y. 
IMPLEMENTATION OF THE STATE

LEGALIZATION IMPACT ASSISTANCE

GRANTS UNDER THE IMMIGRATION

REFORM AND CONTROL ACT OF 1986

OVERVIEW 
f.P.VJClS' 
ljJ' 
'0 
)'d3Q 
OFFICE OF INSPECTOR GENERAL 
OFFICE OF EV ALVA TION AND INSPECTIONS 
FEBRUARY 1990  . -
OFFICE OF INSPECTOR GENERAL

The mission of the Offce of Inspector General (OIG) is to promote the effciency, effective
progrs 
ness, and integrty of  in the United States Deparent of Health and Human Ser
vices (HS). It does this by developing method to detect and prevent fraud, waste, and 
abuse. Create by statute in 1976, the Inspector General keeps both the Secreta and the Con
gress fully and curently inormed about programs or management problems and recommends 
corrtive action. The OIG perform its mission by conducting audits, investigations, and in
sta 
spections with approxiately 1 300  strategicaly located around the countr. 
OFFICE OF EVALUATION AND INSPECTIONS 
This report is prouced by the Offce of Evaluation and Inspections (OEI), one of the thee 
major offces within the OIG. The other two are the Offce of Audit Services and the Offce 
Investigations and Enforcement. Inspections ar conducted in accordace with professional 
stadads developed by OEI. These inspections are tyicaly short-term studies designed to 
progr 
detennne  effectiveness, effciency, and vulnerabilty to fraud or abuse. 
This study was conducte to detennne the effectiveness of the sample States' implementation 
oaf Sntated Leg aClatioon nImpatcrt oAsslis taAncec Grtan tso funfd s 1awa9rde8d un6der. t he
 Immgrtion Reform
The report was prepard under the diction of Don McLaughlin, the Regional Inspector Gen
eral of Region vn, Office of Evaluation and Inspections. Parcipating in this project were the 
followig people:

Kansas City  Headquarters 
Project Leader  Albert J. Nace 
Hugh Owens, 
Julie Quir  Debra Robinson 
Doris Phillps 
Raymond Balandron 
James Wolf 
Alicia Smith 
San Francisco  New York 
Apryl Willams  Lucile M. Cop  -- 
, :---. .' . . - : ._-. ..._,- .:-"  ' ' ..  , - , . -. . . .. -. - ..- . -, -- -
IMPLEMENTATION OF THE STATE

LEGALIZATION IMPACT ASSISTANCE

GRANTS UNDER THE IMMIGRATION

REFORM AND CONTROL ACT OF 1986

OVERVIEW 
Richard P. Kusserow 
INSPECTOR GENERAL 
OEI-07 -88-00440  FEBRUARY 1990  -" '
. .' --- ..- - -.' . ' " "'.''' '+''
.c  ..J 
EXECUTIVE SUMMARY 
PURPOSE 
The purose of ths inspection was to detennne the effectiveness of the States 
progr, 
implementation of the State Legalization hnpact Assistance Grants (SLIAG)  identify 
potential problems early in the process, and identiy good practices which could be shared 
with al States. 
BACKGROUND 
progr 
The SLIAG  was established under the Imgration Reform and Control Act (IRCA) 
of 1986 to reuce the fmancial burden of providig public assistance, public health assistace, 
and educational servces to eligible legalzed alens. In Fiscal Year (FY) 1988, $928.  mion 
progr fuds 
in  were alocated to States, and funds wil continue to be allocated though FY 
1991. These funds also cover admstrtive costs for implementing SLIAG at the State and 
local levels. Payments are made for public assistace activities generally avaiable to 
needy individuals and public health assistance servces offered under the States ' public health 
progrs. The payments also cover educational servces designed to assist eligible legalized 
alens to attain a satisfactory level of performce in school and to achieve English language 
proficiency and citizenship skils necessar to become permanent residents or any educational 
servces authorized by the Adult Education Act. The Famly Support Admnistration (FSA) is 
responsible for admnistering the program. 
Because SLIAG was a new progr, FSA realzed that problems would surace early in its 
implementation. In addtion to the norm diculties encountered in creatig new processes 
and procedures, FSA recognized that SLIAG would have unique problems. Some of these 
issues include the diversity of programs which SLIAG encompasses, cultural and language 
barers associated with the servce population, maintaning confidentialty of information, and 
fres 
the extremely short time  for the grant award process. 
METHODOLOGY 
In response to the anticipated dificulties with implementing SLIAG, FSA requested that the 
Offce of Inspector General (OIG) conduct reviews in 10 States to detennne the progress of 
States ' implementation of this progr. The FSA selected nine States and the Distrct of 
Columbia because of the varety of programs they offered, the number of eligible legalized 
grt 
aliens in the population, or the amount of the  award: The nine States are Arzona, 
California, Colorado, Florida, Ilinois, Massachusetts, New York, Texas, and Washington. 
Interviews based on strctured discussion guides for each major program ara, as well 
documentation furished by FSA and State and local offcials, built the base of information for 
this report. This report represents an overview of the sample States' implementation of the 
SLIAG program as of August 1988.  . .
' . '' -" - . .,::. ' : ! -" ' . ..
C., .,- - -, 
FINDINGS 
. Both FSA and the States were committed to identifying implementation problems and 
developing effective solutions to them. 
Since 1987, FSA has held national conferences and issued information to States on 
implementing the SLIAG program. 
The States have developed innovative approaches to effectively and effciently implement the 
progr. 
SLIAG 
Nevertheless, we found inefficiencies and vulnerabilitis needing attntion by FSA and the 
States. 
The FSA application review process created a number of significant problems for the States. 
Also, the FSA' s application review process interfered with the States ' abilty to plan for 
servces. 
The FSA's definition of public assistace includes some public health assistace activities. 
Ths created admistrative and service delivery problems for States' public health agencies. 
Confictig interpretations of the term "public charge" has caused uncertaities for the aliens 
ar 
as to what servces they  entitled to receive without fear of deportation. 
The FSA's policy of denyig payments for servces rendered by community-based 
organizations and qualified designated entities prior to the application approval date caused 
dificulties. 
States were unable to access minimal eligible legalzed alien information in the Immgrtion 
and Natualization Service (IS) files. 
Some States ' systems and procedurs to identify eligible legalized aliens were nonexistent or 
only in developmental stages at the time of this review. 
The SUAG funds allotted to the States greatly exceed actual expenditures to date. 
Out of $2 billon appropriated in FYs 1988 and 1989, as of June 30, 1989, only 20 percent has 
been drwn down by the States or set aside for reimbursement of Federa expenditures. This 
discrepancy makes the program extrmely vulnerable to potential waste.  . /
RECOMMENDATIONS 
The FSA should make its application and grant award process more orderly. Specifcally 
FSA should 

