Indian Economic Development
Relationship to EDA Grants and Self-determination Contracting Is Mixed Gao ID: GAO-04-847 September 8, 2004American Indians and Alaska Natives generally face worse economic conditions than the rest of the U.S. population. The Economic Development Administration (EDA) within the Department of Commerce provides grants to distressed communities, including to American Indian tribes and Alaska Native entities, to generate employment and stimulate economic growth. Because data on how these EDA grants helped tribes was not publicly available, GAO analyzed all EDA grants made to Indian tribes from 1993-2002 and determined what economic development resulted. Tribes also enter into self-governance and other contracting arrangements with two federal agencies--the Bureau of Indian Affairs (BIA) and the Indian Health Service--to assume the management of individual services, including law enforcement, education, social services, and road maintenance. GAO also analyzed the relationship between changes in tribes' economic profile and the extent to which they had self-governance or contracting arrangements to perform their own services. BIA and EDA provided comments on a draft of this report. BIA generally agreed with GAO's conclusions. EDA took issue with GAO's characterization of the relative success of EDA grant programs.
Indian tribes have used EDA grants to create businesses, build roads and other infrastructure, and create economic development plans, but these grants have had mixed success in generating jobs, income, and private sector investment. From 1993 to 2002, 143 Indian tribes and tribal organizations received $112 million in EDA grants, but this represented a small portion of EDA's awards to all organizations. Of the total amount awarded to Indian tribes or Alaska Native entities, $54 million was used to fund 63 enterprise projects designed to create income and jobs. Of the 59 projects GAO collected data on, 25 had not yet begun operating, and 3 others had just been completed and no results were available. Of the 31 operational projects, tribal officials reported that about half were profitable or were covering their costs, and the remainder were being subsidized or had failed. Most had resulted in the creation of 10 or fewer jobs, and few had attracted private sector investment. EDA also provided $22 million in grants to tribes for infrastructure projects, such as roads and sewer systems, $30 million in grants to assist tribes with economic planning, and $5 million for loan funds and business development. Almost all of the 219 federally recognized tribes with available data had entered into either contracts or self-governance compacts to operate their own tribal programs and services. Based on GAO's analysis of U.S. Census Bureau data, tribes that had self-governance arrangements or were engaging in higher levels of contracting showed greater gains on average in employment levels from 1990 to 2000 compared with tribes that were contracting less. However, the change in per capita income or the percentage of tribal individuals with incomes above poverty levels over this period was not statistically different for self-governance or high-contracting tribes compared with low-contracting tribes.
GAO-04-847, Indian Economic Development: Relationship to EDA Grants and Self-determination Contracting Is Mixed
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Report to the Chairman, Committee on Indian Affairs, U.S. Senate:
September 2004:
INDIAN ECONOMIC DEVELOPMENT:
Relationship to EDA Grants and Self-determination Contracting Is Mixed:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-847]:
GAO Highlights:
Highlights of GAO-04-847, a report to the Chairman, Committee on Indian
Affairs, U.S. Senate
Why GAO Did This Study:
American Indians and Alaska Natives generally face worse economic
conditions than the rest of the U.S. population. The Economic
Development Administration (EDA) within the Department of Commerce
provides grants to distressed communities, including to American Indian
tribes and Alaska Native entities, to generate employment and stimulate
economic growth. Because data on how these EDA grants helped tribes was
not publicly available, GAO analyzed all EDA grants made to Indian
tribes from 1993-2002 and determined what economic development
resulted. Tribes also enter into self-governance and other contracting
arrangements with two federal agencies”the Bureau of Indian Affairs
(BIA) and the Indian Health Service”to assume the management of
individual services, including law enforcement, education, social
services, and road maintenance. GAO also analyzed the relationship
between changes in tribes‘ economic profile and the extent to which
they had self-governance or contracting arrangements to perform their
own services. BIA and EDA provided comments on a draft of this report.
BIA generally agreed with GAO‘s conclusions. EDA took issue with GAO‘s
characterization of the relative success of EDA grant programs.
What GAO Found:
Indian tribes have used EDA grants to create businesses, build roads
and other infrastructure, and create economic development plans, but
these grants have had mixed success in generating jobs, income, and
private sector investment. From 1993 to 2002, 143 Indian tribes and
tribal organizations received $112 million in EDA grants, but this
represented a small portion of EDA‘s awards to all organizations. Of
the total amount awarded to Indian tribes or Alaska Native entities,
$54 million was used to fund 63 enterprise projects designed to create
income and jobs. Of the 59 projects GAO collected data on, 25 had not
yet begun operating, and 3 others had just been completed and no
results were available. Of the 31 operational projects, tribal
officials reported that about half were profitable or were covering
their costs, and the remainder were being subsidized or had failed.
Most had resulted in the creation of 10 or fewer jobs, and few had
attracted private sector investment. EDA also provided $22 million in
grants to tribes for infrastructure projects, such as roads and sewer
systems, $30 million in grants to assist tribes with economic planning,
and $5 million for loan funds and business development.
Almost all of the 219 federally recognized tribes with available data
had entered into either contracts or self-governance compacts to
operate their own tribal programs and services. Based on GAO‘s analysis
of U.S. Census Bureau data, tribes that had self-governance
arrangements or were engaging in higher levels of contracting showed
greater gains on average in employment levels from 1990 to 2000
compared with tribes that were contracting less. However, the change
in per capita income or the percentage of tribal individuals with
incomes above poverty levels over this period was not statistically
different for self-governance or high-contracting tribes compared with
low-contracting tribes.
Results from 31 Completed Tribal Enterprise Projects That EDA Funded:
[See PDF for image]
Note: Percentages do not add to 100% due to rounding.
[End of figure]
www.gao.gov/cgi-bin/getrpt?GAO-04-847.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact William B. Shear at (202)
512-8678 or shearw@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
EDA Grants Have Provided Some Benefits to Tribes, but Overall Success
in Producing Economic Development Has Been Mixed:
Tribes Contracting to Operate More of their Own Programs and Services
Generally Experienced Greater Employment Gains but Not Greater Income
Growth Than Other Tribes:
Observations:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Additional Information on EDA Grants to Tribes:
Appendix III: Additional Information on Relationship between
Contracting and Tribes' Economic Profiles:
Appendix IV: Comments from Department of Commerce:
GAO Comments:
Appendix V: Comments from the Department of the Interior:
Appendix VI: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: Purposes of EDA Grant Programs:
Table 2: GAO Criteria for Classifying Tribes by Extent of Contracting:
Table 3: GAO Categories for Tribes by Level of GTI:
Table 4: EDA Grants to Tribes Ranked by Per Capita Amounts, by State,
Over 10-Year Period, 1993-2002:
Table 5: Economic Development-Related Grants to Tribes in the Lower 48
States with Available Single Audit Act Data, by Agency, 1998-2001:
Table 6: EDA Grants Supporting Indian Revolving Loan Funds, 1993-2002:
Table 7: Benefits of Completed EDA-Funded Infrastructure Projects,
1993-2002:
Table 8: Change in Economic Indicators for Self-governance High-
Contracting and Low-Contracting Tribes, 1990-2000:
Table 9: Change in Economic Indicators of Tribes by Grants-to-Income
Ratio Categories, 1990-2000:
Figures:
Figure 1: Total EDA Grants Appropriations and EDA Grant Dollars to
Indian Tribes and Organizations, 1993-2002:
Figure 2: EDA Grants Received by Indian Tribes and Organizations, 1993-
2002:
Figure 3: Per Capita EDA Grants to Tribes, 1993-2002:
Figure 4: Proportion of Total EDA Grant Funding to Indian Tribes and
Organizations by Grant Type, 1993-2002:
Figure 5: Number of Tribes Receiving EDA Grants by Type of Grant, 1993-
2002:
Figure 6: Types of Enterprise Projects Funded, 1993-2002:
Figure 7: Example of Horticulture Enterprise EDA Funded:
Figure 8: Status of Completed Enterprise Projects Funded by EDA, 1993
to 2002:
Figure 9: EDA-Funded Cultural Center:
Figure 10: Other Funding Sources for EDA-Funded Enterprise Projects:
Figure 11: Number of Jobs Created by EDA-Funded Enterprise Projects,
1993-2002:
Figure 12: Resort Cabins That EDA Funding Has Supported:
Figure 13: Marina and Breakwater Constructed with EDA Grant Funds:
Figure 14: Benefits from Completed EDA-Funded Infrastructure Projects,
1993-2002:
Figure 15: Percentage of Planning Grant Recipient Tribes Receiving
Other Economic Development-Related Grants:
Figure 16: Median Change in Percentage Employed, Per Capita Income
Level, and Percentage Above Poverty from 1990-2000:
Figure 17: Percentage of Tribes with Positive Growth on Economic
Indicators by Contracting Category, 1990-2000:
Figure 18: Percentage Change in Economic Indicators for Tribes by
Grants-to-Income Ratio Category, 1990 to 2000:
Figure 19: Comparing Economic Indicators for Self-governance/High-
Contracting Tribes by Grants-to-Income Ratio Category:
Figure 20: Shortfalls in Contrast Support Funding for BIA and Indian
Health Service, Fiscal Years 1993-2002:
Figure 21: Median Percentage Changes in Economic Indicators for Tribes
by Level of Gaming Revenues:
Figure 22: EDA Grants to Tribes and Organizations by Region, 1993-2002,
as Percentage of Total EDA Grants to Tribes and Organizations:
Figure 23: Percentage of EDA Grants to Tribes in the Lower 48 States,
1993-2002, by State:
Figure 24: Number of Federally Recognized Tribes with EDA Grants, by
State and EDA Region:
Figure 25: Total EDA Grants to Tribes and Tribal Organizations, 1993-
2002, by EDA Region:
Figure 26: Per Capita EDA Grants to Tribes in Lower 48 States, 1993-
2002, by EDA Region:
Figure 27: Extent to Which Tribes Receive EDA Planning Grants by
Regions, 1993-2002:
Figure 28: Percentage of Economic Development-Related Grants Received
by Tribes from Various Federal Agencies, 1998-2001:
Figure 29: Benefits of Completed EDA-Funded Enterprises, 1993-2002:
Figure 30: Outcome of Enterprise Projects Funded by EDA, 1993-2002:
Figure 31: Percentage of Self-governance, High-Contracting, and Low-
Contracting Tribes by Grants-to-Income Ratio:
Abbreviations:
BIA: Bureau of Indian Affairs:
Census: U.S. Census Bureau:
CFDA: Catalog of Federal Domestic Assistance:
Commerce: Department of Commerce:
EDA: Economic Development Administration:
GTI: grants-to-income:
RLFs: revolving loan funds:
Letter September 8, 2004:
The Honorable Ben Nighthorse Campbell:
Chairman, Committee on Indian Affairs:
United States Senate:
Dear Chairman Campbell:
Creating employment and raising incomes is a key priority for Indian
and Alaska Native communities, and we have previously reported that
over 100 federal programs were potentially available to assist tribes
or tribal members with economic development activities.[Footnote 1] One
agency providing such aid is the Economic Development Administration
(EDA) within the Department of Commerce (Commerce), which provides
grants to distressed communities to generate new and retain existing
jobs and to stimulate economic growth in areas of the nation
experiencing high unemployment, low income, or severe economic
distress, including American Indian tribes and tribal
consortia.[Footnote 2] Annually, EDA awards between $200 and $400
million in total grants, but public information on the extent to which
EDA grants are assisting tribes was not readily available. In addition
to financial assistance from federal agencies, Congress has also
attempted to help tribes assume management of their own affairs. Since
1975, the Indian Self-Determination and Education Assistance Act has
authorized tribes to assume the management of programs that had been
administered on their behalf by the two federal agencies that provide
services to tribes--the Department of the Interior's Bureau of Indian
Affairs (BIA) and Health and Human Service's Indian Health Service. As
a result, tribes can enter into contracts with these agencies to assume
management of individual services, including law enforcement,
education, social services, and road maintenance. Under self-governance
compacts, tribes can receive lump sum funding to assume many of the
services that were previously provided federally. Proponents of
contracting and self-governance expect that the experience, expertise,
and control that these arrangements provide should also help these
tribes develop economically.
To assess the success of these efforts, you asked us to review EDA
grants, as well as contracting and self-governance arrangements. In
response, we analyzed (1) all EDA grants made to Indian tribes from
1993-2002 and determined what economic development resulted and (2) the
relationship between changes in the economic profile of tribes and the
extent to which they have entered into self-determination contracts or
self-governance compacts to perform their own services under the Indian
Self-Determination and Education Assistance Act, as amended. We also
identified other advantages and disadvantages to these arrangements and
other factors that can affect changes in tribes' economic profiles.
To determine the results of the EDA grants to tribes, we obtained data
on all EDA grants made to tribes from 1993-2002. Over this period, EDA
provided grants to 125 of the 562 federally recognized tribes and also
to 18 tribal or Alaska Native organizations. For our analysis, we
classified EDA's grants by type of project funded, including projects
for:
* producing income (enterprise projects), such as saw mills;
* business development, including training;
* improving infrastructure, such as roads; and:
* conducting economic development planning.
To determine what economic development resulted from these grants, we
gathered information from all 95 tribes that received EDA grants for
enterprise, infrastructure, and business development projects from 1993
to 2002 by (1) visiting 15 tribes to inspect the projects funded and
(2) conducting a telephone survey of the remaining 80 tribes. If these
tribes also received a planning grant from EDA, we also obtained
information about the results for the planning grant from tribal
officials. We analyzed this information to identify the extent to which
the projects these grants funded were profitable or had led to other
economic development. Our survey results reflect the information
provided by and opinions of tribal officials who participated in our
survey. We also interviewed EDA officials in headquarters and regional
offices to discuss application and monitoring policies and procedures
and reviewed Inspector General reports involving EDA funding to tribes.
To determine the relationship between the economic profile of tribes
and the extent to which they had self-determination contracts or self-
governance compacts, we identified the extent to which tribes in the
lower 48 states were contracting using a database that shows the
amounts from federal programs received by tribes that received at least
$300,000 in federal assistance.[Footnote 3] For purposes of our
analysis, we placed tribes into one of the following three separate
groups:
* self-governance tribes that receive funds to perform multiple
services.
* tribes whose total contracting dollars exceeded a calculated
threshold (high-contracting tribes), and:
* tribes below this amount (low-contracting tribes).[Footnote 4]
Using data from the U.S. Census Bureau (Census), we compared the extent
to which various economic variables, such as the per capita income of
the Native Americans living in the tribal area, had changed from 1990
to 2000 for the tribes in these three groups.[Footnote 5] Because we
were not able to include the extent to which other external factors
also affected the tribe's economic development, our results cannot be
used to definitively determine whether any changes in tribes' economic
profiles are the result of the extent to which they engaged in
contracting or self governance. Our contracting analysis also included
only 219 tribes located in the lower 48 states for which requisite
information for our analysis was available and excluded Alaska Native
entities because comparable contracting and economic profile data was
not available. We performed various steps to assure ourselves of the
reliability of the data that we used in the analyses for this report
and we describe these efforts in appendix I. We determined that the
data was sufficiently reliable for our purposes.
We conducted our work in Washington, D.C; Philadelphia; and various
locations in California, Alaska, Arizona, New Mexico, and Washington
from July 2003 through September 2004 in accordance with generally
accepted government auditing standards. Appendix I contains a detailed
description of our scope and methodology.
Results in Brief:
Indian tribes have used EDA grants to create businesses, build roads
and other infrastructure, and create economic development plans, but
these grants have had mixed success in generating jobs, income, and
private sector investment. From 1993 to 2002, 143 tribes received $112
million in EDA grants. We also found that grants to tribes represented
a small portion of EDA's annual awards and the extent to which tribes
obtained EDA grants varied across states and regions. With these
grants, EDA seeks to create jobs, generate revenue, and attract private
investment. Of the $112 million total, $54 million was used to fund
grants for 63 projects designed to create income and jobs--called
enterprise projects. Of 31 projects completed for which results were
available, tribal officials we contacted reported that 23 percent were
profitable, 32 percent were covering costs, 23 percent were being
subsidized, and 23 percent had failed. Most of these projects have
created 10 or fewer jobs and did not attract direct private sector
investment. EDA also provided less than $5 million to support business
development projects, including revolving loan funds and training
activities.
From 1993 to 2002, EDA also provided $22 million in grants to 23 tribes
for infrastructure projects such as roads and sewer systems. Officials
of the tribes that received these grants reported that the
infrastructure improvements EDA funded resulted in the development of
industrial parks, hotels, casinos, and other commercial enterprises.
But many tribal officials reported that a lack of capital for
infrastructure and other projects limited their development efforts.
During the 10-year period, EDA also provided $30 million in grants to
99 tribes to conduct economic planning. Nearly all of the tribes that
received EDA planning grants also received either additional funding
from EDA or from other federal agencies for enterprise or economic
development projects.
Through funding from BIA and other federal agencies, nearly all tribes
now have contracts or self-governance compacts to operate many of their
own tribal programs and services. Although we did not analyze whether a
direct causal relationship exists, we found that the tribes that were
self-governing or engaged in a high level of contracting showed greater
gains on average in employment levels from 1990 to 2000 than did tribes
that were contracting to perform fewer of their own programs and
services. However, our analysis found that on average the high-
contracting and self-governance tribes had not experienced greater
growth in per capita income or in the percentage of Native Americans in
the tribal area living in households with incomes above the poverty
level than had low-contracting tribes. Although their incomes did not
grow faster on average, a greater percentage of high-contracting and
self-governance tribes experienced positive growth in their levels of
employment, per capita income, and percentage above poverty than did
low-contracting tribes.
