Bureaucracy Times

All the news fit to be declassified.

Category: Congressional & Legislative

  • Medicare Froze Lab Cuts for Six Years. Now CMS Says It Can Save $1 Billion a Year.

    Congress created a market-based system for Medicare laboratory payments because the government had a fairly familiar problem: it was paying more than private insurers for many of the same tests. CMS’s preliminary 2027 Clinical Laboratory Fee Schedule is now the latest evidence of what happened when Congress spent six years preventing that system from correcting itself.

    The solution sounded straightforward enough.

    Collect what private insurers actually pay laboratories. Calculate the market rate. Use those numbers to periodically reset what Medicare pays.

    Then Washington spent years postponing the resets.

    Now, after finally collecting a fresh round of private-payer data, the Centers for Medicare & Medicaid Services says existing Medicare laboratory payment rates are approximately 16 percent higher, on average, than rates calculated from the private market.

    CMS estimates correcting that difference will save taxpayers about $1 billion annually.

    It is an impressive savings announcement.

    It is also the latest chapter in a pricing system that Congress repeatedly prevented from doing precisely the thing it was designed to do.

    The Government Builds a Market

    The Protecting Access to Medicare Act of 2014, better known as PAMA, fundamentally changed how Medicare establishes prices under the Clinical Laboratory Fee Schedule.

    Instead of relying primarily upon an administratively constructed fee schedule with historical roots, Congress directed CMS to collect payment information from laboratories and use the weighted median of private-payer rates to establish Medicare prices.

    The logic was difficult to quarrel with.

    If private insurers were routinely buying the same laboratory services for less money, Medicare should probably know about it.

    There was considerable money at stake.

    GAO later reported that Medicare paid approximately $7.1 billion for 433 million laboratory tests in 2017, the year before the first PAMA market-based rates took effect. The watchdog also found that Medicare had generally been paying more than private insurers before the transition.

    The first new rates arrived in 2018.

    Even that transition was hardly seamless.

    GAO subsequently concluded that CMS’s implementation methodology had produced an estimated $733 million in additional Medicare spending between 2018 and 2020 compared with an alternative baseline GAO believed better reflected congressional intent.

    Still, the underlying mechanism was now in place.

    Private prices would be collected. Medicare prices would be recalculated. The exercise would be repeated periodically so that the government’s laboratory fee schedule would remain connected to the market it was supposed to reflect.

    Then the updating largely stopped.

    Six Years at Zero

    The history is hiding in plain sight on CMS’s own Clinical Laboratory Fee Schedule page.

    For 2020, Medicare laboratory payment reductions were limited to 10 percent.

    For 2021, the reduction limit was zero.

    Then zero again in 2022.

    And 2023.

    And 2024.

    And 2025.

    And 2026.

    That six-year stretch was not the product of some unnoticed administrative malfunction inside CMS. Congress repeatedly altered the statutory schedule.

    Beginning in late 2019 and continuing through pandemic relief legislation and subsequent congressional extensions, lawmakers postponed reporting periods and delayed the application of additional PAMA reductions.

    Each intervention had its own legislative context. Taken together, however, they produced a remarkably simple result: for six consecutive calendar years, the ordinary PAMA mechanism could not impose further reductions on the vast majority of laboratory tests that otherwise would have been subject to them.

    The market continued moving.

    The Medicare schedule largely did not.

    And Medicare continued buying laboratory tests by the hundreds of millions.

    HHS’s Office of Inspector General reported $7.6 billion in Medicare Part B laboratory spending in 2018 and $7.7 billion in 2019. Spending reached $8 billion in 2020.

    MedPAC’s broader Clinical Laboratory Fee Schedule figures show spending climbing to $10.7 billion in 2021 before declining to $9.8 billion in 2022 and $9 billion in 2023.

    OIG reported that Part B laboratory spending reached $8.4 billion in 2024, a 5 percent increase from the previous year in its Part B dataset.

    Those numbers should not be mistaken for a running ledger of money lost because Congress delayed PAMA reductions. They aren’t.

    The laboratory market itself was changing dramatically during the same period.

    Genetic testing is the most obvious example. OIG found that Medicare Part B spending on genetic tests exceeded $3.6 billion in 2024 and accounted for approximately 43 percent of total Part B laboratory spending.

    Medicare was not simply buying the same basket of tests year after year at frozen prices.

    But that changing market is precisely why periodically obtaining current market data was supposed to matter.

    Then CMS Checked the Market Again

    CMS finally received a substantial new batch of private-payer information this year.

    The data underlying its preliminary 2027 Clinical Laboratory Fee Schedule cover private-payer transactions conducted between January 1 and June 30, 2025.

    Laboratories reported those transactions to CMS between May and July 2026.

    The resulting dataset was not trivial.

    CMS says 6,411 laboratories submitted information covering 1,947 billing codes. The agency calculated weighted-median private-payer rates for 1,528 of them.

    After years of statutory delays, Medicare once again had a contemporary private-market yardstick against which to measure its laboratory prices.

    The yardstick delivered an inconvenient answer.

    According to CMS, existing Medicare payment rates are approximately 16 percent higher, on average, than the new rates calculated using private-payer data.

    CMS estimates that bringing Medicare’s rates into alignment will save taxpayers approximately $1 billion every year.

    There is an almost perfect bureaucratic circle to the story.

    Congress created PAMA because Medicare needed laboratory prices that better reflected the private market.

    Congress then repeatedly postponed the process intended to keep those prices connected to that market.

    CMS eventually obtained fresh market information.

    And the government discovered Medicare was once again paying considerably more.

    The $1 Billion We Cannot Backdate

    The temptation at this point is obvious.

    Six years of frozen reductions. One billion dollars in projected annual savings.

    Multiplication is easy.

    It would also be misleading.

    CMS’s $1 billion estimate is based on the newly reported private-payer information and the preliminary payment rates calculated for 2027. It does not tell us what the correct market rate would have been in 2021, 2022 or any other year during the freeze.

    We therefore cannot responsibly multiply the current savings estimate by six and declare that the delays cost taxpayers $6 billion.

    Determining the actual fiscal effect of the repeated postponements would require reconstructing private-payer prices for those earlier periods and modeling what Medicare payments would have been had the scheduled reporting and reductions occurred.

    The available federal records establish something narrower, but hardly insignificant.

    Congress repeatedly postponed the system designed to update Medicare laboratory prices.

    CMS imposed no PAMA-driven reductions from 2021 through 2026.

    Medicare continued spending billions of dollars annually on laboratory services.

    And when CMS finally compared its existing rates against a substantial new collection of private-payer data, it found Medicare’s prices approximately 16 percent higher on average.

    The agency now expects correcting the discrepancy to save roughly $1 billion annually.

    Even the Correction Has a Speed Limit

    Medicare will not simply erase the difference on January 1.

    Federal law continues to limit how quickly individual laboratory payment rates can fall. For calendar years 2027 through 2029, reductions for individual tests generally cannot exceed 15 percent in a single year.

