Introduction

Over the past 10 years, the Department of Indian and Northern Affairs (DIAND), in co-operation with First Nations, has worked to develop progressively more flexible funding arrangements for First Nations. Evaluation of experiences with the latest of these arrangements, the Financial Transfer Arrangement (FTA), is yielding encouraging results.

Background

In October 1983, the Special Committee on Indian Self-Government (the Penner Report) recommended introducing funding arrangements that would give First Nations expanded administrative or policy authorities under existing legislation. Consequently, in 1986, DIAND introduced Alternative Funding Arrangements (AFAs). Evaluations of experiences with AFAs and other types of funding arrangements showed that First Nations were keen to pursue the objective of funding on a more government-to-government basis. These evaluations also pointed to a need to strengthen the Department's accountability framework, consistent with the observations of the Auditor General. In response, over the last four years, DIAND has implemented several pilots of a new form of flexible funding arrangement, the FTA, designed to reinforce both ministerial and local accountabilities.

The implementation of the experiences with Financial Transfer Arrangements (FTAs) is to provide for an accountability regime across all First Nations and Tribal Councils. In terms of resourcing, the approach is to streamline the resource management process in a manner which seeks First Nations participation in managing a moderated resource base over a multi-year period. In terms of inter-departmental cooperation, it is intended that funding from a number of federal government departments be made available through a single federal arrangement in response to the desire expressed by First Nations to reduce administrative burdens.

Purpose of the Evaluation

The Department has undertaken to submit to Treasury Board an evaluation of the experiences to date with FTA. As the FTA concept is still largely at the developmental and experimental stages, this evaluation is formative in nature, with a focus on providing lessons learned and suggesting areas for improvement.

Evaluation Approach and Methodologies

The evaluation was done using in-house and contracted resources in consultation with an evaluation advisory committee. Evaluation methods consisted of three on-site case studies and one on-site visit with First Nations and Tribal Councils participating in pilots with block funding, telephone interviews with 55 participating and non-participating First Nations and Tribal Councils, visits at four DIAND regional offices and one district office, interviews with other DIAND regional and headquarters officials, interviews with representatives of other federal departments, and a comparative analysis of the pilot agreements.

Evaluation Findings

Evaluation Issue #1: To what extent have the targets and objectives of the experiences to date been met?

Overall, the evaluation found that the experiences to date with FTAs have been positive. They represent the introduction of a full service, block funding arrangement in that they provide First Nations and related organizations with increased budgeting and programming responsibilities subject to minimum conditions. The move toward global block funding continues to be relevant: it responds to First Nation desires for increased responsibilities and authorities, and enables the Department and First Nations to operate more effectively with moderated resources.

In terms of implementation status, as of April 1996, 29 First Nations and Tribal Councils had agreements in place and an additional 25 were in the process of entering agreements. The majority of this latter group joined the FTA process at the end of the data collection phase of the evaluation. The evaluation found that there has been an evolution in the nature and content of the pilot agreements. While all focused on variety of practices with block funding, areas which have evolved over the implementation of the pilots include accountability, resourcing, and agreement terms and conditions. The initial pilots were implemented under a variety of names such as second generation AFAs, Community Based Transfer Payments, Transfer Payment Agreements, with the later agreements being introduced as Financial Transfer Arrangements (FTAs).

A primary objective of the funding arrangement is to foster management flexibility in local programming and budgeting. The experiences to date have resulted in the introduction of a block funding arrangement beyond that provided under AFA and participating First Nations welcome the resulting flexibility. Several barriers to using the flexibility of AFAs (such as the number of programs included in the block funding agreement, the way these programs are resourced, and the number of agreements and amendments per First Nation) have been significantly reduced under the pilot FTAs. The new arrangement therefore provides substantially more flexibility than other funding arrangements.

