In the early 1970s, BIA began giving the tribes more training, involvement, and influence in the process of allocating TPA funds. TPA funds are used for programs such as law enforcement, social services, adult vocational training, child welfare, and natural resource management. Most tribes have placed all their available TPA base funding in only 5 or 6 of the more than 30 TPA base fund programs. All federally recognized tribes are eligible to receive TPA funds—either through contracts for operating tribal programs or through BIA-provided programs. As of October 1997, 556 tribes had been recognized by the federal government. The Joint Tribal/BIA/DOI Advisory Task Force on Bureau of Indian Affairs Reorganization, which was created in 1990 to develop goals and plans for reorganizing BIA to strengthen its administration of Indian programs, recommended that all small tribes—those with service populations of 1,500 or less—be brought up to a minimum level of TPA base funding to allow them the opportunity to develop basic self-governance capability.The task force recommended that the small tribes in the lower 48 states have available at least $160,000 in TPA base funds and that the tribes in the state of Alaska have available $200,000. BIA identified 307 tribes as part of this “small tribes funding initiative” that were below the recommended minimum funding levels. As directed by the Congress, BIA used part of its appropriation for fiscal years 1995, 1997, and 1998 to raise all the small tribes up to $160,000 in available TPA base funding. About two-thirds of the tribes included in the funding initiative are located in Alaska, and, for fiscal year 1999, BIA has requested an additional $3 million to move them closer to the recommended $200,000 funding level. The Single Audit Act of 1984, as amended, requires reporting by nonfederal entities, including tribes, that meet certain federal assistance thresholds. Before fiscal year 1997, the threshold was the annual receipt of $100,000 or more in federal funds; in fiscal year 1997, the threshold became the annual expenditure of $300,000 or more in federal funds. Entities meeting the threshold must submit an audited financial statement and a schedule of federal financial assistance. Of the $757 million appropriated for TPA in fiscal year 1998, about $507 million was for base funding, and about $250 million was for non-base funding. BIA distributes TPA base funds primarily on the basis of historical distribution levels. That is, the amount available to a particular tribe is generally the same as last year’s amount, without considering tribal needs or the tribes’ own revenues. Depending on annual appropriation levels, increases or decreases to a tribe’s base fund amount are made on a pro rata basis (e.g., a tribe that receives 0.2 percent of the total TPA base fund amount would receive 0.2 percent of any increase or decrease). In contrast, non-base TPA funds are distributed according to specific program criteria and, in some cases, the income levels of individual tribal members. BIA’s distribution of TPA base funds has been criticized over the last 20 years for, among other things, not being responsive to changes in the relative needs of the tribes. Nor has the distribution of TPA base funds been responsive to changes in the relative levels of the tribes’ own revenues. The majority of the fiscal year 1998 TPA base funds was distributed on the basis of historical funding levels, as has been the case for decades. The funding process used today has remained essentially the same since the early 1970s, when BIA began allowing the tribes more input into budget decisions and priorities. TPA was created to further Indian self-determination by giving the tribes the opportunity to establish their own priorities and to move funds among programs accordingly, in consultation with BIA. BIA believes that a stable funding base enhances the tribes’ ability to plan and budget their funds. Once a program is categorized as part of the TPA base funds, it loses any need-based identity it once had. Prior to their inclusion in TPA, some programs were funded according to specific program criteria. For example, funds provided under the Johnson O’Malley Act of 1934, as amended, are intended to provide supplementary financial assistance to meet the educational needs of Indian children attending public schools. These funds used to be distributed on the basis of education costs in each state and the number of students eligible for program services. Beginning in 1996, however, Johnson O’Malley funds were transferred into the tribes’ TPA base funds, using 1995 data on program costs and eligibility. Because both cost and eligibility may have changed since 1995, and because the tribes have the authority to move funds in and out of the program, the current distribution may bear little resemblance to the original, formula-driven one. In contrast to the base funds, the non-base funds—used for such programs as road maintenance, housing improvement, welfare assistance, and contract support—are generally distributed according to specific program criteria that consider, in