This is the accessible text file for GAO report number GAO-04-847 
entitled 'Indian Economic Development: Relationship to EDA Grants and 
Self-determination Contracting Is Mixed' which was released on 
September 08, 2004.

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov.

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately.

Report to the Chairman, Committee on Indian Affairs, U.S. Senate: 

September 2004: 

INDIAN ECONOMIC DEVELOPMENT: 

Relationship to EDA Grants and Self-determination Contracting Is Mixed: 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-847]: 

GAO Highlights: 

Highlights of GAO-04-847, a report to the Chairman, Committee on Indian 
Affairs, U.S. Senate

Why GAO Did This Study: 

American Indians and Alaska Natives generally face worse economic 
conditions than the rest of the U.S. population. The Economic 
Development Administration (EDA) within the Department of Commerce 
provides grants to distressed communities, including to American Indian 
tribes and Alaska Native entities, to generate employment and stimulate 
economic growth. Because data on how these EDA grants helped tribes was 
not publicly available, GAO analyzed all EDA grants made to Indian 
tribes from 1993-2002 and determined what economic development 
resulted. Tribes also enter into self-governance and other contracting 
arrangements with two federal agencies—the Bureau of Indian Affairs 
(BIA) and the Indian Health Service—to assume the management of 
individual services, including law enforcement, education, social 
services, and road maintenance. GAO also analyzed the relationship 
between changes in tribes’ economic profile and the extent to which 
they had self-governance or contracting arrangements to perform their 
own services. BIA and EDA provided comments on a draft of this report. 
BIA generally agreed with GAO’s conclusions. EDA took issue with GAO’s 
characterization of the relative success of EDA grant programs. 

What GAO Found: 

Indian tribes have used EDA grants to create businesses, build roads 
and other infrastructure, and create economic development plans, but 
these grants have had mixed success in generating jobs, income, and 
private sector investment. From 1993 to 2002, 143 Indian tribes and 
tribal organizations received $112 million in EDA grants, but this 
represented a small portion of EDA’s awards to all organizations. Of 
the total amount awarded to Indian tribes or Alaska Native entities, 
$54 million was used to fund 63 enterprise projects designed to create 
income and jobs. Of the 59 projects GAO collected data on, 25 had not 
yet begun operating, and 3 others had just been completed and no 
results were available. Of the 31 operational projects, tribal 
officials reported that about half were profitable or were covering 
their costs, and the remainder were being subsidized or had failed. 
Most had resulted in the creation of 10 or fewer jobs, and few had 
attracted private sector investment. EDA also provided $22 million in 
grants to tribes for infrastructure projects, such as roads and sewer 
systems, $30 million in grants to assist tribes with economic planning, 
and $5 million for loan funds and business development. 

Almost all of the 219 federally recognized tribes with available data 
had entered into either contracts or self-governance compacts to 
operate their own tribal programs and services. Based on GAO’s analysis 
of U.S. Census Bureau data, tribes that had self-governance 
arrangements or were engaging in higher levels of contracting showed 
greater gains on average in employment levels from 1990 to 2000 
compared with tribes that were contracting less. However, the change 
in per capita income or the percentage of tribal individuals with 
incomes above poverty levels over this period was not statistically 
different for self-governance or high-contracting tribes compared with 
low-contracting tribes. 

Results from 31 Completed Tribal Enterprise Projects That EDA Funded: 

[See PDF for image]

Note: Percentages do not add to 100% due to rounding.

[End of figure]

www.gao.gov/cgi-bin/getrpt?GAO-04-847.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact William B. Shear at (202) 
512-8678 or shearw@gao.gov.

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

EDA Grants Have Provided Some Benefits to Tribes, but Overall Success 
in Producing Economic Development Has Been Mixed: 

Tribes Contracting to Operate More of their Own Programs and Services 
Generally Experienced Greater Employment Gains but Not Greater Income 
Growth Than Other Tribes: 

Observations: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Scope and Methodology: 

Appendix II: Additional Information on EDA Grants to Tribes: 

Appendix III: Additional Information on Relationship between 
Contracting and Tribes' Economic Profiles: 

Appendix IV: Comments from Department of Commerce: 

GAO Comments: 

Appendix V: Comments from the Department of the Interior: 

Appendix VI: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Staff Acknowledgments: 

Tables: 

Table 1: Purposes of EDA Grant Programs: 

Table 2: GAO Criteria for Classifying Tribes by Extent of Contracting: 

Table 3: GAO Categories for Tribes by Level of GTI: 

Table 4: EDA Grants to Tribes Ranked by Per Capita Amounts, by State, 
Over 10-Year Period, 1993-2002: 

Table 5: Economic Development-Related Grants to Tribes in the Lower 48 
States with Available Single Audit Act Data, by Agency, 1998-2001: 

Table 6: EDA Grants Supporting Indian Revolving Loan Funds, 1993-2002: 

Table 7: Benefits of Completed EDA-Funded Infrastructure Projects, 
1993-2002: 

Table 8: Change in Economic Indicators for Self-governance High-
Contracting and Low-Contracting Tribes, 1990-2000: 

Table 9: Change in Economic Indicators of Tribes by Grants-to-Income 
Ratio Categories, 1990-2000: 

Figures: 

Figure 1: Total EDA Grants Appropriations and EDA Grant Dollars to 
Indian Tribes and Organizations, 1993-2002: 

Figure 2: EDA Grants Received by Indian Tribes and Organizations, 1993-
2002: 

Figure 3: Per Capita EDA Grants to Tribes, 1993-2002: 

Figure 4: Proportion of Total EDA Grant Funding to Indian Tribes and 
Organizations by Grant Type, 1993-2002: 

Figure 5: Number of Tribes Receiving EDA Grants by Type of Grant, 1993-
2002: 

Figure 6: Types of Enterprise Projects Funded, 1993-2002: 

Figure 7: Example of Horticulture Enterprise EDA Funded: 

Figure 8: Status of Completed Enterprise Projects Funded by EDA, 1993 
to 2002: 

Figure 9: EDA-Funded Cultural Center: 

Figure 10: Other Funding Sources for EDA-Funded Enterprise Projects: 

Figure 11: Number of Jobs Created by EDA-Funded Enterprise Projects, 
1993-2002: 

Figure 12: Resort Cabins That EDA Funding Has Supported: 

Figure 13: Marina and Breakwater Constructed with EDA Grant Funds: 

Figure 14: Benefits from Completed EDA-Funded Infrastructure Projects, 
1993-2002: 

Figure 15: Percentage of Planning Grant Recipient Tribes Receiving 
Other Economic Development-Related Grants: 

Figure 16: Median Change in Percentage Employed, Per Capita Income 
Level, and Percentage Above Poverty from 1990-2000: 

Figure 17: Percentage of Tribes with Positive Growth on Economic 
Indicators by Contracting Category, 1990-2000: 

Figure 18: Percentage Change in Economic Indicators for Tribes by 
Grants-to-Income Ratio Category, 1990 to 2000: 

Figure 19: Comparing Economic Indicators for Self-governance/High-
Contracting Tribes by Grants-to-Income Ratio Category: 

Figure 20: Shortfalls in Contrast Support Funding for BIA and Indian 
Health Service, Fiscal Years 1993-2002: 

Figure 21: Median Percentage Changes in Economic Indicators for Tribes 
by Level of Gaming Revenues: 

Figure 22: EDA Grants to Tribes and Organizations by Region, 1993-2002, 
as Percentage of Total EDA Grants to Tribes and Organizations: 

Figure 23: Percentage of EDA Grants to Tribes in the Lower 48 States, 
1993-2002, by State: 

Figure 24: Number of Federally Recognized Tribes with EDA Grants, by 
State and EDA Region: 

Figure 25: Total EDA Grants to Tribes and Tribal Organizations, 1993-
2002, by EDA Region: 

Figure 26: Per Capita EDA Grants to Tribes in Lower 48 States, 1993-
2002, by EDA Region: 

Figure 27: Extent to Which Tribes Receive EDA Planning Grants by 
Regions, 1993-2002: 

Figure 28: Percentage of Economic Development-Related Grants Received 
by Tribes from Various Federal Agencies, 1998-2001: 

Figure 29: Benefits of Completed EDA-Funded Enterprises, 1993-2002: 

Figure 30: Outcome of Enterprise Projects Funded by EDA, 1993-2002: 

Figure 31: Percentage of Self-governance, High-Contracting, and Low-
Contracting Tribes by Grants-to-Income Ratio: 

Abbreviations: 

BIA: Bureau of Indian Affairs: 

Census: U.S. Census Bureau: 

CFDA: Catalog of Federal Domestic Assistance: 

Commerce: Department of Commerce: 

EDA: Economic Development Administration: 

GTI: grants-to-income: 

RLFs: revolving loan funds: 

Letter September 8, 2004: 

The Honorable Ben Nighthorse Campbell: 
Chairman, Committee on Indian Affairs: 
United States Senate: 

Dear Chairman Campbell: 

Creating employment and raising incomes is a key priority for Indian 
and Alaska Native communities, and we have previously reported that 
over 100 federal programs were potentially available to assist tribes 
or tribal members with economic development activities.[Footnote 1] One 
agency providing such aid is the Economic Development Administration 
(EDA) within the Department of Commerce (Commerce), which provides 
grants to distressed communities to generate new and retain existing 
jobs and to stimulate economic growth in areas of the nation 
experiencing high unemployment, low income, or severe economic 
distress, including American Indian tribes and tribal 
consortia.[Footnote 2] Annually, EDA awards between $200 and $400 
million in total grants, but public information on the extent to which 
EDA grants are assisting tribes was not readily available. In addition 
to financial assistance from federal agencies, Congress has also 
attempted to help tribes assume management of their own affairs. Since 
1975, the Indian Self-Determination and Education Assistance Act has 
authorized tribes to assume the management of programs that had been 
administered on their behalf by the two federal agencies that provide 
services to tribes--the Department of the Interior's Bureau of Indian 
Affairs (BIA) and Health and Human Service's Indian Health Service. As 
a result, tribes can enter into contracts with these agencies to assume 
management of individual services, including law enforcement, 
education, social services, and road maintenance. Under self-governance 
compacts, tribes can receive lump sum funding to assume many of the 
services that were previously provided federally. Proponents of 
contracting and self-governance expect that the experience, expertise, 
and control that these arrangements provide should also help these 
tribes develop economically.

To assess the success of these efforts, you asked us to review EDA 
grants, as well as contracting and self-governance arrangements. In 
response, we analyzed (1) all EDA grants made to Indian tribes from 
1993-2002 and determined what economic development resulted and (2) the 
relationship between changes in the economic profile of tribes and the 
extent to which they have entered into self-determination contracts or 
self-governance compacts to perform their own services under the Indian 
Self-Determination and Education Assistance Act, as amended. We also 
identified other advantages and disadvantages to these arrangements and 
other factors that can affect changes in tribes' economic profiles.

To determine the results of the EDA grants to tribes, we obtained data 
on all EDA grants made to tribes from 1993-2002. Over this period, EDA 
provided grants to 125 of the 562 federally recognized tribes and also 
to 18 tribal or Alaska Native organizations. For our analysis, we 
classified EDA's grants by type of project funded, including projects 
for: 

* producing income (enterprise projects), such as saw mills;

* business development, including training;

* improving infrastructure, such as roads; and: 

* conducting economic development planning.

To determine what economic development resulted from these grants, we 
gathered information from all 95 tribes that received EDA grants for 
enterprise, infrastructure, and business development projects from 1993 
to 2002 by (1) visiting 15 tribes to inspect the projects funded and 
(2) conducting a telephone survey of the remaining 80 tribes. If these 
tribes also received a planning grant from EDA, we also obtained 
information about the results for the planning grant from tribal 
officials. We analyzed this information to identify the extent to which 
the projects these grants funded were profitable or had led to other 
economic development. Our survey results reflect the information 
provided by and opinions of tribal officials who participated in our 
survey. We also interviewed EDA officials in headquarters and regional 
offices to discuss application and monitoring policies and procedures 
and reviewed Inspector General reports involving EDA funding to tribes.

To determine the relationship between the economic profile of tribes 
and the extent to which they had self-determination contracts or self-
governance compacts, we identified the extent to which tribes in the 
lower 48 states were contracting using a database that shows the 
amounts from federal programs received by tribes that received at least 
$300,000 in federal assistance.[Footnote 3] For purposes of our 
analysis, we placed tribes into one of the following three separate 
groups: 

* self-governance tribes that receive funds to perform multiple 
services.

* tribes whose total contracting dollars exceeded a calculated 
threshold (high-contracting tribes), and: 

* tribes below this amount (low-contracting tribes).[Footnote 4]

Using data from the U.S. Census Bureau (Census), we compared the extent 
to which various economic variables, such as the per capita income of 
the Native Americans living in the tribal area, had changed from 1990 
to 2000 for the tribes in these three groups.[Footnote 5] Because we 
were not able to include the extent to which other external factors 
also affected the tribe's economic development, our results cannot be 
used to definitively determine whether any changes in tribes' economic 
profiles are the result of the extent to which they engaged in 
contracting or self governance. Our contracting analysis also included 
only 219 tribes located in the lower 48 states for which requisite 
information for our analysis was available and excluded Alaska Native 
entities because comparable contracting and economic profile data was 
not available. We performed various steps to assure ourselves of the 
reliability of the data that we used in the analyses for this report 
and we describe these efforts in appendix I. We determined that the 
data was sufficiently reliable for our purposes.

We conducted our work in Washington, D.C; Philadelphia; and various 
locations in California, Alaska, Arizona, New Mexico, and Washington 
from July 2003 through September 2004 in accordance with generally 
accepted government auditing standards. Appendix I contains a detailed 
description of our scope and methodology.

Results in Brief: 

Indian tribes have used EDA grants to create businesses, build roads 
and other infrastructure, and create economic development plans, but 
these grants have had mixed success in generating jobs, income, and 
private sector investment. From 1993 to 2002, 143 tribes received $112 
million in EDA grants. We also found that grants to tribes represented 
a small portion of EDA's annual awards and the extent to which tribes 
obtained EDA grants varied across states and regions. With these 
grants, EDA seeks to create jobs, generate revenue, and attract private 
investment. Of the $112 million total, $54 million was used to fund 
grants for 63 projects designed to create income and jobs--called 
enterprise projects. Of 31 projects completed for which results were 
available, tribal officials we contacted reported that 23 percent were 
profitable, 32 percent were covering costs, 23 percent were being 
subsidized, and 23 percent had failed. Most of these projects have 
created 10 or fewer jobs and did not attract direct private sector 
investment. EDA also provided less than $5 million to support business 
development projects, including revolving loan funds and training 
activities.

From 1993 to 2002, EDA also provided $22 million in grants to 23 tribes 
for infrastructure projects such as roads and sewer systems. Officials 
of the tribes that received these grants reported that the 
infrastructure improvements EDA funded resulted in the development of 
industrial parks, hotels, casinos, and other commercial enterprises. 
But many tribal officials reported that a lack of capital for 
infrastructure and other projects limited their development efforts. 
During the 10-year period, EDA also provided $30 million in grants to 
99 tribes to conduct economic planning. Nearly all of the tribes that 
received EDA planning grants also received either additional funding 
from EDA or from other federal agencies for enterprise or economic 
development projects.

Through funding from BIA and other federal agencies, nearly all tribes 
now have contracts or self-governance compacts to operate many of their 
own tribal programs and services. Although we did not analyze whether a 
direct causal relationship exists, we found that the tribes that were 
self-governing or engaged in a high level of contracting showed greater 
gains on average in employment levels from 1990 to 2000 than did tribes 
that were contracting to perform fewer of their own programs and 
services. However, our analysis found that on average the high-
contracting and self-governance tribes had not experienced greater 
growth in per capita income or in the percentage of Native Americans in 
the tribal area living in households with incomes above the poverty 
level than had low-contracting tribes. Although their incomes did not 
grow faster on average, a greater percentage of high-contracting and 
self-governance tribes experienced positive growth in their levels of 
employment, per capita income, and percentage above poverty than did 
low-contracting tribes.

Tribal officials also indicated that running their own programs through 
contracts and compacts allows them to gain self-governance experience 
and to tailor the programs to their own needs. However, they noted that 
the failure of these contracting and compacting arrangements to provide 
for adequate funding of administrative costs is a disadvantage and can 
reduce the resources such tribes have for other economic development 
activities. Discussions with tribal and federal officials and reviews 
of various studies of Indian economic development issues also indicated 
that other factors such as the desirability of a tribe's location, 
availability of exploitable resources, the adequacy of the physical 
infrastructure near tribal areas, and the stability of tribal 
government were important determinants to the level of economic success 
that tribes experienced. For example, tribes located in areas with 
natural features that serve as a tourist draw or those located closer 
to areas with large urban populations may be able to develop 
economically more easily than other tribes.

This report does not contain recommendations. We requested and obtained 
comments from the Department of Commerce, which provided EDA's 
comments, and the Department of the Interior, which provided BIA's 
comments; these agencies written comments are discussed later in this 
report and are reproduced in appendixes IV and V, respectively. BIA 
generally agreed with our conclusions and stated its support for 
increased self-determination contracting and compacting as a means of 
improving tribal economic development efforts. EDA acknowledged that 
its enterprise development investments had mixed success given the EDA 
investments we reviewed and evaluated. EDA stated that the success of 
other types of EDA investments should be considered in order to make a 
broad statement about the economic development generated by EDA grants 
as a whole. After considering our findings for all the EDA grants to 
tribes between 1993 and 2002, we believe that our conclusion that EDA 
grants have had mixed success is accurate. The grants for enterprise 
projects represent the largest portion--almost half--of the funding EDA 
provided to tribes during this period and these grants, as our report 
shows, have had mixed success in producing economic development. In 
addition, although our report presents information from tribal 
officials that indicated that economic development resulted from the 
other types of EDA grants, we found that the grants generally included 
projects that appeared to be successful, but also included projects 
that had yet to show results, had produced limited benefits, had not 
been sustained, or had not produced benefits.

