Indian Affairs: Further Actions on GAO Recommendations Needed to Address Systemic Management Challenges with Indian Education
Published: 2015-04-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: BIE is responsible for providing quality education opportunities to Indian students. It currently oversees 185 schools, serving about 41,000 students on or near Indian reservations. Poor student outcomes raise questions about how well BIE is achieving its mission. In September 2013, GAO reported that BIE student performance has been consistently below that of Indian students in public schools.
This testimony discusses Indian Affairs' management challenges in improving Indian education, including (1) its administration of schools, (2) staff capacity to address schools' needs, and 3) accountability for managing school construction and monitoring school spending.
This testimony is based on GAO reports issued in September 2013 and November 2014, as well as GAO's February 2015 testimony, which presents preliminary results from its ongoing review of BIE school facilities. A full report on school facilities will be issued later this year. GAO reviewed relevant laws and regulations; analyzed agency data; and conducted site visits to schools, which were selected based on their geographic diversity and other factors.
GAO has made several recommendations in its earlier reports; it is not making any new recommendations in this statement.
section_title: What GAO Found
paragraphs: GAO has reported for several years on how systemic management challenges within the Department of the Interior's Office of the Assistant Secretary–Indian Affairs (Indian Affairs) continue to hamper efforts to improve Bureau of Indian Education (BIE) schools. Over the past 10 years, Indian Affairs has undergone several organizational realignments, resulting in multiple offices across different units being responsible for BIE schools' education and administrative functions. Indian Affairs' fragmented organization has been compounded by frequent turnover in its leadership over a 13-year period and its lack of a strategic plan for BIE. Further, fragmentation and poor communication among Indian Affairs offices has led to confusion among schools about whom to contact about problems, as well as delays in the delivery of key educational services and supplies, such as textbooks. Key practices for organizational change suggest that agencies develop a results-oriented framework, such as a strategic plan, to clearly establish and communicate performance goals and measure their progress toward them. In 2013, GAO recommended that Interior develop a strategic plan for BIE and a strategy for communicating with schools, among other recommendations. Indian Affairs agreed with and reported taking some steps to address the two recommendations. However, it has not fully implemented them.
Limited staff capacity poses another challenge to addressing BIE school needs. According to key principles for effective workforce planning, the appropriate deployment of employees enables organizations to have the right people, with the right skills, in the right place. However, Indian Affairs data indicate that about 40 percent of its regional facility positions, such as architects and engineers, are vacant. Similarly, in 2014, GAO reported that BIE had many vacancies in positions to oversee school spending. Further, remaining staff had limited financial expertise and training. Without adequate staff and training, Indian Affairs will continue to struggle in monitoring and supporting schools. GAO recommended that Interior revise its workforce plan so that employees are placed in the appropriate offices and have the requisite knowledge and skills to better support schools. Although Indian Affairs agreed with this recommendation, it has not yet implemented it.
Inconsistent accountability hampers management of BIE school construction and monitoring of school spending. Specifically, GAO has found that Indian Affairs did not consistently oversee some construction projects. For example, at one school GAO visited, Indian Affairs spent $3.5 million to replace multiple roofs in 2010. The new roofs already leak, causing mold and ceiling damage, and Indian Affairs has not yet adequately addressed the problems, resulting in continued leaks and damage to the structure. Inconsistent accountability also impairs BIE's monitoring of school spending. In 2014, GAO found that BIE does not adequately monitor school expenditures using written procedures or a risk-based monitoring approach, contrary to federal internal control standards. As a result, BIE failed to provide effective oversight of schools when they misspent millions of dollars in federal funds. GAO recommended that the agency develop written procedures and a risk-based approach to improve its monitoring. Indian Affairs agreed but has yet to implement these recommendations.

section_title: Letter
paragraphs: I appreciate the opportunity to testify today to discuss systemic  management challenges facing the Department of Interior’s (Interior)  Bureau of Indian Education (BIE) schools. For the past several years, we  have reported on a broad range of issues related to BIE’s education  programs and operations. Currently, BIE oversees 185 elementary and  secondary schools that serve approximately 41,000 students on or near  Indian reservations in 23 states, often in rural areas and small towns.  About two-thirds of these schools are operated by tribes (tribally- operated), primarily through federal grants, and about one-third are  operated directly by BIE (BIE-operated). BIE’s mission is to provide Indian  students with quality education opportunities. Poor student outcomes,  however, raise questions about how well BIE is achieving its mission. For  example, in September 2013, we reported that student performance at  BIE schools had been consistently below Indian students in public  schools. High school graduation rates for BIE schools were also lower  than the national average. In addition, recent reports have raised  concerns about the physical condition of school facilities and the effect  these conditions may have on the educational outcomes of Indian  students who attend them.
