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General Memorandum 14-006

General Memorandum 14-006
Congress Sends FY 2014 Omnibus Appropriations Bill to President for Signature; Rejects the Administration's Contract Support Costs Proposal

The House and Senate approved this week an omnibus FY 2014 appropriations bill, HR 3547, which provides funding for all federal agencies. The President has stated that he will sign the measure. Under normal procedures, there would have been 12 separate spending bills. The overall funding level reflects the compromise budget agreement reached in December 2013 and as a result there should not be an across-the-board sequestration of discretionary funds in FY 2014. In this Memorandum we focus on the Indian Health Service (IHS) and the Bureau of Indian Affairs/Bureau of Indian Education (Indian Affairs) budgets, including the rejection of the Administration's proposal to cap contract support costs on individual Indian Self-Determination Act agreements.

Funding Overview. The bill will provide funding at the FY 2013 pre-sequestration levels for IHS and Indian Affairs plus a modest additional amount. The
FY 2014 bill has $445 million more for Indian Affairs and the IHS combined than was available for FY 2013.

• Indian Affairs: $2.5 billion which is $142 million over the FY 2013 post-sequester amount and is $17.7 million over FY 2013 enacted (pre-sequester) amount. It is level with FY 2012 appropriations.

• IHS: $4.4 billion which is $303.7 million over the FY 2013 post-sequester amount and is $78.3 million over FY 2013 enacted (pre-sequester) amount. This compares with the FY2012 appropriation of $4.3 billion.

Lack of Funding Detail for Individual Programs. The usual Indian Affairs and IHS program funding detail contained in appropriations charts is lacking in the FY 2014 measure because Congress did not identify a specific amount for contract support costs (CSC), instead, sending it back to the Administration to figure out (see CSC section below). Indian Affairs and the IHS are to report to the appropriations committees within 30 days of enactment of an operating plan "displaying funding allocations to the activity level." In some instances Congress specified funding levels for specific accounts/activities, but we will have to wait until the spending plans are available to have detailed appropriations charts for these two agencies.

Contract Support Costs – Indian Affairs and IHS. Congress is clearly in strong disagreement with the Administration on the issue of contract support costs. They rejected the Administration's proposal to cap CSC on a contract-by-contract basis and also removed the overall CSC caps which have been in previous Indian Affairs and IHS appropriations bills. The aggregate cap has been in place since FY 1998 for the IHS and since FY 1994 for the Bureau of Indian Affairs. Congress called on the Administration to work with them and with tribes on a long-term solution to meet the legal obligation of paying contract support costs. A work plan and announcement of consultation with tribes is to be completed within 120 days of the bill's enactment.

The bill contains no specific amount for CSC; instead, CSC would be payable from each agency's lump sum appropriation ($3,982,842,000 for IHS and $2,378,763,000 for Indian Affairs). The agencies must determine how much CSC to pay from their funds – but underpayments would subject the federal government to contract liability under the Cherokee Nation v. Leavitt decision. As mentioned above, the Joint Explanatory Statement accompanying the bill instructs Indian Affairs and the IHS to submit to the appropriations committees within 30 days of enactment FY 2014 operating plans displaying funding allocations to the activity level. Presumably these plans will indicate how the agencies plan to fund CSC obligations.

The Joint Explanatory Statement section on the Bureau of Indian Affairs provides the following with regard to CSC, a statement which the Joint Explanatory Statement says is also applicable to the IHS:

The agreement includes funding to implement the Indian Self-Determination and Education Assistance Act of 1975 (25 U.S. C. 450 et seq.) as in prior years which, among other things, authorizes discretionary appropriations for contract support costs. The agreement does not include statutory language carried in prior year appropriations bills, which limited the amount available in any given fiscal year for the payment of contract support costs, nor does it include the proposal put forth in the Administration's fiscal year 2014 budget request that would place a cap on the contract support cost amounts available for each tribal contract or compact. That proposal was developed without tribal consultation and the Committees heard from numerous Tribes voicing their strong opposition.

