Welfare Reform: Tribes Are Using TANF Flexibility To Establish	 
Their Own Programs (10-MAY-02, GAO-02-695T).			 
                                                                 
Under welfare reform, American Indian tribes have the option to  
run Temporary Assistance for Needy Families (TANF) programs	 
either alone or as part of a consortium of other tribes rather	 
than receiving benefits and services from state TANF programs.	 
Because of the difficult economic circumstances on many 	 
reservations, the law also gives tribal TANF programs more	 
flexibility to design their programs than it gives to states.	 
Tribes have used various strategies to stimulate economic	 
development; however, unemployment and poverty rates remain high 
on reservations, and prospects for economic growth are limited.  
Nationally, the number of American Indian families receiving TANF
assistance has declined significantly in recent years. On some	 
reservations, however, caseloads have remained the same or	 
increased. American Indians represent an increasing proportion of
the total TANF caseload in some states. To date, 172 tribes,	 
either alone or as part of a consortium, have used the act's	 
flexibility to design and administer their own TANF programs.	 
Tribes face challenges in implementing tribal TANF programs,	 
including a lack of (1) reliable data on the number of American  
Indian TANF recipients; (2) infrastructure support, such as	 
information systems; and (3) experience and expertise in	 
administering welfare programs. 				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-695T					        
    ACCNO:   A03308						        
  TITLE:     Welfare Reform: Tribes Are Using TANF Flexibility To     
Establish Their Own Programs					 
     DATE:   05/10/2002 
  SUBJECT:   Community development programs			 
	     Disadvantaged persons				 
	     Economic development				 
	     Native Americans					 
	     Program evaluation 				 
	     Public assistance programs 			 
	     Regional development programs			 
	     Welfare benefits					 
	     Welfare recipients 				 
	     Aid to Families with Dependent Children		 
	     Program						 
                                                                 
	     Temporary Assistance for Needy Families		 
	     Program						 
                                                                 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-02-695T
     
Testimony Before the Committee on Indian Affairs, U. S. Senate

United States General Accounting Office

GAO For Release on Delivery Expected at 10: 00 a. m. Friday, May 10, 2002
WELFARE REFORM

Tribes Are Using TANF Flexibility To Establish Their Own Programs

Statement of Cynthia M. Fagnoni, Managing Director Education, Workforce, and
Income Security Issues

GAO- 02- 695T

Page 1 GAO- 02- 695T

Mr. Chairman and Members of the Committee: Thank you for inviting me here
today to discuss how American Indian families have fared under welfare
reform. Recognizing the sovereignty of American Indian and Native Alaskan
tribes, 1 the Congress included provisions in the 1996 Personal
Responsibility and Work Opportunity Reconciliation Act (PRWORA) that give
tribes the option to administer Temporary Assistance for Needy Families
(TANF) programs either alone or as part of a consortium with other tribes
rather than receiving benefits and services from state TANF programs.
Because of the difficult economic circumstances on many reservations, the
law also gives tribal TANF programs more flexibility than it gives to states
to design their programs to meet TANF goals. To date, the secretary of
Health and Human Services (HHS) has approved 36 tribal TANF programs, which
serve over 170 tribes. These programs are still in the early stages of
implementation; half of the programs have been operating for fewer than 3
years.

My testimony today is based on the preliminary results of a study that was
requested by you, Mr. Chairman, as well as Senators Baucus, Bingaman,
Conrad, and Daschle. We expect to issue the report in August 2002. Today, I
will focus on four key issues: (1) the economic conditions and the prospects
for economic growth on reservations; 2 (2) how the number of American
Indians receiving TANF assistance has changed in both state and tribal
programs since the welfare reform law was enacted; (3) how tribes have used
the flexibility in PRWORA in administering tribal TANF programs; and (4)
challenges tribes face in implementing their tribal TANF programs. To obtain
this information, we mailed a questionnaire to the TANF program directors in
each of the 34 states where at least one federally recognized Indian tribe
is based and to 370 federally recognized tribes, including the 36 tribal
TANF programs (see appendix I). 3 We received responses from all 34 states
(100 percent) and from 148 of the 370 tribes (40 percent). While this
response rate is low, it is higher than that of other studies that have
surveyed tribes, and we are satisfied that the

1 In this statement, the term American Indians refers to both American
Indians and Alaska Natives. 2 In this statement, the term reservation refers
to all types of tribally owned land.

3 This also includes surveys sent to the presidents of 9 Alaska Native
regional nonprofit corporations. PRWORA limits the entities in the state of
Alaska that may operate a TANF program. The Metlakatla Indian Community of
the Annette Islands Reserve and the 12 Alaska Native regional nonprofits are
the only eligible entities.