provide definitive wrtten instrctions on the SLIAG application requirements 
and establish a dialogue with the States on SLIAG policy, compliance, and 
reportg issues to minimize the confusion that occured in the initial application 
process; 
ensur that suffcient time is allotted to the application process, including the 
State s initial application, FSA' s review and formal comment, the States 
consideration of FSA comments, negotiation of disputes, and submission of 
revised applications for FSA approval; 
revise the grant award process for approved applications so that the notice of 
grant award reaches the States prior to the beginning of the fiscal year; and 
develop an appeals process to use if program or costs associated with providing 
services are denied in the initial application process. 
The FSA should reconsider its positin to classif certain public health services as public 
assistance and make approprie adjustments to this positon. 
The FSA and the INS should further clarify what is meant by ''public charge" and widely 
disseminate this information to the aliens who have raised concerns about their resident 
status. 
The FSA should analyze the effect of its policy to deny retroactive payment to 
community-based organizatins and qualifed designated entities for services rendered in 
good faith, and determine whether a modifcation to its position would be warranted. 
The FSA should arrange for INS to conduct matches of State and INS records to permit the 
State to make retroactive determinations of SLIAG eligibility for program services that meet 
SLIAG funding requirements. 
The FSA should follow-up with the States to ensure proper procedures and systems have 
been implemented to account for SLIAG expenditures. 
billon 
The FSA should request the Congress to suspend the FY  1991  appropriation of  $1 
until an accurate assessment can be made of State financial needs under SLIAG. 
Alternatively, the appropriations  should each be reduced by $500 
for FYs 1990 and  1991 
million.  .. -. 
. -. ," \'... ;--...' . .
FSA COMMENTS 
drt 
The FSA commented on the  report. They generaly agreed with our findings and 
recommendations and reported having taken a number of steps to improve implementation of 
SLIAG. We moded the report to reflect certn concerns and factual matters, mostly of a 
technical natue, which they rased. Their comments ar included verbatim in Appendix B. 
CONGRESSIONAL ACTION 
Since issuance of the draftreport, legislation was enacted (PL 101-166) that reduced the FY 
00. 
1990 SLIAG funding level by $555,299, .............................................. 
......... .............. ....... .................... 
... ..... .-..-. .. ...:.".. ., ,,;.. '............,.--..:..,.... ,,.- ...;. ".;,. ..... .... ................... ... 
TABLE OF CONTENTS 
EXECUTIVE SUMMARY 
INTRODUCTION ............ ............. ............... ..... ...  ...... 1

ORGANIZATIONAL STR UCTU RE  .... ..... 3

FINDINGS AND RECOMMENDATIONS .................................................................. 4

FSA COMMENTS AND OIG RESPONSE 

CONGRESSIONAL ACTION 
... ............................ ..1111............11..... ............. .11..1111.11............ 

APPENDICES 
APPENDIX A: Good Practices..................II.....II........ID......II....1I...... ...... ... A -1

APPENDIX B:  FSA' s Comments .....8......."..........I1........I1.....II..IIII.IIIUIIIII........... 8 - 1
 ,. 
., 
- ."- -' . :- .. ,-. _. ',:''' . ':. :... ";, '-.  _.. __.- :,_. .  .. - -. ' - .
n .. 
INTRODUCTION

PURPOSE 
The Famy Support Admnistrtion (FSA) requested that the Offce of Inspector General 
(OIG) conduct an inspection in nie States and the Distrct of Columbia to determe the 
effectiveness of the States' implementation of the State Legalzation hnpact Assistance Grants 
progr  hngrtion 
(SLIAG)  awarded under the  Reform and Control Act (ICA) of 1986. 
These inspections included reviewing mechanisms in place to identiy these fuds and 
determe whether present or projected policies and procedurs adhere to FSA guidelines. 
identig 
The FSA also was interested in  potential problems early in the process and any 
goo practices which could be shar with al States. Ths report presents an overview of 
those issues identified that  s attention and a summar of the goo practices found 
reuir FSA'
durg 
this inspection. 
BACKGROUND 
Under IRCA, eligible legalzed aliens may apply for permanent residency within a I-year 
period afer they are first eligible (Le., by the 31st month after they receive temporar resident 
status). 
This new population wil increase the demand for State public assistance and public health 
assistace servces sigificantly. It wil also increase the demand for State educational 
servces as these new residents obtain English language and civic skills needed to become 
S. citizens. 
To help States defray many of the costs of providing public assistace, public health 
assistace, and educational services to eligible legalized aliens, IRCA authorized $1 bilion 
each year from Fiscal Year (F) 1988 though 1991 for SLIAG grants, less an amount 
identiied as the "Federa offset." With few exceptions, eligible legalized aliens are ineligible 
progrs 
for federaly funded public assistance  such as Aid to Famlies with Dependent 
Chidrn (AFC), Food Stamps, and Medicaid. The "Federal offset" is the estimated cost to 
the Federal Government of providing these services or benefits to those few legalized aliens 
who are eligible for them. In FY 1988, the law provided $928.5 millon to be allocated to 
States. 
To receive SLIAG funds, States must apply to the FSA Division of State Legalization 
Assistace, which is responsi  le for approving applications and admnistering the program. 
The application must be approved in tota for a State to receive any SLIAG funds. The FSA 
also provides States with technical assistance on policy issues and on the methods used to 
estimate costs and veriy actual costs.  " - .' , ,- .:. '' ,. -- ,_ ._-- _. .,:" ,' '.,-,.. , ... . _.- - -".... -' ....--- . - " - -
u, . 
The basic requiment for States to claim reimbursement is that costs must be alowable, 
reasonable, and allocable. State public assistance and public health assistace program must 
be the same ones available to the general public. States cannot create new program in these 
areas specifcaly for eligible legalzed aliens. However, States may create new or additional 
progrs 
education  for eligible legalzed aliens. States may also claim reimbursement for 
progr admnistrative and SLIAG admistrative costs. 
The SLIAG funds may be used to pay any SLIAG-related cost, which is defined in regulation 
at 45 CP 402.2 as the expenditue of funds (whether State, local, or SLIAG) for any purose 
for which SLIAG reimbursement would be alowable. State and local governments are not 
requied to spend their own funds before drawing down SLIAG funds. The maximum SLIAG 
reimbursement for educational servces is an average of $500 per year per eligible legalized 
progr 
alen. Determing  admnistrtive costs should be made in accordance with the final 
regulation at 45 CPR 402.22. 
The FSA is responsible for admstering the program. Because SLIAG was a new program, 
FSA realed that problems would surace early in its implementation. In addition to the 
norm diculties encountered in creatig new processes and procedures, FSA recognized 
that SLIAG would have unique problems. Among them are the diversity of program which 
SLIAG encompasses, cultual and language barers associated with the service population 
maitaning confidentiality of informtion, and the extremely short tie frames for the grant 
award process. 
METHODOLOGY 
The FSA selected nine States and the Distrct of Columbia for the inspection because of the 
varety of program offered, the number of eligible legalized aliens in the population, or the 
amount of the  nine States are Arzona, Calfornia, Colorado, Florida, llinois, 
grt. The 
Massachusetts, New York, Texas, and Washington. This report provides an overview of the 
progr 
States ' implementation of the SLIAG  as of August 1988. 
strctud 
, the OIG developed  discussion guides for each 
Pror to conducting the inspection
major program activity at the State and local levels. In conducting the reviews, interviews 
were held with officials from public assistance, public health assistace, and education.  .. -'_. . :_ ":;, ,., - ,--
ORGANIZATIONAL STRUCTURE 
The organization admistering SLIAG is slightly different in each State. The areas of public 
assistance, and education were assigned to appropriate agencies at the 
assistace, public health 
State level. Public assistance was assigned to the primar public assistance agency within the 
specifc State. Public health assistace was generaly assigned to the Deparent of Health or 
corrsponding agency within each State. The State s Deparment of Education must be 
responsible for SLIAG funds used for educational services. The assignent of functional 
responsibilties to the components accounts for most of the varance in organizational strcture 
among States. 
Each State designated a single point of contact to admnister and coordinate the SLIAG 
progr. The single point of contact was usualy the grtee agency, with some States 
agency or person to handle the admnistrative duties separately from the normal 
selectig an 
assistance, and education functions. The majority of States, 
public assistace, public health 
however, had assigned the admnistrative and grantee functions to the entity in charge of 
public assistace.  FINDINGS AND RECOMMENDATIONS

