determination and Education Assistance Act
with respect to an Indian tribe or tribal organization
that—
‘‘(1) receives funds under this section for admin-
istrative 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,
the Secretary shall ensure that the Indian tribe or tribal
organization is provided with the full amount of the admin-
istrative costs that are associated with operating the con-
tract or grant school, and of the indirect costs, that are asso-
ciated with all of such other programs, except that funds
appropriated for implementation of this section shall be
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used only to supply the amount of the grant required to
be provided by this section.
‘‘(i) APPLICABILITY TO SCHOOLS OPERATING UNDER
TRIBALLY CONTROLLED SCHOOLS ACT OF 1988.—The pro-
visions of this section that apply to contract or grant schools
shall also apply to those schools receiving assistance under
the Tribally Controlled Schools Act of 1988.
‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated such sums as may be nec-
essary to carry out this section.
‘‘(k) ADMINISTRATIVE COST GRANT BUDGET RE-
QUESTS.—
‘‘(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 re-
spect to each succeeding budget request, the Secretary
shall submit to the appropriate committees of Con-
gress 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 para-
graph (1), the amount required to provide full
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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 per-
cent 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 sub-
mitted, which amount shall include the amount
of funds required to provide 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. 1128. DIVISION OF BUDGET ANALYSIS.
‘‘(a) ESTABLISHMENT.—Not later than 12 months
after the date of enactment of the Native American Edu-
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cation Improvement Act of 2001, the Secretary shall estab-
lish within the Office of Indian Education Programs a Di-
vision of Budget Analysis (referred to in this section as the
‘Division’). Such Division shall be under the direct super-
vision and control of the Director of the Office.
‘‘(b) FUNCTIONS.—In consultation with the tribal gov-
erning bodies and local school boards the Director of the
Office, through the head of the Division, shall conduct stud-
ies, surveys, or other activities to gather demographic infor-
mation on Bureau funded schools and project the amounts
necessary to provide to Indian students in such schools the
educational program set forth in this part.
‘‘(c) ANNUAL REPORTS.—Not later than the date that
the Assistant Secretary for Indian Affairs submits the an-
nual budget request as part of the President’s annual budget
request under section 1105 of title 31, United States Code
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 Committee on Appropriations of
the House of Representatives and the Committee on Appro-
priations of the Senate), all Bureau funded schools, and the
tribal governing bodies relating to such schools, a report
that shall contain—
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‘‘(1) projections, based on the information gath-
ered pursuant to subsection (b) and any other rel-
evant information, of amounts necessary to provide to
Indian students in Bureau funded schools the edu-
cational 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 to be appropriate.
‘‘(d) USE OF REPORTS.—The Director of the Office
and the Assistant Secretary for Indian Affairs shall use the
information contained in the annual report required by
subsection (c) in preparing their annual budget requests.
‘‘SEC. 1129. UNIFORM DIRECT FUNDING AND SUPPORT.
‘‘(a) ESTABLISHMENT
OF SYSTEM
AND FORWARD
FUNDING.—
‘‘(1) IN GENERAL.—The Secretary shall establish,
by regulation 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 1126. All amounts
appropriated for distribution in accordance with this
section shall be made available in accordance with
paragraph (2).
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‘‘(2) TIMING FOR USE OF FUNDS.—
‘‘(A) AVAILABILITY.—For the purposes of
affording adequate notice of funding available
pursuant to the allotments made under section
1126 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 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 Sec-
retary, and shall remain available for obligation
through the succeeding fiscal year.
‘‘(B) PUBLICATIONS.—The Secretary shall,
on the basis of the amounts appropriated as de-
scribed in this paragraph—
‘‘(i) publish, not later than July 1 of
the fiscal year for which the amounts are
appropriated, information indicating the
amount of the allotments to be made to each
affected school under section 1126, of 80
percent of such appropriated amounts; and
‘‘(ii) publish, not later than September
30 of such fiscal year, information indi-
cating the amount of the allotments to be
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made under section 1126, from the remain-
ing 20 percent of such appropriated
amounts, adjusted to reflect the actual stu-
dent attendance.