Page 2 GAO- 02- 695T

results can be used to provide information about the tribes that have
responded. 4 We also met with tribal leaders and program officials of 12
tribes in 5 states- Arizona, Idaho, Montana, North Dakota, and South Dakota-
as well as state TANF officials in those states. Finally, we interviewed
representatives of American Indian organizations, as well as federal
officials from HHS? Administration for Children and Families and the
Department of the Interior?s Bureau of Indian Affairs (BIA). We conducted
this review in accordance with generally accepted government auditing
standards.

In summary, tribes have used various strategies to stimulate economic
development; but despite these efforts, unemployment and poverty rates on
reservations remain high, and prospects for economic growth may be limited.
Nationally, the number of American Indian families receiving TANF assistance
has declined significantly in recent years. However, on some reservations,
caseloads have remained the same or increased and in some states American
Indians represent a large and increasing proportion of the total TANF
caseload. To date, 172 tribes, either alone or as part of a consortium, have
used the flexibility in PRWORA to design and administer their own tribal
TANF programs to meet TANF goals. However, tribes have faced a number of
challenges in implementing tribal TANF programs. These include a lack of
reliable data on the number of American Indian TANF recipients; a lack of
existing infrastructure support, such as information systems; and a lack of
experience and expertise in administering welfare programs. Tribes are still
in the early stages of implementing their own programs, and it is not yet
clear whether the flexibility in program design provided to tribal TANF
programs will allow them to meet TANF goals given the economic circumstances
on reservations.

The Congress passed PRWORA in 1996, making sweeping changes to national
welfare policy and placing new emphasis on the goal of work and personal
responsibility. The Congress recognized the unique economic hardship facing
the 40 percent of American Indians living on reservations by exempting
anyone living on reservations with high unemployment from

4 Survey respondents did not respond to every question. In this statement,
we generally report the number that provided a specific response in addition
to the total number who provided any response to the question. Background

Page 3 GAO- 02- 695T

the law?s 60- month time limit on receipt of TANF cash assistance. 5
Furthermore, the act gave federally recognized American Indian tribes the
option to administer their own TANF programs either individually or as part
of a consortium, an option they did not have in the past. Under the Aid to
Families With Dependent Children (AFDC) program, the precursor to TANF,
tribal members enrolled in state welfare programs.

Under PRWORA, tribes implementing their own TANF programs have greater
flexibility than states in some areas. For example, for state programs,
PRWORA sets numerical goals for the percentage of adults to be participating
in work activities and specifically defines the approved work activities
that count for the purposes of meeting these federal participation rate
goals. 6 The law set state work participation rate goals at 25 percent in
fiscal year 1997, increasing to 50 percent in fiscal year 2002. In contrast,
tribes can set their own participation rate goals and may define work
activities more broadly, subject to approval from HHS. Finally, while states
must adhere to a federal time limit on cash benefits of 60 months or less,
tribal programs can set their own time limits. Tribes have the same
flexibility as states to set their own eligibility requirements and to
determine what policies will govern mandatory sanctions for noncompliance
with program rules. Tribes and states also have the same flexibility to
determine what types of work supports, such as childcare, transportation,
and job training, they will provide to recipients.

Some of the requirements to which tribal TANF programs are subject differ
from those to which states are subject. For example, eligible tribes must
submit a 3- year tribal TANF plan directly to HHS for review and approval;
HHS does not approve states? plans, though it certifies that they are
complete. Unlike states, whose TANF grants are based on the highest of three
possible funding formulas, tribal grants must be based on the amount the
state spent in fiscal year 1994 for all American Indians residing

5 For every month that a reservation has an unemployment rate of 50 percent
or greater, TANF recipients are not subject to the cash assistance time
limit. Most states use the biennial statistics maintained by the BIA.

6 Approved activities include: unsubsidized employment, subsidized private
or public sector employment, work experience, on- the- job training, job
search and job readiness assistance, community service programs, vocational
educational training, job skills training directly related to employment,
education directly related to employment, satisfactory attendance at a
secondary school or a course of study leading to a certificate of general
equivalence, or the provision of child care services to an individual who is
participating in a community service program.

Page 4 GAO- 02- 695T

in the tribe?s designated service area. In addition, tribes are not eligible
for several sources of additional TANF funding that were originally provided
for the states. These include performance bonuses, a population/ poverty
adjuster (for high- population/ low- spending states), and a contingency
fund for states experiencing economic downturns. Finally, whereas a state
can receive a caseload reduction credit, which reduces its work
participation rate goal when its caseloads falls, tribes are not eligible to
receive caseload reduction credits.

