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. 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 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 BIE- operated 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 Secretary- Indian 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. 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. Meanwhile, the Tribally Controlled Schools Act of 1988 limits the financial information that most tribally-operated schools are required to submit to BIE. Tribal school grantees must complete an annual report that 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. This law, as implemented by the Office of Management and Budget, requires a financial audit of grantees who expend at least $500,000 in federal grants and other assistance in a fiscal year. 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. 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. 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, 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. 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 BIE- and 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. 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). The largest source of funding for BIE schools is Interior’s Indian School Equalization Program (ISEP). ISEP provides funding for basic 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. 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. 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) and a related act, according to BIE documents, total annual funding from Interior and Education fluctuated slightly from fiscal year 2009 to fiscal year 2014. 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, we estimate that funding during that period actually decreased slightly, by about 1 percent. Meanwhile, for public schools, funding data from Education were generally not available for the full period from fiscal year 2009 to fiscal year 2014. 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. 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. (See fig. 3.)