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                                                   Calendar No. 295

115th Congress}                                            { Report
                                 SENATE
 2d Session   }                                            { 115-201
 
======================================================================
 
    TO DIRECT THE SECRETARY OF THE INTERIOR TO CONDUCT AN ACCURATE 
  COMPREHENSIVE STUDENT COUNT FOR THE PURPOSES OF CALCULATING FORMULA 
ALLOCATIONS FOR PROGRAMS UNDER THE JOHNSON-O'MALLEY ACT, AND FOR OTHER 
                                PURPOSES

                                _______
                                

                January 24, 2018.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 943]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 943) to direct the Secretary of the Interior to 
conduct an accurate comprehensive student count for the 
purposes of calculating formula allocations for programs under 
the Johnson-O'Malley Act, and for other purposes, reports 
favorably thereon with an amendment in the nature of a 
substitute and recommends the bill, as amended, do pass.

                                Purpose

    The bill, S. 943, would amend the Act of April 16, 1934, 
commonly known as the Johnson-O'Malley Act, to direct the 
Secretary of the Interior (Secretary), in coordination with the 
Bureau of Indian Education (BIE) Director, to take steps to 
ensure the full participation of all qualified and eligible 
Indian students in the Johnson-O'Malley (JOM) program. The 
bill, S. 943, is intended to clarify current contracting and 
reporting practices and address the challenges in serving 
eligible students and obtaining accurate student counts.

                               Background

    The JOM program awards supplemental assistance through 
contracts to eligible entities to address the unique cultural 
and academic needs of Indian students in public schools, where 
more than 90% of all Indian students attend.
    Originally authorized by the Act of April 16 1934 to allow 
``the Secretary of the Interior to arrange with States or 
Territories for the education, medical attention, relief of 
distress, and social welfare of Indians,''\1\ In 1985, Congress 
modified the scope of the JOM program to its current form 
(i.e., contracts for supplementary education) through passage 
of the Act of December 19 1985.\2\ Ten years later and upon 
further instruction from Congress to modify the JOM program,\3\ 
the Bureau of Indian Affairs (BIA) transferred allocations for 
tribal contractors into the tribal priority allocations (TPA) 
base funding category.
---------------------------------------------------------------------------
    \1\Act of April 6, 1934, Pub. L. No. 73-167, 25 U.S.C. 5342 (1934).
    \2\Act of December 19, 1985, Pub. L. No. 99-190, Sec. 101(d), 99 
Stat. 1185, 1235 (1985).
    \3\S. Rep, No, 103-294 (1994).; H. Rep. No. 103-551 (1994).; H. 
Rep. No. 103-740 (1994).
---------------------------------------------------------------------------
    Federal law prohibits changes to a tribe's base funding\4\ 
and the FY1995 TPA transfer caused BIA to suspend updating 
student counts for the JOM program. At the time, the student 
count was approximately 271,884 eligible Indian students. 
According to the 2010 U.S. Census, there were 798,486 qualified 
American Indian and Alaska Native students in the JOM-eligible 
age group. This discrepancy between FY1995 and the 2010 U.S. 
Census student counts indicates that a substantial number of 
Indian students are not being served by the JOM program.
---------------------------------------------------------------------------
    \4\25 U.S.C. Sec. 450j-1(b)(2).
---------------------------------------------------------------------------
    Through the appropriations process, Congress directed BIE 
to update the JOM student count in FY2012 and FY2014.\5\ BIE 
attempted to conduct student counts to update the number of 
eligible Indian students but the agency was unable to verify, 
or make official, any of these counts.\6\ As a result, the 
student count from FY1995 remains in place. Congress previously 
noted concerns (in Appropriations Committee and Conference 
reports) about the persistent inaccuracies of eligible Indian 
student counts and continues to direct the BIE to update the 
student count.\7\
---------------------------------------------------------------------------
    \5\S. 2417, the Tribal Veterans Health Care Enhancement Act, and 
S.2842, the Johnson O'Malley Supplemental Indian Education Program 
Modernization Act Before the S. Comm. on Indian Affairs, 114th Cong. 2 
(2016) (statement of Michael S. Black, Director, Bureau of Indian 
Affairs, U.S. Dep't of the Interior).
    \6\S. 943, S. 1223, and S. 1285 Before the S. Comm. on Indian 
Affairs, 114th Cong. 1 (2017) (statement of Tony Dearman, Director, 
Bureau of Indian Education, U.S. Dep't of the Interior).
    \7\H.R. Rep. No. 112-151 at 42-43 (2012); H.R. Rep. No. 113-551 at 
45 (2014); H.R. Rep. No. 114-170 at 39 (2015).
---------------------------------------------------------------------------

