Tribal Self-governance Demonstration Feasibility Study. Demonstration Design

03/01/2003

While Title V of the Act contains the basic elements that define self-governance in the view of tribes and the Congress, there are significant differences between the IHS model and a demonstration that includes non-IHS programs that will vary significantly in objectives, services, beneficiaries, and administrative requirements. These differences argue for modifying the Title V model. For example, most of the programs recommended for inclusion in a demonstration have statutorily derived formulas for awarding funds, making it impractical to adopt the Title V approach to negotiating funding agreements. The need to address program identity and accountability issues raised by stakeholders also argues for something other than the Title V model.

Therefore, rather than relying on Title V, a specific set of demonstration design recommendations (not to be confused with specific recommendations that follow on the ability of tribes to redesign programs during the course of a demonstration) have been developed and are recommended as the basis for a demonstration. If Congress chooses to create a self-governance demonstration, these design elements should be included in the authorizing legislation.

Definition- Indian Tribe
Recommendation: For the purpose of a demonstration project, it is recommended that the definition of an Indian tribe include federally-recognized Indian tribes or, where authorized by an Indian tribe, an inter-tribal consortium or a tribal organization acting on its behalf.

Selection of Participating Tribes
Recommendation: A demonstration should be limited to up to 50 projects composed of tribes or inter-tribal consortia that either have established compact and funding agreements under Title V of the Act or tribes or consortia that have successfully carried out a planning grant (or in lieu of a planning grant completed a pre-award survey) and meet specified financial stability requirements.

A demonstration project should be open to tribes or tribal consortia that have established compact and funding agreements under the terms of Title V of the Act. These tribes or consortia have already demonstrated program and financial management capacity. For those tribes or consortia not meeting this threshold, eligibility should be established by successful completion of a planning grant (or in lieu of a planning grant completed a pre-award survey) and demonstration of 3 fiscal years of financial stability and management as evidenced by having no uncorrected significant and material audit exceptions under Federal grants or contracts.

In addition, a demonstration should be limited to 50 projects to maintain costs and the manageability of a demonstration and attendant evaluation. The Secretary should be authorized to establish criteria for the selection of participating tribes or consortia in the event that more than 50 tribes or consortia apply for a demonstration. It should be noted that a demonstration will not affect the ability of non-participating tribes or consortia to apply for and operate HHS programs, including the programs under a demonstration.

Planning and Negotiation Grants
Recommendation: Planning grants should be authorized to assist tribes in preparing self-governance proposals. Grants should be limited to tribes with a demonstrated need.

As discussed in the cost section of the study, most tribes do not have sufficient resources to prepare and negotiate self-governance agreements. Prior models have allowed one-time grants for that purpose. Similarly, it is recommended that planning and negotiation grants (at $70,000) be authorized for up to 50 tribes or tribal consortia that want to participate in a self-governance demonstration project. Since some tribes may already administer programs and have experience with self-governance, grants should be limited to those tribes demonstrating a need for planning technical assistance.

Application Process
Recommendation: The Secretary should be authorized to consolidate existing program application requirements into a single application that tribes would submit for proposing participation in a demonstration project.

Currently, programs recommended for inclusion under a demonstration project have separate and often extensive application requirements. While administrative simplification is integral to self-governance and a single application should be part of a demonstration project, implementation of the single application approach will require abolishing separate application processes and information requirements that now exist in the targeted programs. While some of these processes and requirements may not be critical or overlap, others will remain essential to defining the scope of the programs, services, functions, or activities to be carried out under a demonstration; e.g., information related to definitions of service areas, client eligibility, programs objectives and assurances required in program legislation. Therefore, it is important that the Secretary be given specific authority to develop a consolidated process and format for submission of compacts, including the ability to require continued use of critical elements of the existing application process and information requirements from the targeted programs.

Compacts
Recommendation: The Secretary should be authorized to negotiate, to the extent permitted under current law, and enter into a written compact with each Indian tribe participating in a demonstration.

The compact should set forth the terms of the agreement that apply while the agreement is in effect and modifications made only by mutual agreement of the parties.

Funding Agreements
Recommendation: The Secretary should be authorized to negotiate, to the extent permitted under current law, and enter into a written funding agreement with each participating Indian tribe.