    That means some prices substantially above their newly calculated private-market rates will require multiple years to reach them.

    The preliminary 2027 rates are being finalized this fall and are scheduled to take effect January 1.

    So, more than a decade after Congress created a market-based laboratory pricing system, the government is preparing to resume the process of bringing Medicare prices closer to the market.

    CMS is presenting the result as a significant taxpayer savings initiative, and $1 billion annually certainly qualifies.

    But the savings announcement also raises the question sitting quietly beneath it.

    If periodically checking Medicare’s prices against the private market can save taxpayers a billion dollars a year, what happens when Washington spends six years postponing the check?

    For now, the government has not provided that number.

    It has, however, provided a rather compelling reason to ask.

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  • The Agreement Washington Won’t Let Anyone Update

    There is a particular kind of bureaucratic failure that doesn’t require anyone to be corrupt, lazy, or even wrong. It only requires two offices that disagree about who is allowed to fix something. The State Department’s Inspector General found exactly that arrangement sitting inside Embassy Guatemala City, in a report that spends most of its pages on the usual inventory of a mismanaged outpost (unregistered networks, overdue travel advances, a warehouse full of furniture nobody can account for) before landing on something more interesting.

    An agreement the United States signed with a foreign government sits frozen because nobody in Washington will let anyone update it, alongside a set of legally required evaluations that nobody at post even knew they were supposed to conduct.

    A Regional Hub Built From the Wreckage

    Guatemala’s embassy was never a quiet posting. It sits on a 9.4 acre compound, serves a community of roughly 50,000 US citizens, and functions as a category 4 embassy, the State Department’s own term for a post carrying outsized political and economic weight in its region.

    When USAID stopped implementing foreign assistance on July 1, 2025, following the Trump administration’s foreign aid review, the Bureau of Western Hemisphere Affairs designated Guatemala City as the regional assistance hub for Central America. The embassy inherited 18 legacy USAID projects worth $120.6 million and staffed the transition with three US direct-hire employees and five locally employed staff, a skeleton crew for a portfolio that size.

    The report is candid about what that transition actually felt like from inside the building. Staff described incomplete and shifting guidance, unclear expectations about what a “regional hub” was even supposed to do, travel restrictions, and a steadily rising pile of administrative approvals. The OIG’s own prior work found that the Department’s Assistance Transition Working Group never built a strategic workforce plan to figure out how many positions the new arrangement actually needed, following the same key practices the Government Accountability Office has been recommending for years.

    The Department’s last workforce strategic plan expired in 2023 and has not been replaced. So the hub was staffed by instinct rather than by plan, which is one way to run a $120 million portfolio, just not a durable one.

    The Letter Nobody Is Allowed to Fix

    Buried in the foreign assistance section is the finding that should worry anyone who cares about how the United States keeps its word. The Bureau of International Narcotics and Law Enforcement Affairs operates in Guatemala under a 2015 Letter of Agreement that still commits the US government to sectors, including community policing and justice sector reform, that INL quietly stopped funding years ago. Embassy staff told OIG they started drafting an update. Then, in January 2025, INL Washington told them to stop, pending further guidance that never arrived.

    INL’s official response to this finding is a small masterpiece of institutional confidence. The bureau maintains its current activities technically fall within the scope of the old agreement and its modifications, even while conceding the document needs modernizing, and says it will renegotiate “at an appropriate time,” citing Guatemala’s 2027 general elections as a scheduling consideration. OIG’s reply does not buy the premise.

    As the report notes, the agreement commits the US to activities INL no longer supports, which is precisely the risk the finding describes, and the embassy already did the preparatory work before Washington told it to sit down. The recommendation stays open until the Department produces an actual updated agreement, not a plan to eventually consider producing one.

    The companion finding is worse, because it is a repeat offense. INL Guatemala never conducted the joint program evaluations required by that same 2015 agreement and its subsequent amendments, evaluations meant to happen annually, then quarterly, then biannually as the agreement was modified. Embassy staff simply didn’t know the requirement existed.

    This is not INL’s first time getting caught here. OIG flagged the identical failure in a 2023 inspection, and the bureau’s fix at the time was a February 2024 cable instructing embassies to meet with counterparts and file an annual summary. Two years later, Guatemala’s INL staff still hadn’t produced documentation of a single formal joint evaluation, offering instead a description of regular but informal meetings under the High-Level Security Dialogue.

    Regular conversation is not the same thing as a written evaluation measured against agreed metrics, and the Department’s own instruments say so in writing, which makes this less a lapse than a pattern the bureau has now failed to correct twice.

    The Ledger of Small Failures

    Once you get past foreign assistance, the report reads like a checklist of an embassy running on staff who are stretched too thin to double check anything. Twenty nine of 140 residential properties never received the seismic safety evaluation required for a country OBO itself rates as very high risk for earthquakes, a gap the embassy blames on management oversight rather than resources. Property management fared no better.

    Some $315,000 in nonexpendable equipment, including $267,000 of IT hardware, moved from warehouse to office without the required transaction paperwork, while the furniture and appliance pool sat at nearly double the Department’s stock cap, with $89,000 in assets misclassified, including baby cribs and vacuums somehow coded as program furniture.

    Fourteen chauffeurs blew past the 10 hour daily duty limit on 34 occasions across ten pay periods, a driver safety violation the embassy attributes to poor trip planning rather than any shortage of drivers.

    INL itself ran up $115,000 in overdue travel advances, nearly all of it tied to an internal 90-day repayment habit that directly contradicts the Department’s 30-day standard, the same section that couldn’t produce its evaluation paperwork running its own informal exception to a different rule entirely.

    The most quietly damning number in the whole report involves money the Department didn’t lose so much as fail to notice. Only one of the embassy’s five US direct-hire Diplomatic Technology positions was funded through International Cooperative Administrative Support Services, the mechanism that splits IT costs across the agencies who actually use the service, despite the embassy’s own estimate that a second position spends more than half its time on ICASS work.

    The Department had been quietly absorbing costs that other agencies were supposed to share, to the tune of an estimated $219,000 over three years, not because anyone hid it, but because nobody at post knew the requirement to check existed.

    It is the same root cause running through half the findings in this report: not fraud, not negligence in any dramatic sense, just an institution that never told the people doing the work what the rules actually required of them.

    What the Concurrence Actually Buys You

    Embassy Guatemala City concurred, or partially concurred, with all 11 recommendations, and OIG considers every one of them resolved, which in the audit world is a term of art meaning the parties agree on what should happen next, not that it has happened yet. The seismic assessments are still eight properties short of complete.

    The FAP stock reduction target is still short of the Department’s cap, aimed for the end of September. The updated Letter of Agreement is not yet negotiated, and INL’s own timeline explicitly runs it past a foreign election it hasn’t happened yet.

    Resolved, in other words, is a status the Department assigns to problems it has agreed to eventually stop having, which is a useful thing to remember the next time an agency’s press office announces that an inspector general’s findings have been addressed.