My remarks today will focus on management challenges to improving  Indian education, which is overseen by Interior’s Office of the Assistant  Secretary – Indian Affairs (Indian Affairs). Specifically, I will discuss Indian  Affairs’ (1) administration of schools, (2) staff capacity to address schools’  needs, and (3) accountability for managing school construction and  monitoring school spending. My statement is based on our prior reports  issued in September 2013 and November 2014 on BIE’s management of  schools and its oversight of school spending, and on my February 2015  testimony on our ongoing work on the condition of BIE school facilities for  the House Appropriations Subcommittee on Interior, Environment, and  Related Agencies.
To perform this work, we used multiple data collection methodologies.  Specifically, we reviewed relevant federal laws and regulations; analyzed  agency data; and conducted site visits to schools, which were selected to  reflect a mix of tribally-operated and BIE-operated schools, geographic  diversity, and other factors. We also reviewed Indian Affairs’ budget  documents and the Department of Education’s (Education) student  performance data, and conducted interviews with agency officials. We  determined that these data were sufficiently reliable for the purposes of  our work. Further details on the scope and methodology are available  within each of the previously published products. We expect to issue a  final report later this year that will provide our complete results on the  condition of BIE school facilities, as well as Indian Affairs’ accountability  for school construction and repair.
We conducted the work on which this statement is based 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.
subsections: section_title: Background
paragraphs: BIE’s Indian education programs derive from the federal government’s  trust responsibility to Indian tribes, a responsibility established in federal  statutes, treaties, court decisions, and executive actions. It is the policy  of the United States to fulfill this trust responsibility for educating Indian  children by working with tribes to ensure that education programs are of  the highest quality, among other things. In accordance with this trust  responsibility, Interior is responsible for providing a safe and healthy  environment for students to learn. BIE’s mission is to provide Indian  students with quality education opportunities. 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.
All BIE schools—both tribally-operated and BIE-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 about $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 (about 1 percent),  mainly the Department of Agriculture, which provides reduced-price or  free school meals for eligible low-income children. (See fig. 1).
While BIE schools are primarily funded through Interior, they receive  annual formula grants from Education, similar to public schools.  Specifically, schools receive Education funds under Title I, Part A of the  Elementary and Secondary Education Act (ESEA) of 1965, as amended,  and the Individuals with Disabilities Education Act. 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. An Education study published in 2012 found that 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. Further, BIE schools receive  Individuals with Disabilities Education Act funding for special education  and related services, such as physical therapy or speech therapy. BIE  schools tend to have a higher percent of students with special needs than  students in public schools nationally.
BIE schools’ educational functions are primarily the responsibility of BIE,  while their administrative functions are divided mainly between two other  Interior offices.
The Bureau of Indian Education develops educational policies and  procedures, supervises program activities, and approves schools’  expenditures. Three Associate Deputy Directors are responsible for  overseeing multiple BIE local education offices that work directly with  schools to provide technical assistance. Some BIE local offices also  have their own facility managers.
The Office of the Deputy Assistant Secretary of Management  oversees many of BIE’s administrative functions, including  acquisitions and contract services, financial management, budget  formulation, and property management. This office is also responsible  for developing policies and procedures and providing technical  assistance and funding to Bureau of Indian Affairs (BIA) regions and  BIE schools to address their facility needs. Professional staff in this  division—including engineers, architects, facility managers, and  support personnel—are tasked with providing expertise in all facets of  the facility management process.
The Bureau of Indian Affairs administers a broad array of social  services and other supports to tribes at the regional level. Regarding  school facility management, BIA oversees the day-to-day  implementation and administration of school facility construction and  repair projects through its regional field offices. Currently there are 12  regional offices, and 9 of them have facility management  responsibilities.health and safety inspections to ensure compliance with relevant   These responsibilities include performing school  requirements and providing technical assistance to BIE schools on  facility issues.
In September 2013, we reported that BIE student performance on  national and state assessments and graduation rates were below those  of Indian students in public schools. For example, in 2011, 4th grade  estimated average reading scores were 22 points lower for BIE students  than for Indian students in public schools. In 4th grade mathematics, BIE  students scored 14 points lower, on average, than Indian students in  public schools in 2011. (See fig. 2.) We also reported that 8th grade  students in 2011 had consistently lower scores on average than Indian  students in public schools.
