money made available without all the problems which arise with this cost-reimbursable system.

If in fact the act is going to be implemented, money has to be made available to administer these programs. There is a never-ending fight with contractors about administrative costs even when audited reports clearly show what the actual costs are. Even HEW rates which are established are not considered acceptable by the contractors. Promises have been made from the Bureau that their auditors would come into our organization and establish an overhead rate. But unfortunately this has never happened either.

AFN has shown a great insight in their decision not to exist as a statewide prime contractor for education and health programs to further implement this act. My question is, why haven't the other statewide central agencies followed this initiative? It has proven to be impractical if not impossible for one agency to be everything to every region and every village which needs help in the entire State. AIthough the regional nonprofit organizations cannot possibly cover all needs which exist, they at least know the people, their problems, and have close working relationships with them.

When technical assistance is available our region usually is bypassed because of the high cost and the time involved. It, again, is impossible to give assistance on a statewide basis. Rather than using the money for another group to house this type of program, it would be more practical to give this to the region who can in turn hire the expertise to give the technical assistance. This is a more realistic and practical approach, at least in our region. The Bureau sometimes compounds problems for grantees in implementing contracts by their failure of an adequate monitoring system and by their failure to give the necessary technical assistance needed.

The future of the Aleut League will change as the local villages are trained toward their own responsibilities in every phase of social, political, and economic conditions which affect them. We realize that local control of village affairs will have made self-determination a reality.

I didn't give the background of our region, but I have it included in here.

Senator ABOUREZK. Thank you. It will be included in the record. Senator Stevens.

Senator STEVENS. You're basically saying that so far as your Aleut League is concerned there's a general acceptance of your villages to the point of view that you expressed there, that a regional tribal entity would be best for your-Is that right?

Mr. SKAFLESTAD. For most of the smaller villages; yes.
Senator STEVENS. They'd be willing to accept that?

Ms. SKAFLESTAD. Yes; I feel that we, in fact, wouldn't be in existence if there wasn't a need for the regional organization. But there seems to be for the smaller villages. However, the larger villages are becoming more knowledgeable and aren't able to do work contracting on their own. But we still-there still seems to be a need for a regional organization, at least for the smaller villages in our region.

Senator STEVENS. Thank you. Do you believe that the regional organization ought to have prior consent before it applies for contract for the particular type of service for a village? In other words, do you

support the concept that the villages themselves would be the tribal entities and they would delegate power to the regional entity to the extent they wanted to do it?

Ms. SKAFLESTAD. Yes; they have indicated this, right.

Senator STEVENS. Is that generally the position throughout your region?

Ms. SKAFLESTAD. Yes.

Senator STEVENS. Thank you.

Senator ABOUREZK. Senator Gravel.

Senator GRAVEL. No; I think it's been very clear.

Senator ABOUREZK. John?

Commissioner BORBRIDGE. With respect to the delivery of services under the contract, do you feel that you have an adequate opportunity to improve delivery of services or to affect them in some way because you are a Native organization or do you find this to be a very difficult thing to accomplish? In other words, as you enter into a contract there is a requirement for an audit and there's confirmation of the reports on expenditure funds and compliance with basic regulations. Most Native reorganizations enter into the contract simply because they feel they can do the job better, then? Do you feel that youMs. SKAFLESTAD. Yes.

Commissioner BORBRIDGE [continuing]. Actually have the opportunity to do the job better?

Ms. SKAFLESTAD. Yes; I do.

Commissioner BORBRIDGE. Thank you.

Senator ABOUREZK. Vera, thank you very much. We appreciate your appearance and your statement.

Ms. SKAFLESTAD. Thank you.

[The background referred to by Ms. Skaflestad follows:]

INTRODUCTION

West by Southwest of the main body of Alaska, anchored to the depths of the North Pacific Ocean and the Bering Sea, the Aleutian Chain is the rugged home of the Aleut people. For thousands of years, the seafaring Aleut shave fished and hunted the ocean mammals for survival in the water surrounding their homes. Sparsley populated, the islands have some 2,000 Native residents whose village communities are spread out over 1,500 miles of the Aleutian Chain westward from Nelson Lagoon and Sand Point and on the Pribilof Islands in the Bering Sea.

