Several Interior agencies administer various portions of the government’s Indian trust responsibility, including the Bureau of Indian Affairs (BIA), the Bureau of Land Management (BLM), the Minerals Management Service (MMS), the Office of American Indian Trust, and the Office of the Special Trustee for American Indians (OST). We met with Office of Special Trustee officials, including the Special Trustee for American Indians, and officials in BIA, BLM, and MMS to obtain clarification on certain aspects of the Plan. Although our work identifies key issues that the Congress needs to consider in deciding whether to approve the initiatives described in the Plan, it is by no means all inclusive and there are other issues yet to be identified. Problems With Current Indian Trust Asset Management

As we have reported in the past, Interior’s Indian trust fund accounting and asset management problems are long-standing and permeate all facets of the trust fund management business cycle. They include (1) the lack of accurate, up-to-date information on ownerships to ensure that revenue is distributed to the correct account and the increasing workload associated with fractionated ownerships, (2) inadequate management of natural resource assets resulting in a lack of assurance that all earned revenues are collected, (3) weaknesses in trust fund management systems and internal controls and policies and procedures that result in a lack of assurance about the accuracy of trust fund balances, and (4) the failure, in the past, to consistently and prudently invest trust funds and pay interest to account holders. These overall weaknesses preclude account holders from having assurance that their account balances are accurate and that their assets are being prudently managed. This problem has not yet been resolved. The Plan proposes that AITDA assume the federal government’s Indian trust authority related to Indian trust funds and assets. Table 1 summarizes the cost estimates in the Strategic Plan. Implementation Issues

A number of areas require further clarification, planning, or consideration before the Plan can move forward. These include implementation timing of certain initiatives, such as records cleanup and acquiring a new IIM accounting system component; proposals, such as establishing a centralized organization and upgrading and acquiring systems, that need more planning before they can be successfully implemented; and issues requiring congressional consideration that relate to the desirability and feasibility of establishing the new organization as a private entity and establishing the trust development bank. The Plan needs to provide more information on each of these proposals in order to support full consideration by the Congress. (2)    The Strategic Plan proposes the establishment of an Indian Trust and Development Bank. Additional information is needed from the Special Trustee about the proposed organization so that the Congress may carefully consider the government’s Indian trust responsibility; type of organization, funding, and oversight; the types of programs and services to be provided by the new organization; and the relationship of any new organization to the Interior Department and other external organizations. Current Interior Organizations With Indian Programs Covered by the Strategic Plan

Proposed AITDA Organization

(OST) (OTFM) (BIA/LTRO) (OAIT / MMS)

Basis for Cost Estimates

The Strategic Plan includes budget estimates indicating that about $168 million will be needed for fiscal years 1997 through 1999 and about $61 million and $56 million for fiscal years 2000 and 2001, respectively, to implement Phase I of the Plan.
Why GAO Did This Study

GAO discussed the results of its analysis of the Special Trustee for American Indians' Strategic Plan for Indian trust fund accounting and asset management improvement, focusing on: (1) the trust asset management problems that the Strategic Plan proposes to resolve; (2) a high-level summary of the Strategic Plan; (3) the basis for the cost estimates included in the Plan; and (4) implementation issues, including key issues that the Congress would need to consider in deciding whether to approve the initiatives described in the Plan.

What GAO Found

GAO noted that: (1) management of the Indian trust funds and assets has long been characterized by inadequate accounting and information management systems, untrained and inexperienced staff, backlogs in appraisals and ownership determination and recordkeeping, lack of a master lease file and an accounts receivable system, inadequate written policies and procedures, and poor internal controls; (2) because of these overall weaknesses, account holders do not have assurance that their accounts balances are accurate and that their assets are being prudently managed; (3) to address the Department of the Interior's long-standing Indian trust fund accounting and asset management problems, the Congress passed the American Indian Trust Fund Management Reform Act of 1994, which created the Office of the Special Trustee for American Indians; (4) the act required that the Special Trustee provide oversight of reforms within Interior, including development of policies, procedures, and systems; (5) in April 1997, the Special Trustee submitted his Strategic Plan to the Congress; (6) the Strategic Plan proposes a new organization, independent of Interior, to administer trust fund accounting and asset programs; (7) these proposals are estimated to cost $168 million for fiscal years 1997 through 1999 and another $61 million and $56 million for fiscal years 2000 and 2001, respectively; (8) in addition, the Plan proposes establishing an Indian economic development bank to be capitalized by the federal government; (9) a number of areas require further clarification, planning, or consideration before the Plan can move forward; (10) these include: (a) implementation timing of certain initiatives, such as records cleanup and the acquisition of a new individual Indian Money accounting systems component; (b) proposals, such as establishing a centralized organization and upgrading and acquiring systems, that need more planning before they can be successfully implemented; (c) issues relating to the desirability and feasibility of establishing the new organization as a private entity, including the legality of transferring the federal government's trust authorities and responsibilities to such an entity; and (d) issues relating to the establishment of the trust development bank, including the initial funding and on-going capital maintenance proposals; and (11) in order to appropriately address these issues, more information and analysis need to be included in the Plan to provide clarification of the authority and responsibility of the proposed organization, and its relationship to Interior.