House Natural Resources Subcommittee on Indian, Insular, and Alaska Native Affairs Hearing
H.R.329, the "Indian Employment, Training and Related Services Consolidation Act of 2015"; H.R.521, to provide for the conveyance of certain property to the
Chairman Young, Ranking Member Ruiz and Members of the Subcommittee, thank you for the opportunity to submit this statement for the record from the
The Department has testified on similar legislation, most recently in
Public Law 102-477 is a self-determination statute that allows tribes greater control over delivery of social welfare and workforce development services. It permits eligible federally-recognized tribes and Alaska Native organizations to consolidate into a single plan employment- and training-related, formula-funded federal grant monies from eleven different programs within our Department's
Public Law 102-477 designated the Department to be the lead agency to administer this program. The Department is proud, that in FY 2014,
H.R. 329 establishes a dispute resolution mechanism to address agency denials of requests for waivers of "applicable statutory, regulatory, or administrative requirements, or of Federal agency policies or procedures necessary to enable the
We generally support the aim of this provision. These waivers can give tribes the flexibility needed to address urgent problems. We suggest some changes to make the provision more workable. First, 90 days may not be a sufficient amount of time for proper deliberation and collaboration among our federal partners to decide the merits of a tribal waiver request under H.R. 329. This bill appears to offer a workable approach to addressing waiver disputes, particularly since it reserves to the affected agency the ultimate decision with respect to whether a waiver is granted. Second, we suggest that the Waiver Authority under H.R. 329 be clarified. It currently indicates that "the head of each affected Federal agency shall waive any applicable statutory, regulatory, or administrative requirement, regulation, policy, or procedure promulgated by the agency that has been identified by the parties," under subsection (b). While the waiver provisions in Sec. 8 of H.R. 329 identify review and discretion for the request for a waiver, the language identified in subsection (d) mandates the waiver of "any applicable statutory, regulatory, or administrative requirement, regulation, policy, or procedure promulgated by the agency that has been identified by the parties." The Department recommends changing "shall" to "may," to authorize discretion in the review and deliberation of requests for waivers under Sec. 8 of H.R. 329.
Third, the deemed approved provisions place the Department in the position of substituting our discretion for that of other Federal agencies. While our Department welcomes further streamlining of the plan approval process, the Department cannot support giving the Department control over other federal agencies' disposition of funds. What has made the Public Law 102-477 program successful is that it requires cooperation between agencies. This provision undermines that spirit of cooperation by allowing one Department to override the authority and legitimate concerns of co-equal Federal partners.
Finally, while we appreciate the bill's specification of the Department's role as lead agency under the 477 Program, we must oppose the provision contained in Section 11 that would require the Department to distribute funds to tribal grantees "not later than 45 days after the date of receipt of the funds from the appropriate Federal department or agency." As a practical matter, there are steps that must be completed by tribes before the Department can distribute funds from other agencies.
The Department cannot disburse these funds until we obtain a signed grant amendment from the grantee's tribal chairman. This exchange can take time and is often dependent upon the tribal chairman's availability. Also, almost fifty percent of the 477 Program grantees operate under self-governance Annual Funding Agreements, which creates an additional step in the process of disbursing program funds since the BIA is required to prepare a Funding Document to transfer these funds to the
It is important that the Department and our federal partners coordinate closely on the multi-step transfer processes that occur before funds are received by our agency. Further, it is important to quickly disburse program funds because the Department knows that, in many instances, such funds are life sustaining. Section 13 of H.R. 329 would require 477 Program federal partners to transfer funds to the Department "not later than 30 days after the date of apportionment." The Department would like to discuss this section with the affected federal partners and whether this requirement would unreasonably burden them if H.R. 329 were enacted into law.
With respect to the bill's requirement that the Department establish a memorandum of understanding with other Federal agencies to set up an annual meeting of 477 Program tribal participants and federal partners and develop a single report format, we must point out that this kind of collegial and deliberative process is already occurring under authority of the
Good afternoon, Chairman Young, Ranking Member Ruiz, and Members of the Subcommittee. My name is
The provisions in H.R. 812 are similar to language in trust reform legislation from previous Congresses. As discussed in more detail below, it is the Department's view that considerable changes to the language of H.R. 812 would be necessary for it to materially improve
Background
Since the passage of the American Indian Trust Fund Management Reform Act of 1994 (1994 Reform Act), the Department has made great strides in trust reform.
