Thanks to audits conducted annually, BIE knows that 24 schools have misspent $13.8 million in federal Indian School Equalization Program funding on unallowable expenses. Yet the agency has done nothing to follow-up on the evidence, either by conducting second audits to determine the weaknesses of the schools’ financial controls, or to sanction the schools and tribes that operate them for the malfeasance. For example, the BIE found out four years ago that one school gave a no-interest loan to a local school district using $1.2 million in federal ISEP funding, yet has done little to either recover the money or “ensure that its funds are not misused again”. BIE has also done little to sanction or increase oversight over another school, which had to materially restate its financial reports by $1.9 million over three years.

This isn’t exactly shocking because BIE doesn’t actually have a financial monitoring system in the first place. Written procedures to oversee school spending are non-existent. The monitoring schools with shaky financial controls are rarely written down. BIE can’t even answer conclusively whether it even conducts site visits of schools caught misspending money. It is little wonder why BIE didn’t notice that one of its schools failed to submit audit reports for the past three years — until GAO analysts alerted the agency to the oversight. [BIE still hasn't followed up with either sanctions or auditing.] Even when the agency does notice schools and tribes engaging in shoddy financial management practices, it does little to stop them. So a tribe can divert $900,000 in federal funding that was supposed to be used to serve kids in a school’s special ed ghetto into a savings account and likely get away with it.

As a result, much of the $402 million in ISEP funding spent by the federal government on BIE schools (along with millions more in Title I and other federal dollars) is likely being misspent. This can be seen in the fact that BIE spends $15,391 per pupil a year (excluding capital expenditures and debt service), 56 percent more than the average traditional district. Certainly some of those higher costs can be attribute to the high transportation costs tribal schools, which are located on reservations in rural communities, have to bear; the average BIE school spends $1,014 per pupil on transportation versus the $444 per pupil spent by traditional districts. But in light of BIE’s lax oversight and the shoddy financial controls of tribe-operated schools, the costs are also a result of wasteful spending.

At the heart of BIE’s failures in financial monitoring is Interior’s longstanding mismanagement of the agency itself.