Instead, the question of contract support cost amounts to be paid from within the fiscal year 2014 appropriation is remanded back to the agencies to resolve, while the underlying contradictions in current law remain to be addressed by the House and Senate committees of jurisdiction. Until such matters are resolved, the House and Senate Committees on Appropriations are in the untenable position of appropriating discretionary funds for the payment of any legally obligated contract support costs.

Typically obligations of this nature are addressed through mandatory spending, but in this case since they fall under discretionary spending, they have the potential to impact all other programs funded under the Interior and Environment Appropriations bill, including other equally important tribal programs. The Committees therefore direct the Department of the Interior and the Department of Health and Human Services to consult with the Tribes and work with the House and Senate committees of jurisdiction, the Office of Management and Budget, and the Committees on Appropriations to formulate long-term accounting, budget, and legislative strategies to address the situation. In the Committees' view, each Department's solution should consider a standardized approach that streamlines the contract negotiation process, provides consistent and clear cost categories, and ensures efficient and timely cost documentation for the Departments and the Tribes. Within 120 days of enactment of this Act, the Departments shall develop work plans and announce consultation with Tribes on this issue.

The Department of the Interior is directed to submit an operating plan to the Committees within 30 days of enactment of this Act displaying funding allocations to the activity level. The plan should consider the ability of the offices and bureaus overseen by the Assistant Secretary-Indian Affairs to accommodate the streamlining reduction proposed in the fiscal year 2014 budget considering the progress made thus far, while ensuring adequate administrative support at the national and regional level for administrative functions.

Bureau of Indian Affairs and Bureau of Indian Education

Operation of Indian Programs

FY 2013 Enacted $2,367,700,000
FY 2013 Post Sequester $2,243,891,000
FY 2014 Requested $2,183,744,000
FY 2014 Enacted $2,378,763,000

Welfare Assistance
FY 2014 Requested $74,809,000
FY 2014 Enacted $74,809,000

Forward Funded Education
FY 2014 Requested $596,234,000
FY 2014 Enacted $591,234,000

No-year Funding for Housing Improvement, Road Maintenance, etc.
FY 2014 Requested $34,803,000
FY 2014 Enacted $41,900,000

Contract Support Costs

Contract Support
FY 2014 Requested $230,000,000
FY 2014 Enacted $ ---

Indian Self-Determination Fund
FY 2014 Requested $1,000,000
FY 2014 Enacted $ ---

Construction

Education Construction
FY 2014 Requested $52,285,000
FY 2014 Enacted $55,285,000

Public Safety and Justice Construction
FY 2014 Requested $11,306,000
FY 2014 Enacted $11,306,000

Resources Management Construction
FY 2014 Requested $32,759,000
FY 2014 Enacted $32,759,000

General Administration Construction
FY 2014 Requested $10,774,000
FY 2014 Enacted $10,774,000

Indian Land and Water Claim Settlements and Miscellaneous Payments to Indians

Indian Land and Water Claim Settlements and Miscellaneous Payments to Indians
FY 2014 Requested $35,655,000
FY 2014 Enacted $35,655,000

Indian Guaranteed Loan Program Account

Indian Guaranteed Loan Program Account
FY 2014 Requested $5,018,000
FY 2014 Enacted $5,018,000

We Quote Below Language from the Joint Explanatory Statement:

Indian Self-Determination Fund. – The agreement includes funding for this program in the two-year appropriations, as opposed to the no-year appropriation as was done in prior years.

Housing Improvement Program. – The agreement includes $8,000,000 to partially restore the proposed cut to the program.

Trust- Real Estate Services. – The Committees expect the Bureau of Indian Affairs to Support the Klamath Basin Restoration Agreement.

Education. – The bill provides $591,234,000 for forward-funded education but does not include funding for the proposed turnaround schools pilot project.

The Committees are concerned that management challenges within the Department, the Bureau of Indian Affairs, the Bureau of Indian Education (collectively, "Indian Affairs"), as identified in a September 2013 report by the Government Accountability Office (GAO-13-774), may impact the overall success of the students in the system. Although the Committees are encouraged that Indian Affairs concurred with the GAO's recommendations and that a full-time director of the Bureau of Indian Education is in place after a vacancy of more than a year, the Committees expect the Secretary to oversee the implementation of these management reforms. Indian Affairs underwent an administrative realignment in in October 2013, but failed to keep the Committees apprised of its implementation. The Committees direct the Department to submit a report on this recent implementation within 30 days of the enactment of this Act.

