Tribal Self-Governance Program: IHS Compacts/Funding Agreements

To allow Federally recognized Indian Tribes to enter into an agreement with the Indian Health Service (IHS) to assume full funding and control over programs, services, functions and activities (PSFA) (or portions thereof) that the IHS would otherwise

Per 42 CFR § 137.18, to be eligible to participate in the IHS Tribal Self-Governance Program (Program), any Federally recognized Indian tribe must: (a) successfully complete the planning phase described in 42 CFR § 137.20; (b) request participation in the Program by resolution or other official action by the governing body of each Indian tribe to be served; and (c) demonstrate financial stability and financial management capability for three fiscal years. Per 42 CFR § 137.21, the Indian tribe provides evidence that, for the three years prior to participation in the Program, the Indian tribe has had no uncorrected significant and material audit exceptions in the required annual audit of the Indian tribe's self-determination contracts or self-governance funding agreements with any federal agency. Per 42 CFR § 137.22, if the Indian Tribe chooses to centralize its self-determination or self-governance financial and administrative functions with non-self-determination or non-self-governance financial and administrative functions, such as personnel, payroll, property management, etc., the Secretary may consider uncorrected significant and material audit exceptions related to the integrity of a cross-cutting centralized function in determining the Indian Tribe's eligibility for participation in the self-governance program. Per 42 CFR § 137.26, an Indian tribe does not need to receive a planning or negotiation cooperative agreement to be eligible to participate in the IHS Tribal Self-Governance Program. An Indian tribe may use other resources to meet the planning requirement and to negotiate. Under 25 U.S.C. § 458aaa-2(b)(1), each year, an additional 50 Indian tribes that meet the eligibility criteria are entitled to participate in the IHS Tribal Self-Governance Program.

Federally-recognized Indian tribes and tribal organizations (as defined in 25 U.S.C. § 458aaa-(b)) may benefit.

Per 42 CFR 137.167 and 137.168, a self-governance tribe must apply the cost principles of the applicable OMB Circular, except as modified by: (a) section 106(k) of the Act (25 U.S.C. 450j-1), (b) other provisions of law, or (c) any exemptions to applicable OMB circulars subsequently granted by the OMB. No other audit or accounting standards shall be required by the Secretary.

Funds must be spent in accordance with the Indian Self-Determination and Education Assistance Act (ISDEAA), applicable regulations and terms of the negotiated compact, funding agreement, or construction project agreement. Per 42 CFR §§ 137.167-168, a Tribe participating in the IHS Self-Governance Program (Self-Governance Tribe) must apply the cost principles of the applicable OMB Circular, except as modified by: (a) 25 U.S.C. § 450j-1, (b) other provisions of law, or (c) any exemptions to applicable, subsequent OMB circulars. No other audit or accounting standards shall be required by the Secretary. Per 25 U.S.C § 458aaa-7(h) and 42 CFR § 137.100, a Self-Governance Tribe may retain and spend interest earned on any funds paid under a compact or funding agreement. Per 42 CFR § 137.101, a Self-Governance Tribe must invest and manage the funds as a prudent investor would, in light of the purpose, terms, distribution requirements, and provisions in the compact or funding agreement and ISDEAA Title V. This duty requires the exercise of reasonable care, skill, and caution, and is to be applied to investments not in isolation, but in the context of the investment portfolio and as a part of an overall investment strategy that should incorporate risk and return objectives reasonably suitable to the Self-Governance Tribe. In making and implementing investment decisions, the Self-Governance Tribe must diversify the investments, unless it is imprudent under the circumstances. In addition, the Self-Governance Tribe must: (a) conform to fundamental fiduciary duties of loyalty and impartiality; (b) act with prudence in deciding whether and how to delegate authority and in the selection and supervision of agents; and (c) incur only costs that are reasonable in amount and appropriate to the investment responsibilities of the Self-Governance Tribe.

Per 42 CFR § 137.18, to be eligible to participate in the IHS Tribal Self-Governance Program, any Federally recognized Indian tribe must: (a) successfully complete the planning phase described in 42 CFR § 137.20; (b) request participation in the IHS Tribal Self-Governance Program by resolution or other official action by the governing body of each Indian tribe to be served; and (c) demonstrate financial stability and financial management capability for three fiscal years. Per 42 CFR § 137.21, the Indian tribe provides evidence that, for the three years prior to participation in the IHS Tribal Self-Governance Program, the Indian tribe has had no uncorrected significant and material audit exceptions in the required annual audit of the Indian tribe's self-determination contracts or self-governance funding agreements with any federal agency. Per 42 CFR § 137.22, if the Indian Tribe chooses to centralize its self-determination or self-governance financial and administrative functions with non-self-determination or non-self-governance financial and administrative functions, such as personnel, payroll, property management, etc., the Secretary may consider uncorrected significant and material audit exceptions related to the integrity of a cross-cutting centralized function in determining the Indian Tribe's eligibility for participation in the self-governance program. Per 42 CFR § 137.26, an Indian tribe does not need to receive a planning or negotiation cooperative agreement to be eligible to participate in the IHS Tribal Self-Governance Program. An Indian tribe may use other resources to meet the planning requirement and to negotiate. Under 25 U.S.C. § 458aaa-2(b)(1), each year, an additional 50 Indian tribes that meet the eligibility criteria shall be entitled to participate in the IHS Tribal Self-Governance Program.

Funds are transferred to Indian tribes who have successfully negotiated (1) a compact and funding agreement or (2) a compact, funding agreement, and construction project agreement entered into under ISDEAA Title V.

Per 42 CFR § 137.35, upon approval and execution of an ISDEAA Title V compact, the compact remains in effect for so long as permitted by Federal law or until terminated by mutual written agreement or retrocession or reassumption of all PSFAs. Per 42 CFR § 137.55, a funding agreement shall have the term mutually agreed to by the parties. Under 25 U.S.C. § 458aaa-4(e), absent notification from an Indian tribe that it is withdrawing or retroceding the operation of one or more PSFA identified in the funding agreement, the funding agreement shall remain in full force and effect until a subsequent funding agreement is executed.

See 42 CFR §§ 137.410-445 for regulations governing compacts, funding agreements, and construction project agreements entered into under ISDEAA Title V.