SPEAKERS CONTENTS INSERTS
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55–613 l
1999
THE CONTRACT SUPPORT COSTS WITHIN THE INDIAN HEALTH SERVICE ANNUAL BUDGET
HEARING
before the
COMMITTEE ON RESOURCES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
FEBRUARY 24, 1999, WASHINGTON, DC
Serial No. 106–9
Printed for the use of the Committee on Resources
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
or
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Committee address: http://www.house.gov/resources
COMMITTEE ON RESOURCES
DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana
JAMES V. HANSEN, Utah
JIM SAXTON, New Jersey
ELTON GALLEGLY, California
JOHN J. DUNCAN, Jr., Tennessee
JOEL HEFLEY, Colorado
JOHN T. DOOLITTLE, California
WAYNE T. GILCHREST, Maryland
KEN CALVERT, California
RICHARD W. POMBO, California
BARBARA CUBIN, Wyoming
HELEN CHENOWETH, Idaho
GEORGE P. RADANOVICH, California
WALTER B. JONES, Jr., North Carolina
WILLIAM M. (MAC) THORNBERRY, Texas
CHRIS CANNON, Utah
KEVIN BRADY, Texas
JOHN PETERSON, Pennsylvania
RICK HILL, Montana
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BOB SCHAFFER, Colorado
JIM GIBBONS, Nevada
MARK E. SOUDER, Indiana
GREG WALDEN, Oregon
DON SHERWOOD, Pennsylvania
ROBIN HAYES, North Carolina
MIKE SIMPSON, Idaho
THOMAS G. TANCREDO, Colorado
GEORGE MILLER, California
NICK J. RAHALL II, West Virginia
BRUCE F. VENTO, Minnesota
DALE E. KILDEE, Michigan
PETER A. DeFAZIO, Oregon
ENI F.H. FALEOMAVAEGA, American Samoa
NEIL ABERCROMBIE, Hawaii
SOLOMON P. ORTIZ, Texas
OWEN B. PICKETT, Virginia
FRANK PALLONE, Jr., New Jersey
CALVIN M. DOOLEY, California
CARLOS A. ROMERO-BARCELÓ, Puerto Rico
ROBERT A. UNDERWOOD, Guam
PATRICK J. KENNEDY, Rhode Island
ADAM SMITH, Washington
WILLIAM D. DELAHUNT, Massachusetts
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CHRIS JOHN, Louisiana
DONNA CHRISTIAN-CHRISTENSEN, Virgin Islands
RON KIND, Wisconsin
JAY INSLEE, Washington
GRACE F. NAPOLITANO, California
TOM UDALL, New Mexico
MARK UDALL, Colorado
JOSEPH CROWLEY, New York
LLOYD A. JONES, Chief of Staff
ELIZABETH MEGGINSON, Chief Counsel
CHRISTINE KENNEDY, Chief Clerk/Administrator
JOHN LAWRENCE, Democratic Staff Director
C O N T E N T S
Hearing held February 24, 1999
Statement of Members:
Hayworth, Hon. J.D., a Representative in Congress from the State of Arizona, prepared statement of
Inslee, Hon. Jay, a Representative in Congress from the State of Washington, prepared statement of
Kildee, Hon. Dale E., a Representative in Congress from the State of Michigan
Prepared statement of
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Miller, Hon. George, a Representative in Congress from the State of Caliornia, prepared statement of
Young, Hon. Don, a Representative in Congress from the State of Alaska
Prepared statement of
Statement of Witnesses:
Allen, Mr. W. Ron, President, National Congress of American Indians
Prepared statement of
National Congress of American Indians, National Policy Workgroup on Contract Support Cost, First Interim Report
National Congress of American Indians, National Policy Workgroup on Contract Support Cost, Second Interim Report
Antone, Lt. Governor Cecil, Gila River Indian Community, Sacaton, Arizona
Prepared statement of
Gover, Kevin, Assistant Secretary, Indian Affairs, U.S. Department of the Interior
Prepared statement of
Lincoln, Michel E., Deputy Director, Indian Health Service, Rockville, Maryland
Prepared statement of
Williams, Mr. Orie, Executive Vice President, Yukon Kuskokwim Health Corporation, Bethel, Alaska
Prepared statement of
Yukon-Kuskokwim Health Corporation
Additional material supplied:
Council Annette Islands Reserve, Metlakatla Indian Community, prepared statement of
Miller, Lloyd B., Sonosky, Chambers, Sachse & Endreson
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Spratt, Hon. John M., Jr., a Representative in Congress from the State of South Carolina, prepared statement of
HEARING ON THE CONTRACT SUPPORT COSTS WITHIN THE INDIAN HEALTH SERVICE ANNUAL BUDGET
WEDNESDAY, FEBRUARY 24, 1999
House of Representatives
Committee on Resources
Washington, D.C.
The Committee met, pursuant to call, at 11 a.m., in Room 1324, Longworth House Office Building, Honorable Don Young, Chairman of the Committee, presiding.
Members present: Representatives Gallegly, Hayworth, Kildee, Faleomavaega, Ortiz, Smith, Christensen, and Inslee.
Mr. YOUNG. The Committee for Resources will come to order. The Committee is meeting here today to hear testimony on contract support costs within the Indian Health Service, the Bureau of Indian Affairs, annual budget. Under Rule 4 [g] of the Committee rules any oral opening statements at hearings are limited to the Chairman or the Ranking Minority Member. This will allow us to hear from our witness sooner and help members keep up their schedules. Therefore, if any members have any statements, they can include them in the hearing record under this unanimous consent.
Now I recognize Mr. Kildee, for any statement he may have.
STATEMENT OF HON. DALE E. KILDEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN
Mr. KILDEE. Thank you, Mr. Chairman, and thank you for having this very, very important hearing on support costs. In 1975 we passed the Indian Self-Determination Education Assistance Act. We have not always done right by providing the dollars that are needed to administer these programs in self determination, and I think it is important that we address this as the authorizing committee. And I would like to submit my statement and also the statement of the Ranking Member, Mr. Miller, for the record.
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[The prepared statement of Mr. Kildee follows:]
STATEMENT OF HON. DALE E. KILDEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN
Mr. Chairman, today's hearing marks a fine moment in the 106th Congress that allows us to take this opportunity to highlight the successes of native Americans and Alaska natives across the nation since the enactment of the Indian Self-Determination and Education Assistance Act of 1975.
This hearing will also provide us an opportunity to learn of the impediments that have emerged from the implementation of the Federal policy promoting Indian self-determination, and to see what we can do to remove those impediments for the ultimate benefit of the tribes and the people they serve.
Using the tools of self-determination contracting and self-governance compacting, tribes today in financial terms operate $840 million in Indian Health Service Programs, more than 40 percent of the agency's entire budget. The results, as I am sure the Committee will hear today, have been staggering in terms of improved local autonomy and flexibility, streamlined services, expanded programs, better accessing of alternate resources, and improved education, employment, health status and welfare of the Indian communities served.
None of this would have been possible without a true partnership between Congress and the tribes. That partnership is reflected not only in the many improvements we have made to the Self-Determination Act and self-governance laws over the years, but in the financial commitment we have shown, too, in the form of contract support costs, without contract support costs, we would be penalizing tribes, first by turning over underfunded programs to tribal administration, and then telling tribes they must further reduce those programs in order to cover the administrative costs of operating them.
Mr. Chairman, Congress's commitment to pay contract support costs in the Indian Self-Determination Act is not only morally and legally correct, but it is necessary to fulfill the policy of self-determination. The Self-Determination Program is in crisis. Though some may say tribes are victims of their own courage and success, tribes are at this moment operating hundreds of millions of dollars in programs with inadequate contract support costs. We know the problem is not the contract support cost system, because the system has been exhaustively studied and scrutinized time, and time again. The problem is one of funding. While I support the President's FY 2000 budget proposal calling for a $35 million increase in funding for contract support costs in the Indian Health Service, I will request additional funding for contract support costs and funding for the Indian Self-Determination Fund.
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We, Members of Congress, made a commitment nearly a quarter century ago to support tribal self-sufficiency. Tribes have done their part in taking over responsibility for essential Federal programs serving their people. Now we must do our part to support them. Mr. Chairman, we must restore confidence in the self-determination system.
I look forward to hearing today's testimony, and to working with the Committee and the House Interior Subcommittee to close the contract support gap that is threatening the future of the nation's Indian Self-Determination Policy.
[The prepared statement of Mr. Miller follows:]
STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Chairman. We were both here in 1975 and helped pass Public Law 93-638, the Indian Self-Determination and Education Assistance Act allowing tribes to enter into contracts with the Bureau of Indian Affairs to run Federal programs previously provided by the BIA. The concept was simple—through government to government negotiations, Indian Tribes could take over specific programs and supply services directly to tribal members thereby replacing the total Federal involvement. Our belief was that as more and more tribes gained the expertise to administer Federal programs, tribal governments would assume greater control over Federal services authorized for Indian Tribes. We were correct, the desire and ability to enter into what became known as ''638 contracts'' grew and evolved to include Indian Health Service programs and further to include the ability to negotiate one ''self governance contract'' to administer most programs within the BIA or IHS.
The problem, however has been inadequate funding of contract support costs which are necessary costs borne by an Indian Tribe to cover expenses which, when the program is provided by the Federal Government, are funded through other means. These costs can include personnel support, accounting, legal assistance and utilities. Congress and the courts agree that these funds are required, however inadequate funding has brought us to an almost crisis situation.
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Several factors have contributed to this problem including quick expansion of the number of 638 and self governance contracts negotiated, wide variations in the calculations of contract support costs, and appropriation levels too low to address the need. We must get a handle on how to fund these costs as failure to do so will greatly affect direct programs to American Indians.
I don't think there are many in this room who would doubt the appropriateness and success of Indian Tribes running Federal programs, but the very success of this program could result in fewer contracts or severe caps placed on funding in the future. Legislation which I introduced last Congress to make permanent the self governance program within the IHS, was blocked in the Senate because of the issue of contract support costs. I think that was a mistake and I will reintroduce the legislation again. However, the Appropriators have made it clear over the last couple of years that if a solution isn't found soon, they will step in and attempt to curtail spending as they see fit.
This morning we will hear from the Administration and Indian Tribes which are running successful health service programs. In addition the National Congress of American Indians will testify as to the working group they have assembled to come up with recommendations to address the problem. I look forward to all the testimony. We should not go back to the days where every American Indian had to come to the Federal Government to receive a service. I believe answers to this quandary should come from Indian country and not imposed upon tribes and I will work with all interested parties to come up with and implement viable solutions.
STATEMENT OF HON. DON YOUNG, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALASKA
Mr. YOUNG. I thank the gentleman. I also have an opening statement—I would just especially like to welcome my Alaskans that are here today—and I'll submit it for the record also. We have Mr. J.D. Hayworth who has joined us today also. And so we'll continue with the witness list.