The bill retains language preventing the Bureau of Indian Education from funding new schools, including charter schools. The Committees remain willing to consider any proposal that will help more students graduate and succeed without spreading already limited appropriations among more schools. Alternative education organizations and Tribes are encouraged to work together to take advantage of the flexibilities in curricula that the Bureau's tribal grant school model offers.

The Committees continue to support the Johnson O'Malley program, including the need for up-to-date student counts and a full time coordinator. The Bureau is directed to conduct an accurate student count in fiscal year 2014 and publish the results before the end of the fiscal year.

The Committees are aware that during the school year 2013-14 the Bureau of Indian Education will conduct an internal review of early education programs as well as the Family and Children Education (FACE) program in order to explore ways to provide more services to additional children. The Committees expect the results of this review to be reflected in the fiscal year 2016 budget request.

Indian Employment, Training and Related Services. – The Committees remain concerned that an agreement has not been reached between Tribes and the Administration concerning the future management of the Public Law 102-477 program. Language in the explanatory statement accompanying Division E of Conference Report 112-331 established a framework for resolving this dispute. While significant efforts were made by the Public Law 102-477 Working Group, the parties appear to be at an impasse. Accordingly, within 60 days of enactment of this Act, the Bureau of Indian Affairs shall submit a report to the House and Senate Committees on Appropriations describing the current status of the negotiations, listing those items that have been mutually agreed to and those that that remain unresolved, and outlining the path that will be taken to move the process forward in the months ahead.

Spirit Lake Social Services. – The Bureau is directed to report to the House and Senate committees of jurisdiction on the progress of its efforts and the adequacy of child placement and judicial review by the Tribe and the Bureau. The Secretary is expected to take all necessary steps to ensure that children at the Spirit Lake Reservation are placed in safe and secure homes.

Public Safety and Justice – For the purpose of addressing the needs of American Indian youth in custody at tribal detention centers operated or administered by the Bureau of Indian Affairs, the Committee considers educational services to juveniles in custody to be allowable costs for detention/corrections program funding.

Office of Indian Energy and Economic Development. – The Office is urged to consult with Tribes about improving and increasing the use of the one-stop-shop model for expediting energy development on tribal lands, and to utilize Public Law 93-638 and similar authorizations where possible.

Indian Arts and Crafts Board. – Funding for the Indian Arts and Crafts Board is retained within the Office of the Secretary rather than transferred to the Bureau as requested. The Committees are told that the transfer could likely improve the efficiency and effectiveness of enforcement of the Indian Arts and Crafts Act of 1990 and other program activities. However, the Committees remain concerned about the lack of consultation with the Board and ask that the Department evaluate this issue and report to the Congress in the fiscal year 2015 budget request.

Construction

The bill provides $110,124,000 for Construction. In addition to the funding allocation table at the end of this explanatory statement, the agreement includes the following instructions:

Education. – The agreement includes $55,285,000, of which $954,000 is for design costs within replacement school construction, $3,818,000 is for employee housing repair, and $50,513,000 is for facilities improvement and repair.

Significant health and safety hazards exist at Indian educational facilities across the country, including the Bug-O-Nay-Ge-Shig School of the Leech Lake Band of Ojibwe. The Bureau is urged to continue to work with Tribes to repair and replace substandard educational facilities.

Public Safety and Justice. – The Committees continue to encourage the Bureau to consider establishing regional detention centers at new or existing facilities, such as the Shoshone-Bannock Tribes’ Justice Center, as it works to combat the crime problem in Indian Country.

Indian Health Service

Indian Health Services
FY 2013 Enacted $3,914,599,000
FY 2013 Post Sequester $3,712,378,000
FY 2014 Request $3,982,498,000 (includes $477.5 million for CSC which was proposed to be placed in a separate account)
FY 2014 Enacted $3,982,842,000

Bill language provides $36 million for the loan repayment program and $878,575,000 for Referred/Purchase care (formerly called Contract Health Care) of which $51.5 million is for the Indian Catastrophic Health Emergency Fund.