Another objective of the funding agreement is to enable interdepartmental co-operation whereby other federal government department funding is included within DIAND funding arrangements. The evaluation found the extent to which this objective has been achievement is mixed. Where it has been implemented, it is viewed as a best practice. It is a First Nation-driven process that promotes efficiencies at the First Nation and departmental level by streamlining the funding process. Further standardization of reporting practices and accountability conditions and tools across departments would further promote this objective.

Evaluation Issue #2: Do the experiences to date address identified needs for change in terms of accountabilities? And if so, how?

Sound information management systems and budgeting were viewed as fundamental to successful implementation at the local level. Toward this end, having experience with an AFA prior to entering into FTA was seen as beneficial. Entry assessments were found to be instrumental in helping to develop or confirm the necessary requirements, and were viewed as one of the best ways of determining whether sound accountability systems are in place. In terms of local First Nation accountability, the experiences with FTAs to date have helped promote local accountability measures and integrate these within the agreements. Local accountability frameworks are being developed and substantial developments in this area were found in the later pilot agreements. The evaluation found that First Nations used a variety of accountability mechanisms including appeal mechanisms, local conflict of interest guidelines, submission of audit to membership, and program evaluation. There was no appreciable difference between the level and type of accountability mechanisms used by participating and non-participating First Nations. Questions were raised, however, regarding DIAND's role in monitoring and enforcing such measures.

The experiences to date and the ongoing development of the national generic model agreement have been instrumental in promoting development of a Departmental accountability framework and promoting review of the Department's reporting requirements. The later agreements have made clear moves toward enhanced terms and conditions. Although the AFA reporting guide was generally felt to be adequate for First Nations participating in the pilots, concerns were expressed about the implications of this level of reporting in future agreements. Concerns were also raised over whether the authorities represented by the FTAs were being clearly communicated, particularly the flexibility of programming authorities subject to the minimum program terms and conditions in relation to provincial legislative requirements. Accountability concerns were also noted regarding what a financial reporting regime under an FTA will represent, particularly for the ability of the Department to report on actual program expenditures. Although DIAND officials had mixed views on data reviews, it is clear these reviews provide an important element of the Departmental accountability framework and are necessary for developing a baseline database on which historical resourcing methodologies can be applied.

Evaluation Issue #3: What have been the impacts of the experiences to date, intended and unintended?

In terms of the short-term impacts, the evaluation found that the experiences to date with FTA have been positive. The majority of First Nations with a pilot were either satisfied or very satisfied, and none stated that they were dissatisfied. However, concerns were expressed by First Nations regarding the evolution of FTAs and the stricker local accountability requirements and resourcing levels found in the later pilot FTAs. Although the FTA is still in the early stages of development, the experiences to date have generally resulted in the intended short-term impacts: greater local accountability; more independent, formal relations between the Department and First Nations; increased flexibility to apply funds; and promoting the design of community programs and long-term human resources planning. Resource management processes were generally found to be more streamlined for the Department and First Nations; however, they involve increased resources on the part of First Nations to administer.

Evaluation Issue #4: What lessons can be found in terms of delivery process? What are the factors of success?

Several lessons were learned for future implementation. Among these are the need for sound information management systems at the local level, the need for thorough data management at the outset of the process, open information sharing between all parties, and transparency in the funding process. The need for consistent communications regarding FTAs is essential to ensure clear expectations and understanding of the FTAs.

Other factors of success include the provision of training to assist First Nations and Tribal Councils in adopting the increased programming and budgeting responsibilities associated with FTAs, ensuring entry assessments are undertaken which emphasize local information management systems, and data reviews prior to entry to ensure the accuracy of data being used.

Outstanding Implementation Issues and Developments

The evaluation identified a number of outstanding issues regarding future FTA implementation such as confirming the national generic FTA model, clarifying agreement terms and conditions, and further clarifying the roles and responsibilities within the funding process among sectors and directorates at DIAND headquarters. The evaluation recommendations and suggestions are provided to assist in addressing these questions and promote those factors identified within the evaluation which contribute to successful implementation.

