Person:

Kalt, Joseph

The American Rescue Plan Act (ARPA) provides the largest infusion of federal funding for Indian Country in the history of the United States. More than $32 billion dollars is directed toward assisting American Indian nations and communities as they work to end and recover from the devastating COVID-19 pandemic – which was made worse in Indian Country precisely because such funding is long overdue. Below, we set out recommendations which we hope will promote the wise and productive allocation of ARPA funds to the nation’s 574 federally recognized American Indian tribes. We see ARPA as a potential “Marshall Plan” for the revitalization of Indian nations. The Act holds the promise of materially remedying at least some of the gross, documented, and long-standing underfunding of federal obligations and responsibilities in Indian Country. Yet, fulfilling that promise requires that the federal government expeditiously and wisely allocate ARPA funds to tribes, and that tribes efficiently and effectively deploy those funds to maximize their positive impacts on tribal communities. Toward these ends: • To enable tribes to recover and emerge stronger from the pandemic, we recommend wide scope be provided for tribes to invest COVID-19 relief funds in their basic physical, governmental, and educational infrastructures. • To facilitate consultation and promote sound policy development under ARPA, we recommend the establishment of a Treasury/Tribal ARPA Advisory Panel consisting of knowledgeable experts. • To provide guidance and reduce uncertainty regarding permissible ARPA spending and processes, we recommend the creation of a formal system of Tribal/ARPA Determination, Opinion, and Advisory Letters. • To provide much-needed technical assistance to tribes, we recommend the creation of a “hub and web” network of Treasury/Tribal ARPA Tech Centers, with the Treasury Department as the central hub, providing funding and serving as the central node responsible for coordinating and communicating with a set of discipline-spanning Centers. • To ensure maximum community benefit is derived from ARPA funding, we recommend that tribal governments adopt best-practice systems for prioritizing, planning, budgeting, contracting, implementing, and sustaining ARPA-funded projects and programs. • To allocate the ARPA funds dedicated to tribal governments, we recommend a three-part formula that uses data-ready drivers of apportionment and puts 40% weight on each tribe’s population of enrolled citizens, 30% weight on each tribe’s total of tribal government and tribal enterprise employees, and 30% weight on each tribe’s share of Indian Country’s coronavirus infections.

The American Rescue Plan Act of 2021 (“the Act” or “ARPA”) has resulted in the single largest infusion of federal funding for Native America in U.S. history. The core of this funding is 20 billion dollars for the more than 570 federally recognized American Indian and Alaska Native tribal governments. As required by the Act, the Department of the Treasury (“Treasury” or “the Department”) devised and has now implemented a formula for allocating these monies. We find that the allocations that have been made are grossly inequitable and contrary to the policy objectives of Congress, the Biden Administration, and the Treasury Department itself. Treasury’s Formula: Apart from dividing 1 billion dollars of the available 20 billion dollars equally among all tribes, the essence of the Treasury Department’s allocation formula entailed distributing 65% of the ARPA funds for tribal governments based on the number of total tribal citizens served by those governments and distributing the remaining 35% based on tribes’ total number of employees, Native and non-Native, immediately before the COVID-19 pandemic struck. The Result: ARPA’s 20 billion dollars of direct funding was intended to provide relief to tribes because Native American individuals and communities have experienced significant historical disadvantage and have borne significantly disproportionate harms from the pandemic. Correspondingly, within Indian Country, the tribes most in need of assistance are those where extreme disadvantage persists and where the pandemic has been most injurious to Native American individuals, families, and communities. Nonetheless, Treasury’s formula distinctly favored tribes with relatively high proportions of employees relative to enrolled citizens, which tend to be the tribes with strong pre-pandemic economies that financed modern infrastructure and well-funded public services. While these tribes deserve recognition for their accomplishments, they are the tribes that already were in the best position to “build back better.” Yet, Treasury’s formula has resulted in ARPA payments as high as 880,000 dollars per tribal citizen for some “have” tribes. Meanwhile, hundreds of “have not” and “have less” tribes, encompassing 89% of all tribal citizens in the U.S., have received ARPA allocations of less than 10,000 dollars per tribal citizen. Policy Remedies: With the ARPA direct funding monies already distributed to tribes, options for remedying the evident inequities in Treasury’s distributions are limited. However, it still makes sense to: • Create equity offsets by (1) targeting use of ARPA’s 500 million dollars Local Assistance and Tribal Consistency Fund to address the worst inequities, (2) prioritizing disadvantaged tribes in reconciliation, infrastructure, disaster, and other forthcoming funding measures and in other Departments’ funding for tribes, and (3) waiving bureaucratic restrictions on how tribes can use relief and recovery funds; • Create a permanent and appropriately staffed and resourced Office of Tribal Affairs within Treasury in order to build the Department’s capacity and expertise; and • Engage in substantive consultations with tribes that go beyond mere listening to generate useable knowledge and policy options.