Both FSA and the States were commtted to identiying problems and developing effective 
solutions for them. 
FINDING: Since 1987, FSA has held natonal conferences and issued informaton to 
States on implementing the SUAG program. 
The FSA held several national conferences beginning in 1987 to share 
information with States on SLIAG legislation, the implications for States, the 
application process, and the documentation of costs. 
The FSA also provided States with "Question and Answer" issuances and 
demographic data from the Immigration and Naturlization Service (IS). 
FINDING: The States developed innovative approaches to effectively and efficiently 
implement the SUAG program. 
We identified may goo practices developed by the States to make the implementation of 
SLIAG more effcient. They are classified into four aras briefly descrbed below. A 
cOIlplete explanation of the specifc goo practices appear in the appendi of this report. 
Guidelines for Administration: States developed new methods and procedures 
to handle the addtional adistrative responsibilties that arose in the SLIAG 
program. Many States formed special commttees and groups to deal with the 
varous aspects of SLIAG program admnistrtion. 
Systems to Identify Eligible Legalized Aliens: Many States have implemented 
innovative methods to effciently identify the eligible legalized aliens who 
qualify for services under the SLIAG program. 
Controls for the Distribution of Funds: Systems have been developed in 
many States to more effectively control funds. 
progrs 
Innovative Approaches to Education: Education  designed for 
eligible legalized aliens are allowed under SLIAG. Several States have 
progrs 
developed unique  and classes to educate legalized aliens.  - .
- .- -- --. .. -.' - ,. . ;" , . .-. ' ~ ' . .
Neverteless, we found inefficiencies and vulnerabilties needing attention by FSA and the 
States. 
FINDING: The FSA application review process created a number of signifcant problems 
for the States. Also, the FSA's application review process interfered with the States' ability 
to plan 
for services. 
Delay in FSA issuing the implementing regulation resulted in the States' having 
insufficient time to properly plan for SLIAG. 
Numerous policy misinterpretations and disagreements resulted because the FSA 
did not provide definitive written instrctions to assist the States in 
understandig SLIAG application requirements. 
The tie frmes for States submittng the initial SLIAG applications, FSA 
review and comment, and revision of the applications were too short. 
hnplementing SLIAG-funded programs was delayed because of a significant 
delay in notifying the States of the grant awar. 
No formal appeals process exists if program costs are denied in the first level 
reVIew. 
Accordig to fmal regulations published March 10, 1988, States had to submit the FY 1988 
application no later than May 16, 1988. Revisions to the application had to be submitted by 
, 1988, and the FY 1989 application had to be submitted no later than July 15, 1988. 
July 1
progrs 
Applications were to contain brief descrptions of the States  or services, estimates 
of the States' SLIAG-related costs for each program or activity for that parcular fiscal year 
(includig inormation of the number of eligible legalized aliens residing in the State), and a 
brief explanation of the methodology used to estimate these costs. 
RECOMMENDATION: The FSA should make its application and grant award process 
more orderly. Specifcally, FSA should 
provide definitive wrtten instrctions on the SLIAG application requirements 
and establish a dialogue with the States on SLIAG policy, compliance, and 
reporting issues to minimize the confusion that occurred in the initial application 
process; 
ensure that sufficient time is allotted to the application process, including the 
States' initial application, FSA' s review and fonnal comment, the States  , ,. . :' " , '.., - --. .... ---- ..
consideration of FSA comments, negotiation of disputes, and submission of 
revised applications for FSA approval; 
revise the grant award process for approved applications so that the notice of 
grant award reaches the States prior to the beginning of the fiscal year; and 
develop an appeals process to use if program or costs associated with providing 
services are denied in the initial application process. 
FINDING: The FSA's definiton o/public assistance includes some public health activities. 
This created administrative and service delivery problems for States' public health agencies. 
Severa program admnistered by the entity responsible for public health assistance under 
progrs 
SLIAG are considered public assistance  for SLIAG reimbursement puroses. The 
distiction is important because the identication of a service as public assistance requires the 
documentation of costs incurd for individual eligible legalized aliens served. If a program 
or servce is considered public health, the population ratio method for establishing costs can 
be used. Applying this method, costs ar determed by the percentage of eligible legalzed 
members of the relevant service population. Ths 
alens in a service population to al 
progr 
percentage is applied to total  costs to determe how much can be reimbursed with 
SLIAG funds. 
Whle there is no quarel with the logic of FSA's definition of public assistance versus public 
health, the distiction creates serious adnistrtive and service delivery problems for public 
health agencies. These agencies, not the public assistance agencies, must develop and 
implement new processes for identiying individual eligible legalized aliens in order to 
document costs. Public health offcials ar concerned that asking patients about their legal 
status wil seriously afect the wilingness of patients who are ilegal residents to access public 
health servces. These people often enter the countr with highly contagious diseases such as 
Hepatitis B and need treatment immediately. The effect of this policy on the public health in 
general is not known at this time. 
RECOMMENDATION: The FSA should reconsider its position to classify certain public 
health services as public assistance and make appropriate adjustments to this position. 
FINDING: Conflicting interpretations of the term "public charge" has caused 
uncertainties for the aliens as to what servces they are entitled to receive without fear of 
deportation. 
Another situation causing concern for the States, regards the definition of the "
public charge. 
afd 
Par of the eligible legalized alien population is  to apply for public assistance for fear of 
being considered a "public charge." This, they believe, could jeopardize their chances for 
permanent resident alien or citizenship status. In addition, some qualified designated entities 
are tellng aliens not to apply for SLIAG-related programs for the same reason. This situation  --. ".- ' ..., ,,,,-, ,::- ',: . --- -
. J' .' 
has caused uncertainties in the alen population regarding benefits they may be entitled to and 
whether acceptig these benefits would subject them to possible deportation if they 
identied as a "public charge. 
RECOMMENDATION: The FSA and the INS should further clarify what is meant by 
public charge" and widely disseminate this information to the aliens who have raised 
concerns about their resident status. 
FINDING: The FSA' s policy of denying payments for services rendered by 
community-based organizatins and qualifed designated enties prior to the application 
approval date caused difficulties. 
Some community-based organizations and qualed designated entities have provided health 
and educational servces to eligible legalized aliens with the understanding they would be 
reimbursed for these services by the State. The FSA, however, has established a policy that 
services rendered prior to the approved application date could not be reimbursed. This has 
placed a financial burden on these providers, who have rendered the service believing they 
would be reimbured, but may not get paid for it. 
RECOMMENDATION: The FSA should analyze the effect of its policy to deny retroactive 
payment to community-based organizations and qualifed designated entities for services 
rendered in good faith, and determine whether a modifcation to its position would 
warranted. 
FINDING: States were unable to access minimal eligible legalized alien information in 
INS files. 
State records generaly do not provide for identication of eligible legalized alien status. 
Although the INS data files contai this information, it is unavailable to other agencies due to 
unesolved issues coverig confdentialty and  issues. Inabilty to obtai 
trsfer provision 
legalzed alien informtion from the INS fies prevents the States from perfonnng retroactive 
identication of services provided to recipients who mayor may not be eligible legalized 
aliens. Recent informtion obtained though contacts with FSA indicate that FSA is workig 
with INS to establish a way to match fies so statistical data can be obtaied, but not specific 
eligible legalized alien data. 
RECOMMENDATION: The FSA should arrange for INS to conduct matches of State and 
INS records to permit the State to make retroactive determinations of SLIAG eligibility for 
program services that meet SLIAG 
funding requirements. 
FINDING: Some States' systems and procedures to identify eligible legalized aliens were 
nonexistent or only in developmental stages of implementation at the time of this review.  -".., ' ::" : -:" ,. . .
The following items descrbe the major systems and procedures that were absent or not 
in full 
operation at the tie of the review. These problems were not found in every State. 
Guidelies for detennning allowable costs for public health and education were 
lackig. 
Systems to identiy individual eligible legalized aliens and validate costs of 
services rendered were lacking, parcularly for public health assistace. 
Methods for determing and documentig admnistrative costs had not been 
developed at the time of the review. 
Planed modcations of accountig systems to control SLIAG expenditus and 
disbursements had not been implemented. 
Necessar operatig agrements between the State, counties, and major 
providers contaning the details for implementing SLIAG had not yet been 
formalzed. 
Formal procedures for periodc reviews of cash balances had not been developed. 
RECOMMENDATION: The FSA shouldfoHow-up with the States to ensure proper 
procedures and systems have been implemented to account for SLIAG expenditures. 
FINDING: The SUAG funds allotted to the States greatly exceed actual expenditures to 
date. 
hngrtion 
The  Reform and Control Act of 1986 provided up to $1 bilion dollars per year 
for Fiscal Year 1988 though 1991 , less an offset for certn Federa costs for eligible 
legaled aliens. The States have until the close of Fiscal Year 1994 to obligate SLIAG funds 
grt 
alotted to them durng the  period. 
As of June 30, 1989, only about 20 percent of the $2 bilion appropriated for Fiscal Years 
1988 and 1989 has been drwn down by the States or set aside for reimburement of Federal 
expenditures. The States indicate the low costs claied to date are due, at least in par, to 
progr. 
delays in implementig the SLIAG  Though our findings support this position, the 
SLIAG costs are also afected at least as much by the size of the eligible legalized alien 
population and the number of them receiving benefits. 
Fewer ilegal aliens applied for legalized alien status than had been anticipated in the passage 
of the hngration Reform and Control Act. Though May 12, 1989, only 1.7 milion aliens  had applied for amesty under the eligible legalzed aliens provision of the Act. This is below 
the estiated 2 to 4 millon that were originaly expected to be eligible for SLIAG related 
services. 
Of much greater signifcance, however, is the fact that information to date indicates that 
claims for services ar far below original estimates. 
In order to get a better handle on this situation, we obtaied information from the Office of the 
Assistat Secretar for Management and Budget about the rate of expenditue of SLIAG 
funds in FY s 1988 and 1989. We found that: 
Of the $928.5 milion allocated to the States for FY 1988 and the $645 milion 
FY 1989, the States have requested reimbursement for 
origially allocated for 
only $216.7 millon though June 30,1989. Of this, $210 is from FY 1988 
appropriations, and $6.7 from FY 1989. 
Of the $1 bilion approprated for FY 1989, $355 millon had origially been 
reservedfor Federa expenses. However, claims for the Federa porton of the 
progr 
expected and, durng the mid-session 
were far lower than origially 
budget review, the Deparent reduced its estimate to only $100 milion. This 
furer 
demonstrates the degre to which the demand for SLIAG services is 
Moreover, it provides a windfall to the 
faling behind appropriated resources. 
States by mang available an additional $255 millon in FY 1989 that had not 
previously been allocated to them. This windfall should furter reduce the need 
for SLIAG funds in FYs 1990 and 1991. 
the SLIAG program. 

