SCIA Budget Views & Estimates Letter on Indian Programs for FY '98

March 12, 1997

The Honorable Pete V. Domenici
Chairman
Committee on the Budget
United States Senate
Washington, D.C. 20510

The Honorable Frank R. Lautenberg
Ranking Minority Member
Committee on the Budget
United States Senate
Washington, D.C. 20510

Dear Chairman Domenici and Senator Lautenberg:

This letter is in response to your request for the views and estimates of the Committee on Indian Affairs on the President's Budget Request for fiscal year 1998 for Indian programs.

On February 26, 1997, the Committee held a hearing on the President's Budget Request to receive oral and written testimony from the Department of Interior, the Indian Health Service, and numerous other Federal agencies and tribal organizations.

Overall Federal Spending Patterns on Indians and Non-Indians

As in previous years, the Committee requested the Library of Congress to prepare an analysis of the Federal spending trends on programs for American Indians and Alaska Natives over the past twenty three years, as well as a comparison of this spending relative to spending for other Americans. We have attached a copy of the Library of Congress report for your reference.

The Library of Congress study reveals that, despite the efforts of the Committee on the Budget and the Committee on Appropriations to respond to the acute needs of Indians and Native communities, the gap between what the Federal government has annually spent overall on Indians, in contrast to the funds which the United States has spent on non-Indians for purposes other than the national defense, has steadily worsened for Indians since 1985.

The Administration's fiscal year 1998 budget request seeks measurable increases in absolute dollars for many Indian programs. It also proposes to spend a significantly larger portion of these funds at the local level in Indian Reservation or Native American communities. In 1994 constant dollars, the fiscal year 1998 budget request for Indian programs overall would effect a modest reversal of the growing gap between the funds the United States annually spends on non-Indians and those it applies to the benefit of Native Americans. Given the harsh conditions and continuing needs that exist in much of Indian Country, the Committee supports the overall Indian program funding levels requested by the Administration for fiscal year 1998.

In its action on the fiscal year 1997 budget, the Congress applied minor increases in absolute dollars for many Indian programs with an emphasis of directing, where possible, greater resources to priorities identified by tribal governments for the provision of fundamental governmental services at the local level and which typically are spent under the direct control of Indian tribes. The Administration's fiscal year 1998 budget request seeks to continue efforts to acknowledge and fund priorities identified by tribal governments, while also continuing with reform initiatives to streamline the administration of services.

Tribal governments are, of course, the governments closest to the American Indians and Alaska Natives who suffer the most dire and unmet needs. Yet most of the Federal funds that have been made available for Native Americans in the past two decades have tended to result in an expanded Federal bureaucracy rather than an increase in tribally-controlled budgets. For Indian people, this fact has compounded their problems, as their tribal governments face greatly increased responsibilities without corresponding financial support.

Relative Need for Federal Spending on Indians

When compared with all other citizens of the United States, American Indians and Alaska Natives continue to suffer the worst conditions of unemployment, dilapidated and overcrowded housing, poor health, inadequate education, deteriorating or non-existent social and physical infrastructure systems, and other social and economic factors that seriously, and sometimes critically, erode the dignity and quality of life.

1990 census data released by the Bureau of the Census last year confirms these conclusions in the area of housing: 18% of all American Indian households on Reservations are "severely crowded." The comparable figure for non-Indians is 2%. Likewise, while 33% of all Reservation households are considered "crowded", the comparable figure for all households nationally is 5%. Approximately 90,000 Indian families are homeless or underhoused. One out of every five Indian homes lacks complete plumbing facilities.

According to the Census Bureau, nearly one in three Native Americans lives in poverty. The number of Indian families below the poverty line is nearly three times the national average. One-half of all Indian households headed by a female live in poverty. One-half of the Indian children under the age of six living on reservations live in poverty. For every $100 earned by U.S. families, Indian families earn $62. The average per capita annual income for an Indian living on the reservation is $4,478. Poverty in Indian country is a persistent, everyday reality.

Poor health is the twin sister of poverty. Tuberculosis strikes down Native Americans at four times the national mortality rate for this disease. The Indian mortality rate for diabetes exceeds the national average by 139 percent. Indians are four times more likely to die from alcoholism than are other Americans. Fetal Alcohol Syndrome rates among Native Americans are six times the national average. In some Indian communities, reported cases indicate that child abuse has victimized as many as one-fourth of the children. By all measures the health status of Native Americans lags significantly behind every other group of Americans.

In recent decades, there have been two basic justifications given for the Federal funding of Indian programs. The first can be understood as a desire by the United States to address the compelling human needs revealed in statistical surveys like those summarized above. Tribal and Federal officials continue to inform the Committee on Indian Affairs of the existence of an overwhelming backlog of underdeveloped social, physical, and human infrastructure in Indian Country, which they attribute to years of Federal under funding and relative Federal neglect. The second basis for Federal funding of Indian programs can be understood as one expression of the unique, government-to-government relationship between the United States and each tribal government arising from well-settled principles of Federal Indian law. The courts have construed this law on the basis of treaties, agreements, statutes, Executive Orders, course of dealings, and jurisprudential precedence, which typically have relied on a rationale that the Indian tribes transferred to the United States land or other resources in return for peace appropriations.

