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                                                       Calendar No. 188
109th Congress                                                   Report
                                 SENATE
 1st Session                                                    109-118

======================================================================

 
AMENDING THE INDIAN SELF DETERMINATION AND EDUCATION ASSISTANCE ACT TO 
   MODIFY PROVISIONS RELATING TO THE NATIONAL FUND FOR EXCELLENCE IN 
                       AMERICAN INDIAN EDUCATION

                                _______
                                

                 July 29, 2005.--Ordered to be printed

                                _______
                                

    Mr. McCain, from the Committee on Indian Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 1231]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 1231), to amend the Indian Self-Determination and 
Education Assistance Act to modify provisions relating to the 
National Fund for Excellence in American Indian Education, 
having considered the same, reports favorably thereon with an 
amendment in the nature of a substitute and recommends that the 
bill (as amended) do pass.

                                Purpose

    The National Fund for Excellence in American Indian 
Education Amendments Act of 2005 (S. 1231) amends the Act to 
provide four key improvements which will assist the Fund in 
achieving self-sufficiency. First, this legislation provides 
initial seed money to the Fund for three fiscal years to 
facilitate operations.
    In addition, S. 1231 authorizes the Secretary to provide 
funding for operational costs of the Fund on a reimbursement 
basis. S. 1231 also authorizes the Board to appoint the Chief 
Operating Officer rather than mandating the Secretary of the 
Board serve as the Chief Operating Officer.
    Finally, S. 1231 will increase the administrative cost cap 
of ten percent currently in place to 20% for one year, 15% the 
following year and then decreasing back to 10% thereafter.

                               Background

    History of the Fund. In 2000, Congress amended the Act in 
Public Law 106-568 and authorized the Secretary of the Interior 
to establish the Fund as a federally-chartered nonprofit 
corporation to accept and administer charitable donations 
furthering educational opportunities of Indian children 
attending Bureau-funded schools. However, the formal 
establishment and commencement of operations for the Fund have 
not been without considerable difficulty.
    The Committee received testimony from the Acting Chair of 
the Fund that after two years, the Secretary hired an Executive 
Director to initiate establishment of the Fund and appointed a 
Board of Directors (Board). Another six months passed before 
the Board was fully installed and held its first meeting in 
March, 2003.
    However, in November, 2002, it was discovered that another 
private foundation held the legal rights to the official name 
of the Fund designated in Public Law 106-568. After 
negotiations for a name-sharing agreement failed between the 
Board and the private foundation, the Board sought 
Congressional action to remedy any potential conflicts over the 
name.
    In 2004, Congress enacted Public Law 108-267, the Omnibus 
Indian Advancement Act of 2000, which changed the original name 
of the Fund from the ``American Indian Education Foundation'' 
to the ``National Fund for Excellence in American Indian 
Education'', thereby eliminating the confusion and potential 
conflict.
    The Fund was established in July, 2004, when it officially 
incorporated, and received its tax-exempt status determination 
from the Internal Revenue Service in November, 2004, but has 
yet to become operational.
    Operational Limitations. The Committee received testimony 
that the Board faces significant hurdles in beginning 
operations. First, under Public Law 106-568, during the first 
five years after establishment, the Secretary is authorized to 
provide ``in-kind'' administrative support to the Fund and 
provide funds for travel expenses of the Board--all to be 
reimbursed to the Secretary by the Fund. After five years, the 
Secretary may provide onlyadministrative support if space is 
available and on a reimbursement basis.
    In 2004, the Board presented a cooperative agreement to the 
Assistant Secretary for Indian Affairs for a transfer of 
$450,000 to the Fund for administrative purposes. The Office of 
the Solicitor determined that any funding could be used only to 
reimburse travel expenses of the Board, not for operations. 
Since no funding was authorized for operational expenses, the 
Fund currently cannot become operational or begin such 
activities, such as marketing or soliciting donations, needed 
to become operational.
    In addition, the Secretary is authorized to transfer 
property donated for the ``advancement of the Indian race'' 
under 25 U.S.C. 451 to the Fund, subject to any restrictions on 
that donation imposed by the donor.
    In September, 2004, the Assistant Secretary for Indian 
Affairs identified approximately $1.6 million in donated funds 
that could be transferred to the Fund, of which $200,000 were 
restricted. Despite meeting with Department officials regarding 
the transfer, the Board has indicated that no funds have been 
transferred.

