WINNIPEG (CBC) - The federal government is ready to offer relief to financially strapped child-welfare agencies working in Manitoba's First Nations communities.

Earlier this week, a report from Canada's auditor general was highly critical of the way Ottawa funds on-reserve services. Sheila Fraser's report said native children under the care of welfare agencies are being shortchanged by a funding structure that hasn't changed in 20 years despite increased needs.

Robert Eyahpaise, a senior official with Indian Affairs, says Ottawa is meeting with provincial and First Nations officials, making plans to update the child-welfare system on Manitoba reserves.

"We are talking with them currently to see how we can do this together," he said.

Indian Affairs has already signed a deal with Alberta to modernize services delivered on reserve that provides millions of dollars in additional funding, he said.

"Right now, we are in discussions with the province of Manitoba, with the First Nations of Manitoba to say, well, now do we bring them on board next," he said.

Eyahpaise can't say when an agreement will be reached, but he said all parties involved are enthusiastic.

The news was welcomed by Marie Lands, who works with the First Nations of Northern Manitoba Child and Family Services Authority.

Lands says difficult conditions on some reserves - such as overcrowding in housing and high rates of addiction and unemployment - make child-welfare cases more complex, and agencies on reserves can't keep up.

"They haven't got the human resources. They haven't got the programming," she said.

Children on native reserves across Canada are eight times more likely to wind up in under-funded, poorly tracked foster care that appears to be failing them, according to the auditor general's report, released Tuesday.

Among top concerns is that the federal government funds First Nation-delivered services using a formula dating back to 1988. It assumes that a fixed percentage of all communities served by an agency need that help - whether or not the real number is higher or lower.

The formula "has not been changed to reflect variations in legislation ... or the actual number of children in care," Fraser said. Its use "has led to inequities."

LIKE IT?  LET OTHERS KNOW