INS User Fee Revisions: INS Complied With Guidance but Could Make
Improvements (Letter Report, 09/28/98, GAO/GGD-98-197).
The Immigration and Naturalization Service (INS) is authorized to charge
user fees to recipients of certain INS services (e.g., processing an
alien's application for naturalization). These fees are to recover the
agency's costs to provide the services. On the basis of a 1997 study,
INS proposed increasing the fees that it charges users for many of its
services. Some of these fees would more than double under a final INS
rule issued in August 1998. INS collected and deposited about $624
million in application fees into the Immigration Examinations Fee
Account in fiscal year 1997. This report examines (1) the extent to
which INS' methodology for computing the proposed application fees
complied with federal user fee requirements and used generally accepted
statistical sampling procedures and (2) whether INS recognized
implemented and proposed changes to the naturalization process in its
application fees.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-98-197
TITLE: INS User Fee Revisions: INS Complied With Guidance but
Could Make Improvements
DATE: 09/28/98
SUBJECT: User fees
Naturalization
Financial management systems
Management information systems
Federal agency reorganization
Cost accounting
Statistical methods
IDENTIFIER: INS Immigration Examination Fee Account
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INS USER FEE REVISIONS: INS Complied With Guidance but Could Make
Improvements GAO/GGD-98-197 United States General Accounting
Office
GAO Report to the Honorable Dianne Feinstein
September 1998 INS USER FEE REVISIONS INS Complied With Guidance
but Could Make Improvements
GAO/GGD-98-197
GAO/GGD-98-197
GAO United States General Accounting Office
Washington, D. C. 20548 General Government Division
B-280630 September 28, 1998 The Honorable Dianne Feinstein United
States Senate
Dear Senator Feinstein: The Immigration and Naturalization Service
(INS) is authorized to charge user fees to recipients of certain
INS services (e. g., processing an alien's application for
naturalization). The fees that INS charges for its services are to
recover the costs it incurs. On the basis of a 1997 study, 1 INS
proposed increasing the fees it charges users for many of its
services. Subsequently, INS issued a proposed rule soliciting
comment on its fee revisions and, in August 1998, issued a final
rule 2 raising the fees; some of these fees will more than double.
In fiscal year 1997, INS collected and deposited about $624
million in application fees into the Immigration Examinations Fee
Account (IEFA). (App. I contains INS' current and new application
fee schedule.)
This report responds to your request that we review INS' fee
increase proposal. Specifically, we agreed with your office to
examine (1) the extent to which INS' methodology for computing the
proposed application fees complied with federal user fee
requirements and used generally accepted statistical sampling
procedures and (2) whether INS recognized implemented and proposed
changes to the naturalization process in its application fees.
Results in Brief On the basis of its user fee study, INS revised
the fees it charges for 30 types of immigration and naturalization
applications. We believe, on the
basis of our discussions with Office of Management and Budget
(OMB) staff and our review of INS' efforts to identify the costs
associated with processing applications, that INS complied, to the
extent it was able, with OMB user fee guidance. OMB guidance
requires agencies to recover, whenever possible, the full cost of
providing their services. However, according to its 1997 fee study
report, INS was unable to determine its full cost for processing
applications because (1) INS' financial management information
system does not provide actual cost data, including items such as
depreciation and support service costs from other INS functions,
and (2) INS excluded certain cost items, such as unfunded pension
liability and
1 Immigration Examinations Fee Account (IEFA) Study, Immigration
and Naturalization Service, July 30, 1997. 2 Federal Register,
Volume 63, Number 157, August 14, 1998.
GAO/GGD-98-197 INS User Fee Revisions Page 1
B-280630
postretirement life insurance and health benefits costs, because
INS said it lacked guidance on how to treat them. Had INS been
able to determine these costs and include them in its fee
computation, the revised fees could have been set at a higher
level.
INS' initial plan for sampling the processing of applications at
regional service centers and selected district offices and by
selected personnel to determine how long it took to process
various applications incorporated generally accepted statistical
sampling procedures. However, some of the changes INS made for
operational reasons to its planned statistical sample during
implementation undermined scientific sampling principles and
adversely affected INS' ability to project the study's results to
all application processing sites. We are unable to determine the
impact of these changes on the revised user fees.
INS is reengineering the way it processes naturalization
applications. Changes to the naturalization process are intended
to improve the integrity of the process and make it more efficient
and customer oriented. A few changes have recently been
implemented. For example, as of April 15, 1998, all naturalization
applications are to be mailed directly to INS service centers
rather than routed through INS district offices. Since these
changes took place after INS' fee study, the fee revisions do not
recognize these changes. INS officials said INS is planning to
initiate the next IEFA user fee review early in fiscal year 1999
and, at that time, the study will recognize any naturalization
process or other process changes that have taken place.
Background The fiscal year 1989 Department of Justice
Appropriation Act established the IEFA, 3 which was to be used to
reimburse any appropriation for
expenses incurred in providing immigration adjudication and
naturalization services. In 1990, Congress added a provision
allowing the fees for providing adjudication and naturalization
services to be set at a level that would ensure recovery of the
full costs of providing such services, including the costs of
similar services provided to asylum applicants but without a
charge to such applicants. 4 To recover the costs of providing
services to asylum applicants, INS charges all other immigration
and naturalization applicants a surcharge.
