Immigration Application Fees
Costing Methodology Improvements Would Provide More Reliable Basis for Setting Fees Gao ID: GAO-09-70 January 23, 2009The Department of Homeland Security's (DHS) U.S. Citizenship and Immigration Services (USCIS) is responsible for granting or denying immigration benefits to individuals. USCIS charges fees for the millions of immigration applications it receives each year to fund the cost of processing and adjudicating them. In February 2007, USCIS completed a study to determine the full costs of its operations and the level at which application fees should be set to recover those costs. USCIS's new fee schedule increased application fees by a weighted average of 86 percent. Almost 96 percent of USCIS's fiscal year 2008 budget of $2.6 billion was expected to have come from fees. GAO was asked to review the methodology USCIS used in its fee review and controls in place over collection and use of fees. In this report, GAO addresses the consistency of the methodology with federal accounting standards and principles and other guidance, including whether key assumptions and methods were sufficiently justified and documented. The report also addresses internal controls USCIS has in place over the collection and use of fees.
In 2007, USCIS completed a fee review in which USCIS estimated the costs of its immigration application processing and adjudication services and, in accordance with management's objective, set the fees at a level to recover those costs. The methodology USCIS used in its review, however, did not consistently adhere to federal accounting standards and principles and other guidance. While federal accounting standards allow flexibility for agencies to develop managerial cost accounting practices that are suited to their needs, they also provide certain specific guidance based on sound cost accounting concepts. USCIS's methodology, for example, did not include the costs paid by other federal entities on behalf of USCIS. Federal standards and guidance also call for documentation that is sufficient to allow an understanding of and provide justification for the cost assignment processes and data used. USCIS did not adequately document the detailed processes used or sufficiently justify assumptions used in allocating costs to various activities on a prorated basis. As a result, USCIS could not show that its methods provided a reasonable distribution of the costs to the various types of applications. For instance, USCIS allocated $732 million of overhead costs (or 31 percent of total costs)--including information technology operations and maintenance--to offices based on the number of staff full-time equivalents (FTE) in each office. However, USCIS's documentation did not sufficiently justify (1) why cost allocation was used instead of other possible methods or (2) why it did not include about 6,100 contract workers and used only approximately 7,900 FTEs of the total federal FTEs of about 10,400 as the basis for allocation. USCIS also did not adequately justify the equal assignment of activity costs representing 51 percent of total costs to each application type. While such pro rata assignment of costs may be a reasonable method in some circumstances, USCIS did not document its justification for the assumptions made when deciding which costs to allocate on a prorated basis and how those costs should be allocated. Because of these inconsistencies with federal accounting standards and principles and other guidance, USCIS cannot support the reasonableness of cost assignments to the various application types. USCIS has implemented accountability mechanisms to track the use of both regular application fees as well as premium processing fees intended for specific projects. USCIS plans to use its premium processing fee collections to fund its transformation program to make long-term improvements to its business processes and technology. Through its monitoring of fee collection procedures, USCIS has identified some weaknesses at one of its service centers. It has taken actions to strengthen service center controls in the short term, and it is moving all fee receipt functions and the application processing done in preparation for adjudication to lockbox facilities to further strengthen control over collections.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-09-70, Immigration Application Fees: Costing Methodology Improvements Would Provide More Reliable Basis for Setting Fees
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
January 2009:
Immigration Application Fees:
Costing Methodology Improvements Would Provide More Reliable Basis for
Setting Fees:
GAO-09-70:
GAO Highlights:
Highlights of GAO-09-70, a report to congressional requesters.
Why GAO Did This Study:
The Department of Homeland Security‘s (DHS) U.S. Citizenship and
Immigration Services (USCIS) is responsible for granting or denying
immigration benefits to individuals. USCIS charges fees for the
millions of immigration applications it receives each year to fund the
cost of processing and adjudicating them. In February 2007, USCIS
completed a study to determine the full costs of its operations and the
level at which application fees should be set to recover those costs.
USCIS‘s new fee schedule increased application fees by a weighted
average of 86 percent. Almost 96 percent of USCIS‘s fiscal year 2008
budget of $2.6 billion was expected to have come from fees. GAO was
asked to review the methodology USCIS used in its fee review and
controls in place over collection and use of fees. In this report, GAO
addresses the consistency of the methodology with federal accounting
standards and principles and other guidance, including whether key
assumptions and methods were sufficiently justified and documented. The
report also addresses internal controls USCIS has in place over the
collection and use of fees.
What GAO Found:
In 2007, USCIS completed a fee review in which USCIS estimated the
costs of its immigration application processing and adjudication
services and, in accordance with management‘s objective, set the fees
at a level to recover those costs. The methodology USCIS used in its
review, however, did not consistently adhere to federal accounting
standards and principles and other guidance. While federal accounting
standards allow flexibility for agencies to develop managerial cost
accounting practices that are suited to their needs, they also provide
certain specific guidance based on sound cost accounting concepts.
USCIS‘s methodology, for example, did not include the costs paid by
other federal entities on behalf of USCIS. Federal standards and
guidance also call for documentation that is sufficient to allow an
understanding of and provide justification for the cost assignment
processes and data used. USCIS did not adequately document the detailed
processes used or sufficiently justify assumptions used in allocating
costs to various activities on a prorated basis. As a result, USCIS
could not show that its methods provided a reasonable distribution of
the costs to the various types of applications. For instance, USCIS
allocated $732 million of overhead costs (or 31 percent of total
costs)”including information technology operations and maintenance”to
offices based on the number of staff full-time equivalents (FTE) in
each office. However, USCIS‘s documentation did not sufficiently
justify (1) why cost allocation was used instead of other possible
methods or (2) why it did not include about 6,100 contract workers and
used only approximately 7,900 FTEs of the total federal FTEs of about
10,400 as the basis for allocation. USCIS also did not adequately
justify the equal assignment of activity costs representing 51 percent
of total costs to each application type. While such pro rata assignment
of costs may be a reasonable method in some circumstances, USCIS did
not document its justification for the assumptions made when deciding
which costs to allocate on a prorated basis and how those costs should
be allocated. Because of these inconsistencies with federal accounting
standards and principles and other guidance, USCIS cannot support the
reasonableness of cost assignments to the various application types.
USCIS has implemented accountability mechanisms to track the use of
both regular application fees as well as premium processing fees
intended for specific projects. USCIS plans to use its premium
processing fee collections to fund its transformation program to make
long-term improvements to its business processes and technology.
Through its monitoring of fee collection procedures, USCIS has
identified some weaknesses at one of its service centers. It has taken
actions to strengthen service center controls in the short term, and it
is moving all fee receipt functions and the application processing done
in preparation for adjudication to lockbox facilities to further
strengthen control over collections.
What GAO Recommends:
GAO makes six recommendations to help USCIS make its costing
methodology consistent with standards and principles, strengthen the
reliability of the cost assignments it uses to set fees, and better
support the reasonableness of its assumptions and methods. DHS and
USCIS concurred with our recommendations.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-09-70]. For more
information, contact Jeanette Franzel at (202) 512-9406 or
franzelj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Costing Methodology Did Not Consistently Adhere to Federal Accounting
Standards and Principles and Other Guidance:
Accountability Mechanisms Are in Place to Track Use of Fees, and USCIS
Is Taking Steps to Strengthen Control over Collections:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Immigration Application Forms and Related Fees Prior to
and as of the July 30, 2007, Fee Increase:
Appendix III: Federal Statutes, Accounting Standards and Principles
Related to Cost Accounting and User Fees, and Other Guidance:
Appendix IV: Comments from the Department of Homeland Security:
Appendix V: GAO Contacts and Staff Acknowledgments:
Tables:
Table 1: USCIS Funding Sources and Estimated Amounts for Fiscal Year
2008:
Table 2: Amount and Percentage of Fee Collections for the IEFA, Fiscal
Year 2007:
Table 3: Date, Amount of Increase, and Reasons for Past Immigration
Application Fee Increases since 2002:
Table 4: USCIS's Estimate of Annual Funds Needed for Fiscal Years 2008
and 2009:
Table 5: USCIS Estimated Annual Costs for Application Processing
Activities for Fiscal Years 2008 and 2009:
Figure:
Figure 1: Illustration of Cost Assignment Process:
Abbreviations:
CFO: chief financial officer:
DHS: Department of Homeland Security:
FBI: Federal Bureau of Investigation:
FFMIA: Federal Financial Management Improvement Act of 1996:
FMS: Financial Management Service:
FTE: full-time equivalent:
IEFA: Immigration Examinations Fee Account:
INS: Immigration and Naturalization Service:
OCFO: Office of the Chief Financial Officer:
OMB: Office of Management and Budget:
OPM: Office of Personnel Management:
PAS: Performance Analysis System:
SAVE: Systematic Alien Verification for Entitlements:
SFFAS: Statement of Federal Financial Accounting Standards:
USCIS: U.S. Citizenship and Immigration Services:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
January 23, 2009:
The Honorable Zoe Lofgren:
Chairwoman:
Subcommittee on Immigration, Citizenship, Refugees, Border Security and
International Law:
Committee on the Judiciary:
House of Representatives:
The Honorable David Price:
Chairman:
Subcommittee on Homeland Security:
Committee on Appropriations:
House of Representatives:
U.S. Citizenship and Immigration Services (USCIS), an agency of the
Department of Homeland Security (DHS), is responsible for granting or
denying immigration benefits to individuals seeking to become citizens
of the United States or to study, work, or live in this country. In
carrying out its responsibilities, USCIS processes and adjudicates
millions of immigration and naturalization applications each year,
administers work authorizations and other petitions, and provides
services for new residents and citizens.
To fund the cost of processing and adjudicating applications and
associated support services, USCIS charges application fees that are
deposited in the Immigration Examinations Fee Account (IEFA) and are
available until expended.[Footnote 1] Businesses desiring to hire
foreign nationals may pay an additional fee to accelerate the
processing of certain types of applications, such as those for workers
in specialty occupations or temporary workers.[Footnote 2] Congress
authorized this fee to be used to provide certain premium processing
services to business customers, and to make infrastructure improvements
in the adjudications and customer service processes.
GAO and DHS's Inspector General have reported the need for USCIS to
improve its processes, systems, and technology and noted that USCIS's
efforts to modernize have been unfocused, conducted in an ad hoc and
decentralized manner, and, in certain instances, duplicative. In 2006,
USCIS embarked on a transformation of its business processes and
technology to move its operations from paper-based processes to an
electronic environment. USCIS plans to fund its transformation program
mostly with premium processing fees.
In the past, in addition to its fee collections, USCIS received other
appropriations from annual appropriations acts (i.e., direct
appropriations) to help fund its operations. USCIS received
appropriated funds to pay for administrative costs through fiscal year
2004. USCIS also received appropriated funds for specific projects,
such as the initiative to reduce the backlog of pending applications,
from fiscal year 2002 through 2006 and its business transformation
program in fiscal years 2006 and 2007. In fiscal year 2007, USCIS
received direct appropriations for Systematic Alien Verification for
Entitlements (SAVE).[Footnote 3] USCIS also received direct
appropriations for E-Verify[Footnote 4] in fiscal years 2007 and 2008.
We have previously reported that fee collections had not been
sufficient to recover USCIS's full operating costs.[Footnote 5] To
provide funding to cover the shortfall from application fees, USCIS
used the direct appropriations discussed above, and it used premium
processing fees and fees from applications that were waiting to be
processed.