Background: 

American Indian tribes are among the most economically distressed 
groups in the United States. According to data from the 2000 U.S. 
Census, American Indian tribes' median per capita income of $9,200 in 
1999 was less than half the $21,600 per capita income for the entire U. 
S. population.[Footnote 6] In addition, the percentage of American 
Indians with household incomes at or below the official poverty level 
averaged 30 percent across tribes--more than double the 12 percent for 
the U.S. population as a whole.[Footnote 7] According to tribal 
officials and government agencies, conditions on and around tribal 
lands generally make successful economic development more difficult. 
These officials indicated that American Indian communities often are 
lacking in adequate basic infrastructure, such as water and sewage 
systems. These communities also frequently lack sufficient technology 
infrastructure, such as telecommunications lines that are commonly 
found in other American communities. Without such infrastructure, 
tribal communities often find it difficult to compete successfully in 
the economic mainstream. A 1999 EDA study that assessed the state of 
infrastructure in American Indian communities found that these 
communities also had other disadvantages that made successful business 
development more difficult.[Footnote 8] This study found that the high 
cost and small markets associated with investment in Native communities 
continued to deter widespread private sector involvement. Another 
factor that creates more difficult business conditions in some tribal 
areas has been downturns in regionally significant industries. For 
example, tribes in the Northwest and Alaska have been hurt by the 
decline in the fishing and timber industries in their areas.

To help address the needs of Indian tribes, various federal agencies 
provide assistance, including economic development. BIA is charged with 
the responsibility of implementing federal Indian policy. BIA assists 
tribes in various ways, including providing for social services, 
developing and maintaining infrastructure, and providing education 
services. BIA also attempts to help tribes develop economically by 
providing resources to administer tribal revolving loan programs and 
guaranteed loan programs to improve access to capital in tribal 
communities and providing assistance in obtaining financing from 
private sources to promote business development initiatives on or near 
Indian reservations. In addition to the support provided by BIA, other 
agencies with significant programs for tribes include the Department of 
Health and Human Services, which provides funding for the Head Start 
Program and the Indian Health Service; the Department of Housing and 
Urban Development, which provides support for community development and 
housing-related projects; and the Department of Agriculture, which 
provides support for services pertaining to food distribution, 
nutrition programs, and rural economic development.

The Department of Commerce's EDA is an agency that provides assistance 
to tribes specifically for economic development. EDA's mission is to 
create wealth and minimize poverty in economically distressed rural and 
urban communities that experience high unemployment, low income, or 
other severe distress. EDA fulfills its mission with grant programs, 
including six programs explained in table 1.

Table 1: Purposes of EDA Grant Programs: 

EDA grant program type: Public works and economic development; 
Purpose of grants awarded: Provides grants that support construction or 
rehabilitation of essential public infrastructure and development 
facilities necessary to generate private sector jobs and investments.

EDA grant program type: Planning assistance; 
Purpose of grants awarded: Provides grants to assist recipients with 
preparing economic development strategies and to conduct other planning 
and technical assistance services.

EDA grant program type: Economic adjustment assistance; 
Purpose of grants awarded: Provides grants to respond to economic 
changes such as natural disasters, reduction in defense expenditures, 
or depletion of natural resources.

EDA grant program type: Technical assistance; 
Purpose of grants awarded: Provides grants to assist communities in 
analyzing the feasibility of particular economic development 
investments.

EDA grant program type: Trade adjustment assistance; 
Purpose of grants awarded: Provides grants to fund technical assistance 
centers that provide services to firms negatively impacted by foreign 
competition.

EDA grant program type: Research and evaluation; 
Purpose of grants awarded: Provides grants to support communications 
and research into development programs, projects, and emerging issues.

Source: EDA.

[End of table]

EDA has six regional offices that administer its grant programs across 
multistate areas. Each regional office accepts preapplication 
investment proposals from prospective grantees, including American 
Indian tribes and Alaska Natives. Based on established regulations, EDA 
regional officials encourage only those investment proposals that will 
significantly benefit areas experiencing or threatened with substantial 
economic distress to continue with the application process.[Footnote 9] 
Before receiving a grant, an entity must submit a preapplication 
proposal to an EDA Economic Development Representative responsible for 
that area. After preliminary reviews by various EDA regional office 
staff, each preapplication proposal is considered by the region's 
Investment Review Committee, which consists of the Regional Director, 
Regional Counsel, and Division Chiefs, to ensure that entity is 
eligible to receive funds and that the project is likely to provide 
benefits meeting EDA's criteria. The Investment Review Committee will 
then recommend whether the entity should be invited to submit an 
application. EDA headquarters reviews the recommendation action for 
quality assurance. According to Commerce, after receiving quality 
control clearance and depending on the type of grant program, the 
Regional Director approves the decision to invite the entity to submit 
a formal application. After this application is received and found to 
be complete, the grant funds will be awarded. During the 1990s, the 
goals EDA generally sought to meet through its grants were to fund 
projects that would create jobs and produce income for distressed 
communities. However, since 2002 EDA has placed more emphasis on 
projects that create higher-skill, higher-wage jobs and that are market 
based and likely to attract private sector investment.

Activities Tribes Perform under the Indian Self-determination and 
Education Act Are Also Envisioned to Help Economic Development: 

Activities that tribes are authorized to undertake as a result of the 
Indian Self-Determination and Education Assistance Act, as amended, 
could help them develop economically. This act authorizes Indian tribes 
to take over the administration of programs that had been previously 
administered on their behalf by the Departments of the Interior or 
Health and Human Services. In passing the act, Congress recognized that 
the government's administration of Indian programs prevented tribes 
from establishing their own policies and making their own decisions 
about program services. The act allowed tribes to contract for a range 
of Indian programs that are managed by the Interior Department's BIA 
and Health and Human Services' Indian Health Service on their 
behalf.[Footnote 10] According to the act, tribal contractors must 
receive funding equivalent to what each of the agencies would have 
provided if they had operated the programs. The act, as amended, also 
provides that tribal contractors are to receive funding for the 
reasonable costs of activities that they must perform to manage a 
program's contract--known as contract support costs.[Footnote 11] Once 
having contracted a program, a tribe assumes responsibility for all 
aspects of its management, such as hiring program personnel, conducting 
program activities, delivering program services, and establishing and 
maintaining administrative and accounting systems. Typical programs 
that are contracted by tribes include such BIA programs as law 
enforcement, social services, road maintenance, and forestry as well as 
such Indian Health Service programs as hospitals and health clinics; 
dental care; and mental health services.

Congress has amended the act several times since 1975. A series of 
amendments from 1984 through 1994 streamlined contracting requirements, 
provided funds for contract support, and allowed more participation by 
tribal governments in federal rulemaking. In 1988, a new title was 
added to the 1975 act authorizing the creation of the Self-Governance 
Demonstration Project that enabled a number of tribes to receive 
funding for multiple federal programs in one lump sum under a self-
governance agreement. This new title to the act, known as Title III 
Self-Governance Demonstration Project, enables tribes generally to 
receive funding for multiple federal programs in one lump sum under a 
self-governance compact. Tribes operating under a self-governance 
compact have the flexibility to administer funds for multiple programs 
as they see fit, rather than abiding by the circumstances of single-
program contracts. The 1988 amendment also added reasonable contract 
support costs to comply with the terms of the contract and to support 
prudent management. The Tribal Self-Governance Act Amendments of 1994 
directed the Secretary of the Interior to negotiate contracts annually 
with participating tribes to enable the tribes to plan, conduct, 
consolidate, and administer functions and activities that were 
administered by the Secretary. Through the act and the subsequent 
amendments, Congress envisioned that Indian tribes and Indian people 
are best able to determine the most effective and efficient provision 
of government programs, services, and economic development for Indian 
people.

EDA Grants Have Provided Some Benefits to Tribes, but Overall Success 
in Producing Economic Development Has Been Mixed: 

The funding that EDA provided to tribes between 1993 and 2002 
represented a small portion of the economic assistance that EDA 
provided during this 10-year period. The extent to which tribes 
received EDA grants varied across states and these were used for 
various purposes. From 1993 to 2002, EDA provided funding for 63 
enterprise projects intended to generate revenues but these have had 
mixed success in producing economic development. EDA has also provided 
a small amount of funding for business development activities, 
including several revolving loan funds, which were used to fund tribal 
enterprises or training. In addition, 23 tribes received EDA grants for 
infrastructure projects that tribal officials reported as having 
resulted in subsequent economic development activities for their 
tribes. During the 10-year period, 99 tribes and tribal organizations 
received EDA grants for planning activities, including feasibility 
studies, and almost all of the tribes that got these grants either 
received other funding from EDA or obtained economic development aid 
from other government agencies.

EDA Grants to Tribes Represented a Small Portion of its Overall 
Program: 

The funding that EDA provided to tribes represent a small portion of 
overall EDA grants. We obtained data from EDA that included all grants 
it made to American Indian tribes during the years 1993 to 2002. Our 
analysis of these data indicated that 143 Indian tribes and tribal 
organizations received a total of $112 million in EDA grants during 
this 10-year period. Comparing this with the total amount of grants 
that EDA awarded, EDA grants to tribes represented 3 percent of the 
$3.4 billion that the agency had awarded overall between 1993 and 2002. 
Figure 1 shows the relative proportion of funding that tribes received 
each year from EDA, which ranged between 2.1 percent and 5.3 percent of 
total EDA grant appropriations during this period.

Figure 1: Total EDA Grants Appropriations and EDA Grant Dollars to 
Indian Tribes and Organizations, 1993-2002: 

[See PDF for image] 

Note: This is in actual dollars.

[End of figure] 

Using information from the 2000 Census, we calculated that 
approximately 3.5 percent of the persons in the United States with 
income below the official poverty level are American Indians or Alaska 
Natives. Therefore, the proportion of EDA funds going to tribes appears 
to be similar to the proportion of the U.S. population living in 
poverty that these tribes represent.

Based on our analysis of EDA data, 125 (or 22 percent) of the 562 
federally recognized tribes in the lower 48 states and Alaska received 
EDA grants between 1993 and 2002. EDA also provided grants to 18 tribal 
organizations or Alaska Native entities. According to EDA officials, 
other tribes did not receive any EDA grants for various reasons. For 
example, they said that the demand for funding exceeds the available 
grant funding. Also, one EDA official said that some tribes are unable 
to propose a project that appears likely to generate sufficient 
economic development.

EDA Funding to Tribes Varied across States: 

Of the $112 million in total grants to tribes that EDA awarded between 
1993 and 2002, $86 million went to 113 tribes in the lower 48 states. 
This included grants to 100 federally recognized tribes and 13 tribal 
organizations. The remaining $26 million was awarded to 30 Native 
entities in Alaska, including grants to 25 federally recognized Native 
entities and 5 Alaska Native organizations representing more than one 
entity.[Footnote 12]

Our analysis indicated that the amount of EDA funding to tribes varied 
across states. For example, Alaska accounted for almost 23 percent of 
EDA grants to all tribal entities during the years 1993 to 2002, as 
shown in figure 2. In 2001 alone, Native entities in Alaska received 
over half of all EDA grants to tribes, much of which were awarded under 
EDA's disaster relief appropriation for projects to address the slump 
in Alaska's fishing industry.

Figure 2: EDA Grants Received by Indian Tribes and Organizations, 1993-
2002: 

[See PDF for image]

Note: This is in 2002 constant dollars.

[End of figure]

In addition to more tribes in some states receiving grants, our 
analysis showed that EDA-awarded grants to tribes also varied on a per 
capita basis across states. As figure 3 shows, tribes in seven states, 
including Colorado, Florida, Idaho, Maine, Massachusetts, North 
Carolina, and Oregon, received more than $600 per individual in grants 
from EDA between 1993 and 2002. In contrast, tribes in at least eight 
states received no EDA grant funding during this period.

Figure 3: Per Capita EDA Grants to Tribes, 1993-2002: 

[See PDF for image]

[End of figure]

EDA Grants to Tribes Used for Various Purposes: 

The grants EDA made to tribes were for various purposes. In the data we 
analyzed, EDA categorized the grants it awarded according to the 
various funding programs it administers, such as for planning, public 
works, or economic adjustment. However, upon review of these data, we 
found that EDA used funds from these different categories to provide 
grants for similar types of projects. For example, an economic 
adjustment grant or a public works grant could be used for either the 
planning of a project or the construction of a project. Therefore, for 
our analysis, we grouped the various grants into the following 
categories according to type of project or activity funded: 

* Enterprise projects: grants used to develop projects designed to 
generate income for the tribe, such as a cannery, a resort, or a 
sawmill;

* Infrastructure projects: grants used for the design and construction 
of public works infrastructure (e.g., roads, highways, and sewers) that 
would serve as the foundation for general economic development 
activities;

* Business development projects: grants used to fund loan funds, 
training, and other business development projects, including those for 
business incubators, revolving loan funds (RLF), training and capacity 
building, and other assistance that enhances the tribes' economic 
development activities; and: 

* Planning/feasibility grants: grants used for general planning 
purposes such as paying for staff salaries or the broad administration 
of the tribes' planning departments, as well as for developing plans, 
analyses of projects' environmental impact, and feasibility studies for 
specific economic development projects.

Based on the results of our analysis of EDA data, we found that the 
largest portion of the dollars EDA awarded to tribes were for 
enterprise projects. As figure 4 shows, about half of the $112 million 
that EDA awarded to tribes between 1993 and 2002 was for enterprise 
projects. Grants for planning and feasibility studies represented the 
next largest portion of the grants.

Figure 4: Proportion of Total EDA Grant Funding to Indian Tribes and 
Organizations by Grant Type, 1993-2002: 

[See PDF for image]

[End of figure]

In addition to accounting for 27 percent of grant dollars EDA awarded 
between 1993-2002, the most frequent type of grant that tribes received 
was for planning and feasibility studies. As shown in figure 5, more 
tribes received planning and feasibility grants than any other type.

Figure 5: Number of Tribes Receiving EDA Grants by Type of Grant, 1993-
2002: 

[See PDF for image] 

Note: A tribe could receive more than one type of EDA grant.

[End of figure] 

EDA Funding of Tribal Enterprise Projects Has Had Mixed Success 
Generating Economic Development: 

The grants that EDA provided to tribes have had mixed success in 
creating revenue-generating enterprises. Of the $112 million that EDA 
provided to tribes from 1993 to 2002, as shown in figure 6, $54 million 
or nearly half went to fund 63 tribal enterprise projects, including 
almost $20 million for projects in Alaska. As shown in figure 6, most 
of the enterprise projects EDA funded for tribes included industrial 
enterprises, such as wood products plants, or commercial projects, such 
as retail businesses and shopping centers. Most of the EDA-funded 
enterprise projects in Alaska involved community or cultural centers, 
which provided facilities for community and tourist activities. Some of 
the EDA grants also funded natural resource enterprises involving fish, 
wildlife, or horticulture restoration.

Figure 6: Types of Enterprise Projects Funded, 1993-2002: 

[See PDF for image] 

[End of figure] 

Figure 7 describes an example of one enterprise project that EDA 
funded. This grant helped a tribe fund the development of a 
horticultural enterprise that grows vegetation to improve fishing areas 
in local rivers. Although producing some benefits, at the time we 
contacted the tribe operating this project, they were using funds from 
other sources to subsidize its operations, although they hoped it would 
eventually be profitable.

Figure 7: Example of Horticulture Enterprise EDA Funded: 

[See PDF for image] 

[End of figure] 

The enterprise projects EDA funded for tribes have had mixed success in 
helping tribes create revenue-generating enterprises. We gathered 
information on 59 of the 63 projects funded by EDA between 1993 and 
2002--12 by site visits and 47 by telephone interviews with tribal 
officials. Tribal officials we contacted in late 2003 and early 2004 
reported that: 

* 31 projects had been completed;

* 3 were completed, but just opened, and no operating results were yet 
available; and: 

* 25 had not yet been completed, including 20 projects funded in 2001 
and 2002.

As shown in figure 8, of the 31 completed projects with results, tribal 
officials reported about half were either profitable or were earning 
enough to cover their operating costs. However, the remaining projects 
were either requiring subsidies or had ceased operations. Tribal 
officials predicted that 4 of the 7 projects currently being subsidized 
could become sustainable given more time or further expansion.

Figure 8: Status of Completed Enterprise Projects Funded by EDA, 1993 
to 2002: 

[See PDF for image] 

Note: Percentages do not add to 100% due to rounding.

[End of figure] 

Five of the 7 projects that failed were industrial enterprises, 
including a sawmill, a bottled water plant, and a plant to manufacture 
fiberglass household furnishings. According to tribal officials, the 
reasons for failure included market changes or downturns, lack of an 
ongoing source of funding to keep the enterprise afloat, management 
problems, and environmental problems. Four of the 7 failed enterprise 
projects were funded between 1993 and 1995. However, in recent years, 
some tribes reported that they have been able to keep fledgling 
enterprises afloat by subsidizing them with revenues from gaming or 
other tribal enterprises, and the failure rate for EDA-funded 
enterprise projects has decreased. Since 1996, EDA funded 24 tribal 
projects that had been completed and, of these, 14 were either 
profitable or covering their costs, 3 had failed, and 7 were still 
being subsidized (see appendix II, figure 30 for more information on 
the outcome of projects by year of funding). Figure 9 provides an 
example of a project that, although it has not failed, is used only 
once a year and must have its operating costs subsidized by the tribes 
that operate it.

Figure 9: EDA-Funded Cultural Center: 

[See PDF for image] 

[End of figure] 

Our analysis of the enterprise projects that EDA funded indicated that 
most of the projects that tribes developed with EDA funding had not 
attracted funding from private entities. For most of the enterprise 
projects we reviewed, EDA funds covered between 30 percent and 80 
percent of the total project costs. As shown in figure 10, tribal 
officials reported direct private sector investment in 17 percent of 
the projects, though in some cases the tribal share of project funding 
included funds borrowed by the tribes from private financial 
institutions. EDA officials recognize the difficulty tribes face in 
attracting private investment on Indian lands and sometimes make 
allowances for the amount of matching funds they require or suggest to 
tribes that they locate projects outside of reservation land.

Figure 10: Other Funding Sources for EDA-Funded Enterprise Projects: 

[See PDF for image] 

Note: Some projects had multiple sources for the non-EDA share of 
project funding. Figures based on 53 projects for which funding source 
data was available.

[End of figure] 

The grants that EDA provided to tribes for enterprise projects also 
appeared to create limited numbers of jobs. Tribal officials told us 
that many of the EDA-funded enterprise projects had resulted in the 
creation of jobs for tribal members, although the number of jobs 
created generally was less than 10 per project. As shown in the figure 
11, 20 (59 percent) of the enterprise projects resulted in 10 or fewer 
jobs.

