GAO: Interior office lacks timetable for trust fund reforms

The Interior Department's office charged with overseeing the reform of Indian trust fund operations has failed to prepare a timetable for completing its work, the Government Accountability Office stated in a report released Monday.

The Office of the Special Trustee for American Indians has implemented several key trust fund management changes, but important decisions remain about the office's future, the report (GAO-07-104) concluded. The office's 2003 strategic plan did not include specifics on when reforms will be complete or a plan for what will happen once the changes are made, GAO said.

The report recommended that Interior provide Congress with these items. Post-reform plans should address the office's projected staffing levels and funding needs, GAO said.

GAO's findings come during the long-running Cobell v. Kempthorne litigation, in which a group of American Indians is seeking billions of dollars that it claims the department owes trust fund beneficiaries.

Geoffrey Rempel, an accountant with the plaintiffs, said the system used by the department now is worse than when the litigation was first filed more than 10 years ago.

The trustee office was established under the 1994 American Indian Trust Fund Management Reform Act to improve the handling of funds Interior holds in a trust for Indian tribes and individuals. The law directs Interior to develop an information system that connects the trust fund accounting system with land title records and asset management systems. All three are maintained by Interior's Bureau of Indian Affairs.

Most of the key reforms needed to develop the system should be complete by November 2007, officials with the oversight office told GAO. But the office predicted verification of data on leasing activity for Indian lands will not be finished until December 2009, according to the report.

Many of the trustee office's activities, including trust fund operations, trust records management and appraisal services, must continue even after reforms are complete, the report stated. If the office is closed, those responsibilities would have to be moved elsewhere, GAO said.

Interior officials plan to reduce the office's spending once reforms are completed, by terminating contracts, GAO said. But the workforce plan is needed to examine the expenditures and staffing levels for trust fund operations at that point, the report stated.

In an attempt to keep the size of its permanent staff to a minimum, the office has used contractors to perform many of its activities. In fiscal 2004 and fiscal 2005, it allocated $89.7 million to contracting, or nearly 21 percent of its appropriated funds.

According to GAO, about 66 percent of contracting dollars from these two fiscal years went to two firms. One company, Chickasaw Nation Industries, an Indian-owned small business, received more than $31 million. The other, SEI Investments, received $27.7 million.

The office has relied mostly on Interior's National Business Center to manage the contracts.

Interior officials agreed with GAO's recommendations. In a response to the report, Interior Assistant Secretary R. Thomas Weimer said the department expects to have a timetable by late June 2007 for finalizing the reforms.