Territorial Formula Financing in the Context of First Nations Governments

Abstract

There are at least four deficiencies in the current approach to fiscal transfers between the federal government and First Nations. First, funding is insufficient for First Nations to deliver effective programs and services that will improve outcomes on-reserve and in communities. Second, funding is short-term, and therefore is neither predictable nor sustainable. Third, funding does not allow for growth to address rising costs in service delivery, inflation, and increases in governance capacity. Fourth, the current system of separate grants, each with their own reporting and accountability requirements, creates heavy and unnecessary administrative burdens for First Nations. Provided it is applied appropriately, Territorial Formula Financing (TFF) addresses these problems and provides a financial framework for autonomy and a nation-to-nation partnership. The following paper analyzes the TFF as a new model for First Nations and offers specific recommendations for how this model could be modified and applied.