Tribes have used various strategies to stimulate economic development;
however, unemployment and poverty rates remain high on reservations. To
improve the economy on reservations, tribes own many types of enterprises. 7
Despite these efforts, most Indians living on reservations are poor, and
many tribes lack some of the key factors research has shown to be associated
with economic growth on reservations.

While some tribes encourage private companies owned by nonmembers to locate
on their reservations, many tribes responding to our survey place more
emphasis on developing tribally owned enterprises. Eighty- seven of the 133
tribes responding to our survey question reported that they place more
emphasis on promoting tribally owned enterprises than on encouraging private
companies owned by nonmembers to locate on reservations.

Tribes have launched their own enterprises in a number of sectors, which
could include gaming, tourism, manufacturing, natural resources, and
agriculture or ranching (see fig. 1). Of the 110 tribes with enterprises
that

7 See U. S. General Accounting Office, Economic Development: Federal
Assistance Programs for American Indians and Alaska Natives, GAO- 02- 193
(Washington, D. C.: Dec. 2001) for information on federal economic
development programs for tribes and tribal members. Despite Tribes?

Economic Development Efforts, Economic Conditions On Reservations Remain
Poor, And Tribes Lack Some Key Factors For Economic Growth

Tribes Primarily Rely on Developing Tribally Owned Enterprises to Stimulate
the Economy on Reservations

Page 5 GAO- 02- 695T

responded to our survey question, 22 have enterprises that are concentrated
in a single sector and 88 have enterprises in more than one sector.

Figure 1: Number of Tribes that Reported Owning an Enterprise

Note: Tribes can own enterprises in multiple sectors. Source: GAO survey of
tribes.

Many tribes own and operate gaming facilities. Contrary to the common
perception that tribal gaming has dramatically improved the economic
circumstances for many tribes, the most lucrative account for a small
percent of all tribally owned gaming facilities. According to our 1997
report, which provides the most recent comprehensive analysis of tribal
gaming revenues, 40 percent of total gaming revenues were generated by only
8 of 178 tribally operated gaming facilities. 8 For example, the Coeur

8 U. S. General Accounting Office, Tax Policy: A Profile of the Indian
Gaming Industry,

GAO/ GGD- 97- 91 (Washington, D. C.: May 5, 1997).

87 56

45 57 19

53

0 10 20 30 40 50 60

70 80 90 100

Gaming Tourism

Agriculture/ ranching Natural resources

Manufacturing Other

Type of Enterprise Number of tribes (n= 110)

Page 6 GAO- 02- 695T

d?Alene gaming facility in Idaho, near Spokane, Washington, and Lake Coeur
d?Alene, a major tourist area, generates about $20 million in profit per
year. In contrast, officials from the San Carlos Apache Tribe indicated that
its gaming facility, located in a remote area, 90 miles from Phoenix,
Arizona, barely makes enough money to cover its costs. Furthermore, gaming
facilities do not always generate employment for tribal members. Nationally,
only a quarter of all jobs in tribally operated gaming facilities are held
by American Indians. 9

The practice of distributing gaming royalties to tribal members is not
widespread and, contrary to common perception, payments that are made are
not making tribal members wealthy. About a quarter of the tribes that
responded to our survey question distributed a portion of their revenues
from gaming facilities and other enterprises through per capita payments to
members. Of the 87 tribes that reported operating a gaming facility, 28
reported providing per capita payments to members. Of those, 16 provided
payments of less than $5,000 (see table 1).

Table 1: Gaming and Other Sectors in Which Tribes Own Enterprises and
Provide Per Capita Payments Gaming and other sectors No. of tribes No. of
tribes

with payments Amount of annual per capita payment <$ 500 $500-$ 1,499 $1,500
to $4, 999 $5,000+

No enterprises 28 1 0 0 1 0 Gaming only 10 1 0 0 1 0 Gaming and one or more
enterprises in other sectors 77 27 3 8 4 12 One or more enterprises in
sectors other than gaming, but no gaming 29 2 2 0 0 0

Total 144 31 5 8 6 12

Source: GAO survey of tribes.

Despite tribes? efforts to stimulate the economy on reservations, American
Indian families on reservations still have high unemployment and poverty
rates. BIA has reported that in 1999- the most recent year for which data
are available- more than 40 percent of American Indians living on or near
reservations between the ages of 16 and 64 were unemployed, and of those who
were employed, a third were below the federal poverty guideline.
Unemployment was even higher on some reservations. For example, on the
Blackfeet reservation, 74 percent of adults were not employed and 22 percent
of employed adults were poor. Our survey results indicate that

9 National Indian Gaming Association data. Despite Economic

Development Activities, Indians Living on Reservations Continue to Have High
Poverty and Unemployment Rates

Page 7 GAO- 02- 695T

poverty and unemployment rates remain high on many reservations. Fifty of
the 127 tribes with reservations that responded to our survey question
reported that at least half of all families living on their reservations had
incomes below the federal poverty level. 10 In addition, 51 tribes reported
that 50 percent or more of adults living on the tribes? reservations were
unemployed.