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[The prepared statement of Mr. Young. follows:]
STATEMENT OF HON. DON YOUNG, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALASKA
I would like to welcome everyone, especially my Alaskans, to this important hearing on contract support costs.
Last year, the House and Senate Appropriations committees' were very concerned with the proposed $168 million dollars appropriated by the Administration for contract support costs for the Indian Health Service (INS) for fiscal year 1999. The proposed figure would have covered approximately 58 percent of contract support costs (across the board). This was unacceptable to me, the Committee on Resources and the House and Senate Interior Appropriations Committees. The Administration and Congress must remember that tribes are operating Federal programs and are carrying out Federal responsibilities when they operate self-determination contracts.
I am pleased to see that the IHS has opted to retain the $35 million dollars that Chairman Regula added to contract support costs for FY 1999 in their FY 2000 budget. This increase coupled with the one year moratorium set on new contracts, will bring the percentage of coverage on contract support costs to 70 percent across the board.
The Committee will also hear from the Bureau of Indian Affairs with regard to their system for contract support costs. The BIA pro-rates their indirect costs, however, funding for contract support costs does not include direct costs to tribes. Tribes believe that the direct costs paid by the IHS are in fact legitimate and should also be paid by the BIA as well. It is also my belief that the BIA and IHS should remain consistent and utilize similar, if not, identical systems to pay contract support costs.
I want to remind everyone that under the Balanced Budget Act of 1977, we have strict caps on discretionary spending. In FY 2000, these caps will be lower than in FY 1999. Unless these caps are raised, that means that the Appropriations committee will have to cut back on programs rather than increasing or even level-funding them.
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Senator Stevens in the Senate has told me that while he strongly supports Indian Self-Determination, he and many of his colleagues have always believed that as more and more Native organizations began to run their own programs, that Congress would see concurrent downsizing in both the IHS and BIA. To some extent, we have seen that in BIA, but we have not seen that downsizing in IHS. So, this brings us to the hearing today.
I will now recognize my Ranking Minority Member for his opening remarks.
Mr. YOUNG. The first panel is Mr. Michel E. Lincoln, deputy director of the Indian Health Service, Rockville, Maryland. Mr. Kevin Gover, assistant secretary of Indian Affairs, U.S. Department of Interior, Washington DC.
Mr. Lincoln, you are up first.
STATEMENT OF MICHEL E. LINCOLN, DEPUTY DIRECTOR, INDIAN HEALTH SERVICE, ROCKVILLE, MARYLAND
Mr. LINCOLN. Thank you, Mr. Chairman. We appreciate the opportunity to be in front of the Committee today to talk about contract support costs. As a part of the President's Fiscal Year 2000 budget, we're very pleased to report to the Committee that the President has requested an additional increase for contract support costs of $35 million.
On January 26th, the Committee, and through its chairman, has written Dr. Trujillo relative to a number of issues the Committee would like to entertain today and would like us to be responsive to. I would like to just briefly make comment on those issues and to let the Chairman know that we are prepared, though, to talk in detail about the various issues that are of concern to the Committee.
The first issue dealt with contract support cost data. And I'd like the Committee to know that we've been working with the National Congress of American Indians. We've been working with what we call our Contract Support Cost Work Group in order to assist the agency and in order to share the information that has been developed, and in a very real way validate the data that has been developed relative to contract support costs. We believe we have the best data we've ever had and we'd be willing to share that with the Committee and submit that for the record.
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Mr. Chairman, the second issue that was raised discussed the Congressional intent that as more contracting was occurring that there would be, if not a one to one, there would be a similar reduction occur within the administration of the Indian Health Service. I'm here to let you know that since 1993 the Indian Health Service from an administration standpoint has had significant reductions.
These reductions are associated with increased tribal contracting, but also are associated with various reductions in administrative dollars that have occurred as a result of appropriations Acts five and six years ago, and reductions associated, as we absorbed inflationary cost increases that aren't fully funded through the appropriations process.
I would let you know that at our headquarters, as an example, there has been a 500 FTE reduction since 1993. At that time there was approximately 934 FTEs at the Indian Health Service headquarters operations throughout the country, and we are now at below 434.
A similar kind of reduction has occurred at the Area Offices which is another administrative unit.
And I have very detailed data in that regard. The actual increases in FTE for the Indian Health Service have occurred at the service level, those hospitals and those ambulatory care centers. And so on one hand we're seeing service FTEs increase and administrative FTEs go down.
The third issue has to do with the various barriers dealing with downsizing. And to be quite frank with you, I think we've been able to overcome most of the barriers that have been placed in our pathway. And we would be prepared to work with the Committee and with the tribes as we talk about how better to right size the Indian Health Service from an administrative standpoint.
Dr. Trujillo did convene a redesign committee a number of years and we continue to follow that redesign as the Indian Health Service changes its organizational structure.
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For a cost of administration programs, this is the most difficult set of questions that the Committee has raised to us. And I'm here today to let you know that we do not fully have the information available today that the Committee has requested. However, we do have information associated with the Indian Health Service program and what it costs us to administer these various health care programs.
One of the themes, Mr. Chairman and Committee members, that you should be hearing from the Indian Health Service is that we believe any and all of these activities associated with the operation of the health care program should involve tribal governments, should involve Indian organizations, Indian people. As we move forward and plan for our health care system we will need to work with the Committee, we will need to work with the tribes in more completely addressing the fourth question raised by the Committee.
In achieving the highest level of health care, we very much welcome this particular item. Basically we would like to talk about with the Committee, either at this hearing or at a later time when we can meet with your staff and provide a little more detail, as we have a number of ideas. We have a half a dozen ideas about the kind of changes that could be made in accessing third party funding streams and other revenue enhancements.
And we, again, have some details to be shared with you, some access associated with Medicaid and Medicare reimbursements, and some barriers associated with the newly approved Children's Health Insurance Program, and some Title 19 issues associated with Federal Medical Assistance payments to various organizations.
Mr. Chairman, in terms of the number 6 of the issues surrounding non-contracting tribes, I would like the Committee to know that there have been a number of innovative first steps taken by tribes, and in many instances by the Indian Health Service in partnership with those tribes, that we would also be prepared to talk about in more detail.
Noteworthy among these are activities, in Tucson, Arizona, of the Pascal Yaqui tribe, as it works with the State and with an HMO. And the successes associated with that HMO in guaranteeing a benefit package at a reasonable rate and, quite frankly, the challenges associated with continuing that particular benefits package through an HMO mechanism when the population is increasing so rapidly and costs are basically stagnant.
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There are also examples where tribal governments step forward directly. There are some health insurance demonstration projects that are occurring in the country, up in the Northwest specifically. President Allen will be testifying on the next panel, but his tribe, in particular, has taken quite an innovative approach associated with providing health care services to its members.
Needless to say, the Indian Health Service project does not have authority to purchase a health insurance, if you will, as you and I would purchase, on behalf of the Indian people. We'd be looking for some statutory assistance to allow that option to be available to us. There are a number of other activities in Oklahoma with the Pawnee benefits package and with a couple of other examples that we would like to share.
The seventh question dealt with funding needs. And especially, given the expected limitations for funding for contract support costs, we certainly appreciate the limitations and the constraints that the Congress and, quite frankly, the Administration, and tribal programs, and Indian health care programs find themselves in relative to funding. Generally, Indian health care programs are underfunded when we are compared to non-Indian programs.
What we have done as we've looked at contract support costs in developing this study, and working hand-in-hand with tribes and national Indian organizations, is that I think it's through that partnership through that working together in the budget process and on contract support costs, in particular, that the Administration has come forward with its $35 million request.
We believe the need in FY 1999, as our written testimony states, is approximately $52 million. That need will rise to approximately $100 million in round numbers as we move into Fiscal Year 2000. We're certainly looking forward to working with the Committee, working with the Congress, especially in terms of also our appropriations committees. And equally as important, working in partnership with tribes in the national Indian organizations as we pursue the very important serious issues surrounding contract support costs.
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Mr. Chairman, I would like to acknowledge that Mr. Doug Black, who is our director of our Office of Tribal Programs is with me at the table. But also Ms. Paula Williams, who is our director of the Office of Tribal Self Governance, is seated behind me. And if you would allow me, they are the experts in this area and I would like to depend on them for the very detailed answers to the questions that you may ask of us. I thank you for the time and I appreciate being here.
[The prepared statement of Mr. Lincoln may be found at the end of the hearing.]
Mr. HAYWORTH. [presiding] Mr. Lincoln we thank you for the testimony. And there is my good friend from American Samoa, Mr. Faleomavaega. Welcome to all those who serve on this Committee, including my good friend from Michigan and my friend from New Jersey. I want to thank you for bringing your associates this morning, and we will have questions later. Now it's my honor to introduce the assistant secretary for Indian Affairs, for the U.S. Department of the Interior, Mr. Kevin Gover. Mr. Gover, you are recognized.
STATEMENT OF KEVIN GOVER, ASSISTANT SECRETARY, INDIAN AFFAIRS, U.S. DEPARTMENT OF THE INTERIOR
Mr. GOVER. Thank you Mr. Chairman. I have with me the deputy commissioner of the Bureau of Indian Affairs, Hilda Manual, and to my right, Deborah Maddox, who is the director of the Office of Tribal Services. And they will be responding if the Committee has any difficult questions.
We prepared a series of charts in response to the inquiries made by the Chairman. And the first of which is on the stand right now. [Chart]
What that shows right now is that since 1981 the Bureau has gone from nearly 17,000 employees to less than 10,000. Much of that is the result of tribal contracting. Some of the decrease is attributable to various budget cuts and the transfer of the Office of Trust Fund Management out of the Bureau. But most of it in fact is due to the increase in tribal contracting over the years.
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You will also note, at the end of that chart, a slight climb in our FTEs for the year 2000. The reason for that is two fold. One, we will be adding a number of additional police officers over the next year in accordance with the President's law enforcement initiative. The other reason is that right now we are subject to a moratorium on further expanded self-determination contracting and self-governance compacting.
So the bottom line is, to those who wish to see the Bureau of Indian Affairs shrink, we must be authorized to go back to making those contracts and compacts with the tribes.
The second chart, Mr. Chairman, shows what we project our reductions will be. Now, there are certain assumptions behind that. We think we would lose a little less than 400 employees over the next few years, based on what has been happening over the past few years in terms of contracting.
That assumes a couple of things. One is that basically we'll be dealing with a flat budget. One of the things that we know is that in the years where our funding increases, tribal contracting increases. And that is only to be expected as the programs become more attractive. So, again, one of the ironies about the Bureau of Indian Affairs, the more money you give us, the smaller our agency becomes due to the tribal contracting.
