ADMINISTRATIVE COST.

SEC. 5108. ADMINISTRATIVE COST. (a) In General.—The Education Amendments of 1978 (25 U.S.C. 2008) is amended by inserting after section 1128 (25 U.S.C. 2008) the following new section: “administrative cost grants “Sec. 1128A. (a)(1) The Secretary shall, subject to the availability of appropriated funds, provide grants to each tribe or tribal organization operating a contract school in the amount determined under this section with respect to the tribe or tribal organization for the purpose of paying the administrative and indirect costs incurred in operating contract schools in order to— “(A) enable tribes and tribal organizations operating such schools, without reducing direct program services to the beneficiaries of the program, to provide all related administrative 102 STAT. 370overhead services and operations necessary to meet the requirements of law and prudent management practice, and “(B) carry out other necessary support functions which would otherwise be provided by the Secretary or other Federal officers or employees, from resources other than direct program funds, in support of comparable Bureau operated programs. “(2) Amounts appropriated to fund the grants provided under this section shall be in addition to, and shall not reduce, the amounts appropriated for the program being administered by the contract schools. “(b)(1) The amount of the grant provided to each tribe or tribal organization under this section for each fiscal year shall be determined by applying the administrative cost percentage rate of the tribe or tribal organization to each of the direct cost education programs operated by the tribe or tribal organization for which funds are received from or through the Bureau. “(2) The Secretary shall— “(A) reduce the amount of the grant determined under paragraph (1) to the extent that payments for administrative costs are actually received by an Indian tribe or tribal organization under any Federal education program included in the direct cost base of the tribe or tribal organization, and “(B) take such actions as may be necessary to be reimbursed by any other department or agency of the Federal Government for the portion of grants made under this section for the costs of administering any program for Indians that is funded by appropriations made to such other department or agency. “(c) For purposes of this section, the administrative cost percent-age rate for a contract school for a fiscal year is equal to the percentage determined by dividing— “(1) the sum of— “(A) the amount equal to— “(i) the direct cost base of the tribe or tribal organization for the fiscal year, multiplied by “(ii) the minimum base rate, plus “(B) the amount equal to— “(i) the standard direct cost base, multiplied by “(ii) the maximum base rate, by “(2) the sum of— “(A) the direct cost base of the tribe or tribal organization for the fiscal year, plus “(B) the standard direct cost base. The administrative cost percentage rate shall be determined to the one hundredth of a decimal point. “(d)(1)(A) Funds received by a contract school as grants under this section for tribal elementary or secondary educational programs may be combined by the contract school into a single administrative cost account without the necessity of maintaining separate funding source accounting. “(B) Indirect cost funds for programs at the school which share common administrative services with tribal elementary or secondary educational programs may be included in the administrative cost account described in subparagraph (A). “(2) Funds received as grants under this section with respect to tribal elementary or secondary education programs shall remain 102 STAT. 371available to the contract school without fiscal year limitation and without diminishing the amount of any grants otherwise payable to the school under this section for any fiscal year beginning after the fiscal year for which the grant is provided. “(3) Funds received as grants under this section for Bureau funded programs operated by a tribe or tribal organization under a contract or agreement shall not be taken into consideration for purposes of indirect cost under recovery and over recovery determinations by any Federal agency for any other funds, from whatever source derived. “(e) For purposes of this section— “(1)(A) The term ‘administrative cost’ means the costs of necessary administrative functions which— “(i) the tribe or tribal organization incurs as a result of operating a tribal elementary or secondary educational program, “(ii) are not customarily paid by comparable Bureau operated programs out of direct program funds, and “(iii) are either— “(I) normally provided for comparable Bureau programs by Federal officials using resources other than Bureau direct program funds, or “(II) are otherwise required of tribal self-determination program operators by law or prudent management practice. “(B) The term ‘administrative cost’ may include, but is not necessarily limited to— “(i) contract (or other agreement) administration; “(ii) executive, policy, and corporate leadership and decisionmaking; “(iii) program planning, development, and management; “(iv) fiscal, personnel, property, and procurement management; “(v) related office services and record keeping; and “(vi) costs of necessary insurance, auditing, legal, safety and security services. “(2) The term ‘Bureau elementary and secondary functions’ means— “(A) all functions funded at Bureau schools by the Office of Indian Education Programs of the Bureau; “(B) all programs— “(i) funds for which are appropriated to other agencies of the Federal Government, and “(ii) which are administered for the benefit of Indians through Bureau schools; and “(C) all operation, maintenance, and repair funds for facilities and government quarters used in the operation or support of elementary and secondary education