.

IMPLEMENTATION OF THE STATE


LEGALIZATION IMPACT ASSISTANCE


GRANTS UNDER THE IMMIGRATION


REFORM AND CONTROL ACT OF 1986


STA TE OF TEXAS

VIC'SO 

'0 

"dla 

OFFICE OF INSPECTOR GENERAL 

OFFICE OF ANALYSIS AND INSPECTIONS 

OCTOBER 1989 
. 

OFFICE OF INSPECTOR GENERAL


The mission of the Offce of Inspetor Genera (OIG) is to promote the effciency, effectiveness, and integrty of progrs in the United States Deparent of Health and Human Services (HS). It does this by developing methods to detet and prevent fraud, waste, and 

abuse. Create by statute in 1976, the Inspetor General keeps both the Secreta and the Congress fully and curently informed about programs or management problems and recommends

corrtive action. The OIG perform its mission by conductig audits, investigations, and inspections with approximately 1,300 sta strategicaly located around the countr. 

OFFICE OF ANALYSIS AND INSPECTIONS 

This report is produced by the Offce of Analysis and Inspetions (OAl, one of the thee 

major offces within the OIG. The other two are the Offce of Audit and the Offce of Investigations. Inspections are conducted in accordace with professional stadads develope by

OAI. These inspetions ar tyically short-tenn studies designed to determe program effectiveness, effciency, and vulnerabilty to frud or abuse. 

This study was conducted to determne the effectiveness of Texas ' implementation of the State 

Legalzation Impact Assistace Grats funds awarded under the Imgrtion Refonn and Contrl Act of 1986. 

The report was prepar under the dition of Don McLaughlin, the Regional Insptor General, Office of Analysis and Inspections, Kansas City Region. Parcipating in this project were the following people: 

Kansas City San Francisco 

Hugh Owens, Project Leader Apryl Wllliams 

Raymond Balandron 

James Wolf 

Alicia Smith 

Headquarters New York 

Albert 1. N ace Lucile M. Cop 

Debra Robinson 
7 I 


IMPLEMENTATION OF THE STATE


LEGALIZATION IMPACT ASSISTANCE


GRANTS UNDER THE IMMIGRATION


REFORM AND CONTROL ACT OF 1986


STATE OF TEXAS 

Richard P. Kusrow 

INSPECTOR GENERAL 

OAI-07-800 OCTOBER 1989

EXECUTIVE SUMMARY 

PURPOSE 

The purse of this inspetion was to determe how effectively Texas implemented the State 

Legalzation Impact Assistace Grats (SLIAG) progr, to identify potential problems early 

in the proess, and to identify goo practices which al States could shar. 

BACKGROUND 

The SLIAG progr was established under the Imgration Refonn and Contrl Act (IRCA) of 1986 to reuce the fmancial burden of providig public assistace, public health assistace, 

and educational services to eligible legalize aliens. In Fiscal Year (F) 1988, $928.5 milion 

in progr funds were alocated to States, and funds will continue to be alocated thugh FY 

1991. These funds also cover adistrtive costs for implementing SLIAG at the State and 

local levels. Payments are made for public assistace activities generally available to all 

neey individuals and public health assistace services offere under the States ' public health 

progrs. The payments also cover educational services designed to assist eligible legalize 

aliens to attain a satisfactory level of performance in school and to achieve English language 

proficiency and citizenship skils necessar to beome pennanent residents. The Famly Support Admnistrtion (FSA) is responsible for adnistering the program. 

Because SLIAG was a new progr, FSA realze that problems would surace early in its 

implementation. In addition to the norm diculties encountere in creatig new processes 

and proedures, FSA recogniz that SLIAG would have unique problems. Some of these 

issues include the diversity of programs which SLIAG encompasses, cultu and language barers associated with the servce population, maintaning confidentiality of informtion, and 

the extremely short tie fres for the grt award process. 

METHODOLOGY 

In response to the anticipated diculties with implementing SLIAG, FSA requested that the 

Ofce of Insptor General (OIG) conduct reviews in 10 States to determne the progress of 

States ' implementing this progr. The FSA selected nine States and the Distrct of Columbia 

beause of the varety of program they offere, the number of eligible legalize aliens in the 

population, or the amount of the grant. The nine States ar Arzona, California, Colorado, 

Florida, llinois, Massachusett, New York, Texas, and Washington. 
. .

Interviews based on strctu discussion guides for each major program ara, as well as 

documentation fuished by FSA and State and local offcials, built the base of infonnation for 

ths repol1. This report represents the review conducte in the State of Texas and reports on its 

implementation of the SLIAG progr as of August 1988. 

Both FSA and Texas were commtted to identifying problems and developing innovative and 

effective solutions for them. Immedately following our on-site visits, FSA was given an 

outline of the State concerns identied in this report 

FINDING: Since 1987, FSA ha held national conferences and issued informtion 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 cdsts. 

The FSA also provided States with "Question and Answer" issuances and 

demographic data from the Immgration and Naturalization Servce (IS). 

FINDING: Texas established a strture to identify organizational and program needs. 

The Executive Dirtor of the Texas Health and Human Services Coordinating 

Council is the single point of contact. This council is the grtee agency for 

SLIAG fundig purses. This argement works very well for a State in 

which none of the parcipating agencies for SLIAG is the grntee agency. 

FINDING: Tex also took steps to docwnent exenditues and control disbursemenrs. 

Planed modfications to the State s computerized systems provide for the 

captu of SLIAG-related costs under distinct SLIAG expenditue codes. 

One county we visited during the inspection maintaned eligibilty data on the 

mai computer at the county auditor s offce. Once eligibilty infonntion has 

ben obtaned on an eligible legalized alien, this process wi facilitate venfymg 

the status of the applicant and reportng costs for SLIAG- funded service s, 
1 . 

Verifyng eligible legalize alien status for educational programs will be though 

reviewing the 1-688, TemporaResident Car, issued by INS. A continual 

verification process is made to assure that only the intended population is using 

the SLIAG-funded educational progrms. 

The Texas Education Agency has modfied the Stadad Application Form for 

Adult Education to include the costs considere allowable for SLIAG funding 

puroses. The areas identified on this application for providers of educational 

servces ar salar costs, contracted servces, supplies and materials, trvel, and 

capita outlays.


Neverteless, there are some funds contrl vulnerabilties. 

FINDING: The FSA's definition of public assistance includes some public health activities 

which created administrative and service delivery problems for Texas public health agencies. 

The reclassifcation of public health and menta health programs is important as 

it requires identifying individuals reeiving servces in order to document 

SLIAG-related costs. In adtion, asking patients about their legal status may 

adversely influence their wilingness to access public health and mental health 

servces. 

FINDING: The FSA application review process created a numer of signifcant problems for 

Texas. Also, the FSA's application review process interfered with the State s abilty to plan for 

services. 

Delay in FSA issuing the implementing regulation resulted in the State 

inabilty to properly plan for SLIAG. 

Numerous policy misinterpretations and disagreements resulted beause FSA 

did not provide definitive wrtten instrctions to assist Texas in understanding 

SLIAG application requirements. 

The time frames were too short for submittg the initial SLIAG application 

FSA review and comment, and revisions of the application. 

implementing SLIAG-funded programs was delayed beause of a significant 

delay in notifying Texas of the grt awar. 
No formal appeals process exists if progrs or costs ar denied in the fIrst level 

reVIew. 

FINDING: Conflicting interpretations of the term "public charge" ha caused uncertainties 

in the alien population as to what services they are entitled to receive without fear of 

deportation. 

FINDING: State guidelines are needed to determine allowable costs in public assistance and 

public health assistance. 

As mentioned earlier, FSA and Texas have alady initiate action on some of the 

recommendations made in this report. Steps have ben taen by FSA to provide States with 

more speifc, fonnal guidelines for identifying and documentig actual program and 

admnistrative costs. However, adtional actions ar necessar in other aras on the par of 

FSA and Texas. 

RECOMMENDATION: The FSA should reconsider its position to classif certain public 

health services as public assistance and make appropriate adjustments to this position. 

RECOMMENDATION: The FSA should mae its application and grani process more 

orderly. Specifcally, FSA should 

provide definitive wrtten instrctions on the SLIAG application requirments 

and establish a dialogue with Texas on SLIAG policy, compliance, and reportng 

issues to minimze the confusion that occured in the initial application process; 

ensur that suffcient tie is allotted to the application proess including Texas 

intial application, FSA ' s review and fonnal commnt, Texas' consideration of 

FSA comments and negotiation of disputes, and its submission of the revised 

application for FSA approval; 

develop an appeals process to use if program or costs assoiated with providing 

servces ar denied in the initial application process; and 

ensur that the grant award proess for approved applications is timely to permt 

implementing planned SLIAG programs. 

RECOMMENDATION: The FSA and the INS should fuher clarif what is meant by 

public charge" and widely disseminate this informtion to the alien populatin who have 

raised concerns about its resident statu. 
, . 