The Aleutians have aptly been referred to as the "Climate factory of the World" and the "Cradle of the Storms." Temperatures are mild, but high wind, rain, fog, and snow frequently slow the daily activities of living. Winds can reach 120 miles per hour, and strong gusts up to 200 m.p.h. are not unknown. Blizzards are common through the winters, and wind driven, horizontal rain is a frequent

Occurrence.

Travel is difficult and expensive. Reeve Aleutian Airways makes flights three times a week to Sand Point, King Cove, and Unalaksa; Nikolski, St. Paul, Akutan, and False Pass are serviced once a week; Atka depends upon a Navy tug to bring passengers, food, and mail once a month; National Marine Fisheries makes a flight once each month to St. George; and Belkofski can be reached by boat or air charter only. Travel is totally dependent upon weather conditions. As many as nine flights in a row have been cancelled to Unalaska in a one month period and St. Paul has gone as long as three weeks without air service.

The lifestyle of the Aleut people has been greatly altered over the past 200 years. The influences of the Russians, beginning early in the 18th Century, had a tremendous impact on the lives of the Aleutian peoples. The Russian-American Company, a trading firm, virtually enslaved the Aleuts to help hunt sea mammals for pelts, the result being the near extinction of the sea otter and the decimation of the Aleut population. By the 1850's, the Russian government had taken over

a large part of the Russian-American Company's affairs and the governing power. The Aleuts were recognized citizens of Russia by the time of Alaska's purchase by the United States in 1867.

American companies became interested in the rich Aleutian fisheries and a number of canneries were built. The Aleutian Chain was of strategic importance to the United States during World War II and a large number of military installations were built, most of which were abandoned after the war.

Today, commercial fishing and fish-processing form the basic economy of the Aleutians along with the carefully controlled fur sealing on the Pribilofs. In addition, there is a substantial military presence at a few isolated installations on the Chain.

The passage of the Alaska Native Land Claims Settlement Act in 1972 and the establishment of the Aleut Corporation and the non-profit arm, the Aleut League, have brought further changes for the Aleut people. A new spirit of self-determination is on the rise and the Aleut people will have an opportunity to become a significant force in the determination of their own destiny. It also means great responsibilities. To fulfill such responsibilities requires education and training.

BACKGROUND

The median family income of the Natives in the area is $8,357 which is 33 percent or $4,086 below the $12,443 median income for the total population in Alaska. Eleven percent of the Native families had family income less than $3,000 and 26 percent had family income of less than $5,000.

Seventeen percent of the Native families had family incomes that were below the poverty index level. This compares to 9.3 percent of the families below the poverty level for the state of Alaska. Of the Native families in the Aleut Corporation area, 4.6 percent earned less than half enough to reach the non-poverty level, and of the families with the head of the household being over 65 years of age, 53 percent had family income below the poverty level.

Unemployment for Natives in the area is relatively high as 25 percent of the Native males in the labor force were unemployed. This is eight times more than the white males in the area that were unemployed, and is two and one-half times higher than the unemployment rate for the state of Alaska which was a little over 10 percent. Forty-three percent of the employed Natives work for the federal government and 36 percent work for private companies. Only about 2 percent of the Natives are self-employed. Almost half of the employed Natives are in the craftsmen and operatives occupations. Besides a high unemployment rate most of the Natives that are underemployed. The median income for Natives by occupations is much lower than the median income for whites employed in the same occupation.

The median grade completed for Natives 25 years of age and over in the Aleut Corporation area was 7.5 compared to 12.6 for the white population in the area. This means that on the average, the Natives have reached their level of formal education before reaching the eighth grade while the white population will have reached 12.6 years of schooling. In the same category, 56 percent of the Natives will have completed their formal education before reaching the eight grade compared to 2 percent for the white population. Only 8 percent of the Natives had completed some college training compared to 32 percent for the white population in the area.

Senator ABOUREZK. The next witness is Frank Peterson of the Kodiak Native Association. Is Frank here? Frank, we'd like to welcome you to the hearings. Do you have a prepared statement or are you just going to speak off the top of your head?

Mr. PETERSON. Mr. Chairman, I do not have a prepared statement, because of the problems of the indirect rate development that some of our regional nonprofits are experiencing. But I would like to mention a few comments here and then if there is time allowable after the hearings, I'd like to also submit a written testimony.