functions for the benefit of Indians, from whatever source derived. “(3) The term ‘tribal elementary or secondary educational programs’ means all Bureau elementary and secondary functions, together with any other Bureau programs or portions of programs (excluding funds for social services that are appropriated to agencies other than the Bureau and are expended through the Bureau, funds for major subcontracts, construction, and other major capital expenditures, and unexpended funds carried over from prior years) which share common administra-102 STAT. 372tive cost functions, that are operated directly by a tribe or tribal organization under a contract or agreement with the Bureau. “(4)(A) Except as otherwise provided in this paragraph, the direct cost base of a tribe or tribal organization for the fiscal year is the aggregate direct cost program funding for all tribal elementary or secondary educational programs operated by the tribe or tribal organization during— “(i) the second fiscal year preceding such fiscal year, or “(ii) if such programs have not been operated by the tribe or tribal organization during the 2 preceding fiscal years, the first fiscal year preceding such fiscal year. “(B) In the case of Bureau elementary or secondary education functions which have not previously been operated by a tribe or tribal organization under contract or agreement with the Bureau, the direct cost base for the initial year shall be the projected aggregate direct cost program funding for all Bureau elementary and secondary functions to be operated by the tribe or tribal organization during that fiscal year. “(5) The term ‘maximum base rate’ means 50 percent. “(6) The term ‘minimum base rate’ means 11 percent. “(7) The term ‘standard direct cost baseߣ means $600,000. “(f)(1) Upon the enactment of the Indian Education Amendments of 1988, the Secretary shall— “(A) conduct such studies as may be needed to establish an empirical basis for determining relevant factors substantially affecting the required administrative costs of tribal elementary and secondary educational programs, using the formula set forth in subsection (c), and “(B) a study to determine— “(i) a maximum base rate which ensures that the amount of the grants provided under this section will provide adequate (but not excessive) funding of the administrative costs of the smallest tribal elementary or secondary educational programs, “(ii) a minimum base rate which ensures that the amount of the grants provided under this section will provide adequate (but not excessive) funding of the administrative costs of the largest tribal elementary or secondary educational programs, and “(iii) a standard direct cost base which is the aggregate direct cost funding level for which the percentage determined under subsection (c) will— “(I) be equal to the median between the maximum base rate and the minimum base rate, and “(II) ensure that the amount of the grants provided under this section will provide adequate (but not excessive) funding of the administrative costs of tribal elementary or secondary educational programs closest to the size of the program. “(2) The studies required under paragraph (1) shall— “(A) be conducted in full consultation (in accordance with section 1130) with— “(i) the tribes and tribal organizations that are affected by the application of the formula set forth in subsection (c), and 102 STAT. 373 “(ii) all national and regional Indian organizations of which such tribes and tribal organizations are typically members; “(B) be conducted on-site at a representative statistical sample of the tribal elementary or secondary educational programs under a contract entered into with a nationally reputable public accounting and business consulting firm; “(C) take into account the availability of skilled labor, commodities, business and automatic data processing services, related Indian preference and Indian control of education requirements, and any other market factors found substantially to affect the administrative costs and efficiency of each such tribal elementary or secondary educational program studied in order to assure that all required administrative activities can reasonably be delivered in a cost effective manner for each such program, given an administrative cost allowance generated by the values, percentages, or other factors found in the studies to be relevant in such formula; “(D) identify, and quantify in terms of percentages of direct program costs, any general factors arising from geographic isolation, or numbers of programs administered, independent of program size factors used to compute a base administrative cost percentage in such formula; and “(E) identify any other incremental cost factors substantially affecting the costs of required administrative cost functions at any of the tribal elementary or secondary educational programs studied and determine whether the factors are of general applicability to other such programs, and (if so) how they may effectively be incorporated into such formula. “(3) Determinations described in paragraph (2)(C) shall be based on what is pragmatically possible to do at each location studied, given prudent management practice, irrespective of whether required administrative services were actually or fully delivered at these sites, or other services were delivered instead, during the period of the study. “(4) Upon completion of the studies conducted under paragraph (1), but in no case later than October 1, 1989, the Secretary shall submit to the Congress a report on the findings of the studies, together with determinations based upon such findings that would affect the definitions of terms used in the formula that is set forth in subsection (c). “(5) The Secretary shall include in the Bureau’s justification for each appropriations request for each fiscal year beginning after fiscal year 1989, a