Furthermore, students in BIE schools had relatively low rates of  graduation from high school compared to Indian students in public  schools in the 2010-2011 school year. Specifically, the graduation rate for  BIE students for that year was 61 percent—placing BIE students in the  bottom half among graduation rates for Indian students in states where  BIE schools are located. In these states, the Indian student graduation  rates ranged from 42 to 82 percent.
section_title: Organizational Fragmentation and Poor Communication Undermine Indian Affairs’ Administration of BIE Schools
paragraphs: Indian Affairs’ administration of BIE schools—which has undergone  multiple realignments over the past 10 years—is fragmented. In addition  to BIE, multiple offices within BIA and the Office of the Deputy Assistant  Secretary of Management have responsibilities for educational and  administrative functions for BIE schools. Notably, when the Assistant  Secretary for Indian Affairs was asked at a February 2015 hearing to  clarify the responsibilities that various offices have over BIE schools, he  responded that the current structure is “a big part of the problem” and that  the agency is currently in the process of realigning the responsibilities  various entities have with regard to Indian education, adding that it is a  challenging and evolving process. Indian Affairs provided us with a chart  on offices with a role in supporting and overseeing just BIE school  facilities, which shows numerous offices across three organizational  divisions. (See fig. 3.)
The administration of BIE schools has undergone several reorganizations  over the years to address persistent concerns with operational  effectiveness and efficiency. In our 2013 report, we noted that for a brief  period from 2002 to 2003, BIE was responsible for its own administrative  functions, according to BIE officials. However, in 2004 its administrative  functions were centralized under the Office of the Deputy Assistant  Secretary for Management. More recently, in 2013 Indian Affairs  implemented a plan to decentralize some administrative responsibilities  for schools, delegating certain functions to BIA regions. Further, in June  2014, the Secretary of the Interior issued an order to restructure BIE by  the start of school year 2014-2015 to centralize the administration of  schools, decentralize services to schools, and increase the capacity of  tribes to directly operate them, among other goals. Currently, Indian  Affairs’ restructuring of BIE is ongoing.
In our 2013 report, we found that the challenges associated with the  fragmented administration of BIE schools were compounded by recurrent  turnover in leadership over the years, including frequent changes in the  tenure of acting and permanent assistant secretaries of Indian Affairs  from 2000 through 2013. We also noted that frequent leadership changes  may complicate efforts to improve student achievement and negatively  affect an agency’s ability to sustain focus on key initiatives.
Indian Affairs’ administration of BIE schools has also been undermined by  the lack of a strategic plan for guiding its restructuring of BIE’s  administrative functions and carrying out BIE’s mission to improve  education for Indian students. We have previously found that key  practices for organizational change suggest that effective implementation  of a results-oriented framework, such as a strategic plan, requires  agencies to clearly establish and communicate performance goals,  measure progress toward those goals, determine strategies and  resources to effectively accomplish the goals, and use performance  information to make the decisions necessary to improve performance.We noted in our 2013 report that BIE officials said that developing a  strategic plan would help its leadership and staff pursue goals and  collaborate effectively to achieve them. Indian Affairs agreed with our  recommendation to develop such a plan and recently reported it had  taken steps to do so. However, the plan has yet to be finalized.
Fragmented administration of schools may also contribute to delays in  providing materials and services to schools. For example, our previous  work found that the Office of the Deputy Assistant Secretary for  Management’s lack of knowledge about the schools’ needs and expertise  in relevant education laws and regulations resulted in critical delays in  procuring and delivering school materials and supplies, such as  textbooks. In another instance, we found that the Office of the Deputy  Assistant Secretary for Management’s processes led to an experienced  speech therapist’s contract being terminated at a BIE school in favor of a  less expensive contract with another therapist. However, because the  new therapist was located in a different state and could not travel to the  school, the school was unable to fully implement students’ individualized  education programs in the timeframe required by the Individuals with  Disabilities Education Act. In addition, although BIE accounted for  approximately 34 percent of Indian Affairs’ budget, several BIE officials  reported that improving student performance was often overshadowed by  other agency priorities, which hindered Indian Affairs’ staff from seeking  and acquiring expertise in education issues.