Tribal officials we visited indicated that the isolated geographic location
and distance from markets of many reservations as well as a lack of
education and job skills among workers living on the reservation impact
economic growth. For example, a modular home manufacturing plant on the
Blackfeet Reservation in Montana has had trouble finding and keeping enough
workers with construction skills to expand its business. To overcome this
obstacle, the enterprise has worked with the local community college to
offer construction training to tribal members on the reservation. The gaming
facility owned by the White Mountain Apache tribe was forced to hire non-
tribal members. Officials explained that because members lack the basic work
and life skills needed to hold such jobs, nonmembers hold most of the
better- paid jobs.

A number of tribes also lack some key factors research has shown to be
important for economic growth on reservations. These include fully exercised
sovereignty, effective governing institutions, and a strategic orientation.
11 , 12 For example, 45 of the 142 tribes that responded to our survey
question stated that they are not participating in a self- governance
initiative. In addition, although research indicates the separation of
tribal governance and economic development contributes to effective
governing institutions, 78 of the 145 tribes that responded to our survey
question

10 In 2001, the federal poverty guideline in the contiguous 48 states was
$14,630 for a family of three. 11 Eddie F. Brown, D. S. W., Stephen Cornell,
Ph. D., et al., Welfare, Work, and American Indians: The Impact of Welfare
Reform: A Report to the National Congress of American Indians (Nov. 27,
2001).

12 Having culturally appropriate decision- making processes is also often
cited as a prerequisite for economic growth on reservations. This means
there is a cultural match between governing institutions and the prevailing
ideas in the community about how authority should be organized and
exercised. For example, while having a centralized system of government with
a strong executive branch works well for Apache tribes, which have a
tradition of electing their leaders, this form of government may not hold
the same legitimacy among members of tribes that traditionally had more
decentralized governments. Many Tribes Lack Key

Factors Associated With Economic Growth

Page 8 GAO- 02- 695T

stated that they do not have an economic development committee or
organization that is separate from their tribal government. Finally, 56 of
the 140 tribes that responded to our survey question reported they did not
have a written plan for improving economic conditions on the reservation,
although research indicates that having such a formal approach is an
indicator of strategic orientation.

The number of American Indian families receiving cash assistance in state
TANF programs in the 34 states with federally recognized Indian tribes
decreased between 1994 and 2001, from almost 68,000 to about 26,000. 13 Part
of this decline occurred because many American Indian TANF recipients were
served by tribal TANF programs in 2001 and are not included in the data.
While data on tribal TANF program caseloads are not available for 2001,
tribes have estimated that they could serve as many as 22,000 families. Even
if those participating in tribal TANF programs were taken into account, the
decline in American Indian families receiving TANF is significant. In
comparison, the number of all families receiving TANF fell from about 3.4
million families in 1994 to about 1. 5 million in 2001.

In some states, the share of the caseload made up of American Indians has
risen. According to HHS data, the share of the TANF caseload made up of
American Indians increased in 6 of the 34 states with federally recognized
tribes. 14 As shown in figure 2, the increase has been greatest in South
Dakota, Montana, and North Dakota. In South Dakota, the proportion of cash
assistance families that were American Indian increased from under 60
percent in 1994 to about 80 percent in 2001. According to the 2000 census,
about 8 percent of South Dakota?s population were American Indians. 15

13 HHS did not report American Indian caseload data for 1994 for states
without a federally recognized tribe. 14 In Idaho, Iowa, Kansas, Nevada,
South Carolina, and Texas, the share of the TANF caseload made up of
American Indians increased by less than 1 percent between 1994 and 2001.
Insufficient data were provided to calculate the change in proportion for
three states: Alabama, Florida, and Indiana.