RECOMMENDATION: The Texas Departent of Humn Services should develop a 

methodology to identify allowable public assistance program costs. Also, the Tex 

Department of Health should develop guidelinesfor all providers of public health assistance 

services indicating those costs that are allowable for SUAG purposes. 


COMMENTS 

The FSA and the State of Texas both commnted on the drt report. They generaly agree 

with our fmdings and recommndations. Both reported having taen a number of steps to 

improve implementing SLIAG. Their comments ar include as Appendices B and 

respetively. 
...... .... ........ ....... ........ ........ ........ .... ........ ........... ..... ....... ..... ..... ......... ........ .... ......... ..... .......... . ..... ......................... .... ...... 

.... ..... 

TABLE OF CONTENTS 

EXECUTIVE SUMMARY 

I NTRO D U CTIO N ....................................................... ................................................ 1


TEXAS' ORGANIZATIONAL STRUCTURE ............................................. 3


FINDINGS AND RECOMMENDATIONS .................................................................. 5


Pu bl i c Assistance............................. ............................................. ............ 6


Pu bl ic Health Assistance ... ..................... 8


Mental Health.... ......... 


Ed ucation ....... ........ ................................................. 13


Crosscutting Issues ... ................... .... ............ ... 15


OIG RESPONSE TO COMMENTS ........................................................................


APPENDICES 

APPENDIX A: Good Practices............................................................ .


APPENDIX B: FSA's Comments .......................................................... B-1


APPENDIX C: Texas' Comments........................................................

INTRODUCTION


PURPOSE 

The Famly Support Admnistrtion (FSA) reuested that the Offce of Inspetor General 

(OIG) conduct an inspection in nine States and the Distrct of Columbia to determe how 

effectively the States implemente the State Legalzation Impact Assistace Grts (SLIAG) 

progr awarded under the Imgration Refonn and Control Act (ICA) of 1986. The 

inspection included reviewing mechanisms in place to identify these funds and determning whether present or projected policies and proedures adere to FSA guidelies. The FSA also 

was interested in identifyg potential problems early in the process and any goo practices which all States could shar. This report presents the results of the inspetion perting to the 

State of Texas. 

BACKGROUND 

Under IRCA, eligible legalize aliens may apply for permanent residency within a I-year 

period after they are ftrst eligible (Le., by the 31st month after they receive temporar resident 

status) . 

This new population will increase the demand for State public assistance and public health 

assistace services significantly. It wil also increase the demand for State educational 

services as these new residents obtan English language and civic skills neeed to become 

S. citizens. 

To help States defray many of the costs of providing public assistace, public health 

assistace, and educational servces to eligible legalze alens, IRCA authorize $1 bilion 

each year from Fiscal Year (F) 1988 thugh 1991 for SLIAG grts, less an amount 

identied as the "Federa offset." With few exceptions, eligible legalize aliens are ineligible 

for federaly funded public assistace progrs such as Aid to Famlies with Dependent 

Childrn (AFC), foo staps, and Medcaid. The "Federal offset" is the estimated cost to 

the Federal Government of providig these services or benefits to those few legalized aliens 

who ar eligible for them. In FY 1988, the law alocated $928.5 millon to States. 

To receive SLIAG funds, States must apply to the FSA Division of State Legalization 

Assistace, which is responsible for approving applications and adnistering the program. 

The application must be approved in tota for a State to reeive any SLIAG funds. The FS,\ 

also provides States with tehnical assistance on policy issues and on the methods used to 

determne costs and verify actual costs. 
. .

The basic reuirment for States to claim reimburement is that costs must be alowable, 

reasonable, and allocable. State public assistace and public health assistace program must 

be the same ones available to the general public. States cannot create new program in these 

areas speifcaly for eligible legalize aliens. However, States may create new or addtional 

education progrs for eligible legalize aliens. States may also clai reimbursement for 

progr admnistrtive and SLIAG adistrative costs. 

Reimburement for public assistace and public health assistace is limite only to the amount 

of State and local funds expended for SLIAG-related costs. The maimum SLIAG 

reimbursement for educational services is an average of $500 per year per eligible legalized 

alien. Determning progr adnistrtive costs is made in accordace with the fmal 

regulation at 45 CP 402.22. 

The FSA is responsible for admnistering the program Because SLIAG was a new program 

FSA realiz that problems would surace early in its implementation. In addition to the 

norm dificulties encountered in creatig new processes and proedures, FSA recognizd 

that SLIAG would have unique problems. Some of these issues include the diversity of 

progrs which SLIAG encompasses, cultural and language baners associated with the 

service population, maintaiing confidentiality of information, and the extrmely short time 

fraes for the grant award process. 

METHODOLOGY 

The FSA selected nine States and the Distrct of Columbia for the inspetion beause of the 

varety of program offered the number of eligible legalize aliens in the population, or the 

amount of the grt. The nine States are Arona, California, Colorado, Florida, llinois, 

Massachusetts, New York, Texas, and Washington. This report reviews Texas 

implementation of the SLIAG progr as of August 1988. 

Pror to conducting the inspetion, the OIG develope strctu discussion guides for each 

major program activity at the State and local levels. Interviews were held in Austi with 

appropriate sta, includig the single point of contact and State representatives from public 

assistace, public health assistace, and education. In adtion, appropriate staf were 

interviewed in Travis County agencies. Also intervewed were sta frm providers of 

services in health and education. The purse of these local contacts was to obtan 

information from local governing boes as to their planned implementation of the SLIAG 

progr. 

The informtion obtaned from using discussion guides and documentation furished by FSA 

and State and local officials create a base of information as to implementing the SLIAG 

progr. Information-gathering included reviewing policies and procedurs established by 

the State for adnistering SLIAG funds, and compilng SLIAG application data and 

information on progr parcipation. 
, .

TEXAS' ORGANIZATIONAL STRUCTURE


Each State designated a single point of contact.to adnister and coordnate the SLIAG 

progr. For the State of Texas, the contact is the Executive Director of the Texas Health and 

Human Servces Coordiating Council. The State legislatu has designate the council to 

the State agency to apply for SLIAG funds. The council is chared with applyig for these 

funds and distrbutig them to agencies responsible for providing servces to newly legalized 

aliens in accordce with IRCA. The coordiating council is also responsible for coordiating 

State initiatives, application development, continuing oversight, and drwdown of Federa 

funds. 

In Texas, the program components adnistering the SLIAG progr, and their 

responsibilties, ar as follows: the Deparent of Human Services (public assistace), the 

Deparent of Health and the Deparent of Menta Health and Mental Retadation (public 

health assistace), and the Texas Education Agency (education). The inspetion revealed that 

the counties exercise signicant autonomy and control over programs and other matters within 

their respetive jursdictions. 

PUBLIC ASSISTANCE 

The Deparent of Human Servces is responsible for State adistrative functions 

associated with effectively implementing public assistance progrs to be funded by SLIAG. 

An assistat commssioner of the Famly and Childrn s Services has ben appointed to 

admnister functions funded by SLIAG. This sta is respnsible for the agency s support of 

emergency assistace programs admnistere by local agencies. The deparnt, thugh the 

county strctur, wil grt benefit payments to eligible legaliz aliens for emergency relief. 

This includes providig utiities, foo, housing, and clothing though vouchers and purhased 

services. 

PUBLIC HEALTH ASSISTANCE 

The Deparent of Health is responsible for the dit adnistration of SLIAG funds for 

general public health assistance. This responsibilty rests in four offces in the deparnt: 

Community and Rural Health, State Health Data and Policy Analysis, Grats Management, 

and Budget A coordnator wil be responsible for SLIAG activities. A data analyst will 

provide data analysis of reimburable costs and the eligible population. Financial coordnators 

will prepare and approve contrts with providers, prepar report for the coordiatig 

council, and monitor individual providers to valdate SLIAG fundig. 
pp 

Ret prde orantion and 

EN,.AL HEAL,.H Menta heth progr The SLIAG fnncnos 

an cotion of menta ser di. The 

of Menta Health and seces to 

he Depar of the Budget and Fiscal health 

coate unde the diti assurce. and suppove ,rogrtiC diti oversght. quality an cmnunity menta 

provide adniusti by State faciliti depar prgr opte the menta health centers. 

menta retadati 

funde educati 

adisteg the SLlG- nate those 

EOUCA110N agenCY to 

by an Agenc is respnsible for designate in the elementa and and Educati 'f positions have 

natOr is su ato. Elementa The -rxas in the State. education is 

prgrs SLIAG. A SLIAG c


functions relat to oonato and an adult educat 

seonda educati rnY thougb local scbool distrcts. Adult 


senda educati ar prvide p contives


thugh 63 adult education 


prvided 

FINDINGS AND RECOMMENDATIONS


Both FSA and Texas were commtted to identifying problems and developing innovative and 

effective solutions for them. Immedately following our on-site visits, FSA was given an outle of the State concerns identied in this report 

FINDING: Since 1987, FSA has held national conferences and issued information to States 

on implementig the SLIAG progr. 