Senator ABOUREZK. We will hold the record open for 30 days for anybody who wants to submit statements for the record.

STATEMENT OF FRANK PETERSON, EXECUTIVE DIRECTOR, KODIAK AREA NATIVE ASSOCIATION

Mr. PETERSON. Mr. Chairman, on behalf of the board of directors of the Kodiak Area Native Association I appreciate the opportunity to be able to express a few concerns about Public Law 93-638, the problems of the tribal definition and the problems of the programs that come along with that particular piece of legislation in the form of contracts, grants, et cetera. Now, it is my understanding that the purpose of Public Law 93-638 is for revision of social service oriented programs, primarily to Indian or Alaskan Native groups. It's also understood that that particular piece of legislation is to provide the determination on the part of the Indians or Alaska Native people the authority and decisionmaking process to administer or implement the programs to the best of the abilities of the Indians or Alaska Native groups. These are my understandings of that particular law.

But looking at it from where I sit as executive director of the Kodiak Area Native Association, trying to understand how we can best implement social service programs to the people who need certain services, including health social services, housing, et cetera that are available through this legislation, I see that this particular legislation creates and perpetuates some bureaucratic monsters within our Federal agencies resembling what I might relate to as many guys who determine, who are in a position to determine whether or not a village, a region, a village corporation or a regional profit corporation will be the administrator of programs under this particular piece of legislation.

While on the other hand it proliferates the authority and decisionmaking process of the people that this legislation is designed to assist in alleviating some of the social problems that we have within the State.

There are certain concerns that we have. One is the accountability question. I note that there's been several instances here where someone testifying or asking question related to accountabilities. Fiscally whoever is the entity that is administering programs funded through either Indian Health Service or the Bureau of Indian Affairs or through the auspices of 638 are required to go through stringent reguations in the contracting process before an entity can effectively administer a program through the contract. It is a difficult problem. Let me just relate one instance here just completed this week, or this past

week. In order to get any program funds for a particular program since we were formally notified of the availability of funds, we have had to rewrite the contract proposal five times, which has taken us the past 3 months or so to finally accomplish.

Senator ABOUREZK. Which contract is that?

Mr. PETERSON. This is for the Indian Health Service contract. Commissioner BORBRIDGE. I might ask a question, Mr. Chairman, if I might.

Senator ABOUREZK. Go ahead.

Commissioner BORBRIDGE. When you were asked to rewrite the program, was this delegated to the organization to accomplish solely by itself with its own personnel or was it a matter in which the ÏHŠ was it

Mr. PETERSON. Yes.

Commissioner BORBRIDGE [continuing]. Personnel worked with you to insure that the revision was satisfactory?

Mr. PETERSON. Well, in most part it was-we were asked or required to rewrite the proposal here in Anchorage and in no instance do I recall that any representative of that agency came to our region to work with us in developing that contract.

Commissioner BORBRIDGE. And you're headquartered in Kodiak? Mr. PETERSON. Yes; in Kodiak.

Commissioner BORBRIDGE. OK, thank you.

Mr. PETERSON. That is one instance that I want to relate. We have not by our own options pursued any contracts under or from within the Bureau of Indian Affairs as yet.

Getting back to the concern I had about accountability, to be accountable fiscally is quite an undertaking for any entity that is new in administration of certain programs funded by either the State or Federal Government, because of the stringent regulations that come along with these contracts. There is more concern on the part of the agency that lets out the contract for fiscal accountability than there is for programmatic accountability.

The concern of the board of directors, of course, is more in programmatic accountability because of the services that come along with these contracts. So, on the part of the administering entity we are stuck with the problems of being fiscally accountable to the agency letting out the contracts as well as being stuck with the programmatic accountability, the people that we are providing the services to. I have no problem there providing that the structure of the entity contracting also has the accountability to the people that the programs are serving, as well as to get the direction. In some instances right now the entity that I belong to and administer programs through, we do have certain number of board members who are elected at large, which presents a small problem for us. Because those members at large really are not accountable to any agency or any group within the region, nor are they required to get any direction from any entity in order to make these programs successful. Hopefully, after our annual meeting that particular problem will be resolved.

Going down on my discussion list here I note with one exception that most of the discussion here presented to the committee is related primarily to contracts. I note the particular absence to any discussion to the grants that are available under Public Law 93-638, and I would