From 1993  to 2002, EDA provided funding for 63 enterprise projects intended to  generate revenues but these have had mixed success in producing  economic development. EDA also provided grants to 18 tribal organizations  or Alaska Native entities. The remaining $26 million was awarded to 30 Native entities  in Alaska, including grants to 25 federally recognized Native entities and 5  Alaska Native organizations representing more than one entity. As shown in figure 8, of the 31 completed projects with results, tribal  officials reported about half were either profitable or were earning enough  to cover their operating costs. However, the remaining projects were either  requiring subsidies or had ceased operations. Their criteria also emphasize projects more  likely to attract private sector investment. Based on our analysis of the relationship between contracting and  changes in tribes’ economic profiles, we found that self-governance tribes  and those that had contracted to operate a high proportion of their  programs and services generally experienced greater growth in their  employment levels but had not generally shown greater gains in income  levels. Most Tribes Entered Into Contracting Arrangements with the Federal Government

The Indian Self-Determination Act allows tribes to enter into various  arrangements with BIA or the Indian Health Service to assume the  operation of many of the programs and services previously provided by the  agencies. According to BIA information,  43 of the 219 were tribes that had entered into self-governance  arrangements with BIA. As shown in figure 21, tribes with greater amounts of  revenue from gaming generally experienced greater growth in their total  populations, employment rates, per capita income, and in the percentage  with incomes above the poverty level. Scope and Methodology

To review all grant funds made available to Indian tribes and tribal  organizations by the Department of Commerce’s Economic Development  Administration (EDA), we analyzed data from EDA on all grants awarded  to tribes during the years 1993 to 2002. Therefore, for the purposes of our analysis,  we grouped the various grants into the following categories according to  type of project or activity funded:   Enterprise projects: grants used to develop projects designed to  generate income for the tribe, such as a cannery, a resort, or a sawmill;   Infrastructure projects: grants used for the design and construction of  public works infrastructure, such as roads, highways, and sewers, that  would serve as the foundation for general economic development  activities;   Business development projects: grants used to fund loan funds, training,  and other business development projects, including those for business  incubators, revolving loan funds (RLFs), training and capacity building,  and other assistance that enhances the tribes’ economic development  activities; and   Planning/feasibility grants: grants used for general planning purposes  such as paying for staff salaries or the broad administration of the tribes’  planning departments, as well as for developing plans, analyses of  projects’ environmental impact, and feasibility studies for specific  economic development projects. Our analysis of EDA grants was limited to grants provided to Indian tribes. We did not analyze EDA’s preapplication process. Methodology for Analyzing Relationship between Contracting and Economic Profile

To determine whether there exists a relationship between the degree to  which an Indian tribe operates federal programs and services under  contracting or self-governance and that tribe’s economic profile, we used  data from the Department of the Interior’s Bureau of Indian Affairs (BIA),  the U.S. Census Bureau, and the Single Audit Act database to group all  tribes we analyzed into three separate groups. Our analysis of this data indicated that 143 Indian tribes and  tribal organizations received a total of $112 million in EDA grants during  this 10-year period. On average, the high-contracting and self-governance tribes  showed greater growth in employment levels, but differences in the other  indicators were not statistically significant. We also analyzed the relationship between variations in tribes’ grants to  income ratio and the extent to which they were contracting or self- governance. GAO Comments

1. 3. This criteria favors projects that result in higher- wage, higher skill jobs and private investment.
Why GAO Did This Study

American Indians and Alaska Natives generally face worse economic conditions than the rest of the U.S. population. The Economic Development Administration (EDA) within the Department of Commerce provides grants to distressed communities, including to American Indian tribes and Alaska Native entities, to generate employment and stimulate economic growth. Because data on how these EDA grants helped tribes was not publicly available, GAO analyzed all EDA grants made to Indian tribes from 1993-2002 and determined what economic development resulted. Tribes also enter into self-governance and other contracting arrangements with two federal agencies--the Bureau of Indian Affairs (BIA) and the Indian Health Service--to assume the management of individual services, including law enforcement, education, social services, and road maintenance. GAO also analyzed the relationship between changes in tribes' economic profile and the extent to which they had self-governance or contracting arrangements to perform their own services. BIA and EDA provided comments on a draft of this report. BIA generally agreed with GAO's conclusions. EDA took issue with GAO's characterization of the relative success of EDA grant programs.

What GAO Found

Indian tribes have used EDA grants to create businesses, build roads and other infrastructure, and create economic development plans, but these grants have had mixed success in generating jobs, income, and private sector investment. From 1993 to 2002, 143 Indian tribes and tribal organizations received $112 million in EDA grants, but this represented a small portion of EDA's awards to all organizations. Of the total amount awarded to Indian tribes or Alaska Native entities, $54 million was used to fund 63 enterprise projects designed to create income and jobs. Of the 59 projects GAO collected data on, 25 had not yet begun operating, and 3 others had just been completed and no results were available. Of the 31 operational projects, tribal officials reported that about half were profitable or were covering their costs, and the remainder were being subsidized or had failed. Most had resulted in the creation of 10 or fewer jobs, and few had attracted private sector investment. EDA also provided $22 million in grants to tribes for infrastructure projects, such as roads and sewer systems, $30 million in grants to assist tribes with economic planning, and $5 million for loan funds and business development. Almost all of the 219 federally recognized tribes with available data had entered into either contracts or self-governance compacts to operate their own tribal programs and services. Based on GAO's analysis of U.S. Census Bureau data, tribes that had self-governance arrangements or were engaging in higher levels of contracting showed greater gains on average in employment levels from 1990 to 2000 compared with tribes that were contracting less. However, the change in per capita income or the percentage of tribal individuals with incomes above poverty levels over this period was not statistically different for self-governance or high-contracting tribes compared with low-contracting tribes.