	Background

		Student Population

BIE’s mission is to provide Indian students with quality education  opportunities starting in early childhood. About one-third  of BIE schools serve students from the Navajo Nation. BIE Schools Receive Most of their Funding from Federal Sources, Unlike Public Schools

		BIE Schools Receive Funding Mainly from Interior and Education

All BIE schools—both BIE-operated and tribally-operated—receive almost  all of their funding to operate from federal sources, namely, Interior and  Education. Specifically, these elementary and secondary schools  received approximately $830 million in fiscal year 2014—including about  75 percent, or $622 million from Interior and about 24 percent, or  approximately $197 million, from Education. In contrast to BIE schools, federal funding  has generally comprised about 9 percent of public schools’ funding from  school year 2002-03 to 2008-09. BIE-Operated Schools Spent Substantially More Per Student than Public Schools Nationwide Due to Several Factors

		BIE-Operated Day Schools Spent at Least 50 Percent More Per Pupil than the National Average for Public Schools

Average per-pupil expenditures for the 32 BIE-operated day schools were  at least 56 percent higher than in public schools nationally in school year  2009-10, and were higher in the four categories of operating expenditures  that we analyzed. Student demographics. Smaller enrollment and remote location. BIE Lacks Sufficient Staff with Expertise to Oversee School Expenditures

Line office administrators are integral to overseeing school expenditures,  but the number of full-time administrators who oversee school  expenditures decreased from a total of 22 in 2011 to 13 in 2014, 6  permanent and 7 acting. As a result of having fewer line office administrators, the remaining  administrators have been assigned additional responsibilities and their  workload has increased, making it challenging for them to conduct  needed oversight. BIE’s approach to staffing line offices runs counter  to federal internal control standards and key principles for effective  strategic workforce planning. BIE’s Processes Are Not Adequate to Ensure that School Funds Are Spent Appropriately

		BIE Lacks Consistent Processes for Documenting and Sharing Findings and Overseeing Major Programs

			Single Audits

BIE oversees tribally-operated school spending primarily through  information provided in the schools’ annual single audits; however, it does  not have a process in place for consistently documenting actions it takes  to respond to audit findings. If funds are not used for their  intended purpose, students in BIE schools may not receive the services  they need, such as tutoring and other forms of instruction. Rather than using a risk-based  approach to guide how it uses limited monitoring resources, BIE officials  use an ad hoc approach. A March 2014 single audit found that a tribally-operated school lost  $1.7 million in federal funds that were illegally transferred to an off- shore bank account. Conclusions

BIE’s mission is to provide the students attending its schools a quality  education. Further, BIE does not utilize tools, such as written procedures and a risk- based approach to monitor school expenditures that would help improve  the effectiveness of its oversight. Recommendations for Executive Action

We recommend that the Secretary of the Interior direct the Assistant  Secretary-Indian Affairs to take the following four actions:
Develop a comprehensive workforce plan to ensure that BIE has an  adequate number of staff with the requisite knowledge and skills to  effectively oversee BIE school expenditures. In addition, this report will be available at no charge on  GAO’s website at http://www.gao.gov. Appendix I: Objectives, Scope, and Methodology

Our objectives were to assess (1) how sources of funding for Bureau of  Indian Education (BIE) schools compare to those of public schools; (2)  how BIE school expenditures compare to those of public schools; (3) the  extent to which BIE has the staff and expertise needed to oversee school  expenditures; and (4) the extent to which BIE’s processes are adequate  for ensuring that school funds are spent appropriately. We  reviewed relevant federal laws and regulations. Additionally, we reviewed  agency documents from BIE, the Office of the Assistant Secretary-Indian  Affairs (Indian Affairs), and the Department of Education (Education),  including budget justifications, published reports, annual financial audit  reports, and other documents. Further, we conducted site  visits to select BIE schools and nearby public school districts. We focused on school year 2009-10, since it was the most recent year for  which data were available from Education at the time of our analysis. We generally reviewed the most recent version available of  these studies. Objective 3: Staff and Expertise to Oversee School Expenditures