Tribal officials also indicated that running their own programs through
contracts and compacts allows them to gain self-governance experience
and to tailor the programs to their own needs. However, they noted that
the failure of these contracting and compacting arrangements to provide
for adequate funding of administrative costs is a disadvantage and can
reduce the resources such tribes have for other economic development
activities. Discussions with tribal and federal officials and reviews
of various studies of Indian economic development issues also indicated
that other factors such as the desirability of a tribe's location,
availability of exploitable resources, the adequacy of the physical
infrastructure near tribal areas, and the stability of tribal
government were important determinants to the level of economic success
that tribes experienced. For example, tribes located in areas with
natural features that serve as a tourist draw or those located closer
to areas with large urban populations may be able to develop
economically more easily than other tribes.
This report does not contain recommendations. We requested and obtained
comments from the Department of Commerce, which provided EDA's
comments, and the Department of the Interior, which provided BIA's
comments; these agencies written comments are discussed later in this
report and are reproduced in appendixes IV and V, respectively. BIA
generally agreed with our conclusions and stated its support for
increased self-determination contracting and compacting as a means of
improving tribal economic development efforts. EDA acknowledged that
its enterprise development investments had mixed success given the EDA
investments we reviewed and evaluated. EDA stated that the success of
other types of EDA investments should be considered in order to make a
broad statement about the economic development generated by EDA grants
as a whole. After considering our findings for all the EDA grants to
tribes between 1993 and 2002, we believe that our conclusion that EDA
grants have had mixed success is accurate. The grants for enterprise
projects represent the largest portion--almost half--of the funding EDA
provided to tribes during this period and these grants, as our report
shows, have had mixed success in producing economic development. In
addition, although our report presents information from tribal
officials that indicated that economic development resulted from the
other types of EDA grants, we found that the grants generally included
projects that appeared to be successful, but also included projects
that had yet to show results, had produced limited benefits, had not
been sustained, or had not produced benefits.
Background:
American Indian tribes are among the most economically distressed
groups in the United States. According to data from the 2000 U.S.
Census, American Indian tribes' median per capita income of $9,200 in
1999 was less than half the $21,600 per capita income for the entire U.
S. population.[Footnote 6] In addition, the percentage of American
Indians with household incomes at or below the official poverty level
averaged 30 percent across tribes--more than double the 12 percent for
the U.S. population as a whole.[Footnote 7] According to tribal
officials and government agencies, conditions on and around tribal
lands generally make successful economic development more difficult.
These officials indicated that American Indian communities often are
lacking in adequate basic infrastructure, such as water and sewage
systems. These communities also frequently lack sufficient technology
infrastructure, such as telecommunications lines that are commonly
found in other American communities. Without such infrastructure,
tribal communities often find it difficult to compete successfully in
the economic mainstream. A 1999 EDA study that assessed the state of
infrastructure in American Indian communities found that these
communities also had other disadvantages that made successful business
development more difficult.[Footnote 8] This study found that the high
cost and small markets associated with investment in Native communities
continued to deter widespread private sector involvement. Another
factor that creates more difficult business conditions in some tribal
areas has been downturns in regionally significant industries. For
example, tribes in the Northwest and Alaska have been hurt by the
decline in the fishing and timber industries in their areas.
To help address the needs of Indian tribes, various federal agencies
provide assistance, including economic development. BIA is charged with
the responsibility of implementing federal Indian policy. BIA assists
tribes in various ways, including providing for social services,
developing and maintaining infrastructure, and providing education
services. BIA also attempts to help tribes develop economically by
providing resources to administer tribal revolving loan programs and
guaranteed loan programs to improve access to capital in tribal
communities and providing assistance in obtaining financing from
private sources to promote business development initiatives on or near
Indian reservations. In addition to the support provided by BIA, other
agencies with significant programs for tribes include the Department of
Health and Human Services, which provides funding for the Head Start
Program and the Indian Health Service; the Department of Housing and
Urban Development, which provides support for community development and
housing-related projects; and the Department of Agriculture, which
provides support for services pertaining to food distribution,
nutrition programs, and rural economic development.
The Department of Commerce's EDA is an agency that provides assistance
to tribes specifically for economic development. EDA's mission is to
create wealth and minimize poverty in economically distressed rural and
urban communities that experience high unemployment, low income, or
other severe distress. EDA fulfills its mission with grant programs,
including six programs explained in table 1.
Table 1: Purposes of EDA Grant Programs:
EDA grant program type: Public works and economic development;
Purpose of grants awarded: Provides grants that support construction or
rehabilitation of essential public infrastructure and development
facilities necessary to generate private sector jobs and investments.
EDA grant program type: Planning assistance;
Purpose of grants awarded: Provides grants to assist recipients with
preparing economic development strategies and to conduct other planning
and technical assistance services.
EDA grant program type: Economic adjustment assistance;
Purpose of grants awarded: Provides grants to respond to economic
changes such as natural disasters, reduction in defense expenditures,
or depletion of natural resources.
EDA grant program type: Technical assistance;
Purpose of grants awarded: Provides grants to assist communities in
analyzing the feasibility of particular economic development
investments.
EDA grant program type: Trade adjustment assistance;
Purpose of grants awarded: Provides grants to fund technical assistance
centers that provide services to firms negatively impacted by foreign
competition.
EDA grant program type: Research and evaluation;
Purpose of grants awarded: Provides grants to support communications
and research into development programs, projects, and emerging issues.
Source: EDA.
[End of table]
EDA has six regional offices that administer its grant programs across
multistate areas. Each regional office accepts preapplication
investment proposals from prospective grantees, including American
Indian tribes and Alaska Natives. Based on established regulations, EDA
regional officials encourage only those investment proposals that will
significantly benefit areas experiencing or threatened with substantial
economic distress to continue with the application process.[Footnote 9]
Before receiving a grant, an entity must submit a preapplication
proposal to an EDA Economic Development Representative responsible for
that area. After preliminary reviews by various EDA regional office
staff, each preapplication proposal is considered by the region's
Investment Review Committee, which consists of the Regional Director,
Regional Counsel, and Division Chiefs, to ensure that entity is
eligible to receive funds and that the project is likely to provide
benefits meeting EDA's criteria. The Investment Review Committee will
then recommend whether the entity should be invited to submit an
application. EDA headquarters reviews the recommendation action for
quality assurance. According to Commerce, after receiving quality
control clearance and depending on the type of grant program, the
Regional Director approves the decision to invite the entity to submit
a formal application. After this application is received and found to
be complete, the grant funds will be awarded. During the 1990s, the
goals EDA generally sought to meet through its grants were to fund
projects that would create jobs and produce income for distressed
communities. However, since 2002 EDA has placed more emphasis on
projects that create higher-skill, higher-wage jobs and that are market
based and likely to attract private sector investment.
Activities Tribes Perform under the Indian Self-determination and
Education Act Are Also Envisioned to Help Economic Development:
Activities that tribes are authorized to undertake as a result of the
Indian Self-Determination and Education Assistance Act, as amended,
could help them develop economically. This act authorizes Indian tribes
to take over the administration of programs that had been previously
administered on their behalf by the Departments of the Interior or
Health and Human Services. In passing the act, Congress recognized that
the government's administration of Indian programs prevented tribes
from establishing their own policies and making their own decisions
about program services. The act allowed tribes to contract for a range
of Indian programs that are managed by the Interior Department's BIA
and Health and Human Services' Indian Health Service on their
behalf.[Footnote 10] According to the act, tribal contractors must
receive funding equivalent to what each of the agencies would have
provided if they had operated the programs. The act, as amended, also
provides that tribal contractors are to receive funding for the
reasonable costs of activities that they must perform to manage a
program's contract--known as contract support costs.[Footnote 11] Once
having contracted a program, a tribe assumes responsibility for all
aspects of its management, such as hiring program personnel, conducting
program activities, delivering program services, and establishing and
maintaining administrative and accounting systems. Typical programs
that are contracted by tribes include such BIA programs as law
enforcement, social services, road maintenance, and forestry as well as
such Indian Health Service programs as hospitals and health clinics;
dental care; and mental health services.
Congress has amended the act several times since 1975. A series of
amendments from 1984 through 1994 streamlined contracting requirements,
provided funds for contract support, and allowed more participation by
tribal governments in federal rulemaking. In 1988, a new title was
added to the 1975 act authorizing the creation of the Self-Governance
Demonstration Project that enabled a number of tribes to receive
funding for multiple federal programs in one lump sum under a self-
governance agreement. This new title to the act, known as Title III
Self-Governance Demonstration Project, enables tribes generally to
receive funding for multiple federal programs in one lump sum under a
self-governance compact. Tribes operating under a self-governance
compact have the flexibility to administer funds for multiple programs
as they see fit, rather than abiding by the circumstances of single-
program contracts. The 1988 amendment also added reasonable contract
support costs to comply with the terms of the contract and to support
prudent management. The Tribal Self-Governance Act Amendments of 1994
directed the Secretary of the Interior to negotiate contracts annually
with participating tribes to enable the tribes to plan, conduct,
consolidate, and administer functions and activities that were
administered by the Secretary. Through the act and the subsequent
amendments, Congress envisioned that Indian tribes and Indian people
are best able to determine the most effective and efficient provision
of government programs, services, and economic development for Indian
people.
EDA Grants Have Provided Some Benefits to Tribes, but Overall Success
in Producing Economic Development Has Been Mixed:
The funding that EDA provided to tribes between 1993 and 2002
represented a small portion of the economic assistance that EDA
provided during this 10-year period. The extent to which tribes
received EDA grants varied across states and these were used for
various purposes. From 1993 to 2002, EDA provided funding for 63
enterprise projects intended to generate revenues but these have had
mixed success in producing economic development. EDA has also provided
a small amount of funding for business development activities,
including several revolving loan funds, which were used to fund tribal
enterprises or training. In addition, 23 tribes received EDA grants for
infrastructure projects that tribal officials reported as having
resulted in subsequent economic development activities for their
tribes. During the 10-year period, 99 tribes and tribal organizations
received EDA grants for planning activities, including feasibility
studies, and almost all of the tribes that got these grants either
received other funding from EDA or obtained economic development aid
from other government agencies.
EDA Grants to Tribes Represented a Small Portion of its Overall
Program:
The funding that EDA provided to tribes represent a small portion of
overall EDA grants. We obtained data from EDA that included all grants
it made to American Indian tribes during the years 1993 to 2002. Our
analysis of these data indicated that 143 Indian tribes and tribal
organizations received a total of $112 million in EDA grants during
this 10-year period. Comparing this with the total amount of grants
that EDA awarded, EDA grants to tribes represented 3 percent of the
$3.4 billion that the agency had awarded overall between 1993 and 2002.
Figure 1 shows the relative proportion of funding that tribes received
each year from EDA, which ranged between 2.1 percent and 5.3 percent of
total EDA grant appropriations during this period.
Figure 1: Total EDA Grants Appropriations and EDA Grant Dollars to
Indian Tribes and Organizations, 1993-2002:
[See PDF for image]
Note: This is in actual dollars.
[End of figure]
Using information from the 2000 Census, we calculated that
approximately 3.5 percent of the persons in the United States with
income below the official poverty level are American Indians or Alaska
Natives. Therefore, the proportion of EDA funds going to tribes appears
to be similar to the proportion of the U.S. population living in
poverty that these tribes represent.
Based on our analysis of EDA data, 125 (or 22 percent) of the 562
federally recognized tribes in the lower 48 states and Alaska received
EDA grants between 1993 and 2002. EDA also provided grants to 18 tribal
organizations or Alaska Native entities. According to EDA officials,
other tribes did not receive any EDA grants for various reasons. For
example, they said that the demand for funding exceeds the available
grant funding. Also, one EDA official said that some tribes are unable
to propose a project that appears likely to generate sufficient
economic development.
EDA Funding to Tribes Varied across States:
Of the $112 million in total grants to tribes that EDA awarded between
1993 and 2002, $86 million went to 113 tribes in the lower 48 states.
This included grants to 100 federally recognized tribes and 13 tribal
organizations. The remaining $26 million was awarded to 30 Native
entities in Alaska, including grants to 25 federally recognized Native
entities and 5 Alaska Native organizations representing more than one
entity.[Footnote 12]
Our analysis indicated that the amount of EDA funding to tribes varied
across states. For example, Alaska accounted for almost 23 percent of
EDA grants to all tribal entities during the years 1993 to 2002, as
shown in figure 2. In 2001 alone, Native entities in Alaska received
over half of all EDA grants to tribes, much of which were awarded under
EDA's disaster relief appropriation for projects to address the slump
in Alaska's fishing industry.
Figure 2: EDA Grants Received by Indian Tribes and Organizations, 1993-
2002:
[See PDF for image]
Note: This is in 2002 constant dollars.
[End of figure]
In addition to more tribes in some states receiving grants, our
analysis showed that EDA-awarded grants to tribes also varied on a per
capita basis across states. As figure 3 shows, tribes in seven states,
including Colorado, Florida, Idaho, Maine, Massachusetts, North
Carolina, and Oregon, received more than $600 per individual in grants
from EDA between 1993 and 2002. In contrast, tribes in at least eight
states received no EDA grant funding during this period.
Figure 3: Per Capita EDA Grants to Tribes, 1993-2002:
[See PDF for image]
[End of figure]
EDA Grants to Tribes Used for Various Purposes:
The grants EDA made to tribes were for various purposes. In the data we
analyzed, EDA categorized the grants it awarded according to the
various funding programs it administers, such as for planning, public
works, or economic adjustment. However, upon review of these data, we
found that EDA used funds from these different categories to provide
grants for similar types of projects. For example, an economic
adjustment grant or a public works grant could be used for either the
planning of a project or the construction of a project. Therefore, for
our analysis, we grouped the various grants into the following
categories according to type of project or activity funded:
* Enterprise projects: grants used to develop projects designed to
generate income for the tribe, such as a cannery, a resort, or a
sawmill;
* Infrastructure projects: grants used for the design and construction
of public works infrastructure (e.g., roads, highways, and sewers) that
would serve as the foundation for general economic development
activities;
* Business development projects: grants used to fund loan funds,
training, and other business development projects, including those for
business incubators, revolving loan funds (RLF), training and capacity
building, and other assistance that enhances the tribes' economic
development activities; and:
* Planning/feasibility grants: grants used for general planning
purposes such as paying for staff salaries or the broad administration
of the tribes' planning departments, as well as for developing plans,
analyses of projects' environmental impact, and feasibility studies for
specific economic development projects.
Based on the results of our analysis of EDA data, we found that the
largest portion of the dollars EDA awarded to tribes were for
enterprise projects. As figure 4 shows, about half of the $112 million
that EDA awarded to tribes between 1993 and 2002 was for enterprise
projects. Grants for planning and feasibility studies represented the
next largest portion of the grants.
Figure 4: Proportion of Total EDA Grant Funding to Indian Tribes and
Organizations by Grant Type, 1993-2002:
[See PDF for image]
[End of figure]
In addition to accounting for 27 percent of grant dollars EDA awarded
between 1993-2002, the most frequent type of grant that tribes received
was for planning and feasibility studies. As shown in figure 5, more
tribes received planning and feasibility grants than any other type.
Figure 5: Number of Tribes Receiving EDA Grants by Type of Grant, 1993-
2002:
[See PDF for image]
Note: A tribe could receive more than one type of EDA grant.
[End of figure]
EDA Funding of Tribal Enterprise Projects Has Had Mixed Success
Generating Economic Development:
The grants that EDA provided to tribes have had mixed success in
creating revenue-generating enterprises. Of the $112 million that EDA
provided to tribes from 1993 to 2002, as shown in figure 6, $54 million
or nearly half went to fund 63 tribal enterprise projects, including
almost $20 million for projects in Alaska. As shown in figure 6, most
of the enterprise projects EDA funded for tribes included industrial
enterprises, such as wood products plants, or commercial projects, such
as retail businesses and shopping centers. Most of the EDA-funded
enterprise projects in Alaska involved community or cultural centers,
which provided facilities for community and tourist activities. Some of
the EDA grants also funded natural resource enterprises involving fish,
wildlife, or horticulture restoration.
Figure 6: Types of Enterprise Projects Funded, 1993-2002:
[See PDF for image]
[End of figure]
Figure 7 describes an example of one enterprise project that EDA
funded. This grant helped a tribe fund the development of a
horticultural enterprise that grows vegetation to improve fishing areas
in local rivers. Although producing some benefits, at the time we
contacted the tribe operating this project, they were using funds from
other sources to subsidize its operations, although they hoped it would
eventually be profitable.
Figure 7: Example of Horticulture Enterprise EDA Funded:
[See PDF for image]
[End of figure]
The enterprise projects EDA funded for tribes have had mixed success in
helping tribes create revenue-generating enterprises. We gathered
information on 59 of the 63 projects funded by EDA between 1993 and
2002--12 by site visits and 47 by telephone interviews with tribal
officials. Tribal officials we contacted in late 2003 and early 2004
reported that:
* 31 projects had been completed;
* 3 were completed, but just opened, and no operating results were yet
available; and:
* 25 had not yet been completed, including 20 projects funded in 2001
and 2002.
As shown in figure 8, of the 31 completed projects with results, tribal
officials reported about half were either profitable or were earning
enough to cover their operating costs. However, the remaining projects
were either requiring subsidies or had ceased operations. Tribal
officials predicted that 4 of the 7 projects currently being subsidized
could become sustainable given more time or further expansion.
Figure 8: Status of Completed Enterprise Projects Funded by EDA, 1993
to 2002:
[See PDF for image]
Note: Percentages do not add to 100% due to rounding.