A. Committee Recommendations on the Indian Health Service Budget Request

Within the Department of Health and Human Services, for fiscal year 1998, the Administration has requested $2.122 billion in budget authority for the Indian Health Service (IHS). This amount represents an increase of $68 million from FY97 enacted levels. This request represents a 3% increase for Indian Health programs. The requested increase is comprised of approximately $30 million for services and $40 million for facilities.

While the budget request reflects the resources needed to maintain the FY97 level of services provided to approximately 1.4 million American Indians and Alaska Natives, Tribal and Federal officials have informed the Committee of several factors that should be considered in determining adequate funding levels for effective service delivery: (a) the increasingly acute levels of unmet need for health care in Indian Country; (b) the expanding population growth of the Indian beneficiaries requiring service; and (c) higher than average inflationary costs in the field of rural health care delivery.

1. Population Growth. The IHS fiscal year 1998 budget justification indicates there are about 1.4 million American Indians and Alaska Natives served by IHS funded operations. The Library of Congress reports that this service population is growing at an annual rate of 3.8 %, creating an annual average increase of approximately 38,679 additional Indians to be served. Currently the IHS per capita health care expenditure is approximately $1,578, compared to the U.S. civilian per capita expenditure of $3,920. It is anticipated that a nearly $60 million increase for the additional patients associated with population growth would be required simply to maintain existing service levels for all American Indians and Alaska Natives at the current growth rate of 3.8%.

2. Contract Support Requirements. The fiscal year 1998 IHS budget request seeks an increase of $12 million for contract support costs. The Administration has informed the Committee that this request will meet existing requirements and allow expanded numbers of Indian tribes to assume the operation of programs and activities previously administered by IHS. For fiscal year 1998, and estimated $796 million will be transferred directly to tribes and tribal organizations under self determination contracts/grants and self-governance compacts, a $40 million increase from FY97 levels. The Committee commends the Administration for making this cost item a priority in its budget request.

3. Sanitation and Health Facility Construction. In fiscal year 1990, Congress directed the IHS to prepare a 10-year plan to address the backlog of sanitation deficiencies for existing Indian homes and communities. Since then, annual appropriations have not met the level of need identified each year, and additionally, population growth, inflation, and more stringent environmental regulation have increased the backlog of need. IHS now estimates the backlog at $630 million. To meet the ten-year plan by the year 2000 would require annual funding levels of $146.5 million simply to meet the needs of existing housing. The Administration request is $247 million, an increase of $39 million over the FY97 levels. Given the constraints on increases in Federal spending, the Committee commends the Administration for making this matter a priority.

The Administration has requested $24 million for new health facility construction projects in fiscal year 1998 and, notably, $10 million to meet the obligation of several facilities coming on line. The Administration's 5-Year Planned Construction Budget has estimated the cost of projects already on the IHS new health care facilities and staff quarters new construction priority lists at more than $600 million.

The Committee wishes to emphasize that it desires to work with the Committee on the Budget, the Committee on Appropriations, the Congressional Budget Office, and the Office of Management and Budget in the immediate future to explore alternative financing mechanisms or other cost effective and aggressive means to address the overwhelming backlog of need for construction of new or replacement sanitation and health facilities, by leveraging private capital investment, including consideration of how capital leases are scored, a Federally-guaranteed loan program, or a tribal investment bank that would result in the construction of much-needed facilities far more quickly than is now possible under the present discretionary appropriations structures.

B. Committee Recommendations on the Bureau of Indian Affairs Budget Request

The Bureau of Indian Affairs (BIA) fiscal year 1998 request, within the Department of the Interior, would provide for $1.73 billion in current budget authority, a $126.1 million increase over FY97 enacted levels. The requested increases are primarily allocated to the Tribal Priority Allocation (TPA) account, $76.5 million over the FY97 enacted level, to contract supports costs, and to construction accounts.

For fiscal year 1998, the BIA has requested $105.8 in contract support costs, which is an increase of $10 million from last year's funding level. Of this $10 million increase, $5 million was transferred from the Indian Self-Determination Fund. Although the President's request reflects an increase, it is again estimated that contract support costs will not be funded at 100% of the need. By failing to meet 100% of the need, Indian tribes contracting or compacting BIA programs will be required to utilize badly-needed program funds to meet their contract support costs. This will result in reduced services to tribal members on the reservation. Continuing contract support shortfalls could create a significant disincentive to Indian tribal governments seeking to expand their contracting or compacting under the Indian Self-Determination Act and Tribal Self-Governance.

As education is a priority for many Indian communities, the BIA's fiscal year 1998 budget request reflects and increase of $16.8 million for School Operations, for a total of $467 million for FY 1998. In addition, the BIA budget request also proposes an increase of $49.1 million for maintenance and construction of educational facilities.

