This is the accessible text file for GAO report number GAO-04-309R entitled 'Immigration Application Fees: Current Fees Are Not Sufficient to Fund U.S. Citizenship and Immigration Services' Operations' which was released on January 05, 2004. This text file was formatted by the U.S. General Accounting Office (GAO) to be accessible to users with visual impairments, as part of a longer term project to improve GAO products' accessibility. Every attempt has been made to maintain the structural and data integrity of the original printed product. Accessibility features, such as text descriptions of tables, consecutively numbered footnotes placed at the end of the file, and the text of agency comment letters, are provided but may not exactly duplicate the presentation or format of the printed version. The portable document format (PDF) file is an exact electronic replica of the printed version. We welcome your feedback. Please E-mail your comments regarding the contents or accessibility features of this document to Webmaster@gao.gov. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. Because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. January 5, 2004: The Honorable Orrin G. Hatch: Chairman: The Honorable Patrick J. Leahy: Ranking Minority Member: Committee on the Judiciary: United States Senate: The Honorable F. James Sensenbrenner, Jr.: Chairman: The Honorable John Conyers, Jr.: Ranking Minority Member: Committee on the Judiciary: House of Representatives: Subject: Immigration Application Fees: Current Fees Are Not Sufficient to Fund U.S. Citizenship and Immigration Services' Operations: The Homeland Security Act of 2002 (HSA)[Footnote 1] established the Bureau of Citizenship and Immigration Services (CIS)[Footnote 2] within the Department of Homeland Security (DHS). CIS is responsible for several functions transferred from the former Immigration Services Division of the Immigration and Naturalization Service (INS) under the Department of Justice. CIS's functions include adjudicating and processing applications for U.S. citizenship and naturalization, administering work authorizations and other petitions, and providing services for new residents and citizens. CIS collects fees from applicants to process the various immigration-related applications and petitions. CIS also receives appropriated funds to pay for administrative and overhead costs such as records management and backlog reduction.[Footnote 3] HSA requires that we report on whether CIS is likely to derive sufficient funds from fees to carry out its functions in the absence of appropriated funds.[Footnote 4] This report summarizes the information provided during our November 24, 2003, briefing to your staff on this topic. The enclosed briefing slides highlight the results of our work and the information provided. Specifically, we determined application fees collected and projected for funding CIS operations for fiscal years 2001 through 2003 and compared those totals with identifiable operating costs for those 3 fiscal years as a basis for determining whether fees collected would likely be sufficient to fund CIS's operating costs. Results in Brief: We determined that fees were not sufficient to fully fund CIS's operations. In part, this has resulted because (1) the current fee schedule is based on an outdated fee study that did not include all costs of CIS's operations and (2) costs have increased since that study was completed due to an additional processing requirement and other actions. While it is clear fees are insufficient to fully fund CIS's operations, there is insufficient cost data to determine the full extent of the shortfall. A fundamental problem is that CIS does not have a system to track the status of each application as it moves through the process.[Footnote 5] Accordingly, CIS does not have information on the extent to which work on applications in process remains to be finished. In addition, CIS does not know the current cost of each step to process each application. The effect is that CIS knows neither the cost to process new applications nor the cost to complete pending applications. Further, because DHS is still determining how administrative and overhead functions will be carried out and the related costs allocated, CIS does not know what future administrative and overhead costs will be. For the 3-year period from fiscal year 2001 through 2003, CIS's reported operating costs exceeded available fees by almost $460 million, thus creating the need for appropriated funds. CIS projects that this situation will remain in fiscal year 2004. Since the beginning of fiscal year 2001, the number of pending applications increased by more than 2.3 million (about 59 percent) to about 6.2 million at the end of fiscal year 2003. This increase occurred despite additional appropriations beginning in fiscal year 2002 of $80 million annually to address the backlog. In addition, CIS has not performed an analysis of the steps needed to reduce processing times to the 6-month average goal established in the President's backlog initiative. These times increased significantly in fiscal year 2003 to levels well above the 6-month target established in CIS's March 2002 Backlog Elimination Plan. Absent actions to increase