Figure 11: Number of Jobs Created by EDA-Funded Enterprise Projects, 
1993-2002: 

[See PDF for image] 

Note: Jobs created represents number of jobs at the enterprise at the 
time of our survey that did not exist prior to project funding, as 
reported by tribal officials. Some tribes reported seasonal jobs, which 
we counted as one-half of a nonseasonal job. (Total = 34 completed 
projects.) 

[End of figure] 

Although most projects did not create a large amount of jobs, some 
projects that EDA funded were more successful in employing larger 
numbers of people. Of the 34 completed projects we reviewed, 4 projects 
resulted in the creation of 50 or more jobs. These included the 
following projects: 

* One Northwest tribe received a $1.6 million EDA grant in 2002 to help 
fund the opening of a plywood processing plant that uses wood from the 
tribe's own forests. The total project cost was $10 million, with 
additional funds coming from other federal and state grants, the tribe, 
and a bank loan. Tribal officials reported that the enterprise has 
created 265 jobs in a generally depressed rural area and is generating 
enough revenue to cover costs, including debt servicing.

* One Southwest tribe we visited received a $2.5 million EDA grant in 
2000 to help fund a shopping center. Total project cost was nearly $4.5 
million, including an earlier $1 million investment by the tribe to 
install basic infrastructure for the site. The project was built to 
accommodate seven retail businesses. At the time of our visit, the 
center had five tenants--a grocery store, pizza restaurant, laundromat, 
hair salon, and video store--and two vacancies. According to tribal 
officials, the project was still being subsidized by the tribe but is 
expected to be profitable in 3 to 5 years. According to a tribal 
report, the center had generated 70 jobs, provided retail services to 
local consumers, stopped a portion of leakage of tribal dollars to off-
reservation towns, and provided opportunities for some tribal members 
to go into business.

* A Montana tribe received three EDA grants totaling $1 million between 
1996 and 2002 for expansion of a tribal electronics enterprise. Total 
cost of the expansion projects was $2 million. According to tribal 
officials, the projects generated a total of 65 new jobs, including 
participants in a welfare-to-work program. The first two projects were 
profitable, but the third project was not yet turning a profit as of 
early 2004.

Although the projects EDA funded had only mixed success in generating 
revenue and large numbers of jobs, tribal officials told us that the 
EDA-funded enterprise projects had produced other benefits. In some 
cases, tribal officials said that the projects EDA funded resulted in 
the creation of jobs and revenue at other entities. For example, one 
tribe used a $350,000 EDA grant in 1997 to help fund construction of a 
fish hatchery. This enterprise did not make a profit, but 15 jobs were 
created at the hatchery. The project had indirect economic benefits to 
the tribe because it helped to support the local fishing and tourism 
industry, which employed 15 to 20 tribal individuals as fishing guides 
and 8 seasonal jobs at a campground. The hatchery also generated 
increased business for local restaurants and motels and enabled tribal 
subsistence fishermen to catch fish for their own consumption. (See 
app. II, fig. 29, for a list of the completed enterprise projects for 
which we obtained information.) 

In light of the mixed success that EDA-funded enterprise projects 
experienced, tribes may find obtaining EDA funding in the future more 
difficult because of the changes in the agency's criteria for awarding 
grants. Since fiscal year 2002, EDA's criteria for approving grant 
applications requires its staff to seek to fund projects that create 
jobs requiring greater skills and paying higher wages. Their criteria 
also emphasize projects more likely to attract private sector 
investment. In meeting these criteria, EDA officials informed us that 
tribes have to compete with other entities such as state and local 
governments and nonprofit organizations for EDA grants. As a result, 
tribes in rural areas, in particular, find it difficult to propose 
projects that are likely to attract private sector investment or result 
in jobs that pay high wages. For example, EDA officials we spoke to in 
one EDA region noted that communities closer to urban areas were more 
likely to be able to propose projects, such as industrial parks, that 
were likely to attract high technology firms than were the more 
rurally-located tribes in their region.

EDA Also Provided Funds for Loan Funds and Other Business Development 
Activities: 

From 1993 through 2002, EDA also awarded grants to tribes to be used 
for loan funds, business development, and training. Grants for these 
purposes totaled $4.9 million, comprising 4 percent of the total $112 
million that EDA provided to tribes during that 10-year period. About 
$2.2 million of the EDA grants were to support RLFs. These RLFs are 
pools of money loaned out for revenue-generating enterprises. The 
repayment of loan principal and interest replenish the RLF, creating a 
revolving source of capital to finance additional loans and further 
develop the local economy. Of the $2.2 million EDA awarded for RLFs 
between 1993 and 2002, $950,000 was to provide the initial capital--
seed money--to get three new RLFs started and about $1.3 million was 
used to support business development and training programs associated 
with two existing RLFs (see app. II for details).

Tribal officials reported that these RLFs EDA has supported have 
successfully funded both tribal enterprises and small businesses 
started by individual tribal members. For example, a tribe in Northern 
California has administered one of these RLFs since 1977, when EDA 
originally provided initial capital of $1.5 million to finance loans 
relating to the tribe's forest industries. Since 1994, EDA provided 
$285,000 to fund a business training program to assist applicants 
seeking funding from this RLF with instruction on preparing business 
plans, contract agreements, credit applications, and on the use of 
computers and other office equipment. According to documents provided 
by fund officials, over the years, this RLF has made 356 loans to 
businesses resulting in 658 new jobs and attracted $7.8 million in 
private sector investment.[Footnote 13] Among the projects tribal 
officials told us had received funding from this RLF included a 
shopping center, a motel, a restaurant, a gas station, and a gravel 
enterprise. Tribal officials told us that most of the projects this RLF 
has funded have provided jobs or other benefits, although not all are 
operating profitably. To keep the more marginal enterprises operating, 
tribal officials reported using profits from the tribe's own successful 
enterprises to subsidize the financing costs of the other enterprises. 
By keeping these enterprises in operation until loans were paid off, 
their community benefits from the additional jobs and services, and the 
enterprises receive additional time to become sustainable on their own. 
According to documents provided by fund officials, the total amount of 
loan defaults as a percentage of the total loaned out since inception 
for this tribe's RLF was 5.4 percent, and through repayments of 
principal and interest the fund's capital pool has more than doubled to 
over $3.2 million. Although we did not attempt to independently verify 
the accuracy of these figures, we visited several of the businesses the 
tribe indicated had received funding. For example, the gravel 
enterprise, in its first year of production since receiving an $850,000 
loan from the RLF to purchase rock-crushing machinery, was in full 
production, and enterprise officials expected to turn a profit within 2 
years and hoped to add an asphalt plant in the future. At the time of 
our visit, we saw that this facility was operating actively with 
considerable truck traffic into and out of the facility.

The amount of loan activity by the three newly-funded RLFs has been 
limited by start-up challenges and the amount of money in these funds. 
According to RLF officials we interviewed, there are many challenges to 
establishing a successful RLF, including finding additional funds to 
match EDA's seed money and cover operating costs until sufficient 
interest income begins to be received. Other challenges include finding 
and hiring a competent, experienced loan manager; training loan 
applicants in such areas as drawing up business plans; and establishing 
relationships and gaining the confidence of financial institutions to 
leverage the loans. One of the RLFs took 3 years from the time its EDA 
grant was approved until its first loan was made. At the time of our 
survey, the three RLFs that EDA had funded since 1998 reported each had 
made between 7 and 14 loans. Because new loans cannot be made until 
older loans are repaid, considerable time is required for RLFs to grow 
and become more active.

Figure 12 shows an example of a resort cabin business that was funded 
by a loan from an EDA-supported RLF. EDA also funded a grant that was 
used for the design of the project. The tribe operating the project 
reported that the project is generating enough revenue to cover its 
costs despite a short tourist season, but they hoped that an expansion 
of the project could make it profitable.

Figure 12: Resort Cabins That EDA Funding Has Supported: 

[See PDF for image] 

[End of figure] 

In addition to grants to support RLFs, EDA also provided tribes with 
funding for training or business development, but according to tribal 
officials, the success of these programs has been hampered by lack of 
operating funds. Between 1993 and 2002, EDA provided Indian tribes with 
$2.1 million in grants to start 6 training programs. The largest of 
these was a $1.2 million grant in 2000 to renovate a building for a 
vocational training center in Alaska that, according to local 
officials, has trained 830 students. A California tribe that, according 
to a tribal official, lost 150 jobs due to timber industry closures, 
used a $66,000 grant in 1998 to establish a training program that has 
resulted in 2 entrepreneur classes, 100 individual business counseling 
sessions, and 5 start-up businesses. All 6 of these programs sought 
operating funds from other sources, such as state and federal agencies. 
However, 4 of the 6 programs reported difficulties getting on-going 
operating funds--two closed down due to lack of funds, one transferred 
its facilities to a university program, and the fourth reported that 
its program was in jeopardy.

In addition to training programs, EDA also provided about $500,000 to 
six other Indian tribes and organizations for business development 
activities between 1993 and 2002. In most cases the grants were for 
one-time training workshops or conferences on business development 
related topics. In two cases, the grants were used to recruit several 
businesses for business/industrial parks. One tribe, which received a 
$75,000 grant in 2000, reported finding one current and two future 
tenants for their park and used part of the grant to conduct a seminar 
on how tribal businesses can apply for government contracts under the 
Small Business Administration's 8(a) minority contracting program.

EDA Infrastructure Grants Reported to Have Facilitated Development: 

About 20 percent of the funding that EDA provided to Indian tribes 
between 1993-2002 was for projects to improve infrastructure for tribal 
lands. According to government and tribal officials, many rural Indian 
communities lack the infrastructure needed to support industrial and 
commercial development, such as roads, water and waste treatment 
pipelines, and processing facilities. A 1999 EDA study cited lack of 
funding as the overwhelming reason why tribes were not making the 
infrastructure investments needed to facilitate economic 
development.[Footnote 14] The tribal officials we spoke with said that 
obtaining sufficient funding for infrastructure development was 
particularly difficult because such projects do not always offer an 
immediate return on the investment. However, in some cases tribes with 
revenues from gaming and other tribal enterprises were able to use 
these sources in addition to funding from EDA and other federal grants 
to finance improvements to their infrastructure.

Our analysis indicated that EDA provided $22.1 million in grants to 23 
tribes for 26 infrastructure projects between 1993 and 2002. In many 
cases, these funds were supplemented by grants from other federal 
agencies. Most of these projects involved construction or expansion of 
water and waste treatment systems, electrical lines, and roads. Other 
grants that EDA awarded were used to improve dock and harbor 
facilities, to shore up riverbanks for flood control, and to install 
telecommunications equipment. For example, one coastal tribe we visited 
used $2.6 million in EDA funds to construct a breakwater and marina to 
support and protect the tribal fishing boats and to bolster the tribe's 
seasonal boating-related tourism industry (see figure 13). Another 
tribe we visited received a $1 million EDA grant in 1997 to construct 
the water and sewer pipes, roads, and electrical lines needed for a new 
industrial park.

Figure 13: Marina and Breakwater Constructed with EDA Grant Funds: 

[See PDF for image] 

[End of figure] 

Of the tribes that received EDA infrastructure grants, tribal officials 
reported that the funded projects facilitated either current or 
anticipated future business development. We gathered information on 25 
of the 26 EDA infrastructure grants, visiting 4 during our site visits, 
and conducting telephone interviews for the remainder. Nineteen of the 
25 projects had been completed and, according to tribal officials, all 
have led to economic development for their tribes. For example, one 
tribe received a $1.1 million EDA grant in 1995 to upgrade and extend 
their water and sewer systems, which enabled the development of a 
resort, hotel, and casino complex with more than $25 million in annual 
revenues. Tribal officials reported that the complex has created more 
than 550 jobs, which helped reduce the tribal unemployment rate from 37 
percent to 11 percent. According to these officials, the success of 
this project is spurring further economic development, including a 
planned industrial park. Figure 14 shows the various developments that 
were facilitated by the infrastructure grants that EDA provided to 
tribes.[Footnote 15]

Figure 14: Benefits from Completed EDA-Funded Infrastructure Projects, 
1993-2002: 

[See PDF for image] 

[End of figure] 

The benefits for some of the enterprise projects EDA had funded had yet 
to be realized. Of the 25 infrastructure projects that we reviewed, 
construction on 6 had not yet been completed, and 4 had only recently 
been opened, and tribal officials told us that it was too soon to 
realize most of the anticipated development benefits.

EDA Planning Grants Helped Tribes Obtain Other Funding for Their 
Economic Development: 

About one-fourth of the total dollars that EDA awarded to tribes were 
provided to fund planning and feasibility study efforts, which appeared 
to help these tribes identify their needs and obtain other funding for 
their economic development efforts. According to the Department of 
Commerce's fiscal year performance report, EDA considers funding 
distressed communities' planning efforts critical to effective economic 
and sustainable development. Based on our analysis of EDA grants, 99 
tribes and organizations received $30 million in EDA grants to conduct 
planning activities or to fund the preparation of feasibility studies 
from 1993-2002.

The grants awarded for planning went to 72 tribes and 7 tribal 
organizations in the lower 48 states and 6 Alaska Native villages or 
organizations. These grants, which typically ranged from $30,000 to 
$65,000, were generally used by tribes to pay part or all of the salary 
of an individual tasked with developing economic development plans for 
the tribe. More than half of the tribes receiving planning grants 
received them annually throughout the 10-year period, and many have 
received these grants continuously since the 1970s. Over 90 percent of 
the tribal officials in our survey indicated that the planning grants 
were crucial or very important in achieving success in their tribes' 
economic development. However, some officials reported that the 
effectiveness of their planning grants was limited because of lack of 
funds to implement the projects they envisioned or lack of support or 
consensus among the tribal leadership as to what projects to pursue.

EDA also helped fund feasibility studies for 38 tribes. These grants 
were awarded to 34 tribes in the lower 48 states and 4 in Alaska. 
According to tribal officials, performing a feasibility studies before 
embarking on a potential project can assist tribal officials in 
determining whether the project would benefit the tribe. Of the 17 
feasibility studies that we obtained information on from our telephone 
interviews and site visits, 3 of the projects studied were successfully 
implemented, 4 were in the planning stage, 3 were not implemented due 
to a lack of funds, 3 were not implemented due to a change in direction 
by the tribal council, and 4 were determined not to be feasible.

As shown in figure 15, most tribes that receive planning or feasibility 
study grants also receive project funding from EDA or other federal 
agencies.

Figure 15: Percentage of Planning Grant Recipient Tribes Receiving 
Other Economic Development-Related Grants: 

[See PDF for image] 

[End of figure] 

The EDA planning grants appeared to help tribes successfully implement 
EDA enterprise projects. According to the information we obtained on 25 
completed enterprise projects in the lower 48 states that EDA funded 
from 1993-2002, 9 of 14 that had also received EDA planning grants were 
either profitable or covering their costs, compared with 4 of 11 
projects done by tribes that had not obtained EDA planning grants. In 
addition, 4 of the 7 tribal enterprise projects that had failed during 
this period were implemented by tribes that had not received EDA 
planning grants.

Tribes Contracting to Operate More of their Own Programs and Services 
Generally Experienced Greater Employment Gains but Not Greater Income 
Growth Than Other Tribes: 

As authorized under the Indian Self-Determination and Education 
Assistance Act, as amended, nearly all tribes enter into contracting or 
self-governance arrangements to operate their own tribal programs and 
services. Based on our analysis of the relationship between contracting 
and changes in tribes' economic profiles, we found that self-governance 
tribes and those that had contracted to operate a high proportion of 
their programs and services generally experienced greater growth in 
their employment levels but had not generally shown greater gains in 
income levels. Our analysis also suggested that tribes that received a 
high proportion of their income from federal contracts and grants 
generally experienced lower income growth than tribes that had been 
able to find other sources of revenue. Despite these results, the 
tribal representatives saw advantages to running their own programs, 
including the experience such arrangements provide in administering 
their own affairs and the increased flexibility provided for tailoring 
programs to meet local needs. However, tribal officials we spoke to 
said that one disadvantage to contracting is the amounts provided under 
such arrangements can lead to funding shortfalls that divert money away 
from other tribal activities. Furthermore, tribal representatives and 
others identified other factors, such as the tribes' location, 
availability of resources, ability to generate gaming revenues, access 
to capital, and quality of tribal governance as significant influences 
on the ability of tribes to develop their tribal economics 
successfully. Because we were not able to include the extent to which 
these factors also affected tribe's economic development, our 
contracting analysis examined only the relationship to such activities 
and changes in economic profile and could not assess causation.

Most Tribes Entered Into Contracting Arrangements with the Federal 
Government: 

The Indian Self-Determination Act allows tribes to enter into various 
arrangements with BIA or the Indian Health Service to assume the 
operation of many of the programs and services previously provided by 
the agencies. From the list of federally recognized tribes and from 
2000 Census data, we identified 219 tribes in the lower 48 states that 
had 100 or more Native Americans living in the tribal area.[Footnote 
16] According to BIA information, 43 of the 219 were tribes that had 
entered into self-governance arrangements with BIA. As a result, these 
tribes operated most of their own tribal functions and services under a 
funding compact agreement with BIA. By analyzing Single Audit Act data 
that shows funding provided by federal agencies, we determined that 
nearly all of the remaining 176 tribes operated many of their tribal 
functions and services under contracts or other agreements with BIA.

High-Contracting Tribes Generally Experienced More Employment Growth, 
but Income Growth Compared with Other Tribes Was Mixed: 

Our analysis of the relationship between contracting and economic 
profile changes for Indian tribes showed that tribes that contracted 
more generally experienced greater employment growth than did tribes 
that contracted less. To identify the extent to which tribes were 
contracting, we grouped the 219 tribes in the lower 48 states with 
populations greater than 100 into three categories. The first category 
included the 43 tribes that had entered into self-governance compacts 
with BIA. Such tribes generally have assumed the operation of most of 
the services used by tribal members. For the remaining 176 tribes that 
were non-self-governance, we analyzed how much funding these tribes 
received from BIA contracts and grants from 1998 to 2000 in total and 
on a per capita basis. Based on these analyses, we categorized the 121 
tribes with annual per capita BIA contract amounts exceeding $580 and 
total annual BIA contracting amounts greater than $300,000 as high-
contracting tribes, and we, therefore, categorized the remaining 55 
tribes whose per capita or total contracting amounts were less than 
these thresholds as low-contracting tribes.