The FSA held several national conferences begining in 1987 to shar 

infonnation 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 Immgration and Natuzation Service (INS). 

FINDING: Texas established a structure to identify organizational and program needs. 

The Executive Director of the Texas Health and Human Services Coordinating 

Council is the single point of contact. This council is the grtee agency for 

SLIAG funding puroses and is the coordinating and oversight entity for all 

State agencies involved in health and human servces. This argement works 

well for a State in which none of the parcipating agencies for SLIAG is the 

grantee agency, and the staf have goo rappon with the varous agencies 

involved in SLIAG. 

FINDING: Tex also took steps to document expenditures and control disbursements. 

Planned modcations to the State s computerized systems provide for the 

captue of SLIAG-related costs under distinct SLIAG expenditu codes. 

One county we visited durng the inspection maintaned eligibilty data on the

mai computer at the county auditor s office. Once eligibilty informtion has

ben obtained on an eligible legalized alien, this process will faciltate veriying 

the status of the applicant for SLIAG-funded servces. Weekly reports are 
prepared for the auditor s offce on the servces and benefit dollars involved. 

For futu reference, the local welfar offce can obtan information readly on 

each eligible legalize alien for which eligibilty has been determned. 

Verifyng eligible legalize alien status for educational programs will be though 

reviewing the 1-688, Tempora Resident Cad, issued by INS. Eah student 

signs in for each class attended using the assigned "A" number frm the card. A 

continual verication process is made to assur that only the intended population 

is using the SLIAG-funded educational programs. 

The Texas Education Agency has moded the Stadad Application Form for 

Adult Education to include the costs considered allowable for SLIAG funding 

purses. The areas identied on this application for providers of educational 

services ar salar costs, contracted servces, supplies and materials, trvel, and 

capita outlays.


Neverteless, there are some funds contrl vulnerabilties. Findings and reommendations 

concerning these vulnerabilties follow under major topic areas. 

PUBLIC ASSISTANCE 

Assistance or Service Activities 

Public assistace services to be funded by SLIAG include Medcaid health car services, 

Medcaid foster car assistace, the Early Periodc Scrning and Diagnostic Treatment 

progr, the Famy Planning Title XI program, the Vendor Drg progr, the Emergency 

Nutrtion Tempora Emergency Relief program, and the local pass-though program. The

deparent also admisters the Famly Planning Title XX progr as a public health program 

for SLIAG. 

No new progrs have ben established. Famly Planning is provided diectly by the State. 

Other progr ar provide thugh counties or providers. The Emergency Nutrtion 

Tempora Emergency Relief program is adnistere by the counties and community action 

agencies jointly. 

A local county offce indicated that services provided ditly by the county or under contrJ(( 

are nutrtion, utiities, renta assistace, and mecal servces, which include hospitaIJphY"l(l. 

services, denta car, transporttion, the battered womens' program, and indigent burials The 

local welfar offce has access to the county auditor ma computer data base for eligl lIlty 

information. 
Documentaton of Eligible Legalized Alien Stats 

Eligible legalize aliens will be identified generally in the sam maner as they ar identified 

for al other progrs. A few adtional questions wil be asked and the INS car information 

wil be obtaned. Periodc reviews wil be made at the counties and providers to assur the 

intended population is getting SLIAG-funded services. At the county level, scrning and 

in-depth application forms wil be use to obta necessar information. 

Program Costs 

The State intends to develop guidelines to capture program costs expended for services at the 

servcing level. The State wil identify the eligible legalize alien and then tabulate costs 

expended for services rendere. When services ar fuished under contrct, quarerly reports 

wil be submitted by providers reuestig payment from the State for costs incur. Periodc 

sampling wi be conducted at these providers to assur the costs ar correct. Submitted 

invoices will be valdated on a sample basis. Two object expenditue codes will be added to 

the systems for controllng costs. 

At the tie of ths inspetion, the State had provided no guidace to the counties for 

determning allowable program costs. However, one county we visited durng the inspection 

had initiate action on its own to identify program costs by establishing cost centers, 

identiying foo vouchers for eligible legalize aliens, workng with the county auditor 

offce which reords costs and pays bils, setting up line item accounts for each 

category-SLIAG-Foo, SLIAG-Rent, and SLIAG-Utilities, and staping "SLIAG" on each 

voucher identied for eligible legaliz aliens going to the auditor s offce for payment. This 

problem is adessed in grater detal in the section dealng with crosscuttng issues. 

Administrative Costs 

To identi adistrative costs, the State wil determe the tota number of persons receiving 

the service at the county or community action agency. Then the State wil determne the 

number of eligible legalize aliens out of that tota. Finally, the State wil tae that ratio and 

multiply it by the tota adistrative cost to determne the shar pertnent to SLIAG. The

deparent has an indit cost allocation rate established by the Deparent of Health and 

Human Servces (HS). While the FY 1988 application only include State costs, the FY 

1988 updte and the FY 1989 application adde local pass-though adistrtive costs, 

which had previously ben overlooked (only State costs had ben include not county costs). 
These costs are to be reimbured by SLIAG. The costs were based on data from eight 

counties and then projected to all counties. 

At the county level, adnistrtive costs will be determned on the basis of a sample. The 

SLIAG usage wil be determned as a percentage of the tota adnistrtive costs. There is no 

indict cost rate at the county level for public assistace. 

Drawdown of Funds and Cash Balances 

The procedurs for drawdown ar being worked out by the coordnatig council. Generaly, 

the State does not make cash advances to counties or providers. However, if cash balances 

were create at the counties or providers, then subseuent paymnts would be reuced. 

PUBLIC HEALTH ASSISTANCE 

Assistance or Service Activities 

The Deparent of Health provides or contracts for a wide range of public health services, 

includig: 

health protection; 

health promotion/health education; 

prevention, detection, and referral of diseases and disabilties; 

ambulatory car/emergency medcal servces; 

short-term institutional care;


long-term institutional car and alternatives;


health care costs and health professions;


statistics buraus; and 

maternal and child health. 
. .

Other public health progrs have ben designate as public assistace progrs for puroses 

of SLIAG. These ar: 

chronically il and disabled children;


habiltation and rehabiltation (kidney health car);


health car costs and health professions (primar car); 

University of Texas system professional services; 

Texas Tech Health Science Center professional servces; 

women, infants, and children nutrtion; and


maternal and child healthfamly planning.


No new progrs have ben added beause of SLIAG fundig. The State furishes services 

though its public health hospitas, and contract services are furished though the varous 

county health deparnts. The same services offere by the State ar generally offere at the 

county level. Whether a county contrcts with the deparent depends upon the servces

rendere. Some servces ar also provided thrugh contrct with other than county providers. 

Documentaton of Eligible Legalized Alien Stats 

For public health servces, the percentage method is use to determne the ratio of eligible 

legalize aliens to the population served. Data from the HHS ar use to determe the 

number of eligible legalize aliens and speial agrcultura workers. 

For public health assistace progr considere public assistace, an individual eligible 

legalize alien determnation must be made. Varous INS documents ar being considered for 

use in veriying eligible legalze alien status. 

FINDING: The FSA' s definition of public assistance includes some public health activities 

which created adinistrative and service delivery problems for Texa public health agencies. 

Severa program adnistere by the Deparent of Health ar considered public assistance 

progrs for SLIAG reimbursement purses. The distinction is importt beause 

identiying a servce as public assistace requirs documenting costs incur for individual 

eligible legalize aliens served. If a program or servce is considere public health, the 

population ratio method for establishing costs can be used. Applying ths method, costs are 

determned by comparng the percentage of eligible legalze alens using the service to the 
percentage of the general population using the sam servce. This percentage is applied to tota program costs to determne how much can be reimbursed with SLIAG funds. 

While there is no quarl with the logic of FSA's defiition of public assistace versus public 

health, the distiction created serious adnistrtive and servce delivery problems for public 

health agencies. These agencies, not the public assistace agencies, must develop and 

implement new processes for identiying individual eligible legaliz aliens in order to 

document costs. Public health offcials in Texas ar concerned that asking patients about their legal status wil seriously impact the willingness of patients who ar ilegal residents to access 

public health services. These peple often enter the countr with highly contagious diseases and nee tratment immately. 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 classif certain public 

health services as public assistance and make appropriate adjustmnts 10 this position. 

Program Costs 

The State wil use a cost allocation method to determne actual costs. This wil allocate all 

pertnent, allowable costs to arve at an average cost per client for those public health 

progrs considere public assistance. For public health assistace, the percentage or ratio 

method wil be used. To arve at actual costs for the 130 public hospitas (public is defined 

where ownership is by a county or city or hospital distrct), the State intends to use the 

followi g methods: 

For Inpatients - The State wil use cost and bilng information frm these 

hospitas to obtan a daly rate. This rate wil be use to identify the cost of 

servces for an eligible legalized alien. 

For Outpatients - At the time of the dn-site review, the State planned to use 

actual charges for servces to eligible legalize aliens. 

