Billions of dollars needed to fix Indian trust fund mess, report says

The Interior Department estimates that it will take 10 years and approximately $2.4 billion to properly account for individual Indian trust funds dating back more than a century, according to a report released earlier this month.

In a July 3 report to Congress on the historical accounting of Indian trust funds, Interior estimated that it would cost $907 million just to reconcile current accounts from 1985 to 2000. "The magnitude of the historical accounting is enormous," the report said.

Trust fund accounts were set up nearly a century ago to compensate Indians for the use of their land. Currently, the Bureau of Indian Affairs manages about 1,400 tribal accounts and 300,000 individual trust accounts. The agency is responsible for sending checks to Indian trust beneficiaries, many of whom rely on trust funds for basic living necessities.

But only paper records of accounts dating from 1906 to 1985 exist, and those are stored in 120 different locations. Errors in electronic data and missing paper records and land ownership information would also make a complete historical accounting time-consuming and costly, if not impossible, the report concluded.

Compounding those problems is the reluctance of Congress to give the Interior Department the money for an undertaking that might ultimately fail anyway, the report said. "Congress will not appropriate hundreds of millions of dollars for an historical accounting that provides funds for a protracted reconciliation process whose outcome is unlikely to be successful."

And recent actions by the House Appropriations Committee seem to support that argument. On July 9, the committee approved a provision limiting funds for the entire historical accounting project to $500 million and recommending that the Interior Department only reconcile accounts from 1985 to 2000, according to a committee spokesman.

"Some people are concerned that this [report] is just an effort to tell Congress that, 'Hey, this accounting will be real expensive and take a long time, so we don't want to do it,'" said John Dossett, general counsel for the National Council of American Indians, the oldest and largest tribal government organization in the United States. "I also think it speaks to some degree to the need to settle historical accounts…it may not be realistic to ever completely account for [all the individual trust funds]."

Allegations of mismanagement of the BIA trust accounting system culminated in a 1996 lawsuit against Interior filed by Elouise Cobell, founder and current chairwoman of the Blackfeet National Bank.

Interior Secretary Gale Norton, who now faces contempt charges in the lawsuit, created the Office of Historical Trust Accounting in July 2001 to oversee reform of the individual Indian trust accounts and provide a detailed plan for reconciling the accounts.

A court-appointed monitor of trust reform also criticized Interior's report. "The historical accounting proposal in the report is just one more example of the continuing historical unwillingness and inability of the Department of the Interior, as an institution, to honor its trust obligations to the American Indian," said Joseph Kieffer in a report released last week.

A task force created in January and made up of tribal leaders and Interior officials will release its proposal for trust fund reform at the end of July.