                          Need for Legislation

    The JOM student count is important because it is used by 
the BIA to provide its yearly funding distribution to eligible 
entities in JOM programs. The President of the National 
Johnson-O'Malley Association, Carla Mann, testified that the 
FY1995 student count freeze detrimentally impacts the funding 
level of the program and, in turn, limits the scope of services 
available to the children participating in JOM-funded 
projects.\8\ Despite Congressional instruction to the 
Department of the Interior to update the JOM student count, BIE 
has not conducted an accurate, verifiable, and current student 
count nor have they produced a plan to assist the substantial 
number of eligible Indian students who are not served by the 
program. Stronger Congressional action appears necessary to 
resolve this specific issue.
---------------------------------------------------------------------------
    \8\S. 943, S. 1223, and S. 1285 Before the S. Comm. on Indian 
Affairs, 114th Cong. 1 (2017) (statement of Carla Mann, President, 
National Johnson-O'Malley Association).
---------------------------------------------------------------------------
    Additionally, during the Committee hearing on July 12, 
2017, BIE Director Tony Dearman testified that current law does 
not require JOM contractors to submit student count data to the 
BIE.\9\ Director Dearman cited the lack in data submission 
requirement as a primary contributor to the BIE's failed 
efforts to update and verify the JOM student count in FY2012 
and FY2014.
---------------------------------------------------------------------------
    \9\Id supra 8.
---------------------------------------------------------------------------

                          Legislative History

    On April 26, 2017, Senator Heitkamp with Senators Daines 
and Lankford, introduced S. 943, the Johnson-O'Malley 
Supplemental Indian Education Program Modernization Act. The 
Committee held a legislative hearing on S. 943 on July 12, 
2017. BIE Director, Tony Dearman, testified at this legislative 
hearing and expressed support for legislation that would 
address the gap in contractor reporting requirements as a means 
to improve BIE's ability to update the JOM student count. Ms. 
Carla Mann, in her capacity as President of the National 
Johnson O'Malley Association, testified in support of S. 943. 
On October 4, 2017, the Committee held a duly called business 
meeting to consider S. 943.
    One amendment in the nature of a substitute was filed by 
Senator Heitkamp. The amendment incorporates the following 
changes:
     Clarifies only one process for both new and 
existing contractors to determine the number of eligible Indian 
students. This modification is intended to establish a less 
burdensome process for the agency and eligible entities. The 
amendment makes conforming changes throughout the bill to 
accommodate the shift to one process.
     Authorizes the use of a ratable reductions in 
appropriations exception to the hold harmless provision of the 
bill to account for any potential reduction in funding during a 
fiscal year. This provision will ensure that, if there is a 
reduction in funding to JOM, all, not just some, existing 
contracting parties receive funding at a ratably reduced 
amount.
     Changes the sunset of the Hold Harmless provision 
from an undefined term to 4 years after the date of enactment 
of the Act, and provides that no contracting party will receive 
more than a 10% decrease in funding per eligible Indian student 
within one fiscal year at a time at the conclusion of that four 
year hold harmless period.
     Changes the due date for the report from the 
Comptroller General required under Section 2 from 2 years after 
the date of enactment of the Act to 18 months after the final 
report from the Secretary regarding the initial determination 
of the number of eligible Indian students served or potentially 
served by each contracting party. The Government Accountability 
Office requested this change.
     All other changes within the amendment were made 
to be conforming and technical in nature.
    The Committee passed S. 943, as amended, by voice vote and 
ordered the bill, as amended, to be favorably reported. At this 
time, there is no House companion bill to S. 943.
    114th Congress. On April 21, 2016, Senator Heitkamp with 
Senators Daines and Lankford, introduced S. 2842, the Johnson-
O'Malley Supplemental Indian Education Program Modernization 
Act. On May 11, 2016, the Committee held a legislative hearing 
on S. 2842. Michael Black, Director of the Bureau of Indian 
Affairs, and Carla Mann, President of the National Johnson-
O'Malley Association testified at the legislative hearing. Ms. 
Mann's testimony supported S. 2842. No further action was taken 
on S. 2842.
    Representative McCollum introduced H.R. 4390, the Johnson-
O'Malley Supplemental Indian Education Program Modernization 
Act, with Representatives Cole, Huffman, and D. Young as 
cosponsors on January 13, 2016. Representative Napolitano 
joined as cosponsor on February 11, 2016. Representative 
Ellison joined as cosponsor on February 23, 2016. 
Representatives Moore and Grijalva joined as cosponsors on 
February 29, 2016. The bill, H.R. 4390, was referred to the 
Committee on Education and the Workforce of the House of 
Representatives, where no further action was taken on H.R. 
4390.
    113th Congress. Representative Cole with Representatives 
McCollum and D. Young, introduced H.R. 4328, the Johnson-
O'Malley Supplemental Indian Education Program Modernization 
Act, on March 27, 2014. Representative Huffman was added as a 
cosponsor on May 22, 2014. The bill, H.R. 4328, was referred to 
the Committee on Education and the Workforce of the House of 
Representatives where no further action was taken on the bill. 
There was no Senate companion bill to H.R. 4328.