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 provision of law (including a regula-
tion), the supervisor of a Bureau school may ex-
pend an aggregate of not more than $50,000 of
the amount allotted to the school under section
1126 to acquire materials, supplies, equipment,
operation services, maintenance services, and
other services for the school, and amounts re-
ceived as operations and maintenance funds,
funds received from the Department of Edu-
cation, or funds received from other Federal
sources, without competitive bidding if—
‘‘(i) the cost for any single item ac-
quired does not exceed $15,000;
‘‘(ii) the school board approves the ac-
quisition;
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‘‘(iii) the supervisor certifies that the
cost is fair and reasonable;
‘‘(iv) the documents relating to the ac-
quisition executed by the supervisor of the
school or other school staff cite this para-
graph as authority for the acquisition; and
‘‘(v) the acquisition transaction is doc-
umented in a journal maintained at the
school that clearly identifies when the trans-
action occurred, the item that was acquired
and from whom, the price paid, the quan-
tities 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 Amer-
ican Education Improvement 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 education line officer of each agency and
area, and the Bureau division in charge of pro-
curement, at both the local and national levels.
‘‘(C) APPLICATION AND GUIDELINES.—The
Director of the Office shall be responsible for—
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‘‘(i) determining the application of this
paragraph, including the authorization of
specific individuals to carry out this para-
graph;
‘‘(ii) ensuring that there is at least 1
such individual at each Bureau facility;
and
‘‘(iii) the provision of guidelines on the
use of this paragraph and adequate train-
ing on such guidelines.
‘‘(b) LOCAL FINANCIAL PLANS FOR EXPENDITURE OF
FUNDS.—
‘‘(1) PLAN REQUIRED.—
‘‘(A) IN
GENERAL.—Each Bureau school
that receives an allotment under section 1126
shall prepare a local financial plan that specifies
the manner in which the school will expend the
funds made available under the allotment and
ensures that the school will meet the accredita-
tion requirements or standards for the school
pursuant to section 1121.
‘‘(B) REQUIREMENT.—A local financial
plan under subparagraph (A) shall comply with
all applicable Federal and tribal laws.
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‘‘(C) PREPARATION AND REVISION.—The fi-
nancial plan for a school under subparagraph
(A) shall be prepared by the supervisor of the
school in active consultation with the local school
board for the school. The local school board for
each school shall have the authority to ratify, re-
ject, or amend such financial plan and, at the
initiative of the local school board or in response
to the supervisor of the school, to revise such fi-
nancial plan to meet needs not foreseen at the
time of preparation of the financial plan.
‘‘(D) ROLE
OF
SUPERVISOR.—The super-
visor of the school—
‘‘(i) shall put into effect the decisions
of the school board relating to the financial
plan under subparagraph (A); and
‘‘(ii) shall provide the appropriate
local union representative of the education
employees of the school with copies of pro-
posed financial plans relating to the school
and all modifications and proposed modi-
fications to the plans, and at the same time
submit such copies to the local school board.
‘‘(iii) may appeal any such action of
the local school board to the appropriate
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education line officer of the Bureau agency
by filing a written statement describing the
action and the reasons the supervisor be-
lieves such action should be overturned.
A copy of the statement under clause (iii) shall
be submitted to the local school board and such
board shall be afforded an opportunity to re-
spond, in writing, to such appeal. After review-
ing such written appeal and response, the appro-
priate education line officer may, for good cause,
overturn the action of the local school board. The
appropriate education line officer shall transmit
the determination of such appeal in the form of
a written opinion to such board and to such su-
pervisor identifying the reasons for overturning
such action.
‘‘(2) REQUIREMENT.—A Bureau school shall ex-
pend amounts received under an allotment under sec-
tion 1126 in accordance with the local financial plan
prepared under paragraph (1).
‘‘(c) TRIBAL DIVISION OF EDUCATION, SELF-DETER-
MINATION GRANT AND CONTRACT FUNDS.—The Secretary
may approve applications for funding tribal divisions of
education and developing tribal codes of education, from
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funds made available pursuant to section 103(a) of the In-
dian Self-Determination and Education Assistance Act.
‘‘(d) TECHNICAL ASSISTANCE AND TRAINING.—A local
school board may, in the exercise of the authority of the
school board under this section, request technical assistance
and training from the Secretary. The Secretary shall, to
the greatest extent possible, provide such assistance and
training, and make appropriate provision in the budget of
the Office for such assistance and training.
‘‘(e) SUMMER PROGRAM OF ACADEMIC AND SUPPORT
SERVICES.—
‘‘(1) IN GENERAL.—A financial plan prepared
under subsection (b) for a school may include, at the
discretion of the supervisor and the local school board
of such school, a provision for funding a summer pro-
gram of academic and support services for students of
the school. Any such program may include activities
related to the prevention of alcohol and substance
abuse. The Assistant Secretary for Indian Affairs
shall provide for the utilization of facilities of the
school for such program during any summer in which
such utilization is requested.