[End of figure]
Five of the 7 projects that failed were industrial enterprises,
including a sawmill, a bottled water plant, and a plant to manufacture
fiberglass household furnishings. According to tribal officials, the
reasons for failure included market changes or downturns, lack of an
ongoing source of funding to keep the enterprise afloat, management
problems, and environmental problems. Four of the 7 failed enterprise
projects were funded between 1993 and 1995. However, in recent years,
some tribes reported that they have been able to keep fledgling
enterprises afloat by subsidizing them with revenues from gaming or
other tribal enterprises, and the failure rate for EDA-funded
enterprise projects has decreased. Since 1996, EDA funded 24 tribal
projects that had been completed and, of these, 14 were either
profitable or covering their costs, 3 had failed, and 7 were still
being subsidized (see appendix II, figure 30 for more information on
the outcome of projects by year of funding). Figure 9 provides an
example of a project that, although it has not failed, is used only
once a year and must have its operating costs subsidized by the tribes
that operate it.
Figure 9: EDA-Funded Cultural Center:
[See PDF for image]
[End of figure]
Our analysis of the enterprise projects that EDA funded indicated that
most of the projects that tribes developed with EDA funding had not
attracted funding from private entities. For most of the enterprise
projects we reviewed, EDA funds covered between 30 percent and 80
percent of the total project costs. As shown in figure 10, tribal
officials reported direct private sector investment in 17 percent of
the projects, though in some cases the tribal share of project funding
included funds borrowed by the tribes from private financial
institutions. EDA officials recognize the difficulty tribes face in
attracting private investment on Indian lands and sometimes make
allowances for the amount of matching funds they require or suggest to
tribes that they locate projects outside of reservation land.
Figure 10: Other Funding Sources for EDA-Funded Enterprise Projects:
[See PDF for image]
Note: Some projects had multiple sources for the non-EDA share of
project funding. Figures based on 53 projects for which funding source
data was available.
[End of figure]
The grants that EDA provided to tribes for enterprise projects also
appeared to create limited numbers of jobs. Tribal officials told us
that many of the EDA-funded enterprise projects had resulted in the
creation of jobs for tribal members, although the number of jobs
created generally was less than 10 per project. As shown in the figure
11, 20 (59 percent) of the enterprise projects resulted in 10 or fewer
jobs.
Figure 11: Number of Jobs Created by EDA-Funded Enterprise Projects,
1993-2002:
[See PDF for image]
Note: Jobs created represents number of jobs at the enterprise at the
time of our survey that did not exist prior to project funding, as
reported by tribal officials. Some tribes reported seasonal jobs, which
we counted as one-half of a nonseasonal job. (Total = 34 completed
projects.)
[End of figure]
Although most projects did not create a large amount of jobs, some
projects that EDA funded were more successful in employing larger
numbers of people. Of the 34 completed projects we reviewed, 4 projects
resulted in the creation of 50 or more jobs. These included the
following projects:
* One Northwest tribe received a $1.6 million EDA grant in 2002 to help
fund the opening of a plywood processing plant that uses wood from the
tribe's own forests. The total project cost was $10 million, with
additional funds coming from other federal and state grants, the tribe,
and a bank loan. Tribal officials reported that the enterprise has
created 265 jobs in a generally depressed rural area and is generating
enough revenue to cover costs, including debt servicing.
* One Southwest tribe we visited received a $2.5 million EDA grant in
2000 to help fund a shopping center. Total project cost was nearly $4.5
million, including an earlier $1 million investment by the tribe to
install basic infrastructure for the site. The project was built to
accommodate seven retail businesses. At the time of our visit, the
center had five tenants--a grocery store, pizza restaurant, laundromat,
hair salon, and video store--and two vacancies. According to tribal
officials, the project was still being subsidized by the tribe but is
expected to be profitable in 3 to 5 years. According to a tribal
report, the center had generated 70 jobs, provided retail services to
local consumers, stopped a portion of leakage of tribal dollars to off-
reservation towns, and provided opportunities for some tribal members
to go into business.
* A Montana tribe received three EDA grants totaling $1 million between
1996 and 2002 for expansion of a tribal electronics enterprise. Total
cost of the expansion projects was $2 million. According to tribal
officials, the projects generated a total of 65 new jobs, including
participants in a welfare-to-work program. The first two projects were
profitable, but the third project was not yet turning a profit as of
early 2004.
Although the projects EDA funded had only mixed success in generating
revenue and large numbers of jobs, tribal officials told us that the
EDA-funded enterprise projects had produced other benefits. In some
cases, tribal officials said that the projects EDA funded resulted in
the creation of jobs and revenue at other entities. For example, one
tribe used a $350,000 EDA grant in 1997 to help fund construction of a
fish hatchery. This enterprise did not make a profit, but 15 jobs were
created at the hatchery. The project had indirect economic benefits to
the tribe because it helped to support the local fishing and tourism
industry, which employed 15 to 20 tribal individuals as fishing guides
and 8 seasonal jobs at a campground. The hatchery also generated
increased business for local restaurants and motels and enabled tribal
subsistence fishermen to catch fish for their own consumption. (See
app. II, fig. 29, for a list of the completed enterprise projects for
which we obtained information.)
In light of the mixed success that EDA-funded enterprise projects
experienced, tribes may find obtaining EDA funding in the future more
difficult because of the changes in the agency's criteria for awarding
grants. Since fiscal year 2002, EDA's criteria for approving grant
applications requires its staff to seek to fund projects that create
jobs requiring greater skills and paying higher wages. Their criteria
also emphasize projects more likely to attract private sector
investment. In meeting these criteria, EDA officials informed us that
tribes have to compete with other entities such as state and local
governments and nonprofit organizations for EDA grants. As a result,
tribes in rural areas, in particular, find it difficult to propose
projects that are likely to attract private sector investment or result
in jobs that pay high wages. For example, EDA officials we spoke to in
one EDA region noted that communities closer to urban areas were more
likely to be able to propose projects, such as industrial parks, that
were likely to attract high technology firms than were the more
rurally-located tribes in their region.
EDA Also Provided Funds for Loan Funds and Other Business Development
Activities:
From 1993 through 2002, EDA also awarded grants to tribes to be used
for loan funds, business development, and training. Grants for these
purposes totaled $4.9 million, comprising 4 percent of the total $112
million that EDA provided to tribes during that 10-year period. About
$2.2 million of the EDA grants were to support RLFs. These RLFs are
pools of money loaned out for revenue-generating enterprises. The
repayment of loan principal and interest replenish the RLF, creating a
revolving source of capital to finance additional loans and further
develop the local economy. Of the $2.2 million EDA awarded for RLFs
between 1993 and 2002, $950,000 was to provide the initial capital--
seed money--to get three new RLFs started and about $1.3 million was
used to support business development and training programs associated
with two existing RLFs (see app. II for details).
Tribal officials reported that these RLFs EDA has supported have
successfully funded both tribal enterprises and small businesses
started by individual tribal members. For example, a tribe in Northern
California has administered one of these RLFs since 1977, when EDA
originally provided initial capital of $1.5 million to finance loans
relating to the tribe's forest industries. Since 1994, EDA provided
$285,000 to fund a business training program to assist applicants
seeking funding from this RLF with instruction on preparing business
plans, contract agreements, credit applications, and on the use of
computers and other office equipment. According to documents provided
by fund officials, over the years, this RLF has made 356 loans to
businesses resulting in 658 new jobs and attracted $7.8 million in
private sector investment.[Footnote 13] Among the projects tribal
officials told us had received funding from this RLF included a
shopping center, a motel, a restaurant, a gas station, and a gravel
enterprise. Tribal officials told us that most of the projects this RLF
has funded have provided jobs or other benefits, although not all are
operating profitably. To keep the more marginal enterprises operating,
tribal officials reported using profits from the tribe's own successful
enterprises to subsidize the financing costs of the other enterprises.
By keeping these enterprises in operation until loans were paid off,
their community benefits from the additional jobs and services, and the
enterprises receive additional time to become sustainable on their own.
According to documents provided by fund officials, the total amount of
loan defaults as a percentage of the total loaned out since inception
for this tribe's RLF was 5.4 percent, and through repayments of
principal and interest the fund's capital pool has more than doubled to
over $3.2 million. Although we did not attempt to independently verify
the accuracy of these figures, we visited several of the businesses the
tribe indicated had received funding. For example, the gravel
enterprise, in its first year of production since receiving an $850,000
loan from the RLF to purchase rock-crushing machinery, was in full
production, and enterprise officials expected to turn a profit within 2
years and hoped to add an asphalt plant in the future. At the time of
our visit, we saw that this facility was operating actively with
considerable truck traffic into and out of the facility.
The amount of loan activity by the three newly-funded RLFs has been
limited by start-up challenges and the amount of money in these funds.
According to RLF officials we interviewed, there are many challenges to
establishing a successful RLF, including finding additional funds to
match EDA's seed money and cover operating costs until sufficient
interest income begins to be received. Other challenges include finding
and hiring a competent, experienced loan manager; training loan
applicants in such areas as drawing up business plans; and establishing
relationships and gaining the confidence of financial institutions to
leverage the loans. One of the RLFs took 3 years from the time its EDA
grant was approved until its first loan was made. At the time of our
survey, the three RLFs that EDA had funded since 1998 reported each had
made between 7 and 14 loans. Because new loans cannot be made until
older loans are repaid, considerable time is required for RLFs to grow
and become more active.
Figure 12 shows an example of a resort cabin business that was funded
by a loan from an EDA-supported RLF. EDA also funded a grant that was
used for the design of the project. The tribe operating the project
reported that the project is generating enough revenue to cover its
costs despite a short tourist season, but they hoped that an expansion
of the project could make it profitable.
Figure 12: Resort Cabins That EDA Funding Has Supported:
[See PDF for image]
[End of figure]
In addition to grants to support RLFs, EDA also provided tribes with
funding for training or business development, but according to tribal
officials, the success of these programs has been hampered by lack of
operating funds. Between 1993 and 2002, EDA provided Indian tribes with
$2.1 million in grants to start 6 training programs. The largest of
these was a $1.2 million grant in 2000 to renovate a building for a
vocational training center in Alaska that, according to local
officials, has trained 830 students. A California tribe that, according
to a tribal official, lost 150 jobs due to timber industry closures,
used a $66,000 grant in 1998 to establish a training program that has
resulted in 2 entrepreneur classes, 100 individual business counseling
sessions, and 5 start-up businesses. All 6 of these programs sought
operating funds from other sources, such as state and federal agencies.
However, 4 of the 6 programs reported difficulties getting on-going
operating funds--two closed down due to lack of funds, one transferred
its facilities to a university program, and the fourth reported that
its program was in jeopardy.
In addition to training programs, EDA also provided about $500,000 to
six other Indian tribes and organizations for business development
activities between 1993 and 2002. In most cases the grants were for
one-time training workshops or conferences on business development
related topics. In two cases, the grants were used to recruit several
businesses for business/industrial parks. One tribe, which received a
$75,000 grant in 2000, reported finding one current and two future
tenants for their park and used part of the grant to conduct a seminar
on how tribal businesses can apply for government contracts under the
Small Business Administration's 8(a) minority contracting program.
EDA Infrastructure Grants Reported to Have Facilitated Development:
About 20 percent of the funding that EDA provided to Indian tribes
between 1993-2002 was for projects to improve infrastructure for tribal
lands. According to government and tribal officials, many rural Indian
communities lack the infrastructure needed to support industrial and
commercial development, such as roads, water and waste treatment
pipelines, and processing facilities. A 1999 EDA study cited lack of
funding as the overwhelming reason why tribes were not making the
infrastructure investments needed to facilitate economic
development.[Footnote 14] The tribal officials we spoke with said that
obtaining sufficient funding for infrastructure development was
particularly difficult because such projects do not always offer an
immediate return on the investment. However, in some cases tribes with
revenues from gaming and other tribal enterprises were able to use
these sources in addition to funding from EDA and other federal grants
to finance improvements to their infrastructure.
Our analysis indicated that EDA provided $22.1 million in grants to 23
tribes for 26 infrastructure projects between 1993 and 2002. In many
cases, these funds were supplemented by grants from other federal
agencies. Most of these projects involved construction or expansion of
water and waste treatment systems, electrical lines, and roads. Other
grants that EDA awarded were used to improve dock and harbor
facilities, to shore up riverbanks for flood control, and to install
telecommunications equipment. For example, one coastal tribe we visited
used $2.6 million in EDA funds to construct a breakwater and marina to
support and protect the tribal fishing boats and to bolster the tribe's
seasonal boating-related tourism industry (see figure 13). Another
tribe we visited received a $1 million EDA grant in 1997 to construct
the water and sewer pipes, roads, and electrical lines needed for a new
industrial park.
Figure 13: Marina and Breakwater Constructed with EDA Grant Funds:
[See PDF for image]
[End of figure]
Of the tribes that received EDA infrastructure grants, tribal officials
reported that the funded projects facilitated either current or
anticipated future business development. We gathered information on 25
of the 26 EDA infrastructure grants, visiting 4 during our site visits,
and conducting telephone interviews for the remainder. Nineteen of the
25 projects had been completed and, according to tribal officials, all
have led to economic development for their tribes. For example, one
tribe received a $1.1 million EDA grant in 1995 to upgrade and extend
their water and sewer systems, which enabled the development of a
resort, hotel, and casino complex with more than $25 million in annual
revenues. Tribal officials reported that the complex has created more
than 550 jobs, which helped reduce the tribal unemployment rate from 37
percent to 11 percent. According to these officials, the success of
this project is spurring further economic development, including a
planned industrial park. Figure 14 shows the various developments that
were facilitated by the infrastructure grants that EDA provided to
tribes.[Footnote 15]
Figure 14: Benefits from Completed EDA-Funded Infrastructure Projects,
1993-2002:
[See PDF for image]
[End of figure]
The benefits for some of the enterprise projects EDA had funded had yet
to be realized. Of the 25 infrastructure projects that we reviewed,
construction on 6 had not yet been completed, and 4 had only recently
been opened, and tribal officials told us that it was too soon to
realize most of the anticipated development benefits.
EDA Planning Grants Helped Tribes Obtain Other Funding for Their
Economic Development:
About one-fourth of the total dollars that EDA awarded to tribes were
provided to fund planning and feasibility study efforts, which appeared
to help these tribes identify their needs and obtain other funding for
their economic development efforts. According to the Department of
Commerce's fiscal year performance report, EDA considers funding
distressed communities' planning efforts critical to effective economic
and sustainable development. Based on our analysis of EDA grants, 99
tribes and organizations received $30 million in EDA grants to conduct
planning activities or to fund the preparation of feasibility studies
from 1993-2002.
The grants awarded for planning went to 72 tribes and 7 tribal
organizations in the lower 48 states and 6 Alaska Native villages or
organizations. These grants, which typically ranged from $30,000 to
$65,000, were generally used by tribes to pay part or all of the salary
of an individual tasked with developing economic development plans for
the tribe. More than half of the tribes receiving planning grants
received them annually throughout the 10-year period, and many have
received these grants continuously since the 1970s. Over 90 percent of
the tribal officials in our survey indicated that the planning grants
were crucial or very important in achieving success in their tribes'
economic development. However, some officials reported that the
effectiveness of their planning grants was limited because of lack of
funds to implement the projects they envisioned or lack of support or
consensus among the tribal leadership as to what projects to pursue.
EDA also helped fund feasibility studies for 38 tribes. These grants
were awarded to 34 tribes in the lower 48 states and 4 in Alaska.
According to tribal officials, performing a feasibility studies before
embarking on a potential project can assist tribal officials in
determining whether the project would benefit the tribe. Of the 17
feasibility studies that we obtained information on from our telephone
interviews and site visits, 3 of the projects studied were successfully
implemented, 4 were in the planning stage, 3 were not implemented due
to a lack of funds, 3 were not implemented due to a change in direction
by the tribal council, and 4 were determined not to be feasible.
As shown in figure 15, most tribes that receive planning or feasibility
study grants also receive project funding from EDA or other federal
agencies.
Figure 15: Percentage of Planning Grant Recipient Tribes Receiving
Other Economic Development-Related Grants:
[See PDF for image]
[End of figure]
The EDA planning grants appeared to help tribes successfully implement
EDA enterprise projects. According to the information we obtained on 25
completed enterprise projects in the lower 48 states that EDA funded
from 1993-2002, 9 of 14 that had also received EDA planning grants were
either profitable or covering their costs, compared with 4 of 11
projects done by tribes that had not obtained EDA planning grants. In
addition, 4 of the 7 tribal enterprise projects that had failed during
this period were implemented by tribes that had not received EDA
planning grants.
Tribes Contracting to Operate More of their Own Programs and Services
Generally Experienced Greater Employment Gains but Not Greater Income
Growth Than Other Tribes:
As authorized under the Indian Self-Determination and Education
Assistance Act, as amended, nearly all tribes enter into contracting or
self-governance arrangements to operate their own tribal programs and
services. Based on our analysis of the relationship between contracting
and changes in tribes' economic profiles, we found that self-governance
tribes and those that had contracted to operate a high proportion of
their programs and services generally experienced greater growth in
their employment levels but had not generally shown greater gains in
income levels. Our analysis also suggested that tribes that received a
high proportion of their income from federal contracts and grants
generally experienced lower income growth than tribes that had been
able to find other sources of revenue. Despite these results, the
tribal representatives saw advantages to running their own programs,
including the experience such arrangements provide in administering
their own affairs and the increased flexibility provided for tailoring
programs to meet local needs. However, tribal officials we spoke to
said that one disadvantage to contracting is the amounts provided under
such arrangements can lead to funding shortfalls that divert money away
from other tribal activities. Furthermore, tribal representatives and
others identified other factors, such as the tribes' location,
availability of resources, ability to generate gaming revenues, access
to capital, and quality of tribal governance as significant influences
on the ability of tribes to develop their tribal economics
successfully. Because we were not able to include the extent to which
these factors also affected tribe's economic development, our
contracting analysis examined only the relationship to such activities
and changes in economic profile and could not assess causation.