3 Public Law No. 100- 459, 102 Stat. 2186, 2203 (1988). 4
Department of Justice Appropriation Act, 1991, Public Law No. 101-
515, 104 Stat. 2101, 2121 (1990).
GAO/GGD-98-197 INS User Fee Revisions Page 2
B-280630
In subsequent years, according to INS officials, Congress directed
that additional services that traditionally had been paid from
appropriated accounts were to be paid from the IEFA. For example,
in fiscal year 1996, Congress directed that the costs of the
Cuban- Haitian Entrant Program from the Community Relations
Service Appropriation be borne by the IEFA. INS officials said
that this transfer required the IEFA to absorb $10 million in
unreimbursed services. Similarly, in fiscal year 1997, Congress
required that approximately $57 million in costs for asylum
applications and INS' automated application processing system,
which had been funded by the Violent Crime Reduction Trust Fund,
be paid from the IEFA.
INS collects fees and processes applications at 4 regional service
centers and 33 district offices. At the time of its fee study, INS
processed almost all applications that required an applicant
interview (e. g., naturalization) at its district offices.
Generally, applications not requiring an interview are processed
at its service centers. According to INS budget officials, in
fiscal year 1997, INS collected and deposited about $624 million
in application fees into the IEFA. The IEFA comprises
approximately 16 percent of INS' estimated total fiscal year 1998
budget of about $3.8 billion.
OMB Circular A- 25 OMB Circular A- 25, User Fees, establishes
federal policy regarding fees assessed for government services and
provides information on the scope and types of activities that are
subject to user fees. Circular A- 25 states that, as a general
policy, a user charge will be assessed against each identifiable
recipient for special benefits derived from federal activities
beyond those received by the general public. The circular requires
that the imposed charge should, whenever possible, recover the
full cost to the government for providing the special benefit, or
in limited circumstances, its market price. Full cost is defined
in the circular as all direct and indirect costs to any part of
the federal government. Moreover, the circular states that . . .
full cost shall be determined or estimated from the best available
records of the agency, and new cost accounting systems need not be
established solely for this purpose. Agencies imposing user fees
are responsible for reviewing the charges every 2 years in part to
ensure that existing charges are adjusted to reflect unanticipated
changes to costs.
Activity- Based Costing The Federal Accounting Standards Advisory
Board, which was established by the Department of the Treasury,
OMB, and the Comptroller General, recommends accounting standards
for the federal government, including standards on how to
determine the costs of government services. Once the
GAO/GGD-98-197 INS User Fee Revisions Page 3
B-280630
Director of OMB, the Secretary of the Treasury, and the
Comptroller General approve Federal Accounting Standards Advisory
Board recommendations, they are issued by the General Accounting
Office and by OMB as Statements of Federal Financial Accounting
Standards (SFFAS).
SFFAS No. 4, 5 which was issued in final in July 1995, sets forth
managerial cost accounting concepts and standards to be followed
in the federal government. In addressing the selection of a
costing methodology, SFFAS No. 4 notes that its standard does not
require the use of a particular type of costing system or costing
methodology. Instead, SFFAS No. 4 notes that agency and program
managements are in the best position to select the type of costing
system that would meet their needs. However, the standard requires
that whatever system is adopted should be appropriate to the
agency's operating environment and should be used consistently.
SFFAS No. 4 also notes that several costing methodologies have
been successful in the private sector and in some government
entities. Among those discussed was activity- based costing (ABC)
the costing methodology selected by INS for its fee study.
According to SFFAS No. 4, ABC focuses on the activities of a
production cycle, on the basis of the premises that an output 6
requires activities to produce, and activities consume resources.
ABC's major processes are to (1) identify the activities performed
to produce outputs, (2) assign or map resources required to carry
out the activities, (3) identify the outputs for which the
activities are performed, and (4) assign activity costs to the
outputs.
INS Study of the IEFA Fee Schedule
In 1995, INS established a team to develop and conduct a study to
determine what, if any, changes were needed to the IEFA fee
schedule. INS had previously revised its user fees in 1994.
Starting in the spring of 1996, the fee study team was comprised
of INS personnel and contracted technical staff from McNeil
Technologies, Inc., and Coopers & Lybrand L. L. P. 7 INS
identified which fees should be revised by studying all types of
applications with an annual adjudicated volume of 10,000 or more
(26
5 SFFAS No. 4, Managerial Cost Accounting Concepts and Standards
for the Federal Government, sets forth managerial cost accounting
standards aimed at providing reliable and timely information on
the full cost of federal programs, their activities, and their
outputs. Although issued in final in July 1995, SFFAS No. 4 became
effective in fiscal year 1998.
6 Outputs for INS are (1) the notification to the applicants of
INS' decision to approve or disapprove their immigration and
naturalization applications and (2) in the case of the Application
for Naturalization, the naturalization ceremony.
7 In July 1998, Coopers & Lybrand L. L. P. merged with Price
Waterhouse to become PricewaterhouseCoopers L. L. P. We use the
company's former name for the purposes of this report.
GAO/GGD-98-197 INS User Fee Revisions Page 4
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large- volume applications). 8 INS chose large- volume
applications so it could perform random sampling to statistically
project the study's results to the universe of similar
applications. INS applied the ABC methodology to determine its
costs to provide immigration adjudication and naturalization
services.