‘‘(2) USE OF OTHER FUNDS.—Notwithstanding
any other provision of law, funds authorized under
the Act of April 16, 1934 (commonly known as the
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‘Johnson-O’Malley Act’; 48 Stat. 596, chapter 147)
and this Act may be used to augment the services pro-
vided in each summer program referred to in para-
graph (1) at the option of the tribe or school receiving
such funds. The augmented services shall be under the
control of the tribe or school.
‘‘(3) TECHNICAL ASSISTANCE AND PROGRAM CO-
ORDINATION.—The Assistant Secretary for Indian Af-
fairs, acting through the Director of the Office, shall
provide technical assistance and coordination of ac-
tivities for any program described in paragraph (1)
and shall, to the extent possible, encourage the coordi-
nation of such programs with any other summer pro-
grams that might benefit Indian youth, regardless of
the funding source or administrative entity of such
programs.
‘‘(f) COOPERATIVE AGREEMENTS.—
‘‘(1) IN GENERAL.—From funds allotted to a Bu-
reau school under section 1126, the Secretary shall, if
specifically requested by the appropriate tribal gov-
erning body, implement a cooperative agreement that
is entered into between the tribe, the Bureau, the local
school board, and a local public school district that
meets the requirements of paragraph (2) and involves
the school. The tribe, the Bureau, the school board,
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and the local public school district shall determine the
terms of the agreement.
‘‘(2) COORDINATION PROVISIONS.—An agreement
under paragraph (1) may, with respect to the Bureau
school and schools in the school district involved, en-
compass coordination of all or any part of the fol-
lowing:
‘‘(A) The academic program and cur-
riculum, unless the Bureau school is accredited
by a State or regional accrediting entity and
would not continue to be so accredited if the
agreement encompassed the program and cur-
riculum.
‘‘(B) Support services, including procure-
ment and facilities maintenance.
‘‘(C) Transportation.
‘‘(3) EQUAL BENEFIT AND BURDEN.—
‘‘(A) IN GENERAL.—Each agreement entered
into pursuant to the authority provided in para-
graph (1) shall confer a benefit upon the Bureau
school commensurate with the burden assumed
by the school.
‘‘(B) LIMITATION.—Subparagraph (A) shall
not be construed to require equal expenditures, or
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an exchange of similar services, by the Bureau
school and schools in the school district.
‘‘(g) PRODUCT OR RESULT OF STUDENT PROJECTS.—
Notwithstanding any other provision of law, where there
is agreement on action between the superintendent and the
school board of a Bureau funded school, the product or re-
sult of a project conducted in whole or in major part by
a student may be given to that student upon the completion
of such project.
‘‘(h) MATCHING FUND REQUIREMENTS.—
‘‘(1) NOT CONSIDERED FEDERAL FUNDS.—Not-
withstanding any other provision of law, funds re-
ceived by a Bureau funded school under this title for
education-related activities (not including funds for
construction, maintenance, and facilities improve-
ment or repair) shall not be considered Federal funds
for the purposes of a matching funds requirement for
any Federal program.
‘‘(2) NONAPPLICATION OF REQUIREMENTS.—
‘‘(A) IN
GENERAL.—Notwithstanding any
other provision of law, no requirement relating
to the provision of matching funds or the provi-
sion of services or in-kind activity as a condition
of participation in a program or project or re-
ceipt of a grant, shall apply to a Bureau funded
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‘‘(H) institutionalized or incarcerated chil-
dren; and
‘‘(I) children whose parents are institu-
tionalized or incarcerated;
‘‘(4) provide that the contractor will provide
such training and technical assistance to subcontrac-
tors as may be necessary to carry out the purpose of
this section;
‘‘(5) provide that the contractor will annually
report to the Secretary the number of, and describe,
programs funded under paragraph (3); and
‘‘(6) include such other terms and conditions as
the Secretary determines to be appropriate to ensure
the effectiveness of such programs.
‘‘(d) RESTRICTION
ON PAYMENTS.—The Secretary
shall make no payment of the Federal share of the cost of
acquiring and distributing books under any contract under
this section unless the Secretary determines that the con-
tractor or subcontractor, as the case may be, has made ar-
rangements with book publishers or distributors to obtain
books at discounts at least as favorable as discounts that
are customarily given by such publisher or distributor for
book purchases made under similar circumstances in the
absence of Federal assistance.