Navajo-Hopi Nations,Flagstaff & Winslow News
Wed, May 27

When, and how, to spend Navajo Nation Permanent Trust Fund up for debate

WINDOW ROCK, Ariz. - Peterson Zah, sometimes referred to as the father of Navajo Trust Funds because of his involvement in creating several funds, said preserving those accounts is critical to the future of the Navajo people.

In the next few weeks, Zah will launch a public education program, create a web site and recruit volunteers to help continue to inform the public about protecting the Nation's reserves to secure the future of the Navajo Nation.

This past April was the 31st anniversary of the Nation winning a lawsuit -Kerr-McGee versus Navajo Nation - before the United States Supreme Court to the tune of $217 million.

The taxation dispute spurred the lawsuit, which served to establish the initial investment of more than $26 million to create the Permanent Trust Fund. The other trust funds that were established are: Chapter Government Nation Building Fund, College Scholarship Fund, Vocational Education Scholarship, Handicap Trust Fund, Elderly Senior Citizen Trust Fun, Navajo Academy/Preparatory School and, later, Land Acquisition and Veterans Trust Funds.

In September 2014, the Nation received another large settlement, $554 million from the federal government's mishandling of the tribe's trust asset. In accordance with the Navajo Nation's Appropriation's Act, 12 percent was deposited into the Permanent Trust Fund, 2 percent in the Land Acquisition Fund, and 4 percent into the Veterans Trust Fund. In addition 8 percent was set aside for attorney fees, which left $409.9 million.

The council established the Navajo Nation Síhasin Fund Dec. 31, 2014. Public hearings took place to collect comments from Navajo people on how best to spend the $409.9 million.

"Historically, there is pressure to reach into other fund reserves and spend more," said Jim Store, a member of the 15th Navajo Nation Council. "The easy access to funds is evident when evaluating the Síhasin Fund. The Síhasin Fund does not have the same financial controls as the Permanent Trust Fund. In fact, it only requires a vote of two-thirds by the Navajo Nation Council and the expenditure plan contains very broad criterion. The expenditure plan has no expectations for due diligence or a return on investments."

Zah said that when the 15th Navajo Nation Council approved the Permanent Trust Fund legislation, they did so because they wanted to provide a source of income for future generations and to replace depleting natural resources, such as coal, timber, oil and gas.

"These delegates were visionary leaders, fully committed to serving the public," he said. "They made sacrifices, always spoke Navajo in their deliberation, respected each other's views and acted in the best interest of the Nation."

He said he and Vice Chairman Edward T. Begay were fortunate and blessed to have served with those delegates.

When the Permanent Trust Fund was established in 1985, the 15th Council mandated that 12 percent of all tribal revenue be invested in the trust fund. They restricted spending any of that money for 20 years. The fund has two layers of financial control: the first layer requires a two-thirds vote by the Navajo Nation Council to authorize a referendum vote. The second layer requires approval by two-thirds of Navajo voters before the principle can be touched.

The controls help to preserve the principle. Another provision was a 20-year restriction from expending the principle's interest. It mandates that before 95 percent of the interest can be spent, a five-year expenditure plan be approved and the remaining 5 percent be reinvested in the principle.

The Permanent Trust Fund matured in 2006 - when its interest became eligible for spending. The restrictions were to allow the fund to grow.

Anticipating potential revenue, the Navajo Nation Council, in October 2002, created a citizen work group, made up of a representatives from five agencies to develop a fund expenditure plan for the fund. The work group, chaired by Zah,, held seven public hearings on and off the Nation.

The work group did not develop an expenditure plan but submitted five recommendations. The overwhelming advice was to not spend but to reinvest the interest until the fund reaches $1 billion.

Ever since the fund matured in 2006, the council has made attempts to expend the fund's principle and interest. Attempts have been made to amend the tribal code that governs the fund, but each of those efforts have failed.

In the following years, Zah, with a small group of volunteers and certain members from the 15th Navajo Nation Council, have been safeguarding the fund and interest so that it can reach its present combined value of over $2.77 billion for all trust fund investments.

This year, the 23rd Navajo Nation Council, working closely with the Office of the President and Vice President, developed and approved a five-year plan to use $150 million of fund interest for water infrastructure, economic development and agricultural projects.

Almost a year after the $554 million settlement, there are numerous proposals to spend the Síhasin Fund. They include projects from communities and the enterprises. One proposal is a $10 million request to fund the Twin Arrows Travel Center. Other proposals include $8 million grant, $3.5 million for convenience stores and $4.5 million for police substations.

Zah is troubled by some proposals and urges that proposals be beneficial and revenue generating. For example, Zah said in the next few years water will become a big issue for everyone, not just Navajos, because of a projected Southwest water shortage.

"We have to be ready when and if that day comes," he said. "If we spend any money now, it should be going toward water efforts. People in the urban and metropolitan areas live by water conservation rules. California has mandatory water usage restrictions. In Nevada, Lake Mead is now at an all-time low. These stories about water shortage are troubling."

Another critical area is the youth, said long-time tribal leader Charley Long, who is now a Gallup McKinley County Probate judge. He said there are a lot of social issues which impact youth and developing well thought-out and effective programs to help them become responsible and hardworking is important.

"There is not enough federal funding to meet the needs of our youth for education, job creation and economic opportunities," Long said. "Our youth are facing a crisis. In 2014, the Obama administration wrote a report called the "Native Youth Report," a status report. Obama called Native youth conditions a national crisis."

Over the past decades Zah and others have been strong advocates for protecting the Nation's Permanent Trust Fund from what they see as improper expenditures and ensuring disclosure to the public.

"It is important for the public to know about these funds and to remind our tribal leaders that the reserves are for our grandchildren and their children and so on," said Robert Salabye, a member of the 15th Navajo Nation Council and a tribal health advocate. "The Permanent Trust Fund serves a means for potential income and it needs to be safeguarded, the current interest alone averages about $65 million a year."

Navajo Nation President Russell Begaye said that financial officials have projected the same amount, $65 million, in interest for this year.

"If the economy improves, so would the interest for the Permanent Trust Fund," he said.

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