To analyze the relationship between contracting and changes in tribal 
economic profiles, we compared how various indicators of economic well-
being from Census Bureau data had changed for these three groups of 
tribes. Within each group, the changes in their economic indicators 
varied greatly, with some tribes experiencing significant improvement 
and others experiencing declines between 1990 and 2000 (see app. III, 
table 8 for complete data). As shown in figure 16 below, our analysis 
showed that high-contracting and self-governance tribes experienced 
higher growth on average in their employment levels than did tribes 
that contracted less. However, the high-contracting and self-governance 
tribes we analyzed did not, on average, experience greater growth in 
the income of the Native Americans living on their lands. As the figure 
also shows, high-contracting and self-governance tribes' per capita 
incomes did not grow faster than those of tribes contracting less. 
Additionally, these tribes did not experience greater improvement in 
the proportion of Native Americans living on their tribal lands with 
incomes above poverty level. As a result of the wide variability in our 
data, our statistical tests indicated that the differences in income 
growth and proportion above poverty level shown below were not 
statistically meaningful.

Figure 16: Median Change in Percentage Employed, Per Capita Income 
Level, and Percentage Above Poverty from 1990-2000: 

[See PDF for image] 

Note: Employment figures represent the change from 1990 to 2000 in the 
percentage of adults age 16+ employed. The median level in 2000 for the 
43 self-governance tribes was 53 percent, for the 121 high-contracting 
tribes was 48 percent, and for the 55 low-contracting tribes was 43 
percent. For the United States as a whole, the 2000 level was 60 
percent.

[End of figure] 

Although their incomes did not grow faster on average than low-
contracting tribes, the high-contracting and self-governance tribes in 
our analysis were less likely to experience declines in their income-
related measures than the low-contracting tribes. As figure 17 shows, a 
greater proportion of the high-contracting and self-governance tribes 
experienced positive growth on both employment and income indicators 
over the 10-year period from 1990 to 2000.

Figure 17: Percentage of Tribes with Positive Growth on Economic 
Indicators by Contracting Category, 1990-2000: 

[See PDF for image] 

Note: Based on 43 self-governance, 121 high-contracting, and 55 low-
contracting tribes.

[End of figure] 

Tribes Making Greater Use of Federal Contracts and Grants Tended to 
Experience Less Income Growth: 

For many tribes, federal contracts and grants are the major funding 
source for tribal jobs and income. For example, of 53 tribes we 
contacted by telephone or during our site visits, 68 percent reported 
that tribal government, which is funded largely from federal sources, 
was the main source of jobs and income for tribal members. To examine 
further the relationship between level of contracting and economic 
indicators, we compared the total federal contracts and grants received 
by each tribe with the total income of Native Americans living in the 
tribal area. For this analysis, we identified the total average amount 
of federal grants and contracts the tribes in our analysis received 
annually in 1998, 1999, and 2000 from all federal agencies using the 
Single Audit Act database. We then found the total income of the tribe 
by multiplying the per capita income of the tribe by the total number 
of Native Americans living in the tribal area.[Footnote 17] Dividing 
the total federal funding for each tribe by this tribal income amount 
resulted in a grants-to-income ratio. We then classified each tribe in 
our analysis into four categories based on the level of this ratio.

By analyzing the results of these ratios across the 199 tribes in the 
lower 48 states for which data were available, we found that the tribes 
with a very high grants-to-income ratio experienced the least amount of 
improvement in their income growth on average (see app. III, table 9, 
for details). As the figure 18 below shows, tribes with a moderate or 
low grants-to-income ratio on average had more than double the growth 
in per capita income compared with tribes with a very high grants-to-
income ratio. Differences in employment level were not statistically 
significant. Tribes with a moderate grants-to-income ratio--a balance 
of contracts/grants and other sources of income--showed the highest 
growth on economic indicators.

Figure 18: Percentage Change in Economic Indicators for Tribes by 
Grants-to-Income Ratio Category, 1990 to 2000: 

[See PDF for image] 

Note: Number of tribes by category: 26 very high, 52 high, 71 moderate, 
and 50 low.

[End of figure] 

Looking at the high-contracting and self-governance tribes, we found 
that over half had moderate or low grants-to-income ratios, indicating 
there were considerable sources of jobs and income for tribal members 
beyond those funded by federal grants and contracts. However, 15 
percent (25 of 162) of the high-contracting and self-governance tribes 
had a very high grants-to-income ratio, and the economic growth for 
these tribes was relatively low. From 1990 to 2000, the moderate to low 
ratio group had a median per capita income growth more than double that 
of the very high ratio group. Also, the percentage above poverty for 
the moderate to low ratio group increased by 18 percent, compared with 
6 percent for the very high ratio group (see fig. 19).

Figure 19: Comparing Economic Indicators for Self-governance/High-
Contracting Tribes by Grants-to-Income Ratio Category: 

[See PDF for image] 

Note: Number of tribes per category: 25 very high, 89 moderate/low.

[End of figure] 

Many tribal officials we interviewed recognized that obtaining external 
sources of income was critical to their overall economic development. 
They reported that federal contracts and grants alone are insufficient 
to meet a tribe's needs and raise tribal members out of poverty. Tribes 
reporting economic development success credited much of that success to 
the development of other sources of jobs and income.

Tribes Report Other Advantages from Contracting: 

Although the extent to which contracting tribes appeared to have 
experienced improvements in their economic profiles was mixed, tribal 
officials indicated that contracting with federal agencies provided 
other advantages but also some disadvantages. Officials at eight of the 
tribes we spoke with indicated their contracting activities provided 
them other benefits beyond improvement in their economic profile. Some 
tribal representatives and Indian Health Service officials told us that 
the experience of running a program helps develop specific skills, 
which can be carried over to other aspects of tribal activities. For 
example, an official at one tribe said that, as a result of operating 
their own services through contracting, their members have developed 
skills to produce accurate financial statements, helping them prove 
fiscal responsibility and attract additional grants. In addition, a 
1991 academic report we reviewed on tribal activities found that tribes 
that entered into contracts to manage their own their forestry 
activities generally resulted in increased production and revenue than 
had been generated when such activities were under BIA 
management.[Footnote 18] One academic who studies Indian issues told us 
that contracting also allows tribes to gain experience in leadership, 
management, accountability, and organization. He said that the 
resulting enhanced leadership and management skills help tribes to 
receive audits with unqualified opinions, which can allow these tribes 
to attract additional sources of funding.

The advantages tribes gain from contracting can vary by the type of 
arrangement undertaken. Under self-governance arrangements, tribes 
have greater control and flexibility in the use of their funds and less 
reporting requirements. This flexibility allows tribes to design 
programs that are tailored to their needs and set their own priorities. 
For example, an official at one tribe that switched from multiple 
contracts to a self-governance arrangement said they received greater 
funding as a result to use as they saw best given their priorities. 
According to this official, the tribe was able to substantially 
increase their higher education program to provide more assistance to 
tribal members who wanted to go to college and also increase their 
funding for natural resource services. In regard to regular contracting 
arrangements, one tribe told us that the skill sets learned through 
this process are a stepping stone to undertaking self-governance, which 
is the next phase of self-determination.

However, a primary disadvantage to contracting with federal agencies 
was the shortfalls in contract funding. Several tribal officials told 
us that the amount of direct program funding they receive when they 
contract to administer their own programs is not sufficient to provide 
the adequate level of service to tribal members. In addition, several 
tribal officials told us that their contract programs do not receive 
full funding to cover the indirect, support, or start-up costs that 
tribes incur as part of managing these contracts. These contract 
support cost shortfalls arise when funding appropriations for these 
contracts is less than that required by tribes to pay for such costs. 
As shown in figure 20, BIA and the Indian Health Service estimate that 
total administrative funding shortfalls arising from the contracts 
these agencies funded during fiscal years 1993 through 2002 ranged from 
a low of about $25 million to as much as $130 million annually.

Figure 20: Shortfalls in Contrast Support Funding for BIA and Indian 
Health Service, Fiscal Years 1993-2002: 

[See PDF for image] 

Note: Amounts adjusted to 2002 constant dollars using the Bureau of 
Labor Statistics Consumer Price Index.

[End of figure]

The funding shortfalls associated with contracting arrangements can 
hamper tribes' ability to develop economically. Our 1999 report on the 
shortfalls in Indian contract support costs found that tribes have had 
to cover the shortfalls with tribal resources, thereby foregoing the 
opportunity to use those resources to promote economic 
development.[Footnote 19] In addition, these shortfalls divert money 
away from other important tribal activities. For example, tribes may 
not receive enough money to enhance the management of their programs by 
establishing educational systems for leaders, instituting 
constitutional reform, and developing strategies for economic 
development. Several tribes mentioned that they have had to take steps 
to subsidize contract programs, which includes using tribal funds 
earmarked for economic development, returning the management of the 
program to the federal government, and undertaking supplemental 
programs of their own to fill in the unmet service gaps. According to 
three tribal officials, the threat of, or actual funding shortfalls, 
discouraged their tribes from entering into or continuing contracting 
arrangements with the federal government.

Multiple Factors Affect Economic Development Efforts of Indian Tribes 
and Tribal Consortia: 

In addition to the extent to which tribes are contracting to perform 
their own services, other factors can significantly influence the 
degree to which Indian tribes' efforts to develop economically are 
successful. According to the tribal and federal officials we 
interviewed and the various studies of Indian economic development 
issues that we reviewed, the location of a tribe's reservations or 
lands can greatly affect its economic development success. For example, 
tribal officials whose reservation was located near an urban area told 
us that this gives them greater access to existing infrastructure, 
including water and power. In addition, the close proximity of the 
urban population provides them with a greater potential market for 
their tribal enterprises. Another tribe whose lands were located near 
an urban area and a heavily traveled highway has benefited from the 
already established water sewer systems and power lines for development 
projects. Because of its highly visible location, this particular tribe 
has successfully developed a hotel, arts and cultural center, golf 
course, grocery store, and gaming facility.

Tribes located in more remote, rural areas lack such advantages. Tribal 
officials told us they may have to first develop infrastructure before 
they can then invest in development projects. According to tribal 
officials, this can be complicated by the need to conduct more 
extensive environmental or archeological surveys before land can be 
developed. For example, officials for one tribe in an isolated area 
told us that they had to complete land and environmental surveys and 
have water sewer systems, electric power, and roads built as a 
prerequisite to development. In addition, Native officials we talked to 
in Alaska also noted how the isolation of their villages greatly 
complicates their development efforts.

Another factor related to location that can assist a tribe economically 
is whether or not their tribal lands can be developed for tourism. For 
example, some tribes in the Pacific Northwest were able to build 
campgrounds and marinas that attracted visitors interested in 
recreation. A tribe we visited in the Southwest had scenic natural rock 
formations that attracted visitors to their tribal lands. However, one 
village in Alaska that would like to build a visitor center to attract 
tourists is located in an area that is difficult to reach and faces 
less certain prospects for developing such an industry.

Another factor that can provide tribes with an advantage in economic 
development is whether or not they have access or ownership to 
exploitable natural resources. We found tribes with access to timber or 
fisheries often were able to develop these as significant sources of 
income for their tribal members. For example, one of the tribes we 
talked to with forest lands on their reservation had opened a 
successful plant producing plywood and dry veneer, which created jobs 
for tribal members. In contrast, some tribes are located in remote 
desolate areas with little vegetation or natural resources they can 
exploit.

Another factor that can affect tribal economic success is having sound 
legal systems and commercial regulations. Because Indian tribes are 
considered sovereign nations within the United States, they must 
develop their own judicial system and laws for governing operations and 
business conduct within their tribal lands. Having an effective 
judicial system is frequently seen as a prerequisite for attracting 
private investments on tribal lands. This provides investors with 
confidence that disputes will be resolved fairly. For example, one 
expert study examined 67 tribes and found that a strong independent 
judicial system reduces unemployment by 5 percent.[Footnote 20] Another 
study states that tribal success can also be facilitated by sound 
uniform commercial codes.[Footnote 21] According to tribal officials, 
an additional challenge is having sufficient numbers of tribal members 
with the relevant law and graduate degrees to help develop and 
administer these codes.

According to tribal officials and studies, another factor cited as 
important for economic development was stable and effective tribal 
government. For example, some tribal officials we spoke with cited the 
high turnover among the members of their governing councils often 
resulted in abrupt shifts in economic priorities that sometimes delayed 
their ability to seek funding or implement previously planned projects. 
According to EDA officials, some tribes' governing councils are 
completely replaced very frequently, and this greatly reduces their 
effectiveness in achieving economic progress. According to tribal 
officials, one effective method was to stagger tribal council members' 
terms over time, which increases the continuity of the tribal 
government and its policies.

Tribes' ability to develop gaming facilities can also be a significant 
factor that can affect their economic development. Tribes that own 
gaming facilities near concentrated population centers have been able 
to use gaming revenues to develop other projects that have aided their 
tribes and produced income. For example, one particular tribe used its 
gaming revenues to develop a water sewer system for development 
projects and helped it withstand reduced federal and state funding for 
its activities. Another tribe told us gaming revenue is used for 
supplementing education and health programs. As shown in figure 21, 
tribes with greater amounts of revenue from gaming generally 
experienced greater growth in their total populations, employment 
rates, per capita income, and in the percentage with incomes above the 
poverty level.

Figure 21: Median Percentage Changes in Economic Indicators for Tribes 
by Level of Gaming Revenues: 

[See PDF for image] 

Note: We defined high gaming revenue tribes as tribes with gross gaming 
revenues exceeding $10 million in 1998 (n=77). We defined low/no gaming 
tribes as tribes with less than $3 million in gross gaming revenues in 
1998 (n=67). Tribes with $3 million to $10 million in gaming revenues 
and tribes for which comparable data on gaming revenues was not 
available were omitted from this analysis.

[End of figure] 

Observations: 

Efforts to improve the financial well-being of American Indians and 
Alaska Natives face many challenges. These challenges can include the 
isolated and rural locations of tribal lands and lack of 
infrastructure, which can limit their attractiveness to private sector 
investment. Tribal lands may also lack exploitable resources, such as 
oil or timber, or natural features that could serve as a draw for 
tourism. Although EDA has provided limited funding to assist some 
tribes, we found that these grants had resulted in mixed success in 
helping develop the economies and improve the quality of life for these 
groups. In cases in which EDA grants were more successful in producing 
economic development, the tribes sometimes had advantages, such as 
resources or proximity to areas with populations likely to take 
advantage of gaming or other development. In other cases, EDA provided 
funding to tribes without such advantages and at least produced some 
jobs for tribal members.

Overall, we found that the relationship of Indian economic development 
to EDA grants was mixed, and these findings could help inform decisions 
about how and where to focus future efforts. However, EDA's grants to 
tribes represents only 3 percent of the total amount of funding that it 
awarded between 1993 and 2002. As a result, we were neither able to 
evaluate the overall effectiveness of EDA's program nor were we able to 
evaluate the adequacy of how it administers its grants, including how 
the agency applies its criteria in determining what activities to fund.

Beyond government aid, Indian tribes are also taking steps to increase 
their role in their own governance and community activities. Through 
contracting arrangements and self-governance, nearly all tribes are 
assuming the management of programs and services that federal agencies 
previously provided to their communities. Although we found that tribes 
with the highest levels of these contracting activities generally saw 
greater improvements in employment levels, we did not find a 
relationship between level of contracting and tribal individual's 
incomes. However, we did learn that tribes conducting such contracting 
find that it provides other benefits to their communities, including 
providing them with experience in administering their own affairs. In 
addition, the other factors that make improving economic development 
for tribes challenging, such as availability of resources or 
attractiveness to private sector investment, may have proven to be 
greater determinants to tribe's overall economic well-being regardless 
of any benefits resulting from their contracting activities.

Agency Comments and Our Evaluation: 

We requested and obtained comments from the Department of Commerce, 
which provided EDA's comments, and the Department of the Interior, 
which provided BIA's comments; these agencies written comments are 
reproduced in appendixes IV and V, respectively. The letter from the 
Department of the Interior's Assistant Secretary for Policy, 
Management, and Budget stated that BIA generally agreed with our 
report's conclusions. The letter notes that BIA supports increased 
self-determination contracting and compacting as a means of improving 
tribal economic development efforts, but notes, as our report does, 
that other factors can significantly influence the ability to develop 
tribal economies successfully.

In the letter from the Secretary of Commerce, EDA questioned our 
characterization that EDA grants have had mixed success. EDA 
acknowledged that its enterprise development investments had mixed 
success given the EDA investments we reviewed and evaluated and agreed 
that a large portion of EDA funds went to enterprise development 
projects. EDA stated that the success of other types of EDA investments 
should be considered in order to make a broad statement about the 
economic development generated by EDA grants as a whole. The letter 
stated that the other grant funding that EDA provided, including those 
for infrastructure, business development, and planning has produced 
benefits.

After considering our findings for all EDA grants to tribes between 
1993 and 2002, we believe that our conclusion that EDA grants have had 
mixed success is accurate. The grants for enterprise projects represent 
the largest portion--almost half--of the funding EDA provided to tribes 
during this period and these grants, as our report shows, have had 
mixed success in producing economic development. The other half of the 
total funding EDA provided to tribes during this 10-year period 
included grants for business development loan funds and training, 
infrastructure projects, and planning. Regarding business development 
activities, our review of the grants that funded RLFs indicated that 
some were reportedly very successful, and others had yet to produce 
much development. Similarly, the training projects had produced some 
benefits but were also hampered by lack of operating funding. Although 
our report presents information from tribal officials that indicates 
that many infrastructure grants have reportedly produced economic 
development, we found that not all projects had yet done so. In 
addition, although the tribes receiving EDA planning grants reported 
them to be critical to their success, the benefits we reported as 
resulting from these planning grants were that most tribes that 
received them also received other EDA grants, including for enterprise 
projects whose mixed success we discussed, or funding from other 
federal agencies for economic development purposes. In addition, not 
all EDA planning grants led to development projects as the result of 
lack of funding or other issues. Similarly, the EDA funding for 
feasibility studies indicated that, at the time of our review, 3 of the 
17 projects studied had been implemented successfully.

Commerce's letter also provides some technical comments for which we 
made changes to our draft. The letter also presented other comments 
that provide additional detail about EDA grants and their 
administration. Our responses to these comments are presented in 
appendix IV.

We are sending copies of this report to the Ranking Minority Member of 
the Senate Committee on Indian Affairs; the Secretary, Department of 
Commerce; the Secretary, Department of the Interior; and other 
interested parties. We also will make copies available to others upon 
request. In addition, the report will be available at no charge on the 
GAO Web site at [Hyperlink, http://www.gao.gov].