The next graph, Mr. Chairman, reflects total BIA funding, the total amount contracted by the tribes, and the total amount compacted through self-governance compacts. What that shows, therefore, is that fully well more than half of our funds actually go to the tribes in the form of contracts, compacts, and grants to operate BIA schools. Again, we would like to see those first and second bars go up further so that the tribes are running even more of our program. And contract support and funding are primary impediments to increased compacting and contracting.
And this is the chart that shows why it has become difficult for us to expand the amount of contracting and compacting we're doing. As you can see, between 1995 and 1997, we lost a lot of ground in terms of contract support payments to the tribes, going from funding around 92 percent of what the statute says we owe to the tribes to only 77 percent in FY '97.
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Now, we have slowly been able to increase those amounts. And were our budget request for the year 2000 to be granted, that would only bring us back to around 84 percent. So we're still far short of the mark of 100 percent.
Let me add that we too have been working with the National Congress of American Indians on trying to come up with a solution to this problem. You may also know, Mr. Chairman, that we were subject to litigation in which a Federal court determined that we were liable to the tribes for the short fall in contract support funding, notwithstanding the fact that we've spent every dollar that the Congress had given us on contract support funding. The Court found that we were still legally responsible for the rest.
Let me mention some of the ideas that we have been talking with the tribes about and considering internally to deal with this issue. For one thing, we have now been held liable by a court for contract support to support contracts that have been let by other agencies. Now that seems to us to be questionable interpretation of the statute. Nevertheless, it's one that the courts have made. But it seems much more appropriate, given the need in Indian Country and given the continuing shrinking purchasing power of both BIA and IHS dollars, that issue be revisited and that other agencies who contract with the tribes be asked to contribute to contract support.
Second, we would propose to continue distributing contract support on a pro-rata basis. In other words, if we're only able to fund only 84 percent, say, of the contract support needs nationally, that we give 84 percent to each tribe, as opposed to all to some and less to others.
Third, we are considering the tribes' position that we should be paying certain direct costs that are associated with contracting that we do not currently pay. I think the tribes have made a persuasive case that those are appropriate costs of contracting, and we will continue to work with them to decide whether or not we'll be able to do that.
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And, finally, we would like to improve our system for anticipating what our contract support costs are going to be in the future. Right now we have sort of an informal system where we ask the tribes to guess in advance whether or not they are going to be contracting with us so that we can anticipate those costs and ask for the appropriate amount.
However, under the statute, they only have to give us 90 days notice. So if a tribe decides that it wants to exercise its right, we have no way to anticipate that in a way that allows us to make it a part of our budget request. And that too is contributing to our failure to ask regularly for a sufficient amount of contract support funding.
Mr. Chairman, my time is up and we'd be happy to entertain any questions that the Committee may have.
Mr. HAYWORTH. Mr. Gover, we thank you very much for that and thank the panel for its testimony. And also, Mr. Gover, I'd say thank you for bringing your associates for any difficult questions that we might have.
[The prepared statement of Mr. Gover may be found at the end of the hearing.]
Mr. HAYWORTH. And using the prerogative as acting chairman, I just want to welcome my good friend back to the Congress from Washington state, Mr. Inslee, who is here. Good to see you. And in the prerogative of the Chair right now, I won't ask a difficult question here, but just simply for both Messieurs Lincoln and Gover. First Mr. Lincoln.
If you could offer to us what you believe to be the most essential aspect to dealing with this challenge of contract support funding and, in a perfect world, the solution you would like to see fashioned. A chance really to amplify your statement. Let me give that to you right now.
What do you believe, in fairly short order, we in the Congress need to do to deal with this challenge? The very most important challenge we face and the solution that would be yours, if we were freed from some of these strictures we find ourselves under?
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Mr. LINCOLN. Mr. Chairman, I'm going to say something that sounds very simple, that has two pieces to it, that is incredibly complex, but I think both are necessary. First of all, any solution that is crafted dealing with contract support costs, dealing with Indian health care issues, dealing with tribal solvency, and the broad set of issues that we deal with, both the Congress and the Administration, in this case the Indian Health Service, just absolutely requires working hand-in-hand at the beginning with tribal Governments. And that can be accomplished. That is something, though, that is a mandatory requirement in our mind, in the perfect world, that would be part of the response.
As that relates specifically to contract support costs. I believe that issue confronting us today really is one of funding, but it's one of funding that is as a result of the statutes and our interpretation of those statutes, if you will, the law of the land.
In the Indian Self-Determination Education Assistance Act there are requirements that the Congress has described, we think, in clear terms, regarding what the responsibility of the Federal Government is to tribal governments when they take over their health care programs, in our instance. And we believe one of those requirements, one of those essential pieces is the acknowledgement of the need and the legitimacy of contract support costs.
Furthermore, from our perspective, it is our belief that the contract support costs, as we have reviewed them, and as we have worked with tribal organizations, our own Contract Support Costs Work Group, the NCAI, and others who will work with us, those costs are not unreasonable as we look at them and as we compare them to administrative cost rates that exist elsewhere in this country with universities or with other organizations.
The answer that we need more resources is a very simple answer, and it's incredibly complex and difficult to do for all of us.
Mr. HAYWORTH. And of course it's something that it's important to get into the record because from your perspective and ours, it cannot be overstated. Mr. Gover, in preparation for your associates and the quote, unquote, ''difficult questions,'' let me simply mention to both you gentlemen on the panel that the more difficult questions we will offer to you, we have a list prepared by the Committee staffs.
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And if you could get back to us in writing within 10 days of this hearing date, we'd very much appreciate it, so that it will give you a chance to go back and ponder some of the more difficult answers.
But, Mr. Assistant Secretary, again, I'd be interested in your notion of the compelling need and the best remedy at this juncture.
Mr. GOVER. I think there are three things that really need to be done. First of all, we need to develop with the tribes a system for knowing as far in advance as we possibly can what programs they intend to contract so that we can do proper calculations and make appropriate requests for contract support funding.
Second, each agency needs to pay its own contract support costs. The Bureau budget simply can't bear the strain of all tribal contracting with all other agencies in the government. And, third, we need 100 percent funding. We need to ramp up toward 100 percent funding of the contract support costs obligation that we've made to the tribes.
Mr. HAYWORTH. Mr. Assistant Secretary, I thank you very much and thank the panel. It may be somewhat unorthodox to my friend the Ranking Member and my co-chair of the Native American Caucus, but in closing I have my opening statement that I will submit for the record, and without objection, make that a part of the record.
[The prepared statement of Mr. Hayworth follows:]
STATEMENT OF HON. J.D. HAYWORTH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARIZONA
Chairman Young, I appreciate the opportunity to participate in this important hearing on Contract Support Cost (CSC) funding. It is indeed a great honor to sit on the dais of this Committee, on which I formerly served. I would be remiss if I didn't personally thank you for your outstanding work on Contract Support Cost funding in the 105th Congress. During the waning days of the last Congress, I was pleased to work with you and others to convince our leadership to cede to our position on this issue. As part of that agreement, you expressed your intent to hold hearings on Contract Support Cost funding. I am pleased to see that you are taking this important first step.
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Mr. Chairman, if you would allow me to indulge for one moment, I would also like to personally thank you for inviting to testify Lieutenant Governor Cecil Antone of the Gila River Indian Community, one of the eight tribes that I represent in Congress. I believe you will find Lieutenant Governor Antone's testimony especially compelling because although the tribe supported the eventual compromise language that was included in the Omnibus Appropriations bill, it actually lost money because of the compromise. However, its support for the compromise language was based on belief that the entire system must be fixed.
Let me take a moment to explain Gila River's predicament. In fiscal year 1999, Gila River was slated to receive their $4 million Contract Support Cost request because they had patiently waited for more than four years and were at the front of the Indian Self-Determination, or ISD, queue. As you know, Mr. Chairman, the Administration did not include any new funding for the ISD queue. Thankfully, Congress provided an additional $35 million for the queue and Gila River could have received their $4 million contract. However, the tribe was willing to lose $1.2 million in 1999 to fix the process and ensure that all tribes are receiving at least 70 percent of their fiscal year 1999 request. This is a far cry from the 100 percent promised to the tribe, but Gila River came to the conclusion that other tribes that are more economically-challenged should not be penalized by a system that has gone awry.
Sovereign Indian nations face unique health care challenges that make it imperative that they receive the necessary amount of funding. Native Americans suffer from diabetes at a higher rate than any other segment of our population. Some of the cumulative effects of diabetes include gum disease and amputation. Even with these added health care challenges, Native Americans receive far less than the average American in health care dollars. We need to end this, and fully-funding Contract Support Costs is an important first step.
Mr. Chairman, I have one final point to make. There is a serious dispute between the various government agencies and Congress about how much funding is actually needed for Contract Support Costs. The Indian Health Service has one set of numbers, Office of Management and Budget has another, and Congress and other groups have still other numbers. I believe that Congress needs to conduct an audit in order to get accurate data for Contract Support Cost funding. I found this to be one of the most frustrating aspects of the entire process last year. We must have accurate data in order to fully and properly fund tribes for Contract Support Costs.
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Mr. Chairman, you and I represent large Native Alaskan and Native American populations. We must work now to solve the problems of Contract Support Cost funding before more tribes lose crucial funding. I look forward to working with you and all the members of this Committee to solve this problem. I also look forward to working with Congressman Kildee, my fellow cochair of the Native American Caucus, and other members of the caucus, in rectifying the problems associated with Contract Support Cost funding.
Mr. Chainnan, thanks again for the opportunity to be here today.
Mr. HAYWORTH. And now let me turn to my good friend and colleague from Michigan, Mr. Kildee.
Mr. KILDEE. Thank you Chairman J.D. It's always a pleasure working with you on Indian matters. J.D. and I don't agree on a lot of other issues, but we do agree on Indian matters and our Native American Caucus, I think, has been effective. I enjoy working together on that.
Mr. Lincoln, I notice that the President's FY 2000 budget request for IHS did not propose any funding for the ISD Fund. Did IHS recommend the Administration funding for ISD?
Mr. LINCOLN. Mr. Chairman, as the budget was being formulated, and working with tribes, the tribes in the Indian Health Service did agree upon an initial request for contract support costs. That initial request was approximately $150 million. As we were working with the tribes 9, 12 months ago, as the budget progressed through the process, the Secretary indeed supported that budget request.
And I think, legitimately, because of constrained resources, we had to pare back the request both at the Department level and at our level. Our last request that went forward, supported by the Secretary, by Dr. Shalala, was a request of approximately $100 million for contract support costs that did include both short fall and ISD funding.
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Mr. KILDEE. And what happened to that $100 million request?
Mr. LINCOLN. I believe because of limited resources that that $100 million amount was reduced to the $35 million that now appears in the President's budget. That reduction was made at the Office of Management and Budget level. We had many discussions with them. We believe there were sufficient constraints in the available resources that that was one of the casualties of that negotiation.
Mr. KILDEE. At $35 million, what percent of the tribes' needs or requests would be funded?