                      Summary of Major Provisions

    S. 1231 provides key amendments which will assist the Fund 
in achieving self-sufficiency.
    Initial Seed Money. This legislation provides initial seed 
money to the Fund for three fiscal years to facilitate 
operations. The Committee received testimony from the Acting 
Chair regarding the need for ``start-up'' funding. A review of 
other federal statutes establishing federally chartered 
foundations indicated that appropriations had been authorized 
in amounts ranging from $5 million to $25 million per year for 
a limited number of years. Thus, appropriations in the amount 
of $5 million per year for the first three fiscal years 
appeared to be a reasonable amount to assist the Fund in 
achieving self-sufficiency, particularly in the event the 
Secretary is unable to provide operational costs.
    Operational Costs. This legislation clarifies the 
activities for which funds may be provided to the Board. S. 
1231 authorizes the Secretary to provide funding for 
operational costs of the Fund on a reimbursement basis. The 
Committee received testimony recommending elimination of the 
reimbursement requirement. The Committee believes this 
requirement is appropriate, however, it encourages the 
Secretary to provide sufficient accommodations in seeking 
reimbursement which would not unduly burden the Fund nor harm 
direct educational services to Indian children.
    Chief Operating Officer. S. 1231 also authorizes the Board 
to appoint the Chief Operating Officer rather than mandating 
the Secretary of the Board serve as the Chief Operating 
Officer. The Committee received testimony that this designation 
has not proven to be the most efficient means of organizing the 
Fund. The Committee has determined that the Board should 
appoint this position so that the Board can focus on more 
important functions rather than being mired in the daily tasks 
of the Fund's operations.
    Administrative Costs. This legislation will add a provision 
increasing the administrative cost cap currently in place and 
set at 10% to 20% for one year, 15% the following year and then 
decreasing back to 10% thereafter. The Committee received 
testimony that more flexibility in the administrative cost cap 
was needed to fulfill the purposes of the Fund--especially with 
the obstacles the Fund faced in trying to begin operations.
    While the Acting Chair testified that such administrative 
caps were not imposed on other similar foundations such as the 
National Parks Foundation and the Fish & Wildlife Foundation, 
the Committee believed limitations were still appropriate. The 
primary purpose of the Fund is to support Indian children, 
through programs, services or other activities which are not 
considered administrative costs. By maintaining such limits, 
the Committee is assured that the emphasis of the Fund will 
remain focused on serving Indian children.

                          Legislative History

    The bill, S. 1231, was introduced on June 14, 2005, by 
Senator McCain for himself and Senator Dorgan and was referred 
to the Senate Committee on Indian Affairs.
    An oversight hearing on Indian education was held on June 
14, 2005, at which testimony was received by the Fundon the 
provisions of S. 1231. The Fund expressed support for the bill and most 
of the Fund's recommendations are addressed in the substitute amendment 
to S. 1231.

            Committee Recommendation and Tabulation of Vote

    In an open business session on June 29, 2005, the Committee 
considered a substitute amendment proposed by Senator McCain. 
By a unanimous vote, the Committee ordered the substitute 
amendment favorably reported to the full Senate with the 
recommendation that the bill do pass.

                      Section-by-Section Analysis


Section 1. Short title

    The Act may be cited as the ``National Fund for Excellence 
in American Indian Education Amendments Act of 2005''.

Section 2. National fund for excellence in American Indian education

    This section authorizes the Board to appoint the Chief 
Operating Officer and authorizes seed money for the Fund for 
fiscal years 2007 through 2009. This section also increases the 
administrative cost caps from 10% to 20% for the first fiscal 
year after the Fund has been in operations for one year, then 
15% for the second fiscal year and then 10% thereafter.

