Facebook Twitter Email
SEPTEMBER 11, 2000

Legislators are considering a bill that would allow tribal governments to issue bonds to repair, improve, and construct schools, many of which are in poor condition throughout Indian Country.

The Bureau of Indian Affairs estimates it has a construction and repair backlog of over $1 billion. More than half of the 185 schools managed by tribes or the Bureau have exceeded their useful life of 30 years, according to the BIA.

Introduced by Senators Tim Johnson (D-South Dakota), Jeff Bingaman (D-N.Mex), Tom Daschle (D-South Dakota), and Daniel Inouye (D-Hawaii) in May, the Indian School Construction Act hopes to change the state of schools in Indian Country. The bill would allow tribal governments to engage in more creative financing efforts to improve educational facilities on their lands.

The practice of issuing bonds for school construction is already common in public schools throughout the country. A school district offers a bond to investors and promises to pay them interest on it as well as return their investment, or principal, at or before the end of the bond's maturity.

Bond holders are also usually exempt from paying federal taxes and sometimes, state taxes, on their investment.

Tribes, however, have had difficulty being able to obtain financing for non-gaming operations since some institutions are wary of conducting business with tribes. Given the reality that Congress will never be able to appropriate enough money nor have enough time to fix all tribal schools, tribes have been searching for ways to finance school construction efforts on their own.

The Senate Committee on Indian Affairs heard testimony on the bill last week. William Mehojah, Director, of the Office of Indian Education Programs, said the BIA supports the concept of the bill, but had questions on parts of the language of the bill, as well as the amount of money available for tribes to use to issue bonds.

The bill would authorize $30 million for an escrow account that tribes could use, under current market conditions, to turn into $75 million. Mehojah said the account should be larger.

Jeffrey Seidel, president of an investment banking consulting firm in Minnesota, has worked with tribes in trying to obtain financing. He said the bill is the best solution available, given the backlog and the financial market.

But he also said tribes, nor the federal government, will not be obligated to return either the interest or principal to potential investors. Nevertheless, Seidel believes institutions in the private sector will want to invest in tribal school bonds because the escrow account as well as the the type of investments will provide security.

Frank Rapp, Oglala Lakota from Pine Ridge in South Dakota and president of an organization of schools in North and South Dakota, said the time for the United States to live up to its treaty obligations and provide adequate schools for Indian children is now.

"We expect our children to appreciate and be thankful for their education," said Rapp, "What should they be thankful for? A building that passes no fire codes, health inspection, or safety inspections? A building that only has one window and door on one side? A desk that is surrounded by bowls and buckets to collect water dipping from the ceiling? A playground they share with snakes, rodents, and occasionally, a prairie fire?"

Get the Bill:
The Indian School Construction Act. (S.2580)

Relevant Links:
The Office of Indian Education Programs, Bureau of Indian Affairs - www.oiep.bia.edu
The Senate Committee on Indian Affairs - www.senate.gov/~scia