Mr. LINCOLN. Of the tribes that are basically on what we call our ''queue,'' our list of pending requests, as we distribute the $35 million that we received for this fiscal year, for FY 1999, that will essentially fund all tribes no less than 70 percent of their contract support costs needs. The lowest will be 70 percent, the average will be somewhere right around 80 percent.
With this additional $35 million, I need Mr. Black, actually, to respond to that. There will be additional costs associated with contract support costs in the year 2000 and I do not know that off the top of my head.
Mr. BLACK. Actually, with regard to the $35 million, what we would do, I believe, if that was appropriated, is use part of that money to fund any new contracts or compacts, assuming the moratorium on 638 would be lifted. The remainder we would use to raise that 80 percent level up and it would probably be somewhere between 80 and 90 percent level of need funded for the tribes in the system.
Mr. KILDEE. You know, Mr. Lincoln and Mr. Gover both, you are both very good people. I know you individually and your hearts are really set on doing what's just. But I can recall back in 1981 when President Reagan became President, and he appointed Cap Weinberger as Secretary of Defense, and Dave Stockman as his Director of OMB. Now, Dave Stockman went down to all the other agencies and slapped them around and told them to reduce the amount of their request, and Dave Stockman usually won.
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But when he went to Cap Weinberger, Cap Weinberger told him to go to heck. He really became an advocate, a strong successful advocate of the Department of Defense. And you two, I know you are good advocates, but I just encourage you to become just get a little meaner in there when the OMB comes to you.
Dave Stockman ran the government back in 1981. Except he couldn't run Cap Weinberger because Weinberger would slap him in the face and say, ''Go back to your office, kid, we're going to get this amount of money for defense.''
And I think that with all my high regard, and I do have it for both of you, I think you really have to look back and take a page out of Cap Weinberger's book and say, ''We're going to tell OMB to go the heck and we're going to demand more,'' and become a strong, successful advocate for these programs.
And I know you have in your heart to do that. I just give you that advise, not as criticism, because I know you really believe that. But read Cap Weinberger's biography. He was good at pushing Stockman around. Thank you. And thank you, Mr. Chairman.
Mr. YOUNG. Thank you, Mr. Kildee. Let's turn now to my good friend from American Samoa.
Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. It's always a personal welcome to see the assistant secretary of Indian Affairs here with us in the Committee. Secretary Gover and our good friends also from the Indian Health Service, I do have a couple of questions and maybe one basic observation that is somewhat at a loss.
Basically, this year the Administration has requested only $168 million for Indian Health Service contract support costs and yet we need about $250 million to really do the job in a better way. Am I correct on this?
Mr. BLACK. The Administration has actually requested a $35 million increase to a $203 million base in 1999. So the request is actually $238 million for contract support costs in 1999—2000, excuse me.
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Mr. FALEOMAVAEGA. Okay. Do we need an authorization to increase the level of what you need as far as what the authorizing committee is concerned?
Mr. BLACK. No. No, we don't believe an authorization is needed. In fact the 638 law speaks to the necessity of funding these types of costs at 100 percent. It's just a matter of having sufficient appropriations to do so.
Mr. FALEOMAVAEGA. Now, do you get the sense that this is also the reaction from the appropriations committees, that we're on the right level of funding? Because the information I have here is the appropriations committees do not agree with your assessment. You are only asking for $168 million, and yet for the unmet needs we need to come up with about $250 million. Is the information I'm reading wrong as far as you are concerned?
Mr. LINCOLN. Yes, Congressman. The amount of funding that we actually have available this year is $203 million, as Mr. Black said. And we're requesting an additional $35 million to bring it to $238 million. We believe the Appropriations Committee, in our discussions with the committee, is concerned with a number of issues associated with contract support costs.
One of their concerns that has been expressed to us in various ways is the increase in the need for additional contract support costs based upon, though, an analysis that has been performed working with tribes. But also an independent analysis that we've done, we believe the increased need for contract support costs is primarily based upon the increased contracting that is occurring out there. And so more and more of the program is coming under contract, and therefore the need for contract support costs is increasing.
Mr. FALEOMAVAEGA. So in your opinion, you don't need any help from this Committee as far as authorization in concerned?
Mr. LINCOLN. To the extent that this Committee can make known the issues associated with contract support costs, including the requirement and estimated need for resources, that would be very helpful.
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Mr. FALEOMAVAEGA. You are losing me, Mr. Lincoln. Tell me the bottom line, how much to you need?
Mr. LINCOLN. In year 2000, we estimate that the Indian Health Service would need an additional $100 million to the $238 million, in round numbers.
Mr. FALEOMAVAEGA. Now, do you need an authorization?
Mr. LINCOLN. No, we do not. We believe we have the current statutory authorization. We need the appropriation.
Mr. FALEOMAVAEGA. Well, I'm glad to hear that because I'm just a little upset about the whole process, Mr. Chairman. And not taking anything from the sincerity of our friends here from the Indian Health Service, but it's so easy for us to find $18 billion to bail out the financial crisis in Indonesia with a corrupt dictatorship and fraud and nepotism and corruption, billions to help Korea, billions of dollars to bail out Bosnia, and yet we always seem to be trying to look for crumbs to help the indigenous Native Americans in their needs. To me that's an insult.
But I sincerely hope, gentlemen, that the piece of paper I have before me is wrong in its assessment, that we're not short in funding the IHS contract support costs. I'm very happy to hear this.
Mr. Gover, you mentioned that over 50 percent of the BIA funding goes to the tribes?
Mr. GOVER. That's correct.
Mr. FALEOMAVAEGA. So how much of the administrative cost of the total budget goes to the administration then?
Mr. GOVER. Of BIA's total?
Mr. FALEOMAVAEGA. Yes.
Mr. GOVER. We believe it's less than 10 percent. I would have to go back and do some work to get you a number.
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Mr. FALEOMAVAEGA. Does this mean the decrease of the employees now, the BIA, from 17,000 to 10,000, it also means a decrease of everything else the BIA needs?
Mr. GOVER. There has been a sharp decrease in the BIA in almost every program. Both the tribes' contract as well as our administrative function. We too were subject to a dramatic riff in FY 1996.
Mr. FALEOMAVAEGA. Now, you mentioned that there should be an increase on contracting for self governance, that's your recommendation?
Mr. GOVER. Absolutely.
Mr. FALEOMAVAEGA. How much do you think we need to have on that?
Mr. GOVER. To get the tribes to contract all these programs?
Mr. FALEOMAVAEGA. Yes.
Mr. GOVER. The first step is definitely 100 percent funding of contract support. After that, we actually have to begin doing some real needs assessments in the communities. What is it the tribe really needs, and what would it take to get them to assume the responsibilities that we now have? A lot of tribes look at our programs and say, ''Look we don't want that responsibility because this program isn't funded enough.''
Mr. FALEOMAVAEGA. The problem we're having is—sorry, Mr. Chairman.
Mr. HAYWORTH. That's okay. The gentleman's time has expired, but he has identified some real areas of concern. And given the fact that there is a vote on the floor now, we would ask the indulgence of the panel and other members of the Committee. We will take a short recess and resume following the vote so members should return as quickly as possible.
And we thank the panel's indulgence, and I thank my friend the delegate from American Samoa. The Committee is in recess pending completion of the vote, and will return here to the Committee chambers.
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[Recess.]
Mr. HAYWORTH. Mr. Inslee, you have the floor to ask questions of this panel. And thanks for coming back as rapidly as you did.
Mr. INSLEE. Thank you, Mr. Chairman. Somebody has got to hold the fort, so to speak.
Mr. HAYWORTH. That's right.
Mr. INSLEE. Thanks for coming and it's good to see you. You are in a difficult position because many of us would like to see us move forward on self determination and are very concerned that these budget numbers are effectively stymieing that policy. And I think that you know that's a pretty strongly held position, that we do need to move ahead on self determination.
And we hate to see anything stand in our way in that regard. And you are in a difficult position because you are not the ultimate decisionmakers but you are the ones that are here today. And I guess the question is, is it a fair statement to say that these numbers that we are looking at, that this effectively stymies the intent of the self determination that Congress has, I think, repeatedly evinced as our public policy?
Mr. GOVER. Mr. Chairman, I think it's fair to say that the primary impediment to the full implementation of the self-determination and self-governance policies is appropriations to the Bureau.
Mr. INSLEE. Right.
Mr. GOVER. That if we could get these programs up to a point where they are really beginning to achieve some of the things that they are desiring to achieve, then the tribes will be much more interested in taking on even more responsibilities than they have.
I don't think they are particularly interested, nor should we be in seeing them take over these responsibilities, only to fail. So, yes, if we got the kind of funding that actually addressed the extent of the need out there, our agency would become really quite small and tribal governments would take over these responsibilities.
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Mr. INSLEE. During the appropriations discussions, during the process, have you heard rationales for not fully funding this clear policy of the U.S. Government? I mean what rationale is there other than—I'd like to hear it. I've so far not heard it articulated.
Mr. GOVER. There are competing priorities. I should say, first of all, that this is the first year, that I'm aware of that this Administration has proposed substantial increases for both BIA and IHS. Our request is about 9 percent above FY 1999. I think it's about the same for IHS. So both agencies fared reasonably well in the process this year.
What's so frustrating is a big increase, what appears to be a big increase, especially of a time of what's supposed to be a flat budget environment, still doesn't begin to address the need that we know exists in Indian Country. And so even numbers that seem large are small when compared to the need in Indian Country.
Mr. INSLEE. I guess what's really bothersome is there are a lot of needs in our country, they are infinite in describing needs, but this is one that has been determined to be a policy of the United States government. And it's very painful to see the United States government not fulfilling that policy commitment.
And I guess, for whatever good or help it does to you, I hope that you will let everyone who knows, and I recently worked with HHS and had a good experience there, that's there a high temperature here, at least among quite a number of members that this is a very, very important thing to us and we put a high level of interest in it. And we're going to work with you through this budget process to try to fulfill this commitment. Thank you.
Mr. YOUNG. Mr. Lincoln? Do you want to be recognized to give me an accurate number that you misquoted? I didn't even know it. You got away with it as far as I'm concerned. Go ahead.
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Mr. LINCOLN. Mr. Chairman, I very much appreciate the opportunity. I was asked what the 2000 need was for the contract support costs in the Indian Health Service. The number I gave was approximately $338 million. The correct number is $309 million. And we know the Committee has asked for projections of need, and we'll make available the detail to back up those numbers, sir.
Mr. YOUNG. A member had a question, and where is he? We'll just wait for a minute here. Where is his staff? Would you get hold of him? Or I'll ask his question, one or the other. I'll fill in some time and ask some questions. How is the weather outside?
Assistant Secretary Gover, the Indian Health Service has provided the Committee with detailed tables setting forth each tribal contractor's program funding level, contract support cost needs, by category of contract support, and FY 1999 contract support payment being made against that need.