The graph on page 11 shows the relationship of appropriations to curent expenditues under
We recognze that this early infonnation, parcularly since FY 1988 was the fIrst year of 
SLIAG implementation, provides a limited basis for estiating the needs of the States in 
futue fiscal  we believe that it would be unwise to postpone for 
years. At the same time, 
progr 
several years any adjustments necessar to bring appropriations for ths  more in line 
progr 
with actual  needs. Over-obligating of funds makes the program extrmely vulnerable 
to waste. It can lead to situations which promote approval of frivolous or unnecessar 
expenditus or in claiming reimburement for items, such as computers and admnistrative 
progrs 
expenses, which ar shared by severa other  and the value of which is marginal, at 
best to SLIAG. The only ways to avoid such waste ar to intensify program audits or to bring 
the obligational authority more in line with expected expenditures. There are no sufficient 
audit resources to rely exclusively on that approach.  In enactig the SLIAG program the Congrss took the unusual step of appropriating funds in 
year$l 
advance for 4  billon for each of FY s 1988 though 1991. Since unobligated funds 
from one year can be caned over to the next, the proper amount of obligational authority can 
be achieved simply by askig the Congress to withdrw a reasonable amount from futur 
appropriations. 
In view of the extremely low rate of clais for reimbursement received thus far coupled with 
the lower than expected legalzed alien population, it would not be unrasonable to reduce the 
SLIAG appropriations substatially. 
obta 
We also queried the States we had previously reviewed to  their assessments of the 
demand for SLIAG services as of July 1989. With few exceptions, they reported that demand 
is less than origialy expected, parcularly for public assistance. Aside from the 
implementation delays previously reported, the States attrbute this reduced demand to their 
inabilty to identi legalzed alens for whom servces rendered are reimbursable under 
SLIAG and to alens' reluctace to apply for public assistance. 
RECOMMENDATION: The FSA should request the Congress to suspend the FY 1991 
billion until an accurate assessment can be mad 0/ State financial 
approprition 0/  $1 
needs under SLIG. Alternatively, the appropriatons/or FYs 1990 and  1991  should each 
be reduced by $500 miUion.  . .
$ S
1 1   L
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. ,.'-- _. ._,- -.w  _. . . .-  'u_  ..  - . ' , ..- -, - ._- . '- - --. -
FSA COMMENTS AND OIG RESPONSE 
drt  agrd 
The FSA commented on the  report. They generaly  with our findigs and 
recommendations and have taken a number of steps to improve implementation of the SLIAG 
progr,  progr  cert 
includig clarfyng  policies and procedurs. We have modfied 
aspects of the report based on FSA' s comments. Following is a summ of specifc issues 
raised by FSA and our response to them. 
The FSA questioned the statement that the new population would significantly increase public 
assistace and public health assistance services. Early estiates indicated that large numbers 
of alens would qualfy to access the SLIAG program. The report recognzed that information 
obtaned durg the review detennned that substatial incrases in workloads and 
expenditus could occur in these aras as well as in education. However, we understad from 
' offcials that demand for servces nationaly is faling behind 
recent discussions with States
earlier projections. 
We reportd that no formal appeals proess exists if program costs ar denied in the first level 
review. We agree with FSA' s statement that the Grant Appeals Board does h ve jursdiction 
over matters for withholdig and repayment of SLIAG funds. However, it was the States 
concern that an effective appeals mechanism be in place for issues involving programs or 
costs at the first level of FSA' s review in the application process. 
The FSA's defition of public assistance included some public health activities which crated 
adstrative and service delivery problems for public health agencies. The 010 
recommended that FSA reconsider this position. 
priary 
The FSA replied that they see this  as an issue of cost identication and that they wil 
work with the States to develop methods of documentig costs which ar consistent with 
FSA' s responsibilties as stewar of public funds. We believe that FSA's actions to identify 
alternative methods is responsive to our concerns. 
We continue to believe that a strct interpretation which permts public health costs to be 
claied only for specific eligible legalzed alens is burdensome to the States and, in many 
cases, would require considerable revisions to the States' system or statutory requirments. 
However, we do agre that FSA's use of alternative systems, such as the Cost Documentation 
System and a revised population ratio method system which reflects usage, would enhance 
cost effectiveness without requirng States to develop new systems or make considerable 
revisions to present systems. The population ratio method could be revised to consider not 
only eligible legalzed alens in the service population but usage of those services . by the 
eligible legalized alien population based on information already obtaned from program 
experience. Where appropriate, other alternatives might be used which would produce a more  efficient system for the States and addrss congressional intent that the States would not be 
required to establish new or elaborate systems. 
Although the responsibilty for the determnation of whether individuals wil become public 
charges rests with the INS, we recognize the effort FSA has made to communicate to the 
States al information provided by INS on this subject. 
At the tie of our review, the States were clearly under the impression that FSA would 
disapprove claims for services rendered by community-based organizations and qualified 
designated entities prior to the approval of the State s application. In their response, FSA has 
stated they have no policy on retroactive denials of payments for such services by these 
contrctors. Since our review, FSA has clared this issue and advised States which enter into 
contrcts that all costs incurd before the date of execution of the contrct must be fully 
documented. 
The FSA commented that several of the good practices descrbed under "Guidelines for 
Admistration" and "Systems to Identi Eligible Legalized Aliens" appear to be inconsistent 
with statutory and regulatory requirements. Under closer review, we found no inconsistencies. 
However, we did modfy our descrption of these goo practices to resolve FSA's concerns. 
The FSA made numerous comments to  fact, policy, or procedur. 
clarfy certain matters of 
We have included these comments verbati in Appendi B.  - - ,,- :._ ,,- -, 
CONGRESSIONAL ACTION