On the basis of the fee study, INS concluded that the 26 large-
volume application fees needed to be increased to reflect the full
processing costs. INS also proposed increases for the types of
applications with annual adjudicated volumes below 10,000 (4
small- volume applications). 9 For these four application types,
INS determined that the processing activities were similar to
certain large- volume applications and, on the basis of these
similarities, established the new fees. 10
Using the ABC methodology, INS developed processing models for the
large- volume applications to be studied. On the basis of
interviews and observations at INS service centers and district
offices, the study team identified the activities that made up the
application process and diagrammed the flow of applications from
receipt through their adjudication process. For example, the study
identified six common activities (e. g., receive application/
petition, manage records, and respond to inquiry) and two unique
activities (i. e., adjudicate application and issue end product).
Each activity included a number of identified tasks. For example,
the activity referred to as receive application/ petition would
include various tasks, such as get the mail, open the mail, and
affix the date stamp. Using the flow diagrams and a statistical
sampling plan that it had developed, the study team selected
various sites, observed selected employees, and timed how long it
took them to accomplish various tasks in the application
processing cycle.
How the Proposed IEFA Fees Were Calculated
To arrive at the proposed IEFA fee amounts, INS first calculated
the total time needed to process a single application its cycle
time by adding the resultant cycle times for each of the
activities that comprised the processing of that application. INS
then multiplied the total cycle time of the single application by
the estimated number of applications that were
8 Application volumes were derived from fiscal year 1995 data on
reported completions. According to INS' fee study, applications
with annual volumes that were larger than 10,000 represented 99.5
percent of all applications processed. Because some of the
applications' processing activities were similar, INS aggregated
their volumes to achieve volumes of 10,000 or more. For purposes
of this report, we refer to these applications as 26 large- volume
applications. See appendix I for a list of these applications.
9 See appendix I for a list of the four small- volume
applications. 10 INS is completing a study to set the fees for
four additional small- volume applications.
GAO/GGD-98-197 INS User Fee Revisions Page 5
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expected to be received. Using this calculation, INS derived the
total estimated cycle time to be spent processing a single
application type. By adding the total cycle times for each of the
26 large- volume application types, INS determined the total time
spent by staff processing all applications.
Using the above information, INS then calculated the percentage of
total time needed to process each application type to the total
processing time for all application types. INS then applied the
resultant percentages for each application type against the IEFA
budget, which had been adjusted to include certain unfunded items.
The application of the percentages to the budget determined the
total cost for processing an application by type. By dividing the
result by the estimated number of applications to be received, INS
determined a unit cost for each application by type. To this
amount, INS added a pro rata cost for processing waivers and
asylee applications (i. e., applications for which fees are not
charged) to develop a fee for each application type. 11
According to Circular A- 25, the fees charged are to be reviewed
every 2 years and adjusted as costs change or as more precise cost
determination processes become available. In August 1998, on the
basis of the 1997 fee study, INS published its new fees in the
Federal Register. Except for the Application for Naturalization
fee, the implementation of which is being delayed until January
15, 1999, the application fees are scheduled to become effective
on October 13, 1998. The implementation of the Application for
Naturalization fee is being delayed to permit the full
implementation of INS' plan to address naturalization processing,
which the INS Commissioner pledged to improve before implementing
a revised fee.
Objectives, Scope, and Methodology
To achieve our first objective examine the extent to which INS'
methodology for computing the proposed fees complied with federal
user fee requirements and used generally accepted statistical
sampling procedures we examined whether INS (1) followed
legislative requirements and federal guidance in setting
application fees and (2) used generally accepted social science
techniques for statistical sampling in its fee study. We reviewed
applicable legislation governing federal user fees and OMB cost
accounting requirements. To help assess INS' compliance with
Circular A- 25, we talked to OMB staff responsible for user fee
guidance who provided their perspective on INS' adherence to the
circular. We examined the costing methodology that INS used to
determine the user fee
11 The fees for each application type were rounded to the nearest
$5.
GAO/GGD-98-197 INS User Fee Revisions Page 6
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amounts and how that methodology was applied. We also examined
INS' sampling plan and how it was implemented to select
application processing sites and personnel for observation. We
compared the sampling plan to sound social science procedures.
Such procedures included (1) the identification of a known
universe of application processing sites and the use of unbiased
sampling procedures to randomly select sites from this universe,
(2) full disclosure of study procedures and limitations, and (3)
procedures to ensure the statistical validity of the data used and
appropriate generalization on the basis of the data gathered and
analyzed.
Moreover, we interviewed key officials from the INS Office of
Budget, Fee Policy and Rate Setting Branch. This branch was
responsible for the 1997 IEFA fee study and the proposed revisions
to the user fees. In addition, we interviewed key contractor
participants on the fee study team from Coopers & Lybrand L. L. P.
We also interviewed a consultant from Steeples and Associates who
provided statistical analysis. These INS and contractor officials
discussed the procedures and the accounting and statistical
methodology used to conduct the INS 1997 study and the subsequent
statistical analysis of the study's results. The officials
provided us with information and documentation on (1) how INS
determined which immigration applications to examine for a rate
review, (2) the selection and application of the accounting
methodology that was used to determine the revised fees, (3) the
sampling procedures that were used to select the locations for the
study and the personnel to observe processing applications, and
(4) the methodology and procedures used to aggregate and formulate
the final proposed fee schedule.