To determine the extent to which BIE has the staff and expertise needed  to oversee school expenditures, we analyzed BIE data on the number  and location of staff currently responsible for overseeing these  expenditures as compared to the number of staff in prior years and the  location of schools for which they are responsible.
Why GAO Did This Study

BIE, within Interior's office of Indian Affairs, oversees 185 schools, serving about 41,000 students on or near Indian reservations. BIE's mission is to provide students with a quality education. However, BIE student performance has been consistently below that of public school students, including other Indian students. Given these challenges, GAO was asked to review BIE school funding and expenditures.
This report examines how funding sources and expenditures of BIE schools compare to those of public schools; the extent to which BIE has the staff and expertise needed to oversee school expenditures; and the extent to which BIE's processes for oversight adequately ensure that school funds are spent appropriately.
GAO reviewed relevant federal laws, regulations and agency documents, and analyzed BIE and public school expenditure data for school year 2009-10, the most recent year for which data were available. GAO also visited select BIE schools and nearby public schools in four states based on location, school and tribal size, and other factors.

What GAO Found

Unlike public schools, Bureau of Indian Education (BIE) schools receive almost all of their funding from federal sources. BIE directly operates about a third of its schools, and tribes operate two-thirds. According to BIE data, all of the BIE schools received a total of about $830 million in fiscal year 2014: about 75 percent from the Department of the Interior (Interior), 24 percent from the Department of Education (Education), and 1 percent from the Department of Agriculture and other agencies. Public schools nationwide receive about 9 percent of their funding from federal sources and rely mostly on state and local funding.
GAO found that some BIE schools spend substantially more per pupil than public schools nationwide. Specifically, GAO estimates that the average per pupil expenditures for BIE-operated schools—the only BIE schools for which detailed expenditure data are available—were about 56 percent higher than for public schools nationally in school year 2009-10, the most recent year for which data were available at the time of GAO's review. Several factors may help explain the higher per pupil expenditures at BIE-operated schools, such as their student demographics, remote location, and small enrollment.
BIE lacks sufficient staff with expertise to oversee school expenditures. Since 2011, the number of BIE full-time administrators located on or near Indian reservations to oversee school expenditures decreased from 22 to 13, due partly to budget cuts. As a result, the 13 administrators have many additional responsibilities and an increased workload, making it challenging for them to provide effective oversight of schools. Additionally, these administrators have received less training in recent years. Further, the three administrators GAO spoke with said they do not have the expertise to fully understand the school audits they are responsible for reviewing. BIE's staffing of these positions runs counter to federal internal controls standards and key principles for effective strategic workforce planning, such as having sufficient, adequately-trained staff. Without adequate staff and training, BIE will not be able to ensure that school funds are spent appropriately.
BIE's processes for oversight do not adequately ensure that funds are spent appropriately. BIE lacks written procedures for how and when staff should monitor school spending and does not use a risk-based approach to prioritize how it should use its limited resources for oversight. Instead, BIE told GAO that it relies primarily on ad hoc suggestions by staff regarding which schools to oversee more closely. Meanwhile, some schools have serious financial problems. Notably, external auditors identified $13.8 million in unallowable spending at 24 schools as of July 2014. Further, in March 2014, an audit found that one school lost about $1.2 million in federal funds that were improperly transferred to an off-shore account. Without written procedures and a risk-based approach to overseeing school spending—both integral to federal internal control standards—there is little assurance that federal funds are being used for their intended purpose to provide BIE students with needed instructional and other educational services.

What GAO Recommends

Among other things, GAO recommends that Indian Affairs develop a workforce plan to ensure that BIE has the staff to effectively oversee school spending and written procedures and a risk-based approach to guide BIE's oversight of school spending. Indian Affairs generally agreed with GAO's recommendations.