some cases, individual income. Eligibility for housing improvement funds, for example, is based on whether and to what degree the housing being considered for improvement is substandard, as well as on the applicant’s income level. Similarly, eligibility for welfare assistance is based on a determination that an individual’s income is insufficient to meet his or her essential needs. In general, the tribes may not shift non-base funds among programs without special authorization. BIA’s process for allocating base funds, while enhancing the tribes’ budget flexibility, has been criticized for, among other things, not being responsive to changes in the relative needs of the tribes. Although the tribes set priorities for their individual programs, no mechanism exists within TPA for identifying the tribes’ comparative needs and funding them accordingly. As the relative needs of the tribes have changed over time, no corresponding change has occurred in the distribution of TPA base funds, making the apparent funding discrepancies among the tribes more pronounced. In 1978, we reported that BIA had been criticized by the Office of Management and Budget, the American Indian Policy Review Commission, and the tribes for its failure to develop a formula to ensure the equitable allocation of TPA funds among the tribes on the basis of need. We reiterate our belief, as stated in our 1978 report, that “accurate, current, and comparable comprehensive tribal needs analyses would provide BIA with a measurement to be considered in developing a formula on which to allocate Bureau [TPA] funds.” “Developing a system to measure the relative needs of Tribes with widely varying locations, mix of programs, size, and circumstances will be a monumental undertaking. The development will rely heavily on information which can be gathered only through a Tribal/BIA partnership. Much of this information is not currently available in a consistent and reliable form.” Finally, in 1998, a task force—established pursuant to Interior’s 1998 appropriation bill and charged with deciding how to distribute a general increase in 1998 TPA funds—emphasized the importance of BIA’s developing a TPA funding allocation method that addressed funding inequities and unmet tribal needs. This task force recommended in its January 1998 report that funds be set aside to create a working group to develop a standard assessment methodology. Accordingly, BIA set aside $250,000 for this purpose. The working group, according to BIA’s fiscal year 1999 budget request, will develop a revised TPA allocation model that is based on tribal needs. BIA has requested an additional $250,000 for the working group in fiscal year 1999. As long as it continues to use a funding distribution method that is relatively static, based largely on the initial division of funds among the tribes that was developed in the early 1970s, BIA has no assurance that its current TPA distribution is most effectively meeting the needs of the tribes. According to Interior officials, there is no clear documentation on how TPA base amounts for each tribe were initially determined. And even if those initial divisions were clearly documented, they may not support a distribution made in the early 1970s as the appropriate distribution today. At least two significant changes have occurred in the last 25 years that affect Indian tribes: The Indian population has more than doubled in size, and the revenues of some tribes have greatly increased since the approval of Indian gaming in 1988. In 1995, net income from Indian gaming operations was about $1.9 billion. Because the tribes’ own revenues are not considered in distributing TPA base funds, rich and poor tribes alike receive them. In fact, the tribes in our analysis that reported the highest amounts of their own revenues received more in TPA base funds, in total, than did those tribes that reported the lowest amounts of their own revenues. Furthermore, all the tribes covered by the small tribes funding initiative were brought up to about the same level of available TPA base funding, even though some reported substantial revenues of their own. Of the 299 tribes included in our analysis, one reported having more than $300 million in revenues of its own in 1996. Yet that same year, this tribe received over $350,000 in TPA base funds. Similarly, the five other tribes that reported more than $100 million in revenues of their own in 1995 or 1996 received TPA base amounts ranging from about $500,000 to $40 million in the corresponding year. In contrast, three of the six tribes that reported a deficit in their own revenues each received less than $350,000 in TPA base funds. Similarly, for the small tribes identified by BIA as being part of the small tribes funding initiative, the tribes’ own revenues did not affect the TPA base funds they received. Specifically, 72 of these tribes included in our analysis reported revenues that ranged from minus $1.4 million to over $30 million, with a median of about $92,000. Of the 72 tribes, 62 reported having revenues of their own, and 10 reported having no revenues or having losses.