In addition, we analyzed the IEFA fee study report. This report
lays out the basis for the increases to the revised IEFA fees and
describes the accounting and statistical methodology used by INS
to determine the fee schedule adjustments. We also analyzed the
key policy guidance followed by INS to determine these new fees.
The guidance analyzed included (1) Circular A- 25, Revised, which
provides information on the types of activities that are subject
to user fees and the basis for setting these fees; (2) SFFAS No.
4, which sets forth managerial cost accounting concepts and
standards for the federal government; (3) Department of Justice
guidance on user fee programs; and (4) INS guidance on user fee
programs.
Regarding our second objective determine whether INS will reassess
service costs for changes it plans to make to the citizenship
process we interviewed officials from INS' Office of
Naturalization Operations and
GAO/GGD-98-197 INS User Fee Revisions Page 7
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Coopers & Lybrand L. L. P. The officials provided us with
information on the basis for redesigning the naturalization
process, the status of their reengineering efforts, and the
projected benefits to be accrued from this effort. We then
contacted key Fee Policy and Rate Setting Branch members to
determine whether they planned to incorporate the costs of the
newly developed naturalization processing revisions into the
Immigration Examinations Fee Schedule and what the projected
impact revisions would have on these fees. We also obtained and
reviewed key studies dealing with this topic, including A
Blueprint for the New Naturalization Process (Summary Report)
issued by INS in conjunction with Coopers & Lybrand L. L. P. on
September 30, 1997.
To provide information addressing these issues before the user fee
revisions are implemented, we did not determine the validity of
(1) the data INS collected and used to compute the new fees and
(2) the databases INS used for budget and application processing
projections.
We did our work from June 1998 through August 1998 in Washington,
D. C., in accordance with generally accepted government auditing
standards. We requested comments on a draft of this report from
the Attorney General or her designees. Responsible INS officials
provided oral comments at a meeting on September 9, 1998. These
comments are discussed near the end of this report.
To the Extent It Was Able, INS Followed Federal User Fee Guidance
On the basis of its study, INS is revising the fees for 30 types
of applications for immigration and naturalization services. On
the basis of our discussions with OMB staff and our review of INS'
efforts to identify the costs associated with processing
applications, we believe that INS complied, to the extent it was
able, with OMB user fee guidance. In the determination of
appropriate user fees, Circular A- 25 requires that the user fees
imposed should recover, whenever possible, the full cost to the
government for providing an identifiable recipient with special
benefits beyond those received by the public.
To identify its full cost of providing naturalization services,
INS used the ABC methodology. SFFAS No. 4 recognizes ABC as one of
a number of appropriate costing methodologies used in cost
accounting and cost studies. However, according to its 1997 fee
study report, INS was unable to determine the full costs it incurs
for processing applications because (1) INS' financial management
information system cannot provide actual cost data, including such
items as depreciation and support service costs
GAO/GGD-98-197 INS User Fee Revisions Page 8
B-280630
from other INS functions, and (2) INS excluded certain costs
items, such as unfunded pension liability and postretirement life
insurance and health benefits costs, 12 because explicit guidance
on how to treat them had not been promulgated.
According to INS officials, its financial management information
system does not provide actual cost data. According to them, the
best data source INS had available for its analysis was the
President's Fiscal Year 1998 Budget 13 for the IEFA. To recognize
certain costs that were not covered in the estimated IEFA portion
of the budget, INS adjusted that amount by adding to it estimates
of certain unfunded costs, including unused annual leave
carryover, contingent liabilities, and bad debt expenses. However,
INS was not able to calculate other cost items typically included
in determining full costs. These cost items included unfunded
pension liability and postretirement life insurance and health
benefits costs; depreciation expenses; support service costs from
other INS functions (e. g., supply costs, utilities, insurance,
travel, and rents); and some inter- entity costs, which did not
include reimbursable agreements (e. g., services provided to INS
by other government agencies, i. e., the Department of State).
INS' fee study recognizes that these costs were not included and
attributes their omission to such factors as the lack of an
adequate financial management information system, time and cost
constraints to develop certain information, 14 or the lack of
Office of Personnel Management and OMB guidance on how certain
costs are to be incorporated into the fees. Had INS been able to
calculate these amounts and include them in its fee calculations,
the unfunded pension liability and postretirement life insurance
and health benefits costs, depreciation expenses, support service
costs, and inter- entity costs could have increased the fees. INS
officials indicated that future user fee studies would address
these items but that INS was awaiting guidance from the Office of
Personnel Management.
12 These costs, like for other government agencies, are funded, in
part, by appropriations to the Office of Personnel Management. 13
It should be noted that the amount used was an estimate of
anticipated collections for fiscal year 1998, rather than the most
recent data collection data. Budgets that were based on estimated
collections have not always proved reliable in the past.
14 INS officials said that although certain items, such as support
service costs from other INS functions, could be determined,
because of their small impact on the total fees and the time it
would have taken to determine them, INS did not believe it would
be cost efficient to try and develop this information.