Most Tribes Entered Into Contracting Arrangements with the Federal
Government:
The Indian Self-Determination Act allows tribes to enter into various
arrangements with BIA or the Indian Health Service to assume the
operation of many of the programs and services previously provided by
the agencies. From the list of federally recognized tribes and from
2000 Census data, we identified 219 tribes in the lower 48 states that
had 100 or more Native Americans living in the tribal area.[Footnote
16] According to BIA information, 43 of the 219 were tribes that had
entered into self-governance arrangements with BIA. As a result, these
tribes operated most of their own tribal functions and services under a
funding compact agreement with BIA. By analyzing Single Audit Act data
that shows funding provided by federal agencies, we determined that
nearly all of the remaining 176 tribes operated many of their tribal
functions and services under contracts or other agreements with BIA.
High-Contracting Tribes Generally Experienced More Employment Growth,
but Income Growth Compared with Other Tribes Was Mixed:
Our analysis of the relationship between contracting and economic
profile changes for Indian tribes showed that tribes that contracted
more generally experienced greater employment growth than did tribes
that contracted less. To identify the extent to which tribes were
contracting, we grouped the 219 tribes in the lower 48 states with
populations greater than 100 into three categories. The first category
included the 43 tribes that had entered into self-governance compacts
with BIA. Such tribes generally have assumed the operation of most of
the services used by tribal members. For the remaining 176 tribes that
were non-self-governance, we analyzed how much funding these tribes
received from BIA contracts and grants from 1998 to 2000 in total and
on a per capita basis. Based on these analyses, we categorized the 121
tribes with annual per capita BIA contract amounts exceeding $580 and
total annual BIA contracting amounts greater than $300,000 as high-
contracting tribes, and we, therefore, categorized the remaining 55
tribes whose per capita or total contracting amounts were less than
these thresholds as low-contracting tribes.
To analyze the relationship between contracting and changes in tribal
economic profiles, we compared how various indicators of economic well-
being from Census Bureau data had changed for these three groups of
tribes. Within each group, the changes in their economic indicators
varied greatly, with some tribes experiencing significant improvement
and others experiencing declines between 1990 and 2000 (see app. III,
table 8 for complete data). As shown in figure 16 below, our analysis
showed that high-contracting and self-governance tribes experienced
higher growth on average in their employment levels than did tribes
that contracted less. However, the high-contracting and self-governance
tribes we analyzed did not, on average, experience greater growth in
the income of the Native Americans living on their lands. As the figure
also shows, high-contracting and self-governance tribes' per capita
incomes did not grow faster than those of tribes contracting less.
Additionally, these tribes did not experience greater improvement in
the proportion of Native Americans living on their tribal lands with
incomes above poverty level. As a result of the wide variability in our
data, our statistical tests indicated that the differences in income
growth and proportion above poverty level shown below were not
statistically meaningful.
Figure 16: Median Change in Percentage Employed, Per Capita Income
Level, and Percentage Above Poverty from 1990-2000:
[See PDF for image]
Note: Employment figures represent the change from 1990 to 2000 in the
percentage of adults age 16+ employed. The median level in 2000 for the
43 self-governance tribes was 53 percent, for the 121 high-contracting
tribes was 48 percent, and for the 55 low-contracting tribes was 43
percent. For the United States as a whole, the 2000 level was 60
percent.
[End of figure]
Although their incomes did not grow faster on average than low-
contracting tribes, the high-contracting and self-governance tribes in
our analysis were less likely to experience declines in their income-
related measures than the low-contracting tribes. As figure 17 shows, a
greater proportion of the high-contracting and self-governance tribes
experienced positive growth on both employment and income indicators
over the 10-year period from 1990 to 2000.
Figure 17: Percentage of Tribes with Positive Growth on Economic
Indicators by Contracting Category, 1990-2000:
[See PDF for image]
Note: Based on 43 self-governance, 121 high-contracting, and 55 low-
contracting tribes.
[End of figure]
Tribes Making Greater Use of Federal Contracts and Grants Tended to
Experience Less Income Growth:
For many tribes, federal contracts and grants are the major funding
source for tribal jobs and income. For example, of 53 tribes we
contacted by telephone or during our site visits, 68 percent reported
that tribal government, which is funded largely from federal sources,
was the main source of jobs and income for tribal members. To examine
further the relationship between level of contracting and economic
indicators, we compared the total federal contracts and grants received
by each tribe with the total income of Native Americans living in the
tribal area. For this analysis, we identified the total average amount
of federal grants and contracts the tribes in our analysis received
annually in 1998, 1999, and 2000 from all federal agencies using the
Single Audit Act database. We then found the total income of the tribe
by multiplying the per capita income of the tribe by the total number
of Native Americans living in the tribal area.[Footnote 17] Dividing
the total federal funding for each tribe by this tribal income amount
resulted in a grants-to-income ratio. We then classified each tribe in
our analysis into four categories based on the level of this ratio.
By analyzing the results of these ratios across the 199 tribes in the
lower 48 states for which data were available, we found that the tribes
with a very high grants-to-income ratio experienced the least amount of
improvement in their income growth on average (see app. III, table 9,
for details). As the figure 18 below shows, tribes with a moderate or
low grants-to-income ratio on average had more than double the growth
in per capita income compared with tribes with a very high grants-to-
income ratio. Differences in employment level were not statistically
significant. Tribes with a moderate grants-to-income ratio--a balance
of contracts/grants and other sources of income--showed the highest
growth on economic indicators.
Figure 18: Percentage Change in Economic Indicators for Tribes by
Grants-to-Income Ratio Category, 1990 to 2000:
[See PDF for image]
Note: Number of tribes by category: 26 very high, 52 high, 71 moderate,
and 50 low.
[End of figure]
Looking at the high-contracting and self-governance tribes, we found
that over half had moderate or low grants-to-income ratios, indicating
there were considerable sources of jobs and income for tribal members
beyond those funded by federal grants and contracts. However, 15
percent (25 of 162) of the high-contracting and self-governance tribes
had a very high grants-to-income ratio, and the economic growth for
these tribes was relatively low. From 1990 to 2000, the moderate to low
ratio group had a median per capita income growth more than double that
of the very high ratio group. Also, the percentage above poverty for
the moderate to low ratio group increased by 18 percent, compared with
6 percent for the very high ratio group (see fig. 19).
Figure 19: Comparing Economic Indicators for Self-governance/High-
Contracting Tribes by Grants-to-Income Ratio Category:
[See PDF for image]
Note: Number of tribes per category: 25 very high, 89 moderate/low.
[End of figure]
Many tribal officials we interviewed recognized that obtaining external
sources of income was critical to their overall economic development.
They reported that federal contracts and grants alone are insufficient
to meet a tribe's needs and raise tribal members out of poverty. Tribes
reporting economic development success credited much of that success to
the development of other sources of jobs and income.
Tribes Report Other Advantages from Contracting:
Although the extent to which contracting tribes appeared to have
experienced improvements in their economic profiles was mixed, tribal
officials indicated that contracting with federal agencies provided
other advantages but also some disadvantages. Officials at eight of the
tribes we spoke with indicated their contracting activities provided
them other benefits beyond improvement in their economic profile. Some
tribal representatives and Indian Health Service officials told us that
the experience of running a program helps develop specific skills,
which can be carried over to other aspects of tribal activities. For
example, an official at one tribe said that, as a result of operating
their own services through contracting, their members have developed
skills to produce accurate financial statements, helping them prove
fiscal responsibility and attract additional grants. In addition, a
1991 academic report we reviewed on tribal activities found that tribes
that entered into contracts to manage their own their forestry
activities generally resulted in increased production and revenue than
had been generated when such activities were under BIA
management.[Footnote 18] One academic who studies Indian issues told us
that contracting also allows tribes to gain experience in leadership,
management, accountability, and organization. He said that the
resulting enhanced leadership and management skills help tribes to
receive audits with unqualified opinions, which can allow these tribes
to attract additional sources of funding.
The advantages tribes gain from contracting can vary by the type of
arrangement undertaken. Under self-governance arrangements, tribes
have greater control and flexibility in the use of their funds and less
reporting requirements. This flexibility allows tribes to design
programs that are tailored to their needs and set their own priorities.
For example, an official at one tribe that switched from multiple
contracts to a self-governance arrangement said they received greater
funding as a result to use as they saw best given their priorities.
According to this official, the tribe was able to substantially
increase their higher education program to provide more assistance to
tribal members who wanted to go to college and also increase their
funding for natural resource services. In regard to regular contracting
arrangements, one tribe told us that the skill sets learned through
this process are a stepping stone to undertaking self-governance, which
is the next phase of self-determination.
However, a primary disadvantage to contracting with federal agencies
was the shortfalls in contract funding. Several tribal officials told
us that the amount of direct program funding they receive when they
contract to administer their own programs is not sufficient to provide
the adequate level of service to tribal members. In addition, several
tribal officials told us that their contract programs do not receive
full funding to cover the indirect, support, or start-up costs that
tribes incur as part of managing these contracts. These contract
support cost shortfalls arise when funding appropriations for these
contracts is less than that required by tribes to pay for such costs.
As shown in figure 20, BIA and the Indian Health Service estimate that
total administrative funding shortfalls arising from the contracts
these agencies funded during fiscal years 1993 through 2002 ranged from
a low of about $25 million to as much as $130 million annually.
Figure 20: Shortfalls in Contrast Support Funding for BIA and Indian
Health Service, Fiscal Years 1993-2002:
[See PDF for image]
Note: Amounts adjusted to 2002 constant dollars using the Bureau of
Labor Statistics Consumer Price Index.
[End of figure]
The funding shortfalls associated with contracting arrangements can
hamper tribes' ability to develop economically. Our 1999 report on the
shortfalls in Indian contract support costs found that tribes have had
to cover the shortfalls with tribal resources, thereby foregoing the
opportunity to use those resources to promote economic
development.[Footnote 19] In addition, these shortfalls divert money
away from other important tribal activities. For example, tribes may
not receive enough money to enhance the management of their programs by
establishing educational systems for leaders, instituting
constitutional reform, and developing strategies for economic
development. Several tribes mentioned that they have had to take steps
to subsidize contract programs, which includes using tribal funds
earmarked for economic development, returning the management of the
program to the federal government, and undertaking supplemental
programs of their own to fill in the unmet service gaps. According to
three tribal officials, the threat of, or actual funding shortfalls,
discouraged their tribes from entering into or continuing contracting
arrangements with the federal government.
Multiple Factors Affect Economic Development Efforts of Indian Tribes
and Tribal Consortia:
In addition to the extent to which tribes are contracting to perform
their own services, other factors can significantly influence the
degree to which Indian tribes' efforts to develop economically are
successful. According to the tribal and federal officials we
interviewed and the various studies of Indian economic development
issues that we reviewed, the location of a tribe's reservations or
lands can greatly affect its economic development success. For example,
tribal officials whose reservation was located near an urban area told
us that this gives them greater access to existing infrastructure,
including water and power. In addition, the close proximity of the
urban population provides them with a greater potential market for
their tribal enterprises. Another tribe whose lands were located near
an urban area and a heavily traveled highway has benefited from the
already established water sewer systems and power lines for development
projects. Because of its highly visible location, this particular tribe
has successfully developed a hotel, arts and cultural center, golf
course, grocery store, and gaming facility.
Tribes located in more remote, rural areas lack such advantages. Tribal
officials told us they may have to first develop infrastructure before
they can then invest in development projects. According to tribal
officials, this can be complicated by the need to conduct more
extensive environmental or archeological surveys before land can be
developed. For example, officials for one tribe in an isolated area
told us that they had to complete land and environmental surveys and
have water sewer systems, electric power, and roads built as a
prerequisite to development. In addition, Native officials we talked to
in Alaska also noted how the isolation of their villages greatly
complicates their development efforts.
Another factor related to location that can assist a tribe economically
is whether or not their tribal lands can be developed for tourism. For
example, some tribes in the Pacific Northwest were able to build
campgrounds and marinas that attracted visitors interested in
recreation. A tribe we visited in the Southwest had scenic natural rock
formations that attracted visitors to their tribal lands. However, one
village in Alaska that would like to build a visitor center to attract
tourists is located in an area that is difficult to reach and faces
less certain prospects for developing such an industry.
Another factor that can provide tribes with an advantage in economic
development is whether or not they have access or ownership to
exploitable natural resources. We found tribes with access to timber or
fisheries often were able to develop these as significant sources of
income for their tribal members. For example, one of the tribes we
talked to with forest lands on their reservation had opened a
successful plant producing plywood and dry veneer, which created jobs
for tribal members. In contrast, some tribes are located in remote
desolate areas with little vegetation or natural resources they can
exploit.
Another factor that can affect tribal economic success is having sound
legal systems and commercial regulations. Because Indian tribes are
considered sovereign nations within the United States, they must
develop their own judicial system and laws for governing operations and
business conduct within their tribal lands. Having an effective
judicial system is frequently seen as a prerequisite for attracting
private investments on tribal lands. This provides investors with
confidence that disputes will be resolved fairly. For example, one
expert study examined 67 tribes and found that a strong independent
judicial system reduces unemployment by 5 percent.[Footnote 20] Another
study states that tribal success can also be facilitated by sound
uniform commercial codes.[Footnote 21] According to tribal officials,
an additional challenge is having sufficient numbers of tribal members
with the relevant law and graduate degrees to help develop and
administer these codes.
According to tribal officials and studies, another factor cited as
important for economic development was stable and effective tribal
government. For example, some tribal officials we spoke with cited the
high turnover among the members of their governing councils often
resulted in abrupt shifts in economic priorities that sometimes delayed
their ability to seek funding or implement previously planned projects.
According to EDA officials, some tribes' governing councils are
completely replaced very frequently, and this greatly reduces their
effectiveness in achieving economic progress. According to tribal
officials, one effective method was to stagger tribal council members'
terms over time, which increases the continuity of the tribal
government and its policies.
Tribes' ability to develop gaming facilities can also be a significant
factor that can affect their economic development. Tribes that own
gaming facilities near concentrated population centers have been able
to use gaming revenues to develop other projects that have aided their
tribes and produced income. For example, one particular tribe used its
gaming revenues to develop a water sewer system for development
projects and helped it withstand reduced federal and state funding for
its activities. Another tribe told us gaming revenue is used for
supplementing education and health programs. As shown in figure 21,
tribes with greater amounts of revenue from gaming generally
experienced greater growth in their total populations, employment
rates, per capita income, and in the percentage with incomes above the
poverty level.
Figure 21: Median Percentage Changes in Economic Indicators for Tribes
by Level of Gaming Revenues:
[See PDF for image]
Note: We defined high gaming revenue tribes as tribes with gross gaming
revenues exceeding $10 million in 1998 (n=77). We defined low/no gaming
tribes as tribes with less than $3 million in gross gaming revenues in
1998 (n=67). Tribes with $3 million to $10 million in gaming revenues
and tribes for which comparable data on gaming revenues was not
available were omitted from this analysis.
[End of figure]
Observations:
Efforts to improve the financial well-being of American Indians and
Alaska Natives face many challenges. These challenges can include the
isolated and rural locations of tribal lands and lack of
infrastructure, which can limit their attractiveness to private sector
investment. Tribal lands may also lack exploitable resources, such as
oil or timber, or natural features that could serve as a draw for
tourism. Although EDA has provided limited funding to assist some
tribes, we found that these grants had resulted in mixed success in
helping develop the economies and improve the quality of life for these
groups. In cases in which EDA grants were more successful in producing
economic development, the tribes sometimes had advantages, such as
resources or proximity to areas with populations likely to take
advantage of gaming or other development. In other cases, EDA provided
funding to tribes without such advantages and at least produced some
jobs for tribal members.
Overall, we found that the relationship of Indian economic development
to EDA grants was mixed, and these findings could help inform decisions
about how and where to focus future efforts. However, EDA's grants to
tribes represents only 3 percent of the total amount of funding that it
awarded between 1993 and 2002. As a result, we were neither able to
evaluate the overall effectiveness of EDA's program nor were we able to
evaluate the adequacy of how it administers its grants, including how
the agency applies its criteria in determining what activities to fund.
Beyond government aid, Indian tribes are also taking steps to increase
their role in their own governance and community activities. Through
contracting arrangements and self-governance, nearly all tribes are
assuming the management of programs and services that federal agencies
previously provided to their communities. Although we found that tribes
with the highest levels of these contracting activities generally saw
greater improvements in employment levels, we did not find a
relationship between level of contracting and tribal individual's
incomes. However, we did learn that tribes conducting such contracting
find that it provides other benefits to their communities, including
providing them with experience in administering their own affairs. In
addition, the other factors that make improving economic development
for tribes challenging, such as availability of resources or
attractiveness to private sector investment, may have proven to be
greater determinants to tribe's overall economic well-being regardless
of any benefits resulting from their contracting activities.
Agency Comments and Our Evaluation:
We requested and obtained comments from the Department of Commerce,
which provided EDA's comments, and the Department of the Interior,
which provided BIA's comments; these agencies written comments are
reproduced in appendixes IV and V, respectively. The letter from the
Department of the Interior's Assistant Secretary for Policy,
Management, and Budget stated that BIA generally agreed with our
report's conclusions. The letter notes that BIA supports increased
self-determination contracting and compacting as a means of improving
tribal economic development efforts, but notes, as our report does,
that other factors can significantly influence the ability to develop
tribal economies successfully.
In the letter from the Secretary of Commerce, EDA questioned our
characterization that EDA grants have had mixed success. EDA
acknowledged that its enterprise development investments had mixed
success given the EDA investments we reviewed and evaluated and agreed
that a large portion of EDA funds went to enterprise development
projects. EDA stated that the success of other types of EDA investments
should be considered in order to make a broad statement about the
economic development generated by EDA grants as a whole. The letter
stated that the other grant funding that EDA provided, including those
for infrastructure, business development, and planning has produced
benefits.