Indian Health Facilities
FY 2013 Enacted $441,605,000
FY 2013 Post-Sequester $418,569,000
FY 2014 Request $448,139,000
FY 2014 Enacted $451,673,000

Maintenance and Improvement
FY 2014 Request $53,721,000
FY 2014 Enacted $53,614,000

Sanitation Facilities Construction
FY 2014 Request $79,582,000
FY 2014 Enacted $79,423,000

Health Care Facilities Construction
FY 2014 Request $85,048,000
FY 2014 Enacted $85,048,000

The Administration's health care facilities construction request was for Kayenta Health Center ($57 million); San Carlos Health Center ($12.5 million); and Southern California Regional Youth Treatment Center in Hemet ($15.5 million).

Facilities and Environmental Health Support
FY 2014 Request $207,206,000
FY 2014 Enacted $211,051,000

Equipment
FY 2014 Request $22,582,000
FY 2014 Enacted $22,537,000

Also under the Facilities account is bill language providing $2.7 million for purchase of ambulances (funds can come from the Facilities or the Services account); $500,000 for the IHS to purchase TRANSAM equipment from the Department of Defense for IHS and tribal facilities; and $500,000 for a fund for the demolition of federal buildings.

Staffing of New Facilities. The Joint Explanatory Statement states that the bill provides funding for staffing of new and expanded health care facilities. Funds are limited to facilities funded through the Health Care Facilities Construction Priority System or the Joint Venture construction program. While the Statement does not specify the amounts, the Administration's request was for funding the following new facilities: Norton Sound Regional Hospital in Nome; Chickasaw Nation Health Clinic in Ardmore, OK; Cherokee National Health Center in Vinta, OK; Chickasaw Nation Health Clinic in Tishomingo, OK; Southcentral Foundation Valley Primary Care Center in Wasilla, AK; Tanana Chiefs Conference Health Center in Fairbanks, AK; Copper River Health Clinic in Tazlina, AK; Kenaitze Dena'ina Health Clinic in Kenai, AK; Samuel Simmonds Hospital in Barrow, AK; and San Carlos Health Center in AZ.

Dental Health. An unspecified amount of funding is included for an early childhood caries initiative which would include working with BIE schools to bring dentists and hygienists into those schools. The IHS is encouraged to complete making its dental records electronic and to "explore establishing a centralized credentialing system to address workforce needs similar to those of the Departments of Defense and Veterans Affairs, to consider a pilot program for the credentialing of dentists, and to propose funding for fiscal year 2015."

Urban Indian Health. The Explanatory Statement expresses support for urban Indian health grants.

Health Care for Native Veterans. The Explanatory Statement asks the Department of Veterans Affairs and the IHS to implement recommendations made by the Government Accountability Office regarding the implementation of the VA-IHS Memorandum of Understanding and to report to the appropriations committees with an update by March 1, 2014.

LEGISLATIVE PROVISIONS

As mentioned above, the bill does not contain an aggregate cap for contract support costs as has been in past appropriations statutes. It does, consistent, with the Interior appropriations acts for FYs 1999-2013, attempt to limit the ability of the IHS and BIA to fund past-year shortfalls in contract support funding from remaining unobligated balances for those fiscal years (section 406). This provision has been included in the appropriations act for many years and has not precluded recovery on past-year CSC claims.
Sec. 406. Notwithstanding any other provision of law, amounts appropriated to or otherwise designated in committee reports for the Bureau of Indian Affairs and the Indian Health Service by Public Laws 103-138, 103-332, 104-134, 104-208, 105-83, 105-277, 106-113, 106-291, 107-63, 108-7, 108-108, 108-447, 109-54, 109-289, division B and Continuing Appropriations Resolution, 2007 (division B of Public Law 109-289, as amended by Public Law 110-5 and 110-28), Public Laws 110-92, 110-116, 110-137, 110-149, 110-161, 110-329, 111-6, 111-8 and 111-88, 112-10, 112-74 and 113-6 for payments for contract support costs associated with self-determination or self-governance contracts, grants, compacts, or annual funding agreements with the Bureau of Indian Affairs or the Indian Health Service as funded by such Acts, are the total amounts available for fiscal years 1994 through 2014 for such purposes, except that for the Bureau of Indian Affairs, tribes and tribal organizations may use their tribal priority allocations for unmet contract support costs of ongoing contracts, grants, self-governance compacts or annual funding agreements.