With the exception of Head Start, the Older Americans Act, and the SAMHSA Targeted Capacity Expansion program, the programs targeted for a demonstration have statutorily mandated formulas for calculating award amounts, including provisions for indirect costs. In the case of Head Start, awards are based on a negotiated amount. In the case of the Older Americans Act, the Administration on Aging uses a population-based formula (although, as stated, not statutorily mandated). Therefore, it will be important for legislation authorizing a demonstration to recognize that award amounts under funding agreements will largely be based on formulas or other statutory requirements of the authorizing legislation of the programs and will not be subject to negotiation or change unless Congress revises existing formulas. Specific legislative authority will also be needed to allow tribes to move funds between programs included in their demonstrations. With these caveats regarding award amounts, the overall recommendations is that agreements should be mutually negotiated between the Secretary and the tribe.

Indirect Costs/Matching
Recommendation: Current statutory requirements relating to indirect cost should be maintained.

The issue of indirect cost is discussed in detail under the "findings" section of the study. Removing statutory caps on administrative cost that affect recovery of indirect cost would significantly increase the cost of a demonstration project (or potentially result in a reduction of services) and create a situation where State programs would be treated differently than tribes. It is also possible that administrative efficiencies of a demonstration will allow tribes to realize cost savings that will reduce or eliminate any burden caps impose. For these reasons, the recommendation is to maintain current indirect cost caps where applicable, while allowing the consolidation of total allowable indirect costs from each program into a single indirect cost pool to cover administrative costs of the compact and funding agreement.

For similar reasons, a change in current law with respect to program matching requirements also is not recommended, although some of the target programs allow the Secretary to waive matching requirements.

Redesign and Consolidation
Recommendation: Tribes should be provided the authority to redesign and consolidate programs during the course of the demonstration project, subject to limits imposed by non-waivable statutory or regulatory provisions of the individual programs.

Redesign and consolidation authority is a principal tenet and inseparable from the definition of self-government. In practice, this authority provides tribes with the flexibility to change programs and reallocate funds among programs to meet specific tribal needs under a self-government agreement within the boundaries of controlling program legislation.

Also, it should be noted that, since a demonstration largely will be administered within existing legal requirements, redesign and consolidation opportunities will be limited by the authority to waive statutory requirements.

Waivers
Recommendation 1: Program waivers, to the extent provided by statute and regulation, should be available to tribes throughout the demonstration project.

The ability to redesign and consolidate programs and activities depends, in part, on the use of regulatory waiver authority. The Secretary's authority to grant waivers is spelled out in current law and regulations applicable to the targeted programs. Current authority is seen as sufficient and no additional waiver authority is requested for a demonstration.

Recommendation 2: Waiver requests should be limited to the term of a demonstration and subject to withdrawal if the Secretary determines compliance with the waived provision is essential to program integrity. If withdrawal is contemplated, tribes should be provided due process that would include timely notification and the ability to propose a corrective action plan.

Since waivers may have a substantial impact on program beneficiaries, the ability of the Secretary to monitor the use of waivers and to withdraw waivers is an important element under a demonstration project when there is clear evidence that continuation of a waiver will result in substantial harm to the beneficiaries. Tribes should have administrative appeal rights with the tribe bearing the burden of proof and the standard of review being whether the decision withdrawing the waiver was arbitrary or capricious.

Withdrawal and Termination
Recommendation: A demonstration should defer to current law regarding withdrawal and termination for the targeted programs.

Withdrawal occurs when a tribe decides not to receive funding and the Federal government funds another grantee in its place to conduct the program. Termination occurs when the Federal government terminates tribal control of programs for cause. Current statutory and regulatory provisions address withdrawal and termination and should be maintained for the demonstration. It is important to note that States or other entities would assume services should withdrawal and termination occur, since these programs are not delivered directly by HHS.

Final Offers - Appeals
Recommendation: While tribes should have the ability to appeal rejections of final offers for compacts and funding agreements, these appeals should be limited in scope.

To evaluate a time-limited demonstration, it is important that the project and agreements be in place quickly and stability of the program be established. This will not be the case if appeals delay the start of one or more components of a demonstration, such as putting in place funding agreements or reporting systems. Therefore, it is recommended that a demonstration project provide for a limited appeals process in cases where the department and tribes are unable to reach agreement on the terms of self-governance agreements. The legal framework for the process should include the issuance by the Department of a written statement giving the reasons for disapproval of a final tribal offer and the right of a tribe to appeal the decision to the Intra-Departmental Council on Native American Affairs, a body of senior department officials responsible for advising the Secretary on tribal matters in the Department. The burden of proof on appeal would be borne by the tribe. An "arbitrary or capricious" standard would be used. The decision of the Council should be final and not subject to judicial review.