After considering our findings for all EDA grants to tribes between
1993 and 2002, we believe that our conclusion that EDA grants have had
mixed success is accurate. The grants for enterprise projects represent
the largest portion--almost half--of the funding EDA provided to tribes
during this period and these grants, as our report shows, have had
mixed success in producing economic development. The other half of the
total funding EDA provided to tribes during this 10-year period
included grants for business development loan funds and training,
infrastructure projects, and planning. Regarding business development
activities, our review of the grants that funded RLFs indicated that
some were reportedly very successful, and others had yet to produce
much development. Similarly, the training projects had produced some
benefits but were also hampered by lack of operating funding. Although
our report presents information from tribal officials that indicates
that many infrastructure grants have reportedly produced economic
development, we found that not all projects had yet done so. In
addition, although the tribes receiving EDA planning grants reported
them to be critical to their success, the benefits we reported as
resulting from these planning grants were that most tribes that
received them also received other EDA grants, including for enterprise
projects whose mixed success we discussed, or funding from other
federal agencies for economic development purposes. In addition, not
all EDA planning grants led to development projects as the result of
lack of funding or other issues. Similarly, the EDA funding for
feasibility studies indicated that, at the time of our review, 3 of the
17 projects studied had been implemented successfully.
Commerce's letter also provides some technical comments for which we
made changes to our draft. The letter also presented other comments
that provide additional detail about EDA grants and their
administration. Our responses to these comments are presented in
appendix IV.
We are sending copies of this report to the Ranking Minority Member of
the Senate Committee on Indian Affairs; the Secretary, Department of
Commerce; the Secretary, Department of the Interior; and other
interested parties. We also will make copies available to others upon
request. In addition, the report will be available at no charge on the
GAO Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions regarding this report, please
contact Mr. Cody Goebel or me at (202) 512-8678 or [Hyperlink,
goebelc@gao.gov] or [Hyperlink, shearw@gao.gov]. GAO staff that made
major contributions to this report are shown in appendix VI.
Sincerely yours,
Signed by:
William B. Shear:
Director, Financial Markets and Community Investment:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To review all grant funds made available to Indian tribes and tribal
organizations by the Department of Commerce's Economic Development
Administration (EDA), we analyzed data from EDA on all grants awarded
to tribes during the years 1993 to 2002. For each grant, we obtained
from EDA's data the following information:
* grant recipient name,
* state where the grant recipient is located,
* fiscal year the grant was awarded,
* grant amount, and:
* general project description.
The data EDA provided categorized its grants according to the various
funding programs the agency administers, such as its planning, public
works, or economic adjustment programs. However, upon review of these
data, we found that EDA used funds from these various programs to
provide grants for similar types of projects. For example, EDA was
sometimes providing grants to fund the planning of a project or the
construction of the project using its economic adjustment grant program
or its public works grant program. Therefore, for the purposes of our
analysis, we grouped the various grants into the following categories
according to type of project or activity funded:
* Enterprise projects: grants used to develop projects designed to
generate income for the tribe, such as a cannery, a resort, or a
sawmill;
* Infrastructure projects: grants used for the design and construction
of public works infrastructure, such as roads, highways, and sewers,
that would serve as the foundation for general economic development
activities;
* Business development projects: grants used to fund loan funds,
training, and other business development projects, including those for
business incubators, revolving loan funds (RLFs), training and capacity
building, and other assistance that enhances the tribes' economic
development activities; and:
* Planning/feasibility grants: grants used for general planning
purposes such as paying for staff salaries or the broad administration
of the tribes' planning departments, as well as for developing plans,
analyses of projects' environmental impact, and feasibility studies for
specific economic development projects.
Our analysis of EDA grants was limited to grants provided to Indian
tribes. Therefore, we were not able to evaluate how EDA generally
applies its stated criteria to grant applications. In addition, the
application process includes an evaluation by EDA's regional investment
review committees of preapplication proposals and recommending whether
or not an application should be invited. We did not analyze EDA's
preapplication process.
To determine what economic development activities have resulted from
these EDA grants, we surveyed all 95 tribes that received EDA grants
for enterprise projects, infrastructure projects, and loan funds,
business development, and training activities.[Footnote 22] We made 15
site visits in Alaska, Arizona, California, New Mexico, and Washington
to learn more about these tribes' economic development projects and
observe the results of the EDA grants they received during the years
1993 to 2002. We chose tribes for our site visits based on various
factors, including the types of economic development projects the
tribes had, the tribes' location, and the projects' stage at the time
of our visit. We surveyed the remaining 80 tribes and organizations by
phone, interviewing tribal officials that were cognizant of the tribes'
economic development projects and activities. Our survey results
reflect the information provided by and the opinions of tribal
officials who participated in our survey. Outside of obtaining
documents from some tribes and visiting some projects, we did not
independently verify the tribal officials' responses to our questions.
We also interviewed relevant officials from EDA, the Bureau of Indian
Affairs, and the Department of Health and Human Services to get their
perspective on federal assistance to tribes.
Methodology for Analyzing Relationship between Contracting and Economic
Profile:
To determine whether there exists a relationship between the degree to
which an Indian tribe operates federal programs and services under
contracting or self-governance and that tribe's economic profile, we
used data from the Department of the Interior's Bureau of Indian
Affairs (BIA), the U.S. Census Bureau, and the Single Audit Act
database to group all tribes we analyzed into three separate groups.
First, we used BIA data to identify those tribes that had entered into
self-governance compacts.[Footnote 23] We then grouped non-self-
governance tribes into two groups based on the extent to which they
were contracting with BIA. We grouped tribes into these two groups
based on the extent to which they were contracting on both a per capita
basis and on a total dollar amount basis. To derive the per capita BIA
grants and contracts amount, we obtained data from the Single Audit Act
database on the amount of grants and contracts that were received by
tribes from BIA during the years 1998 to 2000.[Footnote 24] For those
tribes that did not have available Single Audit Act information, we
calculated this per capita measure based on BIA's 1998 shortfall budget
data.[Footnote 25]
An examination of the listing of tribes ranked by their per capita
contract amount, tribes above a threshold of $580 appeared to include
those large tribes with the largest overall contract amounts. We found
that some smaller tribes had per capita contracting amounts that
exceeded $580 but whose total contract amount was not significant
compared with other tribes. Therefore, we only placed tribes into the
high-contracting group whose totals in total contract funding exceeded
$300,000, which appeared to be a reasonable level to indicate
significant contracting activity. Table 2 summarizes our criteria for
classifying tribes.
Table 2: GAO Criteria for Classifying Tribes by Extent of Contracting:
Category of tribe: Self-governance;
Per capita contracting amount: Not used;
Total contracting amount: Not used;
Number of tribes in category: 43.
Category of tribe: High-contracting;
Per capita contracting amount: Greater than $580 and;
Total contracting amount: Greater than $300,000;
Number of tribes in category: 121.
Category of tribe: Low-contracting;
Per capita contracting amount: Less than $580 or;
Total contracting amount: Less than $300,000;
Number of tribes in category: 55.
Sources: GAO analysis based on Census, Single Audit Act, and BIA data.
[End of table]
We then compared the change in the economic profiles for each of these
three groups of tribes. To measure each tribe's economic profile, we
collected data from the U.S. Census from 1990 and 2000. For this
analysis, we only included those tribes in the lower 48 states that are
federally recognized, had available 2000 Census data, and had tribal
population of 100 people or more based on population data from the 2000
Census. For each tribe, we obtained economic profile data on Native
Americans living on tribal land, including the percentage employed, the
per capita income, and the percentage in households with incomes above
the poverty level. Our economic profile data categorized by self-
governance, high-contracting, and low-contracting tribes is
descriptive in nature and does not represent an assessment of causation
of economic factors based on governing status or high-or low-
contracting category.
Methodology for Analyzing Relationship between Federal Aid and Economic
Profile:
To supplement our analysis of contracting and economic profile changes,
we also analyzed the relationship between the extent to which tribes
received federal funding and changes in economic profile indicators.
For this analysis, we identified the total average amount of federal
grants and contracts the tribes in our analysis received annually in
1998, 1999, and 2000 from all federal agencies.[Footnote 26] We then
found the total income by multiplying the per capita income of the
tribe by the total number of Native:
Americans living on the reservation.[Footnote 27] Dividing the total
federal funding for each tribe by its tribal income resulted in a
grants-to-income ratio (GTI). We then classified each tribe in our
analysis into four categories based on the level of their GTI, as shown
in table 3.
Table 3: GAO Categories for Tribes by Level of GTI:
Category: Very high;
GTI level: Over 1.0;
Explanation of category: Amount of federal grants and contracts
received exceeds total tribal income.
Category: High;
GTI level: Between .50 and .99;
Explanation of category: Amount of federal grants and contracts
received represent considerable share of tribal income.
Category: Moderate;
GTI level: Between .20 and .49;
Explanation of
category: Tribe has developed significant sources of revenue other
than federal grants and contracts.
Category: Low;
GTI level: Below .20;
Explanation of category: Federal grants and contracts represent small
portion of tribal income.
Sources: GAO analysis of based on Census, Single Audit Act, and BIA
data.
[End of table]
We then analyzed the extent to which changes in tribal economic profile
indicators varied for the tribes in these four GTI categories. Our
economic profile data categorized by grant to income ratio is
descriptive in nature and does not represent an assessment of causation
of economic factors based on the tribe's GTI ratio.
Steps Performed to Ensure Data Reliability:
To ensure that EDA's data on the grants awarded to tribes and the data
we used in our analysis of the tribes' economic profiles were
sufficiently reliable for our analyses, we conducted detailed
reliability assessments of the four datasets that we used. In assessing
the reliability of EDA's grants data, the Single Audit Act data, U.S.
Census Bureau data, and the BIA population data, we reviewed relevant
documentation, interviewed knowledgeable officials, and conducted
frequency analysis of critical data fields, as appropriate. We
restricted these assessments to the specific variables that were
pertinent to our analyses. We found that all of the datasets were
sufficiently reliable for use in our analyses but have included know
limitations in our report when appropriate.
In assessing the reliability of EDA's grants data, we interviewed EDA
officials that were knowledgeable about the data system and reviewed
relevant documents, such as EDA's data manual and documents on internal
controls. On the basis of the information we gathered, we concluded
that EDA's grants data were reliable for our purposes for this
analysis.
Our reliability assessment of the Single Audit Act data included two
steps. First, to assess the general reliability of the Single Audit Act
data we used in our analysis, we reviewed relevant documents (e.g.,
online information on the database, a report by the Department of
Commerce's Office of the Inspector General), as well as corresponded
with a knowledgeable official from the U.S. Census Bureau, about the
Single Audit Act data. On the basis of these document reviews and
correspondence, we concluded that the data we used in our analysis were
reliable for our purposes for this analysis. Second, to assess the
completeness and accuracy of the Single Audit Act data we used in our
analysis, we conducted frequency analysis of relevant fields. On the
basis of the results of our frequency tests of relevant data elements
and our review of pertinent documents, we concluded that the Single
Audit Act data we used in our analysis were reliable for our purposes
for this analysis.
In assessing the reliability of relevant 1990 and 2000 decennial U.S.
Census Bureau data, we reviewed information available online from the
U.S. Census Bureau Web site on its data quality assurance processes and
interviewed relevant officials from Census. On the basis of the results
of our document review and discussions with Census officials, we
concluded that the relevant Census data we used were reliable for our
purposes for this analysis.
In assessing the reliability of the BIA's population data, we
interviewed knowledgeable officials from BIA and tribal representatives
and reviewed relevant documentation. Based on the results of these
discussions with relevant officials and review of pertinent
documentation, we concluded that the BIA's population data were
reliable for our purposes for this analysis.
We also reviewed EDA policies and regulations and talked to EDA
Regional Directors and field staff to determine if EDA complies with
its legislative criteria for monitoring grants.[Footnote 28]
We interviewed tribal officials and economic development experts and
reviewed studies by the Harvard Project on American Indian Economic
Development and the National Congress of American Indians to determine
what other factors impact tribes' economic development efforts.
[End of section]
Appendix II: Additional Information on EDA Grants to Tribes:
We obtained data from the Economic Development Administration (EDA)
that included all grants it made to American Indian tribes during the
years 1993 to 2002. Our analysis of this data indicated that 143 Indian
tribes and tribal organizations received a total of $112 million in EDA
grants during this 10-year period. Of the $112 million in total grants
to tribes that EDA awarded between 1993 and 2002, $86 million went to
113 Indian tribes and tribal organizations in the lower 48 states.
The extent to which EDA funded tribes varied across geographic regions.
Operating nationally, EDA has organized its staff into six regional
offices that cover the various states. These offices are in Atlanta,
Austin, Chicago, Denver, Philadelphia, and Seattle.[Footnote 29] For
the purposes of our analysis, we divided EDA's Seattle region into
three subareas: (1) Alaska; (2) the Northwest covering Idaho, Oregon,
and Washington; and (3) the Southwest covering Arizona, California, and
Nevada. By analyzing EDA's funding across these regions as shown in
figure 22, we found that about 60 percent of EDA grants to Indian
tribes went to tribes in the Seattle region, with tribes in the
Northwest receiving 21 percent of the grant monies awarded by EDA
during the 10-year period.
Figure 22: EDA Grants to Tribes and Organizations by Region, 1993-2002,
as Percentage of Total EDA Grants to Tribes and Organizations:
[See PDF for image]
[End of figure]
In addition to funding provided to Native entities in Alaska, the
extent to which tribes in other states received EDA funding also
varied. For example, as shown in figure 23, tribes in Arizona,
Washington, and Oregon received about 35 percent of all EDA grants to
tribes in the lower 48 states during the years 1993 to 2002.
Figure 23: Percentage of EDA Grants to Tribes in the Lower 48 States,
1993-2002, by State:
[See PDF for image]
Note: "Other States" includes tribes in Colorado, Florida, Maine,
Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, New York,
Oklahoma, Utah, Wisconsin, and Wyoming.
[End of figure]
Our analysis found that 30 of the 42 federally recognized tribes in
Idaho, Oregon, and Washington received EDA grants, as shown in figure
24. In contrast, only 3 of the 37 tribes in Oklahoma received such
grants. According to EDA officials, they funded few tribes in Oklahoma
because entities in other states in EDA's Austin Region, which also
includes Texas, Louisiana and Arkansas; and New Mexico, were deemed
more economically distressed and in greater need of EDA assistance.
Figure 24: Number of Federally Recognized Tribes with EDA Grants, by
State and EDA Region:
[See PDF for image]
Note: "Other States" includes: Alabama (1), Connecticut (2), Iowa (1),
Kansas (4), Louisiana (4), Missouri (1), Rhode Island (1), South
Carolina (1), and Texas (3).
[End of figure]
Using the EDA grants data, we also found that grant amounts varied
widely across states on a per capita basis. For example, tribes in the
Pacific Northwest, which had a combined per capita EDA grant amount of
$593, had the highest per capita, while tribes in Oklahoma and Utah had
the lowest, with per capita EDA grant amounts of $2 and $4. Although
some states received large dollar amounts of funding, the amounts were
not always large given the large Indian populations in their states.
For example, although Arizona received over $10 million during this 10-
year period, this amounted to only $46 per capita because of its large
Indian population. Table 4 and figure 26 show how these amounts varied
across states.
Table 4: EDA Grants to Tribes Ranked by Per Capita Amounts, by State,
Over 10-Year Period, 1993-2002:
States: Massachusetts;
Total EDA grants: $100,000;
Population of tribes with available data: 60;
Per capita EDA grant: $1,667.
States: Oregon;
Total EDA grants: $6,376,250;
Population of tribes with available data: 5,458;
Per capita EDA grant: $1,168.
States: Florida;
Total EDA grants: $1,331,000;
Population of tribes with available data: 1,375;
Per capita EDA grant: $968.
States: Idaho;
Total EDA grants: $5,908,980;
Population of tribes with available data: 6,964;
Per capita EDA grant: $849.
States: Maine;
Total EDA grants: $1,082,000;
Population of tribes with available data: 1,412;
Per capita EDA grant: $766.
States: North Carolina;
Total EDA grants: $4,105,000;
Population of tribes with available data: 5,832;
Per capita EDA grant: $704.
States: Colorado;
Total EDA grants: $1,991,000;
Population of tribes with available data: 3,073;
Per capita EDA grant: $648.
States: Nevada;
Total EDA grants: $3,365,000;
Population of tribes with available data: 7,206;
Per capita EDA grant: $467.
States: Washington;
Total EDA grants: $10,382,567;
Population of tribes with available data: 25,828;
Per capita EDA grant: $402.
States: California;
Total EDA grants: $4,372,800;
Population of tribes with available data: 14,499;
Per capita EDA grant: $302.
States: New York;
Total EDA grants: $1,279,125;
Population of tribes with available data: 4,454;
Per capita EDA grant: $287.
States: North Dakota;
Total EDA grants: $5,133,500;
Population of tribes with available data: 20,555;
Per capita EDA grant: $250.
States: Michigan;
Total EDA grants: $959,000;
Population of tribes with available data: 3,891;
Per capita EDA grant: $246.
States: Montana;
Total EDA grants: $5,960,789;
Population of tribes with available data: 35,698;
Per capita EDA grant: $167.
States: Wisconsin;
Total EDA grants: $2,108,863;
Population of tribes with available data: 13,446;
Per capita EDA grant: $157.
States: Minnesota;
Total EDA grants: $1,952,250;
Population of tribes with available data: 16,358;
Per capita EDA grant: $119.
States: South Dakota;
Total EDA grants: $4,594,800;
Population of tribes with available data: 38,511;
Per capita EDA grant: $119.