The past two decades have demonstrated the wisdom of
Perhaps the best measure of OST's success is a milestone that was first achieved two years ago: for FY 2013 the Department received an unmodified opinion -- a clean audit -- for the
OST continued that record of success by earning another clean audit for FY 2014. During the time period from the first audit to the latest, the Tribal and IIM trust balances increased from
The following list of trust reform accomplishments, achieved under the supervision of OST, is extensive, but by no means exhaustive:
BENEFICIARY RELATIONSHIP
Field Operations has:
* Improved technical and managerial support through employment of five Regional Trust Administrators with extensive backgrounds in trust management.
* Introduced 50+ Fiduciary Trust Officers to serve as the primary point-of-contact for beneficiaries on trust matters, allowing OST to proactively coordinate trust asset management activities with the BIA, tribes and individual beneficiaries in their respective geographic areas.
* Implemented the Trust Beneficiary Call Center (TBCC), stemming from the
* Successfully conducted regular outreach activities, including collaborating with law schools and legal service providers for estate planning.
* Established financial education skills training program for wealth building, beneficiary empowerment and financial planning.
* The Trust Beneficiary Call Center (TBCC) and OST field offices have responded to an extraordinary large volume of calls and "walk-ins" regarding the Cobell settlement payments. From
* Received a total of
* Received
* Made tribal account and Statements of Performance available via the Internet. OST is also piloting the Strataweb product to provide online banking functions to individual beneficiaries.
* Led the promotion and support of self-governance and self-determination efforts related to real estate appraisals, beneficiary services and withdrawal of tribal funds.
ACCOUNTING
* Automated and centralized cumbersome, lengthy, and disparate collection systems into a one-day receipt, deposit, and distribution process.
* Implemented SEI's Trust 3000 system, off-the-shelf software used by11 of the 20 largest U.S. bank holding companies.
* Completed comprehensive daily cash reconciliations with Treasury (approximately 40,000 financial transactions reconciled daily, totaling approximately 10 million annually).
* Received favorable audit results of its monthly and annual financial statements.
* Set up and implemented a tax compliance process, issuing over 15,700 tax forms annually.
* Established a central lockbox for leaseholders on
* Disbursed an average of over
* Implemented Pay.gov, where payers can submit payments online.
* Implemented a receivables system, in conjunction with Indian Affairs, which tracks anticipated funds due.
* Receipted and distributed over
* Issued approximately
* Issued over 870,000 beneficiary statements per year, including ownership encumbrance information and improved transaction descriptions.
* Established a dedicated Probate processing team; distributing funds and closing approximately 8,100 estate accounts annually.
* Established the American Indian Records Repository (AIRR) facility in
* Issued regular Statements of Performance that includes financial transactions, encumbrance data and ownership data. The Explanation of Payments (EOP) for Oil and Gas activity that OST issues conform to the Federal Oil and Gas Royalty Management of 1982 (FOGRMA).
* Updated trust program records in accordance with
* Performed periodic records assessments across all of
TRIBAL TRUST LITIGATION
* Supported the
* Continued work on two major cases, and over 40 other cases in which OST has and continues to provide subject matter experts, supporting documentation and expert, fact, and 30(b)(6) witnesses.
TRUST EXAMINATIONS
* Completed over 390 trust examinations and over 460 records assessments for the period
* Required BIA Agencies, Tribes and others to complete, and implement, Corrective Action Plans to address legal, regulatory and process deficiencies.
The cost for these improvements is relatively small. OST's FY16 budget request of
The Department can appreciate that some in Indian Country want to get back to "business as usual" now that the system is working well and the Cobell litigation is settled, but we need to ensure that any proposed reforms do not inadvertently undo the progress achieved, and do, in fact, provide genuine value and a responsible return on investment.