Section 3. Administrative services and support

    This section authorizes the Secretary of the Interior to 
provide funding for the operating costs of the Fund on a 
reimbursement basis.

                   Cost and Budgetary Considerations

    The cost estimate for S. 1231, as evaluated by the 
Congressional Budget Office, is set forth below:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 11, 2005.
Hon. John McCain,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1231, the National 
Fund for Excellence in American Indian Education Amendments Act 
of 2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Justin 
Humphrey.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

S. 1231--National Fund for Excellence in American Indian Education 
        Amendments Act of 2005

    Summary: S. 1231 would amend the Indian Self-Determination 
and Education Assistance Act to authorize funding and modify 
provisions for the National Fund for Excellence in American 
Indian Education (National Fund). The bill would authorize the 
appropriation of $5 million for each of fiscal years 2007 
through 2009 for National Fund operations. Enacting the bill 
would not affect direct spending or revenues.
    The Congress originally authorized the National Fund in 
2001 to advance and promote educational opportunities for 
American Indian students enrolled in Bureau of Indian Affairs 
(BIA) schools. Current funding comes from personal property 
gifts and private donations.
    S. 1231 contains no intergovernmental or private-sector 
mandates as defined by the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1231 is shown in the following table. 
CBO estimates that implementing this bill would cost $15 
million over the 2007-2010 period. This estimate assumes that 
S. 1231 will be enacted near the start of fiscal year 2006 and 
that the authorized amounts will be appropriated for fiscal 
year 2007 and each subsequent fiscal year. The estimated 
outlays reflect historical spending patterns for the other 
programs in BIA. These costs would fall within budget function 
500 (education, employment, training, and social services).

------------------------------------------------------------------------
                                      By fiscal year, in millions of
                                                 dollars--
                                 ---------------------------------------
                                   2006    2007    2008    2009    2010
------------------------------------------------------------------------
              CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level.............       0       5       5       5       0
Estimated Outlays...............       0       4       5       5       2
------------------------------------------------------------------------

    Intergovernmental and private-sector impact: S. 1231 
contains no intergovernmental or private-sector mandates as 
defined by UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal Costs: Justin Humphrey. 
Impact on State, Local, and Tribal Governments: Lisa Ramirez-
Branum. Impact on the Private Sector: Jennifer Doleac.
    Estimate Approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires each report accompanying a bill to evaluate the 
regulatory and paperwork impact to be incurred in carrying out 
the bill. The Committee believes that S. 1231 will have minimal 
regulatory or paperwork impact.

                        Executive Communications

    The Committee has not received official statements on S. 
1231 from the Department of the Interior.

                        Changes in Existing Law

    In compliance with subsection 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes the following 
changes in existing law made by the bill, S. 1231, as ordered 
reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new matter is printed in 
italic, existing law in which no change is proposed is shown in 
roman):

                                 AN ACT

[To promote maximum Indian participation in the government and 
            education of the Indian people; to provide for the 
            full participation of Indian tribes in certain 
            programs and services conducted by the Federal 
            Government for Indians and to encourage the 
            development of the human resources of the Indian 
            people; to establish and carry out a national 
            Indian education program; to encourage the 
            establishment of local Indian school control; to 
            train professionals in Indian education; and to 
            establish an Indian youth intern program]

                           PUBLIC LAW 93-638

    An Act to promote maximum Indian participation in the 
government and education of the Indian people; to provide for 
the full participation of Indian tribes in certain programs and 
services conducted by the Federal Government for Indians and to 
encourage the development of the human resources of the Indian 
people; to establish and carry out a national Indian education 
program; to encourage the establishment of local Indian school 
control; to train professionals in Indian education; and to 
establish an Indian youth intern program.
    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,