                      Section-by-Section Analysis


Section 1. Short title

    This Act may be cited as the ``Johnson-O'Malley 
Supplemental Indian Education Program Modernization Act''.

Sec. 2. Indian Education Program student count update

    This section amends the Act of April 16, 1934 (25 U.S.C. 
452 et seq.) (commonly known as the ``Johnson-O'Malley Act'') 
by adding the following at the end:

``SEC. 7. COMPUTATION OF STUDENT COUNT.''

            (a) Definitions
    The term `contracting party' means an entity that has a 
contract through a program authorized under this Act.
    The term `eligible entity' means an entity that is eligible 
to apply for a contract for a supplemental or operational 
support program under this Act.
    The term `existing contracting party' means an eligible 
entity with a contract under this Act that is in effect on the 
date of enactment of the JOM Modernization Act.
    The term `JOM Modernization Act' means the Johnson-O'Malley 
Supplemental Indian Education Program Modernization Act.
    The term `new contracting party' means an entity that 
enters into a contract under this Act after the date of 
enactment of the JOM Modernization Act.
    The term `Secretary' means the Secretary of the Interior.
            (b) Determination of the number of eligible indian students
    This subsection describes the process for the Secretary, in 
consultation with eligible entities and current contracting 
parties, to make an initial determination of the number of 
eligible Indian students served or potentially served under the 
JOM program. The Secretary will publish a preliminary report on 
the initial determination and establish a 60-day comment period 
to gain feedback from eligible entities. The final report will 
be published not later than 120 days after concluding the 
comment period.
            (c) Contracting party student count reporting compliance
    Contracting parties shall submit to the Secretary an annual 
report describing the number of eligible Indian students served 
or potentially served by a contracting party. If a contracting 
party fails to submit a report, then it will not receive funds 
for the next fiscal year. The Secretary shall provide technical 
assistance and training on compliance with the reporting 
requirements to contracting parties.
            (d) Annual report
    The Secretary shall provide to Congress an annual program 
assessment including the most recent determination of the 
number of eligible Indian students served by each contracting 
party, recommendations on appropriate funding levels for the 
program based on such determination, and an assessment of the 
contracts under the JOM program.
            (e) Hold harmless
    Existing contractors shall be held harmless from funding 
decreases until funding for new contractors is equal to or 
greater than the amount that existing contracts received per 
eligible Indian student in the fiscal year before enactment. 
However, an existing contractor shall receive less funding if 
it fails to submit its student count report, violates the terms 
of the contract or has otherwise violated Federal law, or if 
the number of students served decreases below the numbers 
identified in the 1995 student count.
    If the funds available under the JOM program for a fiscal 
year are insufficient to pay the full amounts that all existing 
contracting parties are eligible to receive for the fiscal 
year, the Secretary shall ratably reduce those amounts for the 
fiscal year.
    This hold harmless provision will sunset four years after 
the date of enactment of the JOM Modernization Act, at which 
point no contracting party shall receive for a fiscal year more 
than a 10 percent decrease in funding per eligible Indian 
student from the previous fiscal year.
            (f) Funding allocation and reform
    The Secretary shall propose, in consultation with Indian 
tribes and contracting parties, a present day per student 
funding allocation that shall serve as a funding baseline for 
the JOM program.
    This subsection allows the Secretary to make 
recommendations to increase the amount of funding to equal to 
or greater than the amount of funds that were available for 
fiscal year 1995, which is when the most recent official and 
verified student count was conducted by BIA.
    This subsection provides for how funds should be allocated 
in fiscal years with an increase in program funding.
            (g) Increased geographical and tribal participation in the 
                    Johnson-O'Malley Supplementary Education Program
    To the maximum extent practicable, the Secretary shall 
consult with Indian tribes and contact State educational 
agencies and local educational agencies that have not 
previously entered into a JOM contract to determine the level 
of interest and to share information on the application 
process.
            (h) Rulemaking
    Not later than one year after enactment of the Act, the 
Secretary shall complete a rulemaking process to determine how 
the regulatory definition of `eligible Indian student' may be 
revised to clarify eligibility requirements, determine how the 
funding formula may be clarified and revised, and to otherwise 
modernize the program. The Secretary will then submit a report 
to Congress, not later than 30 days after the date the 
rulemaking is completed, on the results of such rulemaking and 
recommendations on implementation.
            (i) Student privacy
    The Secretary shall ensure that data is collected and each 
report is prepared in a manner that protects the rights of 
eligible Indian students under section 444 of the General 
Education Provisions Act (20 U.S.C. 1232g).
            (j) GAO report
    Not later than 18 months after the final report describing 
the initial determination of eligible Indian students is 
published, the Comptroller General shall conduct a review of 
the implementation of the amendment and submit the review to 
Congress.
            (l) Effect
    This subsection ensures that the amendment does not create 
a new program, duplicate programmatic activities, or replaces 
or diminishes the effect of regulations to carry out this Act 
unless expressly provided in the amendment.