15 It should be recognized that the race of TANF recipients recorded on
their applications may not always be accurate. TANF applicants are not
required to disclose their race, and often the caseworker judges the race of
the recipient for reporting purposes, which may lead to misidentification.
Furthermore, according to an HHS official, until recently, at least one
state?s TANF application only listed categories for whites, blacks, and
Hispanics. Fewer American

Indians Are Receiving TANF Nationally, But This Trend Has Not Occurred On
All Reservations

Page 9 GAO- 02- 695T

Figure 2: Proportion of Cash Assistance Caseload Made Up of American Indian
Families Has Increased in Some States

Source: HHS

Although data are not available to confirm this, it is possible that the
decline in the number of American Indians receiving TANF has predominantly
occurred among those not living on reservations, who represent a majority of
all American Indians. Based on responses to our survey, the size of the TANF
caseload on some reservations has in fact stayed about the same or even
increased. Forty- nine of 97 tribes responding to our survey question
reported that the number of tribal members receiving TANF was about the same
size or larger than it had been in 1997.

Several factors may contribute to the lack of welfare caseload decline among
American Indians in certain places. These include the scarcity of jobs on
reservations; the difficulty reservation residents have accessing work
supports, such as job training and child care; and cultural or religious
ties to tribal lands and strong ties to families and communities that make
it difficult for many American Indians to relocate. In addition, like many
other TANF recipients, many American Indian TANF recipients

0.0% 10.0%

20.0% 30.0%

40.0% 50.0%

60.0% 70.0%

80.0% 90.0%

Minnesota Montana Nebraska North Dakota South Dakota Wyoming 1994

2001

Page 10 GAO- 02- 695T

have characteristics such as low education levels and few job skills, which
can make it difficult for them to get and keep jobs.

PRWORA gives tribal TANF programs flexibility in many areas to tailor their
programs to their communities, for example, by defining their own work
activities and work participation rate goals, time limits, and eligibility
requirements. The 36 tribal TANF programs are given the flexibility to
define the activities they count toward meeting the work participation
requirement more broadly than state TANF programs, subject to approval by
HHS. According to data provided by tribal TANF programs to HHS, about a
fifth of all adults engaged in work activities participate in activities
that would not count toward meeting work participation rate goals under
state plans (see fig. 3), but do count toward meeting work participation
goals under tribal programs. For example, the Port Gamble S?Klallam tribe,
whose reservation is located on Washington?s Puget Sound, allows recipients
to count time spent engaged in traditional subsistence gathering and fishing
towards meeting the TANF work requirement. Flexibility Helps

Tribal TANF Programs Meet TANF Goals

Page 11 GAO- 02- 695T

Figure 3: Number of All Tribal TANF Programs Counting Various Work
Activities

* Participation in tribal Native Employment Works (NEW) program, a tribally
administered work activities program.

Source: HHS

In general, rather than adopting an approach similar to most states that
emphasizes job search and work, 16 tribal TANF programs tend to encourage
recipients to engage in education or training activities. While all of the
tribal TANF program officials that responded to our survey question reported
using TANF funds for job search, screening and assessment, and other
employment services, most also used TANF funds for a variety of education
services. 17 Fourteen of the 18 tribal TANF programs responding to our
survey question reported that a greater share of their recipients were
enrolled in educational activities such as high school equivalency programs,
community college, or other job training, than were engaged in employment.
In contrast, a majority of TANF recipients engaged in work activities in
state programs are in unsubsidized jobs. Officials from several of the
tribes we visited reported that their tribal TANF programs emphasize
education and training activities because their recipients have low rates of
high school completion and high rates of illiteracy.

16 This approach is often referred to as ?work first.? 17 28 of the 36
tribal TANF programs (78 percent) responded to our survey. Not all programs
responded to each question.

Number of Programs Counting Various Work Activities

14 12

9 7 7

4 3 2 13

0 2 4 6 8 10 12 14 16

Cultural Activities Counseling/Treatment

Self-Employment Life Skills/Parenting

Subsistence Activities Post-secondary Ed

NEW Participation* Commuting Time

Same as PRWORA # of tribes that count activity

Page 12 GAO- 02- 695T

Tribal TANF programs have flexibility to set their own time limits, subject
to HHS approval. To date, HHS has not approved any tribal TANF plans with a
time limit of greater than 60 months, although at least one tribe has
submitted a plan proposing a longer time limit. Thirty- four of the 36
tribal TANF programs have time limits of 60 months; 2 programs have 24-
month time limits. While a state may exempt no more than 20 percent of its
caseload from time limits due to hardship, tribal programs have the
flexibility to determine the share of the caseload they are allowed to
exempt from time limits due to hardship. A majority of tribes have the same
exemption limit as states, but HHS has approved 10 plans with higher
exemption rates. If tribes want to extend benefits beyond the level approved
in their plans, they must pay for the benefits with their own funds. 18 Many
tribal TANF programs are not subject to time limits because the unemployment
rate on the reservations is greater than 50 percent. PRWORA exempts any
month from counting toward an individual?s time limit if that individual is
living on a reservation with a population of at least 1,000 and an
unemployment rate of 50 percent or greater, whether they are enrolled in a
tribal program or a state program. Of the 29 tribal TANF programs that serve
a single tribe, 16 are located on reservations that have unemployment rates
of 50 percent or greater, according to the most recent BIA data. 19

Tribes also have the flexibility to determine many of their own eligibility
requirements. This includes the flexibility to determine the area that will
be covered by their programs (the service area). Some tribes define their
service area as their reservation or land base, while others serve families
residing in nearby communities or within the counties that overlap with
their reservations (see fig. 4).

