GM 15-015

Administration Proposes Mandatory Funding for Contract Support Costs; Tribal Consultation Process Will be Expedited

President Obama’s FY 2016 budget, released on February 2, 2015, includes a proposal to establish mandatory contract support costs (CSC) appropriations for both the Indian Health Service (IHS) and the Bureau of Indian Affairs (BIA). This exciting development represents a major step forward for tribes and tribal organizations. If approved by Congress, mandatory CSC appropriations would ensure that CSC is paid in full without reducing program funds—a result that all tribes have sought. In this Memorandum, we describe the mandatory CSC proposal.

A new development is that the Administration has decided to expedite the tribal consultation process on this proposal, a move that tribes and tribal organizations had urged. They have made the point that the IHS and BIA have been consulting with tribes for a year on a long-term solution to fully fund CSC and thus further consultation should be expedited, perhaps enabling mandatory funding to begin in FY 2016. A letter from IHS Acting Director Roubideaux is expected to be sent out later today to tribal leaders saying that the consultation process will be done over a period of 30 days.

Congress, as part of the FY 2014 appropriations act, called on tribes and federal agencies to work together on long-term solutions to CSC challenges. Tribes and tribal organizations have advocated for mandatory CSC funding as the centerpiece of these solutions. Acting IHS Director Roubideaux and Assistant Secretary-Indian Affairs Washburn have credited the tribes and the CSC workgroup for swaying the Administration, notably the Office of Management and Budget, to not only support, but to propose, mandatory funding for CSC.

At present, CSC is paid out of the agencies’ discretionary lump-sum appropriations, so fully funding CSC in FY 2014 required cuts to programs and services—an outcome condemned by direct service, self-determination, and self-governance tribes alike. Making CSC a separate, mandatory appropriation would prevent competition between CSC and program funds and avoid the painful reprogramming of funds from health care services that IHS was forced to do in FY 2014.

The Proposal. Under the proposal, FY 2016 funding would continue to be discretionary and in the meantime the agencies would consult with tribes and work with Congress on the details of the proposal. There would be three years—FYs 2017, 2018, and 2019—of capped mandatory funding (see chart below), after which the funding would need to be reauthorized. Any funds not used in one year would carry over to the following year. IHS Acting Director Roubideaux and Assistant Secretary-Indian Affairs Washburn have said they believe the amounts are “generous” and so the fact that they are capped amounts is hopefully not problematic. The proposal also includes a provision that would allow IHS to utilize some of the funding to increase its capacity to fulfill the requirements of administering the mandatory CSC funding. The IHS describes it as follows: “In addition to amounts already dedicated to program administration, up to 2% of CSC totals could be used for administrative capacity and program management.” (FY 2016 IHS Budget Justification, p. CJ-148).


FY 2016
(discretionary) FY 2017
(mandatory) FY 2018
(mandatory) FY 2019

IHS: $718 million
($55 million increase over FY 2015)
IHS: $800 million
IHS: $925 million
IHS: $1.1 billion

BIA: $277 million
($26 million increase over FY 2015)
BIA: $307 million
BIA: $322 million
BIA: $338 million

New mandatory funding is subject to the PAYGO Act, which requires an offset from other mandatory funding or revenue increases.

FY 2016 budget hearings are now beginning. The House Appropriations Subcommittee on Interior, Environment and Related Agencies is holding hearings for public witnesses on Indian programs under its jurisdiction March 24-25, 2015. IHS Acting Director Roubideaux will testify before that Subcommittee on February 11, 2015.

Please let us know if we may provide additional information or assistance regarding the Contract Support Costs proposal.