    Sources: U.S. Department of State Office of Inspector General, Inspection of Embassy Guatemala City, Guatemala (ESP-25-01, 2026); Executive Order 14169, Reevaluating and Realigning United States Foreign Aid (January 2025).

  • Forty Six Percent of Alaska’s Village Water Systems Have Nobody Watching Them

    Somewhere in Alaska in 2025, tribal members turned on a tap and got water contaminated with E. coli, a bacterium capable of causing gastrointestinal illness serious enough, in vulnerable people, to become life threatening. The cause was not a burst pipe or a natural disaster.

    According to a new Government Accountability Office report on tribal water infrastructure, it happened because the utility did not have enough qualified personnel on staff to make sure its chlorination equipment was actually working (Government Accountability Office, GAO-26-107178).

    This was not an isolated incident. It happened twice in 2025 alone, and it fits inside a much larger, quietly alarming statistic buried in the same report, that nearly half of Alaska Native village drinking water systems had no primary certified operator on staff during that same fiscal year.

    The Job Nobody Explains Until Something Breaks

    Water operators are, in the most literal sense, the reason a water system does what it is supposed to do after the ribbon-cutting ends. GAO’s report spells out exactly what that job entails, running the equipment, controlling the treatment processes, and monitoring the plants that make water safe to drink, while wastewater operators do the equivalent work removing pollutants before water is released back into the environment.

    These are not entry level positions filled on a whim; operators need specialized training and must earn and maintain certifications tied to the specific complexity of the system they run, certifications that exist precisely because getting this work wrong has direct public health consequences.

    A water system without a certified operator is not simply understaffed in the abstract sense that any workplace might be short a hand. It is a facility that treats and delivers drinking water without anyone certified to confirm it is doing so correctly.

    That is the exact condition GAO found across a huge share of Alaska Native villages. Citing State of Alaska data, GAO reports that about 46 percent of Alaska Native village drinking water systems, 73 out of 157, did not have a primary water operator certified to the level required for that system on staff in fiscal year 2025.

    That figure applies specifically to systems that were required to have a certified primary operator in the first place, meaning it is not padded by facilities too small to need one. Nearly half of the systems that were supposed to have a qualified person running them did not.

    Why Nobody Stays

    GAO and the State of Alaska both point to the same root cause, and it is not a mystery requiring further study. Rural utilities in Alaska experience high operator turnover, and IHS senior officials attributed that turnover directly to a lack of tribal funding for water operator salaries.

    This is not a story about a shortage of qualified people willing to do specialized technical work in remote communities; it is a story about tribal water systems that, once built, frequently lack the money to pay the specialized staff needed to keep them running, so operators leave for jobs that pay better, and the system cycles through vacancy after vacancy. One utility, unable to afford the energy costs required to run its wastewater aeration system, simply stopped aerating its wastewater, a direct, documented consequence of an operating budget too thin to cover routine costs.

    This turnover and funding problem sits at the center of one of the report’s core findings, that IHS generally does not fund routine operations and maintenance for the water systems it helps build.

    IHS pays to construct the plant. It largely does not pay to keep qualified people running it afterward. The system gets built, the ribbon gets cut, and then the ongoing cost of the one thing that actually keeps water safe, namely a trained person watching the equipment, becomes the tribe’s problem alone, in communities that GAO’s own broader report describes as chronically underfunded relative to the tax base and financing options available to non tribal communities.

    What an Empty Operator Position Actually Costs

    GAO does not let this stay abstract. In 2025, two tribes experienced E. coli contamination in their water systems specifically because they lacked adequate operations and maintenance capacity, including not having enough qualified personnel on hand to ensure chlorination equipment was functioning properly.

    E. coli contamination in a drinking water system is not a paperwork violation; it is a direct threat of gastrointestinal illness and, in vulnerable populations, more serious health outcomes. In a separate 2024 incident, a different tribe lacked enough wastewater utility operators to perform routine maintenance on a lift station, and when the pump inevitably failed, the result was prolonged sewage overflow.

    These are not edge cases dredged up to make a point. They are what GAO explicitly identifies as the predictable consequence of a system where nearly half of a state’s tribal water utilities cannot keep a certified operator on staff, wired directly to a funding structure that pays for construction but not for the ongoing salaries needed to run what gets built.

    The connection between the abstract 46 percent figure and an actual gastrointestinal illness outbreak is not speculative; it is the same causal chain GAO lays out explicitly, funding gap, operator turnover, unmonitored equipment, contamination event.

    A Pilot Program, Finally Proposed

    GAO’s response here goes further than most of its recommendations elsewhere in the report, because this is the one place where GAO does not simply ask an agency to fix its own paperwork. GAO suggests Congress consider authorizing and directing IHS, working with tribes and in collaboration with EPA, to establish a pilot program that would actually help fund tribes’ routine operations and maintenance costs, specifically things like water operator salaries and the energy costs needed to run treatment equipment.

    It is worth noting what this recommendation implicitly concedes, that the current system, in which the federal government funds construction but not the staffing needed to safely operate what it built, is not working, and IHS itself has acknowledged its statutory authority does not currently extend to covering routine operations and maintenance costs at all.

    A pilot program is a modest first step relative to the scale of the problem GAO documents. Forty six percent is not a rounding error or a temporary staffing hiccup; it is essentially a coin flip on whether any given Alaska Native village’s water system currently has a certified professional watching over it. Every one of those vacant positions is a system running, or not running, on borrowed time, waiting for the next equipment failure nobody catches until people start getting sick.

    Source: U.S. Government Accountability Office, Tribal Water Infrastructure: Federal Agencies Should Better Track and Coordinate Their Assistance to Alaska Native Villages (GAO-26-107178, September 2026). The staffing gap is one of three structural failures in the same report. Tribes also contend with a forty-year statutory prohibition that bars IHS from connecting water to homes built with HUD housing funds, leaving communities to choose between homes without water or fewer homes. And when multiple agencies try to fund projects together, the absence of a standardized USDA-IHS interagency agreement adds nearly $100,000 in overhead per project — overhead that produces no water, no pipe, and no certified operator.

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  • The Government That Isn’t: How America Outsourced Its Regulators

    The New York Stock Exchange, as any diligent reader of an SEC filing will notice buried in the letterhead, is an LLC. Not a bureau, not a commission, not a branch of anything resembling the federal government. It is a subsidiary of Intercontinental Exchange, a publicly traded company with shareholders who would very much like a return on their investment.

    And yet the NYSE writes rules, in this case NYSE Rule 1210, that determine how long a stockbroker who fails a licensing exam must sit in the penalty box before trying again. It publishes those rules through the Federal Register. It submits them to a Commission with the word “Securities” in its name. It behaves, in every visible respect, like a government agency, because Congress decided in 1934 that it should be allowed to.

    This is the self-regulatory organization, or SRO, and it is one of the more elegant tricks in the American regulatory playbook.

    Rather than build a federal bureaucracy large enough to police every trading floor and brokerage in the country, Congress simply deputized the industry to police itself, with the government reserving a veto and a badge. The result is a hybrid creature that cashes private paychecks while wielding public authority, and that hybrid nature is exactly why nobody quite knows what to call it when asked.