We reommended that FSA request Congrss to either suspend the FY 1991 SLIAG 
appropriations of $1 billion or reduce each of the FY s 1990 and 1991 appropriations by $500 
millon. Since issuance of the draft report, legislation was enacted (PL 101-166) that reduced 
00. 
the FY 1990 SLIAG funding level by $555,299, APPENDIX A 
GOOD PRACTICES 
Each State included in this review had developed and implemented procedures and/or pro
progr. 
gram to enhance the effcient operation and adnistration of the SLIAG  These 
goo 
practices are organized into four categories and are descrbed below. 
GUIELINES FOR ADMITRATION: States developed new methods and procedures 
progr. 
to handle the addtional admnistrtive responsibilties that arose in the SLIAG 
These procedurs include 
formg internal advocacy and work grups to faciltate and refine SLIAG 
implementation; 
designating a single point of contact that is separate from the public assistance, 
public health assistance, and education functions to alow grater visibilty; 
establishing a workig advisory group to resolve policy issues and assure State 
deparents are in compliance with SLIAG policies; 
sureyig the State s public assistace, public health assistace, and educational 
servces to assess the organizational needs in implementing SLIAG; 
utilizing a centralized intake proess for all noncitizen applicants for assistance 
to assur adequate and accurate delivery of generally available servces; and 
establishing effective accounting and reportng systems. 
SYSTEMS TO IDENTIF ELIGffLE LEGALIZED ALIENS: A challenge facing the 
States in implementig SLIAG has been the identication of eligible legalized aliens. The 
States have established varous crative methods for fmding and communicating with this pop
ulation. These methods include 
using the assigned alien identification number frm the 1-688 Card (Temporar 
Resident Card) to verify eligible legalized alien status, and assure that only the 
intended population is using SLIAG-funded education programs;  contracting with an independent consultig fInn to develop a system to identify 
eligible legalized aliens and document costs; 
maintaining computerized eligibilty data to  process for 
faciltate the verification 
SLIAG-funded services; 
using radio broadcasts in foreign languages to inform the public, including 
eligible legalzed aliens, of available services; 
developing a map showing the concentration of eligible legalized aliens by ZIP 
code to identiy servce delivery centers most affected by SLIAG; 
instrcting local offces to maintain a listofindividuals detennned eligible for 
SLIAG-funded services; 
requirg 
organizations offering educational servces to eligible legalized aliens 
to develop significant outrach and public relations activities; 
developing tl special cod that identifies an individual as an eligible legalized 
alien; 
norm 
using a separate form in the  enrollment process to identify school aged 
eligible legalized aliens; and 
conducting workshops to acquaint school offcials who are working under 
SLIAG with the varous INS cards. 
CONTROLS FOR THE DISTRffUTION OF FUNDS: Systems have been developed in 
many States to more effectively control funds. These systems include 
establishing a reimbursement cap for each hour of attendace by eligible 
legalized aliens in educational facilties and using this to account for, limit, and 
avoid duplicate bilings for educational services;

displaying the costs allowable for SLIAG fundig on the stadad application for 
educational providers; 
modifying existing automated accounting systems to accommodate SLIAG and 
prevent reimburement for unallowable expenditurs;  establishing formal contracts,  operating agreements between service 
grts, or 
providers and the State agency; 
using an automated account to determne if SLIAG funds are being disbursed as 
planned or if excesses may accumulate; and 
diect 
ensurng providers contracted to perform educational services claim only 
adistrative personnel costs to the maimum of eight percent of the 
contractor s total funding. 
INNOVATIV APPROACHES TO  Of the thee areas covered by SLIAG 
EDUCATION: 
(public assistance, public health assistance, and education), education is the only one where 
new program designed specifically for eligible legalized alens under SLIAG can be 
established. Goo practices designed to fulfill the educational needs of eligible legalized 
alens include

designg new education programs to assist eligible legalized aliens in becoming 
lawful permanent residents; 
sendig eligible legalzed aliens though a pre-appraisal proess to assess their 
progrs 
educational needs and refer them to the appropriate  and program 
levels; and 
contractig with a varety of educational service providers to conduct 
SLIAG-related educational programs. 
A- 3
 - _ , .  -- .'---. . .
APPENDIX B

FSA' S COMMENTS  .-... -" -. '.""- ..!.p''.'  
Family Supp rt Administration 
I'EPARTMENTOF HEALTH Ia HUMAN SERVIr.F	
Memorandum 
September& 26. 1989 
...a.... 
From:  Acting Assistant Secretary 
for Family Support 
Report: 
St'bjl!r;f:	 OIG Draft.  Implementation of the State Legalization 
Impact Assistance Grants Under the Immigration Reform and 
(OAI-07-88-00440) 
Control Act of 1986 - Overview 
To: 
Richard P. Kusserow

Inspector General

Attached are the Family Support Administration comments on

coments are technical 
the above report. Many of our 
nature due to' the complexity of the legislation and the 
fact that the SLIAG program was very new at the time of the 
We appreciate the assistance and cooperation we have

received from you in response to our request to conduct this

round of reviews of the SLIAG program. The reports we

received are very useful to us in understanding how States

are implementing the progr

Catherine Bertini

Attachment  . .
. .
OIG DRA 
REPORT: 
Lealization Impact Assistance
Implementation of the state 
Grants

Unde  the Immigration Refora and Control Act of 1986 

overview

The Family Suppo t Administration's comments are divided into

three sections: 
Comments on background information and other

narrative material that does not relate directly to the draft

report' s findings, comments on the findings, and responses to the 
t s recommendations. 
draft report 
Narrative: 
Page i (Executive sumary) -- The draft report says that SLIAG 
funds may be used for "educational services designed to assist 
eligible legalized aliens to attain a satisfactory level of
perfo 
ance in school and to achieve English language proficiency 
and citizenship skills necessary to become permanent residents. 
The final report should make clear that, by regulation, SLIAG 
funds may be used to provide adults any educational service 
authorized by the Adult Education Act. 
Page 1 (Background) -- The draft report says, "This new 
population will increase the demand for state public assistance 
and public health assistance services significantly.  The draft 
report isn't cl ar whose conclusion this is or upon what data and. 
analysis the conclusion is based. The final report should 
clarify these points. 
In the course of implementing SLIAG, we have discovered that 
neither state and local public health programs nor, with few 
exceptions, public assistance programs, inquire about legal
status. 
This suggests that at least some aliens were using 
these services before legalization and that newly legalized
aliens do not .represent a "new population" for public assistance 
and public health assistance services. Preliminary cost data 
from states suggests that newly legalized aliens are accessing 
public assistance services at rates far lower than the general
population. 
There are indications that a backlog of public
. health 
needs existed and was identified during the medical 
legalization. 
examinations required of all applicants for 
However, there is no data to suggest that', other than this 
temporary bulge in demand for public health services, newly 
legalized aliens will generate a significant increase in demand 
for public health assistance or public assistance services. 
Page 2 (Background) -- The draft report says that reimbursement 
for public assistance and public health assistance "is limited 
only to the amount of state and local funds expended for SLIAG-
related costs.  SLIAG funds may be used to pay any SLIAG-related 
cost, which is defined in regulation at 4S CFR 402. 2 as the 
expenditure of funds (whether state, local, or SLIAG) for any 
purpose for which SLIAG reimbursement would be allowable. The  final report should make clear that state and local governments

are not re  ired to spend their own funds before drawing down

SLIAG funds. 
Page 3 (Organiza  ional structure) -- The draft report says that 
usually responsible for
state departments of education are "
ducation matters.  In fact, IRCA specifies that SLIAG funds to
must  be paid to the state
be used for educational services 

educational agency, which, in turn, may provide services thprrooufgiht

local educational agencies or other public or private non-

organizations. The final report should make clear that state

educational agencies must be responsible for SLIAG funds used

for educational services.