The reports submitted by providers of servces (e. , famly planing servces) will list all 

revenue sources. This information will enable the State to assur agaist duplicate fundig. 

Desk audit proedures wi be instituted to verify that services were rendere and payment 

would match the servces rendered. 
.

No guidelines had ben reeived at the county level on determing actual costs. The 

Deparent of Health was workig on them at the tie of this review. 

Administratve Costs


A ratio of eligible legalze alens to the tota State population wil be use to arve at 

admnistrtive cost. The ratio method descbe above would keep the admistrative costs 

separate. 

For one county health deparent, an indiect cost rate of 23 percent had ben established. 

Puhase orders and invoices (vouchers) will also be use to identify SLIAG adnistrative 

costs. 

Drawdown of Funds and Cash Balances 

The drawdown function is the responsibilty of the coordnating council. The State s policy is 

to issue a 2-month advance to get a new progr underway. Large cash balances could occur 

when SLIAG funds are requested, reeived, and not spent. If such cash balances ar identified 

and the cause is related to SLIAG, subsequent SLIAG funds would be reuced. 

MENTAL HEALTH 

Assistance or Serve Activitis 

The activities of the Deparent of Menta Health and Menta Retardation to be rendered and 

funded under SLIAG are client and famly support services, hepatitis-B screening and 

vaccination, and genetics screening servces. No new progrs have been established by the

deparent. Plans ar to clai only those costs for services classified as public health 

assistace. 

Other services are provided by the deparent thugh menta hospitas, nonprofit commun1!)' 

menta health centers, and State mental health centers. The deparnt did not apply for 

approval of these services for SLIAG funding beause the services according to FSA POlll:Y 

are considere as public assistace. The deparent either did not want to or could not 

identiy eligible legalze alens seking these services. By law, the deparent is requ1I"d II) 
furish these services. If the services were classifed as public assistance, deparent 

personnel were concerned that some persons would not apply for menta health services 

beause the deparent would have to seek personal data to obtan SLIAG-related eligibilty 

information. 

Also, if the deparent would choose to claim costs for these services on each of the 

approximate 200,00 persons now receiving services, the State estiates that it would be 

necessar to add 55 persons to conduct an additional half hour of intervew tie. 

Documentation of Eligible Legalized Alien Stats 

The Deparent of Menta Health and Menta Retadation plans to use a ratio or percentage of 

the eligible legalze alens to total service population which is to be consistent with the 

SLIAG regulations. No distinction is made between eligible legalize aliens and special 

agrcultur workers. Both alien categories ar base on data frm HHS, but no effort is made 

to separte them. 

Program Costs 

Actual costs wil be based on budgeted costs and then corrted by actual cost outlays at the 

end of the State s fiscal year (August 31, 1988). Vouchers are sent in for payment and 

checked to determine if categories of services have been rendered. The proess involves 

allocation of costs to each service, number of clients proposed to be served, quarerly reports, 

and yearly audits of units (e.g., regional clinics) by certfied public accountat fis. 

Modfications wil not be made to the accountig' system as there wi be no diculty 

identiying the SLIAG-related services. 

Administratve Costs


A ratio of eligible legalze alens to the tota Texas population wil be use to determine 

admnistrative costs for SLIAG purses. For indit costs, the deparnt wil use the rate 

assigned by the cognizt agent. 
DrawtWwn of Funds and Cash Balances 

The drawdown function wil be the responsibilty of the coordnatig council. The deparent 

wil obtai SLIAG funds thugh the interagency voucher system. As reimburement is made 

for expenses, there should not be cash balances for SLIAG. 

EDUCATION 

Assistance or Serve Activities 

The Texas Education Agency will reeive SLIAG funding for two tyes of educational 

progrs: elementar and seonda education and adult education. 

Eligible legaliz aliens in elementa and seonda schools will reeive the following 

supplementa and basic instrctional services: 

special language programs; 

remedal programs in the basic skils; 

guidance and counseling services; and


special materials and supplies.


Adult education wi include English, language instrction, and citizenship traiing. 

Documentaton of Eligible Legalized Alien Stats 

The norm enrllment proess will be used for eligible legalize aliens entering elementar 

and seconda schools. For adults, the Texas Education Agency wil reuest the 1-688, 

Tempora Resident Cad, and the "A" number be obtaned. The fIrst surey for data on 

eligible legalize aliens in elementa and seonda schools was taen in May 1988 (an 

update was planned to be conducted in August/September 1988). The agency had to wait for 

August/September 1988 enrllnts to obtan adtional inormation. The surey showed 

38,00 eligible legalize alens; FSA then reuced that number to 32 00 and then to 13,00. 
, . 

The reason for this reduction was that most school distrcts could not meet the statutory and 

regulatory requirements for funding. The agency estimated about 390,00 adults wil qualify 

for enrllment by October 1988. 

At the provider level, the documenting involves verifying eligibilty status thugh the 1-688 

card issued by INS. All students will sign into each class using their assigned "A" number. 

Program Costs 

For eligible legalize aliens at the elementa and seonda levels, the State wi use the 

average cost per student ($2,500) per year to document progr costs. The agency sta 

indicate that this is the only Federa program where an average cost has ben use. The 

agency is concerned the Fedral Government wil not allow an average cost, forcing them to 

identiy actual cost. In adtion, a student neeng bilingual training wi cost about $700 

more. For adults, the cost of education is about $3 per hour, and using tutors would incrase 

this figu. Any program income would be deducte from SLIAG paymnts. Invoices 

submitte by contrctors would also be reviewed by fISCal agents. The Stada Application 

Fonn for Adult Education contans information covering allowable costs such as salar, 

contrcted services, supplies and materials, travel, and capita outlays. Al costs must be 

reasonable, alowable, and allocable to SLIAG. 

Administrative Costs


Dirt adnistrtive costs will be determned by using time sheets designed to captur 

expended time on a day, weekly, or monthly basis. For indict costs, the deparent wil 

use the rate assigned by the cognizat agency. Using time studies is consistent with existing 

procedurs for other progrs adnistere by the deparent. 

Drawdown of Funds and Cash Balances 

The drawdown functions ar performed by the coordnating council. The deparent can 

advance up to 25 percent of the estimated cost for the school year at the beginnig of the year 

to some school distrcts for elementa and seonda educational servces to eligible 

legalize aliens. Cash advances ar also made to providers of adult education services. No 

request must be made for this advance. Information on cash balances at providers and 

educational institutions would be included in their regular monthly or quarerly reports. If 
large cash balances were noted, the next alotment to the provider would be reuced. The 

SLIAG funds wil be expended on the basis of costs ,incur. 

CROSSCUTTING ISSUES 

The lateness in issuing the final regulations has caused problems for the State. The State 

could not awar contracts until the regulation proess was finalize. This has reuced the 

period of retroactivity durg which providers would clai SLIAG funds. 

FINDING: The FSA application review process created a nuer of signifcant problems for 

Texas. Also, the FSA's application review process interfered with the State s abilty to plan for 

services. 

Delay in FSA issuing the implementing regulation resulted in the State 

inabilty to properly plan for SLIAG. 

Numerous policy misinterpretations and disagrments resulted beause FSA 

did not provide definitive wrtten instrctions to assist Texas in understading 

SLIAG application reuirments. 

The time frames were too short for submitting the initial SLIAG application, 

FSA review and comment, and revisions of the application. 

Implementing SLIAG-funded progrs was delayed because of a delay in 

notifying Texas of the grt award. 

No formal appeals process exists if progrms or costs ar denied in the first level 

review. 

Accordig to fial regulations published Marh 10, 1988, States had to submit the FY 1988 

application no later than May 16, 1988. Revisions to the application had to be submitte by 

July 1, 1988, and the FY 1989 application had to be submitt no later than July 15, 1988. 

Applications were to conta brief descrptions of the States progrs or services, estiates 

of the States' SLIAG-relate costs for each progr or activity for that parcular fiscal year 

(includig information on the number of eligible legalze alens residing in the State), and a 

brief explanation of the methodology used to estimate these costs. 
Due largely to these short ti fres, FSA provided no fonnal feeback on revisions 

necessar in the Texas FY 1988 application. The informtion was transmitted by telephone or 

in meetings. The time fres to make necessar revisions did not accommodte the 

organzational strctu or the nee to communicate with or sek approval from the progr 

components impacted by revisions reuested by FSA. The Texas grant awar was delayed 

approximately one month due to an errr by the Grants Admistration sta in sending the 

award to an incorrt addrss. 

The FSA would not grt paral funding nor would FSA conditionally approve applications. 

If changes were not made in accordace with FSA suggestions, the enti application was 

disapproved. In adtion, FSA did not provide Texas with an appeals process when programs, 

costs, or methodologies were not approved. Texas had no reoure other than to delete the 

progr entily from its application or forfeit all of the SLIAG funds for that fiscal year. 