In February 2007--to determine the full costs of its operations and the
level at which application fees should be set to recover those costs--
USCIS completed a review of the processes involved in providing
adjudication services and the resources needed. Based on the review,
USCIS implemented a new fee schedule effective July 30, 2007, which
increased application fees by a weighted average of 86 percent. (See
appendix II for a list of applications and their fees.) USCIS expects
that the increased application fees will cover the costs of its
immigration application processing and adjudicating services.
Almost 96 percent of USCIS's fiscal year 2008 budget of $2.6 billion
was expected to have come from fee collections, with the residual
coming from direct appropriations and from other federal agencies for
work done by USCIS on their behalf. It is important that USCIS reliably
accumulate and analyze the costs of its application processing services
as a basis for setting fees and recovering costs and to offer insights
for managing its programs and activities. At your request, we reviewed
the methodology USCIS used in its fee review to develop the current fee
schedule and controls USCIS has put in place over the collection and
use of the fees. Specifically, this report[Footnote 6] addresses the
consistency of the costing methodology USCIS used to develop the
current fee schedule with federal accounting standards and principles
and other guidance, including whether USCIS sufficiently justified and
documented its assumptions and methods. The report also addresses
internal controls in place over the collection and use of fees.
In conducting our work, we considered federal accounting standards,
Office of Management and Budget (OMB) guidance on user fees, and
federal internal control standards.[Footnote 7] We reviewed USCIS
documents related to the fee review and its methodology. We obtained an
understanding of the methodology and reviewed the design and operation
of USCIS's cost system, including its cost accumulation methods and how
it assigned costs involved in adjudicating and processing various types
of immigration applications. We performed a walk-through of the USCIS
process for accumulating specific types of costs and performed
analytical reviews and discussed with USCIS officials key assumptions
and decisions concerning distributing these costs to applications as
their basis for setting fees. We visited all four USCIS service centers
in Laguna Niguel, California; Lincoln, Nebraska; Mesquite, Texas; and
St. Albans, Vermont, and a lockbox facility in Chicago where we
observed fee collection processes. We discussed with USCIS officials
and staff the processes for tracking and monitoring fee collections and
related expenditures and reviewed corroborating and other relevant
documentation.
Appendix I provides additional details about our scope and methodology.
We conducted this performance audit from October 2007 to January 2009
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Results in Brief:
Although the July 2007 fee increases met management's objective to set
fees at a level to recover USCIS's estimated costs of immigration
application processing and adjudication services, the costing
methodology USCIS used to develop the fees for each application type
did not consistently adhere to federal accounting standards and
principles and other guidance. While federal accounting standards allow
flexibility for agencies to develop managerial cost accounting
practices that are suited to their needs, they also provide certain
specific guidance based on sound accounting concepts. USCIS's
methodology was not consistent with federal accounting standards and
principles and other guidance in the following aspects: (1) costs paid
by other federal entities on behalf of USCIS were not included in its
estimates of costs, (2) key assumptions and methods used for allocation
of costs to activities and types of applications were not sufficiently
justified, (3) assumptions about staff time spent on various activities
were not supported by documented rationale or analysis, (4) the cost of
premium processing services was not determined, and (5) documentation
of the processes and procedures was not sufficient to ensure consistent
and accurate implementation of the methodology. Specifically:
* USCIS did not include the costs of lockbox services paid by the
Department of the Treasury (Treasury) or certain retirement benefits to
be paid by the Office of Personnel Management (OPM) in estimating the
full cost of its immigration application processing and adjudication
services. USCIS officials told us that they only included costs that
the agency paid directly. However, according to federal accounting
standards, each entity's full cost also should incorporate the cost of
services that it receives from other entities without charge.
* Some of the assumptions and methods used by USCIS resulted in cost
assignments that lacked precision or analytical support, thereby
reducing confidence that the assignments provided a sound basis for
setting the fees. For instance, USCIS allocated[Footnote 8] 79 percent
of overhead costs (representing 31 percent of total costs) to field
offices based on the number of staff full-time equivalents (FTE)
[Footnote 9] in an office. However, USCIS did not sufficiently justify
(1) why cost allocation was used instead of other possible methods or
(2) why it did not include about 6,100 contract workers and used only
approximately 7,900 FTEs of the total federal FTEs of about 10,400 as
the basis for allocation. Also, USCIS did not adequately justify why it
allocated 51 percent of its total costs equally to the different types
of applications. While such pro rata assignment of costs may be
justifiable in some circumstances, USCIS did not document its
justification to support assumptions made when deciding which costs to
allocate on a pro rata basis and how those costs should be allocated.
* USCIS assigned $292 million of direct costs to activities based on
management's judgment of how much staff time was spent on each
activity. However, USCIS did not document the rationale for such
decisions. For example, based on discussions with representatives from
regions, service centers, and the Performance Management Branch, USCIS
decided to allocate 88 percent of the costs of the immigration
information officers at service centers to the "inform the public"
activity and 12 percent to the "make determination" activity. These
discussions, including the input of the internal experts, and the
rationale linking this information and related analysis with the final
cost assignments were not documented.
* Regarding premium processing services, USCIS estimated annual fee
collections of $139 million for fiscal years 2008 and 2009 but did not
determine the corresponding cost incurred to carry out those
accelerated application processing services. As a result, USCIS cannot
determine the extent to which the collections could apply to the two
authorized uses of premium processing fees--the cost of accelerated
processing and infrastructure improvements.
* Further, the documentation USCIS prepared to describe its costing
methodology was not detailed enough to ensure consistent and accurate
implementation. Insufficient documentation makes it difficult to assess
or replicate the methodology.
Because of these inconsistencies, USCIS cannot support the
reasonableness of the assignment of costs to the various application
types.
USCIS has put accountability mechanisms in place to track the use of
fees and is taking steps to improve internal control over fee
collections. It has established unique codes in the financial system
for specific projects, and according to a USCIS official, the Office of
the Chief Financial Officer (OCFO) monitors obligations and
expenditures against those codes to help ensure that (1) regular
application fees intended to fund processing capability enhancements
(such as additional staff, equipment, and training) are used as planned
and (2) premium processing fees are used to make infrastructure
improvements in the adjudications and customer service processes. USCIS
has documented and assessed internal control activities and processes
related to fee collections, and we identified a system of controls
designed to safeguard fees collected at both the service centers and
the lockbox facilities. Although USCIS has controls in place over fee
collections, it has identified through its own monitoring procedures
some weaknesses at one service center. USCIS has taken actions to
strengthen service center controls in the short term, and it is in the
process of moving all preadjudication application processing and fee
receipt functions to lockbox facilities to further strengthen control
over collections.
We are making six recommendations to the Secretary of Homeland Security
to help make USCIS's costing methodology consistent with federal
accounting standards and principles and strengthen the reliability of
the cost assignments used to set fees and to better support the
reasonableness of USCIS's assumptions and cost assignment methods. In
written comments on a draft of this report, DHS and USCIS concurred
with our recommendations. DHS's comments are discussed in the Agency
Comments and Our Evaluation section of this report and are reprinted in
their entirety in appendix IV. USCIS also provided technical comments,
which we incorporated as appropriate.
Background:
USCIS is responsible for establishing immigration services policies and
priorities and for the administration of immigration and naturalization
adjudication functions. Its approximately 16,000 federal and contractor
employees work in 250 offices worldwide, including field offices,
application support centers, service centers, asylum offices, national
customer service call centers, and forms centers. About 6 million
applications and petitions for immigration and naturalization benefits,
along with applicable fee payments, are submitted to USCIS annually.
USCIS adjudicators process applications and petitions in four general
categories:[Footnote 10]
* family-based petitions--for close relatives to immigrate, gain
permanent residence, or work in the United States;
* employment-based petitions--for current and prospective employees to
immigrate to or stay in the United States temporarily;
* asylum and refugee applications--for those seeking asylum or refugee
status; and:
* naturalization applications--for those who wish to become United
States citizens.
USCIS is authorized[Footnote 11] to collect fees for providing
adjudication and naturalization services at a level that will (1)
ensure recovery of the full costs of providing all such services,
including the costs of similar services provided without charge to
asylum applicants, and (2) recover any additional costs associated with
the administration of the fees collected.[Footnote 12] In 1968, the
Immigration and Naturalization Service (INS), USCIS's predecessor
agency,[Footnote 13] began charging fees for immigration and
naturalization services, depositing the fee collections into the
General Fund of the Treasury as miscellaneous receipts. In 1988,
[Footnote 14] Congress established the IEFA. Since 1989, application
fees have been deposited in the IEFA, which is currently USCIS's
primary source of funding. Once deposited in the IEFA, the fees remain
available to USCIS until expended. In fiscal year 1991, Congress
directed that the IEFA also be used to fund the cost of asylum and
refugee services and adjudication services provided to some immigrants
at no charge,[Footnote 15] and thus, the charges for fee-paying
applicants were increased to recover these costs.
In December 2000, Congress authorized the establishment of a premium
processing program for employment-based applications. INS proposed the
establishment of a premium processing service to provide businesses
with a high level of customer service and improved processing because
it could not otherwise meet the demand for expeditious service to the
business community without an adverse impact on other applications.
According to the INS Commissioner, an optional additional fee of $1,000
for business customers would also make capital available for
infrastructure improvements. In response, Congress authorized the
premium processing service; set the fee at $1,000, which is to be paid
in addition to the regular application fee; and specified that it be
used to provide accelerated processing services to business customers
and to make infrastructure improvements in the adjudications and
customer service processes.[Footnote 16] The premium processing service
is to provide processing of certain employment-based petitions and
applications within 15 calendar days of receipt of the request for
premium processing service form. Premium processing fees also are
deposited in the IEFA to be available until expended.
Currently, funding for USCIS comes from three fee accounts, direct
appropriations, and reimbursements from other federal agencies. Table 1
shows the five funding sources and the amounts estimated for fiscal
year 2008.
Table 1: USCIS Funding Sources and Estimated Amounts for Fiscal Year
2008 (Dollars in millions):
Funding source: Immigration Examinations Fee Account;
Fiscal year 2008 budget: $2,495[A];
Percentage of total funding: 94.2.
Funding source: H1-B Nonimmigrant Petitioner Account;
Fiscal year 2008 budget: $13;
Percentage of total funding: 0.5.
Funding source: Fraud Prevention and Detection Account;
Fiscal year 2008 budget: $31;
Percentage of total funding: 1.2.
Funding source: Direct appropriations;
Fiscal year 2008 budget: $80;
Percentage of total funding: 3.0.
Funding source: Reimbursement from other federal agencies[B];
Fiscal year 2008 budget: $29;
Percentage of total funding: 1.1.
Funding source: Total;
Fiscal year 2008 budget: $2,648;
Percentage of total funding: 100.0.
Source: GAO analysis of data from the Budget of the United States
Government, Fiscal Year 2009 - Appendix.
[A] The $2,495 million for the IEFA includes the anticipated $139
million of premium processing fees.
[B] USCIS receives reimbursement from other federal agencies for work
performed by USCIS on the other agencies' behalf.
[End of table]
In past years, USCIS received larger amounts of direct appropriations
to pay for administrative costs and for specific projects, such as the
initiative to reduce its backlog of pending applications and its
business transformation program to make long-term improvements in its
business processes and technology.[Footnote 17] USCIS also received
direct appropriations for two other specific programs--SAVE in fiscal
year 2007 and E-Verify in fiscal years 2007 and 2008.
The three fee accounts provide almost 96 percent of USCIS's total
fiscal year 2008 budgetary resources. The fee review that is the
subject of this report covers the application fees deposited in the
IEFA, which is budgeted to provide approximately 94 percent of USCIS's
funding for fiscal year 2008. If the number of applications and fee
payments received in a year is more than projected, USCIS can increase
its spending authority to cover the increased workload, and thus get
additional funds from the IEFA through reprogramming after it has
notified Congress.[Footnote 18]
Persons seeking immigration and naturalization benefits submit their
applications and associated fees to one of four service centers, local
offices within one of four regions, or one of two lockbox facilities,
depending on the application type and geographic location of the
applicant. Some applications can be filed electronically with payment
by credit or debit card or electronic transfer of funds. In addition,
some applications require biometric services--collecting information
such as fingerprints, photographs, and signatures for background checks
conducted by the Federal Bureau of Investigation (FBI)--for which a
separate fee is charged.
The four service centers (located in California, Nebraska, Texas, and
Vermont), the National Benefits Center (located in Missouri), and many
local offices receive, process, and adjudicate applications and
petitions for immigration benefits. Contract employees generally are
responsible for preadjudication processing steps, such as mail room
operations, fee collection, data collection, and file operations. USCIS
employees adjudicate the applications, that is, they make
determinations about whether to approve the benefits for which an
applicant has applied.
Lockbox facilities located in Chicago and Los Angeles receive certain
application types and the related fee payments. Banks that operate the
lockbox facilities are designated by Treasury's Financial Management
Service (FMS) as financial agents of the United States.[Footnote 19]
They perform services for USCIS under a memorandum of understanding
between the lockbox facility, FMS, and USCIS. Lockbox facilities are
responsible for mail room operations, data entry, fee collection,
setting up files, and sending the files to a service center or the
National Benefits Center for adjudication. In 2007, in consultation
with USCIS, FMS designated the bank that operates the Chicago lockbox
as the financial agent responsible for all USCIS fee collections. USCIS
is in the process of moving fee collection and other preadjudication
processing activities from the service centers and field offices to
lockbox facilities operated by that bank by March 2011.
Table 2 shows the amount and percentage of regular application fees and
premium processing fees collected by site during fiscal year 2007.
During fiscal year 2008, USCIS collected over $2.4 billion in regular
application fees and premium processing fees for the IEFA.
Table 2: Amount and Percentage of Fee Collections for the IEFA, Fiscal
Year 2007 (Dollars in millions):
Collection site: Service centers;
Amount collected: $1,394;
Percentage of total collections: 67.7.
Collection site: Regional/field offices;
Amount collected: $109;
Percentage of total collections: 5.3.
Collection site: Lockbox facilities;
Amount collected: $471;
Percentage of total collections: 22.9.
Collection site: E-filing;
Amount collected: $84;
Percentage of total collections: 4.1.
Total fiscal year 2007 fee collections:
Amount collected: $2,058;
Percentage of total collections: 100.0.
Source: GAO analysis of USCIS data.
[End of table]
The fiscal year 2007 fee collections reflect an increase in application
fees that occurred at the end of July 2007 and an increase in the
number of application filings prior to the fee increase date by persons
wanting to avoid higher fees. Application filings also increased
because of the publication of a State Department Visa Bulletin
announcing the availability of employment-based visas. Fees increased
by a weighted average of 86 percent per application, based on the fee
review completed by USCIS in February 2007. (See appendix II for a list
of applications and their related fees.)
USCIS's prior fee review was completed in November 1996 and resulted in
fee increases that took effect in 1998. Since then, USCIS has increased
fees four times (including the July 2007 increase). Table 3 shows the
amount and basis for those fee increases.
Table 3: Date, Amount of Increase, and Reasons for Past Immigration
Application Fee Increases since 2002:
Date of fee increase: February 2002;
Weighted average fee increase: $18;
Reasons for fee increase:
* Recover information technology and quality assurance costs;
* Inflation adjustment.
Date of fee increase: April 2004;
Weighted average fee increase: $55; (plus $20 increase in biometric
fee);
Reasons for fee increase:
* Cover annual cost of additional security checks;
* Improve refugee processing, provide naturalization services for
military personnel and other activities;
* Administrative support costs;
* Inflation adjustment.
Date of fee increase: October 2005;
Weighted average fee increase: $8;
Reasons for fee increase:
* Inflation adjustment.
Date of fee increase: July 2007;
Weighted average fee increase: $174;
Reasons for fee increase:
* Close funding gaps;
* Accomplish performance goals;
* Inflation adjustment.
Source: GAO analysis of USCIS data and Proposed and Final Rules (66
Fed. Reg. 41456; 66 Fed. Reg. 65811; 69 Fed. Reg. 5088; 69 Fed. Reg.
20528; 70 Fed. Reg. 56182; 72 Fed. Reg. 4888; 72 Fed. Reg. 29851).
[End of table]
To perform its most recent fee review, USCIS used a commercial off-the-
shelf software application to assign the costs of its immigration
application processing and adjudication services. Management's
objective was to set fees that would recover funds sufficient to cover
USCIS's costs. USCIS officials told us that when developing the
methodology used in the fee review, management anticipated some
skepticism about the fairness of the resulting fees, so its objectives
also included using methods that would distribute costs among the
various application types fairly and in a way that could be readily
understood by fee payers and others.[Footnote 20]
The data USCIS used for its fee review came from a variety of sources.
Financial data USCIS used were from USCIS's fiscal year 2007 budget
adjusted for inflation[Footnote 21] and USCIS estimates of the cost of
enhancements needed to meet its responsibilities. The nonfinancial
information USCIS used included historical data on application
completion rates--the average time it takes to complete adjudication of
an application--from its own Performance Analysis System (PAS) and the
number of applications USCIS estimated it would receive each year in
fiscal years 2008 and 2009.
USCIS estimated that the number of applications to be received in
fiscal years 2008 and 2009 would be 5.577 million per year, including
applications for which no fee is charged. Fee-paying application volume
was estimated to be 4.742 million yearly. USCIS also estimated that
2.196 million of the fee-paying applications would require biometric
services, for which an additional fee is charged.
USCIS also estimated the total annual cost of processing and
adjudicating immigration applications for fiscal years 2008 and 2009.
USCIS started with the fiscal year 2007 IEFA budget adjusted for costs
that will not recur after fiscal year 2007, adjusted for inflation for
fiscal years 2008 and 2009, and added the estimated cost of additional
requirements USCIS determined it needed to enhance service, security,
and infrastructure. USCIS's resulting estimated cost for processing and
adjudicating immigration benefit applications for fiscal years 2008 and
2009 is $2.329 billion, as shown in table 4.
Table 4: USCIS's Estimate of Annual Funds Needed for Fiscal Years 2008
and 2009 (Dollars in millions):
Fiscal year 2007 IEFA budget: $1,760.0;
Less: nonrecurring costs; ($8.5);
Fiscal year 2007 adjusted IEFA budget; $1,751.5;
Plus: inflation; $53.2;
Plus: additional requirements for enhancements; $524.3;
Total: $2,329.0[A].
Source: USCIS.
Note: Data are from USCIS's document entitled Supporting Documentation
to the Proposed Rule: Adjustment of the Immigration Benefit
Application/Petition Fee Schedule, FY 2008/2009 Fee Review Supporting
Documentation, February 2007.
[A] The total of $2,329 million to be recovered by regular application
fees does not include the anticipated annual premium processing fee
collections of $139 million for fiscal years 2008 and 2009. According
to USCIS, premium processing fees will be used to fund its
transformation program to make long-term improvements to its business
processes and technology.
[End of table]
The additional requirements of $524.3 million, shown in table 4,
represent staff, equipment, training, and other costs that were not
previously funded and that USCIS determined it needed to improve its
capabilities to meet its mission responsibilities. These additional
requirements include:
* service enhancements ($134.8 million), such as staff and training,
which according to USCIS, would provide a small surge production
capacity to give it the flexibility to adapt to temporary increases in
filings and the ability to incrementally work to marginally shorten
processing times and improve service delivery over time;
* security and integrity enhancements ($152 million), such as
establishing a second card production facility to support day-to-day
production and to comply with federal standards for contingency
planning to ensure that critical systems remain available in the event
of catastrophic failure;
* humanitarian program enhancements ($14 million) to fully fund the
Cuban Haitian Entrant Program; and:
* infrastructure enhancements ($223.4 million), such as strengthening
administrative support activities and upgrading and maintaining the
information technology environment to sustain current operations.
As discussed in the next section (see also figure 1), USCIS classified
its total estimated costs as either direct or overhead. According to
USCIS, direct costs were assigned to field offices or activities based
on an identified relationship between the cost component and the field
office or activity. Overhead costs were allocated to field offices
primarily based on the number of FTEs assigned to each field office.
The field office costs along with their allocated overhead costs were
assigned to eight application processing activities and distributed as
shown in table 5.
Table 5: USCIS Estimated Annual Costs for Application Processing
Activities for Fiscal Years 2008 and 2009 (Dollars in millions):
Activity: Inform the public;
Cost: $245;
Description: Receiving and responding to customer inquiries through
telephone calls, written correspondence, or walk-in inquires.
Activity: Intake;
Cost: $94;
Description: Mail room and file room operations, including data entry,
file assembly, and fee receipting.
Activity: Conduct Interagency Border Inspection checks;
Cost: $52;
Description: Comparing information on applicants, petitioners,
beneficiaries, and household members who apply for immigration benefits
against various federal lookout systems.
Activity: Review records;
Cost: $233;
Description: Creating files; searching and requesting files;
consolidating files; connecting returned evidence with application and
petition files; pulling, storing, and moving files upon request;
updating systems on the location of files; and archiving inactive
files.
Activity: Make determination;
Cost: $1,334;
Description: Adjudicating applications and petitions; making and
recording adjudicative decisions; requesting and reviewing additional
evidence; interviewing applicants; and consulting with supervisors and
legal counsel and researching applicable laws and decisions on
nonroutine adjudications.
Activity: Fraud detection and prevention;
Cost: $99;
Description: Detecting, combating, and deterring immigration benefit
fraud.
Activity: Issue document;
Cost: $98;
Description: Producing and distributing secure cards that identify the
holder as an alien and identify his or her employment authorization.
Activity: Capture biometrics;
Cost: $174;
Description: Electronic capture of biometric (fingerprint, photograph,
signature) information and background checks performed by the FBI.
Total activity costs: $2,329.
Source: GAO analysis of USCIS data.
[End of table]
The activity costs include USCIS-estimated costs for asylum and refugee
services ($191 million), fee waivers and exemptions[Footnote 22] ($150
million), and biometric services ($174 million). These costs were
allocated to the applications separately as described below. USCIS
assigned the remaining $1.814 billion of activity costs to the expected
4.742 million fee-paying applications, resulting in a processing cost
for each application type. USCIS then allocated the costs of asylum and
refugee services and fee waiver and exemptions in equal dollar amounts
as surcharges to each application's processing cost to arrive at a
total cost for each application type. USCIS set each application fee
based on this total cost. The $174 million of "capture biometrics"
activity costs were allocated evenly to the estimated 2.196 million fee-
paying applications, resulting in a separate and equal biometrics fee
for each application that would require biometric services. (See
appendix II for a list of applications and fees.) Figure 1 illustrates
the cost assignment process.
Figure 1: Illustration of Cost Assignment Process:
[Refer to PDF for image]
Illustration of Cost Assignment Process:
USCIS Estimated Annual Costs for FY 2008/2009 (Dollars in millions):
$2,329.
Direct and Overhead Costs: USCIS identified $1,405 million and $924
million in direct and overhead costs, respectively.
Field Offices: Direct costs of $1,137 million were assigned directly to
field offices. In addition, overhead costs of $924 million were
allocated to the field offices primarily based on FTEs. Total for Field
offices: $2,061.
Activities: Direct costs of $268 million were assigned directly to
activities. In addition, costs associated with field offices, including
allocated overhead, were assigned to activities based on the percentage
of time field office staff spent on a given activity. Total for eight
activities: $2,329.
Application Costs: USCIS identified activity costs of $191 million for
asylum and refugee services, $150 million for fee waivers and
exemptions, and $174 million for biometric services. The remaining
$1,814 million was assigned to 4.742 million fee-paying applications
resulting in a processing cost for each application type. Then, costs
of asylum and refugee services and fee waivers and exemptions were
allocated in equal amounts as surcharges and added to the processing
costs of the fee-paying applications. Biometric services costs were
allocated in equal amounts to 2.196 million of the 4.742 million fee-
paying applications.
Source: GAO.
[End of figure]
Costing Methodology Did Not Consistently Adhere to Federal Accounting
Standards and Principles and Other Guidance:
Although the July 2007 fee increases met management's objective to set
fees at a level to recover USCIS's estimated costs of immigration
application processing and adjudication services, the costing
methodology USCIS used to develop the fees for each application type
did not consistently adhere to federal accounting standards and
principles and other guidance. While federal accounting standards allow
flexibility for agencies to develop managerial cost accounting
practices that are suited to their specific needs and operating
environments, they also provide certain specific guidance based on
sound cost accounting concepts. USCIS officials told us that when
developing the methodology, management anticipated some skepticism
about the fairness of the resulting fees, so its objectives also
included using methods that would distribute costs among the various
application types fairly and in a way that could be readily understood
by fee payers and others.[Footnote 23]
USCIS's methodology was not consistent with federal accounting
standards and principles and other guidance in the following aspects:
(1) unreimbursed costs paid by other federal entities on behalf of
USCIS were not included in USCIS's estimates of total costs, (2) key
assumptions and methods used for allocation of costs to activities and
types of applications were not sufficiently justified, (3) assumptions
about staff time spent on various activities were not supported by
documented rationale or analysis, (4) the cost of premium processing
services was not determined, and (5) documentation of the processes and
procedures was not sufficient to ensure consistent and accurate
implementation of the methodology. Because of these inconsistencies,
USCIS cannot support the reasonableness of the cost assignments to the
various application types.
Certain Costs Paid by Other Federal Entities Were Not Included in the
Fee Review:
USCIS did not include the costs of lockbox services paid by Treasury or
certain retirement benefits to be paid by OPM in estimating the full
cost of its immigration application processing and adjudication
services. USCIS officials told us that they only included costs that
the agency paid directly, which met management's objective to set fees
that recover funds sufficient to cover USCIS's costs. However according
to federal accounting standards, each entity's full cost also should
incorporate the cost of goods and services that it receives from other
entities free of charge.[Footnote 24] This is especially important for
executive agencies when the costs constitute inputs to government goods
or services provided to nonfederal entities for a fee or user charge
because executive agencies should recover the full costs. OMB Circular
No. A-25, which provides guidance for executive agencies on assessment
of user charges, states that when not in conflict with the fee-
authorizing statutes, and unless the agency has been granted an
exception to the general policy, fees should be sufficient to recover
the full cost of providing a service, which includes all costs to any
part of the federal government, including accrued retirement costs not
covered by employee contributions and the costs of collection. In other
words, costs should be included regardless of which agency pays them.
Congress authorized, but did not require, USCIS to recover full costs.
The document USCIS prepared to describe its methodology stated that it
adhered to the principles in OMB Circular No. A-25, but in the final
rule for the fee adjustment, USCIS also made clear that its fees would
recover only the costs of USCIS' operations. Although not inconsistent
with the legislation authorizing the fees, the scope of the costs to be
recovered by USCIS, as announced in USCIS's final rule, is inconsistent
with the general guidance in OMB Circular No. A-25. USCIS did not
document in its final rule, which it indicated OMB had reviewed, or
elsewhere the rationale for excluding non-USCIS costs from its fee
review, including whether or how it considered the executive branch
policy in OMB Circular No. A-25 on recovering full costs and other
factors.[Footnote 25]
At the time of the fee review, USCIS had not estimated the cost of
lockbox services provided by Treasury's FMS. At our request, FMS
provided information showing that it compensated two lockbox providers
$20 million for services provided to USCIS in fiscal year 2007. USCIS
included $2 million of these lockbox costs in the estimate of its costs
of immigration application processing and adjudication services.
According to a USCIS official, these costs were related to changes the
lockbox facility had to make to its systems controls, for example, to
accommodate additional data elements required by USCIS in application
forms. Although the $18 million lockbox costs excluded is not a
material amount in relation to the current $2.329 billion total costs
estimated by USCIS, this lockbox cost is expected to grow significantly
in the future as USCIS executes its plan to move the preadjudication
processing activities, including fee collection, from service centers
and field offices to lockbox facilities by March 2011. In fiscal year
2007, approximately 23 percent of fee collections were at the lockbox
facilities, while almost 68 percent were at service centers.
Legislative authority exists for FMS payment for lockbox services.
[Footnote 26] FMS pays lockbox costs pursuant to its responsibility for
collecting revenues coming into the federal government and for
providing specialized receipt and disbursement services for federal
agencies. FMS officials told us that federal agencies do not pay for
receipting, custody, and disbursement of federal funds by FMS on the
agencies' behalf because these services are FMS's responsibility.
According to FMS officials, agencies are to reimburse FMS only for the
costs of services that are considered unique to that particular agency.
[Footnote 27] USCIS and FMS signed an interagency agreement in
September 2008 that establishes reimbursement levels for onetime and
annual costs that USCIS will pay to FMS. These costs represent the
portion of FMS's lockbox costs that are unique to USCIS.
In addition, USCIS did not include in its estimated costs of
immigration application processing and adjudication services some of
the costs of retirement benefits--pensions and health and life
insurance--to be paid by OPM on behalf of USCIS. Based on its fiscal
year 2007 costs, USCIS estimated that the average annual projected cost
for these benefits for fiscal years 2008 and 2009 is $47 million before
taking into consideration the agency's 14 percent increase in the
number of employees from May 2007 to May 2008 and 16 percent increase
in related payroll costs.
Together, the estimated more than $65 million of FMS and OPM costs
excluded each year represents approximately $14 per fee-paying
application for fiscal years 2008 and 2009. This estimate could differ
among application types if these costs were analyzed more precisely.
Without consideration of these costs paid by other federal entities,
USCIS is not accounting for the full costs to the federal government of
USCIS's immigration application processing and adjudication services,
and USCIS's cost data used for setting fees are incomplete.
USCIS Did Not Sufficiently Justify the Use of Less Precise Cost
Assignment Methods:
The methodology USCIS used to determine the cost and develop the fees
for each application type involved various assumptions and cost
assignment methods. In large part, it consisted of allocating costs on
a prorated basis. USCIS did not prepare and document analyses to
justify its assumptions that prorated allocations provided a reasonable
distribution of those costs. While federal accounting standards do not
prohibit allocating costs on a prorated basis, they list an order of
preference for three cost assignment methods that should be used: (1)
direct tracing of costs wherever economically feasible,[Footnote 28] in
this case, to an identifiable office, activity, or application type;
(2) assigning costs on a cause-and-effect basis;[Footnote 29] or (3)
allocating costs on a reasonable and consistent basis when not
economically feasible to assign costs directly or on a cause-and-effect
basis. The standards also state that the third preference, allocation,
tends to be arbitrary because there may be little correlation between
the costs and the allocation base, and costing distortions often result
from arbitrary allocations. Minimizing arbitrary cost allocations will
improve cost information. Nevertheless, the standards allow flexibility
so that management can select methods that are best suited to the
organization's needs. The standards also state that when making the
selection, management should evaluate alternative costing methods and
select those that provide the best results under its operating
environment.
In the first stage of assigning the estimated $2.329 billion annual
application processing and adjudication services costs for fiscal years
2008 and 2009 (see figure 1), USCIS officials identified $1.405 billion
of direct costs and $924 million in overhead costs. USCIS considered as
overhead the majority of costs of headquarters functions and some field
office functions and centrally managed costs such as rent and
information technology operations and maintenance. Of the $924 million
of overhead costs, $732 million--31 percent of the total $2.329 billion
cost--was allocated to field offices based on the number of FTEs
assigned to each field office. This approach did not consider USCIS's
approximately 6,100 contract workers and used only approximately 7,900
FTEs of the total federal FTEs of about 10,400 as the basis for
distributing overhead costs. Excluding the contract workers from the
base could have changed the proportion of overhead costs assigned to
the various field offices which introduces the potential for an
additional significant effect on the allocation of those costs to
activities and application types.
Minimizing arbitrary cost allocations will improve cost information.
Alternatives to USCIS's FTE-based allocation of overhead to field
offices might have included direct or cause-and-effect assignment. For
example, software licenses for applications used by only a specific
office or activity and training for specific employee groups might have
been assigned directly to offices or activities causing, or driving,
each of those costs rather than allocating all of them in the aggregate
with other overhead costs to all field offices on the basis of FTEs. In
addition, other costs, such as information technology operations, that
were attributable to a particular field office or activity might have
been assigned using a cause-and-effect analysis, such as consumption of
services, rather than a pro rata FTE-based allocation.
Federal accounting standards state that allocation should have a
reasonable basis, usually a relevant common denominator. USCIS costs
that cannot be assigned directly or on a cause-and-effect basis to
specific field offices or activities in an economically feasible manner
might have an alternative allocation basis that is more closely related
to the attributes of those specific costs than to FTEs. For example,
using payroll for certain employee benefits or usage for certain
information technology costs might have provided a more accurate or
reasonable basis for cost distribution than an FTE-based allocation.
Without performing and documenting analyses to evaluate such
alternatives, USCIS management cannot assure itself or others that it
is using the optimal cost allocation method.
Field office overhead and direct costs were assigned to eight discrete
activities (see table 5) related to processing and adjudicating
applications. (See figure 1.) The activity costs were then assigned to
types of applications. As part of this process, USCIS assigned 49
percent (or about $1.143 billion) of total costs to total fee-paying
applications based on the amount of time it took to adjudicate an
application, resulting in varying costs per application type for the
adjudication activity.[Footnote 30] The adjudication time used as the
basis for assigning these activity costs to types of applications was
based on historical data on adjudication time from PAS, which measures
the average time to complete adjudication of each application based on
daily production information input by adjudicators. Thus, for the "make
determination" activity, the more complex types of applications that
take more time to adjudicate were assigned a higher cost, which
resulted in a higher fee. This is consistent with the methodology's
general premise, which according to USCIS is that the more time spent
adjudicating an application, the higher the fee. These cost assignments
used the federal accounting standards' preferred methods of cost
assignment.
USCIS assigned the remaining 51 percent (or about $1.186 billion) of
its costs to applications in equal amounts.[Footnote 31] This type of
assignment did not consider any variation in complexity or processing
time between application types. A USCIS official told us that available
production data for these activities were not sufficiently reliable to
use as a basis for assigning costs to applications. Also, according to
USCIS, pro rata allocation was used because these activities' costs
were not significantly driven by the complexity of an application type.
However, USCIS did not justify its assumption that these costs were not
significantly driven by complexity of application type.
While recognizing that agency management should select costing methods
that best meet their needs, taking into consideration the costs and
benefits of reasonable alternatives, federal accounting standards
recommend minimizing arbitrary cost assignment methods to help avoid
inaccurate product or service costs. It is not unusual for a costing
methodology to assign some costs using logical and justifiable
allocation, especially if more precise assignment methods are not cost
effective. However, for several significant cost elements, such as
those discussed here, USCIS did not prepare the analysis necessary to
demonstrate the reasonableness of or justification for the costs it
allocated to each type of application. Without documented justification
for USCIS's decisions in using methods that are less precise than
others available, decision makers and fee payers do not have access to
information significant in determining their level of confidence in the
reasonableness of USCIS's application fees.
USCIS Did Not Document Its Rationale and Related Analysis to Justify
Its Assumptions about Staff Time Spent on Various Activities:
USCIS did not document its rationale or any related analysis to justify
the assumptions concerning the amount of time staff spent performing
various activities, which were used to assign field office costs to
activities. Although USCIS prepared a supporting document to describe
the methodology it used, the document did not explain certain key
assumptions and methods used in sufficient detail to justify the
reasonableness of the resulting cost assignments. According to federal
internal control standards, significant events are to be clearly
documented.[Footnote 32] Significant events can include key decisions
about assumptions and methods underlying the assignment of costs. Also,
federal accounting standards require documentation of all managerial
cost accounting activities, processes, and procedures used to associate
costs with products, services, or activities.[Footnote 33]
According to USCIS, of the $1.137 billion[Footnote 34] of direct costs
assigned to field offices, $845 million was assigned to activities
based on data from PAS, which include, among other things, the amount
of time adjudicators spend adjudicating applications. The remaining
$292 million of direct field office costs, nearly 26 percent, was
assigned to activities based on management's judgment of how much staff
time was spent on each activity. For example, based on discussions with
representatives from regions, service centers, and the Performance
Management Branch, USCIS decided to allocate 88 percent of the costs of
the immigration information officers at service centers to the "inform
the public" activity and 12 percent to the "make determination"
activity. These discussions, including the input of the internal
experts, and the rationale linking this information and related
analysis with the final cost assignments were not documented. Using the
knowledge of informed experts as the basis for estimating cost
assignments can be a reasonable method when reliable data about the
amount of staff time spent performing various activities or other
factors that drive those costs are not available. However, without
clear documentation of these factors, consideration given to these
factors, and the rationale for cost assignment decisions made using
these factors, USCIS is not able to demonstrate the reasonableness of
the resulting cost assignments.
Costs of Premium Processing Services Were Not Determined:
According to federal accounting standards, Congress and federal
executives need cost information to make decisions about allocating
federal resources, modifying programs, and evaluating program
performance.[Footnote 35] However, USCIS has not determined the costs
of the accelerated processing services offered through its premium
processing program, which provides for the processing of certain
applications within 15 calendar days, rather than the typical 2 months
or more processing time. A business that wishes to hire a foreign
national to come to the United States to work temporarily can pay a
voluntary fee of $1,000, in addition to the regular application fee. By
law, these premium processing fees are to be used to cover the costs of
(1) premium processing services to business customers and (2)
infrastructure improvements in the adjudications and customer service
processes.[Footnote 36] Currently, USCIS is assigning all premium
processing fee collections to its business transformation program to
make long-term improvements to its business processes and technology.
Because USCIS is not using any of the premium processing fee
collections for the accelerated processing efforts, regular fee-paying
applicants could be bearing part of any added cost that might be
associated with processing these applications. According to USCIS
officials, because the $1,000 fee is set by law, and not by USCIS, the
fee was not included in the fee review. Without knowing the cost of its
premium processing services, USCIS management and Congress cannot
determine the extent to which the $1,000 fee would cover the costs of
the agency's premium processing services and infrastructure
improvements.
Documentation of Processes and Procedures Was Not Sufficient to Ensure
Consistent and Accurate Implementation:
USCIS described the costing methodology it used for its fee review in a
proposed rule[Footnote 37] announcing the impending application fee
increases and in a report containing supporting documentation for its
fee review, which was available to the public during the public comment
period on the proposed rule. However, USCIS did not prepare the more
detailed documentation called for in federal accounting standards,
which would allow results to be validated and agency personnel to
perform the fee-setting process in a consistent manner. According to
federal accounting standards, all cost accounting processes and
procedures should be documented by a manual, handbook, or guidebook of
applicable accounting operations that provides instructions for
procedures and practices to be followed.[Footnote 38]
In accordance with management's objective that the methodology be
readily understood by fee payers and others, the documentation USCIS
prepared for the public was prepared so that a third party could
understand USCIS's overall approach. However, specific procedures and
information used in the fee review as a basis for assigning costs were
not documented in sufficient detail to allow a knowledgeable person to
carry out or replicate the procedures. For example, documentation of
the multistep process USCIS used to allocate overhead costs to
activities did not include the percentages used to make these
allocations. Also, application completion rates (i.e., the average
amount of time to complete adjudication of an application) were not
described in enough detail to explain how the rates were used to assign
adjudication activity costs (i.e., "make determination" costs) to the
various application types.
Lack of documentation of the processes and procedures makes it
difficult to ensure that the methodology used to determine the costs
and fees is consistent from year to year, especially when there are
changes in personnel. Lack of documentation also makes it difficult to
train staff in consistent and accurate application of the methodology.
Further, without complete documentation reviewed and approved by
management, an independent party, such as an auditor, cannot readily
assess major assumptions and methods used in the process or audit the
procedures to provide accountability and added assurance that the cost
system is consistent with federal accounting standards and other
requirements and statutes.
Accountability Mechanisms Are in Place to Track Use of Fees, and USCIS
Is Taking Steps to Strengthen Control over Collections:
USCIS has put accountability mechanisms in place to help ensure that it
is using regular application fee collections and premium processing fee
collections as it intended, and it is taking steps to improve internal
control over collection of fees. USCIS has established unique codes in
the financial system for specific projects, and the OCFO monitors
expenditures of fee collections for those projects. Although USCIS has
controls in place over fee collections, it has identified some
weaknesses at the service centers. USCIS reported that it has taken
some actions to strengthen service center controls in the short term,
and that it is in the process of moving all preadjudication application
processing and fee receipt functions from the service centers and field
offices to lockbox facilities to further strengthen control over
collections.
Accountability Mechanisms Are in Place to Track Use of Fees Intended
for Specific Projects:
USCIS has established unique codes in the financial system for its
projects, and according to a USCIS official, the OCFO monitors
obligations and expenditures against those codes to track spending of
fee collections from both regular application fees and premium
processing fees. Expenditures for the additional requirements (staff,
equipment, training, etc.)--enhancements that had not been funded
previously and that USCIS determined it needed to improve its
capability to meet its responsibilities--are to be made from regular
application fees. Expenditures for USCIS's business transformation
program, to make long-term improvements to its business processes and
technology, come from premium processing fees.
USCIS has established accountability mechanisms to track expenditures
for the planned enhancements of $524 million. As discussed earlier, the
fee schedule that became effective in July 2007 is based, in part, on
USCIS's estimated costs for these enhancements. Of the $2.329 billion
that USCIS determined it needed annually to fund the cost of processing
and adjudicating immigration applications for fiscal years 2008 and
2009, over 22 percent (or $524 million) represented additional staff,
equipment, training, and projects included in the planned enhancements.
USCIS plans to use $232 million of that amount for payroll and related
costs to hire about 1,500 additional staff. The remaining $292 million
is to be used for specific projects, such as the establishment of a
second card facility and enhanced delivery of secure documents
(permanent residence cards, employment authorization documents, and
travel documents), so that the United States Postal Service can ensure
that they are delivered to the proper recipients.
USCIS's OCFO has established unique project codes in the financial
system for specific projects included in the planned enhancements to be
financed from regular application fees. According to a USCIS official,
the amounts that USCIS estimated it would spend on each of the
enhancements were allocated to the applicable individual project codes.
Obligations and expenditures made against those project code
allocations are monitored by OCFO to help ensure that USCIS uses the
increased resources to enhance its processing capabilities. A USCIS
official told us that the status of each nonfinancial aspect of the
enhancements, such as new staff hired and draft statements of work for
contracts to be let, is also tracked and discussed at periodic USCIS
management meetings. Some amounts included in the additional
requirements are for items that will not recur, such as the
establishment of a second card facility. The second facility, according
to USCIS, is needed to support day-to-day production and to be
available in the event of catastrophic failure in compliance with
federal standards for contingency planning for critical systems. A
USCIS official told us that any nonrecurring costs included in the
current fee schedule will not be included in the baseline resources for
the next fee review. As of September 30, 2008, USCIS had hired about
1,400 additional staff and had obligated or expended over $207 million
of the planned $292 million for specific projects included in the
enhancements.
USCIS's OCFO tracks the amount of premium processing fee collections
separately from regular application fee collections so that it can
dedicate premium processing fees to its business transformation program
to make long-term improvements to its business processes and
technology.[Footnote 39] USCIS has established an expenditure plan for
its transformation program that shows the estimated annual costs of the
program through fiscal year 2012. According to the program's
expenditure plan, USCIS will dedicate all anticipated premium
processing fee collections to the transformation program for fiscal
years 2008 through 2012. A USCIS official told us that commitments,
obligations, and expenditures for transformation projects are recorded
to specific codes in the financial system, and those amounts are
tracked along with premium processing fees. USCIS plans to use the
entire amount of premium processing fees it received in fiscal year
2008--almost $163 million[Footnote 40]--for its transformation program.
During fiscal year 2008, USCIS obligated over $12 million of that
amount for the transformation program. A USCIS official told us that as
some planned transformation projects move closer to the awarding of
contracts, amounts will be allocated to the transformation project
codes so obligations and expenditures can be made for those projects.
According to USCIS, a Transformation Solution Architect Task Order in
the amount of $14.5 million was awarded at the beginning of November
2008.
USCIS Is Moving Fee Collections to Lockbox Facilities to Strengthen
Control over Collections:
USCIS has documented and assessed its internal control activities and
processes related to fee collections. Based on our review of USCIS's
internal control documentation, service center contracts, and
independent auditor reports and our discussions and observations during
visits to the service centers and lockbox facilities, we identified a
system of controls designed to safeguard fees collected. The controls
include dual custody of fee receipts, surveillance cameras in the fee
collection areas, and balancing and reconciling fee collection amounts
as an application moves through processing. Although controls are in
place, USCIS has identified through its monitoring procedures some
weaknesses at one of its service centers. Because of these weaknesses,
and for other reasons, such as the lockbox facility's flexibility to
respond to unanticipated surges in application receipt volume, USCIS is
in the process of moving all preadjudication application processing and
fee receipt functions from the service centers and field offices to
lockbox facilities.
USCIS management assessed the effectiveness of its service centers'
internal controls over collection and depositing of fees in fiscal year
2007 in accordance with OMB Circular No. A-123, Management's
Responsibility for Internal Control, and found weaknesses, such as fee
receipts not being deposited in a timely manner and applications and
fees being stored in unsecured locations thus creating some security
issues. USCIS reported that these weaknesses resulted in part from the
increased workload attributable to filings by applicants attempting to
beat the proposed fee increases effective in July 2007 and increased
application filings because of the publication of a State Department
Visa Bulletin. An influx of applications and fees exceeded service
center capacity to timely issue receipts and deposit application fees.
Applications were kept in temporary storage containers, or pods, in the
parking lot at one service center and were not being receipted and
deposited timely. USCIS has identified corrective actions, including
the transition of fee collections and preadjudication processing of
applications to lockbox facilities, and is in the process of
implementing them. According to USCIS, other corrective actions were
implemented, including physical security improvements such as
installing a barbed wire fence around the perimeter of the area
containing the pods and a security guard to monitor the area 24 hours a
day, 7 days a week.
According to USCIS, at the four service centers, controls related to
the fee collection process may vary, but each location is expected to
maintain policies and procedures in accordance with management's
directives. We observed certain of these controls in operation at the
service centers. USCIS's procedures require dual custody of fee
receipts at all times. The procedures also state that after application
and check information have been entered into USCIS's system, the checks
are to be removed from the applications and placed in the data entry
clerk's locked safe. We observed the placement of endorsed checks into
small safe-type boxes. However, at one service center, the boxes did
not have locks.
Another control at the service centers relates to preparing the daily
bank deposit. USCIS's procedures require verification of collected fee
amounts at different steps during the process. USCIS and contractor
staff at one service center described the process, and we observed the
documentation that was prepared to support a prior day's bank deposit.
The documentation included required items such as reconciliations,
approvals, bank deposit slips, and courier signatures acknowledging
courier receipt of the checks for delivery to the bank.
At the lockbox facility we visited, we observed controls such as
restricted access to the entire lockbox operations area, surveillance
cameras in the segregated area where employees open mail and separate
checks, and comparing and balancing the number of applications and
amount of fee collections at each step of the process. An independent
auditor reviewed controls at the lockbox facility and determined that
the controls tested were effective.
USCIS is in the process of moving fee collection and other
preadjudication processing activities to lockbox facilities by March
2011. According to USCIS, benefits of the lockbox include reduced
operational costs, a more secure environment for fee collections,
centralized and expedited application and fee collection intake, and
flexibility to address unanticipated surges in application receipt
volume. For example, the lockbox facilities maintain a certain number
of staff as temporary workers who can be called upon when needed.
Conclusions:
Application fees are intended to fund USCIS's immigration benefit
application processing operations and other related services. While
USCIS has met its objective to set fees at a level sufficient to cover
its estimated costs, it has not considered the costs incurred by other
federal entities on USCIS's behalf when estimating the cost of each
type of application and setting fees. Also, key assumptions and methods
for allocating costs to activities and application types are not
sufficiently justified or documented, and USCIS does not know how the
cost of accelerated processing compares to its $1,000 premium
processing fee. Further, documentation that USCIS prepared to describe
its costing methodology does not provide sufficient instruction for the
costing processes and practices to be followed in determining the costs
of each type of application. USCIS, fee payers, congressional decision
makers, and others need assurance that the costing methodology used to
determine the fees for individual application types provides reliable
results and that the assumptions and assignment methods used are
justified. A costing methodology consistent with federal accounting
standards and principles and other guidance, including complete
documentation of the agency's cost assignment process and its analysis
and justification for key assumptions used to estimate costs and
determine application fees, could help provide that assurance. To
increase confidence that its cost estimates provide a reliable basis
for setting application fees, USCIS would need to analyze alternate
cost assignment methods taking into consideration the costs and
benefits of reasonable alternatives, generating additional operations
and production data, such as information system usage and
preadjudication processing time, to prepare those analyses. USCIS's
internal control monitoring procedures identified weaknesses in service
center fee collection procedures that USCIS has addressed while
planning the transition of its collection and preadjudicative
processing functions to lockbox facilities.
Recommendations for Executive Action:
To help make USCIS's costing methodology used for determining
application fees consistent with federal accounting standards and
principles and to strengthen the reliability of the cost assignments
used to set fees, we recommend that the Secretary of Homeland Security
direct the Director of USCIS to take the following four actions:
* identify the full cost of application processing services whether
paid directly by USCIS or by other federal entities for USCIS's
benefit, such as the costs of lockbox services paid by Treasury's FMS
and certain retirement benefits to be paid to USCIS retirees by OPM;
* consider the full costs to the government when USCIS next reviews and
sets application fees and document the rationale for decisions made
about including or excluding any types of costs in the fee
determination process;
* determine the costs of providing premium processing services to
identify the extent to which the $1,000 premium processing fee would
cover associated expedited processing costs and infrastructure
improvements; and:
* document the processes and procedures of the costing methodology in
sufficient detail so that the specific procedures used and the data
sources and cost assignment methods employed for each step in the
process can be understood and replicated.
To better support the reasonableness of USCIS's assumptions and cost
assignment methods, we recommend that the Secretary of Homeland
Security direct the Director of USCIS to take the following two
actions:
* analyze current cost allocation methods to evaluate whether direct or
cause-and-effect assignment methods that are economically feasible or
other allocation bases may offer greater precision and:
* fully document the rationale and any related analysis for using the
assumptions and cost assignment methods selected.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, DHS and USCIS concurred
with our recommendations and reported that related actions are planned
or underway. These actions, if properly implemented, should better
support the reasonableness of USCIS's assumptions and cost assignment
methods and help strengthen the reliability of the cost assignments
used to set fees.
DHS characterized the issues raised in the draft report as mostly
pertaining to documentation and analysis supporting discrete decisions
by USCIS in developing its costing methodology. In this regard, DHS
indicated that USCIS had substantial documentation supporting its
costing methodology. As discussed in the draft report, it will also be
important that available documentation and analysis is sufficient to
explain the methodology to potential users, provide justification for
key assumptions, and guide future program administrators in preparing
future fee reviews using a consistent methodology. This level of
documentation and analysis is critical to developing reliable cost
information for management of fee-based programs on an ongoing basis.
We are sending copies of this report to interested congressional
committees, the Secretary of Homeland Security, the Acting Deputy
Director of USCIS, the Inspector General of DHS, and other interested
parties. This report is also available at no charge on the GAO Web site
at [hyperlink, http://www.gao.gov].
Should you or your staff have any questions about this report, please
contact Jeanette Franzel at (202) 512-9406 or franzelj@gao.gov or Susan
J. Irving at (202) 512-8288 or irvings@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix V.
Signed by:
Jeanette M. Franzel:
Director:
Financial Management and Assurance:
Signed by:
Susan J. Irving:
Director for Federal Budget Analysis:
Strategic Issues:
[End of section]
Appendix I: Scope and Methodology:
To assess the consistency of U.S Citizenship and Immigration Services'
(USCIS) costing methodology with federal accounting standards and
principles, including whether USCIS sufficiently justified and
documented its assumptions and methods, we reviewed federal accounting
standards and Office of Management and Budget (OMB) guidance on user
fees.[Footnote 41] We also reviewed USCIS documents related to the fee
review and its methodology. We obtained further understanding of the
methodology through interviews with knowledgeable USCIS officials and
staff. We reviewed the design and operation of USCIS's cost system, its
accumulation methods, and the assignment of costs involved in
processing and adjudicating immigration applications. We performed a
walk-through of the cost system, discussed key assumptions and
decisions with USCIS officials, and performed analytical reviews. For
example, we performed calculations to verify USCIS's distribution of
overhead costs. We reviewed USCIS documents describing the bases on
which USCIS assigned costs to its processing activities and how
individual application fees were determined. To determine whether USCIS
data were sufficiently reliable for purposes of this report, we
discussed data quality control procedures with agency officials and
reviewed relevant documentation.
To identify and assess the accountability mechanisms and internal
controls that USCIS has in place over the collection and use of fees,
we reviewed internal control standards and relevant USCIS
documentation, and we interviewed knowledgeable USCIS officials and
staff about the controls USCIS has put in place. We corroborated
information obtained in the interviews by reviewing contracts for
service center support operations, USCIS internal control
documentation, and an independent auditor's report on controls in place
at the lockbox facility and through our visits to four USCIS service
centers in California, Nebraska, Texas, and Vermont and a lockbox
facility in Chicago.[Footnote 42] During those visits, we interviewed
officials and staff and observed the fee collection process. Regarding
controls over use of fees, we discussed with USCIS officials and staff
the processes for tracking and monitoring fee collections and related
expenditures. We corroborated the information obtained in the
discussions by reviewing USCIS reports showing the amount of fee
collections received, and we verified that related obligations and
expenditures were made against the specific project codes system for
selected projects.
We conducted this performance audit from October 2007 through January
2009 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Table: Immigration Application Forms and Related Fees
Prior to and as of the July 30, 2007, Fee Increase:
Form no.: I-90;
Description: Application to Replace Permanent Resident Card;
Application fees prior to July 30, 2007: $190;
Application fees as of July 30, 2007: $290;
Biometrics: required: Yes.
Form no.: I-102;
Description: Application for Replacement/Initial Nonimmigrant Arrival-
Departure Document;
Application fees prior to July 30, 2007: $160;
Application fees as of July 30, 2007: $320;
Biometrics: required: No.
Form no.: I-129;
Description: Petition for a Nonimmigrant Worker;
Application fees prior to July 30, 2007: $190;
Application fees as of July 30, 2007: $320;
Biometrics: required: No.
Form no.: I-129F;
Description: Petition for Alien Fiancé(e);
Application fees prior to July 30, 2007:$170;
Application fees as of July 30, 2007: $455;
Biometrics: required: No.
Form no.: I-130;
Description: Petition for Alien Relative;
Application fees prior to July 30, 2007: $190;
Application fees as of July 30, 2007: $355;
Biometrics: required: No.
Form no.: I-131;
Description: Application for Travel Document;
Application fees prior to July 30, 2007: $170;
Application fees as of July 30, 2007: $305;
Biometrics: required: No.
Form no.: I-140;
Description: Immigrant Petition for Alien Worker;
Application fees prior to July 30, 2007: $195;
Application fees as of July 30, 2007: $475;
Biometrics: required: No.
Form no.: I-191;
Description: Application for Advance Permission to Return to
Unrelinquished Domicile;
Application fees prior to July 30, 2007: $265;
Application fees as of July 30, 2007: $545;
Biometrics: required: No.
Form no.: I-192;
Description: Application for Advance Permission to Enter as a
Nonimmigrant;
Application fees prior to July 30, 2007: $265;
Application fees as of July 30, 2007: $545;
Biometrics: required: No.
Form no.: I-193;
Description: Application for Waiver of Passport and/or Visa;
Application fees prior to July 30, 2007: $265;
Application fees as of July 30, 2007: $545;
Biometrics: required: No.
Form no.: I-212;
Description: Application for Permission to Reapply for Admission Into
the United States After Deportation or Removal;
Application fees prior to July 30, 2007: $265;
Application fees as of July 30, 2007: $545;
Biometrics: required: No.
Form no.: I-290B;
Description: Notice of Appeal or Motion;
Application fees prior to July 30, 2007: $385;
Application fees as of July 30, 2007: $585;
Biometrics: required: No.
Form no.: I-360;
Description: Petition for Amerasian, Widow(er) or Special Immigrant;
Application fees prior to July 30, 2007: $190;
Application fees as of July 30, 2007: $375;
Biometrics: required: No.
Form no.: I-485;
Description: Application to Register Permanent Residence or Adjust
Status;
Application fees prior to July 30, 2007: $325;
Application fees as of July 30, 2007: $930;
Biometrics: required: Yes.
Form no.: I-526;
Description: Immigrant Petition by Alien Entrepreneur;
Application fees prior to July 30, 2007: $480;
Application fees as of July 30, 2007: $1,435;
Biometrics: required: No.
Form no.: I-539;
Description: Application to Extend/Change Nonimmigrant Status;
Application fees prior to July 30, 2007: $200;
Application fees as of July 30, 2007: $300;
Biometrics: required: No.
Form no.: I-589;
Description: Application for Asylum and for Withholding of Removal[A];
Application fees prior to July 30, 2007: No fee;
Application fees as of July 30, 2007: No fee;
Biometrics: required: No.
Form no.: I-600;
Description: Petition to Classify Orphan as an Immediate Relative;
Application fees prior to July 30, 2007: $545;
Application fees as of July 30, 2007: $670;
Biometrics: required: Yes.
Form no.: I-600A;
Description: Application for Advance Processing of Orphan Petition;
Application fees prior to July 30, 2007: $545;
Application fees as of July 30, 2007: $670;
Biometrics: required: Yes.
Form no.: I-601;
Description: Application for Waiver of Grounds of Inadmissibility;
Application fees prior to July 30, 2007: $265;
Application fees as of July 30, 2007: $545;
Biometrics: required: No.
Form no.: I-612;
Description: Application for Waiver of Foreign Residence Requirement;
Application fees prior to July 30, 2007: $265;
Application fees as of July 30, 2007: $545;
Biometrics: required: No.
Form no.: I-687;
Description: Application for Status as a Temporary Resident Under
Section 245A of the INA;
Application fees prior to July 30, 2007: $255;
Application fees as of July 30, 2007: $710;
Biometrics: required: Yes.
Form no.: I-690;
Description: Application for Waiver of Grounds of Inadmissibility;
Application fees prior to July 30, 2007: $95;
Application fees as of July 30, 2007: $185;
Biometrics: required: No.
Form no.: I-694;
Description: Notice of Appeal of Decision Under Section 210 or 245A;
Application fees prior to July 30, 2007: $110;
Application fees as of July 30, 2007: $545;
Biometrics: required: No.
Form no.: I-695;
Description: Application for Replacement of Form I-688A, Employment
Authorization, or Form I-688, Temporary Residence Card;
Application fees prior to July 30, 2007: $65;
Application fees as of July 30, 2007: $130;
Biometrics: required: No.
Form no.: I-698;
Description: Application to Adjust Status From Temporary to Permanent
Resident;
Application fees prior to July 30, 2007: $180;
Application fees as of July 30, 2007: $1,370;
Biometrics: required: Yes.
Form no.: I-730;
Description: Refugee/Asylee Relative Petition[A];
Application fees prior to July 30, 2007: No fee;
Application fees as of July 30, 2007: No fee;
Biometrics: required: No.
Form no.: I-751;
Description: Petition to Remove Conditions on Residence;
Application fees prior to July 30, 2007: $205;
Application fees as of July 30, 2007: $465;
Biometrics: required: Yes.
Form no.: I-765;
Description: Application for Employment Authorization;
Application fees prior to July 30, 2007: $180;
Application fees as of July 30, 2007: $340;
Biometrics: required: No.
Form no.: I-817;
Description: Application for Family Unity Benefits;
Application fees prior to July 30, 2007: $200;
Application fees as of July 30, 2007: $440;
Biometrics: required: Yes.
Form no.: I-821;
Description: Application for Temporary Protected Status (first-time
applicants)[B];
Application fees prior to July 30, 2007: $50;
Application fees as of July 30, 2007: $50;
Biometrics: required: Yes.
Form no.: I-824;
Description: Application for Action on an Approved Application or
Petition;
Application fees prior to July 30, 2007: $200;
Application fees as of July 30, 2007: $340;
Biometrics: required: No.
Form no.: I-829;
Description: Petition by Entrepreneur to Remove Conditions;
Application fees prior to July 30, 2007: $475;
Application fees as of July 30, 2007: $2,850;
Biometrics: required: Yes.
Form no.: I-905;
Description: Application for Authorization to Issue Certification for
Health Care Workers[C];
Application fees prior to July 30, 2007: $230;
Application fees as of July 30, 2007: $230;
Biometrics: required: No.
Form no.: I-907;
Description: Request for Premium Processing Services[B];
Application fees prior to July 30, 2007: $1,000;
Application fees as of July 30, 2007: $1,000;
Biometrics: required: No.
Form no.: I-914;
Description: Application for T Nonimmigrant Status;
Application fees prior to July 30, 2007: $270;
Application fees as of July 30, 2007: No fee;
Biometrics: required: No.
Form no.: N-300;
Description: Application to File Declaration of Intention;
Application fees prior to July 30, 2007: $120;
Application fees as of July 30, 2007: $235;
Biometrics: required: No.
Form no.: N-336;
Description: Request for Hearing on a Decision in Naturalization
Proceedings;
Application fees prior to July 30, 2007: $265;
Application fees as of July 30, 2007: $605;
Biometrics: required: No.
Form no.: N-400;
Description: Application for Naturalization;
Application fees prior to July 30, 2007: $330;
Application fees as of July 30, 2007: $595;
Biometrics: required: Yes.
Form no.: N-470;
Description: Application to Preserve Residence for Naturalization
Purposes;
Application fees prior to July 30, 2007: $155;
Application fees as of July 30, 2007: $305;
Biometrics: required: No.
Form no.: N-565;
Description: Application for Replacement of Naturalization/Citizenship
Document;
Application fees prior to July 30, 2007: $220;
Application fees as of July 30, 2007: $380;
Biometrics: required: No.
Form no.: N-600;
Description: Application for Certificate of Citizenship;
Application fees prior to July 30, 2007: $255;
Application fees as of July 30, 2007: $460;
Biometrics: required: No.
Form no.: N-600K;
Description: Application for Citizenship and Issuance of Certificate
Under Section 322;
Application fees prior to July 30, 2007: $255;
Application fees as of July 30, 2007: $460;
Biometrics: required: No.
Form no.: N-644;
Description: Application for Posthumous Citizenship;
Application fees prior to July 30, 2007: No fee;
Application fees as of July 30, 2007: No fee;
Biometrics: required: No.
Description: Biometric Services[D];
Application fees prior to July 30, 2007: $70;
Application fees as of July 30, 2007: $80.
Source: USCIS.
[A] By law, asylum services are provided without charge; therefore, no
fees are associated with these applications.
[B] The fees for Forms I-821 and I-907 are set by statute, and
therefore were not affected by the proposed rule announcing the fee
increases.
[C] The fee for Form I-905 was not increased because the fee was
recently established and USCIS expects a very low volume of application
receipts--only 10 are projected to be submitted each year in fiscal
years 2008 and 2009.
[D] Applicants filing forms that require biometrics services must pay a
fee of $80 in addition to the regular application fee.
[End of table]
[End of section]
Appendix III: Federal Statutes, Accounting Standards and Principles
Related to Cost Accounting and User Fees, and Other Guidance:
The Federal Financial Management Improvement Act of 1996[Footnote 43]
(FFMIA) requires, among other things, that agencies covered by the
Chief Financial Officers (CFO) Act[Footnote 44] have financial
management systems that substantially comply with federal accounting
standards. USCIS is part of the Department of Homeland Security and
must conform to the requirements of the CFO Act. Statement of Federal
Financial Accounting Standards No. 4, Managerial Cost Accounting
Standards and Concepts, sets forth the fundamental elements of
managerial cost accounting. Cost information can be used by federal
managers for budgeting and cost control, performance measurement,
program evaluations, making economic choice decisions, and determining
and setting fees. The standards provide guidance on allocating costs to
products and services provided by federal agencies. The standards do
not impose a specific methodology on federal agencies but allow
flexibility to design a cost accounting system that meets the specific
needs of each agency. Among other things, the CFO Act requires agencies
to review fees imposed by them on a biennial basis.[Footnote 45]
OMB Circular No. A-25, User Charges, contains federal policy regarding
fees assessed for government services and provides information on the
basis upon which user charges (i.e., fees) are to be set. OMB Circular
No. A-25 provisions apply to agencies in their assessment of user
charges under 31 U.S.C. § 9701 (the user fee statute). It provides that
when a service or privilege confers special benefits to an identifiable
recipient beyond those that accrue to the general public, a charge will
be imposed to recover the full cost to the federal government for
providing the special benefit. Full costs, according to OMB Circular
No. A-25, include all direct and indirect costs of providing the
service. OMB Circular No. A-25 also provides guidance to agencies
regarding their assessment of user charges under other statutes, such
as 8 U.S.C. 1356(m) to the extent OMB Circular No. A-25 is not
inconsistent with those other statutes.
The Comptroller General's Standards for Internal Control in the Federal
Government[Footnote 46] provides an overall framework for establishing
and maintaining internal control. Management is responsible for
establishing and maintaining internal control to achieve the objectives
of effective and efficient operations. OMB Circular No. A-123,
Management's Responsibility for Internal Control, defines management's
responsibility for internal control in federal agencies and provides
guidance to federal managers on improving the accountability and
effectiveness of federal programs and operations by establishing,
assessing, correcting, and reporting on internal control.
[End of section]
Appendix IV: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
[hyperlink, http://www.dhs.gov]
January 9, 2009:
Ms. Susan J. Irving
Director for Federal Budget Analysis:
Strategic Issues:
Ms. Jeanette M. Franzel:
Director, Financial Management and Assurance:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Irving and Ms. Franzel:
Re: Draft Report GAO-09-70, Immigration Application Fees: Costing
Methodology Improvements Would Provide More Reliable Basis for Setting
Fees (GAO Job Code 194714).
The Department of Homeland Security welcomes the opportunity to review
and comment on the draft report referenced above. The report contains
six recommendations. The Department, specifically the United States
Citizenship and Immigration Services (USCIS), agrees with the
recommendations.
USCIS appreciates the significant time and effort of the U.S.
Government Accountability Office (GAO) staff in undertaking a thorough
review of Immigration Examinations Fee Account fee setting under the FY
2008-2009 fee review cycle. Overall, the issues raised throughout the
draft report appear to pertain mostly to the adequacy of written
documentation and analysis supporting discrete decisions by USCIS on
the adopted accounting methodologies. Any perceived lack of written
information does not mean alternatives were not discussed or assessed
internally. In fact, USCIS also discussed at length with GAO staff the
basis for some accounting methodology decisions. In addition, the test
of "completeness" with respect to documentation is a subjective one.
While USCIS did not take minutes at every meeting in which it discussed
its fee study, USCIS did make available to the public almost 200 pages
of documentation supporting the methodology, testified before the
Congress twice on the fee changes, and made its computer model
available for public inspection. In future reviews, and for subsequent
audits, USCIS will work to document in even more detail decisions that
support actions taken.
The GAO recommended that the Director of USCIS take four actions to
help make USCIS's costing methodology used for determining application
fees consistent with federal accounting standards and principles and to
strengthen the reliability of the cost assignments used to set fees.
Recommendation 1: Identify the full cost of application processing
services whether paid directly by USCIS or by other federal entities
for USCIS's benefit, such as the costs of lockbox services paid by
Treasury's Financial Management Service and certain retirement benefits
to be paid to USCIS retirees by the Office of Personnel Management.
Response: The FY 2008-2009 fee review identified the full estimated
cost to USCIS of application processing services. Documentation within
the current fee review covering the FY 2010-2011 period will also
estimate the cost of services not paid directly by USCIS. However,
USCIS did state in the final rule adjusting its fee structure that for
the purpose of OMB Circular A-25, User Charges, it was only recovering
costs to USCIS and not those borne by other Federal agencies on its
behalf The Office of Management and Budget (OMB) approved of USCIS
deviation from OMB Circular A-25 in this area when OMB cleared the
notice of proposed rulemaking (NPRM) and final rule. In addition, if
USCIS had charged for costs borne by the Office of Personnel Management
and Treasury's Financial Management Service, applicant fees would have
been raised further.
Recommendation 2: Consider the full costs to the government when USCIS
next reviews and sets application fees and document the rationale for
decisions made about including or excluding any types of costs in the
fee determination process.
Response: USCIS will continue to consider the full cost of programs in
future reviews and enhance documentation of the rationale for decisions
made in the fee determination process during the FY 2010-2011 fee
review.
Recommendation 3: Document the processes and procedures of the costing
methodology in sufficient detail so that the specific procedures used
and the data sources and cost assignment methods employed for each step
in the process can be understood and replicated.
Response: USCIS will include more documentation in subsequent fee
reviews.
Recommendation 4: Determine the costs of providing premium processing
services to identify the extent to which the $1,000 premium processing
fee would cover associated expedited processing costs and
infrastructure improvements.
Response: USCIS will determine the costs of premium processing services
and consider options to adjust premium processing fees.
In addition, GAO recommended that the Director of the USCIS take two
actions to better support the reasonableness of USCIS's assumptions and
cost assignment methods.
Recommendation 5: Analyze current cost allocation methods to evaluate
whether direct or cause-and-effect assignment methods that are
economically feasible or other allocation bases may offer greater
precision.
Response: For future fee reviews USCIS will provide analysis which
provides better justification for chosen cost allocation methodologies
against alternatives.
Recommendation 6: Fully document the rationale and any related analysis
for using the assumptions and cost assignment methods selected.
Response: USCIS will make every effort to improve documentation to a
degree that is sufficient for effective post-fee review audit analysis
and review.
Sincerely,
Signed by:
Michael E. McFarland, for:
Jerald E. Levine:
Director Departmental GAO/OIG Liaison Office:
[End of section]
Appendix V: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Jeanette M. Franzel, (202) 512-9406 or franzelj@gao.gov Susan J.
Irving, (202) 512-8288 or irvings@gao.gov:
Acknowledgments:
In addition to the contacts named above, staff members who made key
contributions to this report include Jack Warner, Assistant Director;
Richard Cambosos; Abe Dymond; Emily Eischen; Fred Evans; P. Barry
Grinnell; Chelsa Gurkin; Maxine Hattery; Jason Kelly; Diane Morris;
Jacqueline Nowicki; Leah Probst; and Nathan Tranquilli.
[End of section]
Footnotes:
[1] USCIS may set fees for providing adjudication services at a level
that will ensure recovery of the full costs of providing all such
services, including the costs of adjudication services provided without
charge to certain immigrants, such as those seeking asylum in the
United States, and any additional costs associated with the
administration of the fees collected. 8 U.S.C. § 1356(m), (n). As such,
Congress has permanently appropriated amounts collected for these
purposes.
[2] Pub. L. No. 106-553, § 1(a)(2) App. B, [Title I, § 112], 114 Stat.
2762A-68 (Dec. 21, 2000). 8 U.S.C. § 1356(u).
[3] SAVE is an intergovernmental information-sharing program to help
federal, state, and local agencies verify the immigration status of
applicants for public benefits and licenses.
[4] The E-Verify program allows participating employers to verify the
employment eligibility of all newly hired employees.
[5] GAO, Immigration Application Fees: Current Fees Are Not Sufficient
to Fund U.S. Citizenship and Immigration Services' Operations,
[hyperlink, http://www.gao.gov/products/GAO-04-309R] (Washington, D.C.:
Jan. 5, 2004).
[6] GAO issued three reports related to this request. This report
assesses USCIS's methodology for determining application fees and
controls over fees. GAO, Federal User Fees: Improvements Could Be Made
to Performance Standards and Penalties in USCIS's Service Center
Contracts, [hyperlink, http://www.gao.gov/products/GAO-08-1170R]
(Washington, D.C.: Sept. 25, 2008), discusses issues related to
contract performance standards for preadjudication activities at the
four service centers. GAO, Federal User Fees: Additional Analyses and
Timely Reviews Could Improve Immigration and Naturalization User Fee
Design and USCIS Operations, [hyperlink,
http://www.gao.gov/products/GAO-09-180] (Washington, D.C.: Jan. 23,
2009), reports on the design of USCIS fees and the effect of agency
operations on those fees.
[7] See appendix III for a description of these cost accounting-and
user fee-related federal statutes, standards, and principles and other
guidance.
[8] Cost allocation is a method of assigning costs to activities,
outputs, or other cost objects using a base that is not necessarily the
cause, or driver, of the cost.
[9] An FTE is a workforce measure representing 2,080 work hours, the
equivalent of one person working full-time for 1 year.
[10] Throughout this report, we use "applications" to refer to both
applications and petitions, and we use "applicants" to refer to both
applicants and petitioners.
[11] Section 286(m) of the Immigration and Nationality Act, as amended.
8 U.S.C. § 1356(m).
[12] While USCIS used its methodology to determine the cost of each
application type, setting fees at a level that will cover the costs of
adjudication services provided without charge to certain immigrants,
such as those seeking asylum, inherently means fee-paying applicants
pay more than the cost of services they receive.
[13] In 2003, functions associated with processing and adjudicating
immigration and naturalization applications were transferred from INS
to USCIS upon establishment of DHS.
[14] Pub. L. No. 100-459, § 209(a), 102 Stat. 2186, 2203 (Oct. 1,
1988).
[15] Pub. L. No. 105-515, § 210(d)(1), (2), 104 Stat. 2101, 2121 (Nov.
5, 1990).
[16] Pub. L. No. 106-553, § 1(a)(2), App. B, [Title I, § 112], 114
Stat. 2762A-68 (Dec. 21, 2000). 8 U.S.C. § 1356(u).
[17] Direct appropriations for (1) administrative expenses ended in
fiscal year 2004, (2) the backlog initiative ended in fiscal year 2006,
and (3) the transformation program ended in fiscal year 2007.
[18] See, e.g., Pub. L. No. 109-295, § 503(a), 120 Stat. 1377 (Oct. 4,
2006).
[19] A financial agent is a financial institution that has authority to
hold deposits of public money and perform related services. See 31
C.F.R. pt. 202. A financial agent has a principal-agent relationship
with Treasury and owes a fiduciary duty of loyalty and fair dealing to
the United States.
[20] We have reported on the design of federal user fees and discussed
issues such as equity and efficiency. See GAO, Federal User Fees: A
Design Guide, [hyperlink, http://www.gao.gov/products/GAO-08-386SP]
(Washington, D.C.: May 29, 2008).
[21] The inflation adjustment was based on pay and nonpay inflation
factors used by OMB in implementing OMB Circular No. A-76, Performance
of Commercial Activities.
[22] USCIS may grant fee waivers to eligible applicants if it
establishes that the applicants are unable to pay the fee. In addition,
asylum and refugee applicants are exempt from paying the fee for
certain immigration benefit applications.
[23] We have reported on the design of USCIS's user fees and discussed
issues such as equity and efficiency. See [hyperlink,
http://www.gao.gov/products/GAO-09-180].
[24] Statement of Federal Financial Accounting Standards (SFFAS) No. 4,
Managerial Cost Accounting Standards and Concepts, paras. 8 and 106.
[25] Any user fee design embodies trade-offs, and policymakers
ultimately need to balance the relative importance they place on
various aspects of a fee's design. For more information about weighing
trade-offs among key design characteristics of user fees, see GAO,
Federal User Fees: A Design Guide, [hyperlink,
http://www.gao.gov/products/GAO-08-386SP] (Washington, D.C.: May
29, 2008).
[26] A permanent indefinite appropriation was established by Pub. L.
No. 108-199, Div. F, Title II, § 218,118 Stat. 321 (2004), 12 U.S.C. §
5018 note, making available to the Secretary of the Treasury such sums
as may be necessary to reimburse financial institutions in their
capacity as depositaries and financial agents of the United States for
all services required or directed by the Secretary of the Treasury or
the Secretary's designee to be performed by such financial institutions
on behalf of Treasury or other federal agencies.
[27] For the purpose of this report, we are making no determination as
to whether lockbox service costs that are unique to USCIS should be
paid for by USCIS or may be recovered by FMS in light of the authority
to use the permanent indefinite appropriation to reimburse depositories
and financial agents for all services required or directed by the
Secretary of the Treasury on behalf of the department or other federal
agencies.
[28] According to federal accounting standards, as a general rule,
directly tracing costs and assigning costs on a cause-and-effect basis
are more expensive than cost allocations, because they require detailed
analyses and record keeping for costs and activities. However, they are
preferable because they produce more reliable cost information than the
cost of allocations. (SFFAS No. 4, para. 143.)
[29] When the relationship of the cost to a product, service or
activity is not directly identifiable but can be measured based on
another factor, it is called cause-and-effect cost assignment.
[30] These costs represented 86 percent of the total $1.334 billion
assigned to one of the eight activities--the "make determination"
activity.
[31] These costs represent costs assigned to the remaining seven
activities and the asylum and refugee services portion of the "make
determination" activity.
[32] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999), 15.
[33] SFFAS No. 4, para. 71.
[34] The $1.137 billion is included in the total direct costs of $1.405
billion, as shown in figure 1.
[35] SFFAS No. 4, para. 1.
[36] Pub. L. No. 106-553, § 1(a)(2) App. B, [Title I, § 112], 114 Stat.
2762A-68 (Dec. 21, 2000).
[37] 72 Fed. Reg. 4888-4915, February 1, 2007.
[38] SFFAS No. 4, para. 71.
[39] In 2006, USCIS embarked on a transformation of its business
processes and technology. According to USCIS, the transformation
program will move its operations from paper-based processes to an
electronic environment. Transformation is to enable both individual and
business applicants to apply online for immigration benefits; establish
unique accounts to facilitate changing application information, such as
changes in name, address, or other contact information; and provide
enhanced and real-time case status information with e-mail capabilities
to request information or inform the applicant about a pending
application.
[40] At the time of its fee review, USCIS had estimated that it would
receive $139 million in premium processing fee collections in fiscal
year 2008. It actually received almost $163 million in fiscal year
2008.
[41] See appendix III for a description of cost accounting-and user fee-
related federal statutes, standards, and principles.
[42] We did not visit the second lockbox facility in Los Angeles. It
receives and processes only one application type. As discussed in this
report, in 2007, the bank that operates the Chicago lockbox was
designated the financial agent responsible for all USCIS fee
collections. USCIS is in the process of transitioning all application
and fee collections to lockbox facilities operated by that bank.
[43] Pub. L. No. 104-208, div. A., § 101(f), title VIII, 110 Stat.
3009, 3009-389 (Sept. 30, 1996).
[44] Pub. L. No. 101-576, 104 Stat. 2838 (Nov. 15, 1990).
[45] 31 U.S.C. 902(a)(8).
[46] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[End of section]
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