ance Demonstration Project Council, and invite tribal leaders to share their input with me.

This concludes my prepared statement. I will be happy to respond to any questions that the committee may have.

[Prepared statement of Ada E. Deer appears in appendix.] Senator MCCAIN. Thank you, Mr. Lavell.

I want to take this opportunity to thank you very much for the outstanding stewardship that you have provided to this program. You have done a magnificent job. We are grateful to you. We understand that you will be retiring in a month or so and we wish you every success. The fact that you are leaving your present position I hope does not mean that you will lose contact with this committee and our staff, who appreciate your wisdom and your insight that you have provided us on this and many other issues over the past 10 years.

Mr. LAVELL. Thank you, Mr. Chairman. I assure you that I will be around. [Laughter.]

Senator MCCAIN. Mr. Lavell, the Congress has intended the selfgovernance demonstration project allow tribes increased flexibility in deciding what programs and functions shall be provided, and in redesigning those programs to meet the unique circumstances of their reservation.

What reporting requirements do you feel are warranted for selfgovernance if we make this program a permanent option? Do you feel that we could eliminate many of the multiple reports that presently exist?

Mr. LAVELL. As you know, Mr. Chairman, at present we have several reports. First, there is the semi-annual cost and benefits report in reference to the baseline measures. I believe that clearly could be modified in that the baseline measures could be reduced somewhat in size. The tribes, as I understand, are working on that at the moment. This should only be an annual report.

Second, we have an annual trust assessment. This should continue, in my opinion. It is a new thing, really. It is something that probably should be done Bureau-wide.

Finally, we have the Single Audit Trust Act audit, which deals with the handling of the money.

Frankly, I would be loathe to get into any more reporting than that. I think that is adequate.

Senator MCCAIN. The Self-governance Demonstration Project Council was established, as you know, to provide policy guidance to the Assistant Secretary. When is the council due to expire? Would you recommend that the council continue?

Mr. LAVELL. It is due to expire in December and I definitely recommend that it continue. As you heard the Assistant Secretary's statement, she also will recommend that it continue. It exists by a secretarial order. I am sure our recommendation will go forward to the Secretary.

Senator MCCAIN. Mr. Lincoln, have you considered establishing such a policy council?

Mr. LINCOLN. Mr. Chairman, we have not considered that. It has not been under active discussion. We do believe that as we hold our next series of meetings with the self-governance tribes the next meeting to occur in November-that there are a number of out

standing issues that have not been resolved by the Indian Health Service. We can certainly put this on the list and have this fully discussed.

Senator MCCAIN. Thank you.

I would like you to consider that because it has been successful at the Department of the Interior.

Mr. Lavell, numerous tribes have indicated a desire to negotiate for a share of Central Office programs rather than just receiving $45,000. Would you recommend allowing for such negotiations for next year?

Mr. LAVELL. Actually, Mr. Chairman, we are planning to have a negotiation for at least a portion of this year for Central Office funds. The commitment has been made both at the secretarial level by the counselor to the Secretary and by Ms. Deer to form a team-and that is the team to which she is referring in her statement to review the Central Office and to determine what amounts should be on the table for negotiation and to actually establish a negotiation, hopefully later this fall or early winter.

Senator MCCAIN. Do you plan to downsize in response to self-governance?

Mr. LAVELL. There has been some downsizing in response to selfgovernance that I am aware of. Let me give you one example.

When the Cherokee first contracted, they took over the entire agency, since they were a one-tribe agency, and left just enough money to cover one position in the area office to handle trust matters. They did not negotiate for area office funds that year.

This year, two other Muskogee Area tribes came in as self-governance tribes, and all three tribes negotiated a share of the area office. Among the three of them, they represent about 50 percent of the budget for that area. The area director, as a part of restructuring, reduced staff at the area office by seven positions effective October 1.

So there are some things happening but there has been no overall uniformity, no.