RECOMMENDATION: The FSA should mae its application and grant process more orderly. Specifcally, FSA should 

provide definitive wrtten instrctions on the SLIAG application reuirments 

and establish a dialogue with Texas on SLIAG policy, compliance, and reporting 

issues to minimize the confusion that occur in the initial application process; 

ensur that sufficient tie is allotted to the application proess including Texas 

initial application, FSA' s review and formal commnt, Texas' consideration of 

FSA comments and negotiation of disputes, and its submission of the revised 

application for FSA approval; 

develop an appeals process to use if progr or costs associated with providing 

servces ar denied in the initial application process; and 

ensur that the grt award proess for the approved applications is timely to 

permt implementing planned SLIAG programs. 

FINDING: Conflicting interpretations of the term "public charge" ha caused uncertainties 

in the alien population as to what services they are entitled to receive without fear 

deportation. 
State and local offcials report that the alien population often misconstre the term "public 

charge." These alens ar afaid that accepting certn alowable SLIAG progr benefits ,. 

could subject them to possible deporttion. To compound this problem, State program 

managers indicate that some Texas counties have reeived conflcting information from local 

INS offces on the subject of "public chare." This has cause varous interpretations of what 

constitutes "public charge" by different counties. 

RECOMMENDATION: The FSA and the INS should fuher clarify what is meant by 

public charge" and widely disseminate this informtion to the alien population who have 

raised concerns about its resident statU. 

FINDING: State guidelines are needed to determine allowable costs in public assistance and 

public health assistance. 

At the time of this inspection, the State had not inform the counties of FSA guidelines for 

determning allowable costs in public assistance program under the SLIAG program. 

However, since the State had not issued any guidelines, the county visited durg the 

inspection was moving ahead to develop its own guidelines for determning these costs. 

Also, guidelines had not ben reeived at the county level covering determing actual public 

health assistace program costs. County health sta indicate that they were told the 

Deparent of Health was working to draw up these guidelines. 

The State of Texas should recognize that there ar limitations on the diection that FSA can 

provide which wil cover the varous internal processes and operations of every State. 

Guidelines must be flexible enough to accommte varations in State systems and internal 

processes. Ultimately the State, as the grantee, is responsible for development and 

implementation of SLIAG progr activities, and for the fiscal documentation of costs and

expenditurs. 

RECOMMENDATION: The Texa Departent of Humn Services should develop a 

methodology to identif allowable public assistance program costs. Also, the Texas 

Department of Health should ensure that all providers of public health assistance services are 

informed of FSA guidelines for identifing allowable costs. 
OIG RESPONSE TO COMMENTS 

The FSA and the State of Texas both commnt on the drt report. 

THE FSA 

The FSA has generally agr with the OIG report findings and reommendations. The FSA 

has taen a number of steps to improve implementig the SLIAG progr including 

clarfyig program policies and proedures. The State had severa concerns about how FSA 

admnistered the program. We have moded certn aspets of the report base on FSA' 

comments. 

The FSA questioned the statement that the new population would significantly incrase public 

assistace and public health assistace servces. Early estiates indicated that large numbers 

of aliens would qualy to access the SLIAG program. The report reogni that inonnation 

obtaned durg the review determned that substatial incrases in workoads and 

expenditurs could occur in these aras as well as in education. However, we understad from 

reent discussions with States' offcials that demand for services nationaly is faling behind 

earlier projections. 

The FSA's definition of public assistance included some public health activities which crated 

admnistrative and service delivery problems for Texas public health agencies. The OIG 

recommended that FSA reonsider this position. 

The FSA replied that they se this position priary as an issue of identifying costs and that 

they will work with the States to develop method ,of docume,ntig costs which ar consistent 

with FSA's respnsibilties as stewars of public funds. We believe that FSA's actions to 

identiy alternative method is responsive to our concerns. 

We contiue to believe that a strct interpretation which permts public health costs to be clai only for speifc eligible legalze alens is burdensome to the States. In many cases, 

the interpretation would reuir considerable revisions to the States' system or statutory 

requirments. However, we do agr that FSA's use of alternative systems, such as the Cost 

Documentation System and a revise population ratio method system which reflects usage, 

would be a positive effort to enhance cost effectiveness without reuirg States to develop 

new systems or make considerable revisions to present systems. The population ratio method 

could be revise to consider not only eligible legalize aliens in the servce population but 

also usage of those servces by these aliens based on information alady obtaed from 

progr experience. Where appropriate, other alternatives might be use which would 
produce a more effcient system for the States and addess congrssional intent that the States 

would not be required to establish new or elaborate systems. 

We report that no fonnal appeals proess exists if progr costs ar denied in the ftrst level 

review. We agr with FSA's statement that the Grat Appeals Boar does have jursdction 

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 program or 

costs at the ftrst level of FSA' s review in the application proess. 

The FSA made numerous comments to clarfy certn matters of fact, policy, or procedure. 

We have included these comments verbati in Appendix B. 

The Stae of Texas


The State has generaly agree with the OIG report findings and reommendations. Their 

comments are included verbatim in Appendix C. Since the time of the on-site review, the 

State has taen significant steps to effectively implement the SLIAG program thugh 

procedur and system changes.


The State commnts indicate that guidelines have ben develope for determning allowable 

progr costs for use by county agencies and providers of servces. In adtion, Texas has 

clarfted State organizational responsibilties concerning implementig the SLIAG progrm 

where several State agencies are involved. 

Recognition is made of the State s concern regarding classifying some public health assistace 

activities as public assistace. Reference should be made to our comments above concerning 

this issue as adssed to FSA. 
APPENDIX A


GOOD PRACTICES

A number of practices have been identified that other States could shar. 

The Executive Director of the Texas Health and Human Services Cordnating Council 

is the single point of contact. This council is the grtee agency for SLIAG fundig 

purses and is the coordnating and oversight entity for al State agencies involved in 

health and huma services. This argement works well for a State in which none of 

the parcipating agencies for SLIAG is the grante agency, and the sta have goo rapport with the varous agencies involved in SLIAG. 

The Travis County Welfar Offce maintaned eligibilty data on the main computer at 

the county auditor s offce. Once eligibilty information has ben obtaed on 

eligible legalized alien, this process wil faciltate veriying the status of the applicant 

for SLIAG-funded servces. Weekly repons ar prepared for the auditor s offce on 

the services and benefit dollars involved. For futu reference, the local welfare offce 

can obtan information readiy on each eligible legaliz alien for whom eligibilty has 

ben determed.


Verifying eligible legalizd alen status for educational program wil be though 

reviewing the 1-688, Tempora Resident Car, issued by INS. Each student signs in 

for each class attended using the assigned "A" number from the card. A continual 

verication process is made to assur that only the intended population is utilizing 

SLIAG-funded educational progrs. 

The Texas Education Agency has moded the Stadad Application Form for Adult 

Education to include the costs considered allowable for SLIAG fundig purposes. The 

areas identied on ths application for providers of educational services ar salar 

costs, contracte services, supplies and materials, trvel, and capita outlays. 

Planned modfications to the State s computerize systems provide for the capture of 

SLIAG-relate costs under distinct SLIAG expenditu codes. 
APPENDIX B


FSA' S COMMENTS

,

: .

APPENDIX B


DEPARTMENT Of HEALTH & HUMAN SERVICES f" Family Support Adminislraliol1

Memorandun 

Dale: June 27. 1989 

From: cting Assistant Secretary


f or Family Support


Subject: OIG Draft Report: Implementation of the State Legalization Impact Assistance Grants Under the Immigration Reform and Control
 Act of 1986 - State of Texas (OAI-07-88-00449) To: 

Richard P. Kusserow 

Inspector General


At tached are the Family Support A
 inistration comments On above draft report. Many of our comments are tech the 

due to the complexity of the legislation and the fact that ical r.a tU 

SLIAG program was very new at the time of the the review. 

We appreciate the assistance and cooperation we have received


from you in response to our request to conduct this round of


rev iews of the SLIAG program. The reports we received are very useful to us in understanding how States are implementing the


program. 

De Bert


l: t tachren t 
OIG DRA REPORT: Implementation of the state Legalization Impact Assistance Grants Under the Immigration Reform and Control Act of 1986 ­

state of Texas 

The Family Support 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 draft report' s recommendations.


Narrative: 

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 clear 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 Isome , aliens were using these services before legalization and that newly legalized aliens do

not represent a "new population" for public assistance and public 

heal th 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 heal th needs existed and was identified during the medical

examinations required of all applicants for legalizations.


However, there is no data to suggest that, other than this
 temporary bulge in demand for public hea'lth services, newly
 legalized aliens will generate a significant increase in demand


for publi'c health assistance or public assistance services. 

Page 2 (Background) -- The draft report says, "states must


develop a method acceptable to FSA for determining administrative


costs. " We note that several methods for determining the share


of administrative costs in ongoing programs that are allocable to


SLIAG and which are acceptable 
 a priori are specified in the
 regulation at 45 CFR 402. administrative costs 22 (b) . The process of determining LIAG (those costs incurred in administering the SLIAG grant itself), like all costs associated with administering

HHS grants , is governed by 45 CFR Parts 74 and 92 and relevant

OMB circulars.

