Bureau of Indian Affairs Schools:

Expenditures in Selected Schools are Comparable to Similar Public Schools, But Data Are Insufficient to Judge Adequacy of Funding and Formulas

GAO-03-955: Published: Sep 4, 2003. Publicly Released: Sep 4, 2003.

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In 2001, Congress directed GAO to examine the adequacy of Bureau of Indian Affairs (BIA) school funding and the adequacy of the formulas employed by BIA to distribute various types of operating funds. Because there is no universally accepted standard for adequacy, for this report, GAO examined (1) the sources and amounts of federal funding provided for BIA schools and how they are determined, (2) how BIA school budgets and expenditures compared to national per-pupil expenditures and expenditures for similarly situated public schools, and (3) how equitably various formulas distribute funding across BIA schools and whether they account for all relevant costs. To obtain expenditure data for BIA schools GAO reviewed BIA budget and financial documents and collected data from 8 BIA and 6 public schools that were similar in terms of their relative isolation and student characteristics.

Most BIA school operating funds are provided by the Department of Interior through the standard federal budget process; however, the agency has little financial data to inform its school budget proposals. In 2002, Interior provided 78 percent of BIA's operating funds, while Education provided 22 percent. To formulate its annual budget proposals for BIA schools, Interior uses prior year data with updates for enrollment, teacher salaries, and fixed costs. Because BIA does not collect detailed expenditure data from its schools, GAO was unable to assess the overall adequacy of the funding. BIA budgeted dollars for its 112 day schools were higher on a per-pupil basis than the national average expenditure for public schools, but expenditures were comparable for selected similar BIA and public schools. However, all 8 BIA schools GAO visited spent less on instruction and more on facilities than the public schools visited. Also, most BIA school officials GAO spoke with reported that their budgets for transportation did not cover their actual transportation expenditures. About 40 percent of all BIA-operated schools (day and boarding) spent more on transportation than they received through their transportation budgets in school year 2001-2002. The six BIA formulas that BIA uses to distribute funds appear to have distributed funds fairly, but they did not include certain cost-related factors associated with BIA schools, and their adequacy cannot be determined from BIA's data. GAO found that the primary formula, the Indian School Equalization Program (ISEP) formula, distributed instructional funds equitably. The transportation formula for BIA schools does not account for costs associated with differences in degrees of isolation. Because BIA does not collect complete expenditure data, GAO was limited in its ability to assess the overall adequacy of the formulas.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve the transportation formula so that it more accurately reflects costs and encourages efficiency, the Secretary of Interior should direct the Assistant Secretary of Indian Affairs to include an isolation index and an efficiency incentive in addition to an adjustment for road conditions.

    Agency Affected: Department of the Interior

    Status: Closed - Not Implemented

    Comments: The National Rule Making Committee's proposed rules were published in the Federal Register in February 2004 for a 120-day comment period that ended in June 2004. The Committee did not incorporate the isolation index or the efficiency incentive for transportation. There has been no action taken as of 7/18/07.

    Recommendation: To better assess BIA funding and formulas for their adequacy, the Secretary of the Interior should also consider entering into negotiations with tribal entities to acquire detailed expenditure data for the schools they manage so they can compare it with public schools.

    Agency Affected: Department of the Interior

    Status: Closed - Not Implemented

    Comments: BIA's Office of Indian Education Program, in consultation with the Tribally Controlled School Boards, concluded that this recommendation would not be feasible with the School Boards' existing systems. No action was taken action to address it.

    Recommendation: To better assess BIA funding and formulas for their adequacy and to ensure that budgeted funds are spent as intended and well managed, the Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to collect expenditure data for the schools the agency directly manages in greater detail so that the data can be compared with public schools. For example, BIA should consider adopting the expenditure classifications, particularly the function and object codes, listed in Education's Financial Accounting for Local and State School Systems, 1990.

    Agency Affected: Department of the Interior

    Status: Closed - Not Implemented

    Comments: BIA reported that the Assistant Secretary of Indian Affairs (AS-IA) issued a memo directing that the BIA's accounting system be reviewed and modified to enable BIA-operated schools to collect detailed expenditure data. The AS-IA and BIA have stated that they will consider amending the financial system (FFS) to include expenditure classification codes identified by the Department of Education's National Center for Education Statistics in its Financial Accounting for Local and State School Systems, 1990. BIA did not provide a response in 2006 to confirm whether they completed these actions.

    Recommendation: To better manage Interior's funds, the Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to identify and allocate all costs of administering BIA-funded schools, including the costs of (1) administrative services provided by BIA to BIA-operated schools and (2) central office services provided by headquarters and regional offices.

    Agency Affected: Department of the Interior

    Status: Closed - Not Implemented

    Comments: IA reported that the Department of the Interior is replacing its existing financial system with a new system that integrates financial, budgeting, property, and acquisition disciplines into one reporting system. BIA believes that this system will allow it to determine administration costs for BIA schools. BIA did not provide a response in 2006 to confirm whether they completed this action.

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