School funding in Indian country not far away
WASHINGTON - Funding school construction and maintenance in Indian country may be just a congressional vote away.
A group of schools that make up the Dakota Area Consortium of Tribal Schools reworked a plan to acquire funds from the U.S. Treasury and leverage the principal to acquire enough money over a 15-year period to construct new school facilities. The new plan was presented to the Senate Committee on Indian Affairs.
"The leveraging of limited funds which provides more funds for this critical need is a moderate, yet creative solution. ... one that we personally use when we buy a house, and one which public schools, municipalities, and states have been using for years," said Frank Rapp, DACTS vice president.
"For years now we have been told to wait because next year Congress will appropriate more money. Every year we find there is not enough."
Rapp reminded the Senate Committee that repairs to tribal school and construction has a $1 billion backlog, something members already knew. He also said the approach in the past was minimal with "piecemeal repairs and quick fixes" that took care of symptoms.
"I have seen very expensive, yet worthless, portable classrooms built and fall apart in a few years. Good money has been thrown away after bad," Rapp said.
The new plan could be approved by Congress before the end of the session, Rapp said. The bill, introduced by Sen. Tim Johnson, D-S.D., will allow for a one-time appropriation of $30 million to be placed in an escrow account.
"Instead of funding construction projects directly, these existing funds will be leveraged through bonds to fund substantially more tribal construction, maintenance and repair projects," Johnson said.
Bonds will be sold by various tribal schools to facilitate construction with tax credits going to the bond holders. Rapp said the beauty of this measure will be that tribes will not be held responsible should any one of the bonding schools default.
To make this bonding work, the $30 million will be placed in a secured, interest-bearing account. Estimates show that at current interest rates the principle will grow to $75 million in 15 years. Tribes will be allowed to submit plans for construction and bonding, subject to approval of the Department of Interior, and then sell bonds that would equal the $75 million figure.
No interest on the bonds would be paid to the bondholders. These individuals or companies would instead receive tax credits. For example, a $75 million bond will provide a $95 million tax credit over the 15-year period, Jeff Seidel, president of Parkway Muni Resources said. Seidel worked closely with DACTS in constructing the proposal for legislation.
Neither the school facility nor the land on which it is located will be mortgaged. The federal government will issue no guarantee. But, Seidel said this fact, along with tribes not being held responsible for an default, should not be a deterrent to any potential investors.
"Our experience in this field tells us that the appropriated escrow, with the statutory conditions on its management and use, will attract eager investors from the private markets. The bonds issued under this bill will be seen as good, safe and sound investments."
Another advantage for tribes is that local contractors and designers will be directly involved with any construction project from the beginning. The tribes will have local control. They will contract with local engineers, architects and lawyers to draw up the plans and initial proposals that go to Interior for approval. Seidel said this will allow the local firms to accelerate construction to complete a project on time and avoid costly delays.
"It would permit use of the trust departments of private financial institutions to maintain control over disbursement and re-investment of the funds. It would allow tribal schools to raise seed money for professional services. And it would involve federal oversight but without the tremendous delay in the design, engineering and most importantly, the funding of the projects," Seidel said.
William Mehojah, director of the Office of Indian Education Programs, said more than half of the school facilities have exceeded a useful building life of 30 years and because of that there are health, safety and space deficiencies. "The existing backlog of education facility repair is over $800 million."
Mehojah points out that President Bill Clinton proposed issuing $200 million in bonds for BIA-funded schools in 2001 and 2002.
The director recommended the bill include a provision to allow the tribal governments an opportunity to use the entire $200 million, minus what he called the $30 million sinking fund, to leverage bond sales.
He added, at that rate the three remaining schools on the list of 16 published in the Federal Register in 1993 will be funded along with the first three schools on the list published in 2000. He calculated that under the administration's plan, four to six schools would be funded each year.
"Even in these prosperous times, only two to three schools are funded each year. At that pace it is doubtful that the federal government will ever reduce the backlog. We have looked at all the alternatives we could think of, and the solution contained in this bill is the culmination of that effort," Seidel said.
John W. Cheek, executive director of the National Indian Education Association, reminded the Senate committee that during a hearing in 1991 the committee was told of an $850 million backlog of maintenance and repair deficiencies. In 1998 the estimate was $758 million.
"The immediate conclusion is that few financial resources have been focused on the school facilities dilemma over the past several years. The fact of the matter is that problems with all facets of education construction at BIA-funded and operated schools have been evident for years."
"Our children come to school with this huge spirit to learn. The federal government kills that spirit by putting them in overcrowded buildings that have torn up tile, broken windows, and a lack of heat and cooling systems.
"We expect our children to appreciate and be thankful for their educator. What should they appreciate, a building that passes no fire codes, health inspections, or safety inspections? How do they learn respect and to appreciate anything when they are expected to learn in an environment such as this?" Rapp asked.