    A Regulatory Agency That Turns a Profit

    The legal architecture is straightforward enough on paper. Section 6 of the Securities Exchange Act of 1934 requires securities exchanges to register with the SEC and to adopt rules governing their own members, rules that must, among other things, prevent fraud and manipulation and promote “just and equitable principles of trade.”

    The SEC’s own historical account of this arrangement traces the impulse back to a practical concession, one first voiced by an Assistant Secretary of Commerce in 1963, that direct government regulation of markets “on a wide scale” was simply too unwieldy to attempt (SEC Historical Society). Better, the thinking went, to let the exchanges regulate themselves, with Washington holding a leash.

    That leash is real. Under Section 19 of the Act, an SRO must submit every proposed rule change to the SEC, which is precisely the mechanism on display in Release No. 34-106460, the filing that prompted this piece; NYSE proposing to shave FINRA’s own qualification exam waiting periods down to match, filed under a provision that lets “immediately effective” changes take hold while the Commission merely watches from the wings (SEC Release No. 34-106460, File No. SR-NYSE-2026-44).

    The SEC can suspend an SRO rule within 60 days if it senses trouble. It rarely bothers. FINRA, the successor to the old National Association of Securities Dealers and now the primary regulator of broker dealers nationwide, occupies the same strange perch, a nonprofit corporation that nonetheless carries the statutory power to fine, suspend, and expel the very firms that fund it through membership dues.

    Cornell’s Legal Information Institute puts the arrangement in blunter terms than the SEC ever would, noting that Congress built in “more stringent oversight” precisely because lawmakers recognized the conflict of interest lurking inside the design, the fox, as the encyclopedia entry puts it, guarding the chicken coop (Cornell LII).

    The fox has so far kept the coop reasonably tidy, though the 2008 financial crisis and a steady drizzle of enforcement settlements suggest the guarding is more aspirational than absolute.

    The Robe Wears the Badge Too

    Securities markets are the flashiest example, but they are far from the only industry that gets to write its own rulebook.

    Ask a lawyer who regulates lawyers and the honest answer, in most states, is other lawyers, operating under a license from the state’s highest court. The Washington State Bar Association, to take one plainly worded example, “operates under the delegated authority of the Washington Supreme Court” to license and discipline the state’s attorneys, administering exams, maintaining records, and running the entire professional discipline system “without public funding” (Washington State Bar Association).

    California’s arrangement is stranger still. The State Bar there was established by statute in 1927 as a public corporation, yet the state’s own Supreme Court has insisted, in litigation over just this question, that the legislature’s involvement “does not alter or affect its constitutional and inherent regulatory authority over the bar” (State Bar of California).

    Nobody in Sacramento is quite sure whether the State Bar is a government agency, a private association, or some administrative changeling that shape shifts depending on which court is asking.

    The justification offered for this arrangement, at least by the people who benefit from it, is that self-regulation preserves judicial independence from the other two branches, a genuinely serious argument dressed up, not incidentally, as a professional cartel’s best defense of its own gatekeeping power.

    The American Bar Association’s Model Rules make the same case for lawyers that the SEC once made for stockbrokers, namely that the industry, not the state, should hold the whip, and that the whip will somehow be wielded more wisely for it.

    Medicine, Accounting, and the Long Tail of Delegated Trust

    The pattern repeats across American professional life with a consistency that ought to unsettle anyone who assumes a license means a government inspector signed off on it. State medical boards, composed overwhelmingly of physicians, license and discipline doctors under authority delegated by state legislatures.

    Accounting has its own version in state boards dominated by CPAs. Even arbitration, that quiet corner of civil law where most consumer and employment disputes now go to die, runs through the American Arbitration Association, itself recognized as an SRO with statutory duties under securities law (Wikipedia, Self-regulatory organization).

    In every case the pitch is identical, that professionals understand their own profession better than a generalist bureaucrat ever could, so let them write the rules, subject to a government stamp that arrives after the fact and rarely gets withheld.

    What ties the securities exchange to the state bar to the medical board is not statutory language, which varies wildly, but a shared bet that the regulated industry, given the pen, will regulate itself more competently and more cheaply than the government could manage alone.

    Sometimes that bet pays off in exactly the dull, bureaucratic fashion intended, a waiting period trimmed from 30 days to 15, filed, published, forgotten. Other times the fox remembers what it is.

    The Ledger So Far

    None of this is secret and none of it is new; the SEC’s own historians trace SRO structures back more than two centuries and treat the arrangement as a settled compromise rather than a scandal (SEC Historical Society).

    But settled is not the same as scrutinized, and an institutional structure that quietly licenses lawyers, disciplines brokers, and adjudicates arbitration claims, all while carrying letterhead that says “LLC” or “Association” rather than “Department” or “Bureau,” deserves more attention from the public it nominally serves than a stray footnote in a Federal Register notice.

    The government did not disappear when it delegated these powers. It simply changed its clothes.

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  • The Department Started Fixing Its Data, Then Fired the People Fixing It

    Late in 2024, the Department of Education did something almost unheard of in federal data governance. It admitted a flaw in one of its own signature statistics and started building the fix. Officials began requiring states to report the number of students enrolled in a school across the full school year, the same timeframe already used to count chronically absent students, instead of the single frozen October snapshot that had been producing chronic absenteeism rates north of one hundred percent. It was a small, boring, correct decision. Then the Department gutted the office responsible for finishing it, and decided the fix wasn’t worth finishing after all.

    A Reorganization With a Body Count

    In March 2025, the Department announced a reduction in force and reorganization. The numbers, drawn from Office of Personnel Management data cited in GAO’s report, are not subtle. The Institute of Education Sciences, the statistical and research arm responsible for the EDFacts data collection that produces chronic absenteeism figures, went from 191 staff at the end of calendar year 2024 to 28 staff at the end of 2025, a reduction of more than 85 percent. The Office of Elementary and Secondary Education, which officials told GAO serves as data steward for the chronic absenteeism collection specifically, lost 43 percent of its workforce over the same period.

    Officials were direct with GAO about the sequence of events. They began the enrollment fix in late 2024. They later decided not to proceed, “due to staffing changes at the agency.” That sentence, delivered without elaboration, is doing an enormous amount of work. It is the Department’s own explanation for why a known, documented flaw in a nationally reported education statistic will keep producing implausible numbers indefinitely. Not because the fix was hard. Because the people assigned to do it no longer worked there.

    The Burden That Was Already Being Carried

    What makes the abandonment particularly hard to defend on the merits, as opposed to the staffing chart, is how little the fix would have actually cost anyone. States are already required to identify which students were enrolled in a given school for at least 10 days, because that is the threshold used to determine who counts as chronically absent in the first place. GAO interviewed an outside expert on chronic absenteeism data who made the obvious point plainly, since states are already identifying and collecting these enrollment figures internally to comply with an existing requirement, reporting that same number to EDFacts, rather than the separate October 1 snapshot, would add minimal additional burden.

