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GAO: Fiscal Oversight Weak for Federally Run Schools for Native Americans

By guest blogger Madeline Will. Crossposted from Learning the Language.

Federally funded schools that serve tens of thousands of Native American children have serious financial problems, including a lack of proper oversight and accumulations of unspent funds that aren't reaching classrooms and students as intended, according to a government watchdog report.

The Government Accountability Office released a 54-page report Thursday, detailing examples of financial mismanagement and a lack of federal oversight for the 185 schools on or near American Indian that are overseen by the Bureau of Indian Education. The BIE directly operates about a third of these schools, and tribes operate the rest under agreements with the federal agency. 

BIE-operated and -funded schools are among the lowest-performing in the country, as Education Week's Lesli Maxwell explored in this story package on Indian education. 

The GAO report said that the BIE, which is part of the U.S. Department of the Interior, lacks enough experienced staff members to oversee the schools' spending. Since 2011, the number of the Bureau's full-time administrators who are located on or near reservations to oversee school expenditures has been slashed from 22 to 13--partly due to budget cuts, the report said. The remaining administrators are overworked and under-trained, and three of them told the GAO that they didn't have the expertise to understand the school audits they review.

There are no written procedures for how and when staff members should monitor school spending, and there's no risk-based approach to prioritize resources for oversight, the report found. As of July, there has been $13.8 million in unallowable spending at 24 schools, according to an external audit, but the GAO found "minimal follow-up" from the BIE. And in March, an audit found that one tribally-operated school lost $1.2 million in federal funds that were transferred to an off-shore account as a result of computer hacking. 

"...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," the report said. 

Unspent federal funds have also piled up at some BIE schools. One school accumulated more than $900,000 in unspent money that was intended for special education services to students with disabilities. 

According to a government study in June, about 80 tribally-operated schools have, over time, accumulated about $125 million in unspent funds--which the BIE has exacerbated by not implementing policies that encourage schools to take advantage of the funding. Currently, federal law provides an incentive for schools to not spend their funds, because they can earn interest on them. 

In fiscal year 2014, BIE schools received a total of $830 million, and per-pupil spending in the agency's schools is much higher than at public schools across the country, the GAO said. The average per pupil spending for BIE-operated schools was about 56 percent higher than for public schools nationwide in the school year 2009-10, the most recent data available at the time of the report. This is likely due to higher poverty rates and higher percentages of students with special needs in BIE schools, as well as smaller enrollment and the remoteness of the schools. 

The Obama administration has been trying to improve the schools, with plans to turn more control of the schools over to the tribes, and transform the BIE into a "school improvement organization" that assists tribally-controlled schools rather than operating them. But it has been a rocky road, with many challenges. 

The report also includes recommendations to develop written procedures and plans to ensure proper oversight of the schools' spending--with the necessary number of knowledgeable staff. 

Kevin Washburn, assistant secretary of Indian affairs at the Interior Department, said in a letter to the GAO that the BIE agrees with most of the recommendations. 

"The department understands that providing quality administrative services to assist in the success of Indian youth in Indian Country is vital to their individual success and to the future of Indian Country," he wrote.

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