In our 2013 report, we also found that poor communication among Indian  Affairs offices and with schools about educational services and facilities  undermines administration of BIE schools. According to school officials  we interviewed, communication between Indian Affairs’ leadership and  BIE is weak, resulting in confusion about policies and procedures. We  have reported that working relations between BIE and the Office of the  Deputy Assistant Secretary for Management’s leadership are informal  and sporadic, and BIE officials noted having difficulty obtaining timely  updates from the Office of the Deputy Assistant Secretary for  Management on its responses to requests for services from schools. In  addition, there is a lack of communication between Indian Affairs’  leadership and schools. BIE and school officials in all four states we  visited reported that they were unable to obtain definitive answers to  policy or administrative questions from BIE’s leadership in Washington,   For example, school officials in one state  D.C. and Albuquerque, NM.we visited reported that they requested information from BIE’s  Albuquerque office in the 2012-2013 school year about the amount of  Individuals with Disabilities Education Act funds they were to receive. The  Albuquerque office subsequently provided them three different dollar  amounts. The school officials were eventually able to obtain the correct  amount of funding from their local BIE office. Similarly, BIE and school  officials in three states reported that they often do not receive responses  from BIE’s Washington, D.C. and Albuquerque offices to questions they  pose via email or phone. Further, one BIE official stated that meetings  with BIE leadership are venues for conveying information from  management to the field, rather than opportunities for a two-way dialogue.
We testified recently that poor communication has also led to confusion  among some BIE schools about the roles and responsibilities of the  various Indian Affairs’ offices responsible for facility issues. For  example, the offices involved in facility matters continue to change, due  partly to two re-organizations of BIE, BIA, and the Office of the Deputy  Assistant Secretary for Management over the past 2 years. BIE and tribal  officials at some schools we visited said they were unclear about what  office they should contact about facility problems or to elevate problems  that are not addressed. At one school we visited, a BIE school facility  manager submitted a request in February 2014 to replace a water heater  so that students and staff would have hot water in the elementary school.  However, the school did not designate this repair as an emergency.  Therefore, BIA facility officials told us that they were not aware of this  request until we brought it to their attention during our site visit in  December 2014. Even after we did so, it took BIE and BIA officials over a  month to approve the purchase of a new water heater, which cost about  $7,500. As a result, students and staff at the elementary school went  without hot water for about a year.
We have observed difficulties in providing support for the most basic  communications, such as the availability of up-to-date contact information  for BIE and its schools. For example, BIE schools and BIA regions use an  outdated national directory with contact information for BIE and school  officials, which was last updated in 2011. This may impair communications, especially given significant turnover of BIE and school  staff. It may also hamper the ability of schools and BIA officials to share  timely information with one another about funding and repair priorities. In  one BIA region we visited, officials have experienced difficulty reaching  certain schools by email and sometimes rely on sending messages by fax  to obtain schools’ priorities for repairs. This situation is inconsistent with  federal internal control standards that call for effective internal  communication throughout an agency. In 2013, we recommended that  Interior develop a communication strategy for BIE to update its schools  and key stakeholders of critical developments. We also recommended  that Interior include a communication strategy—as part of an overall  strategic plan for BIE—to improve communication within Indian Affairs  and between Indian Affairs and BIE staff. Indian Affairs agreed to these  two recommendations and recently reported taking some steps to  address them. However, it did not provide us with documentation that  shows it has fully implemented the recommendations.
section_title: Staff Capacity to Support Schools Is Limited
paragraphs: Limited staff capacity poses another challenge to addressing BIE school  needs. According to key principles of strategic workforce planning, the  appropriate geographic and organizational deployment of employees can  further support organizational goals and strategies and enable an  organization to have the right people with the right skills in the right  place. In 2013 we reported that staffing levels at BIA regional offices  were not adjusted to meet the needs of BIE schools in regions with  varying numbers of schools, ranging from 2 to 65. Therefore, we noted  that it is important to ensure that each BIA regional office has an  appropriate number of staff who are familiar with education laws and  regulations and school-related needs to support the BIE schools in its  region.
Consequently, in 2013 we recommended that Indian Affairs  revise its strategic workforce plan to ensure that its employees providing  administrative support to BIE have the requisite knowledge and skills to  help BIE achieve its mission and are placed in the appropriate offices to  ensure that regions with a large number of schools have sufficient  support. Indian Affairs agreed to implement the recommendation but has  not yet done so.