18 States may use their maintenance of effort funds to extend benefits to
recipients who reach their time limits but do not fall within the 20-
percent exemption. Tribes do not have a maintenance- of- effort requirement
and, therefore, do not have the same access to funding for this extension.

19 Our analysis does not include tribal coalitions that serve residents of
more than one reservation. Of the remaining 13 tribal programs that serve
residents of one or two reservations, 6 have unemployment rates of 40 to 49
percent and 6 have unemployment rates of 20 to 39 percent.

Page 13 GAO- 02- 695T

Figure 4: Tribal TANF Program Service Areas

Source: HHS

Tribes also have the flexibility to determine whom they will serve (the
service population). Some tribes base eligibility on race or tribal
membership; others serve all families in their service areas. Figure 5 shows
the decisions all 36 tribal TANF programs have made about their service
populations.

10 21

2 3

0 5

10 15

20 25

Reservation Only Surrounding County or Counties

BIA Defined Service Area

Alaskan Regional Corporation Area

Number of tribes

Page 14 GAO- 02- 695T

Figure 5: Tribal TANF Service Populations

Source: HHS

Tribes have faced a number of challenges in implementing tribal TANF
programs. Many tribes have found that data on the number of American Indians
are inaccurate, complicating the determination of tribal TANF grant amounts
and making it difficult to design and plan programs. Because tribes do not
have the infrastructure they need to start their programs, tribes have had
to solicit contributions from a variety of different sources to cover their
significant start- up costs and ongoing operating expenses. In addition,
because tribes do not have experience operating welfare programs, they lack
the expertise needed to administer key program features, including
determining eligibility. Some tribes have requested and received technical
assistance from states and the federal government to help them develop this
expertise.

The challenges tribes have to overcome in order to plan, develop, and
implement tribal TANF programs include, among others:

Obtaining the population data necessary to conduct reliable feasibility
studies and to plan and design tribal TANF programs.

HHS and tribal officials told us that state data on American Indians is
inaccurate, complicating the determination of TANF grant amounts and Tribes
Face

Challenges Implementing Their Programs

16 16 4 0 2

4 6

8 10

12 14

16 18

Serves only tribal members

Serves all Indian families

Serves all families

Number of tribes

Page 15 GAO- 02- 695T

making it difficult to design and plan programs. The law specifies that
federal tribal TANF grants must be based on the funds expended on American
Indians who were residing in the program?s designated service area and
receiving AFDC from the state in fiscal year 1994. In practice, however, few
states collected reliable data on the race of AFDC recipients in 1994, so
some tribes negotiate the number on which their grant will be based,
according to tribal officials. 20 , 21 Having accurate data on American
Indian caseloads is also critical for tribes as they design their programs
and make decisions about how to allocate their resources.

The degree to which any tribal TANF program?s federal grant corresponds to
its current caseload varies substantially. Some officials attribute this to
underestimates of the number of American Indian families who were receiving
AFDC in 1994. Others believe that eligible families are more likely to seek
benefits from a tribal program, in part because of increased outreach.
Changes in the economy and population growth over the past decade have also
led to fluctuations in public assistance caseloads on some reservations. The
majority of tribes with TANF programs responding to our survey question, 19
of 21, reported that the number of families they were currently serving was
the same as, or smaller than, the number of families on which their grant
was based. However, 2 of the 21 tribes reported that their TANF caseload was
larger than the caseload on which their grant was based.

Securing or leveraging the resources needed to establish the infrastructure
needed to administer tribal TANF. Because most tribes starting tribal TANF
programs do not have the infrastructure they need in place, they have
secured and leveraged funding from a variety of sources to meet the basic
?start- up? costs involved in setting up a new program. These start- up
costs include those for basic infrastructure such as information technology
systems. In addition, tribal TANF programs are not eligible to receive any
of the performance incentives currently available to states.

20 This lack of data on American Indian caseloads makes it difficult for
states and tribes to determine tribal TANF grant amounts, but it also
hinders a tribe?s ability to plan and design its programs. The Torres-
Martinez Desert Cahuilla tribe of Los Angeles, for example, based its tribal
TANF plan on American Indian TANF recipient estimates that turned out to be
inaccurate.