    This is not a case of the Department discovering a fix that would require new infrastructure, new surveys, or new cooperation from fifty-one state agencies that would rather not be bothered. The data was already sitting in state files. The only missing step was an internal decision, at the Department, to accept it as the new denominator and update the collection specification accordingly. That decision got made, reversed, and shelved, all inside about a year, and the reversal had nothing to do with the states.

    It is also worth noting what this same reorganization did not spare. The same Department that could not staff a straightforward denominator fix also suspended its consolidated monitoring of ESEA fiscal and programmatic requirements across all fifty one states in 2026, the subject of a separate finding in this same GAO report. These are not two unrelated cost-cutting decisions that happened to land in the same document. They are two downstream consequences of one upstream event, a reduction in force large enough to leave the agency unable to sustain either its oversight function or its data quality commitments, at the same time, in the same fiscal year. When an agency loses eighty five percent of a statistical office’s staff, it does not get to treat the resulting gaps as a series of isolated, defensible tradeoffs. It has one explanation, repeated in two different sections of the same audit.

    A Strategic Plan That Reads Differently in Hindsight

    The Department’s own Strategic Plan for fiscal years 2022 through 2026 identifies strengthening agencywide data governance as a stated goal, and names improving the quality of data collected from grantees and subrecipients as one of the strategies for getting there. GAO quotes this language back at the Department in its report, not unkindly, but not gently either. An agency does not get credit for a data governance strategy it wrote down and then failed to staff.

    The Department’s public defense of the current approach, offered in its formal response to GAO’s recommendations, does not mention the reduction in force at all. It says only that the Department has “chosen to continue working with currently reported EDFacts data elements, highlighting limitations as needed, rather than imposing additional reporting burden on states.” That framing casts the decision as a considered tradeoff between data quality and administrative burden. GAO’s own reporting elsewhere in the same document shows it was not a tradeoff at all. It was a project that started, ran into a staffing cliff, and stopped, and the public explanation retroactively describes the stopping point as a choice.

    There is a version of this story where an agency looks at its own reduced capacity, decides which existing commitments it can no longer keep, and says so plainly to Congress and the public. There is another version where the agency keeps the sentence about “highlighting limitations as needed” and quietly drops the sentence about staffing changes into an interview with an auditor, where it will only surface if someone reads a forty page report closely enough to notice the connection. The Department picked the second version. GAO just happened to be reading closely, and the version of events available to anyone who does not read forty page audit reports, meaning most parents, most school board members, and most of Congress, is still just the tidy line about choosing not to impose additional burden on states.

    Source: U.S. Government Accountability Office, K-12 Education: Actions to Improve Oversight of Key Federal Programs and Address High Chronic Absenteeism (GAO-26-107920, September 2026). Related: Eighteen Billion Dollars, and Nobody Assigned to Watch It and A Chronic Absenteeism Rate of 125 Percent Is Still an Official Federal Statistic.

  • The Paperwork Costs More Than the Pipe

    Imagine two identical tribal water projects, same pipe, same pump, same size crew, funded through two different federal agencies. One costs the tribal health consortium administering it about $15,000 in extra paperwork to complete. The other costs nearly $100,000. The physical infrastructure is the same. The only variable that changed is which federal agency’s money paid for it, and specifically, whether that agency had already bothered to sign a standardized agreement with the Indian Health Service. According to a new Government Accountability Office report, that gap is not hypothetical; it is a real cost estimate from a tribal health consortium that runs water programs in Alaska, and it is one of the clearest illustrations in the entire document of how interagency plumbing can cost more than the plumbing itself (Government Accountability Office, GAO-26-107178).

    One Agreement, Two Outcomes

    IHS routinely works with EPA to jointly fund tribal water projects, and over time the two agencies have built something useful, a standard interagency agreement, or IA, with agreed upon terms and conditions that both sides already understand (GAO-26-107178). When a project moves through that channel, the paperwork is largely settled in advance. USDA, by contrast, does not often contribute to projects already listed in IHS’s own project tracking database, and IHS area officials and USDA state office staff told GAO there is often little to no collaboration between the two agencies on the same tribal water projects (GAO-26-107178). When USDA money does end up funding pieces of an IHS project, it typically arrives through a different, less standardized channel, with the tribe itself acting as project owner, negotiating USDA’s application requirements directly and retaining responsibility for administering the funds on its own (GAO-26-107178).

    That difference in plumbing between agencies produces a difference in cost that has nothing to do with the water system being built. The tribal health consortium that administers Alaska’s water program estimated that using funding sources without a standard IA in place, USDA being the example GAO cites by name, can add close to $100,000 in additional administrative costs to a single project (GAO-26-107178). The comparable figure for an EPA-funded project moving through the existing standard IA with IHS was about $15,000 (GAO-26-107178). Same category of project. A roughly sevenfold difference in overhead, driven entirely by whether the funding agency and IHS had already done the paperwork once, in advance, at the program level, instead of leaving each individual project to reinvent it.

    Where the Extra Ninety Thousand Actually Goes

    It would be easy to wave this off as an abstract accounting exercise, so it is worth being specific about where that nearly six figure gap comes from. According to the tribal health consortium’s own cost breakdown, the most significant drivers are the application process itself, the development and legal review of individual, one off project agreements negotiated from scratch, spending and billing procedures that differ from IHS’s own systems, and the ongoing coordination and reporting required to keep two agencies’ bookkeeping in sync across the life of a project (GAO-26-107178). None of that is water infrastructure. None of it is engineering, materials, or labor on the actual system tribal members will eventually drink from. It is entirely the cost of two federal bureaucracies figuring out, one project at a time, how to talk to each other and hand off money.

    GAO is explicit that most of these costs are the kind that a standardized program level agreement could eliminate; the consortium’s own estimate flags application processes, individual agreement development, billing procedures, and reporting coordination as exactly the categories that standardized terms and conditions are designed to address (GAO-26-107178). In other words, nearly all of the $85,000 difference between the USDA path and the EPA path is not an inherent cost of moving federal water infrastructure money to a tribe. It is the cost of doing that negotiation over and over, at the individual project level, because no template exists.

    The Fix Already Exists, Just Not for USDA

    The frustrating part of this story is that GAO is not asking anyone to invent something new. IHS and EPA have already proven a standardized IA works; it is the reason EPA funded projects only run up about $15,000 in overhead rather than $100,000. GAO’s recommendation is essentially to extend that same template to USDA. GAO recommends that IHS, working with USDA’s Under Secretary for Rural Development, develop program level standardized interagency agreements, with agreed upon terms and conditions, for USDA’s Native American and Water and Waste Disposal programs, and use those agreements whenever tribes request that USDA funds be transferred to IHS (GAO-26-107178). Where legally permissible, GAO suggests those standard terms include advance lump sum payments and the removal of duplicative USDA administrative requirements, mirroring what already works in the EPA relationship (GAO-26-107178).

