— Native American Finance Officers Association Executive Director Dante Desiderio
Fears young adults receiving large disbursements would lapse into idleness and drug abuse apparently have not materialized to a great degree . Studies show dropout rates for students with the Eastern Band of Cherokee improved when their families began receiving income subsidies .
But there is anecdotal evidence of increasing high school dropout rates tied to large per-capita payments .
“ After we started per-capita payments ( of $ 2,000 per month ) it seemed everybody lost motivation ,” a Southern California tribal leader told Harvard researchers . “ We had a high dropout rate , around 85 percent .”
According to studies — most notably a 2010 report by Duke University Medical School for the National Institute of Health — young Native American adult recipients of income subsidies encounter few psychiatric disorders . But there have been incidents of violence linked to drugs and gangs on a handful of California reservations with lucrative casinos .
Modest per-capita payments normally are used to pay off debts and nominal household expenses . Research suggests that mental health issues and socially damaging behavior for school-age children increase with the excessive accumulation of wealth .
The First Nations Development Institute encourages crafting per-capita distribution programs to promote education , savings and investment programs . Some tribes require the recipient to undergo financial training . Others require incremental payments over a period of time .
“ Considering the potential for negative consequences of children coming into one-time moderate-to-large amounts of capital as young adults , ages 18 to 25 years , it is a profound responsibility to assist youth to better understand the economic choices they have gained through accounts established by tribes for their futures ,” Karen Edwards and Sarah Dewees write in “ Developing Innovations ,” a study for the Native Assets Research Center .
“ Many children in tribes today do not remember historical ‘ hard times ’ and do not have a point of reference as to what life was like when their parents , grandparents and ancestors had to sacrifice just so their children would survive shortages of food , shelter and other basic necessities ,” Edwards and Dewees write .
An Alternative To RAPs
IGRA requires that tribes seeking to make per-capita payments submit a revenue allocation plan ( RAP ) to the Department of the Interior for approval . The RAP must ensure the tribe has adequate funding for its tribal government , tribal economic development and donations to charitable organizations and local governments .
In addition , the RAP must include information and criteria for accounting of disbursements as well as dispute resolution and utilization or creation of a tribal court system .
The primary criticism of per-capita is its divisive impact on politics and the fact it diverts revenue from government , social services and economic development programs .
Per-capita payments to individuals are subject to taxation . But the Tribal Welfare Exclusion Act of 2014 states that tribal government payments to citizens for certain benefits — such as health coverage , housing , elder care , education and cultural programs — are exempt from taxation .
“ Tribes are currently weighing a recent alternative ,” Desiderio says of the Welfare Exclusion Act . The legislation , Desiderio says , “ offers a way to provide programs and services that are exempt from income taxes , making them attractive alternatives to individual distributions for both the government and the individual .”
The demand RAPs place on the funding of tribal government programs can also impact bank underwriting of tribal debt .
“ The decision to continue or increase per-capita payments is not without consequences ,” Desiderio says . “ Banks and rating agencies may weigh the per-capita obligations when underwriting loans or assigning credit scores . So the decisions may impact future growth .
“ With the benefit of a few decades of experience and hindsight , our panelists will relate their experiences , lessons learned , and what issues may be in store for the future ,” Desiderio says . “ For example , with slowing revenue from a mature gaming industry and an exploding youth population , how do tribes meet future expectations ? We will also look to the academic community to weigh community impacts .”
“ When you get into guaranteed income , people depend on it . If something happens and the tribe can no longer maintain the payments , not only is it a political death knell for the current administration , but it has a lot of ramification for the tribal economy .”
— Joe Valandra , managing director of VAdvisors and former chief of staff for the National Indian Gaming Commission
38 TRIBAL GOVERNMENT GAMING 2019