Conflict of Interest
Recommendation: A conflict of interest prohibition should be established for tribes participating in a demonstration project.

Tribes should be required to have internal measures in place to prevent conflict of interest in the administration of the programs under a demonstration project.

Cost Principles
Recommendation: Cost principles found in applicable Office of Management and Budget (OMB) circulars and made applicable to recipients of financial assistance by various Federal regulations must be made applicable to tribes under a demonstration project.

Audit Exceptions
Recommendation: Current audit procedures under OMB Circular A-133 regarding resolution of audit exceptions must be made applicable to a demonstration project.

Record Keeping
Recommendation: Current Federal recording keeping requirements applicable to grantees should apply to tribes participating in a demonstration.

Savings
Recommendation: To the extent that compacts and funding agreements reduce the administrative or other responsibilities of the Secretary through program consolidation with respect to the operation of programs under a demonstration project, the savings should be made available to the tribes.

While it is not expected that savings to HHS will accrue because of a demonstration, any savings that can be identified should be available to the tribes.

Transfer of Funds
Recommendation: To facilitate coordination of programs under a demonstration, the Secretary should be authorized to establish a common funding cycle for programs under a demonstration project.

Currently, some of the programs targeted for a demonstration have different award and funding cycles. Manageability of a demonstration would be greatly improved by allowing all programs under a demonstration to begin on the same cycle. This would also enhance coordination of program reporting and evaluation of a demonstration project.

Prompt Payment Act
Recommendation: Chapter 39 of title 31, United States Code must be made applicable to the transfer of funds due under a compact or funding agreement in a demonstration project.

This would ensure that the interest penalty and other provisions of the Prompt Payment Act would apply to the transfer of funds under a funding agreement in a demonstration project.

Carryover of Funds
Recommendation: All funds awarded under a funding agreement should remain available until expended.

Current law requires federal approval for tribes to carry over funds from one fiscal year to the next. Again, a core element of self-governance is tribal discretion and control over the management of funds. This recommendation will devolve federal control over this level of decision making while enhancing tribal flexibility.

Construction
Recommendation: The provisions of Title V, Sections 509 and 510 relating to construction should be made applicable to a demonstration, subject to retention of a federal interest in the property.

This recommendation will ease the administrative burden on tribes, consolidating current construction rules that vary from program to program into a single, uniform set of construction rules that tribes currently use under the IHS self-governance program. This promotes the goal of administrative simplification. This recommendation also would allow tribes, under the consolidation and redesign authority to consolidate and use funds from the programs under a compact or funding agreement for construction purposes to the extent that the use of funds for construction is allowable under the authorizing legislation of the programs included in the demonstration project. In this respect, it should be noted that several of the programs currently prohibit the use of funds for construction and would require changes to the legislation authorizing the programs (see Appendix E), if funds from these programs were to be available for construction. The legislation authorizing a demonstration project should specify that there is a federal interest in facilities constructed using funds provided under a demonstration project in order to avoid future controversy on the matter.

Changes in Funding
Recommendation: Changes in tribal funding for any program or activity under a demonstration should be in accordance with existing statutory authority and nothing in a demonstration should be construed to change that authority.

Clearly, nothing in a demonstration should affect the level of funding a tribe should otherwise receive under the statutes and regulations governing the programs in a demonstration. It is recommended that the authorization for a demonstration include language stating that participation in a demonstration will not change the amount of funding a tribe would receive for any program compared to the amount it would receive from that program outside of a demonstration.

Length of Demonstration
Recommendation: A demonstration should be authorized for five years.

A five-year demonstration should provide adequate time to implement and evaluate a demonstration project.

Project Administration
Recommendation: A single program office in HHS should manage a demonstration project.

Given the number and complexity of programs and tribes that could participate in a demonstration, a single point of contact and coordination of demonstration project operations is essential to success. Specific legislative authority would be needed for a single office to be able to provide consolidated awards, which are currently made by the separate HHS programs recommended for inclusion in the demonstration, to tribes participating in a demonstration. Therefore, the Secretary should be authorized to establish a single point of contact for management of a demonstration project. The Secretary should also have the authority to establish policy, negotiate and make awards, and evaluate a demonstration.