The Obama Administration’s move last month to award $1.2 million in Tribal Sovereignty grants to six American Indian tribes to help them take over Bureau of Indian Education schools on their reservations is just the latest step in its belated overhaul of the agency. While there are questions as to whether the administration’s overall plan for the federal government’s school system — including handing over the 58 remaining schools it operates to tribes — will pass muster with a Congress that will soon be fully under Republican control, the grants are a key step toward executing it.

this_is_dropout_nation_logoYet as the Government Accountability Office noted late last week in its latest report, BIE’s financial affairs (along with its overall operations) are still in shambles. School reformers need to pressure both the Obama Administration and Congress to do right by Native children by fully overhauling BIE’s operations.

The failures of the federal agency, a hybrid of traditional school district, charter school authorizer, and state education agency, has been well-documented. A scathing GAO report released last year detailed how the U.S. Department of the Interior has thoroughly mismanaged BIE’s operations. This includes six top executives since 2007, and Interior’s unwillingness to give BIE control — either through in-house management or even sophisticated management of contracts with vendors similar to that done by private-sector companies through its procurement and outsourcing functions — over its own operations. These failures on Interior’s part is one immediate reason why BIE has done so poorly in providing Native students with high-quality education.

But as GAO notes in its latest report, BIE’s failures extend even to simple monitoring of the 115 schools operated by tribes. Such failures on the oversight front bode poorly for the Obama Administration’s plan to fully transform the agency into a state education department.

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. As state education departments and charter school authorizers can attest, oversight is as much a matter of manpower as it is a result of systems and practices in place. Yet Interior’s structuring of BIE’s operations have all but ensured that the agency can’t even do something as simple as follow up on a qualified audit. Just 13 staffers were charged with overseeing the financial affairs of both agency- and tribally-controlled schools in 2013-2014; that’s down from 22 in 2010-2011. The lack of manpower, along with nonexistent financial controls, all but assures that the agency will fail at its most-basic monitoring tasks. While Interior has begun moving to restructure BIE’s operations and give it full control over its operations, the department has failed to address the agency’s financial oversight woes.

But the problem doesn’t lie just with BIE alone. It is also a failure of the federal government to structure the operation of BIE schools in a sensible manner. While tribes technically operate all but a smattering of BIE schools, the reality is that their education departments aren’t often the ones actually operating schools. In many cases, the schools are managed by boards who play upon legitimate desires of Native communities to control their own educational destiny, but often end up resisting accountability efforts of both BIE and their parent tribes. For tribes looking to overhaul failing schools such as Navajo Nation, the most-populous tribe in the country, the byzantine governance structure often impedes their efforts; in July 2013, for example, one school board successfully rebuffed Navajo Nation’s effort to take over control of its three schools. Even when the tribes operate the schools, the lack of capacity of their education departments to manage operations properly (a result of the federal government’s inattention to this matter) often means they can end up making costly financial decisions.

The 48,000 Native children forced to attend BIE schools suffer the dire consequences of this fiscal mismanagement. When tribes and their school boards mismanage much-needed federal subsidies, kids end up losing out on high-quality teaching and comprehensive-yet-culturally relevant curricula. This ends up being compounded by BIE’s own failures on fiscal oversight. Add in BIE’s other failures — from not repairing and replacing 65 hazardous and unsafe school buildings, to snafus on academic accountability — and it is no wonder why 59 percent of BIE eighth-graders scored Below Basic in math on the 2013 National Assessment of Educational Progress while a mere 10 percent were numerate at Proficient levels.

Certainly the Obama Administration’s plan to overhaul BIE will help address these shortcomings. But not if the agency’s failures as an oversight agency aren’t addressed. The administration must request and work with Congress on getting the talent and the financial management systems in place to track spending and hold schools accountable; this is as important a move as implementing a unified academic accountability system in order to track the progress of schools in improving student achievement. Crafting written procedures for financial spending, both for BIE and for schools, is also important. Meanwhile the Obama Administration should end Interior’s control of BIE and place it under the U.S. Department of Education. This won’t please some Native education activists. But it is clear that BIE needs to be run as a proper school operator, which is something that Education can do.

Meanwhile Congress must play its part by overhauling how BIE schools are managed by tribes. This starts with amending the various laws governing the schools — including the Tribally Controlled Schools Act of 1988 — to encourage schools to be moved from local board control to tribal education departments better-suited for the job. But that isn’t enough. While the Obama Administration’s Tribal Sovereignty grants will be helpful in allowing tribes to build up the capacity of their education departments, the money isn’t enough. The administration should bring in high-quality private and charter school operators such as Cristo Rey and KIPP to serve as consultants (with the emphasis on consult and advise) to tribal education departments who can then use their advice to build up their capacity to run schools.

The GAO’s latest report is another reminder of this country’s continued educational abuse of Native children. It is high time to stop it.