    USDA’s own response to this recommendation is worth sitting with. The agency neither agreed nor disagreed, noting instead that it was already working on state level interagency agreements and that expanded use of those might be possible (GAO-26-107178). GAO pushed back on that framing directly, arguing that state by state agreements do not solve the underlying problem, since USDA needs an effective tool it can leverage nationwide, not a patchwork negotiated separately in every state where a tribal water project happens to sit (GAO-26-107178). A program level agreement, done once, would apply everywhere USDA and IHS work together. Fifty separate state level versions of the same negotiation simply relocates the inefficiency instead of removing it.

    What a Sevenfold Markup Actually Buys

    Step back from the specific numbers and the pattern here is almost embarrassingly simple. Two federal agencies can jointly fund the same category of tribal water project for wildly different amounts of overhead, and the only variable is whether they had already agreed, once, on how to work together before the money started moving. IHS and EPA did that homework years ago and the administrative cost dropped accordingly. USDA has not, and every tribal water project that touches USDA money pays a tax for that gap, a tax that shows up nowhere in a press release about funding awarded, but shows up very precisely in a tribal health consortium’s own internal accounting.

    Ninety thousand extra dollars per project does not buy better water. It buys more lawyers reviewing individual agreements, more staff hours reconciling two accounting systems that were never designed to talk to each other, and more time before anyone actually turns on a tap. GAO has already shown, using IHS’s own relationship with EPA, exactly what the alternative costs. USDA’s job now is to stop treating that as optional. The overhead problem is one of three structural failures documented in the same GAO report. Even before the interagency funding question arises, many of these systems are built under a forty-year-old statutory prohibition that bars IHS from connecting water to homes built with HUD funds — leaving tribes to choose between homes without water and fewer homes altogether. And even when a system does get built and funded, nearly half of Alaska Native village water systems had no certified operator on staff in fiscal year 2025 — a direct consequence of IHS funding construction but not the ongoing salaries needed to run what it builds.

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  • DOJ Rewrites the Rules on Whistleblower Suits, Right After Quietly Killing Four Times as Many of Them

    The Justice Department announced on September 18 that it was revising two sections of the Justice Manual governing the False Claims Act, the statute the government has used since 1986 to recover more than $85 billion from contractors, hospitals, and grant recipients who lied to Uncle Sam. Associate Attorney General Stanley E. Woodward Jr. described the changes in suitably poetic terms: “The Department of Justice should enforce the law, not make law through enforcement.”

    A fine sentiment, and one that would carry more weight if the policy in question were not primarily a formal blessing for something DOJ was already doing at quadruple its previous rate.

    This is not the Department’s first pass at the Manual, and it won’t be the last; the document is a living internal rulebook, revised whenever an administration wants to signal, in writing, how it intends to point the FCA’s considerable weaponry.

    What makes this revision worth a second look is not its stated content but its timing, arriving four and a half months after a senator started asking pointed, on-the-record questions about exactly the authority the Manual now blesses.

    The Manual Gets a Rewrite

    The first revision reinstates the 2017 “Brand Memo” doctrine, which holds that sub-regulatory guidance (the informal circulars, bulletins, and advisory letters agencies issue between actual rulemakings) cannot create legal obligations that don’t already exist in statute or regulation.

    This is presented as a fair notice measure, to wit, a company should be liable for breaking the law, not for failing to intuit an agency’s unpublished preferences. Reasonable enough, and DOJ is right that guidance documents have a way of acquiring the force of law without ever going through the trouble of becoming law.

    The second revision is the one that matters. It directs DOJ attorneys to affirmatively consider seeking dismissal of qui tam suits (the whistleblower-initiated cases that make up the bulk of FCA litigation) whenever the Department declines to intervene, and to keep revisiting that option as the case proceeds. This authority comes from 31 U.S.C. § 3730(c)(2)(A), and the Supreme Court blessed its broad use in the 2023 case United States ex rel. Polansky v. Executive Health Resources.

    Assistant Attorney General Brett Shumate framed the update as keeping “enforcement efforts remain aligned with those interests” of the United States, which is bureaucratic for “we intend to throw more of these cases out.”

    The Numbers DOJ Would Rather You Learned From a Senator

    Here is what the press release does not mention. Senator Chuck Grassley, the Iowa Republican who wrote the 1986 amendments strengthening the FCA in the first place, sent a letter to Shumate on April 2 asking pointed questions about dismissal practices. In it, Grassley noted that DOJ dismissed roughly 25 qui tam cases under § 3730(c)(2)(A) in 2025, compared to an average of about six per year under the prior administration.

    That’s not a policy adjustment; that’s a quadrupling, delivered months before the Manual itself caught up to reflect it. Deputy Assistant Attorney General Brenna Jenny made the posture explicit at an industry conference in January, telling a room full of FCA defense lawyers that “(c)(2)(A) is back.”

    None of this is happening in a vacuum of litigation. FY2025 was a record year for whistleblowers by every measure that counts, with 1,297 new qui tam suits filed, up from 980 the year before and 712 the year before that, nearly doubling in two years. Those suits generated $5.3 billion of the $6.8 billion the government recovered under the FCA in FY2025, or roughly 78 percent of the total, a figure DOJ’s own Civil Division touted as a historic high the same month Grassley was asking why the Department was dismissing whistleblower cases at four times the prior rate.

    The Department is, in other words, simultaneously bragging about relators bringing in most of its money and building the institutional machinery to throw more of their cases out. Both statements can be true. Neither makes the other look good.

    It’s worth noting where that money actually comes from. Health care accounted for roughly 84 percent of FY2025 recoveries, north of $5.7 billion, which means the cases most exposed to a more dismissal-friendly Department are precisely the ones involving hospital systems, pharmaceutical manufacturers, and Medicare and Medicaid billing practices, the same institutions that tend to have the resources to make a dismissal motion attractive to a Department weighing its limited litigation bandwidth against a case’s “alignment with the interests of the United States.”

    The Article II Question Nobody in the Press Release Mentions

    There’s a reason DOJ might want its dismissal muscle memory in good working order right now, and it has nothing to do with fair notice. The qui tam mechanism itself is under constitutional siege. In Polansky, three Supreme Court justices (Thomas, Kavanaugh, and Barrett) suggested in a concurrence and dissent that there are “substantial arguments” the entire relator-driven structure violates Article II, on the theory that private citizens cannot represent the interests of the United States in litigation the Executive Branch hasn’t chosen to bring.

    A Florida federal district court subsequently agreed and held the qui tam provisions unconstitutional outright; that ruling is now sitting with the Eleventh Circuit.

    A more aggressive dismissal posture is one of the cleanest ways for DOJ to reassert that it, not some private relator’s contingency-fee attorney, controls whether a False Claims Act case lives or dies, regardless of how the Eleventh Circuit eventually rules on the underlying constitutional question.

    Revising the Justice Manual to formalize that posture, quietly, four months after a sitting senator started asking uncomfortable questions about it, reads less like a course correction and more like an agency building the paper trail to justify a practice it had already adopted.