Could the Bureau please provide the Committee the same detailed data we have received from the Indian Health Service on individual tribal contract support needs, with each need area and its anticipated FY 1999 payments? Long question.
Mr. GOVER. Mr. Chairman, we will do so. We have sent you FY 1998. FY 1999 is being prepared even as we speak.
Mr. YOUNG. Okay. The Indian Health Service recognizes tribal needs for direct contract support, primarily to cover personal associated expenses not available to the agency for transfer to a tribe. Why has the Bureau never before recognized tribal needs for direct contract support costs in addition to indirect costs as the Indian Health Service has done so?
Mr. GOVER. I don't know why it hasn't in the past but as we addressed in my statement, in my oral testimony, we are considering that. Basically, through the process with NCAI and with IHS over the past year, we've become persuaded that this is quite likely an appropriate cost for us to pay.
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Mr. YOUNG. I have been asked to submit a question by the gentleman from Hawaii. And I so in writing and you can answer directly to him. With that, if there is no more questions of this panel, I'll dismiss the panel. And, thank you, for your directness and I hope we can go forth and solve these problems. Thank you very much.
The next panel is Mr. Ron Allen, president of the National Congress of American Indians; Mr. Orie Williams, executive vice president, Yukon Kuskokwim Health Corporation, Bethel, Alaska; and Lt. Governor Cecil Antone, Gila River Indian Community, Sacaton, Arizona.
And I am going to allow Mr. J.D. Hayworth to chair the meeting. And Mr. Williams and I discussed his testimony and I'm quite pleased and enamored with it. And we'll solve these problems, but I have another meeting I've got to go to, so Mr. J.D. will take over. I appreciate it.
Mr. HAYWORTH. [presiding] And as we get the appropriate labels attached to the appropriate guests, and guests on the Committee dais as well, we will begin. Mr. Allen, we'd be happy to have your opening statement, if you please, sir.
STATEMENT OF MR. W. RON ALLEN, PRESIDENT, NATIONAL CONGRESS OF AMERICAN INDIANS
Mr. ALLEN. Are you calling upon me, Mr. Chairman?
Mr. HAYWORTH. Yes, sir. We'd be happy to have your statement.
Mr. ALLEN. Mr. Chairman, on behalf of the National Congress of American Indians, it's a pleasure to be here and testify and share some observations along with my colleagues with regard to the contract support issue. You have our testimony for the record and accompanying it is a couple of reports on the progress that we've made with regard to this topic.
We want to begin this discussion by saying that the Self-Determination Act passed in 1975 essentially made a commitment to empowering tribal governments. And we have made substantial progress. And today, in 1999, the issue here is a topic that causes us a great deal of frustration with regard to contract support. You know, we have spent a great deal of time eliminating the paternalism and forced dependencies and the patronizing bureaucratic ways of dealing with Indian affairs that we have witnessed for decades. And we have now seen tribal governments begin the process of becoming fully empowered and capable governments to manage their own affairs as we move forward today.
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In terms of taking over Federal programs, we eventually started to grow in our capacity and started to ask the fundamental question, how much of the Federal system should we be taking over and how much should be left in order to administer what we would call ''inherent Federal functions.'' We firmly believe that we are moving forward with greater autonomy and with responsibility and accountability for these resources.
The contract support component of this issue is one that causes us a great deal of frustration because it is a policy, a Federal policy that is inconsistent. We believe that if you look in every corridor in which the Federal Government administers contracts with different entities out there, whether it's educational institutions, or even within the agencies and departments in the Federal Government itself, you will see that they fully pay these consistent and similar costs for those entities.
You would never underfund the educational institutions out there, you would never underfund the administrative costs for defense contractors, you never underfund yourselves when you transfer funds back and forth between agencies and departments. And I would footnote, the rate that you share these costs back and forth when one agency does something for another agency averages around 48 percent.
The average rate for contract support expenses and indirect cost rates for Indian Country is around 25, 26 percent. So we aren't even at the same level of the rate of recovery of cost as you see elsewhere throughout the Federal system. The issue for us is how are you going to administer these costs with regard to the programs and activities that we're taking care of?
So as we take over more Bureau programs, as we take over more IHS programs, these costs, the indirect costs, the direct contract support costs, the start up costs for taking over these functions are all legitimate costs. They are all straightforward costs, they are established by rules that the Federal Government establishes, negotiated by the Federal Government, so there is nothing wrong with these costs.
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The thing that's frustrating for us is that when you underfund and you've been underfunding for two decades, for two decades you have been underfunding us, it means that when we take over these Federal programs, we are subsidizing with our limited dollars Federal Government programs, the programs that you are responsible for in serving our people.
And we find it very frustrating, the notion that the Congress or the Administration says we've got to make priorities in terms of what we can pay for means we can only pay for so much of this and so much of that. But when you take over these programs, these are costs that come with it. And in 1994, as the previous panel noted, it recognized that you will not underfund us. That you will not continue to underfund the tribes with regard to the contract support. Can you resolve the underfunding of tribes with regard to Federal agencies outside of the BIA and IHS which are the two primary funding agencies? So the frustration for us is that is absolutely outrageous. The number is outrageous. If you got around $4 billion between these two agencies alone, it's a little over $4 billion, the issue to us is that you are telling us that another $150 million is too high a price to pay for the empowerment of tribal governments.
And our point is if we're going to advance devolution+—''devolution'' means that we are empowering the local governments to take care of the community needs—if it works for the states and local governments, why doesn't it work for the tribes? The tribes, you know, can take care of their people and manage their resources.
So the issue with contract support is that if you take away from these hard costs it means that you are eliminating direct services. That's what you are doing. Whether it's health care services, enforcement services, natural resource management services, travel costs, and so forth, and programs that advance the welfare reform legislation, then you are cutting away from those programs to address those needs in our communities. They are paying for these hard costs for facilities and basic accounting responsibilities, et cetera.
So we're pointing out that we're working with the Administration and we want OMB to own up to this responsibility and quit rationalizing. It is a dry topic, we acknowledge that. But it's a topic that we can understand. It's a topic that we can show you in layman's terms how it works and why it's legitimate. And Congress needs to own up to that responsibility so we are asking you to work with us.
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NCAI has a task force. We will present you a report in April and that report will show what we believe is constructive solutions for resolving this issue. Thank you.
Mr. HAYWORTH. Mr. Allen, we thank you for your testimony. We look forward to the report, and we thank you for your candid comments which many of us here share and are happy to hear.
[The prepared statement of Mr. Allen may be found at the end of the hearing.]
Mr. HAYWORTH. Let me call upon the gentleman to whom our Chairman alluded, before he had to exit, his good friend from Bethel, Alaska, Mr. Williams for his testimony.
STATEMENT OF MR. ORIE WILLIAMS, EXECUTIVE VICE PRESIDENT, YUKON KUSKOKWIM HEALTH CORPORATION, BETHEL, ALASKA
Mr. WILLIAMS. Thank you, Mr. Chairman. I'd like to introduce Mr. Lloyd Miller, Esquire, who is a renowned tribal attorney who has helped our tribe and others across the Nation deal with this issue and many, many others. I'd also recognize Ken Brewer, in the audience, a chief executive officer from SEARCH, who has worked on contract support for years, on the technical and accounting parts.
Good morning, Mr. Chairman, and honorable Committee members. My name is Orie Williams, and I am the executive vice president of the Yukon Kuskokwim Health Corporation, based in Bethel, Alaska. Thank you for the opportunity to testify this morning on what Congress 10 years ago called the single most serious problem with implementation of the Indian health information policy. Namely, the failure to fully fund contract support costs.
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YKHC serves as a consolidated health care provider for 58 federally recognized Alaskan native tribal governments, spread across a roadless area the size of South Dakota. Poverty and poor health have led some to compare conditions in many of our villages to those faced in Third World countries.
Indeed, over 50 percent of all our tribal members are Medicaid eligible. In many of our villages the unemployment rate exceeds 80 percent. And most of our village homes use six gallon plastic buckets for toilets. You may have heard them referred to as ''honey buckets.''
Prenatal mortality is more than double the average of the U.S. rate. Death by suicide is four times the national rate. Fetal alcohol syndrome and fetal alcohol effect are rampant. And the lack of adequate sewer and water systems has left our communities victim to every known infectious disease and higher rates of tuberculosis, even as we enter the 21st century.
Our tribal governments, working together to maximize the opportunities available under self-determination and self-governance, are meeting the many challenges we face through the direct administration of 47 village clinics, one mid-level sub-regional clinic, with two others under construction, a 51-bed hospital, and over 1,000 employees operating with approximately $40 million in Indian Health Service funding.
We have done much to improve the delivery of health care services since the days of Indian Health Service administration. But the contract support shortfall we face of over $2.3 million consistently cripples our ability to do more. As my written testimony details, the shortfall has meant deficiencies in our accounting department, our billing and admissions department, our technology support, and our hospital and facility maintenance.
In addition, the short fall has required us to transfer funds from key programs, and has not allowed us the flexibility to enhance our substance abuse and mental health services, home health care for the elderly, village clinic operations, and to promote disease prevention and health education. To those who are unfamiliar with health care conditions in rural Alaska, our deficit is just a number. For us it is having a real impact on the quality of health care in general.
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Having contracted the operation of health care programs in the Yukon Kuskokwim Delta since the mid-1960s, we have the following recommendations to offer the Committee as it examines the contract support costs system. First, the system itself is not broken. So, please do not give in to the temptation to replace it with something new. It is a system that works well for determining each tribe's necessary requirements to transfer and carry out Indian Health Service's health care programs. In 1988, the Committee closely scrutinized the entire contract support system and came up with only one recommendation for fundamental change. The system must be fully funded. In 10 years that has not changed.
Second, the Committee would reject persistent calls for change in the underfunded Indian Health Service contract support system by a flat pro rata approach. That proposal, considered and properly rejected last year, would have only made our own situation worse, causing massive layoffs and instability. Yes, it is true that the underfunding across Indian Country, is for a variety of reasons, uneven, but the answer is not to reallocate the misery among the Nation's tribes, the answer is to meet the Country's obligation to all the Nation's tribes.
Third, we agree with the Committee's concern that despite vast improvements in recent years, the Indian Health Service must still do more to downsize and transfer to tribes both headquarters resources and many of the resources in the area offices.
Not everybody in the Indian Health Service system fully embraces the self-governance process, and the bureaucracy therefore often misuses such concepts such as ''residual'', ''inherently Federal,'' ''transitional,'' and ''business payment plan.'' More often than not, these are simply phrases and devices used to protect the Federal bureaucracy from being transferred to a tribal operation.
Fourth, we ask the Committee to remember that the Indian Self-Determination Policy was initially designed and announced by President Nixon, not as a means of saving the Federal Government money but as a way to end Federal paternalism and promote tribal accountability and responsibility. Congress and Indian Health Service and the tribes will fall short of that goal if our focus becomes preoccupied strictly with a cost accounting of how much the system costs to operate and why there are differences in those costs.