States: Nebraska;
Total EDA grants: $515,000;
Population of tribes with available data: 4,867;
Per capita EDA grant: $106.
States: Wyoming;
Total EDA grants: $602,762;
Population of tribes with available data: 6,394;
Per capita EDA grant: $94.
States: New Mexico;
Total EDA grants: $3,246,600;
Population of tribes with available data: 37,836;
Per capita EDA grant: $86.
States: Mississippi;
Total EDA grants: $312,000;
Population of tribes with available data: 4,108;
Per capita EDA grant: $76.
States: Arizona;
Total EDA grants: $10,915,573;
Population of tribes with available data: 236,364;
Per capita EDA grant: $46.
States: Utah;
Total EDA grants: $13,500;
Population of tribes with available data: 3,178;
Per capita EDA grant: $4.
States: Oklahoma;
Total EDA grants: $395,000;
Population of tribes with available data: 230,983;
Per capita EDA grant: $2.
States: Other states;
Total EDA grants: $0;
Population of tribes with available data: 5,962;
Per capita EDA grant: $0.
Sources: GAO analysis of EDA, 2000 Census data, and the Federal
Register's list of federally recognized tribes.
Note: "Other States" includes: Alabama, Connecticut, Iowa, Kansas,
Louisiana, Rhode Island, South Carolina, and Texas.
[End of table]
As shown in figure 25, the total amount of EDA grants awarded also
varied considerably by region.
Figure 25: Total EDA Grants to Tribes and Tribal Organizations, 1993-
2002, by EDA Region:
[See PDF for image]
[End of figure]
Similarly, as figure 26 shows, EDA grants also varied considerably by
region on a per capita basis.
Figure 26: Per Capita EDA Grants to Tribes in Lower 48 States, 1993-
2002, by EDA Region:
[See PDF for image]
[End of figure]
The extent to which tribes received EDA planning grants also varied
greatly by EDA region. For example, EDA's Chicago Region did not
provide any of the 29 tribes located in that region with individual
planning grants, although it did provide planning grants to three
intertribal organizations in that region that represented several
individual tribes joining together to receive a grant. By contrast, 79
percent of the tribes in the Pacific Northwest with a population over
100 as well as two intertribal organizations received planning grants
(see fig. 27). Demand for planning grants can sometimes exceed the
amount of available funding in some regions. For example, officials in
EDA's Seattle Region told us that they have a waiting list of 36 tribes
that would like to obtain EDA planning grants but insufficient funds
exist to award these grants.
Figure 27: Extent to Which Tribes Receive EDA Planning Grants by
Regions, 1993-2002:
[See PDF for image]
Note: Bar graph includes tribes in the lower 48 states with 100 or more
Indians residing on the reservation. For purposes of this analysis we
have excluded tribes with populations under 100 and Alaska Native
entities. Seattle (NW) includes tribes in Washington, Oregon, and
Idaho. Seattle (SW) includes tribes in California, Nevada, and Arizona.
[End of figure]
EDA grants appeared to be awarded equally to tribes with differing
levels of income. Using Census data for 2000, we ranked the tribes in
the lower 48 states by per capita income. By comparing the tribes
ranked by income with the amounts tribes received from EDA, we found
that tribes in the top 25 percent of per capita income had received 28
percent of the grants EDA awarded to tribes in the lower 48 states
between 1993 and 2002. Similarly, the tribes in the bottom 25 percent
of per capita income had received 30 percent of the total amount EDA
awarded to tribes during this period.
EDA Not the Largest Provider of Grants to Tribes:
EDA has not been the largest source of funding for economic development
grants for tribes. To analyze how the total EDA grants to tribes
compared with other economic development-related grants received by
tribes from other federal agencies, we obtained data from the Single
Audit Act database, which is maintained by the Bureau of the Census and
contains information on the amounts of federal funding received by
states, governments, and nonprofit organizations, including Indian
tribes.[Footnote 30] With the data available for 1998 to 2001, we found
that 7 percent of all economic development-related grants annually
received on average by tribes during these years were from EDA. The
remaining 93 percent of the economic development-related grants tribes
received came from other federal agencies, including:
* the Department of Housing and Urban Development, which provided block
grants to tribes to improve the housing stock, provide community
facilities, make infrastructure improvements, and expand job
opportunities by supporting the economic development of Native American
communities;
* the Department of the Interior, which provided economic development
funding to tribes for protecting and restoring rangelands and forests
and for operating irrigation projects;
* the Department of Health and Human Services, which provided loans and
grants for implementing social and economic development strategies that
support locally determined projects, including developing the tribes'
comprehensive tourism and business plans and providing training in job,
computer, and small business skills to tribal members; and:
* the Department of Agriculture, which provided funds for rural
development.
Figure 28 shows, on average, the extent to which various federal
agencies funded economic development assistance to Indian tribes based
on amounts provided between 1998 and 2001.
Figure 28: Percentage of Economic Development-Related Grants Received
by Tribes from Various Federal Agencies, 1998-2001:
[See PDF for image]
Notes: Numbers do not add to 100% due to rounding.
"Other agencies" include non-EDA Department of Commerce programs,
Department of Education, Environmental Protection Agency, Department of
Defense, and the Small Business Administration.
[End of figure]
Table 5 shows that several other federal agencies have typically given
a greater amount of economic development-related grants to tribes than
has EDA.
Table 5: Economic Development-Related Grants to Tribes in the Lower 48
States with Available Single Audit Act Data, by Agency, 1998-2001:
Agency: Department of Housing and Urban Development;
Total average annual amount received by tribes: $41,143.971;
Number of tribes receiving grants: 192.
Agency: Department of Housing and Urban Development;
CFDA[A]: 14.862;
Program: Indian Community Development Block Grant Program;
Total average annual amount received by tribes: $35,116,860;
Number of tribes receiving grants: 168.
Agency: Department of Housing and Urban Development;
CFDA[A]: 14.227;
Program: Community Development Block Grants/Special Purpose;
Grants/Technical Assistance;
Total average annual amount received by tribes: $1,807,891;
Number of tribes receiving grants: 14.
Agency: Department of Housing and Urban Development;
CFDA[A]: 14.218;
Program: Community Development Block Grants/Entitlement Grants;
Total average annual amount received by tribes: $1,047,241;
Number of tribes receiving grants: 12.
Agency: Department of Housing and Urban Development;
CFDA[A]: 14.250;
Program: Rural Housing and Economic Development;
Total average annual amount received by tribes: $946,882;
Number of tribes receiving grants: 10.
CFDA[A]: 14.246;
Program: Community Development Block Grants/Economic Development
Initiative;
Total average annual amount received by tribes: 864,377;
Number of tribes receiving grants: 3.
Agency: Department of Housing and Urban Development;
CFDA[A]: 14.228;
Program: Community Development Block Grants/States Program;
Total average annual amount received by tribes: $676,028;
Number of tribes receiving grants: 12.
Agency: Department of Housing and Urban Development;
CFDA[A]: 14.219;
Program: Community Development Block Grants/Small Cities Program;
Total average annual amount received by tribes: $540,242;
Number of tribes receiving grants: 5.
Agency: Department of Housing and Urban Development;
CFDA[A]: 14.511;
Program: Community Outreach Partnership Center Program;
Total average annual amount received by tribes: $144,450;
Number of tribes receiving grants: 1.
Agency: Department of the Interior;
Total average annual amount received by tribes: $26,560,928;
Number of tribes receiving grants: 127.
Agency: Department of the Interior;
CFDA[A]: 15.039;
Program: Fish, Wildlife, and Parks Programs on Indian Lands;
Total average annual amount received by tribes: $8,658,723;
Number of tribes receiving grants: 65.
Agency: Department of the Interior;
CFDA[A]: 15.035;
Program: Forestry on Indian Lands;
Total average annual amount received by tribes: $7,306,262;
Number of tribes receiving grants: 56.
Agency: Department of the Interior;
CFDA[A]: 15.124;
Program: Indian Loans/Economic Development;
Total average annual amount received by tribes: $3,360,975;
Number of tribes receiving grants: 13.
Agency: Department of the Interior;
CFDA[A]: 15.034;
Program: Agriculture on Indian Lands;
Total average annual amount received by tribes: $2,914,703;
Number of tribes receiving grants: 34.
CFDA[A]: 15.049;
Program: Irrigation on Indian Lands;
Total average annual amount received by tribes: 1,835,852;
Number of tribes receiving grants: 25.
Agency: Department of the Interior;
CFDA[A]: 15.032;
Program: Indian Economic Development;
Total average annual amount received by tribes: $1,334,650;
Number of tribes receiving grants: 23.
Agency: Department of the Interior;
CFDA[A]: 15.038;
Program: Minerals and Mining on Indian Lands;
Total average annual amount received by tribes: $1,149,765;
Number of tribes receiving grants: 19.
Agency: Department of Health and Human Services;
Total average annual amount received by tribes: $13,341,091;
Number of tribes receiving grants: 181.
Agency: Department of Health and Human Services;
CFDA[A]: 93.612;
Program: Native American Programs;
Total average annual amount received by tribes: $13,111,687;
Number of tribes receiving grants: 179.
Agency: Department of Health and Human Services;
CFDA[A]: 93.570;
Program: Community Services Block Grants;
Total average annual amount received by tribes: $229,404;
Number of tribes receiving grants: 7.
Agency: Department of Agriculture;
Total average annual amount received by tribes: $13,066,832;
Number of tribes receiving grants: 57.
Agency: Department of Agriculture;
CFDA[A]: 10.421;
Program: Indian Tribes and Tribal Corporation Loans;
Total average annual amount received by tribes: $5,827,137;
Number of tribes receiving grants: 5.
Agency: Department of Agriculture;
CFDA[A]: 10.854;
Program: Rural Economic Development Loans and Grants;
Total average annual amount received by tribes: $4,317,280;
Number of tribes receiving grants: 8.
Agency: Department of Agriculture;
CFDA[A]: 10.766;
Program: Community Facilities Loans and Grants;
Total average annual amount received by tribes: $1,735,930;
Number of tribes receiving grants: 9.
Agency: Department of Agriculture;
CFDA[A]: 10.769;
Program: Rural Business Enterprise Grants;
Total average annual amount received by tribes: $775,651;
Number of tribes receiving grants: 18.
Agency: Department of Agriculture;
CFDA[A]: 10.670;
Program: National Forest/Dependent Rural Communities;
Total average annual amount received by tribes: $317,529;
Number of tribes receiving grants: 21.
Agency: Department of Agriculture;
CFDA[A]: 10.064;
Program: Forestry Initiative Program;
Total average annual amount received by tribes: $49,804;
Number of tribes receiving grants: 1.
Agency: Department of Agriculture;
CFDA[A]: 10.773;
Program: Rural Business Opportunity Grants;
Total average annual amount received by tribes: $15,607;
Number of tribes receiving grants: 2.
Agency: Department of Agriculture;
CFDA[A]: 10.771;
Program: Rural Coop Development Grants;
Total average annual amount received by tribes: $15,395;
Number of tribes receiving grants: 1.
Agency: Department of Agriculture;
CFDA[A]: 10.772;
Program: Empowerment Zones Program;
Total average annual amount received by tribes: $12,500;
Number of tribes receiving grants: 1.
Agency: Department of Commerce (EDA only);
Total average annual amount received by tribes: $6,690,120;
Number of tribes receiving grants: 83.
Agency: Department of Commerce (EDA only);
CFDA[A]: 11.307;
Program: Economic Adjustment Assistance;
Total average annual amount received by tribes: $3,198,651;
Number of tribes receiving grants: 14.
Agency: Department of Commerce (EDA only);
CFDA[A]: 11.300;
Program: Public Works and Economic Development;
Total average annual amount received by tribes: $1,566,118;
Number of tribes receiving grants: 24.
Agency: Department of Commerce (EDA only);
CFDA[A]: 11.302;
Program: Support for Planning Organizations;
Total average annual amount received by tribes: $970,380;
Number of tribes receiving grants: 40.
Agency: Department of Commerce (EDA only);
CFDA[A]: 11.305;
Program: State and Local Economic Development Planning;
Total average annual amount received by tribes: $495,366;
Number of tribes receiving grants: 25.
Agency: Department of Commerce (EDA only);
CFDA[A]: 11.303;
Program: Technical Assistance;
Total average annual amount received by tribes: $433,684;
Number of tribes receiving grants: 12.
Agency: Department of Commerce (EDA only);
CFDA[A]: 11.312;
Program: Research and Evaluation;
Total average annual amount received by tribes: $25,921;
Number of tribes receiving grants: 1.
Agency: Department of Commerce (non-EDA only);
Total average annual amount received by tribes: $647,507;
Number of tribes receiving grants: 10.
Agency: Department of Commerce (non-EDA only);
CFDA[A]: 11.801;
Program: Native American Programs;
Total average annual amount received by tribes: $203,685;
Number of tribes receiving grants: 2.
Agency: Department of Commerce (non-EDA only);
CFDA[A]: 11.800;
Program: Minority Business Development Centers;
Total average annual amount received by tribes: $183,021;
Number of tribes receiving grants: 1.
Agency: Department of Commerce (non-EDA only);
CFDA[A]: 11.552;
Program: Technology Opportunities;
Total average annual amount received by tribes: $139,544;
Number of tribes receiving grants: 5.
Agency: Department of Commerce (non-EDA only);
CFDA[A]: 11.427;
Program: Fisheries Development;
Total average annual amount received by tribes: $121,257;
Number of tribes receiving grants: 3.
Agency: Department of Education;
Total average annual amount received by tribes: $311,964;
Number of tribes receiving grants: 2.
Agency: Department of Education;
CFDA[A]: 84.234;
Program: Projects with Industries;
Total average annual amount received by tribes: $311,964;
Number of tribes receiving grants: 2.
Agency: Environmental Protection Agency;
Total average annual amount received by tribes: $218,430;
Number of tribes receiving grants: 13.
Agency: Environmental Protection Agency;
CFDA[A]: 66.811;
Program: Brownfields Pilots Coop Agreements;
Total average annual amount received by tribes: $218,430;
Number of tribes receiving grants: 13.
Agency: Department of Defense;
Total average annual amount received by tribes: $207,363;
Number of tribes receiving grants: 2.
Agency: Department of Defense;
CFDA[A]: 12.110;
Program: Planning Assistance to States;
Total average annual amount received by tribes: $174,821;
Number of tribes receiving grants: 1.
Agency: Department of Defense;
CFDA[A]: 12.600;
Program: Community Economic Adjustment;
Total average annual amount received by tribes: $32,542;
Number of tribes receiving grants: 1.
Agency: Small Business Association;
Total average annual amount received by tribes: $105,587;
Number of tribes receiving grants: 8.
Agency: Small Business Association;
CFDA[A]: 59.007;
Program: Management and Technical Assistance;
Total average annual amount received by tribes: $103,257;
Number of tribes receiving grants: 7.
Agency: Small Business Association;
CFDA[A]: 59.009;
Program: Procurement Assistance to Small Businesses;
Total average annual amount received by tribes: $2,330;
Number of tribes receiving grants: 1.
Grand total;
Total average annual amount received by tribes: $102,293,792.
Source: GAO analysis of Single Audit Act data.
Note: This analysis only pertains to tribes in the lower 48 states with
available Single Audit Act information at the time of our download
(August 2003) and entries with valid CFDA numbers.
[A] Catalog of Federal Domestic Assistance (CFDA) is a governmentwide
compendium of federal programs and activities that is coordinated by
the Office of Management and Budget and compiled by the General
Services Administration.
[End of table]
Additional Information on Results of EDA Grants:
Figure 29 shows provides details on the results of completed EDA-funded
enterprise projects, including the status of the projects as of early
2004, the EDA grant amount, the number of jobs created, and other
benefits that have accrued to the tribe as a result of undertaking the
project.
Figure 29: Benefits of Completed EDA-Funded Enterprises, 1993-2002:
[See PDF for image]
[A] Number of jobs at the enterprise at the time of our survey that did
not exist prior to project funding, as reported by tribal officials.
For purposes of this analysis, seasonal jobs are counted as half a job.
[End of figure]
Figure 30 shows the status of EDA-funded enterprise projects broken
down by year funded.
Figure 30: Outcome of Enterprise Projects Funded by EDA, 1993-2002:
[See PDF for image]
Note: Most of the projects funded in 2001 were grants to Alaska tribes
and organizations under a disaster relief appropriation in response to
a slump in fishing industry.
[End of figure]
Officials from two of the tribes that had projects fail in the earlier
years said they have learned from their mistakes and were now engaged
in successful enterprise development buttressed by revenues from gaming
and other tribal enterprises.
As noted earlier, many of the tribal enterprise projects that EDA
funded were in Alaska, and most have yet to be completed. From 1998
through 2001, EDA provided $14 million to cover approximately 40
percent of the cost of constructing 15 Alaska Native cultural/community
centers. The goal of these projects was to promote tourism and/or
community development. The economic impact of these projects has yet to
be determined because 11 of the 15 centers are still under development,
and two of the completed projects have not been in operation long
enough to establish results. However, Native officials provided revenue
and job projections that indicate the cultural/community center
projects would not create many jobs or generate much revenue for Alaska
Natives. However, an EDA official told us that economic development for
these communities is challenging for several reasons, including these
areas' remoteness, harsh climate, limited infrastructure, high fuel and
shipping prices, and short construction seasons.
Table 6 gives details on the Indian revolving loan funds (RLFs)
supported by EDA during the 1993-2002 period. In some instances EDA
gave funds to support business-training programs for loan fund
applicants. In other instances, EDA provided seed money to help start
new RLFs.
Table 6: EDA Grants Supporting Indian Revolving Loan Funds, 1993-2002:
Service area: 1 California tribe;
Year RLF initiated: 1977;
EDA funds 1993-2002: $285,000;
Use of EDA funds: Business training program;
Current loan pool amount: $3,267,000.