    What We’re Requesting

    Grassley’s 25-dismissals figure and DOJ’s own “six per year” baseline both trace back to the same letter and the same set of conference remarks. Neither is an independently verifiable dataset, and DOJ has not published a public accounting of which qui tam cases it moved to dismiss in 2025, on what grounds, or with what success rate in front of the actual district courts hearing them.

    Bureaucracy Times is filing a Freedom of Information Act request with the Civil Division’s Commercial Litigation Branch for the underlying dismissal log, including case names, filing dates, the grounds cited under § 3730(c)(2)(A), and the disposition of each motion. If DOJ’s new posture really is about “fair and effective enforcement,” as Associate Deputy Attorney General Paul Perkins put it, the underlying record should hold up to daylight.

    We’ll report back on what, if anything, we get.

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  • Two Minutes of House, 33 Seconds of Senate, and 27 Legislative Requests From the Department of War

    Congress did almost nothing on the floor Tuesday, but the paper kept moving. The House met at 4 p.m. and adjourned at 4:02. The Senate held a pro forma session from 1:31:12 to 1:31:45 p.m. There were no votes, no quorum calls, and no committee meetings. Both chambers return Friday, October 9, for another pro forma round.

    The real action was in the executive communications. The Department of War’s Legislative Affairs office sent nine letters, EC-4842 through EC-4850, transmitting 27 legislative proposals it wants enacted this session. Twenty-one went to Armed Services, three to Foreign Affairs, and one each to Oversight, Natural Resources, and Judiciary. The Record prints only counts and referrals, not the proposals themselves. What a defense department wants from Natural Resources and Judiciary is worth chasing.

    Veterans’ Affairs Chairman Bost filed two reports. H.R. 6698 would make the Board of Veterans’ Appeals identify the factors behind untimely disposition and remand of appeals in its annual report. H.R. 7260 would require an annual report on the National Cemetery Administration. Both are reporting mandates, not new spending.

    Among 17 bills introduced, a few stand out.

    • H.R. 10764, from Rep. Moore, would require certain procedures for compromise settlements or awards involving executive branch officials. It went to Judiciary.
    • H.R. 10766, from Rep. Self, would add Golden Dome assets to the Defense Department’s Critical Asset List.
    • H.R. 10752, from Rep. Carter of Louisiana, would create an artificial intelligence task force inside CISA.
    • H.R. 10765, from Rep. Raskin, would direct the Smithsonian to build a permanent exhibition on government propaganda, corruption, and authoritarianism during the Trump presidencies.

    The Smithsonian thread continued in the Extensions of Remarks. Rep. Mfume honored Secretary Lonnie Bunch as he prepares to conclude his service, and he argued that the administration has pushed to reshape how federal institutions present American history. That is his characterization, not a finding. It follows the independence fight we covered with Rep. Stansbury’s H.R. 10527.

    One more thing about the Record itself. Several tributes read as if they were pulled from earlier years. Rep. Wilson’s tribute to Timothy Belcher asks colleagues “from the 117th Congress” to join her. Her Tragil Wade-Johnson tribute talks about reaching 2,500 girls “in 2023 alone.” Her Nancy Dawkins tribute celebrates a 100th birthday for a woman born in 1923. It is October 2026, and in the Record it is always a little bit 2023 somewhere.

    Sources

  • A Chronic Absenteeism Rate of 125 Percent Is Still an Official Federal Statistic

    There are two kinds of numbers a federal agency can publish. There is the kind that is wrong because the world is complicated and measurement is hard. And there is the kind that is wrong because the agency built the measurement out of two pieces that were never designed to fit together, and kept publishing it anyway. The Department of Education’s chronic absenteeism rates, the only nationally comparable figures on how many American students are missing significant school, are the second kind. Some of them exceed one hundred percent. The Department knows this. It has known for a while. It has decided, as of this year, not to fix it.

    The Government Accountability Office’s review of Department data found implausible chronic absenteeism rates, meaning more students reported chronically absent than were recorded as enrolled, in roughly 2.5 percent of schools nationwide using 2022 to 2023 data, the most recent year available. That is GAO’s word, implausible, chosen with the sort of restraint auditors reserve for things that would otherwise require a stronger one.

    Two Clocks, One Number

    The mechanics are almost embarrassingly simple once laid out. To calculate a chronic absenteeism rate, the Department divides the number of students identified as chronically absent by the number of students enrolled. The chronically absent count is tallied over the entire school year, students who missed ten percent or more of the days they were enrolled, at any point, for any reason. The enrollment count, on the other hand, is captured on a single day, October 1, and never updated. A student who enrolls in November and racks up chronically absent status by May is counted in the numerator of a rate whose denominator was frozen months before that student ever showed up.

    In a stable school with a fixed roster, this barely matters. In a school where students are constantly moving in and out, it produces nonsense. GAO’s own illustrative example makes the point better than any explanation could. A school with 100 chronically absent students and 80 enrolled on October 1 reports a chronic absenteeism rate of 125 percent. Using the number of students who were actually enrolled for at least 10 days over the full year, the same school’s real rate is 66 percent, itself alarming, but at least a number that exists inside the bounds of arithmetic. Somewhere between those two figures sits the actual scale of a real problem, and the Department has chosen to publish the version that cannot possibly be correct.

    The Department’s own EDFacts documentation contains a data note warning users that rates calculated this way may be inflated. Which is one way of describing a nationally reported statistic that occasionally exceeds the maximum value a percentage is capable of holding.

    The Schools Where It Breaks Hardest

    The mismatch is not evenly distributed, and where it concentrates tells its own story. Schools identified for Comprehensive Support and Improvement, meaning the lowest performing schools in the country, the ones this data is supposed to help states target, had implausible rates in nearly 13 percent of cases, compared to about 2 percent for non-CSI schools. These are precisely the schools where students change addresses and schools most often, and precisely the schools where accurate absenteeism data would matter most for deciding where to send help.

    Shared-time schools fare even worse. These serve students who split their day between two buildings, often for career and technical education programs, and can end up double-counted as absent in one building while attending the other. More than 30 percent of shared-time schools had implausible rates, against under 2 percent everywhere else. The variation between states is its own indictment of data quality. Delaware, Idaho, Maryland, Missouri, North Carolina, and Rhode Island each report zero shared-time schools with implausible rates. Pennsylvania reports implausible rates in 62 of its 63 shared-time schools, 98 percent. States are not disagreeing about a close call here. They are simply not reporting the same phenomenon the same way, because nobody at the Department has told them how. Education, GAO notes dryly, provides states with guidance on how to report enrollment for shared-time students, but not on how to report their chronic absenteeism, an oversight nobody apparently noticed until an outside auditor went looking.

    A Known Limitation Is Still a Limitation

    In 2024, the Department began requiring states to report the number of students enrolled over the full school year, the same timeframe already used for the chronic absenteeism count, which would have let it calculate a rate that actually means what it claims to mean. It abandoned that effort before completion. GAO’s report ties the reversal to staffing reductions inside the Institute of Education Sciences, whose workforce fell by more than 85 percent between the end of 2024 and the end of 2025.