Page 12 (Education -- Documentation of Eligible Legalized Alien 

status) -- The draft report says that the State survey of 

eligible legalized aliens in elementary and secondary schools

showed 38, 000 eligible legalized aliensl "FSA then reduced that 

number to 32, 000 and then to 13, 000. The reason for this 

reduction was that not all eligible legalized aliens in 

elementary and secondary schools will need the services funded by 

SLIAG. 

That statement is incorrect in several respects. Not all school 

districts or all eligible legalized alien children within a 

school district are eligible for funding. Therefore, Texas' ini tial estimates were unrealistically high because they failed 

to consider the statutory and regulatory limitations on the use 

of SLIAG funds for this purpose. Because it applies the 

definitions and provisions of the Emergency Immigrant Education Act (EIEA) to use of SLIAG funds for educational services, IRCA 

stipulates that SLIAG funds may be expended for educational 

services only on behalf of eligible legalized alien students who

have attended U. S. schools for fewer than three complete academic

years. Additionally, to receive any SLIAG funding for elementary 

and secondary education, a school district must have 500 eligible 

legalized alien students with fewer than three complete academic years in u. s. schools, or such students must make up 3 percent of 

students in the school district. 

In evaluating the State' s estimated number of eligible legalized


alien students, the only factor we considered was the likelihood


that the estimated number was a reasonably accurate reflection of


the number of students that could be expected to meet the above


requirements. We used this criterion because, under the SLIAG


allocation formula, a State' s estimates of its costs directly


ffect the amount of money that it and every other state receives. (Half of funds are allocated on the basis of costs. 

Thus, we had a responsibility to ensure that estimates were 

reasonable, and to apply the same criteria to all states. The 

criteria employed in our review are specified in the SLIAG 

regulation at 45 CFR 402. 44. 

The state education agency' s approved FY 1988 application 

estimated that there would be 14, 808 "countable" eligible 

legalized alien children in Texas elementary and secondary 

school. This number represented one-third of 44, 425, the total 

number of eligible legalized alien children 6-17 in the state of Texas. (Subsequent information from the Texas Education Agency 

indicates that this estimate, in fact, was mucb too high.


Page 13 -- The draft report says that the lateness of issuing


final regulations (which were published March 10, 1988) "has


reduced the period of retroactivity during which providers would


claim SLIAG funds.

The SLIAG regulation was delayed because we received so many


comments on the proposed rule , which was published in August
 1988. The comments were far-reaching, and deserved full and.


careful consideration. This process took time, but we believe
 the final product was Duch improved as a result. 


activities for which SLIAG funds could be used was expanded
 he range of


. dramatically in the final rule, as a result of our analysis and
 consideration of comments we received. The final rule also
 opted a more equitable method for allocating 
funds. 

We do not bel ieve that the timing of the final regulation' publ ication adversely affected States' ability to claim 

SLIAG funds are available for public assistance and educational
 costs.

services costs incurred from October 
1, 1987, for public health
 assistance costs incurred from May 5, 1987, and for SLIAG
 administrative costs incurred after November 
6, 1986. The
 methodologies for establishing costs did not change from the
 proposed to the final rule. We have worked extensively with
 States to help them establish costs for periods during which they 

did not have tracking systems in place. 

Findings: 

Finding:	 Since 1987, FSA has held national conferences and 

issued information to States on implementing the SLIAG 

program. 

Comment:	 Since the OIG' s onsite visits in August 1988, we have continued to provide assistance to States. 
We have conducted several more workshops and meetings to assist


states in implementation. In October 
1988, we issued a
 compendium incorporating the extensive formal guidance


previously provided to States on methods of cost


documentation. We also have provided assistance to
 individual States in the form of correspondence,

telephone consultation, and onsi te technical assistance. We are in the process of conducting initial program reviews of the major States, including


Texas, which we visited in April 1989. We request that
 the final report reflect this continuing dialogue with
 States. 

Finding:	 Texas also took steps to document expenditures and


control disbursements.


Comment:	 On page 6 , the draft report lists Family Planning under

the Public Assistance category. Family Planning is included in the statutory and regulatory definition of 

public health assistance, and is included under the 

public health assistance category in 
Texas' approvej

Finding: 

Comments: 

application. The final report should correct this statement. 

Page 8 of the draft report says, "For public health


assistance programs considered public assistance, an


individual eligible legalized alien determination must


be made. That statement is incorrect and should be


corrected in the final report.


The regulation allows costs for public assistance


programs to be established by (1) establishing costs
 associated with identified eligible legalized aliens,


(2) using a statistically valid sample of the program'


caseload, or (3) "any other reliable method of cost 

calculation, subject to Federal review" (45 CFR 402. 21). We are making available to states a Cost 

Documentation System, initiated by HHS, which will 

enable them to establish costs based on a blind match 

of social security numbers of program participants. 

have worked with States to develop other alternative 

methods that do not involve inquiring into the 

immigration status of any individual. We have 

distributed information on these alternative methods to States. 

The FSA' s definition of public assistance includes some 

public health activities which creates administrative 

and service delivery problems for Texas public health

agencies. 

The draft report is in error in saying that the


definitions of pUblic health and public assistance


create service delivery problems for Texas public


health agencies. By law 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 on-going, generally available programs. In most programs, immigration status is not a condition of eligibility. If the alien is eligible for services, he or she would 

receive those services, regardless of whether the costs

were reimbursed under SLIAG. The final report should

clarify this point. 

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. The final report should explain that the regulatory 

definitions of public assistbnce and public health are 

based directly on IRCA. 
Programs of public assistance are defined as programs that "provide for cash, medical or other assistance.. . designed to meet the basic' subsistence Ot 

heal th needs of individuals" (section 204 Cj) (2) (A) emphasis added). Con istent with IRCA' s explicit inclusion of medical assistance under the public 

assistance category, State or locally funded programs 

that provide medical treatment to needy individuals are public 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 history indicate that Congress


intended to allow certain traditional public health


functions under the public health assistance category


and medical assistance to the needy under the public
 assistance category. In implementing SLIAG, we have followed that statutory framework. We have defined public health assistance as, among other things, 

programs or activities that "are provided for the primary purpose of protecting the health of the general public" (45 CFR 402. 2). The scope of programs included in that regulatory definition of public health


assistance goes far beyond the specific activities


listed in the Immigration Reform and Control Act of


1986 CIRCA), which created SLIAG. 

Regarding the draft report' s concern 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 program. 

Texas would like to use the population ratio method to 

establish costs for all programs run by the Department of Health. 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 

provide treatment to needy individuals. To the contrary, the information that we have to date 
. .

Finding: 

Comment: 

indicates that allowing Use of the population ratio 

method for these programs generally would overstate

costs , dramatically in some cases. However be willing to allow Use of the population ratio method
 , we would
 for any program for which there is an 


to indicate that doing so would not overstate costs.
 empirical basis

The regulation also permits establishing costs Using


any other reliable method of cost calculation, Subject


to Federal review.


work with States We have continually offered to


, including Texas, to devise acceptable
 alternative methods.


FSA realizes that many public assistance and public 

heal th programs don't routinely collect information on immigration status collect social security numbers. , but , we have found that many do

and devoted substantial staff resources to developing a 

system that will match the social security numbers of 

program participants with those of newly legalized aliens. This system will give States information on

That is why we funded


the number of newly legalized aliens participating in a


program and the cost of services to them. 


available and allows States to establish costs for FY
 It is now


1988 as well as current and future years. 


sent State SLIAG Single Points of Contact suggestions
 Recently, we
 for other Possible methods for establishing costs.


None of these alternative methods would require setting


up new administrative mechanisms or checking status of


all program participants.


We have worked closely with Texas to develop 

methodologies to document costs for all programs in the State' s approved application. 

The FSA appl ication process created a number of significant problems for Texas. Also
 application review process interfered with the State' , the FSA'


ability to plan for services.


The draft report says that the time period for


sUbmission, review
, revision and approval of the
 initial application was too short. 


would have been preferable to have had a longer period
 We agree that it


of time between the PUblication of the final regulation


and the deadline for submission and approval of FY 1988


and FY 1989 applications. 


should note that However, the final report
 , because of the way IRCA set up the
 allocation formula, one major reason for the compressed 

timeframe as that we could not award funds to any State until all States' applications had been 

In order for us to run the allocation formula approved. 

, which 
IRCA requires to include estimates of costs, we must


have approved estimates for all States before we can
 calculate States' allocations. 

The draft report says that "numerous policy

misinterpretations and disagreements resulted because 

FSA did not provide definitive written instructions to 

assist Texas in understanding SLIAG application

requirements. Had there been more time, we would have 

communicated more extensively in writing. However, the final report also should note that some of Texas' 

misunderstandings resulted from the State' s failure to 

provide us initially with complete information about 

the programs and activities included in its 

application. The lack of adequate information required 

extensive dialogue and subsequent revision of the

State' s application. 