good practices"

Pages 12-13 (Good Practices) -- Several of the "
described under "Guidelines for Administration" and "systems to

" as described, appear to be

Identify Eligible Legalized Aliens,
inconsistent with statutory and regulatory requirements. One 
such recommended practice is, "surveying the state' s public

assistance, public health assistance, and educational services to

assess the overall needs in providing assistance to eligible

legalized aliens. " A survey of the needs of eligible legalized 
aliens for public assistance or public health assistance would

not be an allowable use of SLIAG funds because public assistance

and public health assistance activities that reoeive SLIAG funds

must be generally available. No public assistance or public

health activity, including a needs survey, that is targeted

specifically to eligible legalized aliens could be funded through

SLIAG. (The "generally available" requirement does not apply to
educational services. 
The draft report also praises a system which utilizes a

centralized intake process for all noncitizen applicants for

assistance to assure adequate and accurate delivery of services.

We believe that it would be important to look closely at such a

system to ensure that the "generally available" requirements,

discussed above, for pUblic assistance and public health 
assistance were met, and that only allowable costs were charged

to SLIAG.

The draft report further endorses identification of areas of

concern from the alien population by establishing a bilingual

toll free hotline. 
This description raises questions not only
regarding the "generally available" requirement, discussed above, 
but also regarding the extent to which hotline activities would

meet the statutory and regulatory definition for either public

assistance. 
assistance or public health 
by, "forming advocacy and work

It also is unclear what is meant 
groups to facilitate implementation of SLIAG and generate new

ideas. 
B-3
 . .
Under "systems to Identify Eligible Legalized Aliens" on pages

12-13, the'draft report endorses use of the 1-688 card to

assure that only the intended population is using SLIAG-funded

programs. " The final report should clarify that the purpose for

identifying eligible legalized aliens is to ensure that SLIAG

funds are being used in accordance with IRCA and Federal

regulations. Whether an individual is an eligible legalized

alien cannot affect eligibility for public assistance and public

health assistance activities for which SLIAG funds are used

Whether or

because such activities must be generally available. 
not educational services are limited to eligible legalized 
numer of eligible 
aliens, it would be necessary to determine the 
legalized aliens receiving services in order to determine the 
allowable a ount of SLIAG payment for such services.

The draft report also endorses the practice of using radio

broadcasts in foreign languages to inform eligible legalized

aliens of available services. The final report should make clear 
which services are included. The cost of such messages directed

could. be funded by 
specifically to eligible legalized aliens 
SLIAG only to the extent that they related to availability of

educational services. Even so, the cost would come under either

inistrati ve cost 
the state educational agency' s a  cap or the 
maximum payment provisions that apply to educational providers.

Similarly, the draft report includes under good practices a

requirement that organizations offering services to eligible

legalized aliens develop "significant outreach and public

relations activities.  The cost of outreach designed .to inform

eligible legalized aliens of the availability of educational

services is allowable, but the cost of outreach directed

specifically to eligible legalized aliens regarding public

assistance and public health assistance activities would not be

generally 
allowable as a SLIAG-related cost because of the "
available" requirement thaatc ItiRvCAi taipepsl.i eIst  tiso  public assistance and

unclear what is meant 
public health assistance 
by "public rel  tions, " so we cannot determine whether such 
activities could be funded through SLIAG for any activity.

social 
Finally, the draft report endorses an instruction to "
service districts to maintain a list of individuals eligible for 
SLIAG-funded services.  The final report should make clear what 
this statement means, especially in light of the fact that 
social services" are not included in the range of activities for 
which SLIAG funds may be used. 
The final report should either present the practices described in

such a way to make clear that costs associated with the

activities in question are allowable or omit them from the list

of good practices. If the OIG is unable to determine

definitively that the activities meet SLIAG statutory and

B.4  . -
regulatory criteria, we would request that the OIG forward to us
immediatel  specific information about any such practices. 
FINDINGS AND RECOMMENDATIONS

FINDING: Since 1987, FSA has held national conferences and 
issued information to States on implementing the SLIAG program.

COMM: 
Since the OIGl  nsite visits in Auqust 1988, we have

States. We have conducted

continued to provide assistance to 
several more workshops and meetings to assist States in

implementation. In October 
1988, we issued a compendium 
incorporating the extensive formal quidance previously provided

to states on methods of cost documentation. We also have

provided assistance to individual States in the form of

onsite technical

correspondence, :telephone consultation, and 
assistance. We have conducted initial program reviews of the

maj or states and are in the process of planning further

monitoring visits. We request that the final report reflect this

continuing dialogue with States. 
FINDING: The FSA application reviesw.  process created a numer of 
significant problems for the Stat  Also, the FSA I 
ability to 
application review process interfered with the States' 
plan for services.  t. 
COMM: 
The draft report says that the time period for 
submission, review, revision and approval of the initial

application was too short. We agree that it would have been

preferable to have had a longer period of time between the

publication of the final. 
requlation and the deadline for 
submission and approval of FY 1988 and FY 1989 applications. 
However, the final report should note that, because of the way 
IRCA set up the allocation formula, one maj or reason for the 
compressed time frame was that we could not award funds to any-
had been approved. In order 
State until all States' applications .
for us to run fhe allocation formula, which IRCA requires to

include estimates of costs, we must have approved estimates for

. all States before we can calculate states' allocations.

The report says no formal appeals process exists if programs or

costs are denied. 
The SLIAG regulation provides that the Grant 
Appeals Board has jurisdiction over issues related to the 
wi thholding and repayment of funds. For other matters, States 
may follow normal procedures for disagreeing with an -agency 
finding. 
RECOMMDATION: The FSA grant process should be made more
orderly. 
RESPONSE: The report should make clear that this recommendation

applies to the SLIAG grant process, not the overall FSA grant
 process. We have already made a number of significant changes in

process. As the draft report

the application and grant award 
indicates, the timeframes for the FY 1988 and FY 1989

In effect, the

application processes were necessarily short. 
states and FSA had to complete two application processes in less

than a year. We do not expect similar problems for the FY 1990

and FY 1991 application processes.

time to prepare their FY 
To ensure that states have adequate '
data, we have extended the 
1990 applications based on empirical 
1, 1989. Additionally, we have 
deadline from July 15 to October 
encouraged states to submit as early as possible any new 
programs, questions, or issues, and have advised them that they

may submit all or portions of their applications at any tiimsseu.
ed

written. We 
All comments on states' submissions now are 
extensive written guidance on the FY 1990 application process and 
applications. 
the standards we will apply in reviewing 
revise the grant 
The draft report on page 5 recommends that we "
award process for approved application so that notice of grant 
award reaches the states prior to the beginning of the fiscal 
year.  possible. For FY 1990, 
Under the regulation, that is not 
1, 1989, and 
the deadline for submitting applications is October 
15, 1989. While 
applications must be approvable by December 
cannot run the allQcation formula or award grants until all 
the formula 
States' applications are approved, we expect to run 
in January 1990. 
However, states have told us that, because they 
have FY 1988 and FY 1989 funding that they catnh ceamrr.y  over into
For FY 1991,
FY 1990, the delay will not be a problem for 15, 1990, and
the deadline for filing applications is July 
expect 
1, 1990. We 
applications must be approvable by October 
to run the allocation formula and prepare grant awards early in
FY 1991. 
The draft report also recommends that we develop an appeals

process to use if programs or costs associated with providing

nied in the initial application process. The 
services are d 
Department' s Grant Appeals Boa d already has jurisdiction over
funds. . Normal
cases involving the repayment or withholding of 

. channels wi thin the Department are open to states that disagree

with decisions made during the course of application review.