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Fifth, to make the self-determination policy as efficient as possible, Congress should promptly enact the permanent self-governance legislation that passed the full House last year as H.R. 1833. In addition, IHS should expand to all tribes the so-called ''base budget'' multi-year funding approach, so the tribal savings and administrative overhead remain available for program delivery.
Sixth, let us build on the success that we have already achieved by opening the door to permit tribes to contract over non-Indian Health Service health care programs currently operated by the Department of Health and Human Services. Enacting Title 6, the Indian Self-Determination Act again, as proposed last year, in H.R. 1833, will help us lay the ground work for achieving greater economic efficiencies in health care, as tribes bring more and more programs together.
Similarly, extending the Medicare and Medicaid demonstration program, as proposed in S. 406, will allow us to more efficiently bring in third party resources so that the level of care being funded across Indian Country can be enhanced.
We are thankful to the Committee for once again focusing Congress' attention on contract support costs. At long last the system must stop punishing tribal health care providers that take up the self-determination and self-governance challenges to operate Indian Health Service programs.
I say ''punish'' because if a tribe or tribal organization wants to operate an Indian Health Service program, if it wants to take on the responsibility for the health of its people, if it wants to break the cycle of paternalism and dependency, there is a price; The tribe must finance the government's underfunding of contract support directly out of program funds. Congress does not ask this of the Department of Defense contractors, and Congress certainly should not ask it of tribal health care providers.
We believe the Indian Health Service's new estimates for fully funding the contract support system are conservative and achievable in this fiscal year. We also believe that restoring the Indian Self-Determination Fund to between $10 million and $15 million a year may be sufficient to meet the average rate of growth the Indian Health Service anticipates in the years ahead.
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Self determination and self governance work and other tribes should be encouraged by Congress to move forward as we have in Alaska. Tribes and tribal organizations should not be told we must wait one, two, or more years either to operate a program or to receive contract support for a program. And we should not be told we can only operate a program if we agree to perpetual underfunding in our contract support costs.
Thank you Mr. Chairman, for the opportunity to testify today. YKC looks forward to working with the Committee, the National Congress of American Indians, and the Indian Health Service to improve the Indian Self-Determination and Self-Governance Acts.
Finally, we extend an invitation to the Committee, the Committee members, their spouses, and staff to visit us in Alaska in the Yukon Kuskokwim Delta region. We would like to share with you the sights of our great state and the hospitality of our people, and have you witness first hand our villages and our efforts to improve the health of our people. I pray for you and your families, the best of good health.
Mr. HAYWORTH. Mr. Williams, we thank you for your testimony and for your invitation. As my friends from Arizona will attest, especially in the summertime, round about August, it gets pretty hot on the desert floor and we think the climate would be a marked contrast in the great state of Alaska. So thank you for that kind and generous invitation, as well as your testimony.
[The prepared statement of Mr. Williams may be found at the end of the hearing.]
Mr. HAYWORTH. Again using the prerogative of the Chair, last but not least, I'm pleased to call on one of my constituents. And by way of introduction of this particular gentleman, let me simply point out something that has already been included in the record but I need to articulate.
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As my colleague from Michigan and my friend from American Samoa will attest, the whole issue of contract support costs was something that we worked very closely together on a bipartisan, indeed, a non-partisan basis to make some profound changes in the closing days of the 105th Congress.
My friends from the Gila River Indian community in dealing with this matter, as an additional $35 million was provided for the queue, Gila River could have received its $4 million contract. But I think this was significant. The tribe was willing to lose $1.2 million in 1999 to fix the process and ensure that all tribes are receiving at least 70 percent of their FY 1999 request. That's a far cry from the 100 percent promise to the tribe.
But Gila River came to the conclusion that other tribes that are more economically challenged should not be penalized by a system that has gone awry. It is that type of responsibility and response to challenges that typifies the Gila River Indian community and my good friend Lt. Governor Cecil Antone, from Sacaton, Arizona, who will offer his testimony now.
Mr. Lt. Governor, we welcome you and we thank you, and we look forward to hearing your testimony right now, sir.
STATEMENT OF LT. GOVERNOR CECIL ANTONE, GILA RIVER INDIAN COMMUNITY, SACATON, ARIZONA
Mr. ANTONE. Good morning, Mr. Chairman, members of the Committee. My name is Cecil Antone. I am the Lt. Governor of the Gila River Indian Community. In the audience today is Mr. Pete Jackson, who is the chairman of the Gila River Care Corporation, along with one of our council members that came yesterday and is here for the hearing, Councilman Earl Lara. I'd like to recognize them.
Our community is located on 772,000 acres in south central Arizona. Our community is comprised of 19,000 tribal members, 13,000 of whom live within the boundaries of the Reservation. We have a young and rapidly growing population that presents us with a variety of current and future health care challenges.
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Our community is fortunate enough to have a hospital on the Reservation. Its program's services in and of themselves are not enough to serve the entire community. Our Public Health Department provides health care services to our tribal members. Our community's experience with contract support cost funding exposes some of the weaknesses of past funding practices. It also illustrates, however, that significant rewards can result when Indian tribal governments embrace the self-determination policy articulated in the Indian Self-Determination Act by taking over our operation of health care programs.
Our community has expanded and improved services since assuming local operation and management of health care services throughout our Department of Public Health and the Gila River Health Care Corporation which operates our hospital. We restored services that IHS was forced to eliminate due to inadequate funding in the early 1990s. We have changed aspects of our health care delivery system which has resulted in increased outpatient visits and redirection of services to target our community's most serious health needs.
We have made these improvements despite operating our hospital for more than three years with no contract support cost funding whatsoever. We are also beginning to convert the Department of Public Health from an underfunded and overworked tribal health care agency to a public agency we believe can rival the best of local and state programs. These tremendous strides in health care service improvements by our community have been made at the same time a significant cost savings have been achieved through the assumption of local operation of administrative functions.
Despite these improvements, our total funding of the hospital only provides approximately $1,400 per patient, well below the national average of $3,000 per patient. Underfunding contract support costs is a significant factor in keeping our funding per patient so low.
Every contract support dollar that we have been short changed is one less dollar that we can spend on health care services over the past three years that we have been operating our hospital. The hospital has had to absorb over $10 million in unfunded contract support costs. As you can see, these dollars would have made a significant impact in bringing per patient funding closer to the national average.
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We need a firm commitment from Congress and the Administration that they will maintain 100 percent funding for contract support services for the future. This is the central theme of my testimony today.
Now I would like to briefly address certain of the issues that have been raised in the Committee's letter to Dr. Trujillo. First, we support Federal legislation that would provide a reduction in IHS administrative costs, consistent with the goals of Indian self determination, so long as the diverse and unique needs of all Indian tribal governments are considered.
Second, we strongly support legislation to make self determination permanent within IHS. We appreciate the Chairman's leadership in inducing and securing passage in the House of H.R. 1833, in the 105th Congress. And we look forward to supporting similar efforts in this Congress. Clearly, it is vital to the policy of self determination that Indian tribal governments have the continued right to enter into self-determination contracts. We strongly support lifting the 638 contract moratorium applied by Congress this past year on any new and expanded 638 contracts. The moratorium is a direct affront to the right of self governance and self determination provided to Indian tribal governments under Federal law.
Fourth, we encourage Congress to remain committed to increasing contract support costs not only within the IHS budget, but also within the Bureau of Indian Affairs budget. In addition, any proposed Congressional solution to contract support costs must address contract support costs within IHS and the BIA in a consistent manner.
In conclusion, what our story demonstrates is that the self-governance framework can build tribal administrative capacity, reduce bureaucracy, save money, and most importantly improve the quality of health care services to tribal members.
And with that, I would like to ask unanimous consent that my full statement be entered into the record. I would now be pleased to answer any questions the Committee may have.
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But in addition to that, Mr. Chairman, I'd like to recognize yourself for all the hard work that you have done throughout the years in representing the Gila River Indian Community in Congress, as well as other tribal nations throughout this country.
Mr. HAYWORTH. Mr. Lt. Governor, I thank you for those kind words. Without objection, the remainder of your statement will be included in the record, and that goes for everyone who has joined us here today, for their written statements. But, again, I thank you very much for those kind words.
Let me begin Lt. Governor Antone, with a question for you. It may interest all those who joined us today to understand the extent to which diabetes is a serious problem within your tribal population. And I'd like you to first of all to talk about the nature of the problem. And, also, if you could address the question, how does contract support cost funding relate to that issue of the incidence of diabetes among your community's population?
Mr. ANTONE. You are absolutely right, Mr. Chairman. Our community has the highest incidence of diabetes in the world, and it is a significant health care problem in our community including among our children. I know you have been a champion for fighting juvenile diabetes because we have worked with you on issues in the past and we will continue to work with you on the same issue in the future.
Taking over health care programs has allowed us to focus on our community's most serious health problems such as diabetes. We have been able, for example, to reduce the rate of foot amputations relating to diabetes significantly by placing two podiatrists at our hospital on our staff. The decrease in foot amputations is just one example of how funding to run our health care programs is improving the outlook of diabetes patients in our community. Even with this progress however, we are still so far behind that it remains our top health care issue. Every contract support dollar that we don't get reduces the money that we can spend on the diabetes care. Conversely, every dollar we do get goes into improving the health of our community members.
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Mr. HAYWORTH. Lt. Governor, thank you for your testimony. I was privileged to have two members of Congress from both sides of the aisle join me on a tour, as you know, of your community in the past weeks, and visiting your health care facilities. But as you pointed out, as we have seen, your community has found ways to improve health care services while absorbing millions of dollars in additional costs each year due to inadequate or absent contract support costs funding.
In your mind and through your experience, how was your community able to achieve those improvements?
Mr. ANTONE. Mr. Chairman, as a result of contracting with IHS under the Indian Self-Determination Act, we have found that once we were not burdened by bureaucracy we were able to make much more efficient use of program dollars that were formerly under IHS control. We found not only could we stretch these dollars further and gain significant cost savings, but we also could create a better quality health care service by tailoring our programs to the unique health care concerns of our tribal population, and most importantly, the disease of diabetes.
Mr. HAYWORTH. Mr. Lt. Governor, in your opinion, is the queue system of allocating contract support costs funds preferable, if it means getting 100 percent funding later rather than 70 percent funding earlier?
Mr. ANTONE. Mr. Chairman, although we would have received 100 percent last year if the funding procedures related to the queue had remained the same, the queue system is very problematic for tribes. There is no predictability with respect to how much funding will be available each year, how long tribes will have to wait for new funding, and how long it will take to get to 100 percent funding.
The fact is, however, Indian tribal governments should not have to make the choice at all between some funding early or more funding later. Ongoing and recurring contract support cost funding is Federal policy.
