Under these contracts, the Federal Government would expend money appropriated by Congress for the purposes of the Act to the States, Territories, and Agencies involved.
Including communicating with school and medical professionals, negotiating terms of the contracts, and setting minimum standards for service, as long as the minimums set are not less than the highest maintained for like purposes by the State or Territory in which it will be in effect.
The act was one of the principal means for subsidizing education for Indian students in the United States.
This way of subsidizing costs for Indian students by the federal government had been going on in an "ad hoc" basis since 1890 up until the official Act was passed in 1934.
Local committees of Indian parents have the power to approve or disapprove of school programs funded under the Act.