Indian Affairs:

Bureau of Indian Education Needs to Improve Oversight of School Spending

GAO-15-121: Published: Nov 13, 2014. Publicly Released: Nov 13, 2014.

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What GAO Found

Unlike public schools, Bureau of Indian Education (BIE) schools receive almost all of their funding from federal sources. BIE directly operates about a third of its schools, and tribes operate two-thirds. According to BIE data, all of the BIE schools received a total of about $830 million in fiscal year 2014: about 75 percent from the Department of the Interior (Interior), 24 percent from the Department of Education (Education), and 1 percent from the Department of Agriculture and other agencies. Public schools nationwide receive about 9 percent of their funding from federal sources and rely mostly on state and local funding.

GAO found that some BIE schools spend substantially more per pupil than public schools nationwide. Specifically, GAO estimates that the average per pupil expenditures for BIE-operated schools—the only BIE schools for which detailed expenditure data are available—were about 56 percent higher than for public schools nationally in school year 2009-10, the most recent year for which data were available at the time of GAO's review. Several factors may help explain the higher per pupil expenditures at BIE-operated schools, such as their student demographics, remote location, and small enrollment.

BIE lacks sufficient staff with expertise to oversee school expenditures. Since 2011, the number of BIE full-time administrators located on or near Indian reservations to oversee school expenditures decreased from 22 to 13, due partly to budget cuts. As a result, the 13 administrators have many additional responsibilities and an increased workload, making it challenging for them to provide effective oversight of schools. Additionally, these administrators have received less training in recent years. Further, the three administrators GAO spoke with said they do not have the expertise to fully understand the school audits they are responsible for reviewing. BIE's staffing of these positions runs counter to federal internal controls standards and key principles for effective strategic workforce planning, such as having sufficient, adequately-trained staff. Without adequate staff and training, BIE will not be able to ensure that school funds are spent appropriately.

BIE's processes for oversight do not adequately ensure that funds are spent appropriately. BIE lacks written procedures for how and when staff should monitor school spending and does not use a risk-based approach to prioritize how it should use its limited resources for oversight. Instead, BIE told GAO that it relies primarily on ad hoc suggestions by staff regarding which schools to oversee more closely. Meanwhile, some schools have serious financial problems. Notably, external auditors identified $13.8 million in unallowable spending at 24 schools as of July 2014. Further, in March 2014, an audit found that one school lost about $1.2 million in federal funds that were improperly transferred to an off-shore account. Without written procedures and a risk-based approach to overseeing school spending—both integral to federal internal control standards—there is little assurance that federal funds are being used for their intended purpose to provide BIE students with needed instructional and other educational services.

Why GAO Did This Study

BIE, within Interior's office of Indian Affairs, oversees 185 schools, serving about 41,000 students on or near Indian reservations. BIE's mission is to provide students with a quality education. However, BIE student performance has been consistently below that of public school students, including other Indian students. Given these challenges, GAO was asked to review BIE school funding and expenditures.

This report examines how funding sources and expenditures of BIE schools compare to those of public schools; the extent to which BIE has the staff and expertise needed to oversee school expenditures; and the extent to which BIE's processes for oversight adequately ensure that school funds are spent appropriately.

GAO reviewed relevant federal laws, regulations and agency documents, and analyzed BIE and public school expenditure data for school year 2009-10, the most recent year for which data were available. GAO also visited select BIE schools and nearby public schools in four states based on location, school and tribal size, and other factors.

What GAO Recommends

Among other things, GAO recommends that Indian Affairs develop a workforce plan to ensure that BIE has the staff to effectively oversee school spending and written procedures and a risk-based approach to guide BIE's oversight of school spending. Indian Affairs generally agreed with GAO's recommendations.

For more information, contact Melissa Emrey-Arras at (617) 788-0534 or emreyarrasm@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: In May 2017, the Bureau of Indian Education (BIE) Director reported that an internal working group would draft a comprehensive workforce plan that is aligned with BIE's strategic plan. They did not specify whether such a plan would include a focus on BIE administrative offices responsible for oversight of school expenditures. In August 2017, BIE officials indicated that they would revisit the strategic workforce planning effort by Indian Affairs. In May 2018, BIE officials told us that they are taking steps implementing this recommendation and will coordinate with other Indian Affairs offices assessing the workforce needs of offices that provide financial oversight and administrative support to BIE schools. Officials said they held several workforce planning sessions over the last year and will begin developing a workforce plan once BIE publishes its strategic plan in July 2018. They estimated that the workforce plan would be completed by the end of 2018. We will continue to monitor the agency's implementation efforts.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary-Indian Affairs to develop a comprehensive workforce plan to ensure that BIE has an adequate number of staff with the requisite knowledge and skills to effectively oversee BIE school expenditures.

    Agency Affected: Department of the Interior

  2. Status: Closed - Implemented

    Comments: In August 2017, Education officials reported that it had developed and implemented a SharePoint-based system for sharing single audit reports to ensure that all key staff have access to this system. The agency said it planned to explore other technological options for providing staff with access to single audit reports, but we noted that the SharePoint system includes audit reports on fewer than half of all tribally-operated schools; such reports are a vital source of information for monitoring how schools use federal funds. In March 2018, BIE officials provided documentation that staff responsible for overseeing BIE schools' spending were provided direct access to single audit reports through the Federal Audit Clearinghouse with the assistance of Interior's Office of Financial Management and Office of Inspector General. Such access includes the ability of staff to download single audit reports for BIE schools, resolving longstanding challenges BIE staff encountered in obtaining single audits reports from Indian Affairs' Division of Internal Evaluation and Assessment to support their oversight of BIE school spending.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary-Indian Affairs to develop a process to share relevant information, such as single audit reports, with all BIE staff responsible for overseeing school expenditures to ensure they have the necessary information to identify schools at risk for misusing funds.

    Agency Affected: Department of the Interior

  3. Status: Closed - Implemented

    Priority recommendation

    Comments: In August 2017, Education officials reported taking several steps to address this recommendation. In particular, officials reported that they had drafted written procedures for overseeing BIE school spending, which are awaiting further review and revision before being finalized and implemented. In May 2018, BIE provided documentation that it had finalized and implemented written procedures for monitoring school expenditures of major education programs, including Interior's Indian School Equalization Program and Education's Title I and IDEA programs. The written procedures define the oversight and monitoring responsibilities of different individuals and offices within BIE and describe the required steps for conducting fiscal monitoring, including documentation of monitoring activities and corrective actions for schools to resolve identified financial weaknesses.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary-Indian Affairs to develop written procedures for BIE to oversee expenditures for major programs, including Interior's Indian School Equalization Program. These procedures should include requirements for staff to consistently document their monitoring activities and actions they have taken to resolve financial weaknesses identified at schools.

    Agency Affected: Department of the Interior

  4. Status: Closed - Implemented

    Priority recommendation

    Comments: In August 2017, agency officials reported that they had begun drafting a risk assessment policy and procedures for monitoring BIE school expenditures, which are pending further review and revision before final implementation. In May 2018, BIE provided documentation that it had implemented a risk-based approach to oversee BIE school expenditures. BIE's new policy requires that relevant staff identify and monitor BIE-funded schools at greatest risk of misusing federal funds by using a variety of risk indicators, including student enrollment, funding levels, single audit findings, academic proficiency scores, and other reported information.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary-Indian Affairs to develop a risk-based approach to oversee BIE school expenditures to focus BIE's monitoring activities on schools that auditors have found to be at the greatest risk of misusing federal funds.

    Agency Affected: Department of the Interior

 

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