If you or your staff have any questions regarding this report, please 
contact Mr. Cody Goebel or me at (202) 512-8678 or [Hyperlink, 
goebelc@gao.gov] or [Hyperlink, shearw@gao.gov]. GAO staff that made 
major contributions to this report are shown in appendix VI.

Sincerely yours,

Signed by: 

William B. Shear: 
Director, Financial Markets and Community Investment: 

[End of section]

Appendixes: 

Appendix I: Scope and Methodology: 

To review all grant funds made available to Indian tribes and tribal 
organizations by the Department of Commerce's Economic Development 
Administration (EDA), we analyzed data from EDA on all grants awarded 
to tribes during the years 1993 to 2002. For each grant, we obtained 
from EDA's data the following information: 

* grant recipient name,

* state where the grant recipient is located,

* fiscal year the grant was awarded,

* grant amount, and: 

* general project description.

The data EDA provided categorized its grants according to the various 
funding programs the agency administers, such as its planning, public 
works, or economic adjustment programs. However, upon review of these 
data, we found that EDA used funds from these various programs to 
provide grants for similar types of projects. For example, EDA was 
sometimes providing grants to fund the planning of a project or the 
construction of the project using its economic adjustment grant program 
or its public works grant program. Therefore, for the purposes of our 
analysis, we grouped the various grants into the following categories 
according to type of project or activity funded: 

* Enterprise projects: grants used to develop projects designed to 
generate income for the tribe, such as a cannery, a resort, or a 
sawmill;

* Infrastructure projects: grants used for the design and construction 
of public works infrastructure, such as roads, highways, and sewers, 
that would serve as the foundation for general economic development 
activities;

* Business development projects: grants used to fund loan funds, 
training, and other business development projects, including those for 
business incubators, revolving loan funds (RLFs), training and capacity 
building, and other assistance that enhances the tribes' economic 
development activities; and: 

* Planning/feasibility grants: grants used for general planning 
purposes such as paying for staff salaries or the broad administration 
of the tribes' planning departments, as well as for developing plans, 
analyses of projects' environmental impact, and feasibility studies for 
specific economic development projects.

Our analysis of EDA grants was limited to grants provided to Indian 
tribes. Therefore, we were not able to evaluate how EDA generally 
applies its stated criteria to grant applications. In addition, the 
application process includes an evaluation by EDA's regional investment 
review committees of preapplication proposals and recommending whether 
or not an application should be invited. We did not analyze EDA's 
preapplication process.

To determine what economic development activities have resulted from 
these EDA grants, we surveyed all 95 tribes that received EDA grants 
for enterprise projects, infrastructure projects, and loan funds, 
business development, and training activities.[Footnote 22] We made 15 
site visits in Alaska, Arizona, California, New Mexico, and Washington 
to learn more about these tribes' economic development projects and 
observe the results of the EDA grants they received during the years 
1993 to 2002. We chose tribes for our site visits based on various 
factors, including the types of economic development projects the 
tribes had, the tribes' location, and the projects' stage at the time 
of our visit. We surveyed the remaining 80 tribes and organizations by 
phone, interviewing tribal officials that were cognizant of the tribes' 
economic development projects and activities. Our survey results 
reflect the information provided by and the opinions of tribal 
officials who participated in our survey. Outside of obtaining 
documents from some tribes and visiting some projects, we did not 
independently verify the tribal officials' responses to our questions. 
We also interviewed relevant officials from EDA, the Bureau of Indian 
Affairs, and the Department of Health and Human Services to get their 
perspective on federal assistance to tribes.

Methodology for Analyzing Relationship between Contracting and Economic 
Profile: 

To determine whether there exists a relationship between the degree to 
which an Indian tribe operates federal programs and services under 
contracting or self-governance and that tribe's economic profile, we 
used data from the Department of the Interior's Bureau of Indian 
Affairs (BIA), the U.S. Census Bureau, and the Single Audit Act 
database to group all tribes we analyzed into three separate groups. 
First, we used BIA data to identify those tribes that had entered into 
self-governance compacts.[Footnote 23] We then grouped non-self-
governance tribes into two groups based on the extent to which they 
were contracting with BIA. We grouped tribes into these two groups 
based on the extent to which they were contracting on both a per capita 
basis and on a total dollar amount basis. To derive the per capita BIA 
grants and contracts amount, we obtained data from the Single Audit Act 
database on the amount of grants and contracts that were received by 
tribes from BIA during the years 1998 to 2000.[Footnote 24] For those 
tribes that did not have available Single Audit Act information, we 
calculated this per capita measure based on BIA's 1998 shortfall budget 
data.[Footnote 25]

An examination of the listing of tribes ranked by their per capita 
contract amount, tribes above a threshold of $580 appeared to include 
those large tribes with the largest overall contract amounts. We found 
that some smaller tribes had per capita contracting amounts that 
exceeded $580 but whose total contract amount was not significant 
compared with other tribes. Therefore, we only placed tribes into the 
high-contracting group whose totals in total contract funding exceeded 
$300,000, which appeared to be a reasonable level to indicate 
significant contracting activity. Table 2 summarizes our criteria for 
classifying tribes.

Table 2: GAO Criteria for Classifying Tribes by Extent of Contracting: 

Category of tribe: Self-governance; 
Per capita contracting amount: Not used; 
Total contracting amount: Not used; 
Number of tribes in category: 43.

Category of tribe: High-contracting; 
Per capita contracting amount: Greater than $580 and; 
Total contracting amount: Greater than $300,000; 
Number of tribes in category: 121.

Category of tribe: Low-contracting; 
Per capita contracting amount: Less than $580 or; 
Total contracting amount: Less than $300,000; 
Number of tribes in category: 55.

Sources: GAO analysis based on Census, Single Audit Act, and BIA data.

[End of table]

We then compared the change in the economic profiles for each of these 
three groups of tribes. To measure each tribe's economic profile, we 
collected data from the U.S. Census from 1990 and 2000. For this 
analysis, we only included those tribes in the lower 48 states that are 
federally recognized, had available 2000 Census data, and had tribal 
population of 100 people or more based on population data from the 2000 
Census. For each tribe, we obtained economic profile data on Native 
Americans living on tribal land, including the percentage employed, the 
per capita income, and the percentage in households with incomes above 
the poverty level. Our economic profile data categorized by self-
governance, high-contracting, and low-contracting tribes is 
descriptive in nature and does not represent an assessment of causation 
of economic factors based on governing status or high-or low-
contracting category.

Methodology for Analyzing Relationship between Federal Aid and Economic 
Profile: 

To supplement our analysis of contracting and economic profile changes, 
we also analyzed the relationship between the extent to which tribes 
received federal funding and changes in economic profile indicators. 
For this analysis, we identified the total average amount of federal 
grants and contracts the tribes in our analysis received annually in 
1998, 1999, and 2000 from all federal agencies.[Footnote 26] We then 
found the total income by multiplying the per capita income of the 
tribe by the total number of Native: 

Americans living on the reservation.[Footnote 27] Dividing the total 
federal funding for each tribe by its tribal income resulted in a 
grants-to-income ratio (GTI). We then classified each tribe in our 
analysis into four categories based on the level of their GTI, as shown 
in table 3.

Table 3: GAO Categories for Tribes by Level of GTI: 

Category: Very high; 
GTI level: Over 1.0; 
Explanation of category: Amount of federal grants and contracts 
received exceeds total tribal income.

Category: High; 
GTI level: Between .50 and .99; 
Explanation of category: Amount of federal grants and contracts 
received represent considerable share of tribal income.

Category: Moderate; 
GTI level: Between .20 and .49; 
Explanation of 
category: Tribe has developed significant sources of revenue other 
than federal grants and contracts.

Category: Low; 
GTI level: Below .20; 
Explanation of category: Federal grants and contracts represent small 
portion of tribal income.

Sources: GAO analysis of based on Census, Single Audit Act, and BIA 
data.

[End of table]

We then analyzed the extent to which changes in tribal economic profile 
indicators varied for the tribes in these four GTI categories. Our 
economic profile data categorized by grant to income ratio is 
descriptive in nature and does not represent an assessment of causation 
of economic factors based on the tribe's GTI ratio.

Steps Performed to Ensure Data Reliability: 

To ensure that EDA's data on the grants awarded to tribes and the data 
we used in our analysis of the tribes' economic profiles were 
sufficiently reliable for our analyses, we conducted detailed 
reliability assessments of the four datasets that we used. In assessing 
the reliability of EDA's grants data, the Single Audit Act data, U.S. 
Census Bureau data, and the BIA population data, we reviewed relevant 
documentation, interviewed knowledgeable officials, and conducted 
frequency analysis of critical data fields, as appropriate. We 
restricted these assessments to the specific variables that were 
pertinent to our analyses. We found that all of the datasets were 
sufficiently reliable for use in our analyses but have included know 
limitations in our report when appropriate.

In assessing the reliability of EDA's grants data, we interviewed EDA 
officials that were knowledgeable about the data system and reviewed 
relevant documents, such as EDA's data manual and documents on internal 
controls. On the basis of the information we gathered, we concluded 
that EDA's grants data were reliable for our purposes for this 
analysis.

Our reliability assessment of the Single Audit Act data included two 
steps. First, to assess the general reliability of the Single Audit Act 
data we used in our analysis, we reviewed relevant documents (e.g., 
online information on the database, a report by the Department of 
Commerce's Office of the Inspector General), as well as corresponded 
with a knowledgeable official from the U.S. Census Bureau, about the 
Single Audit Act data. On the basis of these document reviews and 
correspondence, we concluded that the data we used in our analysis were 
reliable for our purposes for this analysis. Second, to assess the 
completeness and accuracy of the Single Audit Act data we used in our 
analysis, we conducted frequency analysis of relevant fields. On the 
basis of the results of our frequency tests of relevant data elements 
and our review of pertinent documents, we concluded that the Single 
Audit Act data we used in our analysis were reliable for our purposes 
for this analysis.

In assessing the reliability of relevant 1990 and 2000 decennial U.S. 
Census Bureau data, we reviewed information available online from the 
U.S. Census Bureau Web site on its data quality assurance processes and 
interviewed relevant officials from Census. On the basis of the results 
of our document review and discussions with Census officials, we 
concluded that the relevant Census data we used were reliable for our 
purposes for this analysis.

In assessing the reliability of the BIA's population data, we 
interviewed knowledgeable officials from BIA and tribal representatives 
and reviewed relevant documentation. Based on the results of these 
discussions with relevant officials and review of pertinent 
documentation, we concluded that the BIA's population data were 
reliable for our purposes for this analysis.

We also reviewed EDA policies and regulations and talked to EDA 
Regional Directors and field staff to determine if EDA complies with 
its legislative criteria for monitoring grants.[Footnote 28]

We interviewed tribal officials and economic development experts and 
reviewed studies by the Harvard Project on American Indian Economic 
Development and the National Congress of American Indians to determine 
what other factors impact tribes' economic development efforts.

[End of section]

Appendix II: Additional Information on EDA Grants to Tribes: 

We obtained data from the Economic Development Administration (EDA) 
that included all grants it made to American Indian tribes during the 
years 1993 to 2002. Our analysis of this data indicated that 143 Indian 
tribes and tribal organizations received a total of $112 million in EDA 
grants during this 10-year period. Of the $112 million in total grants 
to tribes that EDA awarded between 1993 and 2002, $86 million went to 
113 Indian tribes and tribal organizations in the lower 48 states.

The extent to which EDA funded tribes varied across geographic regions. 
Operating nationally, EDA has organized its staff into six regional 
offices that cover the various states. These offices are in Atlanta, 
Austin, Chicago, Denver, Philadelphia, and Seattle.[Footnote 29] For 
the purposes of our analysis, we divided EDA's Seattle region into 
three subareas: (1) Alaska; (2) the Northwest covering Idaho, Oregon, 
and Washington; and (3) the Southwest covering Arizona, California, and 
Nevada. By analyzing EDA's funding across these regions as shown in 
figure 22, we found that about 60 percent of EDA grants to Indian 
tribes went to tribes in the Seattle region, with tribes in the 
Northwest receiving 21 percent of the grant monies awarded by EDA 
during the 10-year period.

Figure 22: EDA Grants to Tribes and Organizations by Region, 1993-2002, 
as Percentage of Total EDA Grants to Tribes and Organizations: 

[See PDF for image]

[End of figure]

In addition to funding provided to Native entities in Alaska, the 
extent to which tribes in other states received EDA funding also 
varied. For example, as shown in figure 23, tribes in Arizona, 
Washington, and Oregon received about 35 percent of all EDA grants to 
tribes in the lower 48 states during the years 1993 to 2002.

Figure 23: Percentage of EDA Grants to Tribes in the Lower 48 States, 
1993-2002, by State: 

[See PDF for image]

Note: "Other States" includes tribes in Colorado, Florida, Maine, 
Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, New York, 
Oklahoma, Utah, Wisconsin, and Wyoming.

[End of figure]

Our analysis found that 30 of the 42 federally recognized tribes in 
Idaho, Oregon, and Washington received EDA grants, as shown in figure 
24. In contrast, only 3 of the 37 tribes in Oklahoma received such 
grants. According to EDA officials, they funded few tribes in Oklahoma 
because entities in other states in EDA's Austin Region, which also 
includes Texas, Louisiana and Arkansas; and New Mexico, were deemed 
more economically distressed and in greater need of EDA assistance.

Figure 24: Number of Federally Recognized Tribes with EDA Grants, by 
State and EDA Region: 

[See PDF for image] 

Note: "Other States" includes: Alabama (1), Connecticut (2), Iowa (1), 
Kansas (4), Louisiana (4), Missouri (1), Rhode Island (1), South 
Carolina (1), and Texas (3).

[End of figure]

Using the EDA grants data, we also found that grant amounts varied 
widely across states on a per capita basis. For example, tribes in the 
Pacific Northwest, which had a combined per capita EDA grant amount of 
$593, had the highest per capita, while tribes in Oklahoma and Utah had 
the lowest, with per capita EDA grant amounts of $2 and $4. Although 
some states received large dollar amounts of funding, the amounts were 
not always large given the large Indian populations in their states. 
For example, although Arizona received over $10 million during this 10-
year period, this amounted to only $46 per capita because of its large 
Indian population. Table 4 and figure 26 show how these amounts varied 
across states.

Table 4: EDA Grants to Tribes Ranked by Per Capita Amounts, by State, 
Over 10-Year Period, 1993-2002: 

States: Massachusetts; 
Total EDA grants: $100,000; 
Population of tribes with available data: 60; 
Per capita EDA grant: $1,667.

States: Oregon; 
Total EDA grants: $6,376,250; 
Population of tribes with available data: 5,458; 
Per capita EDA grant: $1,168.

States: Florida; 
Total EDA grants: $1,331,000; 
Population of tribes with available data: 1,375; 
Per capita EDA grant: $968.

States: Idaho; 
Total EDA grants: $5,908,980; 
Population of tribes with available data: 6,964; 
Per capita EDA grant: $849.

States: Maine; 
Total EDA grants: $1,082,000; 
Population of tribes with available data: 1,412; 
Per capita EDA grant: $766.

States: North Carolina; 
Total EDA grants: $4,105,000; 
Population of tribes with available data: 5,832; 
Per capita EDA grant: $704.

States: Colorado; 
Total EDA grants: $1,991,000; 
Population of tribes with available data: 3,073; 
Per capita EDA grant: $648.

States: Nevada; 
Total EDA grants: $3,365,000; 
Population of tribes with available data: 7,206; 
Per capita EDA grant: $467.

States: Washington; 
Total EDA grants: $10,382,567; 
Population of tribes with available data: 25,828; 
Per capita EDA grant: $402.

States: California; 
Total EDA grants: $4,372,800; 
Population of tribes with available data: 14,499; 
Per capita EDA grant: $302.

States: New York; 
Total EDA grants: $1,279,125; 
Population of tribes with available data: 4,454; 
Per capita EDA grant: $287.

States: North Dakota; 
Total EDA grants: $5,133,500; 
Population of tribes with available data: 20,555; 
Per capita EDA grant: $250.

States: Michigan; 
Total EDA grants: $959,000; 
Population of tribes with available data: 3,891; 
Per capita EDA grant: $246.

States: Montana; 
Total EDA grants: $5,960,789; 
Population of tribes with available data: 35,698; 
Per capita EDA grant: $167.

States: Wisconsin; 
Total EDA grants: $2,108,863; 
Population of tribes with available data: 13,446; 
Per capita EDA grant: $157.

States: Minnesota; 
Total EDA grants: $1,952,250; 
Population of tribes with available data: 16,358; 
Per capita EDA grant: $119.

States: South Dakota; 
Total EDA grants: $4,594,800; 
Population of tribes with available data: 38,511; 
Per capita EDA grant: $119.

States: Nebraska; 
Total EDA grants: $515,000; 
Population of tribes with available data: 4,867; 
Per capita EDA grant: $106.

States: Wyoming; 
Total EDA grants: $602,762; 
Population of tribes with available data: 6,394; 
Per capita EDA grant: $94.

States: New Mexico; 
Total EDA grants: $3,246,600; 
Population of tribes with available data: 37,836; 
Per capita EDA grant: $86.

States: Mississippi; 
Total EDA grants: $312,000; 
Population of tribes with available data: 4,108; 
Per capita EDA grant: $76.

States: Arizona; 
Total EDA grants: $10,915,573; 
Population of tribes with available data: 236,364; 
Per capita EDA grant: $46.

States: Utah; 
Total EDA grants: $13,500; 
Population of tribes with available data: 3,178; 
Per capita EDA grant: $4.

States: Oklahoma; 
Total EDA grants: $395,000; 
Population of tribes with available data: 230,983; 
Per capita EDA grant: $2.

States: Other states; 
Total EDA grants: $0; 
Population of tribes with available data: 5,962; 
Per capita EDA grant: $0. 

Sources: GAO analysis of EDA, 2000 Census data, and the Federal 
Register's list of federally recognized tribes.

Note: "Other States" includes: Alabama, Connecticut, Iowa, Kansas, 
Louisiana, Rhode Island, South Carolina, and Texas.

[End of table]

As shown in figure 25, the total amount of EDA grants awarded also 
varied considerably by region.

Figure 25: Total EDA Grants to Tribes and Tribal Organizations, 1993-
2002, by EDA Region: 

[See PDF for image] 

[End of figure] 

Similarly, as figure 26 shows, EDA grants also varied considerably by 
region on a per capita basis.