Since the 1970s, federal American Indian policy in the United States has been aimed at promoting self-determination through self-governance by federally-recognized tribes. This policy has proven to be the only policy that has worked to make significant progress in reversing otherwise distressed social, cultural and economic conditions in Native communities. The policy of self-determination reflects a political equilibrium which has held for four decades and which has withstood various shifts in the party control of Congress and the White House. While Republicans have provided relatively weak support for social spending on Indian issues when compared to Democrats, both parties’ representatives have generally been supportive of self-determination and local self-rule for tribes. Analysis of thousands of sponsorships of federal legislation over 1970-present, however, finds the equilibrium under challenge. In particular, since the late 1990s, Republican congressional support for policies of self-determination has fallen off sharply and has not returned. The recent change in the party control of Congress calls into question the sustainability of self-determination through self-governance as a central principle of federal Indian policy.

The federal response to the COVID‐19 pandemic has played out in varied ways over the past several months. For Native nations, the CARES Act (i.e., the Coronavirus Aid, Relief, and Economic Security Act) has been the most prominent component of this response to date. Title V of the Act earmarked $8 billion for tribes and was allocated in two rounds, with many disbursements taking place in May and June of this year.

This federal response has been critical for many tribes because of the lower socio‐economic starting points for their community members as compared to non‐Indians. Even before the pandemic, the average income of a reservation‐resident Native American household was barely half that of the average U.S. household. Low average incomes, chronically high unemployment rates, and dilapidated or non‐existent infrastructure are persistent challenges for tribal communities and tribal leaders. Layering extremely high coronavirus incidence rates (and the effective closure of many tribal nations’ entire economies2) on top of these already challenging circumstances presented tribal governments with a host of new concerns. In other words, at the same time tribal governments’ primary resources were decimated (i.e., the earnings of tribal governmental gaming and non‐gaming enterprises dried up), the demands on tribes increased. They needed these resources to fight the pandemic and to continue to meet the needs of tribal citizens.

For at least the last several decades, federal Indian policy in the US has supported tribal self-determination through tribal self-government. The results have been (1) remarkable economic growth across most of Indian Country, and (2) concomitant expansions of the responsibilities and capacities of tribal governments. Hundreds of tribes across the other Lower 48 states now routinely serve their citizens with the full array of governmental functions and services that we expect from non-Indian state and local governments in the US, and increasing numbers of tribes are the economic engines of their regions.

Unique to Maine, the federal Maine Indian Claims Settlement Act of 1980 (MICSA) empowers the state government to block the applicability of federal Indian policy in Maine. As a result, the development of the Wabanaki Nations’ economies and governmental capacities have been stunted. Today, all four of the tribes in Maine—Maliseet, Mi’kmaq, Passamaquoddy, and Penobscot—are stark economic underperformers relative to the other tribes in the Lower 48 states.

The subjugation of the Wabanaki Nation’s self-governing capacities is blocking economic development to the detriment of both tribal and nontribal citizens, alike. For the tribal citizens of Maine held down by MICSA’s restrictions, loosening or removing those restrictions offers them little in the way of downside risks and much in the way of upside payoffs.

Importantly, we find in this study that “nowhere to go but up” also applies to the Maine state government and Maine’s non-tribal citizens. From case after case, the pattern that has emerged under federal policies of tribal self-determination through self-government is one in which tribal economic development spills over positively into neighboring non-tribal communities and improves the abilities of state and local governments to serve their citizens. As is the case with any neighboring governments, conflicts can arise between tribal and non-tribal governments. The overall experience outside of Maine in this regard has been that increasingly capable tribal governments improve state-tribal relations by enabling both parties to come to the table with mature capacities to cooperate. Against these upside prospects is a status quo in which all sides leave economic opportunities on the table and ongoing cycles of intergovernmental conflict, litigation, recrimination, and mistrust continue.