BIA regional offices also have limited staff capacity for addressing BIE  school facility needs due to steady declines in staffing levels for over a  decade, gaps in technical expertise, and limited institutional knowledge.  For example, our preliminary analysis of Indian Affairs data shows that  about 40 percent of BIA regional facility positions are currently vacant,  including regional facility managers, architects, and engineers who  typically serve as project managers for school construction and provide  technical expertise. Our work and other studies have cited the lack of  capacity of Indian Affairs’ facility staff as a longstanding agency  challenge. Further, officials at several schools we visited said they face  similar staff capacity challenges. For example, at one elementary school  we visited, the number of maintenance employees has decreased over  the past decade from six employees to one full-time employee and a part- time assistant, according to school officials. As a result of the staffing  declines, school officials said that facility maintenance staff may  sometimes defer needed maintenance.
Within BIE, we also found limited staff capacity in another area of school  operations—oversight of school expenditures. As we reported in  November 2014, the number of key local BIE officials monitoring these  expenditures had decreased from 22 in 2011 to 13, due partly to budget  cuts. These officials had many additional responsibilities for BIE schools  similar to school district superintendents of public schools, such as  providing academic guidance. As a result, the remaining 13 officials had  an increased workload, making it challenging for them to effectively  oversee schools. For example, we found that one BIE official in North  Dakota was also serving in an acting capacity for an office in Tennessee  and was responsible for overseeing and providing technical assistance to  schools in five other states—Florida, Louisiana, Maine, Mississippi, and  North Carolina.
Further, we reported that the challenges that BIE officials confront in  overseeing school expenditures are exacerbated by a lack of financial  expertise and training. For example, although key local BIE officials are  responsible for making important decisions about annual audit findings,  such as whether school funds are being spent appropriately, they are not  auditors or accountants. Additionally, as we reported in November 2014,  some of these BIE officials had not received recent training on financial  oversight. Without adequate staff and training, we reported that BIE will  continue struggling to adequately monitor school expenses.  Consequently, we recommended in 2014 that Indian Affairs 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. Indian Affairs agreed with our  recommendation but has not yet taken any action.
section_title: Inconsistent Accountability Hampers Management of School Construction and Monitoring of School Spending
paragraphs: Our work has shown that another management challenge, inconsistent  accountability, hinders Indian Affairs in the areas of (1) managing school  construction and (2) monitoring overall school expenditures. Specifically,  this challenge hinders its ability to ensure that Indian students receive a  quality education in a safe environment that is conducive to learning.
subsections: section_title: Inconsistent Accountability for School Construction
paragraphs: In our February 2015 testimony on BIE school facilities, we reported that  Indian Affairs had not provided consistent accountability on some recent  school construction projects. According to agency and school officials  we interviewed, some recent construction projects, including new roofs  and buildings, went relatively well, while others faced numerous  problems. The problems we found with construction projects at some  schools suggest that Indian Affairs is not fully or consistently using  management practices to ensure contractors perform as intended. For  example, officials at three schools said they encountered leaks with roofs  installed within the past 11 years. At one BIE-operated school we visited,  Indian Affairs managed a project in which a contractor completed a $3.5  million project to replace roofs in 2010, but the roofs have leaked since  their installation, according to agency documents. These leaks have led  to mold in some classrooms and numerous ceiling tiles having to be  removed throughout the school. (See fig. 4.) In 2011, this project was  elevated to a senior official within Indian Affairs, who was responsible for  facilities and construction. He stated that the situation was unacceptable  and called for more forceful action by the agency. Despite numerous  subsequent repairs of these roofs, school officials and regional Indian  Affairs officials told us in late 2014 that the leaks and damage to the  structure continue. They also said that they were not sure what further  steps, if any, Indian Affairs would take to resolve the leaks or hold the  contractors or suppliers accountable, such as filing legal claims against  the contractor or supplier if appropriate.
At another school we visited, construction problems included systems  inside buildings as well as building materials. For example, in the  cafeteria’s kitchen at one BIE-operated school, a high voltage electrical  panel was installed next to the dishwashing machine, which posed a  potential electrocution hazard. School facility staff told us that although  the building inspector and project manager for construction approved this  configuration before the building opened, safety inspectors later noted  that it was a safety hazard. (See fig 5.)
In South Dakota, a school we visited recently encountered problems  constructing a $1.5 million building for bus maintenance and storage  using federal funds. According to Indian Affairs and school officials,  although the project was nearly finished at the time of our visit in  December 2014, Indian Affairs, the school, and the contractor still had not  resolved various issues, including drainage and heating problems.  Further, part of the new building for bus maintenance has one hydraulic  lift, but the size of the building does not allow a large school bus to fit on  the lift when the exterior door is closed because the building is not long  enough. Thus, staff using the lift would need to maintain or repair a large  bus with the door open, which is not practical in the cold South Dakota  winters. (See fig. 6.)
