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Tribe repaying $3.6 million in misused funds

ROCKY BOY'S INDIAN RESERVATION - The Chippewa Cree Tribe misused $4 million in federal funds in the last few years and is repaying the debt to its own tribal programs, a U.S. Department of Interior official said.

”The tribe has spent money that was (Office of Self-Governance and Self-Determination) funds for purposes that were not governed by the agreement,“ Office of Self-Governance director Bill Sinclair said in a recent interview. His office oversees 88 funding agreements with tribes and Alaska Native entities that have taken over the management of government programs.

Sinclair said he has no legal right to find out how the money was used, only to know whether it was used for programs his office funds.

Tribal officials said the money was used in place of other grants when those grants were delayed. In one case, the tribe said the U.S. Bureau of Indian Affairs authorized a $1 million fire suppression program, but, after more than a year, has not reimbursed the tribe for that expenditure.



In the course of the federal fiscal year, tribes are allowed to use the funds in advance of receiving grants for other programs but they are supposed to pay the money back during the year, Sinclair added.

Over the course of 2002 and 2003, the tribe used self-governance funds in that way but did not pay all the money back to self-governance programs, tribal chief of staff Richard Sangrey said.

”Once a year is over, everything should level out, but it didn't,“ Sangrey said.

Three tribal leaders met with Sinclair in Washington, D.C., this week to update him on the tribe's progress in repaying the money and adopting better accounting practices.

Rocky Boy tribal council chairman John ”Chance“ Houle said at a council meeting Thursday that Sinclair praised the tribe's efforts.
”That lifted about a 400- or 500-pound ball off my shoulders to hear we were in the right direction,“ Houle said.

Sinclair said other tribes have been misused self-governance money, but few as seriously as Rocky Boy.

The problem was discovered in the tribe's 2002 audit and again in 2003, he said. The recently completed 2004 audit showed a gain on the debt, leaving it at $3.6 million, before the Office of Self-Governance required a repayment plan.

It was being caught year by year,“ Sinclair said. ”The Office of Self-Governance was waiting for the tribe to correct it. Finally we said, ‘You now must pay this amount back.'“

Had the tribe not agreed to the repayment plan, the Office of Self-Governance could have referred the debt to the U.S. Treasury, which would have subtracted the amount the tribe owed from federally appropriated funds, Sinclair said.

One other entity, an Alaska village, is also on a repayment plan, he said. Nationwide, the Office of Self-Governance has 88 agreements to fund tribally managed programs on Indian reservations and in Alaska, Sinclair said. It funds the programs self-governing tribes have taken over from the U.S. Bureau of Indian Affairs. At Rocky Boy, compacted programs include natural resources, law and order, roads and housing, among others.

Rather than pay back the Office of Self-Governance, Sinclair and the tribe agreed that Rocky Boy will make five annual payments of $800,000 that will be added to funds available to the tribe for compacted programs.

The tribe can pay the money back to itself because the money it misused was set aside just for Rocky Boy. No other tribes lost money because of Rocky Boy, Sinclair said.

He added that the tribe may have shortchanged some of its own compacted programs to support other projects, but he said his office has no legal right to know how the money was used.



”We wanted the situation corrected, but we didn't want to inflict pain on the tribe and especially on tribal members,“ Sinclair said of the repayment plan.



This summer the tribe delivered its first $800,000 check, Sinclair said. That will be added to the Office of Self-Governance funds the tribe receives in the 2005 fiscal year and can be used toward any compacted programs the tribe chooses, he said.



For 2005, the Office of Self-Governance agreed to pay the tribe $6.62 million to operate compacted programs.



Sangrey said other programs are funded through federal Administration for Native Americans grants and other state and federal grants. The tribe also supplements some programs with its general fund.



The tribe's five annual payments will be paid from the tribal trust, Sangrey said. Trust money accumulates from oil and gas revenues and grazing leases.



Sangrey said the payments won't reduce funding for other programs.



The tribe recently hired an accounting firm that has worked with other tribes with similar problems, Houle said. The West Coast firm, Moss-Adams LLC, will return Oct. 24 to continue its study of the tribe's accounting practices.



Aside from the yearly repayment, the tribe will face other consequences as a result of the debt. Since the repayment plan was put into place, the tribe has been required to draw on its Office of Self-Governance funding monthly, rather than receiving the funding in annual lump sums, losing the interest it would otherwise have been able to accumulate and use as it wanted.



Also, the tribe's repayment plan identifies it as a ”high-risk“ tribe, Sinclair said. ”One implication is that other federal departments will look at that and take it into consideration when making determinations about funding,“ he added.



Council members and staffers say they haven't noticed that the tribe has had more difficulty getting funding. Instead, they are concerned about preventing the problem from happening again.



One source of the problem is that the state and federal governments operate on different fiscal calendars, and some grants are done by the calendar year, Sangrey said. Sometimes the tribe spends money in advance of receiving a grant, and the delay in receiving the grant can mean the money is not paid back to tribal programs in the same federal fiscal year.



Delays can be caused by disagreement in Congress, among other things, he added.



Tribal council member Raymond ”Jake“ Parker said some tribal programs are consistently difficult to fund. In the case of law and order, the tribe generally has to carry the costs of the department for three or four months before it receives the funding for it.



”Because of the restructuring we've done, we're (starting) to get a hold on it,“ Sangrey said.



Rather than carry tribal programs with advance funding from other areas, the tribe has started to take out bank loans for programs if funding hasn't come through yet, Sangrey said. When the program is funded, the tribe pays back the loan.



Though there are drawbacks - the tribe must pay interest on the loans - the system is much simpler for accounting purposes, Sangrey said.



Houle said he hopes to have a clean audit for the 2005 fiscal year, which he said will be his ”report card.“