Figure 26: Per Capita EDA Grants to Tribes in Lower 48 States, 1993-
2002, by EDA Region: 

[See PDF for image] 

[End of figure] 

The extent to which tribes received EDA planning grants also varied 
greatly by EDA region. For example, EDA's Chicago Region did not 
provide any of the 29 tribes located in that region with individual 
planning grants, although it did provide planning grants to three 
intertribal organizations in that region that represented several 
individual tribes joining together to receive a grant. By contrast, 79 
percent of the tribes in the Pacific Northwest with a population over 
100 as well as two intertribal organizations received planning grants 
(see fig. 27). Demand for planning grants can sometimes exceed the 
amount of available funding in some regions. For example, officials in 
EDA's Seattle Region told us that they have a waiting list of 36 tribes 
that would like to obtain EDA planning grants but insufficient funds 
exist to award these grants.

Figure 27: Extent to Which Tribes Receive EDA Planning Grants by 
Regions, 1993-2002: 

[See PDF for image] 

Note: Bar graph includes tribes in the lower 48 states with 100 or more 
Indians residing on the reservation. For purposes of this analysis we 
have excluded tribes with populations under 100 and Alaska Native 
entities. Seattle (NW) includes tribes in Washington, Oregon, and 
Idaho. Seattle (SW) includes tribes in California, Nevada, and Arizona.

[End of figure] 

EDA grants appeared to be awarded equally to tribes with differing 
levels of income. Using Census data for 2000, we ranked the tribes in 
the lower 48 states by per capita income. By comparing the tribes 
ranked by income with the amounts tribes received from EDA, we found 
that tribes in the top 25 percent of per capita income had received 28 
percent of the grants EDA awarded to tribes in the lower 48 states 
between 1993 and 2002. Similarly, the tribes in the bottom 25 percent 
of per capita income had received 30 percent of the total amount EDA 
awarded to tribes during this period.

EDA Not the Largest Provider of Grants to Tribes: 

EDA has not been the largest source of funding for economic development 
grants for tribes. To analyze how the total EDA grants to tribes 
compared with other economic development-related grants received by 
tribes from other federal agencies, we obtained data from the Single 
Audit Act database, which is maintained by the Bureau of the Census and 
contains information on the amounts of federal funding received by 
states, governments, and nonprofit organizations, including Indian 
tribes.[Footnote 30] With the data available for 1998 to 2001, we found 
that 7 percent of all economic development-related grants annually 
received on average by tribes during these years were from EDA. The 
remaining 93 percent of the economic development-related grants tribes 
received came from other federal agencies, including: 

* the Department of Housing and Urban Development, which provided block 
grants to tribes to improve the housing stock, provide community 
facilities, make infrastructure improvements, and expand job 
opportunities by supporting the economic development of Native American 
communities;

* the Department of the Interior, which provided economic development 
funding to tribes for protecting and restoring rangelands and forests 
and for operating irrigation projects;

* the Department of Health and Human Services, which provided loans and 
grants for implementing social and economic development strategies that 
support locally determined projects, including developing the tribes' 
comprehensive tourism and business plans and providing training in job, 
computer, and small business skills to tribal members; and: 

* the Department of Agriculture, which provided funds for rural 
development.

Figure 28 shows, on average, the extent to which various federal 
agencies funded economic development assistance to Indian tribes based 
on amounts provided between 1998 and 2001.

Figure 28: Percentage of Economic Development-Related Grants Received 
by Tribes from Various Federal Agencies, 1998-2001: 

[See PDF for image] 

Notes: Numbers do not add to 100% due to rounding.

"Other agencies" include non-EDA Department of Commerce programs, 
Department of Education, Environmental Protection Agency, Department of 
Defense, and the Small Business Administration.

[End of figure] 

Table 5 shows that several other federal agencies have typically given 
a greater amount of economic development-related grants to tribes than 
has EDA.

Table 5: Economic Development-Related Grants to Tribes in the Lower 48 
States with Available Single Audit Act Data, by Agency, 1998-2001: 

Agency: Department of Housing and Urban Development; 
Total average annual amount received by tribes: $41,143.971; 
Number of tribes receiving grants: 192.

Agency: Department of Housing and Urban Development; 
CFDA[A]: 14.862; 
Program: Indian Community Development Block Grant Program; 
Total average annual amount received by tribes: $35,116,860; 
Number of tribes receiving grants: 168.

Agency: Department of Housing and Urban Development; 
CFDA[A]: 14.227; 
Program: Community Development Block Grants/Special Purpose; 
Grants/Technical Assistance; 
Total average annual amount received by tribes: $1,807,891; 
Number of tribes receiving grants: 14.

Agency: Department of Housing and Urban Development; 
CFDA[A]: 14.218; 
Program: Community Development Block Grants/Entitlement Grants; 
Total average annual amount received by tribes: $1,047,241; 
Number of tribes receiving grants: 12.

Agency: Department of Housing and Urban Development; 
CFDA[A]: 14.250; 
Program: Rural Housing and Economic Development; 
Total average annual amount received by tribes: $946,882; 
Number of tribes receiving grants: 10.

CFDA[A]: 14.246; 
Program: Community Development Block Grants/Economic Development 
Initiative; 
Total average annual amount received by tribes: 864,377; 
Number of tribes receiving grants: 3.

Agency: Department of Housing and Urban Development; 
CFDA[A]: 14.228; 
Program: Community Development Block Grants/States Program; 
Total average annual amount received by tribes: $676,028; 
Number of tribes receiving grants: 12.

Agency: Department of Housing and Urban Development; 
CFDA[A]: 14.219; 
Program: Community Development Block Grants/Small Cities Program; 
Total average annual amount received by tribes: $540,242; 
Number of tribes receiving grants: 5.

Agency: Department of Housing and Urban Development; 
CFDA[A]: 14.511; 
Program: Community Outreach Partnership Center Program; 
Total average annual amount received by tribes: $144,450; 
Number of tribes receiving grants: 1.

Agency: Department of the Interior; 
Total average annual amount received by tribes: $26,560,928; 
Number of tribes receiving grants: 127.

Agency: Department of the Interior; 
CFDA[A]: 15.039; 
Program: Fish, Wildlife, and Parks Programs on Indian Lands; 
Total average annual amount received by tribes: $8,658,723; 
Number of tribes receiving grants: 65.

Agency: Department of the Interior; 
CFDA[A]: 15.035; 
Program: Forestry on Indian Lands; 
Total average annual amount received by tribes: $7,306,262; 
Number of tribes receiving grants: 56.

Agency: Department of the Interior; 
CFDA[A]: 15.124; 
Program: Indian Loans/Economic Development; 
Total average annual amount received by tribes: $3,360,975; 
Number of tribes receiving grants: 13.

Agency: Department of the Interior; 
CFDA[A]: 15.034; 
Program: Agriculture on Indian Lands; 
Total average annual amount received by tribes: $2,914,703; 
Number of tribes receiving grants: 34.

CFDA[A]: 15.049; 
Program: Irrigation on Indian Lands; 
Total average annual amount received by tribes: 1,835,852; 
Number of tribes receiving grants: 25.

Agency: Department of the Interior; 
CFDA[A]: 15.032; 
Program: Indian Economic Development; 
Total average annual amount received by tribes: $1,334,650; 
Number of tribes receiving grants: 23.

Agency: Department of the Interior; 
CFDA[A]: 15.038; 
Program: Minerals and Mining on Indian Lands; 
Total average annual amount received by tribes: $1,149,765; 
Number of tribes receiving grants: 19.

Agency: Department of Health and Human Services; 
Total average annual amount received by tribes: $13,341,091; 
Number of tribes receiving grants: 181.

Agency: Department of Health and Human Services; 
CFDA[A]: 93.612; 
Program: Native American Programs; 
Total average annual amount received by tribes: $13,111,687; 
Number of tribes receiving grants: 179.

Agency: Department of Health and Human Services; 
CFDA[A]: 93.570; 
Program: Community Services Block Grants; 
Total average annual amount received by tribes: $229,404; 
Number of tribes receiving grants: 7.

Agency: Department of Agriculture; 
Total average annual amount received by tribes: $13,066,832; 
Number of tribes receiving grants: 57.

Agency: Department of Agriculture; 
CFDA[A]: 10.421; 
Program: Indian Tribes and Tribal Corporation Loans; 
Total average annual amount received by tribes: $5,827,137; 
Number of tribes receiving grants: 5.

Agency: Department of Agriculture; 
CFDA[A]: 10.854; 
Program: Rural Economic Development Loans and Grants; 
Total average annual amount received by tribes: $4,317,280; 
Number of tribes receiving grants: 8.

Agency: Department of Agriculture; 
CFDA[A]: 10.766; 
Program: Community Facilities Loans and Grants; 
Total average annual amount received by tribes: $1,735,930; 
Number of tribes receiving grants: 9.

Agency: Department of Agriculture; 
CFDA[A]: 10.769; 
Program: Rural Business Enterprise Grants; 
Total average annual amount received by tribes: $775,651; 
Number of tribes receiving grants: 18.

Agency: Department of Agriculture; 
CFDA[A]: 10.670; 
Program: National Forest/Dependent Rural Communities; 
Total average annual amount received by tribes: $317,529; 
Number of tribes receiving grants: 21.

Agency: Department of Agriculture; 
CFDA[A]: 10.064; 
Program: Forestry Initiative Program; 
Total average annual amount received by tribes: $49,804; 
Number of tribes receiving grants: 1.

Agency: Department of Agriculture; 
CFDA[A]: 10.773; 
Program: Rural Business Opportunity Grants; 
Total average annual amount received by tribes: $15,607; 
Number of tribes receiving grants: 2.

Agency: Department of Agriculture; 
CFDA[A]: 10.771; 
Program: Rural Coop Development Grants; 
Total average annual amount received by tribes: $15,395; 
Number of tribes receiving grants: 1.

Agency: Department of Agriculture; 
CFDA[A]: 10.772; 
Program: Empowerment Zones Program; 
Total average annual amount received by tribes: $12,500; 
Number of tribes receiving grants: 1.

Agency: Department of Commerce (EDA only); 
Total average annual amount received by tribes: $6,690,120; 
Number of tribes receiving grants: 83.

Agency: Department of Commerce (EDA only); 
CFDA[A]: 11.307; 
Program: Economic Adjustment Assistance; 
Total average annual amount received by tribes: $3,198,651; 
Number of tribes receiving grants: 14.

Agency: Department of Commerce (EDA only); 
CFDA[A]: 11.300; 
Program: Public Works and Economic Development; 
Total average annual amount received by tribes: $1,566,118; 
Number of tribes receiving grants: 24.

Agency: Department of Commerce (EDA only); 
CFDA[A]: 11.302; 
Program: Support for Planning Organizations; 
Total average annual amount received by tribes: $970,380; 
Number of tribes receiving grants: 40.

Agency: Department of Commerce (EDA only); 
CFDA[A]: 11.305; 
Program: State and Local Economic Development Planning; 
Total average annual amount received by tribes: $495,366; 
Number of tribes receiving grants: 25.

Agency: Department of Commerce (EDA only); 
CFDA[A]: 11.303; 
Program: Technical Assistance; 
Total average annual amount received by tribes: $433,684; 
Number of tribes receiving grants: 12.

Agency: Department of Commerce (EDA only); 
CFDA[A]: 11.312; 
Program: Research and Evaluation; 
Total average annual amount received by tribes: $25,921; 
Number of tribes receiving grants: 1.

Agency: Department of Commerce (non-EDA only); 
Total average annual amount received by tribes: $647,507; 
Number of tribes receiving grants: 10.

Agency: Department of Commerce (non-EDA only); 
CFDA[A]: 11.801; 
Program: Native American Programs; 
Total average annual amount received by tribes: $203,685; 
Number of tribes receiving grants: 2.

Agency: Department of Commerce (non-EDA only); 
CFDA[A]: 11.800; 
Program: Minority Business Development Centers; 
Total average annual amount received by tribes: $183,021; 
Number of tribes receiving grants: 1.

Agency: Department of Commerce (non-EDA only); 
CFDA[A]: 11.552; 
Program: Technology Opportunities; 
Total average annual amount received by tribes: $139,544; 
Number of tribes receiving grants: 5.

Agency: Department of Commerce (non-EDA only); 
CFDA[A]: 11.427; 
Program: Fisheries Development; 
Total average annual amount received by tribes: $121,257; 
Number of tribes receiving grants: 3.

Agency: Department of Education; 
Total average annual amount received by tribes: $311,964; 
Number of tribes receiving grants: 2.

Agency: Department of Education; 
CFDA[A]: 84.234; 
Program: Projects with Industries; 
Total average annual amount received by tribes: $311,964; 
Number of tribes receiving grants: 2.

Agency: Environmental Protection Agency; 
Total average annual amount received by tribes: $218,430; 
Number of tribes receiving grants: 13.

Agency: Environmental Protection Agency; 
CFDA[A]: 66.811; 
Program: Brownfields Pilots Coop Agreements; 
Total average annual amount received by tribes: $218,430; 
Number of tribes receiving grants: 13.

Agency: Department of Defense; 
Total average annual amount received by tribes: $207,363; 
Number of tribes receiving grants: 2.

Agency: Department of Defense; 
CFDA[A]: 12.110; 
Program: Planning Assistance to States; 
Total average annual amount received by tribes: $174,821; 
Number of tribes receiving grants: 1.

Agency: Department of Defense; 
CFDA[A]: 12.600; 
Program: Community Economic Adjustment; 
Total average annual amount received by tribes: $32,542; 
Number of tribes receiving grants: 1.

Agency: Small Business Association; 
Total average annual amount received by tribes: $105,587; 
Number of tribes receiving grants: 8.

Agency: Small Business Association; 
CFDA[A]: 59.007; 
Program: Management and Technical Assistance; 
Total average annual amount received by tribes: $103,257; 
Number of tribes receiving grants: 7.

Agency: Small Business Association; 
CFDA[A]: 59.009; 
Program: Procurement Assistance to Small Businesses; 
Total average annual amount received by tribes: $2,330; 
Number of tribes receiving grants: 1.

Grand total; 
Total average annual amount received by tribes: $102,293,792. 

Source: GAO analysis of Single Audit Act data.

Note: This analysis only pertains to tribes in the lower 48 states with 
available Single Audit Act information at the time of our download 
(August 2003) and entries with valid CFDA numbers.

[A] Catalog of Federal Domestic Assistance (CFDA) is a governmentwide 
compendium of federal programs and activities that is coordinated by 
the Office of Management and Budget and compiled by the General 
Services Administration.

[End of table]

Additional Information on Results of EDA Grants: 

Figure 29 shows provides details on the results of completed EDA-funded 
enterprise projects, including the status of the projects as of early 
2004, the EDA grant amount, the number of jobs created, and other 
benefits that have accrued to the tribe as a result of undertaking the 
project.

Figure 29: Benefits of Completed EDA-Funded Enterprises, 1993-2002: 

[See PDF for image] 

[A] Number of jobs at the enterprise at the time of our survey that did 
not exist prior to project funding, as reported by tribal officials. 
For purposes of this analysis, seasonal jobs are counted as half a job.

[End of figure] 

Figure 30 shows the status of EDA-funded enterprise projects broken 
down by year funded.

Figure 30: Outcome of Enterprise Projects Funded by EDA, 1993-2002: 

[See PDF for image] 

Note: Most of the projects funded in 2001 were grants to Alaska tribes 
and organizations under a disaster relief appropriation in response to 
a slump in fishing industry.

[End of figure] 

Officials from two of the tribes that had projects fail in the earlier 
years said they have learned from their mistakes and were now engaged 
in successful enterprise development buttressed by revenues from gaming 
and other tribal enterprises.

As noted earlier, many of the tribal enterprise projects that EDA 
funded were in Alaska, and most have yet to be completed. From 1998 
through 2001, EDA provided $14 million to cover approximately 40 
percent of the cost of constructing 15 Alaska Native cultural/community 
centers. The goal of these projects was to promote tourism and/or 
community development. The economic impact of these projects has yet to 
be determined because 11 of the 15 centers are still under development, 
and two of the completed projects have not been in operation long 
enough to establish results. However, Native officials provided revenue 
and job projections that indicate the cultural/community center 
projects would not create many jobs or generate much revenue for Alaska 
Natives. However, an EDA official told us that economic development for 
these communities is challenging for several reasons, including these 
areas' remoteness, harsh climate, limited infrastructure, high fuel and 
shipping prices, and short construction seasons.

Table 6 gives details on the Indian revolving loan funds (RLFs) 
supported by EDA during the 1993-2002 period. In some instances EDA 
gave funds to support business-training programs for loan fund 
applicants. In other instances, EDA provided seed money to help start 
new RLFs.

Table 6: EDA Grants Supporting Indian Revolving Loan Funds, 1993-2002: 

Service area: 1 California tribe; 
Year RLF initiated: 1977; 
EDA funds 1993-2002: $285,000; 
Use of EDA funds: Business training program; 
Current loan pool amount: $3,267,000.

Service area: 1 South Dakota tribe; 
Year RLF initiated: 1986; 
EDA funds 1993-2002: $1,000,000; 
Use of EDA funds: Construct facility for training, etc; 
Current loan pool amount: $2,000,000.

Service area: 1 South Dakota tribe; 
Year RLF initiated: 1998; 
EDA funds 1993-2002: $150,000; 
Use of EDA funds: RLF seed money; 
Current loan pool amount: $375,000.

Service area: Tribes in Montana and Wyoming; 
Year RLF initiated: 1998; 
EDA funds 1993-2002: $500,000; 
Use of EDA funds: RLF seed money; 
Current loan pool amount: $448,000.

Service area: 54 Northwest tribes; 
Year RLF initiated: 1998 (first loans in 2001); 
EDA funds 1993-2002: $300,000; 
Use of EDA funds: RLF seed money; 
Current loan pool amount: $1,150,000.

Source: GAO analysis of EDA data.

[End of table]

Table 7 provides information on the results of 19 completed EDA-funded 
infrastructure projects including the year funded, the project 
description, the EDA grant amount, and the benefits accrued.

Table 7: Benefits of Completed EDA-Funded Infrastructure Projects, 
1993-2002: 

Year funded: 1993; 
Project description: Sewer and road; 
EDA grant amount: $400,000; 
Benefits: Enabled establishment of industrial park.