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The real issue is getting Congress to realize that those funds promised to tribes must be appropriated in full and recurring amounts. Anything less than full and recurring appropriations for all contract support cost funding needs is an abdication of Congressional responsibility toward Indian tribal governments.
Mr. HAYWORTH. Mr. Lt. Governor, as I pointed out in introducing you, the Gila River Indian Community was willing to really step forward and make a sacrifice. Let me ask you again, to follow up on that, would your community be willing to sacrifice 100 percent contract support costs funding so that all tribes could have funding levels raised to, for example, about 80 percent?
Mr. ANTONE. Last year our community was fully expecting to receive 100 percent of its contract support costs needs because we had waited patiently for four years to rise to the top of the ISD queue. In light of FTEs $35 million in new funds made available for the ISD queue last year, however, we agreed to a proposed allocation of those funds that would strive to give all tribes on the ISD queue 70 percent funding.
Mr. HAYWORTH. Mr. Lt. Governor, we thank you for your comments and for the efforts of your community.
[The prepared statement of Mr. Antone may be found at the end of the hearing.]
Mr. HAYWORTH. Let me turn now to my good friend from Michigan for any questions that he may have for the panel.
Mr. KILDEE. Thank you, Mr. Chairman. First of all I'd like to thank Ron Allen and Lloyd Miller for participating recently in the caucus briefing we had on support costs. That was very helpful. We had about 40 staff members there, including a member from the Subcommittee on Appropriations, so it was very helpful.
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As a matter of fact our Native American Caucus has grown from 55 members last year to 74 members this year from both parties, so we are going to become more proactive. And your participation in that briefing was very, very helpful and will lay the groundwork for that. Also, Lt. Governor Antone, please give my greetings to Governor Murray Thomas. I've enjoyed visiting your Nation out there. Having grown up wanting to be a fireman, I was captivated by your fire department out there. I spent more time in the firehall talking to the fire fighters, but it was very interesting.
And whether we have a queue system or pro rata the whole thing will be solved if the United States Government obeys the law passed in 1975. We have broken treaties and we've broken the law. And we don't really need an authorization for that because that was in the 1975 law, the appropriations and the budget process, to call for that money.
And I certainly will begin to increase my pressure on the Executive Branch of Government. We have now a surplus in the budget, no longer a deficit. We're saving most of that surplus for Social Security and Medicare. But certainly we can find the dollars for our commitments to the Native American Nations in this Country. And I will increase my advocacy for that. And we need your help in doing that, and you've already helped. I just appreciate all your testimony here today and look forward to working with you. Thank you.
Mr. ANTONE. Congressman Kildee, Mr. Chairman, I appreciate your kind words and I'll relay the information to Governor Thomas.
Mr. HAYWORTH. Thank you Mr. Kildee. The gentleman from American Samoa.
Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. I'm sorry that I wasn't able to follow up with a couple of questions I had with a previous witness but I certainly welcome our panel members.
Mr. HAYWORTH. If the gentleman will yield? If my friend from American Samoa would like to submit those questions in writing?
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Mr. FALEOMAVAEGA. I definitely will.
Mr. HAYWORTH. Without objection, it is so ordered.
Mr. FALEOMAVAEGA. And my good friend Ron Allen, there are some 500 tribes currently in United States, Mr. Allen. How many do participate in this contracting program of self governance? Do you have any idea?
Mr. ALLEN. Well, it's probably in the neighborhood of 325 to 350 that are contracting or compacting.
Mr. FALEOMAVAEGA. And in your opinion this has gone very well since it's been implemented?
Mr. ALLEN. Well the contracting movement, in terms of taking over the programs has been very constructive because the tribes have wanted to take over these programs and services and manage them for themselves according to their own governmental priorities, and so that has been moving forward. And the contract support issue and the notion that it's out of control has become a new kind of political impediment.
Mr. FALEOMAVAEGA. Do you agree with the Administration's assessment in terms of the proposed budget? I had outlined that the Administration had actually requested only $160 million and they disagreed. And they are actually requesting almost $250 million for this contract services program. Is that in line with your underfunding of the budget proposal for FY 1999?
Mr. ALLEN. Well, I guess it's about, somewhere around $240 million, just under I think, for next year, FY 2000. And they had revealed that there is a need for an additional $100 million and we concur with that. One good thing about IHS is on their side of the aisle they have done a good job in getting more accurate data.
Their data is pretty accurate now in terms of how many contracts are out there and what that level of shortfall is both from those that are new programs by tribes, or new tribes that are taking on programs, as well as the shortfall for existing contracts and shortfalls in start up monies as well.
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One other factor that was weighed into that number they gave you is that it's an inflationary adjustment. And you know the Federal Government gives COLA adjustments, inflationary adjustments all the time. Unfortunately, we never get them. And they'll come up with a rationalization of why they shouldn't do that.
So we're urging IHS and BIA, as they make their projections, to insert that inflationary adjustment because the cost of securing those services is increasing.
Mr. FALEOMAVAEGA. So in your best assessment, whenever we talk about Indian funding, there has never been any indexing done as far as adjusting for inflation?
Mr. ALLEN. No, it's not adjusted. Basically, all they are doing is taking the raw numbers and transferring them over to the next year, and then adding whatever they can justify for additional increase in CSC numbers in conjunction with the ISD Fund. It was pointed out earlier that the ISD Fund, which is for new contracts, needs to be reinstated in IHS. It is on the BIA, and it does need to be reinstated on IHS to accommodate those new contracts.
Mr. FALEOMAVAEGA. I know we do it for the Department of Defense and for other Federal agencies but not for the Indian Services. I'm very surprised. Mr. Williams, I enjoyed listening to your testimony about the problems affecting Native Alaskans. Do I understand that of the program under the Indian Health Service, do the Native Alaskans have a separate Indian Health Service program, or are you all grouped in it together with the continental Native Americans?
Mr. WILLIAMS. We're all under the same system. We're part of the United States, as I'm sure you are well aware, but are all under the same system. The Alaskan area has their own area office which, as of January, is all contracted. In YKHC's case, we've contracted everything available to us. In the State; under the demonstration, the 226 tribes have come together under one compact with Congress, with the United States, under the same system and criteria as other tribes in the continental United States.
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Mr. FALEOMAVAEGA. So your program is little different structurally because of the way the——
Mr. WILLIAMS. It's 58 individually recognized Federal Governments that have come together because of their size and ability to generate the funds and work together to get the best efficiency out of the funding that we do have. These are very small tribes; we have 58, the largest one is about 3,000 members and the smallest one might be 48 members. So for economy of scale they have joined together under one agreement.
And they tribally elect their board members. The tribes elect the people that make the priorities on the health care delivery system. Then prioritize them every year. We bring tribal members in, they prioritize the health care delivery system. You've given us the flexibility to work within the funding level that we have to make that system delivery possible for them.
Mr. FALEOMAVAEGA. And the funding level has not been at all sufficient to meet those needs?
Mr. WILLIAMS. No. I call it a ''crisis care delivery system.'' When somebody can't afford to go to see a provider until they are so sick that they have to go to the hospital, and they can't go for prenatal visits, that's a crisis care system. We want to transfer that to a prevention system.
Mr. FALEOMAVAEGA. Thank you, Mr. Chairman.
Mr. HAYWORTH. Thank you, Mr. Faleomavaega. The gentleman from Washington State.
Mr. INSLEE. I'd ask consent to place a statement, if I may?
Mr. HAYWORTH. Without objection, it's so ordered.
[The prepared statement of Mr. Inslee follows.]
STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON
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Mr. Chairman, I am glad that we have the opportunity to learn more about the critical and sometimes complicated issues surrounding contract support costs for Indian programs. I look forward to hearing from and working with my colleagues on the Committee and today's witnesses, especially NCAI Chairman Ron Allen, who is chairman of the Jamestown S'Klallam Tribe in Washington. For those of my colleagues who may not know this, I am privileged to have the Jamestown S'Klallams located in my Congressional District.
The Indian Self-Determination and Education Assistance Act gives tribal governments the rights to assume local control over Federal Indian programs, such as health care, law enforcement, education, and natural resources management. A major principle of the Federal Government's policy under Self-Determination is that tribal governments should not be penalized financially for exercising their right under the law to operate their own programs.
Yet, that is the situation we find ourselves in today. Because Congress has failed to fully fund the costs associated with contracting, tribal governments are increasingly forced to spend their program funds to offset their contract support costs, pay these costs from tribal funds, or cut critical administrative activities below the level needed for contract compliance. I am concerned that the effect of this shortfall is that we are taking funds from one needed program in order to pay the administrative costs of another.
In addition, I am concerned that the current moratorium on new and expanded contracts contained in the FY 1999 Omnibus Appropriations Act is a not-so-subtle backdoor approach to eliminating the rights of tribes to operate their own local programs under the Self-Determination Act. We should not let appropriations riders take away Indian self-determination or undermine tribal sovereignty.
I would like to commend the Chairman for holding this hearing today. I look forward to working with tribal governments, the Administration and my colleagues to find a solution to this issue so that tribal governments will be able to fully exercise their self-determination rights under Federal law.
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Mr. INSLEE. I do have a couple of questions, if I may?
Mr. HAYWORTH. Certainly.
Mr. INSLEE. First, I want to thank you all for coming, particularly Mr. Chair for journeying from the serene bay where you hang your hat all the way to try to horsewhip Congress into doing the right thing. That takes a lot of energy and we appreciate that.
But I'd like to ask you why do you perceive, and this is an issue that folks who believe in devolution, folks who believe in having local governments handle affairs, folks who believe we ought to devolve power to the governments who are closest to the people, also at times some of those folks seem to be the ones most opposed to fully funding self determination.
Why is that? I mean, what possible reason do you think we are up against in trying to convince them to fulfill this obligation to the Native American Nations?
Mr. ALLEN. Congressman, it's a complicated question you ask. And I guess one of my simple answers is that I believe that there is a subliminal philosophy that permeates throughout our society with regard to Indian affairs, who the Indian people are, what our governments are all about. And I believe that as you move the Federal policy of empowering tribal government forward there is not really a belief that tribal governments were going to be really fully empowered, tribal governments.
And over the course of the last 25 years tribes have proven that they can be very effective in every aspect of governmental operation. And all of the sudden you end up with a new level of clashes over jurisdiction and control, over controlling affairs over our communities whether it's in rural settings or it's in urban settings. And, unfortunately, there is this notion that there is no obligation to the Indian people into perpetuity for the relinquishing of the lands and the resources that our peoples gave up. That is simply a premise that is unacceptable. It isn't honoring the commitment of the United States to these peoples and our governments.
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Now, as tribal governments continue to grow there is a notion, and it hides behind different theories, about how to be accountable for the Federal resources designated to serve our communities. It is increasing but it is not increasing proportionately.
But we're going to show you and the rest of the Congressional leadership, in our education campaign, that when you look across every Indian program, we are categorically not maintaining the same pace as the other programs serving mainstream America. And even though there is increases, proportionately we are not increasing and keeping pace with mainstream America.