    In its formal response to GAO’s draft recommendation on this point, the Department did not dispute any of the math above. It disputed the need to change anything, writing that the mismatch is “a known limitation that is already documented,” and that it has chosen to keep working with the data elements it already collects rather than add reporting burden on states. GAO’s counter is worth sitting with, since states already have to identify which students were enrolled at least 10 days in order to calculate the chronically absent count required for EDFacts in the first place. The number the Department is declining to collect is a number states are already generating internally to comply with an existing requirement. The Department is not avoiding new work. It is avoiding one additional column in a spreadsheet the states are already filling out, and calling the result a documented limitation rather than an unfinished fix.

    Documenting a flaw is not the same as correcting it, and a data note buried in a technical appendix does not travel with the number once a school board, a state legislature, or a local reporter pulls it out to argue that a particular school is failing its students at a rate of 125 percent. The number will be believed. It just will not be true.

    Source: U.S. Government Accountability Office, K-12 Education: Actions to Improve Oversight of Key Federal Programs and Address High Chronic Absenteeism (GAO-26-107920, September 2026). Related: Eighteen Billion Dollars, and Nobody Assigned to Watch It, and The Department Started Fixing Its Data, Then Fired the People Fixing It.

  • A South Dakota Housing Authority Says Building Homes Without Water Is Becoming Normal

    For more than forty years, an annual line buried in appropriations acts has told the Indian Health Service one thing plainly. It cannot spend its own money connecting water to a new home if that home was built with a Department of Housing and Urban Development grant. Not a workaround, not a special case; a blanket statutory wall between two federal agencies whose programs, if you squint at the org chart, look like they were designed to work together. A new Government Accountability Office report on tribal water infrastructure lays out exactly what four decades of that wall have produced, and the answer is homes with no running water, built on purpose, because the alternative was building fewer homes at all (Government Accountability Office, GAO-26-107178).

    Choose Your Deprivation

    HUD’s Indian Housing Block Grant program funds new home construction on tribal land, and normally the total cost of a new IHBG home is supposed to include the water and utility connections needed to live in it, according to HUD guidance (GAO-26-107178). That is the plan. The reality, as tribal housing authorities describe it to GAO, is a forced choice between two bad options, because IHBG funding has not kept pace with tribal housing need and, for decades, remained essentially flat in nominal terms while material and labor costs rose around it (GAO-26-107178). A tribal housing authority in California told GAO it would take one tribe nearly 350 years to build enough homes to meet its own housing need using only its annual IHBG allocation (GAO-26-107178). Three hundred and fifty years, using the money as currently allotted, to catch up on housing that people need now.

    Given that math, tribes building homes with IHBG dollars have to pick a form of scarcity. Option one, build more homes and skip the water connection, accepting that families will move into a brand new house with no tap. Option two, include the water connection and build fewer homes, meaning some families who need housing get nothing while others get housing with plumbing. According to a senior HUD official, tribes reported that as recently as April 2026, HUD-funded homes were still being completed without water infrastructure (GAO-26-107178). One tribal housing authority in South Dakota told GAO plainly that building HUD-funded homes without running water is becoming the norm (GAO-26-107178). Not an emergency measure in a crisis year. The norm.

    The Alaska Math Nobody Wants

    In some parts of the country the math behind that choice is brutal enough to explain the whole pattern by itself. A HUD official told GAO that in Alaska, connecting a single new home to water can consume roughly 30 percent of that home’s entire construction budget (GAO-26-107178). Under a fixed development cost cap set by HUD regulation, an amount that must cover site work, utilities, and the home itself combined, a water connection eating nearly a third of the budget forces impossible tradeoffs (GAO-26-107178). GAO cites a HUD official describing exactly this kind of tradeoff in practice; a tribal housing authority in Alaska had to shrink a planned project from five homes down to four, specifically to cover the cost of connecting the remaining units to water and replacing a pumphouse the added water demand required (GAO-26-107178). One home, sacrificed to plumb the other four.

    None of this is happening because HUD or IHS want families living without water. It is happening because a statutory prohibition, renewed year after year in appropriations riders since sometime in the 1980s, forbids IHS from spending its own water infrastructure money on any home built with HUD housing funds, full stop, regardless of need (GAO-26-107178). The prohibition does not ask whether the tribe can afford the water hookup out of pocket. It simply removes IHS, the one federal agency whose entire statutory purpose is building water infrastructure for Indian homes, from the table the moment HUD money is involved.

    Nobody Knows What Happens If It Ends

    Here is the strange part, and it is the part that makes this article different from the rest of the series. This is not a case where GAO found an obvious fix sitting on the shelf. GAO explicitly concludes that the effects of removing the prohibition are unclear (GAO-26-107178). HUD and IHS actually tried to find out; the two agencies ran joint formal tribal consultation from 2024 to 2025, specifically asking tribes what role, if any, IHS should play in connecting new HUD homes to water, and what removing the prohibition might change (GAO-26-107178). That consultation produced feedback, not certainty. Nobody, including the agencies whose money is at stake, can currently say with confidence what happens to program costs, agency workload, or existing water infrastructure prioritization if Congress simply deletes the line.

    GAO’s actual recommendation reflects that uncertainty rather than pretending it away. Rather than telling Congress to remove the prohibition outright, GAO recommends that HUD and IHS jointly estimate the cost of providing water connections for newly built HUD-funded homes, aggregating IHS’s cost data with HUD’s home construction numbers, and report that estimate to Congress so lawmakers have real figures to work with (GAO-26-107178). It is a recommendation to do the homework before making the call, which is a modest ask given how long the underlying prohibition has already sat unexamined.

    The Data Congress Already Has

    The most quietly damning line in this section of the report is not about tribes or IHS at all; it is about the excuse HUD gave for resisting even this modest step. In its formal comments on the recommendation, HUD said it disagreed, stating that it lacked the authority to impose new reporting requirements on tribes beyond what statute and regulation already require (GAO-26-107178). GAO’s response is almost dismissive in its simplicity. Implementing the recommendation would not require HUD to collect a single new piece of information from any tribe, because HUD already collects and reports annually on the number of homes built with IHBG funding (GAO-26-107178). The data needed to answer Congress’s question already sits inside HUD’s own annual reporting. Someone would just have to combine it with IHS’s cost estimates and send it up the hill.

    Health and Human Services, for its part, said IHS would work with HUD to find a methodology for combining the two datasets (GAO-26-107178). That leaves the question sitting exactly where it has sat for forty years, dependent on two agencies actually following through on a joint estimate that requires no new legislation, no new appropriation, and no new burden on a single tribe, just an agreement to share numbers each of them already has. The statutory wall between HUD and IHS is one of three structural problems GAO identifies in the same report. Even when water infrastructure does get connected, the odds are roughly even that no certified operator will be on staff to run it — because IHS funds construction but not the ongoing salaries needed to keep qualified personnel in place. And when multiple federal agencies do try to jointly fund a project, the lack of a standardized interagency agreement can add nearly $100,000 in administrative overhead per project — money that, in communities already making impossible tradeoffs, does not go toward water.

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