Senator MCCAIN. I would ask you and Mr. Lincoln to formulate plans for downsizing as the tribes take over more of their own responsibilities. I think it would be foolish for us to implement selfgovernance and yet at the same time not reduce the size of the bureaucracy that is supposed to be performing these functions. I am very concerned about that aspect of self-governance. I would appreciate it if you would provide the committee with your plans in writing, if you would.

Mr. LINCOLN. Mr. Chairman, we negotiated in 14 compacts approximately $7 million worth of tribal shares at area offices and at headquarters. We indeed are putting those plans together now that will demonstrate that those are real administrative savings and the downsizing associated with that. We would be glad to provide that information to the committee.

Senator MCCAIN. Thank you.

Mr. Lavell and Mr. Lincoln, the information that this committee has received is that the tribes-now some 28-that have chosen the self-governance project—and I emphasize again and again that it is a voluntary action on the part of the tribes are uniformly pleased

with the success of their projects. Would you share that view, Mr. Lavell?

Mr. LAVELL. Definitely. An assessment was done on the first year of operation by an outside entity consortium in Oklahoma. They reported very favorably having done an assessment of the operation. There is a whole list of findings that they have which are extremely positive concerning the flexibility and the ability of tribal governments under this program to adapt the funding to the needs of that reservation at that particular time.

My observations as I travel around and as I talk to tribal leaders lead me to the same conclusion. This is a program whose time has come. It is the program that is putting tribal governments in the proper place in the system of American governments.

Senator MCCAIN. Is that your view as well, Mr. Lincoln?

Mr. LINCOLN. Mr. Chairman, we have had compacts in place for exactly 20 days now. We still are in the demonstration phase. We believe that the planning phase and the working relationship with self-governance tribes is healthy, positive, and certainly can be improved. It is a little early for us to be exercising any judgment, given the amount of time we have been involved.

Senator MCCAIN. We contemplate in draft legislation to make the self-governance demonstration project permanent for the BIA, not for IHS. Have you a handle on how long it would take the IHS to be prepared to be fully engaged in self-governance?

Mr. LINCOLN. I have not fully considered that issue, Mr. Chairman. We believe that the flexibility that is going to be exercised by the self-governance tribes to redesign the program will have to have a strong evaluation phase. The baseline measures that will be negotiated individually with the tribes I think are the key to that

answer.

There is one other element that I do believe is key, Mr. Chairman, and that is the outcome measures associated with this activity. I certainly believe that there will be improved health status associated with more tribal and community control of resources. We will want to be able to document that effort, however.

Senator MCCAIN. Do you believe that there are any health functions that should not be compacted with the tribes, Mr. Lincoln? Mr. LINCOLN. No; I do not, Mr. Chairman.

Senator MCCAIN. As you know, Mr. Lavell, I met yesterday with the self-governance tribes and we had a very lively discussion. One of the major topics that kept coming up was how many tribes in draft legislation should be allowed and whether there should be any geographic balance mandated by the legislation.

Do you have any views on that?

Mr. LAVELL. I don't think the need for geographic balance would exist when the program becomes permanent. We are getting pretty good geographic balance as it is. We have all but three areas and Navajo officially started their planning phase last week. We have the other two areas covered with people in planning. I think geographic balance would not be important when permanent.

As to numbers, it is going to be a function of how much traffic can be handled in a given year by the staff available. I would be much in favor of pushing the staff to the limit and get as many tribes in as we can.

Senator MCCAIN. Would that be 30 a year?
Mr. LAVELL. I would say up to.

Senator MCCAIN. And how much would your staff have to increase?

Mr. LAVELL. Well, we are hoping to add about three people to our financial end of the program. We are taking over more and more responsibility in moving the money starting this year, and next year we are going to do even more so that will be three additional positions. Plus, I would like to open an office in the southwest to better serve tribes. It works better to have somebody local. That would be an addition of around five positions.

Senator MCCAIN. Thank you.

I note the presence of Senator Cochran, a distinguished member of this committee.

Do you have any comments or questions?

