This report represents a hearing on the Indian School Equalization Program (ISEP) administered by the Bureau of Indian Affairs (BIA). The hearing began with opening remarks by the acting committee chairman of the Senate Select Committee on Indian Affairs, Paul Simon. Testimonies concerning the inadequacies of the ISEP funding formula are provided by members of Senate and Congress, leaders of individual tribal school organizations, and representatives of the National Indian Education Association. ISEP assigns different educational activities to Bureau-operated and contract schools with weights that reflect the basic cost associated with a specific activity. The number of students participating in the various educational activities is identified by each school, totaled by activity, and multiplied by the weight factor to arrive at the total number of weighted student units (WSUs) at each school. Under the proposed ISEP budget for the school year beginning July 1, 1993, schools would receive $150 less per WSU than they are receiving this year, because of an estimated shortage of $35 million. The effects of funding shortages could mean program cuts, teacher lay-offs, increases in class size, or shortchanges in critical program management aspects. Appendices include prepared statements; prepared answers by the BIA to Senate oversight hearing questions; and position papers regarding constant shortage of BIA funds for school districts in Arizona, South Dakota, Mississippi, North Dakota, New Mexico and Michigan. (LP)