Year funded: 1993/94; 
Project description: Electricity, sewer, water, road; 
EDA grant amount: $800,000; 
Benefits: Enabled establishment of industrial park.

Year funded: 1994/97; 
Project description: Water and sewer expansion; 
EDA grant amount: $1,514,000; 
Benefits: Enabled tribal industries and resort and casino to operate.

Year funded: 1994; 
Project description: Water system improvements; 
EDA grant amount: $724,000; 
Benefits: Enabled expansion of housing and tribal offices.

Year funded: 1994; 
Project description: Construct water treatment plant; 
EDA grant amount: $900,000; 
Benefits: Enabled expansion of tribal facilities.

Year funded: 1994; 
Project description: Public dock construction; 
EDA grant amount: $826,000; 
Benefits: Enabled fishing boat docking and fuel deliveries.

Year funded: 1995; 
Project description: Water/sewer upgrade and extension; 
EDA grant amount: $1,100,000; 
Benefits: Enabled development of resort and casino complex.

Year funded: 1995; 
Project description: Construct water storage tank; 
EDA grant amount: $539,000; 
Benefits: Enabled business expansion.

Year funded: 1995/97; 
Project description: Sewer system renovation; 
EDA grant amount: $1,260,000; 
Benefits: Enabled development of industrial park and casino.

Year funded: 1996/99; 
Project description: Construct marina/ breakwater; 
EDA grant amount: $2,600,000; 
Benefits: Support fishing and tourism industries.

Year funded: 1997; 
Project description: Streambed stabilization; 
EDA grant amount: $205,000; 
Benefits: Enabled valley to be used for agriculture, offices, etc.

Year funded: 1997; 
Project description: Water, sewer, electrical, roads; 
EDA grant amount: $1,000,000; 
Benefits: Enabled establishment of industrial park.

Year funded: 1997; 
Project description: Dock renovation; 
EDA grant amount: $824,000; 
Benefits: Facilitated public use and fish plant.

Year funded: 1998; 
Project description: Construct sewer line; 
EDA grant amount: $1,618,000; 
Benefits: Enabled construction of commercial mall and casino.

Year funded: 1999; 
Project description: Construct wastewater system; 
EDA grant amount: $425,000; 
Benefits: Enabled development of hotel and casino.

Year funded: 2000; 
Project description: Extend water, sewer, and electrical lines; 
EDA grant amount: $500,000; 
Benefits: Enabled establishment of commercial and industrial parks.

Year funded: 2000; 
Project description: Install satellite dishes for Internet connections; 
EDA grant amount: $170,000; 
Benefits: Enabled tribal members to connect to Internet.

Year funded: 2001; 
Project description: Construct sewer, water, road; 
EDA grant amount: $759,000; 
Benefits: Enabled development of industrial park.

Year funded: 2002; 
Project description: Construct sewer line; 
EDA grant amount: $1,000,000; 
Benefits: Enabled business district to be sustained. 

Source: GAO analysis of EDA data.

[End of table]

Declining Administrative Resources Reduced Extent to Which EDA Monitors 
and Provides Technical Assistance for Its Grants to Indian Tribes: 

In recent years, EDA has reduced the amount of staff and resources it 
uses to conduct monitoring of grant recipients, including projects 
developed by Indian tribes. EDA regulations require regional offices 
and field staff to monitor grant activities by reviewing reports and 
conducting site visits within 3 years of the application. According to 
EDA development strategy guidelines, grant recipients annually submit 
their development strategy to ensure their plan or strategies for 
developing the area economically are complete and up to date.[Footnote 
31] EDA headquarters officials told us they expect for field staff to 
review reports quarterly and annually visit grant sites to review the 
progress of EDA-funded construction projects, including enterprise or 
infrastructure projects. According to the regional officials, the 
purpose of these visits is to verify that grantees are actually using 
the funds for the purpose stated in the approved grant application and 
in their economic development strategy.

According to EDA funding documents, the number of EDA staff acting as 
economic development representatives in individual states has declined 
by about 26 percent from 47 to 35 between fiscal years 1993 to 
2002.[Footnote 32] According to EDA staff, this has reduced their 
ability to monitor funded projects and provide technical assistance to 
grant recipients. Also, one regional official told us cutbacks in 
travel funds have required some economic development representatives to 
forego visiting some projects and to rely instead on reviewing reports 
submitted by the private sector construction engineers. For example, 
staff in one of the EDA regional offices told us that one of their 
field staff is responsible for two very large states with its grants 
located in such remote locations that site visits are seldom made 
because of the limited travel funds.

The staffing and travel fund reductions have also reduced the amount of 
technical assistance that EDA provided to tribes. According to regional 
EDA officials, their economic development representatives frequently 
provide one-on-one consultations with grantees either by telephone or 
during site visits. These consultations give tribe officials the 
opportunity to address concerns or issues with the grant application, 
construction, or infrastructure projects. However, with fewer field 
staff and less travel funds, their staff are able to provide such 
assistance less frequently.

Tribal officials we interviewed indicated that they needed more 
assistance from EDA. For example, one tribal official told us that they 
needed help completing grant applications; while others said that they 
would like to have more frequent visits by the Economic Development 
Representatives and to have them work directly with the tribes. Another 
official at one tribe said that they experienced difficulties obtaining 
necessary funding to complete their projects. According to a study on 
Indian economic development, the lack of technical assistance can 
negatively affect the success of EDA-funded projects.[Footnote 33] For 
example, one Alaskan tribe told us they had to seek additional funds 
before their project failed because of lack of direct interaction with 
an Economic Development Representative to answer questions.

According to regional officials, in addition to the direct 
consultations, EDA also formerly provided technical assistance through 
conferences and seminars. In addition to a national conference, EDA 
would hold regional seminars, which EDA officials saw as beneficial 
because people in the local area could more easily attend and receive 
information specific to their particular region or tribe. However, as a 
result of the resource cutbacks, EDA officials told us that the agency 
now only holds the one annual national conference and no longer 
provides funding for any regional events.

[End of section]

Appendix III: Additional Information on Relationship between 
Contracting and Tribes' Economic Profiles: 

The Indian Self-Determination Act, as amended, allows tribes to enter 
into various arrangements with federal government agencies to assume 
the operation of many of the programs and services previously provided 
by the agencies. From the list of federally recognized tribes and from 
2000 U.S. Census Bureau (Census) data, we identified 219 tribes in the 
lower 48 states that had 100 or more Native Americans living in the 
tribal area. According to Department of the Interior's Bureau of Indian 
Affairs (BIA) information, 43 of the 219 tribes had entered into self-
governance arrangements with BIA. As a result, these tribes operated 
most of their own tribal functions and services under a funding compact 
agreement with BIA. By analyzing Single Audit Act data that shows 
funding provided by federal agencies, we determined that nearly all of 
the remaining 176 tribes operated many of their tribal functions and 
services under contracts and other agreements with BIA.

We grouped the 219 tribes in the lower 48 states with populations 
greater than 100 into three categories. The first category included the 
43 tribes that had entered into self-governance arrangements with BIA. 
Such tribes generally have assumed the operation of most of the 
services used by tribal members. For the remaining 176 non-self-
governance tribes, we analyzed how much funding these tribes received 
from BIA contracts and grants from 1998 to 2000 in total and on a per 
capita basis. Based on these analyses, we determined that the 121 
tribes with annual per capita BIA contract amounts exceeding $580 and 
total annual BIA contracting amounts greater than $300,000 appeared to 
be high-contracting tribes, and we, therefore, categorized the 
remaining 55 tribes whose per capita or total contracting amounts were 
less than these thresholds as low-contracting tribes.[Footnote 34]

To analyze the relationship between contracting and changes in tribal 
economic profiles, we compared how various indicators of economic well-
being from Census data had changed for these three groups of tribes. 
Table 8 shows the changes in economic indicators for three categories 
of tribes used in our analysis--the self-governance tribes, the high-
contracting tribes, and the low-contracting tribes. The data shows that 
there was great variability within each category, with the top 10 
percent of tribes showing high growth, while the bottom 10 percent had 
negative growth. On average, the high-contracting and self-governance 
tribes showed greater growth in employment levels, but differences in 
the other indicators were not statistically significant.

Table 8: Change in Economic Indicators for Self-governance High-
Contracting and Low-Contracting Tribes, 1990-2000: 

Employment level: Self-governance; 
Percentage change 1990-2000: Number of tribes: 43; 
Percentage change 1990-2000: Median level, 2000: 53%; 
Percentage change 1990-2000: Median change: 13%; 
Percentage change 1990-2000: 90th percentile: 37%; 
Percentage change 1990-2000: 10th percentile: - 5%; 
Percentage change 1990-2000: Percent positive: 78%; 

Employment level: High-contracting; 
Percentage change 1990-2000: Number of tribes: 121; 
Percentage change 1990-2000: Median level, 2000: 48%; 
Percentage change 1990-2000: Median change: 10%; 
Percentage change 1990-2000: 90th percentile: 38%; 
Percentage change 1990-2000: 10th percentile: - 23%; 
Percentage change 1990-2000: Percent positive: 68%; 

Employment level: Low-contracting; 
Percentage change 1990-2000: Number of tribes: 55; 
Percentage change 1990-2000: Median level, 2000: 43%; 
Percentage change 1990-2000: Median change: - 1%; 
Percentage change 1990-2000: 90th percentile: 53%; 
Percentage change 1990-2000: 10th percentile: - 37%; 
Percentage change 1990-2000: Percent positive: 49%.

Per capita income: Self-governance; 
Percentage change 1990-2000: Number of tribes: 43; 
Percentage change 1990-2000: Median level, 2000: $9,790; 
Percentage change 1990-2000: Median change: 25%; 
Percentage change 1990-2000: 90th percentile: 76%; 
Percentage change 1990-2000: 10th percentile: - 3%; 
Percentage change 1990-2000: Percent positive: 89%; 

Per capita income: High-contracting; 
Percentage change 1990-2000: Number of tribes: 121; 
Percentage change 1990-2000: Median level, 2000: $8,791; 
Percentage change 1990-2000: Median change: 32%; 
Percentage change 1990-2000: 90th percentile: 80%; 
Percentage change 1990-2000: 10th percentile: 0%; 
Percentage change 1990-2000: Percent positive: 89%; 

Per capita income: Low-contracting; 
Percentage change 1990-2000: Number of tribes: 55; 
Percentage change 1990-2000: Median level, 2000: $9,505; 
Percentage change 1990-2000: Median change: 37%; 
Percentage change 1990-2000: 90th percentile: 158%; 
Percentage change 1990-2000: 10th percentile: - 10%; 
Percentage change 1990-2000: Percent positive: 85%.

Percentage above poverty: Self-governance; 
Percentage change 1990-2000: Number of tribes: 43; 
Percentage change 1990-2000: Median level, 2000: 69%; 
Percentage change 1990-2000: Median change: 9%; 
Percentage change 1990-2000: 90th percentile: 51%; 
Percentage change 1990-2000: 10th percentile: - 1%; 
Percentage change 1990-2000: Percent positive: 84%; 

Percentage above poverty: High-contracting; 
Percentage change 1990-2000: Number of tribes: 121; 
Percentage change 1990-2000: Median level, 2000: 68%; 
Percentage change 1990-2000: Median change: 16%; 
Percentage change 1990-2000: 90th percentile: 48%; 
Percentage change 1990-2000: 10th percentile: - 21%; 
Percentage change 1990-2000: Percent positive: 79%; 

Percentage above poverty: Low-contracting; 
Percentage change 1990-2000: Number of tribes: 55; 
Percentage change 1990-2000: Median level, 2000: 73%; 
Percentage change 1990-2000: Median change: 15%; 
Percentage change 1990-2000: 90th percentile: 64%; 
Percentage change 1990-2000: 10th percentile: - 15%; 
Percentage change 1990-2000: Percent positive: 74%.

Sources: GAO analysis of data from Census, Single Audit Act, and BIA.

[End of table]

We also analyzed how the amount of federal grants and contracts related 
to tribes' total tribal income and how changes in economic profiles 
varied according to this relationship. For this analysis, we identified 
the total average amount of federal grants and contracts the tribes in 
our analysis received annually in 1998, 1999, and 2000 from all federal 
agencies using the Single Audit Act database. We then found the total 
income of the Native Americans living on the tribe's lands, which was 
calculated by multiplying the per capita income of the tribe by the 
total number of Native Americans living on the reservation, with an 
adjustment for Native Americans living in the reservation's service 
area.[Footnote 35] Dividing the total federal funding for each tribe 
by its tribal income resulted in a grants-to-income ratio. We then 
classified each tribe in our analysis into four categories based on the 
level of this ratio. As table 9 shows, tribes with a moderate or low 
grants-to-income ratio showed significantly higher gains in per capita 
income and percent above poverty than did tribes with a very high 
grants-to-income ratio.

Table 9: Change in Economic Indicators of Tribes by Grants-to-Income 
Ratio Categories, 1990-2000: 

Grants-to-income ratio category[A]: Per capita income; 
Median percentage change, 1990-2000: Low: (0 to .20): (n=50): 33%; 
Median percentage change, 1990-2000: Moderate: (.21 to .49): (n=71): 
38%; 
Median percentage change, 1990-2000: High: (.50 to .99): (n=52): 29%; 
Median percentage change, 1990-2000: Very high: (over 1.0): (n=26): 
16%.

Grants-to-income ratio category[A]: Percentage employed; 
Median percentage change, 1990-2000: Low: (0 to .20): (n=50): 3%; 
Median percentage change, 1990-2000: Moderate: (.21 to .49): (n=71): 
13%; 
Median percentage change, 1990-2000: High: (.50 to .99): (n=52): 6%; 
Median percentage change, 1990-2000: Very high: (over 1.0): (n=26): 
10%.

Grants-to-income ratio category[A]: Percentage above poverty; 
Median percentage change, 1990-2000: Low: (0 to .20): (n=50): 10%; 
Median percentage change, 1990-2000: Moderate: (.21 to .49): (n=71): 
26%; 
Median percentage change, 1990-2000: High: (.50 to .99): (n=52): 14%; 
Median percentage change, 1990-2000: Very high: (over 1.0): (n=26): 
6%. 

Sources: GAO analysis of Census, and Single Audit Act, and BIA data.

Note: Number of tribes by category: 50 low, 71 moderate, 52 high, and 
26 very high.

[A] Based on 1998-2000 data. See appendix 1 for categorization 
methodology details.

[End of table]

We also analyzed the relationship between variations in tribes' grants 
to income ratio and the extent to which they were contracting or self-
governance. Figure 31 shows that about half the high-contracting and 
self-governance tribes had moderate or low grants-to-income ratios, 
while about 9 percent of the self-governance tribes and 18 percent of 
the high-contracting tribes have a very high grants-to-income ratio.

Figure 31: Percentage of Self-governance, High-Contracting, and Low-
Contracting Tribes by Grants-to-Income Ratio: 

[See PDF for image]

[End of figure]

[End of section]

Appendix IV: Comments from Department of Commerce: 

THE SECRETARY OF COMMERCE: 
Washington, D.C. 20230:

August 9, 2004:

Mr. William B. Shear: 
Director, Financial Markets and Community Investment: 
U.S. Government Accountability Office: 
441 G Street, NW, Room 2A10: 
Washington, DC 20548:

Dear Mr. Shear:

Thank you for providing the U.S. Department of Commerce an opportunity 
to review and comment on the draft report entitled Indian Economic 
Development: Relationship to EDA Grants and Self-Determination 
Contracting is Mixed.

I enclose the Department of Commerce comments on this report.

Sincerely, 

Signed by: 

Donald L. Evans: 

Enclosure:

COMMENTS FROM THE DEPARTMENT OF COMMERCE REGARDING GAO DRAFT REPORT 
(GAO-04-847) INDIAN ECONOMIC DEVELOPMENT: RELATIONSHIP TO EDA GRANTS 
AND SELF-DETERMINATION CONTRACTING IS MIXED:

The Department of Commerce (DOC) appreciates the Government 
Accountability Office's (GAO) diligence in pursuing this important 
study, its willingness to provide us with the details of its analyses, 
and the opportunity to respond. The Economic Development Administration 
(EDA) acknowledges that our enterprise development investments, at the 
point in time they were analyzed, had "mixed" success given the EDA 
investments GAO reviewed and evaluated. However, the success of other 
types of investments should be considered in order to make a broad 
statement about the economic development generated by EDA grants as a 
whole.

The report categorized EDA assistance as enterprise projects, revolving 
loan fund and business development programs, infrastructure projects, 
and planning and feasibility studies. The report reviewed data from 59 
enterprise projects funded between 1993 and 2002 and focused on 31 
recently completed projects. Figure 8 on page 19 of the report 
indicates that 23 percent of the projects were profitable; 32 percent 
covered costs; 23 percent were subsidized; and 23 percent had failed. 
On the basis of this information, GAO concludes that EDA investments 
have had "mixed success" in generating economic development for the 
Indian tribe recipients.

The report emphasizes that the largest portion of EDA funds were 
provided for enterprise development to create revenue and apparently 
based its findings primarily on the success or profitability of these 
projects. While EDA agrees that a large portion of EDA funds did go to 
enterprise development projects, other major EDA investments 
(classified by GAO as infrastructure, business development, and 
planning and technical assistance) also contributed to revenue 
generation, business development, and job creation. The report 
indicates that several of these investments appear to have produced 
positive results for the Indian tribes involved, but did not include a 
detailed analysis of these projects. See for example, the favorable 
treatments of EDA infrastructure grants at pages 28-29 of the report. 
Also see all favorable comments regarding planning grants at page 31. 
The EDA planning grants appeared to help tribes successfully. 
Therefore, EDA suggests that the report, and in particular the title of 
the report, more accurately reflects that the relationship of Indian 
economic development to EDA enterprise projects is mixed.

Statement on page 8: "...since 2002 EDA has placed more emphasis on 
projects that create high-wage, high-skill jobs and that are market 
based and likely to attract private sector investment." Statement on 
page 23 that "in light of the mixed success that EDA funded enterprise 
projects experienced, tribes may find obtaining EDA funding in the 
future more difficult because of the changes in the agency's criteria 
for awarding grants."