projection of the overall costs associated with the formula set forth in subsection (c) for all tribal elementary or secondary educational programs which the Secretary expects to be funded in the fiscal year for which the appropriations are sought. “(6) For purposes of this subsection, the size of tribal elementary or secondary educational programs is determined by the aggregate direct cost program funding level for all Bureau funded programs which share common administrative cost functions. “(g)(1) There are authorized to be appropriated for each fiscal year such sums as may be necessary to carry out the provisions of this section. “(2) If the total amount of funds necessary to provide grants to tribes and tribal organizations in the amounts determined under subsection (b) for a fiscal year exceeds the amount of funds appro-102 STAT. 374priated to carry out this section for such fiscal year, the Secretary shall reduce the amount of each grant determined under subsection (b) for such fiscal year by an amount that bears the same relationship to such excess as the amount of such grant determined under subsection (b) bears to the total of all grants determined under subsection (b) for all tribes and tribal organizations for such fiscal year. “(h)(1) Notwithstanding any other provision of this section, the amount of the grants provided under this section for fiscal year 1989 shall— “(A) in lieu of being determined under subsection (b), be determined for each tribal elementary or secondary educational program on the same basis that indirect costs were determined for such programs for fiscal year 1988, and “(B) be subject to the provisions of subsection (d). “(2) Notwithstanding any other provision of this section, the amount of the grant provided under this section for fiscal year 1990 with respect to each tribal elementary and secondary educational program that was operated by a tribe or tribal organization in fiscal year 1989 shall be equal to— “(A) if the amount of the grant determined under subsection (b) for fiscal year 1990 with respect to such program exceeds the amount received by the tribe or tribal organization with respect to such program for administrative costs for fiscal year 1988 (or fiscal year 1989 if such program was not operated by the tribe or tribal organization during fiscal year 1988), the sum of— “(i) such amount received, plus “(ii) one-third of the excess of— “(I) such amount determined under subsection (b), over “(II) such amount received, or “(B) if such amount received exceeds such amount determined under subsection (b), the excess of— “(i) such amount received, over “(ii) an amount equal to one-third of the excess of— “(I) such amount received, over “(II) such amount determined under subsection (b). “(3) Notwithstanding any other provision of this section, the amount of the grants provided under this section for fiscal year 1991 with respect to each tribal elementary and secondary educational program that was operated by a tribe or tribal organization in fiscal year 1989 shall be equal to— “(A) if the amount of the grant determined under subsection (b) for fiscal year 1991 with respect to such program exceeds the amount received by the tribe or tribal organization with respect to such program for administrative costs for fiscal year 1990, the sum of— “(i) such amount received, plus “(ii) one-half of the excess of— “(I) such amount determined under subsection (b), over “(II) such amount received, or “(B) if such amount received exceeds such amount determined under subsection (b), the excess of— “(i) such amount received, over “(ii) an amount equal to one-half of the excess of— “(I) such amount received over. 102 STAT. 375 “(II) such amount determined under subsection (b).”. (b) School Board Training.—Paragraph (3) of section 1128(c) of the Education Amendments of 1978 (20 U.S.C. 2008(c)(3)) is amended to read as follows: “(3)(A) The Secretary shall reserve for national school board training 0.133 percent of the funds appropriated for each fiscal year for distribution under this section. Such training shall be conducted through the same organizations through which, and in the same manner in which, the training was conducted in fiscal year 1986. If the contract for such training is not awarded before May 1 of each fiscal year, the contract under which such training was provided for the fiscal year preceding such fiscal year shall be renewed by the Secretary for such fiscal year. The agenda for the training sessions shall be established by the school boards through their regional or national organizations. “(B) For each year in which the Secretary uses a weighted unit formula established under subsection (a) to fund Bureau schools, a Bureau school which generates less than 168 weighted units shall receive an additional 2 weighted units to defray school board activities. “(C) From the funds allotted in accordance with the formula established under subsection (a) for each Bureau school, the local school board of such school may reserve an amount which does not exceed the greater of— “(i) $4,000, or “(ii) 2 percent of such allotted funds, for school board activities for such school, including but not limited to, and notwithstanding any other provision of law, meeting expenses and the cost of membership in, and support of, organizations engaged in activities on behalf of Indian education.”. (c) Percentage of Funds Not Subject to Fiscal Year Limitation.—Section 1128 of the Education Amendments of 1978 (20 U.S.C. 2008) is amended by adding at the end thereof the following new subsection: “(h) At the election of the local school board made at any time during the fiscal year, a portion equal to no more than 15 percent of the funds allocated with respect to a school under this section for any fiscal year shall remain available to the school for expenditure without fiscal year limitation.”.