Senate threatens to outsource trust fund management

The Senate last week said it may opt to turn over to one or more private companies the management of American Indians' trust funds, which the United States has overseen for more than 100 years, because of ongoing management failures.

Although the Clinton administration has begun to spend millions of dollars on new computer systems to manage the trust funds, senators meeting in a joint hearing of the Indian Affairs Committee and the Energy and Natural Resources Committee voiced support for outsourcing to industry the management of the funds. The trust funds represent income due to American Indians from lands awarded to them by treaties with the U.S. government but leased to oil, gas and other private industrial companies.

Sen. Ben Nighthorse Campbell (R-Colo.), chairman of the Indian Affairs Committee, said he may introduce legislation that would take responsibility for trust management away from the Interior Department. Sen. Frank Murkowski (R-Alaska), chairman of the Senate Energy and Natural Resources Committee, questioned whether the management of the funds "really belongs within the government."

"There are no excuses. There should be no excuses," said Sen. Larry Craig (R-Idaho). Many companies manage trust funds without so much as "a dime" out of place, Craig said. "Why can't we be smart enough to hire the right people to do the job?"

At issue is nearly $2.4 billion in money that the Bureau of Indian Affairs (BIA) cannot accurately account for, although Interior Secretary Bruce Babbitt said it has not been stolen. A group of American Indians has filed a class-action lawsuit seeking accurate accounting of the money and an overhaul of the way Interior manages the funds. In some cases, documents have been stored in trash bags and others have been soiled by rodent droppings, requiring special handling because of a concern the papers may be carrying the deadly hantavirus. The virus is caught through contact with rodent droppings.

The Office of the Special Trustee for American Indians, set up by a 1994 law to sort out the trust problems, last year awarded SEI Investments, Oaks, Pa., a five-year, nearly $50 million contract to replace Interior's 21-year-old Integrated Records Management System, which the agency used to track trust fund accounts and payments. The new systems will manage information on disbursements to more than 300,000 trust accounts for American Indians and American Indian tribes.

The Office of the Special Trustee has asked Congress for $100 million in fiscal 2000 to continue the task of cleaning up American Indian trust information, including almost $15 million to continue developing and deploying the new Trust Fund Accounting System (TFAS).

Meanwhile, the BIA, separate from the special trustee, plans to spend $42 million over the next two years to build the Trust Asset Accounting and Management System (TAAMS) to manage information on the American Indian land that the government leases to private industrial companies. TFAS will account for distribution of trust money to American Indians' accounts. Dominic Nessi, program manager for TAAMS, said Interior plans to integrate TAAMS with TFAS in the future.

Babbitt assured senators on March 3 that progress was being made with the trusts, explaining that deployment of new systems will take place by the end of the year. He characterized mismanagement of the records as a legacy within the department. "This problem began on March 3, 1849," Babbitt testified last week, 150 years after the founding of his department. "Forty-seven of my predecessors have done virtually nothing."

Nessi said an information technology contractor will begin work March 8 on a data cleanup project at BIA offices in Billings, Mont. By late June, he said, BIA should move on to the next step: a pilot test involving new TAAMS software by Artesia Systems Group, a division of Applied Terravision Systems Inc., Dallas.

Artesia president David Orr said getting TAAMS operational will be a key component in making sure that money ultimately gets attributed accurately to American Indians' trust accounts.