fees, reduce processing costs and times, or both, as well as to improve the timeliness and completeness of fee schedule updates, CIS will continue to need appropriated funds to avoid even greater increases in the backlog of pending applications. The full costs of CIS's operations cannot be determined until analyses of the costs to process incoming and pending applications and administrative and overhead costs are completed. Recommendations for Executive Action: In order to achieve the goals of the President's backlog initiative, we recommend that the Secretary of Homeland Security direct the Director of CIS to perform an analysis of current processing functions to determine steps needed to reduce the processing time to an average of 6 months or less. In order to determine the cost to process new and pending applications, we recommend that the Secretary of Homeland Security direct the Director of CIS to: * perform a comprehensive fee study to determine the costs to process new immigration applications and: * determine the costs to eliminate the backlog of pending applications. In order for CIS to know the full cost of its operations, we recommend that the Secretary of Homeland Security direct the Deputy Secretary to identify which support services and functions, such as shared services, modernizing and supporting shared databases, shared infrastructure, and other forms of support, and the cost of those functions should be transferred or allocated to CIS. Regarding the timing of fee schedule updates, we recommend that the Secretary of Homeland Security direct the Director of CIS to identify options to improve the timeliness for implementing fee updates to help ensure that all costs are captured. Agency Comments and Our Evaluation: We obtained oral comments on a draft of our briefing slides from DHS and CIS officials. They generally agreed with our conclusions and recommendations. However, they stated that our recommendations did not address the fact that fee schedules do not go into effect promptly, thus delaying implementation of fee levels that would help ensure that the full costs of adjudications are covered. The timing of fee schedule updates is a key issue, and we have added a recommendation to address this issue. DHS and CIS officials also provided technical comments, which we incorporated as appropriate. Scope and Methodology: We analyzed actual and estimated/projected application fees and appropriations that fund CIS operations and the related costs for fiscal years 2001 through 2003. To determine if fees collected were sufficient to fund CIS's operations, we (1) interviewed CIS staff and officials and external auditors, (2) reviewed biennial fee review reports, (3) reviewed audit reports, (4) reviewed financial records and budget-related documents, (5) analyzed various other documents provided by CIS containing information on numbers of applications and application fees, and (6) analyzed data on fee collections and appropriated funds and compared these to our analysis of the related costs. We assessed the reliability and completeness of the CIS-provided data for fiscal years 2001 and 2002 by reconciling the funds received and costs incurred to the audited financial statements. For fiscal year 2003 data, the audit was not yet complete. We did not otherwise verify the data. We did not assess the effectiveness of CIS's application processing functions or verify the accuracy of application totals. We requested comments on a draft of the enclosed briefing slides from DHS and CIS officials. We received oral comments from DHS and CIS that were incorporated into the briefing slides and this report as appropriate. We conducted our work from March through November 2003 in accordance with generally accepted government auditing standards. We are sending copies of this report to congressional committees and subcommittees responsible for issues related to immigration services and the Department of Homeland Security, the Secretary of Homeland Security, the Deputy Secretary of the Department of Homeland Security, and the Director of CIS. This report is also available at no charge on GAO's home page at [Hyperlink, http://www.gao.gov] h [Hyperlink, http:/ /www.gao.gov] ttp://www.gao.gov. If you have any questions about this report, please contact me at (202) 512-9508 or Steven Haughton, Assistant Director, at (202) 512-5999. You may also reach us by e-mail at [Hyperlink, calboml@gao.gov] or [Hyperlink, haughtons@gao.gov]. Additional contributors to this assignment were Diane N. Morris and Estelle M. Tsay. Linda M. Calbom Director Financial Management and Assurance: Signed by Linda M. Calbom: Enclosure: [End of section] Enclosure: [See PDF for image] [End of figure] [End of section] (190117) FOOTNOTES [1] Pub. L. No. 107-296, § 451, 116 Stat. 2195. [2] The bureau is now referred to as the United States Citizenship and Immigration Services (CIS). [3] A backlog exists when the processing time for a newly filed application exceeds the processing target time, which is 6 months or less for every application. [4] Pub. L. No. 107-296, § 477(d)(3), 116 Stat. 2210. [5] According to CIS officials, the deployment of a new system that will track the status of each application is expected in 2006.