This report was submitted in support of an amendment to the Indian Self-Determination and Education Assistance Act (ISDEAA) that will extend and expand the Self-Governance Demonstration Project. In late 1987, several Congressional committees investigated allegations of fraud and mismanagement in the administration of federal Indian programs. In response to charges of paternalism and ineffective bureaucracy, the Department of the Interior (without tribal consultation) proposed legislation to authorize block grant funding to tribes in return for a waiver of the federal trust responsibility. Several tribes proposed an alternative, the Self-Governance Demonstration Project, which became Title III of ISDEAA, and which reaffirmed the federal government's trust responsibility. Under the project, 20 participating tribes choose which Bureau of Indian Affairs (BIA) programs and activities they wish to administer themselves and receive the equivalent federal funds directly. The tribes are still eligible for direct services from programs they do not choose to manage. Funds from the Tribally Controlled Community College Assistance Act and Indian School Equalization formula cannot be included in the project. Since 1987, almost all progress in the project has been produced by participating tribes, with no support or cooperation from the BIA. Amendments to the project would extend it through 1996, expand the number of authorized participants to 30 tribes and Alaska village consortiums, increase funding, and make certain technical changes. A section-by-section analysis of the legislation is included. (SV)