FIlrDING: The FSA's definition of public assistance includes some

public health activities. This created administrative and

service delivery problems for states' public health agencies.

COMM: 
We question how the definitions of public health and 
public assistance create service delivery problems for state

public health agencies. By statute and regulation, all programs 
or activities under both categories must be generally available. 
In practice, this means that SLIAG funds are available only to
reimburse costs in ongoing, generally available programs.  most programs, immigration status is not a condition of

eli9ibilit 
(The draft report notes that undocumented aliens
access public health assistance services.  If the alien is 
eligible for services, he or she would receive those services

ther they were reimbursed under SLIAG. The

regardless of wh 
final report should clarify this point.

Pag  6 of the draft report notes that "there is no quarrel with 
the logic of FSA's definition of. public assistance versus public
health, 
" but does not explain that logic or why the OIG
its logic. 
recommends that FSA reverse - The final report should 
lain that the regulatory definitions of public assistance and 
public health assistance are based directly on section 204 of 
(IRCA), which 
the Immigration Reform and Control Act of 1986 
SLIAG. . 
crea ted 
Programs of public assistance are defined as programs that

assistance.. . desianed to

provide for cash, medical or other 
meet the bas c subsistence or health needs of individuals

(section 204 (j) (2) (A) emphasis added). consistent with IRCAt

explicit inclusion of medical assistance under the public

assistance category, state or locally funded programs that

provide medical treatment to needy individuals are considered by

FSA to be p  lic assistance.

IRCA defines programs of public health assistance as programs
which "provide public health services, including immunizations 
for immunizable diseases, testing and treatment for tuberculosis 
and sexually-transmitted diseases, and family planning services" 
(section 204 (j) (3) (A) )  These statutory definitions and the 
legislative histo  indicate that Congress intended to allow 
certain traditional public health functions under the public 
heal th assistance category and medical assistance to the needy
under the public assistance category. In implementing SLIAG, we 
defined public 
have followed that statutory framework. We have 
health assistance as, among other things, programs or activities
that "
are provided for the primary purpose 2o)f . protecting the 
heal th of the general public" (45 CFR 402.  The scope of 
that. regulatory definition of public health 
. programs included in 
assistance goes far beyond the specific activities listed in the 
IRCA. 
Regarding the draft report's concern, on page 6, that aliens 
often enter the country with highly contagious diseases.. . and 
need treatment immediately, " the final report should note that

the treatment of dangerous contagious diseases, including

tuberculosis and sexually transmitted diseases, is included in

the statutory and regulatory definition of public health

assistance. 
The public assistance/public health assistance categorization

issue is primarily one of cost documentation requirements, not
 the allowability of costs associated with any particular health

e permit states to use the population ratio method to

program. 
establish costs for all programs that are allowable as publi 
heal th assistance, as defined in the statute and regulation 
governing SLIAG. . This method may be used to establish actual 
costs and involves merely performing a mathematical calculation 
data. 
with easily available aggregate population and program cost 
Implicit in this method is the assumption that eligible legalized 
aliens will access programs in the same frequency and at the same
cost as the general population. 
We do not believe this 
assumption to be appropriate for medical assistance programs that 
individuals, i.  statute 
provide treatment to needy  e., what the .
defines as a public assistance program. 
To the contrary, the 
information that we have to date indicates that allowing use of 
atio method for these programs generally would
tohe vpopeulartisont 
ate costs; dramatically in some cases. However, we would 
be willing to allow use of the population ratio method for any 
emDirica1 basis to indicate that

program for which there is an

doing so would not overstate costs. 
FSA realizes that many public assistance and public health 
programs do not routinely collect information on immigration 
status but has found many do collect social security numbers. 
That is why we funded and devoted substantial resources to 
numers 
developing a system that will match the social security 
of program participants with those of newly legalized aliens. 
numer of newly 
This system gives states information on the 
legalized aliens participating in a program and the cost of
services to them. 
It is now available and allows States to 
establish costs for FY 1988 as well as current and future years. 
In May, we sent state SLIAG Single Points of Contact suggestions 
for other possible methods for establishing costs. None of these 
alternative methods requires setting up new administrative 
mechanisms or checking status of all program participants. 
We will continue to work closely with states to develop

methodologies fo document costs for all programs in its approved

applications. 
RECOMMDATION: The FSA should reconsider its position to 
classify certain public health -services as public assistance and

make appropriate adjustments to this position.

RESPONSE: As discussed above, the primary issue relating to the

definitions of public assistance and public health assistance is

one of cost documentation. states would like to use the

population ratio method for all programs run by their health

departments. The final report should clarify whether the OIG is

recommending that we allow use of the population ratio in

programs where, as discussed above, its use would likely

overstate actual costs. 
 We believe that using the population method for all programs run

al th 
by state h  departments would be inconsistent with our 
responsibility to exercise fiscal responsibility in administering 
SLIAG funds. However, we recognize that some states may 
encounter difficplties  in establishing actual costs, especially 
where ELAs are a small percentage of a State's population or for

programs that few ELAs access. We will continue to work with

states to ensure that a method is available to allow them to

establish actual costs for each program in their approved

applications, consistent with our responsibilities as stewards of

public funds.

FINDING: Conflicting interpretation of the term "public charge"
has caused uncertainties for the al iens as to what services they
are entitled to , 
receive without fear of deportation. 
RECOMMATION: The FSA and the INS should further clarify what 
is meant by "public charge" and widely disseminate this

information to the aliens who have raised concerns about their

resident status. 

RESPONSE: Under IRCA and the Immigration and Nationality Act,

the INS alone is responsible for determining whether individuals

are likely to become public charges. FSA cannot establish policy

on this issue. Nor can FSA disseminate information directly to

the alien population. 
INS is precluded by IRCA from providing 
names and addresses of eligible legalized aliens to outside

agencies. 
However, we agree that it is important that all concerned know

INS policy on the public charge issiuses.u Wee.  note that the INS

Phase II regulation clarifies this  Additionally, INS 
representatives have made presentations at virtually all of our

workshops and conferences. At these meetings, States have been

able to ask questions and receive direct information from the

IrNSe. Wec haeve ciomvmuniceated. t o States all information provided to

us by INS on tgis and other pertinent issues, and will continue

our policy of disseminating any relevant information that we

The Department also has indicated its support for a legislative

change to allow States to use a small portion of their SLIAG

rants to inform temporary residents of the requirements for

adjustment to lawtul permanent resident status and of the rights

and responsibilities of lawful temporary residents. Such use is

not permitted under current l&w. 
FINDING: The FSA I s policy of denying payments for services 
rendered by community-based organizations and qualified 
caused 
designated entities prior to the application approval date
difficulties.  COMMNT: ,we have no such policy. Under the ,SLIAG regulation, 
any allowable public assistance or educational services cost 
incurred by a state since October 1, 1987 may be reimbursed with 
SLIAG funds. Any allowable public health assistance or SLIAG 
ost incurred after November 6, 1986 may be

administrative  funds.

reimbursed with SLIAG 
We have encouraged states that enter into contracts with an

effective date before the date of execution to be sure that all

costs covered under such contracts are properly documented.