In general, the Committee generally commends the Administration for its fiscal year 1998 budget request for the BIA and urges the Committee on Budget to strongly consider these priorities.

C. Committee Recommendations on Other Agencies' Budget Requests

1. Department of Housing and Urban Development (HUD). Fiscal Year 1998 will be a crucial year for Indian housing programs at HUD. The Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA), signed by the President on October 26, 1996 and scheduled to take effect on October 1 of this year, marks a radical departure from the heavily bureaucratic structure used by HUD to provide housing assistance to Native American families in the past. The $485 million dollar request by the administration to fund the block grant provided for under NAHASDA represents roughly level funding of Indian housing programs. This Committee strongly encourages the Budget Committee to consider funding efforts to help alleviate the tremendous need for housing construction and improvement in Indian Country. At the very least, this should entail no consideration of reducing the funds available for Indian housing block grant below the level requested by the Administration.

The Committee also supports the Administration's funding request for the Indian Community Development Block Grant set-aside. Though statutorily the Indian set-aside is only 1 percent, HUD has for two years provided one and a half percent for this set-aside. CDBG is designed to focus resources on communities in need of development resources while providing local flexibility. Clearly, the challenges facing economic development efforts in Indian Country merit these funds, as Indian communities face poverty rates more than twice that of the rest of America as well as double the rates of unemployment and far lower median incomes.

While we are concerned that funding levels should represent the needs of Native American communities, the Committee is cognizant of the importance of maximizing dollars spent on Indian housing, what the President terms "doing more with less." NAHASDA provides such an opportunity through a loan guarantee authority, authorized under Title VI. This new authority, patterned after the very successful Section 108 loan guarantee program utilized with Community Development Block Grant funds, allows more money to be used for Indian housing for fewer appropriated dollars.

Despite the President's challenge to utilize public-private partnerships to solve problems, the Administration budget provides no funding for a credit subsidy for Title VI guarantees. This subsidy, required under the 1990 Credit Reform Act, is necessary before any guarantees can be made. The Committee urges the Budget Committee to provide funding for Title VI loan guarantees -- even if only on a limited basis -- so that partnerships between tribal governments and private markets can start the very difficult and important work of improving housing conditions for Native American families in a responsible, economically sound manner.

2. Department of Education. Many American Indian and Alaska Native children attend public schools, which are supported in large part by various programs administered through the U.S. Department of Education, as are schools funded through the BIA. The Administration's budget request for fiscal year 1998 for Indian education programs under the Department of Education seeks $62.6 million of which approximately $59.7 million will be committed to Formula Grants to Local Education Agencies. The purpose of these funds are to support financial support for elementary and secondary school programs that serve Indian students.

The committee again encourages full funding for the Indian programs within the Department of Education.

3. Administration for Native Americans (ANA). The President's request for the Administration for Native Americans (ANA) is $34.9 million for FY1998, a level equal to the FY1997 enacted levels.

The ANA fosters tribal self-sufficiency by providing critical funds for tribal governance efforts, social and economic development projects, environmental compliance measures, and efforts to preserve Native languages.

In light of the acute tribal need for seed capital, employment, and governance initiatives, the Committee generally commends the Administration for its request, and recommends that the ANA program be maintained and strengthened in the future.

4. Environmental Protection Agency (EPA). The focus of the Environmental Protection Agency's efforts for State and Tribal Assistance Grants (STAG) continues to be capacity building for tribal partners. The Administration's stated policy, of turning authority for running environmental programs over to the tribes themselves whenever feasible, is consistent with this Committee's goals of strengthening the government-to-government relationship between tribes and the federal government.

Of more than $41 million in increases to the STAG account, $31 million is for tribal priorities. Water quality issues, which for many tribes is their first priority for environmental issues, receives a $9,829,300 increase through the Section 106 pollution control program, designed to identify and monitor risks to water quality on reservations. This crucial program represents the only increase in STAG water program funding.

The problem of leaking underground storage tanks continues to plague Indian communities. The tanks, found commonly at gas stations, can be costly and require increased resources if they are to be dealt with effectively. The budget proposal includes $450,000 for underground tank clean-up, but this amount is clearly not enough to fully address the problem.

The committee strongly encourages that funding for EPA programs take into consideration the importance of the Indian General Assistance Program grants as a tool for tribes to locate and deal with environmental concerns. Particularly for smaller tribes, the flexibility of this grant has meant that tribal priorities take precedence over bureaucratic concerns. Considering the Administration's goal of dealing with "worst sites first," the usefulness of this grant cannot be overstated.

D. Conclusion

The Committee on Indian Affairs, in its March 11, 1997 business meeting, favorably adopted the foregoing letter of recommendations on the budget views and estimates.

We very much appreciate the opportunity to provide this information on the President's Budget Request for Indian programs for fiscal year 1998 to the Committee on the Budget and look forward to working with you in the coming year.

Sincerely,

BEN NIGHTHORSE CAMPBELL, Chairman

DANIEL K. INOUYE, Vice-Chairman