Maintain the Restriction of IHS Funds in Alaska to Regional Native Organizations. The bill will continue the provision that provides that IHS funds for Alaska be made available only to regional Alaska Native health organizations (with some exceptions).
Sec. 424. (a) Notwithstanding any other provision of law and until October 1, 2013, the Indian Health Service may not disburse funds for the provision of health care services pursuant to Public Law 93-638 (25 U.S.C. 450 et. seq.) to any Alaska Native village or Alaska Native village corporation that is located within the area served by an Alaska Native regional health entity.
(b) Nothing in this section shall be construed to prohibit the disbursal of funds to any Alaska Native village or Alaska Native village corporation under any contract or compact entered into prior to May 1, 2006, or to prohibit the renewal of any such agreement.

(c) For the purpose of this section, Eastern Aleutian Tribes, Inc., the Council of Athabascan Tribal Governments, and the Native Village Eyak shall be treated as Alaska Native regional health entities to which funds may be disbursed under this section.

IDEA Data Collection Language. The bill will continue to authorize the BIA to collect data from the IHS and tribes regarding disabled children in order to assist with the implementation of the Individuals with Disabilities Education Act (IDEA):
Provided further, That the Bureau of Indian Affairs may collect from the Indian Health Service and tribes and tribal organizations operating health facilities pursuant to Public Law 93-638 such individually identifiable health information relating to disabled children as may be necessary for the purpose of carrying out its functions under the Individuals with Disabilities Education Act, (20 U.S.C. 1400, et. seq.)

Prohibition on Implementing Eligibility Regulations. The prohibition on the implementation of the eligibility regulations, published on September 16, 1987, will be continued.

Services for non-Indians. The provision that allows the IHS and tribal facilities to extend health care services to non-Indians, subject to charges, will be continued. The provision states:

Provided, In accordance with the provisions of the Indian Health Care Improvement Act, non-Indian patients may be extended health care at all tribally administered or Indian Health Service facilities, subject to charges, and the proceeds along with funds recovered under the Federal Medical Care Recovery Act (42 U.S.C. 2651-2653) shall be credited to the account of the facility providing the service and shall be available without fiscal year limitation.

Assessments by DHHS. The bill will continue the provision that has been in the Interior appropriations act for a number of years which provides that no IHS funds may be used for any assessments or charges by the Department of Health and Human Services "unless identified in the budget justification and provided in this Act, or approved by the House and Senate Committees on Appropriations through the reprogramming process."

Limitation on No-Bid Contracts. The bill will continue the provision regarding the use of no-bid contracts. The provision specifically exempts Indian Self-Determination agreements and reads:

Sec. 412. None of the funds appropriated or otherwise made available by this Act to executive branch agencies may be used to enter into any Federal contract unless such contract is entered into in accordance with the requirements of the Chapter 33 of title 41 United States or chapter 137 of title 10, United States Code, and the Federal Acquisition Regulations, unless:

(1) Federal law specifically authorizes a contract to be entered into without regard for these requirements, including formula grants for States, or federally recognized Indian tribes; or

(2) such contract is authorized by the Indian Self-Determination and Education and Assistance Act (Public Law 93-638, 25 U.S.C. 450 et seq., as amended) or by any other Federal laws that specifically authorize a contract within an Indian tribe as defined in section 4(e) of that Act (25 U.S.C. 450b(e)); or

(3) Such contract was awarded prior to the date of enactment of this Act.

Please let us know if we may provide additional information regarding FY 2014 Indian Affairs and Indian Health Service appropriations.

# # #

Inquiries may be directed to:
Karen Funk (kfunk@hobbsstraus.com)
Moriah O'Brien (mobrien@hobbsstraus.com)

Available Documents for Download ( any referenced attachments are included in download )


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