Towards these ends, department management have undertaken a series of initiatives starting with a meeting of Senior Management in Winnipeg in October, 1996 to further define the FTA and future implementation processes. The decisions arriving from this meeting go a long way towards addressing the recommendations outlined below. Senior Management were supportive of the FTA concept and a decision was taken to continue the FTA pilots. Other actions taken include: initiating steps to finalize the national generic model including formalized consultations and communications with First Nations; undertaking activities to assist First Nations to prepare for block funding such as data review and program reviews; adopting consistent funding practices across regions; and identifying essential data requirements of First Nations. Although it is recognized that the government will continue to be highly program focused and that central agencies will continue to place significant program expectations upon DIAND, Senior Management identified the benefits of block funding, particularly in terms of the management flexibility it affords to First Nations.

Recommendations

The main suggestions and recommendations contained in section 11 of the report are provided below.

Process

• It is recommended that, prior to initial entry, joint management assessments be undertaken with all First Nations, regardless of former funding arrangement, with a particular focus on local information management systems and budgeting. Management plans should be developed, in collaboration with the First Nation, where entry requirements are not met.
• It is recommended that orientation sessions be held with Chief and Council at the outset of the agreements. In addition, orientation of Chiefs and Councils elected during the term of the agreement should be undertaken, with this option built into the agreements.
• It is recommended that a training program be developed that focuses on building program and financial management capacity for First Nation officials and staff.

National Generic Model

• It is recommended that the national generic model be confirmed as soon as possible.
• To assist in finalizing the national generic model, it is recommended that a formal process be established, such as an intersectoral task force consisting of senior headquarters and regional departmental officials, along with a working group and a working timetable.
• It is recommended that the division of responsibilities among sectors and directorates within headquarters for funding arrangements (such as developing and monitoring program terms and conditions, reporting, etc.) be clarified and clearly communicated throughout the Department.

Communications

• It is recommended that training, including workshops on FTAs for DIAND financial officers and program analysts, be integrated into the implementation process.
• It is recommended that ongoing internal communications be established, such as a newsletter, regarding FTA status and developments.
• It is suggested that the department facilitate inter-First Nation communications by promoting the development of a national inventory of best practices among First Nations in areas such as policy, programming, and accountability initiatives.

Resourcing

• It is recommended that a national, standard, transparent distributive resourcing model be used between the Department and First Nations.

Local Accountability

• It is recommended that the Department and First Nations work together to implement a limited number of pilot projects aimed at promoting the use of evaluation at the community level. These pilots would provide an evaluation framework, consistent with the block funding initiative, for use by First Nations and would foster the use of self-evaluation at the community level.

Departmental Accountability

• It is recommended that First Nations be consulted as part of the Department's review of its reporting requirements.
• It is recommended that financial information (at the program level consistent with Departmental authorities) on actual expenditures be provided on a national basis within the Departmental estimates.
• It is suggested that consideration be given to replacing the 1986 Treasury Board Submission with a revised FTA authority.
• It is recommended that there be a DIAND FTA agreement data review guide, with appropriate monitoring criteria and checklists like those in the entry assessment guide. These reviews should be conducted prior to signing the FTAs and the standardized program requirements and evaluation methodology should be communicated to First Nations prior to the reviews thereby assisting in garnering greater acceptance at the First Nation level.

Inter-Departmental Cooperation

• It is recommended that the Department's information management system be updated to reflect interdepartmental initiatives.
• It is recommended that DIAND senior officials in coordination with central agencies approach other federal departments about entering into memorandums of agreement re-affirming the commitment to enter into interdepartmental block funding arrangements with First Nations.

Interim Evaluation Of The Experiences To Date With Financial Transfer Arrangements (PDF 301 Kb) in PDF format.

Accessibility Notice

To read the electronic version of a document in PDF format, you will need to use Acrobat Reader. You can download and install the free reader from the Internet Website of Adobe Systems Incorporated.

Please visit Access Adobe to help make PDF files accessible to screen reading utilities. These tools convert Adobe PDF documents into HTML or ASCII text which can then be read by a number of common screen reading programs that synthesize text as audible speech.

Back