STATEMENT OF HON. THAD COCHRAN, U.S. SENATOR FROM

MISSISSIPPI

Senator COCHRAN. No, Mr. Chairman; I came by to indicate my interest, though, in looking at this demonstration program. In our State of Mississippi, the Choctaw Nation is observing and monitoring this very closely, particularly as it relates to the Indian Health Service funds. So the testimony and the record we are accumulating today and the information will be quite helpful to tribes all over the country, whether they are now participating in the demonstration program or not.

We thank you for conducting the hearing and again express the fact that we appreciate your leadership on this committee very much.

Senator MCCAIN. I thank my friend from Mississippi.

Mr. Lincoln, the tribal self-governance initiative, as amended, provides direction that all programs, services, functions, and activities will be considered available for negotiations. Do you believe this also includes construction activities?

Mr. LINCOLN. Mr. Chairman, our opinion is that it does. And I speak for the Indian Health Service.

Senator MCCAIN. Thank you.

I want to thank you both very much. I would like to submit to you several questions we would like to have you answer for the record.

Mr. Lavell, do you have anything additional you would like to say?

Mr. LAVELL. If I may have a moment for a personal observation, Mr. Chairman, I want to take this opportunity since I will be leaving this position shortly-to thank you and the members of the committee and your staff for the inspiration and help you have been in getting this thing going. I especially want to thank the tribal leaders and members. It has been my privilege to work in this program. If I may refer to Felix' reference where he likened the Nation's conduct of Indian affairs to the miner's canary in assessing the health of civil liberties in the land, I am happy to report that the winds of self-governance are blowing in fresh air and the miner's canary is well and happy.

Thank you, Mr. Chairman.

Senator MCCAIN. Thank you very much, Mr. Lavell. I appreciate those comments.

As I mentioned earlier, your stewardship has been a vital element in the success of this project. You and the tribal leaders are the ones who deserve the credit for the success of this program. It is my firm belief that we should make this program permanent. The question concerns the details of it and not whether it should be permanent.

Thank you both very much. I look forward to seeing you.

Senator MCCAIN. I would like to ask our next panel, which is William Ron Allen, chairman, Jamestown Band of S'Klallam Indians; Elmer Manatowa, principal chief, Sac and Fox of Oklahoma Business Committee; Joe DeLaCruz, president, Quinault Business Committee; and the Michael Pablo, chairman, Confederated Salish and Kootenai Tribes of the Flathead Reservation.

Again, gentlemen, let me emphasize that you are free to read your entire statement, if you choose. You are free to summarize. Your entire statement will be made a part of the record.

If it is agreeable with you, we will proceed in the order in which you were called, beginning with William Ron Allen.

Welcome, Mr. Allen.

STATEMENT OF WILLIAM RON ALLEN, CHAIRMAN, JAMESTOWN BAND OF S'KLALLAM INDIANS, SEQUIM, WA

Mr. ALLEN. Thank you, Mr. Chairman.

My name is Ron Allen and I am the chairman and executive director for the Jamestown S'Klallam Tribe, located in Washington State. We appreciate you and this committee for calling this hearing on this important historic initiative for the tribes.

As has already been shared through your statements and others that have been here, this is a very important effort that we are embarking. We have been working on it since 1988 and we have traveled quite a road to get to this point. That is why we feel that we are really at a very important threshold in advancing the project to the next level.

We feel that is reflective of a vision that has been seen for many years. As stated earlier, its time has come. So the issue for us and for the Congress is how to transport this idea into a reality and how to make it begin to have a foundation we can build on.

This project has a very sharp distinction between self-administration of Federal programs versus self-governance. We know it when we see it and we know it when we're managing it. That is what we are trying to do here, to make that change and to make that shift. We have seen many pieces of legislation through history-such as the Snyder Act and the Self-Determination Act, et cetera-help us progress through that era. We are now moving into what we call the self-governance phase, which is actually exercising our sovereign authority.

We know there are many skeptics out there who will question whether or not this is a viable project or a viable right for tribes to pursue this approach. But despite the skeptics or those who don't quite know or understand this project, we have been proceeding.