Why Not Mandate Mandatory CSC Funding?

Philip Baker-Shenk and W. Ron Allen

The time has come to fund tribal contract support costs, or “CSC,” from the mandatory federal spending accounts of the federal government, the same as are Social Security, Medicare, Medicaid, interest on the national debt, court judgments and other obligations of the United States.

CSC funding covers the indirect costs required to administer multiple federal contracts and grants. It is the common practice with all federal contracting, including military and higher education contracts.

Unlike with other federal contractors, tribes have not received full CSC funding in recent decades. As a consequence, tribes have been forced to divert tribal program funds to pay for these administrative expenses. CSC funding is what fuels tribal services, like gas in a car. You might be able to roll downhill for a while, but your car won’t get very far without it.

Fewer dollars for core tribal administrative functions diminishes a tribe’s ability to effectively serve its tribal citizens. The exercise of tribal sovereignty and governmental functions is like a muscle – if you don’t use it, you lose it. Without administrative funds essential to fulfilling its mission to benefit its citizens, a tribe’s sovereignty and ability to becoming self-reliant is at risk.

Tribal self-governance and self-reliance has done much to transform Indian country ever since the beginning of the Indian Self-Determination movement era 40 years ago. But the annual threat of funding reductions, blown by the political winds of the moment, make for a fragile future for this exercise of tribal sovereignty. Administrative funding shortfalls could turn the Indian Self-Determination and Education Assistance Act of 1975, as amended, into a house of cards and a shrine to empty promises.

The Act’s original idea was simple and straightforward – it makes common sense to empower tribal governments to assume the administration of federally-funded programs, functions, services and activities because tribes can run them more efficiently and effectively than can federal bureaucracies. Not only did this innovative initiative stretch the limited federal dollars available to meet need, but it allowed tribes local flexibility to target actual and current need. When you think about it, tribal political and cultural structures actually hold tribal providers far more accountable than federal workers are held by personnel rules and congressional oversight.

But for decades, until the tribes prevailed in federal court a few years ago, Congress and OMB shied away from paying the full contract support costs owed to tribes. Even today, the widely heralded move by Congress to fully fund CSC has come at a price – the Budget Control Act and its sequestration impact has resulted in full funding for CSC being reprogrammed from program accounts and diminished services to tribal communities.

The only fair and honorable answer is to pay tribal CSC costs – governed by indirect cost rates that are negotiated under common federal rules to meet actual expenses reflecting regional cost differences – from mandatory spending accounts and to hold them exempt from sequestration. Whatever is a tribe’s real administrative cost should be paid, so long as it conforms to the reasonable and necessary expenditure requirements of a negotiated federal rate. And that payment of CSC should not come at the expense of program funding accounts.

In our judgment, CSC fits nicely with the definition of exempt mandatory spending, which is composed of programs funded by formulas set in law and paid out of accounts with guaranteed appropriations. Such accounts include Social Security, certain health care programs, and what is known as “other mandatory spending.” It is time for the Obama Administration and the Congress to further fulfill the historical, moral and legal obligations the United States has to the 566 American Indian and Alaska Native Nations by using the FY 2016 budget reconciliation process to include tribal CSC funding within exempt “other mandatory spending.”  Now that would be a legacy with real and lasting effect.

Philip Baker-Shenk was general counsel to the Senate Committee on Indian Affairs and now represents Tribes through Holland & Knight, LLP. W. Ron Allen is Chairman and Chief Executive Officer of the Jamestown S’Klallam Tribe in western Washington.

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