H.R. 812, the Indian Trust Asset Reform Act
As discussed above, OST has shown strong performance and significantly improved the trust system. OST's success story also illustrates the value of a separate organization dedicated solely to the accounting of tribal and individual trust assets, ensuring that principles of fiduciary management of trust assets are upheld. The Department does not support the termination of OST.
H.R. 812 makes significant restructuring and reorganization of Indian Affairs without taking into consideration budgetary cost implications that could result as part of its implementation. Nor does it provide assurances that the independence of OST, which enabled it to make significant improvements to the fiduciary and accountability standards for managing tribal and individual
Additional analysis and the Department's position on specific provisions of H.R. 812 follow.
TITLE I--RECOGNITION OF TRUST RESPONSIBILITY
This title sets forth congressional findings regarding
TITLE II--
This title would establish a demonstration project to further the authority and flexibility for tribes to manage their trust assets outside of the Department. To participate in the project, tribes would submit to the Secretary an
The Department has long supported increased tribal self-governance and self-determination, and we are also supportive of program authority, similar to that found in the HEARTH Act, enacted several years ago, that would provide tribes with flexibility to manage their resources.
The Department strongly supports tribes' right to self-determination and self-governance.
The Department has consistently maintained that there should be a linkage between control of a federal program and the liability for that program. The entity most responsible for managing a program should also bear the responsibility for mismanagement. Section 205 of Title II breaks that linkage by maintaining the government's full liability.
The Department has developed and implemented sophisticated trust IT systems and processes to improve the administration of trust assets. It is our intention to allow tribes to utilize these systems and related benefits, including access to nationwide trust data, which is essential in providing services to tribal members. Without an unambiguous waiver of federal liability, the Department will be forced to develop additional computer systems to interface with what could be incompatible individual tribal IT systems and incur additional administrative support costs that are likely to increase and develop gaps in the data for both the federal and tribal systems.
One of the chief causes of the
In addition, it is more common than not for individual
Title II also requires deeper consideration of attendant issues, such as how the Department would take back program responsibilities if it were required to re-assume a program, or the kind of monitoring that must be conducted to ensure a tribe is adhering to the commitments in its plan. Any incompatibility in systems or practices would stress our ability to effectively monitor or reassume the management of assets or funds if a tribe relinquished its self-management role.
While we strongly support self-governance and self-determination, it is necessary to have a management framework that provides clarity and certainty to the federal government, tribes and individual Indians.
TITLE III--RESTRUCTURING OFFICE OF THE SPECIAL TRUSTEE
Title III of the legislation would, among other things, restructure the BIA, the office of the Assistant Secretary - Indian Affairs and OST, and create an Under Secretary for Indian Affairs within the Department.
As drafted, the bill mandates that OST submit a report to
Any proposed change in an organizational structure must be specific and must be carefully evaluated in order to be successful. In our view, H.R. 812, as written, lacks sufficient detail to ensure that individual beneficiaries and tribes will retain the level of care they currently receive under the Department's trust management structure.
Further, hard lessons learned from experiences of the past two decades, including the Cobell lawsuit and dozens of tribal lawsuits, compel the Department to recommend that any restructuring of
* OST is not special as an office within the Department, but its function is special because it is fiduciary. The Court in the Cobell case reaffirmed this numerous times: a fiduciary responsibility requires a higher level of care - and the best way to ensure that higher level of care at the present time is to segregate and protect those duties. Fiduciary duties related to accounting for Individual and tribal trust assets must be segregated from other
* The systemic improvements implemented by the Department should be institutionalized by creating a management structure that ensures adherence to best practices, a focus on beneficiaries and a commitment to continual reform.
* Any proposed new structure for managing the
* Finally, before engaging in any restructuring, whether initiated by
We welcome the opportunity to work directly with congressional staff to develop language to address these issues in a careful manner that will thoughtfully consider the impacts it will have on both our tribal and individual
CONCLUSION
The new structures and business practices put in place at the Department have greatly improved the management of the
Read this original document at: http://naturalresources.house.gov/UploadedFiles/LoganTestimony4_14.pdf
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