The report says no formal appeals process exists if


programs or costs are denied. The Grant Appeals Board


has jurisdiction over issues related to the withholding


and repayment of funds. For other matters, the State


may follow normal procedures for disagreeing with an


agency finding. 

ecom."tendations : 

Thr e of the draft report' s recommendations propose action on the 

part of FSA:


Recommendation:	 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. Texas wants to use the 

population ratio method for all programs run by 

its Health Department. 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 ratio


method for all heal th depar ment programs would


be inconsistent with our responsibility to


exercise fiscal responsibility in administering


SLIAG funds. However, we recognize that some


States may encounter difficulties in

Recommendation: 

Response: 

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. 

The FSA grant process should be made more
 orderly. 

The draft report' s recommendation refers to the


FSA grant process , but the specifics indicate
 that it is referring to the SLIAG application


and grant award process. The language of the
 recommendation should be more specific.


We agree that the application process should be


conducted in a more orderly fashion than was the


case for the initial sUbmissions. 
As the draft
 report indicates, the time frames for the FY


1988 and FY 1989 application processes were


necessarily short. In effect, the States and we
 had to complete two appl ication processes in
 less than a year. We do not expect similar
 problems for the FY 1990 and FY 1991 application


processes. 

To ensure that States have adequate time to


prepare their FY 1990 applications based on


empirical data, we have extended the deadline


from July 15 to October 1. Additionally, we
 have 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 time.


In order to reduce the possibility of


misunderstanding, we have advised States that we


will communicate all substantive questions and


concerns on their FY 1990 applications in


wri ting, as was done for States' end-of­
year reports. We issued extensive written guidance
 on the FY 1990 application process and the


standards we will apply.


The draft report also recommends that we develop 

an appeals process to use if programs or costs 

associated with providing services are den i ej the initial applications process. We do not
 believe such a process is necessary. The

, Recommendation:


Response: 

Department' s Grant Appeals Board has jurisdiction over cases involving the repayment


or withholding of funds. Normal.


the Department are open to States that disagree
 channels within


with decisions made during the Course of 


application review.


The FSA and the Immigration and Naturalization Service (INS) should further clarify what is meant by "public charge" and widely disseminate this information to the alien population who


have raised concerns about its resident 


status. 

Under IRCA and the Immigration and Nationality

Act , the INS alone is responsible for 

determining whether individuals are likely to


become public charges. 


policy on this issue. FSA cannot establish


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 issue. INS representatives have made presentations at virtually all of our workshops


and conferences. At these meetings


been able to ask questions and receive direct


information from the INS. 


, States have


to States all information provided to us by INS
 We have communicated


on this and other pertinent issues


continue our policy of disseminating any
 , and will


relevant information that we receive.


The Department also has indicated its support


for a legislative change to allow States to use


a small portion of their SLIAG grants to inform


temporary residents of the requirements for


adjustment to lawful permanent resident status


and of the rights and responsibilities of lawful


temporary residents. Such Use is not perri under current law. tted
. .

APPENDIX C


TEXAS' COMMENTS

APPENDIX C


TEXAS HEALTH AND HUMAN SERVICES 

COORDINATING COUNCIL


311-A EAST 14TH ST. 

AUSTIN. TEXAS 78701 

July 18, 1989 

Mr. Richard P. Kusserow


Inspector General


Office of Inspector General


Department of Health and Human

Washington, Services
 D. C. 20201 

Dear Mr. Kusserow:


Thank you for the opportunity to review and comment on the


entitled "Implementation of the State Legalization Impact report
 Assistance Grants Under the Immigration Reform and Control


1986 - State of Texas. Act of


The report findings are based on a program inspection by the


Office of Inspector General conducted in August


SLIAG program was still in the early development, 1988 , when the


then, the state agencies have developed and refined program
 rules , procedures , provider manuals, and contracts among service providers. Our comments thus include updated information, as 

phase. Since

well a corrections of facts reported.


The comments correspond to the sections contained in the 


report. xecutive ecommendatio 

Page ii and page 4. The finding that the Family Support Administration (FSA) held conferences and issued information is true. However, the timing gf the conferences and issuance of information limited their usefulness. 

example , FSA held a conference in October, For 

states in establ ishing costs for the end-of-1988, to assist 

December 31, year reports due
 1988. Two months was not adequate time to
 establish costs for most programs
, particularly since many
 programs were relying on the anticipated Use of the Cost


Documentation System , which only became available to states
 this month. Similarly, FSA did not provide demographic data needed to establish end-of­


programs until March, 1989. year costs for public health 
Mr. Richard P. Kusserow


July 18, 1989


Page 3


Page iv and page 9. The state strongly supports' the OIG recommendation that FSA reconsider its position to classify


certain public health services as public assistance and make


appropriate adjustments to this position. 
The state
 believes the recommendation to be in line with the original


intent of the congressional legislation implementing 
SLIAG. 

Texas' Organi zational structure


Page 3, "General. , The various categories of SLIAG funds are not administered by single agencies , as indicated in the report. The Department of Health, the Department of Human Services , and the Department of Mental Health and Mental 

Retardation each administer public health assistance and 

public assistance programs under SLIAG. 

Agency administers the educational component of SLIAG. The Texas Education

The Texas Health and Human Services Coordinating 
Council, is
 responsible for the overall state administration and


implementation of SLIAG in Texas. 

Page 3, "Public Assistance. The Department of Human
 Services is 
 not responsible for state administrative

functions associated with effectively implementing public 

assistance programs to be funded by SLIAG. Each of the heal th-related state agencies participating in SLIAG have 

programs classified as public health assistance and public 

assistance. Each agency is responsible for effectively


implementing rules, procedures , and provider manuals for
 their respective programs.


Department of Human Services staff in the Emergency


Assistance Programs branch are directly responsible for the


implementation of the City/County Pass Through and the


ENTERP/SLIAG programs. They are also responsible for
 coordinating the overall Department of Human Services


implementation of other SLIAG public assistance programs


including Medicaid Heal th Care Services, Early Periodic
 Screening Diagnosis and Treatment (EPSDT) program, the County Indigent Health Care program, the Vendor Drug 

program, Medicaid Foster Care Assistance program, and Family Planning Title XIX program. The Department of Human Services does not, through the county structure, qrant 

benefit payments to ELAs for emergency relief. The agency will, however, work with local government agencies to obtain SLIAG reimbursement for their expenses in serving ELAs. 
Mr. Richard P. Kusserow
 July 18, 1989 

Page 4


Page 3, "Public Health Assistance. The Department of Heal th is not responsible for the direct administration of SLIAG funds for general public health assistance. Each of the health-related state agencies participating in SLIAG 

have programs classified as public health assistance and 

public assistance. Each agency is responsible for
 effectively implementing rules , procedures, and provider
 manuals for their respective programs. 

Publ ic Assistance 

Page 6, "Assistance or Service Activities. The Texas Department of Human Services public assistance services that 

are eligible for SLIAG reimbursement include Medicaid Health

Care Services , Medicaid Foster Care Assistance program, Early Periodic Screening Diagnosis and Treatment 
(EPSDT) program, Vendor Drug program , Family Planning Title XIX program, the Emergency Nutrition/ Temporary Emergency Relief


(ENTERP) pr gram, City/County Welfare Public Assistance Pass


Through program, and the County Indigent Health Care


program. The Department of Human Services also administers


the Family Planning Title XX program as a public health


program under SLIAG.


Page 6, "Program Costs. The Department of Human Services
 has now established multiple object expenditure codes for


audi t purposes. The agency has also provided complete and
 detailed guidance to city and county public assistance


agencies on how to identify ELAs , determine allowable
 program costs , and submit claims for reimbursement.


Page 7, "Drawdown of Funds and Cash Balances.
 The state
 administers the SLIAG program on a reimbursement basis


e., funds are only drawn down once documented expenditures have been made. Adult education funds are disbursed on a 

thirtY-day advance basis. 

Coordinating Council has establ ished There are no cash balances. The reimbursement/payment procedures for state agencies contracting with the Council. The fOllowing cost documentation must accompany each request 

for reimbursement: 

- Drawdown Program Cost Summary
 - Request for Reimbursement/Cash Management Report
 - Self-Monitoring Checklist
 - List of Subcontractors (associated with the drawdown)

Hr. Richard P. Kusserow


July 18 , 19


Page 5


Public Health Assistanc,


Page 7 , "Assistance or Service Activities.
 assistance and public assistance programs at the Department
 Public health
 of Health have not been correctly classified in the 

The following programs are public health assistance report. programs: 

- Health protection
 - Health promotion/health education
 - Prevention, detection, and referral of diseases


and disabilities
 - Ambulatory care/emergency medical services
 - Short-term institutional care


- Long-term institutional care and alternatives


- Health care costs and health professions
 - Statistics bureau


- Maternal and child health


Other public health programs have been designated as pUblic


assistance programs for purposes of SLIAG


These are: reimbursement. 