21 If the state and tribe cannot agree on the 1994 caseload numbers
submitted by the state, the secretary of HHS, or designee, is required to
make a decision on the tribal TANF grant amount.

Page 16 GAO- 02- 695T

One infrastructure need that tribes have found particularly difficult to
meet is the development of new information systems. Like states, tribal TANF
programs are permitted to spend as much of their federal TANF grant on
management information systems as they choose, and some tribes have
developed systems for their new TANF programs. Unlike states, tribes did not
receive additional federal funds expressly for the purpose of developing and
operating automated information systems under AFDC, the precursor to the
TANF program. 22 Although most of the tribal TANF programs reported using an
automated system to report TANF data, many- 8 of 27- do not. For example,
the Fort Belknap tribal TANF program in Montana has a caseload of 175
families, yet it does not have an automated information system for the
collection, processing, and reporting of TANF data. Eleven tribes reported
having an automated system devoted to their TANF program. Others use the
state?s computer system or contract with the state to collect, store, or
process data for federal reporting purposes.

Because most tribal TANF funds are used to provide benefits and services to
TANF recipients, some tribes have leveraged funds from other federal
programs or relied on other sources, including state TANF funds and tribal
government contributions. States recognize that it is in their best interest
if tribal TANF programs succeed, and therefore most provide at least some of
their state maintenance of effort (MOE) funds to tribal programs in their
state. 23 HHS reports that 29 of 36 tribal TANF programs receive MOE funds
from the states. Some states provide tribes with a share of MOE
proportionate to the population they are serving; others provide some start-
up costs; and others have not provided any funds. There is little incentive
for states to contribute MOE to tribes. The law does not require states to
contribute MOE to tribal programs, and in fact, if a tribe opts to
administer a tribal TANF program, the state?s MOE requirement drops by an
amount that is proportional to the population served by the tribal

22 Between 1980 and 1992, the federal government reimbursed states for 50 to
90 percent of the costs incurred in planning, designing, developing,
installing, and operating automated welfare systems. From 1994 to 1997,
states could be reimbursed for 50 percent of their automated systems costs.
We reported that between 1984 and 1992, the federal government spent more
than $500 million annually on state automated AFDC systems. (See GAO-
HEHS00- 48 and GAO- AIMD- 94- 52- FS).

23 To receive a TANF block grant, each state must meet a maintenance of
effort (MOE) requirement, under which it must spend at least a specified
amount of its own funds. Under AFDC, state funds accounted for 45 percent of
total federal and state expenditures. Under PRWORA, the law requires states
to sustain 75 to 80 percent of their fiscal year 1994 level of spending on
welfare through the MOE requirement.

Page 17 GAO- 02- 695T

program. However, any contributions made by states to tribal TANF programs
do count toward a state?s MOE requirement.

Most tribal TANF programs that responded to our survey question, 24 of 27,
reported that their tribal government made contributions to their TANF
program. Eighteen of these respondents reported their tribes contributed
office space or buildings. In addition, 15 programs received contributions
from the tribal governments to cover other start- up costs.

In addition to securing resources from federal, state, and tribal
governments, some tribes have leveraged other funds to enable them to
administer tribal TANF with limited resources. One way tribes have been able
to do this is by combining TANF and other tribally administered federal
employment and training programs into a single program with a single budget
through a ?477? plan. 24 Tribes with 477 plans are able to save on
administrative costs and reduce duplication of services by streamlining the
administration of related programs. For example, a tribe with a 477 plan
could provide job search and job preparation services to all tribal members
through a single program, rather than having a separate program for TANF
recipients. To date, 13 tribal TANF programs responding to our survey
question have included TANF in their 477 plans. Two of the tribes we
visited, the Confederated Salish and Kootenai tribe and the SissetonWahpeton
tribe, included their tribal TANF programs in 477 plans, and both tribes
indicated that the ability to combine funding sources and streamline service
delivery was instrumental in allowing them to administer tribal TANF within
their budget constraints.

Developing the expertise to better implement tribal TANF programs. Because
they do not have experience in administering welfare programs, tribal TANF
program administrators have had to quickly develop the expertise to plan and
operate tribal TANF programs. Tribal TANF administrators have had to train
staff on eligibility determination, data reporting requirements, and
administration. They have also had to set up information systems, conduct
feasibility studies, and leverage resources to help cover their costs.

24 The Indian Employment, Training and Related Services Demonstration Act of
1992 (P. L. 102- 477) allows federally recognized tribes and Alaska Native
entities to combine federal grant funds for employment training, or any
related area, into a 477 plan, with a single budget and a single reporting
system.

