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In response to your June 1, 1989, letter and subsequent discussions with your offices, this report provides the results of our review of the Bureau of Indian Affairs' Indian Priority System budget formulation process. The report discusses the evolution of the Indian Priority System process, its current implementation, and the extent to which tribes influence the budgeting for selected Bureau of Indian Affairs' programs through the process. We are making a recommendation to improve the way in which the process is implemented.

We are sending copies of this report to the Secretary of the Interior; the Assistant Secretary for Indian Affairs, Bureau of Indian Affairs; the Director, Office of Management and Budget; and interested congressional offices.

This work was performed under the general direction of James Duffus III, Director, Natural Resources Management Issues, who may be reached at (202) 275-7756. Other major contributors are listed in appendix I.

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Executive Summary

Purpose

In recent years controversy has arisen concerning the determination of
funding and program priorities under the Indian Priority System (IPS)
budget formulation process. One of the main purposes of the process is
to increase Indian self-determination by giving tribes more say in using
some appropriated moneys for programs benefitting them. As requested
by the Senate Select Committee on Indian Affairs, GAO examined (1) the
portion of the Department of the Interior's Bureau of Indian Affairs
(BIA) budget subject to the IPS process; (2) the development and current
implementation of the process; and (3) the level of tribal involvement in
the process and the extent of tribal influence in setting budget priorities
for IPS funds. GAO also discusses certain overriding issues raised by
tribes regarding budgeting for and implementing federal Indian
programs.

Background

In the early 1970S BIA implemented a budget formulation process designed to give Indian tribes a substantial role in setting priorities among programs and their levels of funding. Following passage of the Indian Self-Determination and Education Assistance Act of 1975, BIA characterized its budget formulation process-now referred to as the IPS process as a means of fulfilling the Congress' commitment to effective and meaningful participation by Indian tribes in planning, conducting, and administering Indian programs.

Under the IPS process, BIA area and agency offices, in conjunction with Indian tribes, are to develop proposed budgets for selected programs under the Operation of Indian Programs budget component. This process generally involves BIA'S Central Office providing the area and agency offices and tribes with base budget amounts. The BIA Offices and the tribes then identify program priorities and associated funding levels within the base amounts. Their input is consolidated into BIA's annual budget.

Programs subject to the IPS process include some that Indian tribes have
contracted with BIA to plan, conduct, and administer under section 102
of the 1975 act. The levels of funding for these contracted programs are
generally established at the time of contract negotiations between the
tribes and BIA and are included in the tribes' annual base budget
amounts. Although contracting is separate from the IPS process, during
the IPS process the tribes may identify their preferences for changing the
priority and funding levels for all IPS programs.

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