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Overdrawn Rosebud Sioux Tribe embroiled in financial mess

ROSEBUD, S.D. ? Rosebud Sioux tribal officials are trying to account for more than $2.3 million in federal monies spent in a three month period, as federal officials and tribal members scrutinize the tribe's management of its finances.

Tribal officials have dipped into reserve accounts and taken a loan to meet payrolls and stabilize the tribe's finances while attempting to track the $2.3 million that a Bureau of Indian Affairs official from the Aberdeen Area Office said was largely "unaccounted for."

Tribal and B.I.A. officials blamed an antiquated financial system that allowed tribal income to be deposited and disbursed through one account.

The tribe has had to reach into investment accounts to try to recover its financial position after a 90-day spending spree between August and October. The spending affected at least 16 federally funded programs including law enforcement.

Tribal Chairman William Kindle said the financial spiral took place during the previous council's tenure. In a dramatic change, tribal members voted earlier this year to change nearly two-thirds of the 20-member council.

Kindle attributed financial problems to an out-of-date accounting system. He also blamed lack of sufficient staff to monitor the tribe's accounts and insufficient training of key personnel.

The tribe's problems included a $60,000 overdraft at Wells Fargo Bank, Kindle said. The shortfalls took place because of inadequate tracking of funds under BIA contracts in the tribe's finance office, he said. The problem intensified, he said, when the BIA failed to transfer monies into the appropriate accounts when requests were made. When funds were drawn from the accounts, he said, overdrafts resulted.

The RST Education Committee was told during a meeting in early December the tribe owed more than $400,000 in outstanding clothing order bills to area merchants. The bills were for vouchers issued to tribal members for school clothing. Each eligible school child has received a voucher for $100 in early August during the past few years.

Adding to the financial woes, the tribe failed to pay payroll taxes on time to the U.S. Internal Revenue Service, making it liable for $834,000 in penalties and interest. The penalty was reduced to $214,000, Wayne Boyd, chairman of the tribe's Budget and Finance Committee, told Antelope Community members at a recent meeting.

The tribal council appointed a team of tribal employees to work with a BIA team to get to the bottom of the finance mess. The tribe's Budget and Finance Committee has met nearly every day, attempting to sort out the accounts, Kindle said.

In an effort to address the crisis, the tribe's Budget and Finance Committee proposed three resolutions. Most pressing was covering its nearly $400,000 bimonthly payroll for the more than 500 employees who work for the tribe. The council approved a resolution to secure a 90-day, $888,000 line of credit with Wells Fargo Bank and to authorize the tribe to back it with $88,000 in certificates of deposit from a Morgan Stanley Inc. account, $300,000 from the Tribal Land Enterprise reserve account, $200,000 from the tribal casino's operating reserve account and $300,000 from the tribal Water and Sewer Enterprise Fund.

Another resolution authorized separate bank accounts for the several federally funded programs under 638 contracts.

One of the problems in the last administration was that councilmen requested advances on per diem as far as three to four months in advance, Kindle said.

"We've curtailed our spending a lot," he said.

A fair number of problems, Kindle said, stemmed from an antiquated computerized accounting system that dated back to the early 1960s.

"It was something I wanted to change two years ago. It was a probably a good system in its time, but it has outlived its time," Kindle said.

Kindle said he was aware the system had flaws and attempted to work on the issue last year. He slowly started to change accounting software at each of the tribe's programs until they were an integrated system, but the conversion to a new system required time and resources.

"We need a whole new system, a lot of training and a couple more monitors," said Kindle.

Richard Zephier, a contracting officer for the Bureau of Indian Affairs Aberdeen Area Office, told the tribal council at special meeting in late November that the tribe spent $2,306,967 of federal funds in a 90-day period from Aug. 13 to Oct. 13, 2001.

"The bulk of that money remains unaccounted for," Zephier said.

A Jan. 15 deadline has been set for the tribe to account for the $2.3 million. Zephier warned that unless the directive is followed, he wouldn't allow negotiation of the tribe's fiscal year 2002 federally funded contracts.

"I'm taking responsibility for it, and it is my responsibility as tribal chairman to take responsibility for it instead of pointing fingers at others. The buck stops at my desk," Kindle said.

"We're hoping to have everything in place by Jan. 15," he said.

The Business and Finance Committee will report to Zephier on Jan. 15 with recommendations to reorganize the tribe's financial matters and to meet the BIA directive.

Meanwhile, Kindle said the tribe will look at its options for securing a loan to cover its expenses and keep its programs operating. Tribal officials will look at what is available in lease payments and other revenue to leverage against the loan, he said.

While the tribe has tightened its purse strings, the council failed to pass another resolution recommended by its Budget and Finance Committee calling for a salary and per diem reduction for elected officials, and for political appointees.

The failure of the resolution frustrated Budget and Finance Committee members who are trying to slow the spending of tribal financial resources and force greater accountability.

"How can we expect our tribal directors and others to help our financial situation if we aren't willing to do it ourselves," asked Wanda Brave, a member of the tribe's Budget and Finance Committee

The tribe has asked its program directors to make financial adjustments to help the tribe get through this time of crisis.

The tribe is also dealing with a slowdown in the availability of trust funds managed under the BIA because of the upheaval in the BIA's reorganization of the management of trust resources.

Kindle said the tribe is having difficulties which are hampering payments to tribal members on general assistance. The problems also affect those receiving lease payments, the transfers of payments for Tribal Land Enterprises monies and foster parents caring for tribal children.