RECOMMATION: The FSA should analyze the effect of its policy 
to deny retroactive payment to 'community-based organizations and 
qualified designated entities for services rendered in good
faith, and dete  ine whether a modification to its position would

be warranted.

RESPONSE:  As noted above, we have no such policy. 
FINDING: States were unable to access minimal eligible 
files. 
legalized alien information in INS 
RECOMMATION: The FSA should arrange for INS to conduct 
matches of State and INS records to permit the States to make 
retroactive determinations of eligibility for SLIAG service 
REPONSE: In 
March 1988, FSA conceived the idea of setting up a 
computerized matching system that would allow States to use 
numers of 
social security  program participants instead of 
checking immigration status to document program participation by 
eligible legalized aliens. We received outstanding cooperation 
from the Social Security Ad inistration, the INS, and the General
Services Administration. 
Barely 14 months after the idea was 
conceived, the system was set up, problems and concerns about 
solved, 
confidentiality and system reliability were addressed and 
and States were getting cost data from the system. 
This recommendation is superfluous and should be omitted because

. the -system was fully operational two months before the draft

report was issued.

phrase, 
The final report should refrain from using the 
eligibility for SLIAG services.  This phrase, used on page 
implies that there are activities funded totally by SLIAG or that 
services directed specifically to this population may be funded 
true only for educational services. Public 
by SLIAG. That is 
assistance and pUblic health assistance programs may receive 
SLIAG funds only if they are generally available, i.e., that 
status as a legalized alien is not a factor in determining 
program eligibility. Thus, there are no "SLIAG services" in the 
public assistance or public health assistance categories.  . ..
FINDING: Some States' systems and procedures to identify

eligible l 
galized aliens were nonexistent or only in

review.

developmental stages at the time of this 
RECOMMATION: The FSA should follow up with the states to

ensure proper prbcedures and systems have been implemented to

account for SLIAG services.

RESPONSE: It is unclear what is meant by the term, "SLIAG

services. 
(For reasons discussed above, this phrase is

misleading. ) However, it appears that the intent of the draft

report is to recommend that the FSA ensure that States are using

SLIAG funds properly. The FSA reviews State end-of-year reports 
to ensure that costs charged to SLIAG have been calculated
properly. 
Additionally, we are monitoring states' use of SLIAG 
funds on an ongoing basis. In October 1988, we issued a

compendium of previous qui dance on acceptabI lteo  methods to

States in
calculate SLIAG-related costs and cautions 

determining those costs. 
FINDING: SLIAG funds allotted to the States greatly exceed 
actual expenditures to date.

COMM: We agree with the OIG'S conclusion, that SLIAG funding 
and FY 1991 should be reduced. But we believe that 
for FY  1990 
the draft report's discussion of this topic is premised on some 
program. 
basic misunderstandings of the SLIAG 
only 1.  million 
First, the draft report on page 8, says, "  7 ' 
aliens had applied for amnesty under the eligible legalized

aliens provisions of the Act. This is below the estimated 2 to 4

million that were originally expected to be eligible for SLIAG-

related services.  The 1. 7 million refers only to applicants 
The 
under section 245A of the Immigration and Nationality Act. 
draft report omits Special Agricultural Workers that bring the
total numer of applicants who, if granted status, would be 
eligible legalized aliens to 3. 1 million. The draft report also 
fails to note that Replenishment Agricultural Workers will be 
eligible legalized aliens. We do not at this time know whether

. or how many aliens will be granted legal status under the 
Replenishment Agricultural Worker program, but the Secretaries of 
Agriculture and Labor notified the INS that it should prepare to 
substantial. 
numers could be 
implement the program, and the 
Throughout the draft report, the OIG appears to approach SLIAG as 
a program that provides services to eligible legalized aliens. 
component. IRCA limits use 
This is true only for the education 
of SLIAG funds for public assistance and public h"e ai.l th assistance 
generally available, 
e., those 
programs to those that are "
ongoing in which an individual's status as a newly legalized 
alien does not affect eligibility. This means that, in these two 
program areas, there is no direct relationship between SLIAG  . ,

. .
funding and service availability. Instead, SLIAG functions to

transfer Federal revenue to state and local governments to

reimburse costs that they incur in ongoing programs to provide

public assistance and pubiic health assistance services to this

population. 
As the OIG points out, states are having some difficulty

documenting costs, but we expect that ultimately they will be

able to do so. For example, many states already are establishing

costs through the Cost Documentation System, discussed below, or

through some of the alternative methods allowed by the

regulation. 
Whenever these costs are established, Sta es will be 
able to draw down SLIAG reimbursement. Thus, we have a 
contingent liability.

We agree with the OIG that this contingent liability is likely to 
be substantially less than current state estimates which total
1994. 
approximately $3. 3 billion through FY  (Under IRCA, states 
have through FY 1994 to obligate SLIAG funds.  We also agree 
that there still is some uncertainty about the rate at which 
newly legalized aliens are accessing public services. But we 
strongly disagree that the level of drawdown to date is a good 
indicator of FY 1988 and FY 1989 costs. As States establish 
costs-, they can be expected to increase their drawdowns 
substantially. T  tie our recommendations for SLIAG funding to 
drawdowns that dramatically understate allowable costs undermines 
levels. 
the valid policy reasons for re-examining SLIAG funding 
RECOMMDATION: FSA should request the Congress to suspend the 
FY 1991 appropriation of $1 billion until an accurate assessment 
SLIAG. Alternatively, 
can be made of state financial needs under 
the appropriations for FYs 1990 and 1991 should be reduced by 
$500 million. 
RESPONSE: As noted above, we believe States will incur costs 
law. 
that total nearly the amount made available under current 
However, there are good policy and budgetary reasons for reducing 
.f unsdipnge lcevielfs.i Wce  deffeur tno dthie nSegcr etalrye'vs reeclomsme.nd at
ions for
The draft report suggests that providing States with

substantially more in funding than they have in legitimate costs

can lead to wasteful use of SLIAG funds. We agree, but we do not

believe that reducing SLIAG funding for FY 1990 and FY 1991
eliminates that danger. 
States have substantially more funds 
now  We believe that the time of 
than they can document in costs 
greatest danger for wasteful spending is now, when states do not 
know the full extent of their costs and when they may be seeking 
funding. This is 
to generate costs to justify continued  why we 
already have begun an on-going monitoring program and will 
continue to monitor state programs closely to ensure that use of 
SLIAG funds is necessary, reasonable, and allocable to SLIAG.  , -..-. .'. - . '- . - - '- -. - -. -,_.
I '

We believe that a strong case can be made for reducing SLIAG 
funding fdr several reasons that do not relate to drawdowFni,r sotr,  
even to what the eventual total of state costs may be. 
the legislative histo  indicates that Congress created SLIAG to
imDact  it expected the legalization
alleviate some of the fiscal 
 Two of those 
program to create for state and local governments. 
anticipated impacts have occurred. The first is the temporary 
II in 
"bulge  demand for public health services created when medical 
problems were identified in the physical examinations required of
legalization applicants. The second impact on state and local 
governments is the need by "pre-82" aliens for educational

services in order to meet the English language and citizenship

requirements for permanent residency. Funding already made

he costs

available to states is more than sufficient to meet 
 factors. 
generated by both of these 
As noted above, . SLIAG funding has no direct effeaclti eonn st.h e 
Once 
availability of services to eligible legalized 
status, we 
pre-82" aliens have met their permanent residence 
question the extent to which newly legalized aliens should be
given continued preferential access to educational services.

For these reasons, we believe tha  an examination of SLIAG 
, leads 
funding needs, balanced with other higher priority needs
naturally to a decision to reduce SLIAG funding substantially for 
FY 1990 and FY 1991.