The statement on page 8 should read "... higher-skill, higher-wage 
jobs...." EDA seeks to create environments in which jobs are created 
that are higher skill, higher-wage than those that currently exist in 
the area or region where the investment is being made. The generation 
of private sector investment is also essential to creating a growing 
economy, and EDA investments seek to create the conditions that will 
attract private sector investment. These goals are particularly 
important to Indian tribes, since conditions unique to these 
communities tend to make private capital investment less attractive. 
Additionally, EDA does not evaluate proposals on these criteria in 
isolation - all aspects of an investment and all potential benefits are 
assessed during funding decisions. EDA does review investment proposals 
on the basis of investment policy guidelines designed to ensure that 
investments represent the best chance of creating market-based and 
sustainable growth. No region or area is disadvantaged in the 
competition for funding because of its location, the level of distress 
or the populated served. EDA has a long history of supporting Indian 
economic development and such support will continue. See for example, 
the favorable treatments of EDA infrastructure grants at pages 28-29 of 
the report. Also see all favorable comments regarding planning grants 
at page 31. The EDA planning grants appeared to help tribes 
successfully.

Discussion of RLF investments, specifically on page 25:

EDA concurs with the report, which provides a cautionary description of 
the challenges that EDA faces with respect to the revolving loan fund 
(RLF) program. While RLFs can be successful, their implementation can 
be difficult, particularly in the environment of Indian country. For 
these reasons, EDA reaffirms that it has standards that are expected to 
be met for all its investments, especially RLFs.

Statement on page 29: "According to the Department of Commerce's fiscal 
year performance report, EDA considers funding distressed communities' 
planning efforts critical to effective economic and sustainable 
development."

EDA has firmly supported planning for regions facing economic 
challenges and, in fact, requires comprehensive planning as the basis 
of any implementation funding proposal. We note the positive comments 
in the GAO report that 90 percent of the tribal officials surveyed 
indicated that the planning grants were crucial or very important in 
achieving success in their tribes' economic development (page 29). The 
report further notes that the EDA planning grants appeared to help 
tribes successfully implement EDA enterprise projects (page 31). This 
confirms the importance and utility of comprehensive strategies. At the 
same time, EDA also recognizes that the planning process must result in 
tangible outcomes. EDA will continue constantly improving the 
effectiveness of all our program tools as part of the agency's own 
performance-based planning requirement.

Statements on Pages 10 and 44 that EDA's assistance to tribes represent 
only 3% of the total amount of funding it awarded between 1993 and 
2002.

EDA confirms that Indian tribes did receive approximately 3 percent of 
the total amount of funding EDA awarded between 1993 and 2002; however, 
as the report notes on page 11, "the proportion of EDA funds going to 
tribes appears to be similar to the proportion of the U.S. population 
living in poverty that these tribes represent." The GAO report notes 
comments from tribal leaders that economic development would progress 
faster if more funds were made available. EDA affirms that there is no 
annual quota for Indian economic development funding and that 
investment proposals are considered fairly and solely on the basis of 
merit.

Heading on page 70: "Declining Administrative Resources Reduced Extent 
to Which EDA Monitors and Provides Technical Assistance for Its Grants 
to Indian Tribes."

EDA has experienced cutbacks in staffing, operating resources, and a 
reduction in grant funding. EDA is currently streamlining its grant 
delivery and analyzing administrative processes to ensure higher 
standards of customer service and assistance to all grantees, including 
Indian tribes. We also continue to seek new ways to maintain the 
relationships that EDA has forged with tribes. This may involve working 
more with other agencies to seek increased leveraging of our joint 
efforts and resources.

Statement on page 8: "After receiving quality control clearance and 
depending on the type of grant program, either the Regional Director or 
the Assistant Secretary in EDA headquarters approves the decision to 
invite the entity to submit a formal application."

Correction: Delete "either" and delete "or the Assistant Secretary in 
EDA headquarters." The Assistant Secretary is not involved in the 
investment proposal review and application submission process.

The following are GAO's comments on the Department of Commerce's letter 
dated August 9, 2004.

GAO Comments: 

1. Our scope for analyzing EDA grants was confined to the 95 Indian 
tribes we surveyed. Our survey methodology included interviewing tribal 
officials that were cognizant of the tribes' economic development 
projects and activities. Our survey results reflect the information 
provided by and the opinions of tribal officials who participated in 
our survey. We also interviewed relevant officials from EDA. We think 
our methodology was sufficient to reach our overall findings.

2. We made revisions based on this comment.

3. Our report notes that tribal officials and some EDA staff expressed 
the view that tribes, particularly those located in rural areas, would 
have a harder time obtaining funding under the investment criteria that 
EDA implemented in 2002. This criteria favors projects that result in 
higher-wage, higher skill jobs and private investment. However, 
Commerce's letter states that no area or region will be disadvantaged 
and that its long history of support of Indian tribes will continue.

4. We made revisions based on this comment.

[End of section]

Appendix V: Comments from the Department of the Interior: 

United States Department of the Interior:
OFFICE OF THE ASSISTANT SECRETARY:
POLICY, MANAGEMENT AND BUDGET: 
Washington, D.C. 20240:

AUG 10 2004:

William B. Shear, Director:
Financial Markets and Community Investment: 
Government Accountability Office:
441 G Street, NW: 
Washington, DC 20548:

Dear Director Shear:

Thank you for providing us the opportunity to review the Government 
Accountability Office (GAO) draft report entitled, "INDIAN ECONOMIC 
DEVELOPMENT: Relationship to EDA Grants and Self-Determination is 
Mixed" (GAO-847). The purpose of the review was to determine how tribes 
were benefiting economically from Federal assistance received through 
the Economic Development Administration grant program from contracting 
and compacting arrangements entered into with the Bureau of Indian 
Affairs (BIA) pursuant to the Indian Self-Determination and Education 
Assistance Act. Regarding the economic benefits derived from 
contracting and compacting arrangements, the GAO found that tribes that 
were self-governing or engaged in a high level of contracting showed 
greater gains on average in employment levels from 1990 to 2000 than 
did tribes that were contracting to perform fewer of their own 
programs. Other analyses were not statistically different for self 
governing or high-governing or high-contracting tribes compared to low-
contracting tribes. Tribal officials indicated to GAO that running 
their own programs through contracts and compacts allowed them to gain 
self-governance experience and to tailor the programs to their own 
needs.

The BIA has reviewed the report and generally agrees with the 
conclusions reached by the GAO. The BIA supports increased self-
determination contracting and compacting as a means of improving tribal 
economic development efforts. But as noted in the report, other 
factors, such as, the tribe's location, availability of resources, 
access to capital, and quality of tribal governance also significantly 
influence a tribe's ability to develop their tribal economics 
successfully. The report contains no recommendations for the BIA to 
address.

Sincerely,

Signed by: 

P. Lynn Scarlett: 
Assistant Secretary Policy, Management and Budget: 

[End of section]

Appendix VI: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

William B. Shear (202) 512-8678 Cody J. Goebel (202) 512-7329: 

Staff Acknowledgments: 

In addition to the individuals named above, Carl Barden, Mark de la 
Rosa, DuEwa Kamara, Jeffery Malcolm, Bettye Massenburg, Don Porteous, 
LaSonya Roberts, Walter Vance, and Carrie Wilks made key contributions 
to this report.

(250157): 

FOOTNOTES

[1] GAO, Economic Development: Federal Assistance Programs for American 
Indians and Alaska, GAO-02-193 (Washington, D.C.: Dec. 21, 2001).

[2] For simplicity, references to tribes in this report generally 
includes American Indian tribes or tribal consortia and Alaska Native 
villages or entities unless otherwise noted. 

[3] This database is the Single Audit Act database and is operated by 
the Federal Audit Clearinghouse within the Bureau of the Census on 
behalf of the Office of Management and Budget. The Single Audit Act 
database contained the results of audits by private accounting firms of 
entities that received more than $300,000 in federal monies between 
1997 and 2002. We analyzed data only for tribes in the lower 48 states 
because data on Alaska Native entities was not comparable. 

[4] We classified tribes with per capita BIA contracts and grants 
exceeding $580 and total BIA contracts and grants exceeding $300,000 as 
"high-contracting." We limited our analysis to tribes with a 
reservation population of 100 or more Native Americans. 

[5] For this analysis, we only included those tribes in the lower 48 
states that are federally recognized, had available 2000 Census data, 
and had tribal population of 100 people or more based on population 
data from the 2000 Census. Various tribes have filed suit against 
federal agencies alleging that the 2000 Census undercounted their 
tribal members. However, we had no information indicating that any such 
undercounting would affect the economic profile indicators we used in 
our analysis. 

[6] These figures comparing the economic conditions for American 
Indians and the United States population as a whole were derived from 
GAO's analyses of 2000 U.S. Census data. Census data by Indian 
reservation were used in calculating the median figures for American 
Indian tribes. Only the 219 reservations with complete 2000 Census 
information were included in this analysis. 

[7] The U.S. Census Bureau uses a set of money income thresholds that 
vary by family size and composition to detect who is poor. If the total 
income for a family or unrelated individual falls below the relevant 
poverty threshold for that size household, then they are classified as 
being "below the poverty level." For example, in 1999, the poverty 
threshold for a family of four people with two children under 18 years 
old was $16,895. 

[8] Linda A. Riley, B. Nassersharif, and J. Mullen, Assessment of 
Technology Infrastructure in Native Communities, a study based on a 
survey of 48 Native communities, New Mexico State University, (Las 
Cruces, NM, 1999), EDA project no. 99-07-13799. 

[9] Economic distress is defined by EDA policy as including: high 
levels of unemployment, low income levels, large concentrations of low-
income families, significant declines in per capita income, substantial 
loss of population because of the lack of employment opportunities, and 
large numbers (or high rates) of business failures. 

[10] These contracts are known as 638 contracts because the authority 
to contract was created by Pub. L. No. 93-638, the Indian Self-
Determination and Education Assistance Act of 1975.

[11] The statute also provides that the funding of contract support 
costs is subject to the availability of appropriations and that the 
Secretary is not required to reduce funding for programs, projects, or 
activities serving a tribe to make funds available to another tribe or 
tribal organization. In Thompson v. Cherokee Nation of Oklahoma, 334 
F.3d 1075 (Fed. Cir. 2003), cert. granted 125 S.Ct.1656 (No. 03-853), 
the Court of Appeals for the Federal Circuit determined that the 
Secretary of Health and Human Services lacked discretion to refuse to 
reprogram funds from a lump-sum appropriation to meet a contractual 
obligation to pay a tribal contractor the full indirect contracts 
support costs. The Supreme Court has agreed to review the case.

[12] These federally recognized entities are based on classifications 
made by BIA and refer to those Indian tribal entities (in the lower 48 
states) and Native entities (in the state of Alaska) that are 
recognized by and are eligible to receive funding and services from 
BIA, see 68 Fed Reg. No. 68180 (Dec. 5, 2003). 

[13] Tribal officials said that many, but not all, of the businesses 
and jobs generated over the years are still in operation, but exact 
figures were not available. 

[14] Linda A. Riley, B. Nassersharif, and J. Mullen Assessment of 
Technology Infrastructure in Native Communities, (EDA project no. 99-
07-13799: 1999). 

[15] Appendix II contains more information on the results of the EDA 
infrastructure grants to American Indian tribes.

[16] We did not include Alaska Native entities in this analysis because 
the contracting and economic profile data were not comparable. In 
addition, provision of federal funds to Alaska Native entities has 
unique characteristics compared with those for American Indians in the 
lower 48 states. We currently have ongoing work addressing the 
provision of federal funds to Alaska Native entities. 

[17] Appendix I describes in detail how we calculated this income 
amount.

[18] Matthew B. Krepps, Can Tribes Manage Their Own Resources? A Study 
of American Indian Forestry and the 638 Program, Harvard University, 
(Cambridge, MA, 1991). This study analyzed data from a nationwide 
sample of 75 tribes with forestry resources and the results produced by 
tribes that entered into self-determination contracts to oversee the 
management of forestry resources versus nonparticipating tribes with 
BIA management of forestry operations.

[19] See GAO, Indian Self-Determination Act: Shortfalls in Indian 
Contract Support Costs Need to Be Addressed, GAO/RCED-99-150 
(Washington, D.C.: June 30, 1999).

[20] Miriam Jorgensen, and Jonathan B. Taylor, What Determines Indian 
Economic Success? Evidence from Tribal and Individual Indian 
Enterprises, Harvard Project on American Indian Economic Development, 
Harvard University, (Cambridge, MA, 2000).

[21] Stephan Cornell and Joseph P. Kalt, What Can Tribes Do? Strategies 
and Institutions in American Indian Economic Development, University of 
California, (Berkeley, CA 1992).

[22] We decided not to include in our survey those tribes that received 
only planning grants since we wanted to examine EDA grants that 
directly resulted in tangible economic development activities. However, 
if a tribe received an enterprise, infrastructure, or a business 
development grant and also received a planning grant from EDA, we asked 
tribal officials about the results of their planning grants as well. 

[23] Self-governance tribes are those that have entered into a 
contractual arrangement between the tribe and BIA and/or Indian Health 
Service. Under these self-governance compacts, tribes receive a single 
amount of funding to assume the management of one or more services 
previously provided for them by these agencies. Self-governance tribes 
have greater control and flexibility in the use of these funds and 
reduced reporting requirements compared to self-determination 
contracting done under Pub. L. No. 93-638.

[24] The Single Audit Act database contains data from 1997 to the 
present. We analyzed data from 1998 to 2000 because data for these 
years were more complete than data for the other years. 

[25] 1998 was the latest year that BIA had their shortfall budget 
broken down by tribe. 

[26] We derived these federal grants and contracts data from the Single 
Audit Act database. 

[27] We derived each tribe's per capita income and total number of 
Native Americans living on its the reservation from the 2000 Census. We 
then adjusted the total number of Native Americans living in the 
reservation by using BIA numbers for the total number of Native 
Americans living in the service area as reported in BIA's 2001 American 
Indian Population and Labor Force Information. Many of the grants and 
contracts (e.g., BIA contracts for road maintenance, law enforcement, 
fire protection) are reservation based, while other contracts (e.g., 
for social services) are based on the number of Native Americans in the 
service area. Some reservations are small, but many Indians live in the 
surrounding service area. Other reservations are more isolated, and 
most of the Indians in the service area live on the reservation. We 
used the following method to weight the population toward that on the 
reservation while adjusting it for the service area population: We 
multiplied the reservation population by 2, added the service area 
population, and then divided by 3. (Thus, if a tribe's reservation 
population was 500 and total service area population--including the 
reservation--was 1,000, then the adjusted population would be 667.)

[28] The Economic Development Administration and Appalachian Regional 
Development Reform Act of 1998, Pub. L. No. 105-393, Nov. 13, 1998.

[29] The Atlanta Region consists of Alabama, Florida, Georgia, 
Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee. 
The Denver Region consists of Colorado, Iowa, Kansas, Missouri, 
Montana, North Dakota, Nebraska, South Dakota, Utah, and Wyoming. The 
Austin Region consists of Arkansas, Louisiana, New Mexico, Oklahoma, 
and Texas. The Philadelphia Region consists of Connecticut, Delaware, 
District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, 
New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia, 
and West Virginia. The Chicago Region consists of Illinois, Indiana, 
Michigan, Minnesota, Ohio, and Wisconsin. For the purposes of our 
analysis of EDA grants by EDA regions, we analyzed Native entities in 
Alaska (which are technically included in the Seattle EDA region) 
separately. We further broke the Seattle EDA Region states into two 
groups: Seattle (NW or Northwest), which included Idaho, Oregon, and 
Washington, and Seattle (SW or Southwest), which included Arizona, 
California, and Nevada.

[30] The Single Audit Act of 1984, Pub. L. No. 98-502, and the Single 
Audit Act Amendments of 1996, Pub. L. No. 104-156, require that states, 
local governments, Indian tribes, and nonprofit organizations that 
annually expend $300,000 or more in federal awards--$500,000 for fiscal 
years ending after December 31, 2003--have audits. The audits must be 
conducted in accordance with OMB's Circular A-133, Audits of States, 
Local Governments, and NonProfit Organizations (June 24, 1997). The 
circular further requires that the results of these audits be submitted 
to the Federal Audit Clearinghouse, which is responsible for 
maintaining this information in the government wide Single Audit Act 
database. The Federal Audit Clearinghouse has contracted with the 
Census Bureau to maintain this database. 

[31] The Economic Development Administration and Appalachian Regional 
Development Reform Act of 1998, Pub. L. No. 105-393, a comprehensive 
amendment of the Public Works and Economic Development Act of 1965, 
requires a comprehensive economic development strategy to qualify for 
assistance under most EDA agreements.

[32] Department of Commerce Economic Development Administration's 
Notice of Funding Availability for Fiscal Years 1993-2002.

[33] Miriam Jorgensen and Jonathan B. Taylor, What Determines Indian 
Economic Success? Evidence from Tribal and Individual Indian 
Enterprises, Harvard Project on American Indian Economic Development, 
Harvard University, (Cambridge, MA 2000).

[34] We used both per capita and total contract amounts to categorize 
the tribes because larger tribes tended to have smaller contract 
amounts on a per capita basis. By setting the thresholds where we did, 
we appeared to capture those large tribes that were engaged in 
extensive contracting activities on a total dollar amount basis despite 
having a lower per capita contracting amount than some other tribes.

[35] Appendix I describes in detail how we calculated this income 
amount.

GAO's Mission: 

The Government Accountability Office, the investigative arm of 
Congress, exists to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and accountability 
of the federal government for the American people. GAO examines the use 
of public funds; evaluates federal programs and policies; and provides 
analyses, recommendations, and other assistance to help Congress make 
informed oversight, policy, and funding decisions. GAO's commitment to 
good government is reflected in its core values of accountability, 
integrity, and reliability.

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains 
abstracts and full-text files of current reports and testimony and an 
expanding archive of older products. The Web site features a search 
engine to help you locate documents using key words and phrases. You 
can print these documents in their entirety, including charts and other 
graphics.

Each day, GAO issues a list of newly released reports, testimony, and 
correspondence. GAO posts this list, known as "Today's Reports," on its 
Web site daily. The list contains links to the full-text document 
files. To have GAO e-mail this list to you every afternoon, go to 
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order 
GAO Products" heading.

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office

441 G Street NW, Room LM

Washington, D.C. 20548: 

To order by Phone: 

Voice: (202) 512-6000: 

TDD: (202) 512-2537: 

Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470: 

Public Affairs: 

Jeff Nelligan, managing director,

NelliganJ@gao.gov

(202) 512-4800

U.S. Government Accountability Office,

441 G Street NW, Room 7149

Washington, D.C. 20548: