Illegal Aliens

Concerns about the financial burden of providing public benefits and services have prompted several states, including California, to sue the federal government for repayment of these costs. To help Congress evaluate California's request for federal reimbursement, GAO examined estimates of the fiscal impact of illegal aliens living in California. GAO examined estimates presented in the Governor of California's 1994-95 budget published in January 1994, the state's revised estimates published in September 1994, and estimates by Urban Institute researchers published in September 1994. This report (1) reviews the studies' cost estimates for elementary and secondary education, Medicaid benefits, and adult imprisonment; (2) reviews the studies' estimates of revenues attributable to illegal aliens; and (3) summarizes current federal efforts to improve estimates of the public fiscal impact of illegal aliens. GAO concludes that the credibility of such estimates is likely to be a persistent issue, given the limited data available on the population of illegal aliens and differences in key assumptions and methodologies used to develop the estimates. For example, the studies differed in their treatment of capital costs, the age groups they used to estimate education costs, and their methodologies for projecting revenues.

GAO found that: (1) there are limited data on California's illegal alien population's size, use of public services, and tax payments and a lack of consensus on the appropriate methodologies, assumptions, and data sources to use in estimating the costs and revenues for illegal aliens in California; (2) using the most reasonable assumptions, it adjusted California's revised estimates on the costs of elementary and secondary education and adult incarceration for illegal aliens; (3) while its overall adjusted cost estimate of $2.35 billion agreed with the state's revised estimate, the component estimates differed; (4) the estimates of revenues attributable to illegal aliens ranged from $500 million to $1.4 billion, but data limitations prevented it from judging the reasonableness of the revenue estimates; and (5) although the Urban Institute has attempted to standardize and improve states' methodologies for estimating illegal aliens' costs to the public, many differences still remain that will require further consensus.