- Chest hospitals


- Chronically ill and disabled children


- Habilitation and rehabilitation 
 - Health care costs and health professions (primary
 (kidney health care)


care) - Publ ic hospitals - University of Texas System professional services


- Texas Tech Health Science Center professional


services - Women, infants
, and children nutrition
 - Certain maternal and child health programs


paqe S , "Assistance or Service Activities.
 should read: 
No new programs have been added because of
 SLIAG funding. The The paraqraph


state furnishes traditional public
 health services through its regional public health clinics


and contract serVices are furnished through the various


county health departments. 

. state are generally offered at the county level. 
 The same services offered by the


county contracts with the department depends upon services
 rendered. Some services are also provided through contract with other "local" providers. Whether a

Page 9 , "Program Costs.
 public health assistance The paragraph should read: 


, the ratio method will be used to
 For
, 

Mr. Richard P. Kusserow


July 18 , 1989


Page 6


determine costs. 
For public assistance programs within the Department of Health, actual costs will be determined. arrive at actual costs for the public hospital (public is


defined as ownership by a county or city or hospital


district), the State intends to use the fOllowing 


For Inpatienti methods: - The state will Use cost and expense
 information from these hospitals to obtain a daily expense rate. This rate will then be used to determine the cost of 

services for an eligible legalized alien.


For Outpatients - The Department reimburses the billed amount for an outpatient visit multiplied by each hospital'


Medicaid outpatient interim 


Ratio of Cost to Charges" rate, often called a hospital'


actual charges to reimburse outpatient hospital services
 (RCC). (The State does


indicated in the report. Dot Use

, as 

The Department of Health has established and distributed 

quidelines to counties for determining costs. 

Page 10 , "Drawdown of Funds . administers the SLIAG program on a reimbursement basis
 and Cash Balances.

The state
 i. e. , funds are only drawn down once documented expenditures have been made. Adult education funds are disbursed on a
 thirtY-day advance basis. 


Coordinating Council has established reimbursement/payment There are no cash balances.


procedures for state agencies contracting with the The

The following cost documentation must accompany each request Council. for reimbursement:


- Drawdown Program Cost - Request for Reimbursement/Cash Management Report
 Sumary - Self-Monitoring Checklist


List of Subcontractors 


(associated with the drawdown)


Kental Healtb


Page 10 , "Assistance or Service Activities.
 assistance and public assistance programs at the Department


programs: 

Public health of Mental Health and Mental Retardation are not accurately


. classified. The 
following are public health assistance


- Hepatitis-B screening and vaccination


Genetics screening


- Mental health program administration
 - Central administration


C-6 
Mr. Richard P. Kusserow July 18, 1989 

Page 7


Other public bealth programs bave been designated as public


assistance programs for purposes of SLIAG


These are: reimbursement. 

- Campus-based residential treatment and habilitation


- CommunitY-based services


- Facility management and support
 - Community MH centers residential services - Community MH centers management and support - Case management services


- Client and family support services


- Autism services


The agency will Use the POpulation ratio method to claim


costs for public health assistance activities. 


will claim costs for pUblic assistance programs Using the
 The agency
 FSA Cost Documentation System when the system becomes fully


operational and available to the 
state. 

Page 10, "Assistance or Service Activities. 

apply for approval of all programs listed aboveThe agency did the programs classified as public assistance 

1988 and FFY 1989 state applications. , including 

, in the FFY
 activities were approved by HHS and listed as "
 The public assistance


programs until such time as the agency could account for the
 placeholder" costs of services to eligible legalized 


intends to Use the FSA Cost Documentation System to
 aliens. The agency establ ish costs 
for these programs when the system becomes
 fully operational and available to the state.


Page 11, "Documentation of Eligible Legalized Alien Status.


The Department of Mental Health and Mental Retardation plans


to Use the population ratio method to claim costs for public


bealth activities. The 


that the agency distinguish between individuals who applied
 Use of this method does not require


under Section 245A and Section 


amnesty applicants are considered eligible legalized aliens


once they have received temporary resident 


210. Both categories of

status. 

The agency will claim costs for public assistance programs


using the FSA Cost Documentation System when the system


becomes fully operational and available to the 


state. Page 11 , "Program Costs. the Department of Mental Health and Mental Retardation was
 At the time of the interviews


uncertain about how to identify and document SLIAG-related


costs for mental bealth programs in the public assistance


category. The description of program costs in the report

Mr. Richard P. Kusserow
 July 18, 1989 

Page 8


applies to the usual procedure for disbursement of state


funds to community MH centers, and n2 to SLIAG ' reimbursement procedures. 

The agency intends to claim costs for public assistance 

programs using the FSA Cost Documentation System when the 

system becomes fully operational and available to the state. 

The statement that modifications will not be made to the


accounting system is incorrect. The state agencies
 participating in the SLIAG program account for SLIAG-related


reimbursements under distinct internal cost centers or


program activity codes.


Page 11, "Administrative Costs. The statement regarding administrative costs is correct as it applies to program 

administrative costs under public health activities. 

this time the agency does not identify SLIAG administrative costs. The agency may claim administrative costs related to 

use of the FSA Cost Documentation System. 

Education 

Page 12, "Documentation of Eligible Legalized Alien Status. 

The normal enrollment process will be used to identify 

eligible legalized aliens entering elementary and secondary schools. In SLIAG adult education classes, the adult 

education directors will request documentation of resident 

status and will accept students with I-688A or 1-688 cards. Adult education directors will only request SLIAG 

reimbursement for costs incurred by students who have 

temporary resident status, i. e., students with 1-688 cards.


The Texas Education Agency reduced the estimated numbers of 

eligible legalized aliens in elementary and secondary 

schools for purposes of estimating costs in the FFY 1988 state application at the request of the FSA. The reason for the reduction was 
 not because the services were not needed 

by eligible legalized alien students in elementary and


secondary schools. Rather, most school districts could not


meet the FSA requirement that school districts identi fy 500
 students or 3 percent of the student population as el ig ible legalized aliens 
 and the requirement that no eligible

legalized alien student who had received more than three years of educational instruction in u. S. schools be counted 

toward the 500 student/3 percent threshold requirements. 

Four school districts qualify for SLIAG reimbursement for 

FFY 1988 and FFY 1989. 
Mr. Richard P. Kusserow


July 18, 1989


Page 9


Texas has enrolled approximately 111, 000 eligible legalized alien students in adult education classes as of March, 1989. 

Page 12, "Program Costs. The description of program costs


for elementary and secondary school students is basically correct. Since the average cost per year of education for 

eligible legalized aliens at the elementary and secondary 

levels exceeds the $500 average limit, school districts will 

request $500 per eligible student. 

The average cost of education for adults varies by region of 

the state and depends on local costs for teacher salaries, materials and supplies, and other related costs of service. 

Page 13, nDrawdown of Funds and Cash Balances. The procedures outlined for drawdown of funds accurately 

describe the Texas Education Agency policy for reimbursement

under the Adult Basic Education program. This procedure for disbursement of SLIAG funds was under consideration at the


time of the August interviews, but was not the established
 funds distribution policy of the Council. In December, 1988, the FSA sanctioned the advance of funds equal to 

thirty-days anticipated disbursements for the cost of 

education services. The Texas Education Agency adjusts each 

adul t education cooperative' s request for thirty-days advance funds based on the previous month' s actual cost documentation. There are no cash balances. 

Cross-Cutting Issues 

Page 13. ' The state concurs with the inding that the lateness in issuing the final regulations has caused 

problems for the state in implementing SLIAG. The FSA 

issued a policy change in september, 1988, to permit service contracted providers to claim costs of services for the 

period before the issuance of federal regulations provided 

that costs are fully documented and reasonable, allowable, and allocable to SLIAG. However, providers continue to have difficulty identifying and documenting costs for the period 

before the issuance of the federal regulations. 

Page 14. The state strongly supports the recommendation


that the FSA grant process be made more orderly, including


the development of an appeals process to use if program or


costs associated with providing services are denied in the


initial application process.

. . , 

'1i 

Mr. Richard P. Kusserow
 July 18, 1989


Page 10


Page 15. The state endorses the recommendation for the FSA


and the INS to clarify what. is meant by "public charge" and widely disseminate this information to the alien population 

who have raised concerns about resident status. 

Two of the stated purposes of the inspection were to identify


potential problems early in the process and to identify good


practices which could be shared with all states. 


agrees with the intent of these purposes and wishes that the The state


results of the inspection could have been accomplished much earlier. Problems continue to be identified by the state and by

FSA, leading to delays in claiming FY 1988 


practices" from other states have yet to be shared in any kind of
 costs. Also good

useful format.


Again , we appreciate the opportunity to provide comments. need further clarification or If you
 information, please contact me or
 Marguerite Rivera directly at, (512) 463-2195. 

Sincerely, 

ff'l 

Patrice Thomas


Executive Director


cc:	 Governor William P. Clements


Lieutenant Governor William Hobby
 Speaker Gib Lewis


Representative Debra Danburg


Polly Sowell


Gloria ROdriguez