The American Rescue Plan Act (ARPA) provides the largest infusion of federal funding for Indian Country in the history of the United States. More than $32 billion dollars is directed toward assisting American Indian nations and communities as they work to end and recover from the devastating COVID19 pandemic – which was made worse in Indian Country precisely because such funding is long overdue.

In this policy brief, we set out recommendations which we hope will promote the wise and productive allocation of ARPA funds to the nation’s 574 federally recognized American Indian tribes. We see ARPA as a potential “Marshall Plan” for the revitalization of Indian nations. The Act holds the promise of materially remedying at least some of the gross, documented, and long-standing underfunding of federal obligations and responsibilities in Indian Country. Yet, fulfilling that promise requires that the federal government expeditiously and wisely allocate ARPA funds to tribes, and that tribes efficiently and effectively deploy those funds to maximize their positive impacts on tribal communities.

This study dissects the US Department of the Treasury’s formula for distributing first-round CARES Act funds to Indian Country. The Department has indicated that its formula is intended to allocate relief funds based on tribes’ populations, but the research team behind this report finds that Treasury has employed a population data series that produces arbitrary and capricious “over-” and “under-representations” of tribes’ enrolled citizens.

The COVID‐19 pandemic has wrought havoc in Indian Country. While the American people as a whole have borne extreme pain and suffering, and the transition back to “normal” will be drawn out and difficult, the First Peoples of America arguably have suffered the most severe and most negative consequences of all. The highest rates of positive COVID‐19 cases have been found among American Indian tribes, but that is only part of the story.

Even before the pandemic, the average household income for Native Americans living on Indian reservations was barely half the U.S. average. Then the pandemic effectively shut down the economies of many tribal nations. In the process, tribal governments’ primary sources of the funding – which are needed to fight the pandemic and to meet citizens’ needs – have been decimated.

As with the rest of the U.S., emergency and interim support from the CARES Act and other federal measures have helped to dampen the social and economic harm of the COVID‐19 crisis in Indian Country. Yet this assistance has come to the country’s 574 federally recognized Indian tribes with litigation‐driven delay and counterproductive strings attached, and against a pre‐ pandemic background characterized by federal government underfunding and neglect – especially as compared to the funding provided and attention paid to state and local governments.

Title V of the CARES Act requires that the Act’s funds earmarked for tribal governments be released immediately and that they be used for actions taken to respond to the COVID‐19 pandemic. These may include costs incurred by tribal governments to respond directly to the crisis, such as medical or public health expenditures by tribal health departments. Eligible costs may also include burdens associated with what the U.S. Treasury Department calls “second‐order effects,” such as having to provide economic support to those suffering from employment or business interruptions due to pandemic‐driven business closures. Determining eligible costs is problematic. Title V of the CARES Act instructs that the costs to be covered are those incurred between March 1, 2020 and December 30, 2020. Not only does this create the need for some means of approximating expenditures that are not yet incurred or known, but the Act’s emphasis on the rapid release of funds to tribes also makes it imperative that a fair and feasible formula be devised to allocate the funds across 574 tribes without imposing undue delay and costs on either the federal government or the tribes.

Recognizing the need for reasonable estimation of the burdens of the pandemic on tribes, the authors of this report propose an allocation formula that uses data‐ready drivers of those burdens. Specifically, they propose a three‐part formula that puts 60% weight on each tribe’s population of enrolled citizens, 20% weight on each tribe’s total of tribal government and tribal enterprise employees, and 20% weight on each tribe’s background rate of coronavirus infections (as predicted by available, peer‐reviewed incidence models for Indian Country).

In testimony before the Alyce Spotted Bear and Walter Soboleff Commission on Native Children on December 15, 2022, Joseph Kalt, Ford Foundation Professor of International Political Economy, Emeritus testified about the importance that American Indian self-determination has played in helping spark a remarkable period of economic growth across a broad swath of Indian Country.

Kalt, who serves as the co-director of the Harvard Project on American Indian Economic Development at Harvard Kennedy School delivered a detailed set of findings outlining how the expansion of the responsibilities and capacities of tribal governments have resulted in a remarkable period of economic growth over the past thirty years. “The onset of tribal self-determination through self-government in the late 1980s ushered in the only policy that has ever worked to improve economic and social conditions in Indian Country,” said Kalt in his remarks before the commission.