Service area: 1 South Dakota tribe;
Year RLF initiated: 1986;
EDA funds 1993-2002: $1,000,000;
Use of EDA funds: Construct facility for training, etc;
Current loan pool amount: $2,000,000.
Service area: 1 South Dakota tribe;
Year RLF initiated: 1998;
EDA funds 1993-2002: $150,000;
Use of EDA funds: RLF seed money;
Current loan pool amount: $375,000.
Service area: Tribes in Montana and Wyoming;
Year RLF initiated: 1998;
EDA funds 1993-2002: $500,000;
Use of EDA funds: RLF seed money;
Current loan pool amount: $448,000.
Service area: 54 Northwest tribes;
Year RLF initiated: 1998 (first loans in 2001);
EDA funds 1993-2002: $300,000;
Use of EDA funds: RLF seed money;
Current loan pool amount: $1,150,000.
Source: GAO analysis of EDA data.
[End of table]
Table 7 provides information on the results of 19 completed EDA-funded
infrastructure projects including the year funded, the project
description, the EDA grant amount, and the benefits accrued.
Table 7: Benefits of Completed EDA-Funded Infrastructure Projects,
1993-2002:
Year funded: 1993;
Project description: Sewer and road;
EDA grant amount: $400,000;
Benefits: Enabled establishment of industrial park.
Year funded: 1993/94;
Project description: Electricity, sewer, water, road;
EDA grant amount: $800,000;
Benefits: Enabled establishment of industrial park.
Year funded: 1994/97;
Project description: Water and sewer expansion;
EDA grant amount: $1,514,000;
Benefits: Enabled tribal industries and resort and casino to operate.
Year funded: 1994;
Project description: Water system improvements;
EDA grant amount: $724,000;
Benefits: Enabled expansion of housing and tribal offices.
Year funded: 1994;
Project description: Construct water treatment plant;
EDA grant amount: $900,000;
Benefits: Enabled expansion of tribal facilities.
Year funded: 1994;
Project description: Public dock construction;
EDA grant amount: $826,000;
Benefits: Enabled fishing boat docking and fuel deliveries.
Year funded: 1995;
Project description: Water/sewer upgrade and extension;
EDA grant amount: $1,100,000;
Benefits: Enabled development of resort and casino complex.
Year funded: 1995;
Project description: Construct water storage tank;
EDA grant amount: $539,000;
Benefits: Enabled business expansion.
Year funded: 1995/97;
Project description: Sewer system renovation;
EDA grant amount: $1,260,000;
Benefits: Enabled development of industrial park and casino.
Year funded: 1996/99;
Project description: Construct marina/ breakwater;
EDA grant amount: $2,600,000;
Benefits: Support fishing and tourism industries.
Year funded: 1997;
Project description: Streambed stabilization;
EDA grant amount: $205,000;
Benefits: Enabled valley to be used for agriculture, offices, etc.
Year funded: 1997;
Project description: Water, sewer, electrical, roads;
EDA grant amount: $1,000,000;
Benefits: Enabled establishment of industrial park.
Year funded: 1997;
Project description: Dock renovation;
EDA grant amount: $824,000;
Benefits: Facilitated public use and fish plant.
Year funded: 1998;
Project description: Construct sewer line;
EDA grant amount: $1,618,000;
Benefits: Enabled construction of commercial mall and casino.
Year funded: 1999;
Project description: Construct wastewater system;
EDA grant amount: $425,000;
Benefits: Enabled development of hotel and casino.
Year funded: 2000;
Project description: Extend water, sewer, and electrical lines;
EDA grant amount: $500,000;
Benefits: Enabled establishment of commercial and industrial parks.
Year funded: 2000;
Project description: Install satellite dishes for Internet connections;
EDA grant amount: $170,000;
Benefits: Enabled tribal members to connect to Internet.
Year funded: 2001;
Project description: Construct sewer, water, road;
EDA grant amount: $759,000;
Benefits: Enabled development of industrial park.
Year funded: 2002;
Project description: Construct sewer line;
EDA grant amount: $1,000,000;
Benefits: Enabled business district to be sustained.
Source: GAO analysis of EDA data.
[End of table]
Declining Administrative Resources Reduced Extent to Which EDA Monitors
and Provides Technical Assistance for Its Grants to Indian Tribes:
In recent years, EDA has reduced the amount of staff and resources it
uses to conduct monitoring of grant recipients, including projects
developed by Indian tribes. EDA regulations require regional offices
and field staff to monitor grant activities by reviewing reports and
conducting site visits within 3 years of the application. According to
EDA development strategy guidelines, grant recipients annually submit
their development strategy to ensure their plan or strategies for
developing the area economically are complete and up to date.[Footnote
31] EDA headquarters officials told us they expect for field staff to
review reports quarterly and annually visit grant sites to review the
progress of EDA-funded construction projects, including enterprise or
infrastructure projects. According to the regional officials, the
purpose of these visits is to verify that grantees are actually using
the funds for the purpose stated in the approved grant application and
in their economic development strategy.
According to EDA funding documents, the number of EDA staff acting as
economic development representatives in individual states has declined
by about 26 percent from 47 to 35 between fiscal years 1993 to
2002.[Footnote 32] According to EDA staff, this has reduced their
ability to monitor funded projects and provide technical assistance to
grant recipients. Also, one regional official told us cutbacks in
travel funds have required some economic development representatives to
forego visiting some projects and to rely instead on reviewing reports
submitted by the private sector construction engineers. For example,
staff in one of the EDA regional offices told us that one of their
field staff is responsible for two very large states with its grants
located in such remote locations that site visits are seldom made
because of the limited travel funds.
The staffing and travel fund reductions have also reduced the amount of
technical assistance that EDA provided to tribes. According to regional
EDA officials, their economic development representatives frequently
provide one-on-one consultations with grantees either by telephone or
during site visits. These consultations give tribe officials the
opportunity to address concerns or issues with the grant application,
construction, or infrastructure projects. However, with fewer field
staff and less travel funds, their staff are able to provide such
assistance less frequently.
Tribal officials we interviewed indicated that they needed more
assistance from EDA. For example, one tribal official told us that they
needed help completing grant applications; while others said that they
would like to have more frequent visits by the Economic Development
Representatives and to have them work directly with the tribes. Another
official at one tribe said that they experienced difficulties obtaining
necessary funding to complete their projects. According to a study on
Indian economic development, the lack of technical assistance can
negatively affect the success of EDA-funded projects.[Footnote 33] For
example, one Alaskan tribe told us they had to seek additional funds
before their project failed because of lack of direct interaction with
an Economic Development Representative to answer questions.
According to regional officials, in addition to the direct
consultations, EDA also formerly provided technical assistance through
conferences and seminars. In addition to a national conference, EDA
would hold regional seminars, which EDA officials saw as beneficial
because people in the local area could more easily attend and receive
information specific to their particular region or tribe. However, as a
result of the resource cutbacks, EDA officials told us that the agency
now only holds the one annual national conference and no longer
provides funding for any regional events.
[End of section]
Appendix III: Additional Information on Relationship between
Contracting and Tribes' Economic Profiles:
The Indian Self-Determination Act, as amended, allows tribes to enter
into various arrangements with federal government agencies to assume
the operation of many of the programs and services previously provided
by the agencies. From the list of federally recognized tribes and from
2000 U.S. Census Bureau (Census) data, we identified 219 tribes in the
lower 48 states that had 100 or more Native Americans living in the
tribal area. According to Department of the Interior's Bureau of Indian
Affairs (BIA) information, 43 of the 219 tribes had entered into self-
governance arrangements with BIA. As a result, these tribes operated
most of their own tribal functions and services under a funding compact
agreement with BIA. By analyzing Single Audit Act data that shows
funding provided by federal agencies, we determined that nearly all of
the remaining 176 tribes operated many of their tribal functions and
services under contracts and other agreements with BIA.
We grouped the 219 tribes in the lower 48 states with populations
greater than 100 into three categories. The first category included the
43 tribes that had entered into self-governance arrangements with BIA.
Such tribes generally have assumed the operation of most of the
services used by tribal members. For the remaining 176 non-self-
governance tribes, we analyzed how much funding these tribes received
from BIA contracts and grants from 1998 to 2000 in total and on a per
capita basis. Based on these analyses, we determined that the 121
tribes with annual per capita BIA contract amounts exceeding $580 and
total annual BIA contracting amounts greater than $300,000 appeared to
be high-contracting tribes, and we, therefore, categorized the
remaining 55 tribes whose per capita or total contracting amounts were
less than these thresholds as low-contracting tribes.[Footnote 34]
To analyze the relationship between contracting and changes in tribal
economic profiles, we compared how various indicators of economic well-
being from Census data had changed for these three groups of tribes.
Table 8 shows the changes in economic indicators for three categories
of tribes used in our analysis--the self-governance tribes, the high-
contracting tribes, and the low-contracting tribes. The data shows that
there was great variability within each category, with the top 10
percent of tribes showing high growth, while the bottom 10 percent had
negative growth. On average, the high-contracting and self-governance
tribes showed greater growth in employment levels, but differences in
the other indicators were not statistically significant.
Table 8: Change in Economic Indicators for Self-governance High-
Contracting and Low-Contracting Tribes, 1990-2000:
Employment level: Self-governance;
Percentage change 1990-2000: Number of tribes: 43;
Percentage change 1990-2000: Median level, 2000: 53%;
Percentage change 1990-2000: Median change: 13%;
Percentage change 1990-2000: 90th percentile: 37%;
Percentage change 1990-2000: 10th percentile: - 5%;
Percentage change 1990-2000: Percent positive: 78%;
Employment level: High-contracting;
Percentage change 1990-2000: Number of tribes: 121;
Percentage change 1990-2000: Median level, 2000: 48%;
Percentage change 1990-2000: Median change: 10%;
Percentage change 1990-2000: 90th percentile: 38%;
Percentage change 1990-2000: 10th percentile: - 23%;
Percentage change 1990-2000: Percent positive: 68%;
Employment level: Low-contracting;
Percentage change 1990-2000: Number of tribes: 55;
Percentage change 1990-2000: Median level, 2000: 43%;
Percentage change 1990-2000: Median change: - 1%;
Percentage change 1990-2000: 90th percentile: 53%;
Percentage change 1990-2000: 10th percentile: - 37%;
Percentage change 1990-2000: Percent positive: 49%.
Per capita income: Self-governance;
Percentage change 1990-2000: Number of tribes: 43;
Percentage change 1990-2000: Median level, 2000: $9,790;
Percentage change 1990-2000: Median change: 25%;
Percentage change 1990-2000: 90th percentile: 76%;
Percentage change 1990-2000: 10th percentile: - 3%;
Percentage change 1990-2000: Percent positive: 89%;
Per capita income: High-contracting;
Percentage change 1990-2000: Number of tribes: 121;
Percentage change 1990-2000: Median level, 2000: $8,791;
Percentage change 1990-2000: Median change: 32%;
Percentage change 1990-2000: 90th percentile: 80%;
Percentage change 1990-2000: 10th percentile: 0%;
Percentage change 1990-2000: Percent positive: 89%;
Per capita income: Low-contracting;
Percentage change 1990-2000: Number of tribes: 55;
Percentage change 1990-2000: Median level, 2000: $9,505;
Percentage change 1990-2000: Median change: 37%;
Percentage change 1990-2000: 90th percentile: 158%;
Percentage change 1990-2000: 10th percentile: - 10%;
Percentage change 1990-2000: Percent positive: 85%.
Percentage above poverty: Self-governance;
Percentage change 1990-2000: Number of tribes: 43;
Percentage change 1990-2000: Median level, 2000: 69%;
Percentage change 1990-2000: Median change: 9%;
Percentage change 1990-2000: 90th percentile: 51%;
Percentage change 1990-2000: 10th percentile: - 1%;
Percentage change 1990-2000: Percent positive: 84%;
Percentage above poverty: High-contracting;
Percentage change 1990-2000: Number of tribes: 121;
Percentage change 1990-2000: Median level, 2000: 68%;
Percentage change 1990-2000: Median change: 16%;
Percentage change 1990-2000: 90th percentile: 48%;
Percentage change 1990-2000: 10th percentile: - 21%;
Percentage change 1990-2000: Percent positive: 79%;
Percentage above poverty: Low-contracting;
Percentage change 1990-2000: Number of tribes: 55;
Percentage change 1990-2000: Median level, 2000: 73%;
Percentage change 1990-2000: Median change: 15%;
Percentage change 1990-2000: 90th percentile: 64%;
Percentage change 1990-2000: 10th percentile: - 15%;
Percentage change 1990-2000: Percent positive: 74%.
Sources: GAO analysis of data from Census, Single Audit Act, and BIA.
[End of table]
We also analyzed how the amount of federal grants and contracts related
to tribes' total tribal income and how changes in economic profiles
varied according to this relationship. For this analysis, we identified
the total average amount of federal grants and contracts the tribes in
our analysis received annually in 1998, 1999, and 2000 from all federal
agencies using the Single Audit Act database. We then found the total
income of the Native Americans living on the tribe's lands, which was
calculated by multiplying the per capita income of the tribe by the
total number of Native Americans living on the reservation, with an
adjustment for Native Americans living in the reservation's service
area.[Footnote 35] Dividing the total federal funding for each tribe
by its tribal income resulted in a grants-to-income ratio. We then
classified each tribe in our analysis into four categories based on the
level of this ratio. As table 9 shows, tribes with a moderate or low
grants-to-income ratio showed significantly higher gains in per capita
income and percent above poverty than did tribes with a very high
grants-to-income ratio.
Table 9: Change in Economic Indicators of Tribes by Grants-to-Income
Ratio Categories, 1990-2000:
Grants-to-income ratio category[A]: Per capita income;
Median percentage change, 1990-2000: Low: (0 to .20): (n=50): 33%;
Median percentage change, 1990-2000: Moderate: (.21 to .49): (n=71):
38%;
Median percentage change, 1990-2000: High: (.50 to .99): (n=52): 29%;
Median percentage change, 1990-2000: Very high: (over 1.0): (n=26):
16%.
Grants-to-income ratio category[A]: Percentage employed;
Median percentage change, 1990-2000: Low: (0 to .20): (n=50): 3%;
Median percentage change, 1990-2000: Moderate: (.21 to .49): (n=71):
13%;
Median percentage change, 1990-2000: High: (.50 to .99): (n=52): 6%;
Median percentage change, 1990-2000: Very high: (over 1.0): (n=26):
10%.
Grants-to-income ratio category[A]: Percentage above poverty;
Median percentage change, 1990-2000: Low: (0 to .20): (n=50): 10%;
Median percentage change, 1990-2000: Moderate: (.21 to .49): (n=71):
26%;
Median percentage change, 1990-2000: High: (.50 to .99): (n=52): 14%;
Median percentage change, 1990-2000: Very high: (over 1.0): (n=26):
6%.
Sources: GAO analysis of Census, and Single Audit Act, and BIA data.
Note: Number of tribes by category: 50 low, 71 moderate, 52 high, and
26 very high.
[A] Based on 1998-2000 data. See appendix 1 for categorization
methodology details.
[End of table]
We also analyzed the relationship between variations in tribes' grants
to income ratio and the extent to which they were contracting or self-
governance. Figure 31 shows that about half the high-contracting and
self-governance tribes had moderate or low grants-to-income ratios,
while about 9 percent of the self-governance tribes and 18 percent of
the high-contracting tribes have a very high grants-to-income ratio.
Figure 31: Percentage of Self-governance, High-Contracting, and Low-
Contracting Tribes by Grants-to-Income Ratio:
[See PDF for image]
[End of figure]
[End of section]
Appendix IV: Comments from Department of Commerce:
THE SECRETARY OF COMMERCE:
Washington, D.C. 20230:
August 9, 2004:
Mr. William B. Shear:
Director, Financial Markets and Community Investment:
U.S. Government Accountability Office:
441 G Street, NW, Room 2A10:
Washington, DC 20548:
Dear Mr. Shear:
Thank you for providing the U.S. Department of Commerce an opportunity
to review and comment on the draft report entitled Indian Economic
Development: Relationship to EDA Grants and Self-Determination
Contracting is Mixed.
I enclose the Department of Commerce comments on this report.
Sincerely,
Signed by:
Donald L. Evans:
Enclosure:
COMMENTS FROM THE DEPARTMENT OF COMMERCE REGARDING GAO DRAFT REPORT
(GAO-04-847) INDIAN ECONOMIC DEVELOPMENT: RELATIONSHIP TO EDA GRANTS
AND SELF-DETERMINATION CONTRACTING IS MIXED:
The Department of Commerce (DOC) appreciates the Government
Accountability Office's (GAO) diligence in pursuing this important
study, its willingness to provide us with the details of its analyses,
and the opportunity to respond. The Economic Development Administration
(EDA) acknowledges that our enterprise development investments, at the
point in time they were analyzed, had "mixed" success given the EDA
investments GAO reviewed and evaluated. However, the success of other
types of investments should be considered in order to make a broad
statement about the economic development generated by EDA grants as a
whole.
The report categorized EDA assistance as enterprise projects, revolving
loan fund and business development programs, infrastructure projects,
and planning and feasibility studies. The report reviewed data from 59
enterprise projects funded between 1993 and 2002 and focused on 31
recently completed projects. Figure 8 on page 19 of the report
indicates that 23 percent of the projects were profitable; 32 percent
covered costs; 23 percent were subsidized; and 23 percent had failed.
On the basis of this information, GAO concludes that EDA investments
have had "mixed success" in generating economic development for the
Indian tribe recipients.