                   Cost and Budgetary Considerations

    The following cost estimate, as provided by the 
Congressional Budget Office, dated November 13, 2017, was 
prepared for S. 943:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, November 13, 2017.
Hon. John Hoeven,
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. 943, the Johnson-
O'Malley Supplemental Indian Education Program Modernization 
Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Leah 
Koestner.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

S. 943--Johnson-O'Malley Supplemental Indian Education Program 
        Modernization Act

    Summary: S. 943 would amend the Johnson-O'Malley Act to 
require the Department of the Interior (DOI) to annually update 
its count of students who are eligible to be served by the 
Johnson-O'Malley (JOM) program. Under that program, DOI 
contracts with tribal organizations, states, and school 
districts to provide supplemental educational services for 
Indian students. Assuming appropriation of the estimated 
amounts, CBO estimates that implementing the bill would cost 
$13 million over the 2018-2022 period.
    Enacting S. 943 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    CBO estimates that enacting S. 943 would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    S. 943 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary effect of S. 943 is shown in the following table. The 
costs of this legislation fall within budget function 500 
(education, training, employment, and social services).

----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, in millions of dollars--
                                                              --------------------------------------------------
                                                                2018    2019    2020    2021    2022   2018-2022
----------------------------------------------------------------------------------------------------------------
                                 INCREASES IN SPENDING SUBJECT TO APPROPRIATION
 
Estimated Authorization Level................................       0       0       5       5       5         15
Estimated Outlays............................................       0       0       3       5       5         13
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: CBO assumes that S. 943 will be enacted 
before October 1, 2018, that the new student count would be 
implemented by 2020, and that the estimated amounts will be 
appropriated each year. Estimated outlays are based on 
historical spending patterns for the current program.
    The JOM program is permanently authorized to be 
appropriated such sums as are necessary; it received an 
appropriation of $14.8 million in fiscal year 2017. The current 
program's funding allocation is based on an official count from 
1995 of 271,884 eligible Indian students.
    S. 943 would direct the DOI to update the count of students 
who could be served by the JOM program and to ensure that the 
number of students is consistent with available data from the 
Census Bureau, the National Center for Education Statistics, 
and the Office of Indian Education. The bill would require JOM 
program contractors to submit annual reports to DOI, and would 
require DOI to update the student count annually on the basis 
of that information. S. 943 also would require DOI to propose a 
new per-pupil funding formula and allow the department to 
recommend legislation to increase the amount of funds available 
for each eligible student.
    CBO expects that the count of eligible students would be 
higher than the count from 1995; therefore, S. 943 would 
effectively increase the amount authorized to be appropriated 
for the JOM program. DOI conducted an unofficial count in 2014, 
which showed a 26 percent increase in the number of eligible 
students since the 1995 count. Because contractors were not 
required to participate in the 2014 count, and many did not, 
CBO believes that count underestimates the number of eligible 
students. Adjusting for that undercount, CBO estimates that the 
count conducted under this bill would be 30 percent higher than 
in 1995--about 80,000 additional students. CBO calculated per-
pupil spending by dividing the 2017 grant amount by the number 
of students in the 1995 count and then adjusting that amount, 
$54 per student in 2017, for expected inflation each year. CBO 
estimates that implementing the bill would cost $13 million 
over the 2018-2022 period and around $5 million each year 
thereafter (80,000 students times $56 per student in 2020).
    Finally S. 943 would require the Government Accountability 
Office to submit a report evaluating the bill's implementation. 
Based on the cost of similar studies, CBO estimates that 
completing that report would cost less than $500,000.
    Pay-As-You-Go considerations: None.
    Increase in long-term direct spending and deficits: CBO 
estimates that enacting S. 943 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2028.
    Mandates: S. 943 contains no intergovernmental or private-
sector mandates as defined in UMRA.
    Estimate prepared by: Federal costs: Leah Koestner; 
Mandates: Rachel Austin.
    Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.

               Regulatory and Paperwork 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 that would be incurred in 
carrying out the bill. The Committee believes that S. 943 will 
have minimal impact on regulatory or paperwork requirements.

                        Executive Communications

    The Committee has received no communications from the 
Executive Branch regarding S. 943.

                        Changes in Existing Law

    In accordance with Committee Rules, subsection 12 of rule 
XXVI of the Standing Rules of the Senate is waived. In the 
opinion of the Committee, it is necessary to dispense with 
subsection 12 of rule XXVI of the Standing Rules of the Senate 
to expedite the business of the Senate.

                                  [all]