How are we expected to be self sufficient, how are we expected to become independent governments within the Federal system, and how are we going to serve our people? We cannot, if we're not provided the same respect as other governments.
Mr. INSLEE. Well, I appreciate your passion. You know, sometimes I encourage witnesses to be dispassionate, but in this case I welcome it. And I'm glad you are here showing it because I think it's appropriate. Let me ask, and anyone on the panel can help me. Is there a current litigation? One of the previous panelists made reference to a court case of some sort involving the BIA. If anybody could tell me the status of that, I'd appreciate it.
Mr. MILLER. Yes, Congressman, there are presently about a half dozen cases wending their way through different parts of the court system. Some of them are in the Interior Board of Contract Appeals, some of them are at the Appellate level of the Federal System, some are in the Federal District Courts.
Assistant Secretary Gover alluded to a judgment awarded against the Bureau of Indian Affairs on behalf of all tribes in the United States, a deal with the Bureau of Indian Affairs. The matter was concluded on liability, as settled, on damages at $76 million. That sum is now being approved by the Federal District Court, and we understand a final approval is imminent any day this week.
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Mr. INSLEE. And what is the basis? I mean how is that number adjudicated? Does that go to a certain time period or——
Mr. MILLER. Yes, it was a certain time period. Prior to 1994, between 1988 and FY 1993, for those fiscal years, the Bureau of Indian Affairs employed a method for determining contract support costs that actually diluted its responsibility. It counted in the calculation of contract support small programs from other Federal agencies that don't contribute contract support but also don't contribute materially to the work load of the tribe.
But counting those programs, the Bureau of Indian Affairs was able to shave in a small way its own responsibility, where shaving it in a small way for 500 tribes for five years became quite a large sum. And the $76 million represents a settlement on that amount.
The case is actually into a second phase now, being handled by a Mr. Michael Gross, out of Albuquerque, New Mexico, where they will be looking at the BIA policies from 1994 to the present.
Mr. INSLEE. Does the shortage which we've been addressing here, is that potentially subject to further litigation? Can the judicial system solve this problem potentially, if Congress does not?
Mr. MILLER. Well, I think the judicial system has been called upon by individual tribes and even on a larger basis to do exactly that, Mr. Congressman. It would be unfortunate, however, I think for the policy of the United States, if it was the judiciary that had to call the United States Congress and——
Mr. INSLEE. I'm not suggesting that.
Mr. MILLER. [continuing] into account for such an important responsibility. But I think if Congress is unable, working with the agencies, with the Indian tribes, to find some common ground in this area, the courts are going to continue issuing rulings against both agencies that will be extremely costly.
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Mr. INSLEE. Thank you.
Mr. ALLEN. Mr. Chairman, might I add just a little bit to that?
Mr. HAYWORTH. Certainly.
Mr. ALLEN. In our report to you and the Senate, we're going to address this issue and its complications. And we're going to throw out some suggestions about how to address this very complicated issue that was raised in the court. It causes a lot of people a lot of concern. And we believe there is a very constructive solution that can be proposed to the Congress in terms of how to address it.
Mr. HAYWORTH. Thank you. The gentleman's time has expired. The Chair would reiterate that if any member of the Committee has questions for either the first or the second panel, if they would submit questions in writing to the Committee staff. Mr. Faleomavaega made the point earlier and we're very happy to follow up with those inquiries.
I would also state for the record that questions in writing will be submitted from the Pascal Yaqui Tribe of Arizona, some of my friends in my home state who also have some concerns. Is there any further business?
Mr. KILDEE. No. I just want to thank the Chairman and yourself for chairing this meeting today. I think it was very, very helpful. I think this is an area that is not just a legal area, it's a moral area. We have a legal and moral obligation to carry out those responsibilities and I think you presented the case very, very well. We have to pursue this until you secure full justice.
Mr. HAYWORTH. The gentleman from American Samoa?
Mr. FALEOMAVAEGA. Mr. Chairman, the 11 years that I have been a member of this Committee, I, too, would like to echo the sentiments that have been expressed earlier in terms of your leadership and the dynamic services that you have provided for the Indian Country. And I really would like to commend you for your dedication to this.
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Because so often and so many times whenever Indian issues are brought before this Committee and the Congress—it's not because I question the sincerity or the insincerity of those members—that affect the needs of our Native American community, somehow things just don't get done.
And Mr. Chairman, I want to thank you for your personal attention given to this real serious problem that we have in our Nation. And I do want to say that for the record. Thank you.
Mr. HAYWORTH.I thank you Mr. Faleomavaega. It's good to have my friend from American Samoa, who during the course of the 104th Congress, on a very aforementioned August day, foreswore his tropical paradise to come to the desert——
Mr. FALEOMAVAEGA. Mr. Chairman, as long as you'll continue this leadership, I promise I will export more football players to the University of Arizona and Arizona State.
Mr. HAYWORTH. And let me state for the record, even though Arizona is my home, at North Carolina State University, I enjoyed the services of Ricky Logo, from Samoa for many years, and we appreciated that. And he had to return home to become King, so he was certainly well prepared with his education at North Carolina State.
Mr. FALEOMAVAEGA. If the Chairman will yield. Most of my cousins have played for Arizona State and the University of Arizona, and they continue to do so. And I'm going to tell them to do so as long as my friend J.D. helps my Native American brothers and sisters. Thank you.
Mr. HAYWORTH. I thank you, Mr. Faleomavaega. And again I thank you not only for your kind comments but all the witnesses for their valuable testimony. And if there is no further business, again we thank the members and the members of our panel. And the Committee stands adjourned.
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[Whereupon, at 12:45 p.m., the Committe was adjourned.]
STATEMENT OF HON. JOHN M. SPRATT, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA
Dear Chairman Young,
Thank you for allowing me the opportunity to submit testimony regarding the difficulties encountered by the Catawba Indian Tribe of South Carolina in obtaining adequate Indian Health Services and contract support funding. The Catawbas' relationship with the Federal Government was terminated in the early 1960's and was not re-established until Congress passed legislation to do so in the mid-1990's. Prior to recognition, the tribe did not keep an up-to-date, accurate, or complete record of its members. The tribal roll the Catawbas relied upon when originally filing for IHS funding understated its tribal membership by over one-half.
The Catawbas first sought IHS funding in fiscal year 1994 directly following their land settlement and Federal recognition. At that time the Catawbas had no paid staff. A loose roll of 1,200 members was kept as a courtesy by an elderly member, now deceased. Although this roll did not reflect an accurate accounting of members' deaths, births, and marriages, it was used by the Catawbas because it was the only list of members available when the tribe filed for IHS funding. The tribe has since found that they have a health service population of 2,700, over twice as many as originally reported.
The Catawbas are currently funded at $1.5 million, or $779 per person, which is well below the average Indian Health Services funding of $1,430 per member. The tribe spends $2.5 million a year on health care, or $1 million more than IHS funds. As a result, they must scrape together this additional money from other programs in an already tight budget.
Other Native American tribes with similar populations are funded at twice the level of the Catawbas. The Yuma Indians, for example, receive $4.1 million a year for a near identical service population. The Catawbas deserve the same level of funding received by other similarly situated tribes, and should at least get funding commensurate with the current determination of their membership.
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In addition, the Catawbas have consistently been denied proper payment for IHS contract support costs. Since their Federal recognition in 1993, the tribe has been underfunded by $1.8 million in contract support costs on their contract. In FY97, for example, the Catawbas' contract support rate was set at 51.1 percent or $414,368, of which they received only $57,000. Without the proper funding, the tribe has both downsized their health-related services and taken steps to cede the administration of their health program back to Indian Health Services. The Catawbas simply cannot afford to maintain it without the proper funding.
Thank you for holding a hearing on this important matter. I would very much appreciate having this letter entered in the record of the hearing.
STATEMENT OF MICHAEL E. LINCOLN, DEPUTY DIRECTOR, OFFICE OF THE DIRECTOR, INDIAN HEALTH SERVICE
Good morning. I am Michel Lincoln, Deputy Director of the Indian Health Service (IHS). Today, I am accompanied by Mr. Douglas Black, Director, Office of Tribal Programs; and Ms. Paula Williams, Director, Office of Tribal Self-Governance. We welcome the opportunity to testify on the issue of contract support costs in the Indian Health Service. Contract support cost funding is critical to the provision of quality health care by Indian tribal governments and other tribal organizations contracting and compacting under the Indian Self-Determination and Education Assistance Act ((ISDEA), Public Law (P.L.) 93-638).
The IHS has been contracting with Tribes and Tribal organizations under the Act since its enactment in 1975. We believe the IHS has implemented the Act in a manner consistent with Congressional intent when it passed this cornerstone authority that re-affirms and upholds the government-to-government relationship between Indian tribes and the United States.
At present, the share of the IHS budget allocated to tribally operated programs is in excess of 40 percent. Over $1 billion annually is now being transferred through self-determination agreements to tribes and tribal organizations. Contract support cost funding represents less than 20 percent of this amount. The assumption of programs by tribes has been accompanied by significant downsizing at the IHS headquarters and Area Offices and the transfer of these resources to tribes.
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Contract support costs are defined under the Act as an amount for the reasonable costs for those activities that must be conducted by a tribal contractor to ensure compliance with the terms of the contract and prudent management. They include costs that either the Secretary never incurred in her direct operation of the program or are normally provided by the Secretary in support of the program from resources other than those under contract. It
is important to understand that, by definition, funding for contract support costs is not already included in the program amounts contracted by tribes. The Act directs that funding for contract support costs be added to the contracted program to provide for administrative and related functions necessary to support the operation of the health program under contract.
The requirement for contract support costs has grown significantly since 1995 due to the increasing assumption of IHS programs. In the fiscal years 1996 and 1997 appropriations committee reports, the IHS was directed to report on Contract Support Cost Funding in Indian Self-Determination Contracts and Compacts. In the development of this report, IHS consulted with tribal governments, the Bureau of Indian Affairs (BIA) and the Office of Inspector General within the Department of the Interior. The report detailed the accelerated assumption of IHS programs by tribes beginning in 1995 as a result of the 1994 amendments to the ISDEA and authorization of the Self-Governance Demonstration Project for the IHS. The report showed that despite the significant growth in self-determination contracting and compacting, contract support cost appropriations have remained relatively flat. This has resulted in under-funding of contract support costs. The report also highlights that the rates for tribal indirect costs, which are the major component of contract support costs, have averaged around 23 percent of direct program costs over this same period of time.
In addition, pursuant to the statutory requirements of the ISDEA, the IHS gathers contract support cost data annually as a part of its annual ''Contract Support Cost Shortfall Report To Congress.'' This report details, among other things, the total contract support cost requirement of tribes contracting and compacting under the ISDEA and how these funds are allocated among the tribes.
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