The report emphasizes that the largest portion of EDA funds were
provided for enterprise development to create revenue and apparently
based its findings primarily on the success or profitability of these
projects. While EDA agrees that a large portion of EDA funds did go to
enterprise development projects, other major EDA investments
(classified by GAO as infrastructure, business development, and
planning and technical assistance) also contributed to revenue
generation, business development, and job creation. The report
indicates that several of these investments appear to have produced
positive results for the Indian tribes involved, but did not include a
detailed analysis of these projects. See for example, the favorable
treatments of EDA infrastructure grants at pages 28-29 of the report.
Also see all favorable comments regarding planning grants at page 31.
The EDA planning grants appeared to help tribes successfully.
Therefore, EDA suggests that the report, and in particular the title of
the report, more accurately reflects that the relationship of Indian
economic development to EDA enterprise projects is mixed.
Statement on page 8: "...since 2002 EDA has placed more emphasis on
projects that create high-wage, high-skill jobs and that are market
based and likely to attract private sector investment." Statement on
page 23 that "in light of the mixed success that EDA funded enterprise
projects experienced, tribes may find obtaining EDA funding in the
future more difficult because of the changes in the agency's criteria
for awarding grants."
The statement on page 8 should read "... higher-skill, higher-wage
jobs...." EDA seeks to create environments in which jobs are created
that are higher skill, higher-wage than those that currently exist in
the area or region where the investment is being made. The generation
of private sector investment is also essential to creating a growing
economy, and EDA investments seek to create the conditions that will
attract private sector investment. These goals are particularly
important to Indian tribes, since conditions unique to these
communities tend to make private capital investment less attractive.
Additionally, EDA does not evaluate proposals on these criteria in
isolation - all aspects of an investment and all potential benefits are
assessed during funding decisions. EDA does review investment proposals
on the basis of investment policy guidelines designed to ensure that
investments represent the best chance of creating market-based and
sustainable growth. No region or area is disadvantaged in the
competition for funding because of its location, the level of distress
or the populated served. EDA has a long history of supporting Indian
economic development and such support will continue. See for example,
the favorable treatments of EDA infrastructure grants at pages 28-29 of
the report. Also see all favorable comments regarding planning grants
at page 31. The EDA planning grants appeared to help tribes
successfully.
Discussion of RLF investments, specifically on page 25:
EDA concurs with the report, which provides a cautionary description of
the challenges that EDA faces with respect to the revolving loan fund
(RLF) program. While RLFs can be successful, their implementation can
be difficult, particularly in the environment of Indian country. For
these reasons, EDA reaffirms that it has standards that are expected to
be met for all its investments, especially RLFs.
Statement on page 29: "According to the Department of Commerce's fiscal
year performance report, EDA considers funding distressed communities'
planning efforts critical to effective economic and sustainable
development."
EDA has firmly supported planning for regions facing economic
challenges and, in fact, requires comprehensive planning as the basis
of any implementation funding proposal. We note the positive comments
in the GAO report that 90 percent of the tribal officials surveyed
indicated that the planning grants were crucial or very important in
achieving success in their tribes' economic development (page 29). The
report further notes that the EDA planning grants appeared to help
tribes successfully implement EDA enterprise projects (page 31). This
confirms the importance and utility of comprehensive strategies. At the
same time, EDA also recognizes that the planning process must result in
tangible outcomes. EDA will continue constantly improving the
effectiveness of all our program tools as part of the agency's own
performance-based planning requirement.
Statements on Pages 10 and 44 that EDA's assistance to tribes represent
only 3% of the total amount of funding it awarded between 1993 and
2002.
EDA confirms that Indian tribes did receive approximately 3 percent of
the total amount of funding EDA awarded between 1993 and 2002; however,
as the report notes on page 11, "the proportion of EDA funds going to
tribes appears to be similar to the proportion of the U.S. population
living in poverty that these tribes represent." The GAO report notes
comments from tribal leaders that economic development would progress
faster if more funds were made available. EDA affirms that there is no
annual quota for Indian economic development funding and that
investment proposals are considered fairly and solely on the basis of
merit.
Heading on page 70: "Declining Administrative Resources Reduced Extent
to Which EDA Monitors and Provides Technical Assistance for Its Grants
to Indian Tribes."
EDA has experienced cutbacks in staffing, operating resources, and a
reduction in grant funding. EDA is currently streamlining its grant
delivery and analyzing administrative processes to ensure higher
standards of customer service and assistance to all grantees, including
Indian tribes. We also continue to seek new ways to maintain the
relationships that EDA has forged with tribes. This may involve working
more with other agencies to seek increased leveraging of our joint
efforts and resources.
Statement on page 8: "After receiving quality control clearance and
depending on the type of grant program, either the Regional Director or
the Assistant Secretary in EDA headquarters approves the decision to
invite the entity to submit a formal application."
Correction: Delete "either" and delete "or the Assistant Secretary in
EDA headquarters." The Assistant Secretary is not involved in the
investment proposal review and application submission process.
The following are GAO's comments on the Department of Commerce's letter
dated August 9, 2004.
GAO Comments:
1. Our scope for analyzing EDA grants was confined to the 95 Indian
tribes we surveyed. Our survey methodology included interviewing tribal
officials that were cognizant of the tribes' economic development
projects and activities. Our survey results reflect the information
provided by and the opinions of tribal officials who participated in
our survey. We also interviewed relevant officials from EDA. We think
our methodology was sufficient to reach our overall findings.
2. We made revisions based on this comment.
3. Our report notes that tribal officials and some EDA staff expressed
the view that tribes, particularly those located in rural areas, would
have a harder time obtaining funding under the investment criteria that
EDA implemented in 2002. This criteria favors projects that result in
higher-wage, higher skill jobs and private investment. However,
Commerce's letter states that no area or region will be disadvantaged
and that its long history of support of Indian tribes will continue.
4. We made revisions based on this comment.
[End of section]
Appendix V: Comments from the Department of the Interior:
United States Department of the Interior:
OFFICE OF THE ASSISTANT SECRETARY:
POLICY, MANAGEMENT AND BUDGET:
Washington, D.C. 20240:
AUG 10 2004:
William B. Shear, Director:
Financial Markets and Community Investment:
Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Director Shear:
Thank you for providing us the opportunity to review the Government
Accountability Office (GAO) draft report entitled, "INDIAN ECONOMIC
DEVELOPMENT: Relationship to EDA Grants and Self-Determination is
Mixed" (GAO-847). The purpose of the review was to determine how tribes
were benefiting economically from Federal assistance received through
the Economic Development Administration grant program from contracting
and compacting arrangements entered into with the Bureau of Indian
Affairs (BIA) pursuant to the Indian Self-Determination and Education
Assistance Act. Regarding the economic benefits derived from
contracting and compacting arrangements, the GAO found that tribes that
were self-governing or engaged in a high level of contracting showed
greater gains on average in employment levels from 1990 to 2000 than
did tribes that were contracting to perform fewer of their own
programs. Other analyses were not statistically different for self
governing or high-governing or high-contracting tribes compared to low-
contracting tribes. Tribal officials indicated to GAO that running
their own programs through contracts and compacts allowed them to gain
self-governance experience and to tailor the programs to their own
needs.
The BIA has reviewed the report and generally agrees with the
conclusions reached by the GAO. The BIA supports increased self-
determination contracting and compacting as a means of improving tribal
economic development efforts. But as noted in the report, other
factors, such as, the tribe's location, availability of resources,
access to capital, and quality of tribal governance also significantly
influence a tribe's ability to develop their tribal economics
successfully. The report contains no recommendations for the BIA to
address.
Sincerely,
Signed by:
P. Lynn Scarlett:
Assistant Secretary Policy, Management and Budget:
[End of section]
Appendix VI: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
William B. Shear (202) 512-8678 Cody J. Goebel (202) 512-7329:
Staff Acknowledgments:
In addition to the individuals named above, Carl Barden, Mark de la
Rosa, DuEwa Kamara, Jeffery Malcolm, Bettye Massenburg, Don Porteous,
LaSonya Roberts, Walter Vance, and Carrie Wilks made key contributions
to this report.
(250157):
FOOTNOTES
[1] GAO, Economic Development: Federal Assistance Programs for American
Indians and Alaska, GAO-02-193 (Washington, D.C.: Dec. 21, 2001).
[2] For simplicity, references to tribes in this report generally
includes American Indian tribes or tribal consortia and Alaska Native
villages or entities unless otherwise noted.
[3] This database is the Single Audit Act database and is operated by
the Federal Audit Clearinghouse within the Bureau of the Census on
behalf of the Office of Management and Budget. The Single Audit Act
database contained the results of audits by private accounting firms of
entities that received more than $300,000 in federal monies between
1997 and 2002. We analyzed data only for tribes in the lower 48 states
because data on Alaska Native entities was not comparable.
[4] We classified tribes with per capita BIA contracts and grants
exceeding $580 and total BIA contracts and grants exceeding $300,000 as
"high-contracting." We limited our analysis to tribes with a
reservation population of 100 or more Native Americans.
[5] For this analysis, we only included those tribes in the lower 48
states that are federally recognized, had available 2000 Census data,
and had tribal population of 100 people or more based on population
data from the 2000 Census. Various tribes have filed suit against
federal agencies alleging that the 2000 Census undercounted their
tribal members. However, we had no information indicating that any such
undercounting would affect the economic profile indicators we used in
our analysis.
[6] These figures comparing the economic conditions for American
Indians and the United States population as a whole were derived from
GAO's analyses of 2000 U.S. Census data. Census data by Indian
reservation were used in calculating the median figures for American
Indian tribes. Only the 219 reservations with complete 2000 Census
information were included in this analysis.
[7] The U.S. Census Bureau uses a set of money income thresholds that
vary by family size and composition to detect who is poor. If the total
income for a family or unrelated individual falls below the relevant
poverty threshold for that size household, then they are classified as
being "below the poverty level." For example, in 1999, the poverty
threshold for a family of four people with two children under 18 years
old was $16,895.
[8] Linda A. Riley, B. Nassersharif, and J. Mullen, Assessment of
Technology Infrastructure in Native Communities, a study based on a
survey of 48 Native communities, New Mexico State University, (Las
Cruces, NM, 1999), EDA project no. 99-07-13799.
[9] Economic distress is defined by EDA policy as including: high
levels of unemployment, low income levels, large concentrations of low-
income families, significant declines in per capita income, substantial
loss of population because of the lack of employment opportunities, and
large numbers (or high rates) of business failures.
[10] These contracts are known as 638 contracts because the authority
to contract was created by Pub. L. No. 93-638, the Indian Self-
Determination and Education Assistance Act of 1975.
[11] The statute also provides that the funding of contract support
costs is subject to the availability of appropriations and that the
Secretary is not required to reduce funding for programs, projects, or
activities serving a tribe to make funds available to another tribe or
tribal organization. In Thompson v. Cherokee Nation of Oklahoma, 334
F.3d 1075 (Fed. Cir. 2003), cert. granted 125 S.Ct.1656 (No. 03-853),
the Court of Appeals for the Federal Circuit determined that the
Secretary of Health and Human Services lacked discretion to refuse to
reprogram funds from a lump-sum appropriation to meet a contractual
obligation to pay a tribal contractor the full indirect contracts
support costs. The Supreme Court has agreed to review the case.
[12] These federally recognized entities are based on classifications
made by BIA and refer to those Indian tribal entities (in the lower 48
states) and Native entities (in the state of Alaska) that are
recognized by and are eligible to receive funding and services from
BIA, see 68 Fed Reg. No. 68180 (Dec. 5, 2003).
[13] Tribal officials said that many, but not all, of the businesses
and jobs generated over the years are still in operation, but exact
figures were not available.
[14] Linda A. Riley, B. Nassersharif, and J. Mullen Assessment of
Technology Infrastructure in Native Communities, (EDA project no. 99-
07-13799: 1999).
[15] Appendix II contains more information on the results of the EDA
infrastructure grants to American Indian tribes.
[16] We did not include Alaska Native entities in this analysis because
the contracting and economic profile data were not comparable. In
addition, provision of federal funds to Alaska Native entities has
unique characteristics compared with those for American Indians in the
lower 48 states. We currently have ongoing work addressing the
provision of federal funds to Alaska Native entities.
[17] Appendix I describes in detail how we calculated this income
amount.
[18] Matthew B. Krepps, Can Tribes Manage Their Own Resources? A Study
of American Indian Forestry and the 638 Program, Harvard University,
(Cambridge, MA, 1991). This study analyzed data from a nationwide
sample of 75 tribes with forestry resources and the results produced by
tribes that entered into self-determination contracts to oversee the
management of forestry resources versus nonparticipating tribes with
BIA management of forestry operations.
[19] See GAO, Indian Self-Determination Act: Shortfalls in Indian
Contract Support Costs Need to Be Addressed, GAO/RCED-99-150
(Washington, D.C.: June 30, 1999).
[20] Miriam Jorgensen, and Jonathan B. Taylor, What Determines Indian
Economic Success? Evidence from Tribal and Individual Indian
Enterprises, Harvard Project on American Indian Economic Development,
Harvard University, (Cambridge, MA, 2000).
[21] Stephan Cornell and Joseph P. Kalt, What Can Tribes Do? Strategies
and Institutions in American Indian Economic Development, University of
California, (Berkeley, CA 1992).
[22] We decided not to include in our survey those tribes that received
only planning grants since we wanted to examine EDA grants that
directly resulted in tangible economic development activities. However,
if a tribe received an enterprise, infrastructure, or a business
development grant and also received a planning grant from EDA, we asked
tribal officials about the results of their planning grants as well.
[23] Self-governance tribes are those that have entered into a
contractual arrangement between the tribe and BIA and/or Indian Health
Service. Under these self-governance compacts, tribes receive a single
amount of funding to assume the management of one or more services
previously provided for them by these agencies. Self-governance tribes
have greater control and flexibility in the use of these funds and
reduced reporting requirements compared to self-determination
contracting done under Pub. L. No. 93-638.
[24] The Single Audit Act database contains data from 1997 to the
present. We analyzed data from 1998 to 2000 because data for these
years were more complete than data for the other years.
[25] 1998 was the latest year that BIA had their shortfall budget
broken down by tribe.
[26] We derived these federal grants and contracts data from the Single
Audit Act database.
[27] We derived each tribe's per capita income and total number of
Native Americans living on its the reservation from the 2000 Census. We
then adjusted the total number of Native Americans living in the
reservation by using BIA numbers for the total number of Native
Americans living in the service area as reported in BIA's 2001 American
Indian Population and Labor Force Information. Many of the grants and
contracts (e.g., BIA contracts for road maintenance, law enforcement,
fire protection) are reservation based, while other contracts (e.g.,
for social services) are based on the number of Native Americans in the
service area. Some reservations are small, but many Indians live in the
surrounding service area. Other reservations are more isolated, and
most of the Indians in the service area live on the reservation. We
used the following method to weight the population toward that on the
reservation while adjusting it for the service area population: We
multiplied the reservation population by 2, added the service area
population, and then divided by 3. (Thus, if a tribe's reservation
population was 500 and total service area population--including the
reservation--was 1,000, then the adjusted population would be 667.)
[28] The Economic Development Administration and Appalachian Regional
Development Reform Act of 1998, Pub. L. No. 105-393, Nov. 13, 1998.
[29] The Atlanta Region consists of Alabama, Florida, Georgia,
Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee.
The Denver Region consists of Colorado, Iowa, Kansas, Missouri,
Montana, North Dakota, Nebraska, South Dakota, Utah, and Wyoming. The
Austin Region consists of Arkansas, Louisiana, New Mexico, Oklahoma,
and Texas. The Philadelphia Region consists of Connecticut, Delaware,
District of Columbia, Maine, Maryland, Massachusetts, New Hampshire,
New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia,
and West Virginia. The Chicago Region consists of Illinois, Indiana,
Michigan, Minnesota, Ohio, and Wisconsin. For the purposes of our
analysis of EDA grants by EDA regions, we analyzed Native entities in
Alaska (which are technically included in the Seattle EDA region)
separately. We further broke the Seattle EDA Region states into two
groups: Seattle (NW or Northwest), which included Idaho, Oregon, and
Washington, and Seattle (SW or Southwest), which included Arizona,
California, and Nevada.
[30] The Single Audit Act of 1984, Pub. L. No. 98-502, and the Single
Audit Act Amendments of 1996, Pub. L. No. 104-156, require that states,
local governments, Indian tribes, and nonprofit organizations that
annually expend $300,000 or more in federal awards--$500,000 for fiscal
years ending after December 31, 2003--have audits. The audits must be
conducted in accordance with OMB's Circular A-133, Audits of States,
Local Governments, and NonProfit Organizations (June 24, 1997). The
circular further requires that the results of these audits be submitted
to the Federal Audit Clearinghouse, which is responsible for
maintaining this information in the government wide Single Audit Act
database. The Federal Audit Clearinghouse has contracted with the
Census Bureau to maintain this database.
[31] The Economic Development Administration and Appalachian Regional
Development Reform Act of 1998, Pub. L. No. 105-393, a comprehensive
amendment of the Public Works and Economic Development Act of 1965,
requires a comprehensive economic development strategy to qualify for
assistance under most EDA agreements.
[32] Department of Commerce Economic Development Administration's
Notice of Funding Availability for Fiscal Years 1993-2002.
[33] Miriam Jorgensen and Jonathan B. Taylor, What Determines Indian
Economic Success? Evidence from Tribal and Individual Indian
Enterprises, Harvard Project on American Indian Economic Development,
Harvard University, (Cambridge, MA 2000).
[34] We used both per capita and total contract amounts to categorize
the tribes because larger tribes tended to have smaller contract
amounts on a per capita basis. By setting the thresholds where we did,
we appeared to capture those large tribes that were engaged in
extensive contracting activities on a total dollar amount basis despite
having a lower per capita contracting amount than some other tribes.
[35] Appendix I describes in detail how we calculated this income
amount.
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