GAO/GGD-98-197 INS User Fee Revisions Page 9
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An OMB staff person who was responsible for reviewing INS' study
said that INS complied, to the extent it was able, with user fee
setting guidance. Furthermore, he said that OMB's goal is for
agencies to achieve complete compliance with the full cost
requirement. He also noted that Circular A- 25 does not require
agencies to include in their fee calculations costs that their
financial information management systems do not capture.
Subsequent to INS' fee study, OMB issued a memorandum 15 to
federal agencies' chief financial officers and inspectors general
addressing the need to determine inter- entity costs for purposes
related to SFFAS No. 4 and provided interim guidance on
incorporating inter- entity costs into their financial statements.
According to the memorandum, OMB believes that significant
progress toward the full cost accounting standard can be made by
recognizing several major categories of costs that are paid by one
agency but reported by another agency. Among those costs that OMB
is asking agencies to recognize are costs funded by the Office of
Personnel Management, such as employees' pension, health and life
insurance, and other benefits for retired employees. For
information needed to calculate these items, OMB directs agencies,
where applicable, to consult with the Office of Personnel
Management. Moreover, OMB asks agencies not to recognize any other
inter- entity costs until OMB can provide further guidance. While
OMB staff stated that the purpose of the memorandum was to provide
guidance for developing full cost information for financial
statement reporting purposes, we believe this cost information
could be used by INS in developing full cost data that would be
helpful in calculating appropriate user fees in accordance with
Circular A- 25.
INS Made Adjustments to Its Sampling Plan That Undermined
Scientific Sampling Principles
To collect data on the amount of time it took INS to process
applications (application cycle time), INS' study team developed a
statistical sampling plan that was based on scientific probability
sampling. The cycle times provided the means of assigning activity
costs to each application using the ABC methodology. Applications
to be timed were to have had a known chance 16 of being selected
into the sample. First, sites were to be randomly chosen. Second,
employees in each site who processed applications were to be
randomly selected and timed while completing certain activities.
INS intended for the study results to be generalized to all INS
application processing sites nationwide. However, several
judgmental
15 Technical Guidance for the Implementation of Managerial Cost
Accounting Standards for the Federal Government, Office of
Management and Budget, April 6, 1998. 16 A known chance means that
each application was eligible to be included in the sample, and,
theoretically, this chance could be computed.
GAO/GGD-98-197 INS User Fee Revisions Page 10
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changes made to (1) INS' initial sample of randomly selected sites
and (2) the procedures used to select employees to be observed
during the study's implementation adversely affected INS' ability
to project the study's results to all processing sites.
Stratification and Site Selection
The methodology INS used to select application processing sites
included both random selections and nonrandom judgmental
selections. While INS provided operational reasons for including
the judgmental selections, their inclusion undermined the
scientific basis for making statistical inferences about all INS
processing sites. Thus, INS' projection of its study results to
INS offices as a whole and its claim that these results are
representative is not appropriate.
To select the sample of sites, INS grouped sites into strata that
were based on the annual number of applications the sites
processed. INS divided district offices into small, medium, and
large office strata and then randomly selected seven sites from
the three strata. INS selected Miami, FL, and Los Angeles, CA, to
represent large offices; Honolulu, HI, Phoenix, AZ, and San
Antonio, TX, to represent medium offices; and Kansas City, MO, and
Omaha, NE, to represent small offices. INS grouped service centers
into a separate stratum and judgmentally selected the Nebraska
Service Center.
After the initial random selection of district office sites, INS
made several adjustments to the sample. INS judged that offices in
the Eastern Region were underrepresented. To compensate for this
situation, INS randomly selected the Boston District Office from a
pool of district offices in the northeast and added it to the
large district office selections. In addition, it removed the
Honolulu District Office from the sample, because of the high
costs of travel to Hawaii, and randomly selected the Philadelphia
District Office from the remaining offices in the medium district
office stratum to replace Honolulu. Moreover, INS added the
Baltimore District Office to the sample because the district
office was piloting an automated application processing system
that it plans to roll out over time to other offices. INS wanted
to determine how this system would affect the processing of
applications.
During the study, INS for various reasons made additional sampling
adjustments, some of which affected the randomness of the sample.
For example, (1) sample sizes of timings at specific sites were
increased to better ensure that the total number of timings needed
could be obtained;
GAO/GGD-98-197 INS User Fee Revisions Page 11
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(2) a visit to the Toronto, Ontario (Canada) preinspection site
(judgmental selection) was added to observe the processing of an
application that was not processed at any other INS site; and (3)
the Buffalo (NY) District Office was judgmentally added to gather
timings of applications for which too few had been obtained at
other sites. Although the above changes may appear to be
reasonable, some adversely affected the projectability of the
study's results to all sites.
Selection of Employees for Observation
The methodology to select employees within service centers and
district offices also used both random and nonrandom samplings.
The plan to sample employees for observation and applications for
timing was based on selecting employees randomly by using a random
numbers table and establishing a specific quota of timings needed
at each selected office. However, judgmental changes that INS made
during study implementation about how employees would be selected
for observation were not appropriate for making statistical
inferences about the time employees take to process applications.
Therefore, the nationwide projections about the processing of the
types of applications studied could be affected by these nonrandom
selection procedures.
