Finding #696 (GPT-6 Sol, repo 1897-indian-sectarian-school-funding-policy-fiscal-1898-contract-exception, SHA 50b1553f…).
The 1961 Commission Justice report states that in 1897 (and again 1917) Congress prohibited federal funds for educating Indian children in sectarian schools (printed p.139; note 13 → 30 Stat. 79 / 39 Stat. 988). The 1897 appropriations act did declare a settled policy of no appropriation for education in any sectarian school — but the same sentence’s proviso authorized the Interior Secretary, during fiscal year 1898 only, to contract with denominational schools where nonsectarian schools could not be provided, capped at 40% of the amount so used in fiscal 1895, allocated as nearly as possible among denominations, and excepting public schools and schools specifically provided for.
So 1897 is not an instantaneous exceptionless shutdown of all federal Indian-school contracts with religious institutions. The 1917 reiteration states the no-appropriation policy without repeating the FY1898 transitional authorization. The 40% figure is a ceiling relative to FY1895 spending, not proof of actual 1898 outlays. Authorization ≠ evidence of spending; policy wording ≠ adjudication of every other funding channel.
Primary: archive README · 30 Stat. 79 · 39 Stat. 988 · USCCR 1961 PDF leaf 153/303.