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With sequestration threat looming, Eastern Band preps for the worst

The Eastern Band of Cherokee Indians could see an estimated $2.2 million evaporate from its budget in March if Congress does not reach an agreement on the federal budget and mandatory, across-the-board cuts of 5.1 percent known as sequestration kick in.

The threat of sequestration was supposed to be an incentive for divisive lawmakers to come to an agreement on where to rein in spending and where to raise additional revenue.


The history of indecision and schism in Washington has tribal financiers expecting and planning for the worst.

“Having gone to D.C., it sounds like it’s likely,” said Kim Peone, chief financial officer for the Eastern Band. Peone added that given her position, she errs on the side of caution rather than hoping that something won’t happen, whereas a politician may have the opposite mentality.

The Eastern Band receives about $43.7 million from the federal government each year to fund various programs and departments, meaning the 5.1 percent cut would translate to $2.2 million.

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Many programs and departments typically funded by state government elsewhere in North Carolina are federally funded on the reservation — from road building to subsidized preschool for low-income families.

The threat of sequestration felt like a slap in the face to Peone, who said the budget year started off positive. This fiscal year, the tribe had lifted cost containment measures it had in put in place previously to ride out the recession.

“Here we are thinking we are on a good course, and we continue to be challenged by variables that we don’t have control over,” Peone said. She cited not only federal cuts but the closure of U.S. 441 through the Great Smoky Mountains National Park after a landslide in January, which could put a dent in casino revenue the tribe relies on.

“It’s going to be impactful, and it’s a daunting thought to think, ‘Oh my God, we are going to have to go back to the drawing table,’” Peone said.


Health care sees biggest hit

In terms of impact on Cherokee, Indian Health Services will take the hardest hit. Indian Health Services helps fund the Cherokee Indian Hospital and the tribe’s diabetes program, among other health services. The Eastern Band expected to get $26.9 million from IHS this year — more than half the tribe’s total federal funding. But Cherokee’s federal health funding could decline by $1.3 million under sequestration.

“It could be very, very difficult for this community to respond to such a deep, deep cut,” said Casey Cooper, CEO of the Cherokee Indian Hospital.

The hospital already has a list of services that it hopes to expand with the construction of a new hospital building, but the decrease in federal funds could force leaders to reduce the services it already offers — let alone expand.

“It’s going to adversely impact the amount of care we can provide,” Cooper said. “We would have to scale back the scope of services we provide.”

Cherokee Indian Hospital may also have to eliminate jobs to offset the cuts, though Cooper would not say if the hospital plans to lay anyone off yet.

The hospital has some reserves but not enough to keep it running without evaluating how to cut its current operational costs. The loss of funds would affect enrolled members’ access to medication, primary care and specialty care, Cooper said.

Sequestration also will significantly affect the tribe’s diabetes program, Cooper said.

The program is part of a national special diabetes program for Native Americans, who have higher rates of the disease due to genetic predisposition.

According to numbers from the Cherokee Indian Hospital, nearly 22 percent of enrolled tribal members have diabetes, whereas nationally only about 8 percent of Americans are diabetic.

The Eastern Band receives about $1.5 million a year for its diabetes program, and while a 5.1 percent budget reduction would only mean a $76,500 cut, that could mean that fewer educational materials are available.

Cooper said his biggest worry is how the sequestration will affect people’s daily lives, and thereby their health.

“I would be more concerned about the impact on cultural determinants,” Cooper said. Unemployment and low education and low capital are “large determinations in the health of a population.”

Cooper emphasized that the Indian Health Services is not a fattened pig in terms of funding.

“With the Indian Health Services, we are already talking about an agency that has proven to be severely underfunded,” Cooper said. “We are not talking about a plush agency.”

A 2003 study by the independent, bipartisan U.S. Commission on Civil Rights showed that IHS was underfunded by at least 41 percent.

“The federal government spends less per capita on Native American health care than on any other group for which it has this responsibility, including Medicaid recipients, prisoners, veterans, and military personnel,” the report stated.

Under President Barack Obama, IHS made positive strides, receiving increased allocations. But now, the department is facing cuts.

“This is going to be such a setback,” Cooper said. “That is what is so catastrophic about it.”


No respite in sight

Tribal leaders had lobbied the federal government to exempt IHS from the impacts of sequestration. Medicare, Medicaid, veterans’ programs, food stamps, the Children’s Health Insurance Program (CHIP) and child nutrition programs are immune from sequestration — so why not Indian Health also?

“We just basically said, ‘It was logical that it would be coupled in with these exemptions,’” Peone said.

But, IHS is still on the chopping block, as is funding for Cherokee’s Head Start program and the tribe’s department of transportation. Those three receive the largest federal appropriations. Cherokee DOT receives $4.8 million a year and will face a $246,000 cut. Head Start gets about $2.7 million annually. Therefore, a 5.1 percent cut would translate to $137,000.

Each division, which oversees the programs facing cuts, will be responsible individually for figuring out how to offset them. However, the tribe’s finance office may place a moratorium on discretionary spending.

“If this were to come into play, we probably would go into another cost containment. Maybe,” Peone said. “And it may not be tribal wide, it may be something in reference to the programs it affects.”

While the tangible cuts to the tribe’s budget are worrisome, the Eastern Band, and towns and cities around the U.S., will also feel the side effects of the sequestration on the economy.

“Whatever happens on a national level affects our economy, and then that economy trickles down to who we are locally,” Peone said. “If the market bounced, the play at the casino bounced.”

Reports from national media have warned that the cuts at the federal level will result higher unemployment rates, prevent some needy families from getting necessary help, cause delays at airports and eliminate national park programs, among other ramifications.

“It will cause a wave of pain,” Peone said.

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