In general, INS decided to observe the minimum number of employees
necessary to obtain the specified quota of timings for each site;
therefore, when the quota was obtained, data collection stopped,
regardless of the number of timings obtained from different
employees. Additionally, to obtain the quotas in the shortest time
possible, team members were instructed to observe, whenever
possible, other employees who processed the same type of
applications and who sat in proximity to the selected employee and
to time their activities as well. Therefore, employees who worked
next to each other could have had higher probabilities of having
timings recorded than employees who worked alone.
No Empirical Basis for Knowing the Validity of the Study's
Estimates
For several reasons, INS is unable to determine the precision of
the study's estimated times for processing the various
applications. Using a nonprobability sample has two important
implications.
First, it is not clear to what universe of INS application
processing sites INS' observations can be generalized. For
example, Hawaii was excluded from the initially drawn sample due
to travel costs. It is not clear whether INS would have excluded
other offices, such as Anchorage, AK, or San Juan, PR, due to high
travel costs had they been selected. To have precluded this
GAO/GGD-98-197 INS User Fee Revisions Page 12
B-280630
problem, INS should have specified before its initial selections
which offices were eligible for data collection and which were
not. INS then should have specified that its projections only
referred to eligible offices. Second, even if INS had defined a
universe of sites, its timings of employee
activities cannot be adjusted to adequately represent all
employees who process applications, because of the judgmental
changes made in the way employees were selected for observation.
Additionally, the data collection database did not provide
sufficient information about the observations or the sample design
to enable calculation of sampling errors or to evaluate the
accuracy of the fees. For example, observations cannot be
distinguished by individual employees in the database, nor can the
times for specific work tasks be separated. In part, according to
INS, this was due to the nature of its work and the way some
activities are performed at various offices, such as sorting mail
and batching applications of the same type.
We are not able to evaluate the precision 17 of the estimates of
the amount of time needed to complete the application forms, nor
the fees upon which these are based. Had INS repeated the surveys
under essentially the same conditions, we do not know whether the
resultant fees would have been similar or different from the ones
derived from this study.
17 The study provided estimates of precision for the timings of
each of the activities observed, but the study did not provide
precise estimates for individual forms the levels at which fees
are set. Because the estimation formula used considered only the
number of forms for which timings were observed and not that these
estimates came from a much smaller number of employees whose
average task completion times may differ, the precision of the
activity estimates is likely to be overstated.
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INS Is to Assess the Costs for the New Naturalization Service
Process as Part of Routine Fee Review
To increase its productivity while ensuring the fairness and
integrity of the naturalization process, INS has begun
implementing changes to the process. 18 INS determined the need
for a reengineered naturalization process because of (1) integrity
problems relating to the fingerprinting of alien applicants, 19
(2) continued customer service problems, and (3) a projected
increase of new applications in 1998. To address these issues, in
March 1997, Justice awarded a 2- year contract to Coopers &
Lybrand L. L. P. to develop a plan to reengineer the
naturalization process and, according to a Coopers & Lybrand L. L.
P. official, to assist with the new process' implementation and
evaluate the new process once it has been implemented. On
September 30, 1997, INS and Coopers & Lybrand L. L. P. issued the
summary report outlining the concept for a new naturalization
process.
Partly on the basis of the Coopers & Lybrand L. L. P. study, INS
is now in the process of implementing a number of improvements to
the immigration naturalization process. According to INS
officials, the majority of the improvements that are being
implemented are to be paid from the IEFA. The officials said that
both the costs and resulting efficiencies derived from the new
processes will be reflected in future revisions to the user fees
generated by the next and succeeding biennial IEFA user fee
studies.
Progress and Plans for Implementing the Reengineered
Naturalization Process
According to INS, its specific goals for the new naturalization
process are to establish a framework that will allow INS to (1)
make the correct eligibility decisions regarding who is qualified
to become a naturalized citizen, (2) make decisions in reasonable
time frames, (3) conduct the naturalization process consistently,
(4) design a cost- effective naturalization process, and (5)
improve customer satisfaction. To achieve these goals, INS has
completed some changes and is in the process of
18 Aliens who apply to INS to become naturalized citizens
generally have to meet certain requirements, such as residing in
the United States for at least 5 years as legal permanent
residents, demonstrating a knowledge of the English language and
American civics, and being of good moral character. To demonstrate
adequate knowledge of English and civics, aliens are tested by
INS. To determine whether aliens applying for citizenship have
been convicted of a crime that would preclude them from being
naturalized, INS submits the aliens' fingerprints to the Federal
Bureau of Investigation to determine if the aliens have criminal
history records on file. Depending on the type of offense and
punishment imposed and the timing of their arrest and/ or
convictions, aliens with criminal history records may be denied
citizenship.
19 To ensure that INS received the correct criminal history record
for that alien, Congress prohibited INS from accepting fingerprint
cards for benefit applications unless the fingerprints are taken
by INS, designated law enforcement agencies, or military
installations. In the past, aliens were permitted to submit a set
of fingerprints on a fingerprint card with their applications
without INS' being able to verify whose fingerprints were
submitted.
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B-280630
implementing several others to the naturalization process. Some of
the important changes include the following:
Through many sources, such as INS' forms centers, community-
based organizations, and the Internet, INS plans to distribute
naturalization packets containing information that explains
naturalization eligibility requirements and how the process works.
INS believes this information will help reduce application
processing times and the current backlog of applications by (1)
improving qualified aliens' compliance with INS documentation
requirements and (2) reducing unqualified aliens' submissions of
naturalization applications. As of April 15, 1998, INS completed
its implementation of a nationwide
direct- mail system that routes all naturalization applications
directly to INS service centers, rather than through INS' district
offices. INS expects this system to expedite processing times
because (1) the service centers are centralized and better
equipped to handle upfront receipt and processing of applications
than district offices and (2) district offices will be able to
focus their efforts on alien interviews and case completion
responsibilities. Because of integrity concerns about
fingerprints that aliens submitted to
INS with their applications, Congress mandated that INS be
responsible for taking naturalization applicants' fingerprints. 20
According to INS, it is now overseeing alien fingerprinting, which
is now done by a contractor located in INS facilities.
Impact of the New Naturalization Process on the Immigration
Examinations Fee Schedule
The new naturalization process is being substantially paid from
the IEFA, which, in turn, is funded through the collection of user
fees. According to INS officials, costs resulting from the
reengineered naturalization process will be reflected in INS'
budget. Moreover, changes in application processing at the service
centers and district offices are to be captured in the ABC
methodology when INS makes its biennial fee evaluation. INS
officials stated that they plan to initiate a new study of its
user fees in early fiscal year 1999.
INS officials told us that because the revised fees were
calculated before any reengineering changes were made, those
changes are not reflected in the fees. Furthermore, INS officials
told us that they do not know whether full implementation of the
reengineered naturalization process will increase or decrease the
component fees in the immigration examination
20 Designated state and local law enforcement agencies, and the
Departments of State and Defense with respect to applicants
residing abroad, may also take fingerprints to be submitted with
INS applications.
GAO/GGD-98-197 INS User Fee Revisions Page 15
B-280630
fee schedule. For example, the cost of processing applications
could increase due to the cost of purchasing new computers and
telecommunications equipment, but this cost may be offset by a
reduction in personnel costs or, if application processing times
improve, once the present application backlog is reduced. INS
officials believe that some of its changes will help to reduce the
existing application backlog while other changes will systemically
improve the naturalization process in the long term.
Conclusions On the basis of our discussions with OMB staff and our
review of INS' efforts to identify the costs associated with
processing applications, we believe
that INS complied, to the extent it was able, with available OMB
user fee guidance that requires agencies to recover the full costs
of providing services. However, according to its 1997 fee study,
INS was unable to determine its full costs for processing
applications because (1) INS' financial management information
system does not provide actual cost data, including such items as
depreciation and support service costs from other INS functions,
and (2) INS excluded certain cost items, such as unfunded pension
liability and postretirement life insurance and health benefits
costs, because it lacked guidance on how to treat them. Circular
A- 25 does not require agencies to include in their fee
calculations costs that their financial information management
systems do not capture. Had INS been able to determine these costs
and included them in its fee computation, the revised fees could
have been set at a higher level.
INS' initial plan for sampling the processing of applications at
regional service centers and selected district offices and by
selected processing personnel to determine how long it took to
process various applications incorporated generally accepted
statistical sampling procedures. However, some of the changes INS
made for operational reasons to its planned statistical sample
during implementation undermined scientific sampling principles
and adversely affected INS' ability to project the study's results
to all application processing sites. We are unable, however, to
determine the impact of these changes on the revised user fees.
INS is reengineering the way it processes naturalization
applications. Changes to the naturalization process are intended
to improve the integrity of the process and make it more efficient
and customer oriented. Some changes have already taken place while
others are slated to take place in the future. Since these changes
took place after INS' fee study, the fee revisions do not
recognize these changes, and INS does not know what
GAO/GGD-98-197 INS User Fee Revisions Page 16
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affect these changes will have on the user fee schedule. INS
officials said INS is planning to initiate the next IEFA user fee
review early in fiscal year 1999. The costing methodology that INS
plans to use in this study ABC should capture whatever
reengineering or other process changes that have taken place at
the time of the study.
Recommendation To improve confidence in the sampling methodologies
used to determine future immigration and naturalization fees, we
recommend that the
Commissioner of INS ensure that future samples are consistent with
generally accepted social science techniques and that the
statistical integrity of the sampling plans are maintained
throughout the study.
Agency Comments To obtain comments on a draft of this report, we
met on September 9, 1998, with officials representing INS from the
Offices of Budget,
Naturalization Operations, General Counsel, Congressional Affairs,
Adjudications, Internal Audit, and Public Affairs. Overall, the
officials agreed that the draft report was accurate and fair. They
also provided technical comments, which have been incorporated in
this report where appropriate.
As arranged with your office, we plan no further distribution of
this report until 30 days after the date of its publication,
unless you release the report or its contents before that time.
After 30 days, we will send copies of this report to the Chairmen
and Ranking Minority Members of congressional committees with
jurisdiction over INS, the Attorney General, the Commissioner of
the Immigration and Naturalization Service, and other interested
parties.
GAO/GGD-98-197 INS User Fee Revisions Page 17
B-280630
Please contact me at (202) 512- 8777 if you or your staff have any
questions concerning this report. Major contributors to this
report are listed in appendix II.
Sincerely yours, Norman J. Rabkin Director, Administration of
Justice Issues
GAO/GGD-98-197 INS User Fee Revisions Page 18
GAO/GGD-98-197 INS User Fee Revisions Page 19
Contents Letter 1 Appendix I INS' Current and Revised Application
Fees Schedule
22 Appendix II Major Contributors to This Report
24 Tables Table I. 1: Twenty- Six Large- Volume Applications With
Fee
Revisions 22
Table I. 2: Four Small- Volume Applications With Fee Revisions 23
Abbreviations
ABC Activity- Based Costing INS Immigration and Naturalization
Service IEFA Immigration Examinations Fee Account OMB Office of
Management and Budget SFFAS Statements of Federal Financial
Accounting Standards
GAO/GGD-98-197 INS User Fee Revisions Page 20
GAO/GGD-98-197 INS User Fee Revisions Page 21
Appendix I INS' Current and Revised Application Fees Schedule
The following tables show the immigration and naturalization
application fees that are currently being charged, the revised
fees, and fiscal year 1995 annual volume for the various
applications.
Table I. 1: Twenty- Six Large- Volume Applications With Fee
Revisions Application number Description Current fees Revised fees
Number of applications processed in fiscal year 1995
I- 90 Application to Replace Alien Resistration Card $75 $110
543,165 I- 102 Application to Replace Nonimmigrant
Document 65 85 11,672 I- 29 a I- 129H a
I- 129L a Petition for Nonimmigrant Worker
Petition to Classify Nonimmigrant as Temporary Worker/ Trainee
Petition to Employ Intracompany
75 80
80 110
110 110
272,817 I- 129F Petition for Alien Fiance( e) 75 97 258,399 I- 130
Petition to Classify Status of Alien Relative for
Immigration Visa 80 110 369,611 I- 131 Application for Travel
Document 70 97 282,709 I- 140 Immigrant Petition for Foreign
Worker 75 115 55,115 I- 485 Application to Register Permanent 130
220 357,567 I- 539 Application to Extend Status - Change
Nonimmigrant Status 75 120 212,485 I- 600 a
I- 600A a Petition to Classify Orphan as Immediate
Relative Application for Advance Processing of Orphan Petition
155 155
405 405
15,858 I- 724 b Waiver forms (6) 90- 95 b 170 30,809 I- 751
Application to Remove on Residence 80 125 107,211 I- 765
Application for Employment Authorization 70 100 847,040 I- 817
Application for Voluntary Departure Under
Family Unity Program 80 120 26,806 I- 824 Filing for Action on
Approved Application or
Petition 30 120 30,744 N- 400 Application for Naturalization 120
225 504,821 N- 565 Application to Replace Naturalization
Citizenship Certificate 65 135 13,405 N- 600 Application for
Certificate of Citizenship 100 160 20,523
(Table notes on next page)
GAO/GGD-98-197 INS User Fee Revisions Page 22
Appendix I INS' Current and Revised Application Fees Schedule
a For these forms, INS did not have volume data by application.
The volume data provided represent the total volume for all forms
in each group. To achieve a total volume larger than 10,000, INS
combined the volumes of Forms I- 600 and I- 600A because the
processing of these forms was determined through discussions with
field office personnel to be similar.
b INS uses Form I- 724 as a generic term for six IEFA waiver
forms. The six waiver forms, including their current fees
(established in 1994), are I- 191 ($ 90), Application for Advance
Permission to Return to Unrelinquished Domicile; I- 192 ($ 90),
Application for Advance Permission to Enter as a Nonimmigrant; I-
193 ($ 95), Application for Waiver of Passport and/ or Visa; I-
212 ($ 95), Application to Reapply for Admission into the U. S.
After Deportation; I- 601 ($ 95), Application for Waiver on
Grounds of Excludability; I- 612 ($ 95), Application for Waiver of
the Foreign Residence Requirement. While the annual volumes for
some of these forms had to have been less than 10,000, INS' study
treated them as 1 form for fee determination purposes because the
process to adjudicate them was similar.
Source: INS.
Table I. 2: Four Small- Volume Applications With Fee Revisions
Application number Description Current fees Revised fees
Number of applications processed in fiscal year 1995
I- 17 Application for School Approval $140 $200 1,401 I- 526
Immigrant Petition by Alien Entrepreneur 155 350 409 I- 829
Application for Filling Petition by
Entrepreneur to Remove Conditions 90 345 121 N- 643 Application
for Certificate of Citizenship on
Behalf of Adopted Child 80 125 6,549 Source: INS.
GAO/GGD-98-197 INS User Fee Revisions Page 23
Appendix II Major Contributors to This Report
General Government Division, Washington, D. C.
James M. Blume, Assistant Director Robert P. Glick, Assignment
Manager Michael G. Kassack, Evaluator- in- Charge James M. Fields,
Senior Social Science Analyst David P. Alexander, Senior Social
Science Analyst Sidney H. Schwartz, Senior Mathematical
Statistician Lauren M. Phillips, Intern
Accounting and Information Management Division, Washington, D. C.
Larry J. Modlin, Assistant Director Office of the General Counsel,
Washington, D. C.
Jan B. Montgomery, Assistant General Counsel
(183623) GAO/GGD-98-197 INS User Fee Revisions Page 24
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