Page 18 GAO- 02- 695T

Most of the tribes that responded to our survey reported that states
provided them with at least some technical assistance in these areas, but
the amount of assistance provided by states varied. PRWORA does not require
states to provide technical assistance to tribes, but 19 tribes reported
that the state helped them to a great or very great extent in developing
their initial concept paper describing their TANF program. In addition, 26
tribal TANF programs reported that they had received technical assistance
and support from the state in developing or operating automated systems to
collect and report TANF program data. A number of programs reported that
they received assistance from the state on other aspects of administering a
TANF program. Tribes also reported that HHS has provided them with technical
assistance when asked.

Tribal officials indicated that certain types of technical assistance were
not readily available to them from states or the federal government. For
example, tribes interested in administering tribal TANF often conduct
studies to help them determine whether it is feasible to administer their
own programs, but neither states nor the federal government had provided
tribes with technical assistance on how best to conduct a feasibility study
that would provide them with all of the information they needed to make an
informed decision. Similarly, some of the tribes we visited indicated that
they have little access to information about the ?best practices? of other
tribal TANF programs, which could help them meet TANF goals.

PRWORA gives tribes a new opportunity to exercise their sovereignty by
administering their own TANF programs. At this early stage of tribal TANF
implementation, we see tribes making progress in exercising their
flexibility by tailoring the design of their programs and engaging their
members in a broad array of work activities. However, tribes face challenges
in developing the data, systems, and expertise they need to operate their
programs.

While tribes have moved forward in establishing their own programs, it is
not yet known whether these programs will help recipients find employment
before reaching time limits. In addition, it is not yet clear whether the
flexibility afforded to tribal TANF programs will allow them to continue to
provide benefits and services to those who reach the time limit without
obtaining a job. Whether tribal TANF programs will be successful in moving
more American Indians from welfare into the workforce will ultimately depend
on not only the ability of the programs to meet their recipients? need for
income support, education, and training, Concluding

Observations

Page 19 GAO- 02- 695T

but also the success of economic development efforts in providing employment
opportunities for American Indians.

Mr. Chairman, this concludes my prepared statement. I look forward to
sharing the results of our final study with you in August. I will be happy
to respond to any questions you or other Members of the Committee may have.

For future contacts regarding this testimony, please call Cynthia M. Fagnoni
at (202) 512- 7215 or Clarita Mrena at (202) 512- 3022. Individuals making
key contributions to this testimony included Kathryn Larin, Carolyn Blocker,
Mark McArdle, Bob Sampson, Catherine Hurley, and Corinna Nicolaou. GAO
Contacts and

Acknowledgments

Page 20 GAO- 02- 695T

State Tribal TANF Programs

Association of Village Council Presidents Central Council Tlingit and Haida
Indian Tribes of Alaska Alaska

Tanana Chiefs Conference, Inc. Pascua Yaqui Tribal Council Navajo Nation
(also in New Mexico and Utah) White Mountain Apache Tribal Council Hopi
Tribal Council Arizona

Salt River Pima- Maricopa Indian Community Council Owens Valley Career
Development Center Southern California Tribal Chairmen?s Association
California

Torres- Martinez Desert Cahuilla Indians Coeur d?Alene Tribal Council Nez
Perce Tribal Executive Committee Idaho

Shoshone- Bannock Tribes of the Fort Hall Reservation Minnesota Mille Lacs
Reservation Business Committee

Confederated Salish & Kootenai Tribes, Tribal Council Montana Fort Belknap
Community Council Nebraska Winnebago Tribal Council New Mexico Pueblo of
Zuni Oklahoma Osage Tribal Council

Klamath General Council Oregon Confederated Tribes of Siletz Indians South
Dakota Sisseton- Wahpeton Sioux Tribal Council

Lower Elwha Tribal Council Quinault Indian Nation - Business Committee
Colville Business Council Port Gamble S?Klallam Tribe Washington

Quileute Tribal Council Bad River Band of Lake Superior Tribe of Chippewa
Indians Red Cliff Band of Lake Superior Chippewa Indians of Wisconsin
Stockbridge Munsee Community of Wisconsin Sokaogon Chippewa (Mole Lake)
Community of Wisconsin Lac du Flambeau Band of Lake Superior Chippewa
Indians of Wisconsin Wisconsin

Forest County Potawatomi Community of Wisconsin Northern Araphaho Tribe
(Wind River) Wyoming Shoshone Business Committee

Appendix I: Tribal TANF Programs

(130051)
*** End of document. ***