The federal government is reviewing its funding for First Nations post-secondary education at the very time when chiefs across the country have made such funding their single top priority.
Ottawa has been spending about $300-million a year on the Post-Secondary Student Support Program. The funding helped 22,000 First Nations students to pay for tuition, travel to university or college, and living expenses in 2008.
Sources say next week's federal budget won't be all bad news for First Nations education. But the post-secondary scheme as it stands now raises all sorts of red flags for the Conservatives, who are aiming to eradicate a $56-billion deficit.
The program, run by the Department of Indian and Northern Affairs, has been under scrutiny since an internal audit last year warned that the money was not being properly tracked or fairly handed out.
Nor was it adequately financed.
The money used to be sufficient to fund 30,000 students a year but that number has dwindled, even as the First Nations population bulges.
"The funding authorities currently in use, coupled with the limited tracking of how funds are spent, do not support the sound stewardship of Program funds," the audit concluded.
Accountability has come to the fore recently at the First Nations University in Saskatchewan. Federal and provincial governments halted their funding for the institution because of allegations of financial mismanagement.
At the same time, Indian Affairs has been undergoing a government-ordered strategic review aimed at identifying programs that can be cut so the money can be saved or reallocated.
So First Nations communities are concerned that the program will be swept away into some other less-focused initiative, handed off to a third party with few links to aboriginal communities, turned into loans, or simply cut to the bone - all in the name of improving accountability and saving money.
"I'm expecting to hear the worst," said Angus Toulouse, the Assembly of First Nations' regional chief for Ontario.
The review of the key federal support for post-secondary education among First Nations comes at an awkward time. While the post-secondary program raises troubling accountability issues for the federal Conservatives, there's a growing consensus that education for First Nations is more important than ever.
Prime Minister Stephen Harper has underlined the need for better education for First Nations.
"We want to ensure that all First Nations and Inuit learners have access to education that encourages them to stay in school, to graduate, and gives them the skills they need to enter the labour market," said a spokeswoman for Indian Affairs Minister Chuck Strahl.
And the Assembly of First Nations has found some rare unanimity among its chiefs that education should be the single top policy priority for federal and provincial funding.
In its pre-budget lobby to Ottawa, the AFN jettisoned its wider, long-standing pleas for funding for social housing, health care and infrastructure to focus solely on a sharply defined goal to improve schooling.
In particular, in a pitch laced with Conservative-friendly buzzwords such as "innovation," "productivity" and "strategic investment," AFN National Chief Shawn Atleo says Ottawa should commit to producing at least 65,000 more post-secondary graduates and building at least 60 new schools within five years.
Funding of about $500-million a year - $180-million for capital investment and the rest for topping up the post-secondary support program - could close the education gap between First Nations and the rest of the population at a time when the Canadian work force is poised to be hungry for skilled labour, Mr. Atleo points out.
"We have to bring some reality to the picture and turn the conversation to investments and contributions to the economy," he said in an interview. "This can't be any more about just a relationship for funding to achieve some minimal or nominal progress."
He said the money should not just come from Ottawa, though. The private sector and provincial governments would also find it in their best interests to get involved, he insisted.
But his arguments come as Ottawa is warning that no new funding will be approved in next week's budget. Indeed, senior officials say they want to slow the rate of spending growth, and have warned of cuts in some areas.
The government is also preparing to take full advantage of its continuing strategic review of spending. Every year, a quarter of the government's organizations are told to look over their costs and earmark five per cent for re-allocation elsewhere.
In the past two years, however, the government has only re-allocated about 2.5 per cent of the targeted funding, rather than five per cent. This year is expected to be different, although the details will not be released until the budget is tabled next week.
Indian and Northern Affairs is on the list for review this year. But with the Prime Minister's focus on Arctic sovereignty, programs for the North are largely believed to be safe - putting the pressure on program spending for First Nations.
The AFN argues that post-secondary education is important enough to be the recipient of re-allocated funding, and not the target.
About $8.5-million in annual core funding for national aboriginal organizations - such as the Assembly of First Nations, the Congress of Aboriginal Peoples and the Native Women's Association - is also in play.