According to Indian Affairs officials, part of the difficulty with this federally- funded project resulted from the school’s use of a contractor responsible  for both the design and construction of the project, which limited Indian  Affairs’ ability to oversee it. Indian Affairs officials said that this  arrangement, known as “design-build,” may sometimes have advantages,  such as faster project completion times, but may also give greater  discretion to the contractor responsible for both the design and  construction of the building. For example, Indian Affairs initially raised  questions about the size of the building to store and maintain buses.  However, agency officials noted that the contractor was not required to  incorporate Indian Affairs’ comments on the building’s design or obtain its  approval for the project’s design, partly because Indian Affairs’ policy  does not appear to address approval of the design in a “design-build”  project. Further, neither the school nor Indian Affairs used particular  financial incentives to ensure satisfactory performance by the contractor.  Specifically, the school already paid the firm nearly the full amount of the  project before final completion according to school officials, leaving it little  financial leverage over the contractor. We will continue to monitor such  issues as we complete our ongoing work on BIE school facilities and  consider any recommendations that may be needed to address these  issues.
section_title: Uneven Accountability for School Spending
paragraphs: In our 2014 report on BIE school spending, we found that BIE’s oversight  did not ensure that school funds were spent appropriately on educational  services, although external auditors had determined that there were  serious financial management issues at some schools. Specifically,  auditors identified $13.8 million in unallowable spending by 24 BIE  schools as of July 2014. Additionally, in one case, an annual audit found  that a school lost about $1.2 million in federal funds that were illegally  transferred to an offshore bank account. The same school had  accumulated at least another $6 million in federal funds in a U.S. bank  account. As of June 2014, BIE had not determined how the school  accrued that much in unspent federal funds. Further, instead of using a  risk-based approach to its monitoring efforts, BIE indicated that it relies  primarily on ad hoc suggestions by staff regarding which schools to target  for greater oversight. For example, BIE failed to increase its oversight of  expenditures at one school where auditors found that the school’s  financial statements had to be adjusted by about $1.9 million and found  unreliable accounting of federal funds during a 3-year period we  reviewed. We recommended that Indian Affairs develop a risk-based  approach to oversee school expenditures to focus BIE’s monitoring  activities on schools that auditors have found to be at the greatest risk of  misusing federal funds. However, Indian Affairs agreed but has not yet  implemented this recommendation.
In addition, we found that BIE did not use certain tools to monitor school  expenditures. For example, BIE did not have written procedures to  oversee schools’ use of Indian School Equalization Program funds, which  accounted for almost half of their total operating funding in fiscal year  2014. In 2014, we recommended that Indian Affairs develop written  procedures, including for Interior’s Indian School Equalization Program, to  consistently document their monitoring activities and actions they have  taken to resolve financial weaknesses identified at schools. While Indian  Affairs generally agreed, it has not yet taken this action. Without a risk- based approach and written procedures 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.
In conclusion, Indian Affairs has been hampered by systemic  management challenges related to BIE’s programs and operations that  undermine its mission to provide Indian students with quality education  opportunities and safe environments that are conducive to learning. In  light of these management challenges, we have recommended several  improvements to Indian Affairs on its management of BIE schools. While  Indian Affairs has generally agreed with these recommendations and  reported taking some steps to address them, it has not yet fully  implemented them. Unless steps are promptly taken to address these  challenges to Indian education, it will be difficult for Indian Affairs to  ensure the long-term success of a generation of students. We will  continue to monitor these issues as we complete our ongoing work and  consider any additional recommendations that may be needed to address  these issues.
Chairman Rokita, Ranking Member Fudge, and Members of the  Subcommittee, this concludes my prepared statement. I will be pleased to  answer any questions that you may have.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: For future contact regarding this testimony, please contact Melissa  Emrey-Arras at (617) 788-0534 or emreyarrasm@gao.gov. Key  contributors to this testimony were Elizabeth Sirois (Assistant Director),  Edward Bodine, Matthew Saradjian, and Ashanta Williams. Also,  providing legal or technical assistance were James Bennett, David  Chrisinger, Jean McSween, Jon Melhus, Sheila McCoy, and James  Rebbe.
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