           *       *       *       *       *       *       *


   TITLE V--NATIONAL FUND FOR EXCELLENCE IN AMERICAN INDIAN EDUCATION

SECTION 501. NATIONAL FUND FOR EXCELLENCE IN AMERICAN INDIAN EDUCATION

           *       *       *       *       *       *       *


    [(g) Officers.--
          (1) In general.--The officers of the Foundation shall 
        be a secretary, elected from among the members of the 
        Board, and any other officers provided for in the 
        constitution and bylaws of the Foundation.
          (2) Secretary of foundation.--The secretary shall 
        serve, at the direction of the Board, as its chief 
        operating officer and shall be knowledgeable and 
        experienced in matters relating to education in general 
        and education of American Indians in particular.]
    (g) Officers.--
          (1) In general.--The officers of the Foundation shall 
        be--
                  (A) a chief operating officer, to be 
                appointed in accordance with paragraph (2); and
                  (B) any other officers, to be appointed or 
                elected in accordance with the constitution and 
                bylaws of the Foundation.
          (2) Chief operating officer.--
                  (A) Appointment.--The Board shall appoint a 
                chief operating officer to the Foundation.
                  (B) Requirements.--The chief operating 
                officer of the Foundation shall--
                          (i) demonstrate experience and 
                        knowledge in matters relating to--
                                  (I) education, in general; 
                                and
                                  (II) education of Indians, in 
                                particular; and
                          (ii) serve at the direction of the 
                        Board;

           *       *       *       *       *       *       *

    (l) Restrictions.--
          [(1) Limitation on spending.--Beginning with the 
        fiscal year following the first full fiscal year during 
        which the Foundation is in operation, the 
        administrative costs of the Foundation may not exceed 
        10 percent of the sum of--
                  [(A) the amounts transferred to the 
                Foundation Under subsection (m) during the 
                preceding fiscal year; and
                  [(B) donations received from private sources 
                during the preceding fiscal year.]
          (1) Limitation on spending.--For each fiscal year 
        following the first fiscal year during which the 
        Foundation is in operation, the administrative costs of 
        the Foundation shall not exceed--
                  (A) for the first fiscal year, an amount 
                equal to 20 percent of the sum of--
                          (i) the amounts transferred to the 
                        Foundation under subsection (m) during 
                        the preceding fiscal year; and
                          (ii) donations received from private 
                        sources during the preceding fiscal 
                        year;
                  (B) for the second fiscal year, an amount 
                equal to 15 percent of the sum of--
                          (i) the amounts transferred to the 
                        Foundation under subsection (m) during 
                        the preceding fiscal year; and
                          (ii) donations received from private 
                        sources during the preceding fiscal 
                        year; and
                  (C) for the third fiscal year, and each 
                fiscal year thereafter, an amount equal to 10 
                percent of the sum of--
                          (i) the amounts transferred to the 
                        Foundation under subsection (m) during 
                        the preceding fiscal year; and
                          (ii) donations received from private 
                        sources during the preceding fiscal 
                        year.'';

           *       *       *       *       *       *       *

    (o) Authorization of Appropriations.--
          (1) In general.--There is authorized to be 
        appropriated to carry out this section $5,000,000 for 
        each of fiscal years 2007 through 2009.
          (2) Effect on other funds.--Funds appropriated under 
        paragraph (1) shall not reduce the amount of funds 
        available for any other program relating to Indian 
        education.

SECTION 502. ADMINISTRATIVE SERVICES AND SUPPORT

    (a) Provision of Support by Secretary.--

           *       *       *       *       *       *       *

          [(2) may provide funds to reimburse the travel 
        expenses of the members of the Board under section 
        458bbb of this title; and]
          (2) may provide funds--
                  (A) to pay the operating costs of the 
                Foundation; and
                  (B) to reimburse travel expenses of a member 
                of the Board under section 501; and

           *       *       *       *       *       *       *

    [(b) Reimbursements.--]
    (b) Reimbursements.--
    * * * and the operating and travel expenses described in 
subsection (a)(2).

           *       *       *       *       *       *       *