y. 

IMPLEMENTATION OF THE STATE


LEGALIZATION IMPACT ASSISTANCE


GRANTS UNDER THE IMMIGRATION


REFORM AND CONTROL ACT OF 1986


OVERVIEW 

f.P.VJClS' ljJ' 

'0 

)'d3Q 

OFFICE OF INSPECTOR GENERAL 

OFFICE OF EV ALVA TION AND INSPECTIONS 

FEBRUARY 1990 
OFFICE OF INSPECTOR GENERAL


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

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

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

OFFICE OF EVALUATION AND INSPECTIONS 

This report is prouced by the Offce of Evaluation and Inspections (OEI), one of the thee 

major offces within the OIG. The other two are the Offce of Audit Services and the Offce 

Investigations and Enforcement. Inspections ar conducted in accordace with professional 

stadads developed by OEI. These inspections are tyicaly short-term studies designed to 

detennne progr effectiveness, effciency, and vulnerabilty to fraud or abuse. 

This study was conducte to detennne the effectiveness of the sample States' implementation 

of State Legalation Impact Assistance Grants funds awarded under the Immgrtion Reform and Control Act of 1986. 


The report was prepard under the diction of Don McLaughlin, the Regional Inspector General of Region vn, Office of Evaluation and Inspections. Parcipating in this project were the 

followig people:


Kansas City Headquarters 

Hugh Owens, Project Leader Albert J. Nace 

Julie Quir Debra Robinson 

Doris Phillps 

Raymond Balandron 

James Wolf 

Alicia Smith 

San Francisco New York 

Apryl Willams Lucile M. Cop 
, 

. . . . : ._. ..._,.:.. , , . . , 

IMPLEMENTATION OF THE STATE


LEGALIZATION IMPACT ASSISTANCE


GRANTS UNDER THE IMMIGRATION


REFORM AND CONTROL ACT OF 1986


OVERVIEW 

Richard P. Kusserow 

INSPECTOR GENERAL 

OEI-07 -88-00440 FEBRUARY 1990 
... . .

.c ..J 

EXECUTIVE SUMMARY 

PURPOSE 

The purose of ths inspection was to detennne the effectiveness of the States 

implementation of the State Legalization hnpact Assistance Grants (SLIAG) progr, identify 

potential problems early in the process, and identiy good practices which could be shared 

with al States. 

BACKGROUND 

The SLIAG progr was established under the Imgration Reform and Control Act (IRCA) 

of 1986 to reuce the fmancial burden of providig public assistance, public health assistace, 

and educational servces to eligible legalzed alens. In Fiscal Year (FY) 1988, $928. mion 

in progr fuds were alocated to States, and funds wil continue to be allocated though FY 

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

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

needy individuals and public health assistance servces offered under the States ' public health 

progrs. The payments also cover educational servces designed to assist eligible legalized 

alens to attain a satisfactory level of performce in school and to achieve English language 

proficiency and citizenship skils necessar to become permanent residents or any educational 

servces authorized by the Adult Education Act. The Famly Support Admnistration (FSA) is 

responsible for admnistering the program. 

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

implementation. In addtion to the norm diculties encountered in creatig new processes 

and procedures, FSA recognized that SLIAG would have unique problems. Some of these 

issues include the diversity of programs which SLIAG encompasses, cultural and language 

barers associated with the servce population, maintaning confidentialty of information, and 

the extremely short time fres for the grant award process. 

METHODOLOGY 

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

Offce of Inspector General (OIG) conduct reviews in 10 States to detennne the progress of 

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

Columbia because of the varety of programs they offered, the number of eligible legalized 

aliens in the population, or the amount of the grt award: The nine States are Arzona, 

California, Colorado, Florida, Ilinois, Massachusetts, New York, Texas, and Washington. 

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

documentation furished by FSA and State and local offcials, built the base of information for 

this report. This report represents an overview of the sample States' implementation of the 

SLIAG program as of August 1988. 
. .

. .,. ..

C., .,- - -, 

FINDINGS 

. Both FSA and the States were committed to identifying implementation problems and 

developing effective solutions to them. 

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

implementing the SLIAG program. 

The States have developed innovative approaches to effectively and effciently implement the 

SLIAG progr. 

Nevertheless, we found inefficiencies and vulnerabilitis needing attntion by FSA and the 

States. 

The FSA application review process created a number of significant problems for the States. 

Also, the FSA' s application review process interfered with the States ' abilty to plan for 

servces. 

The FSA's definition of public assistace includes some public health assistace activities. 

Ths created admistrative and service delivery problems for States' public health agencies. 

Confictig interpretations of the term "public charge" has caused uncertaities for the aliens 

as to what servces they ar entitled to receive without fear of deportation. 

The FSA's policy of denyig payments for servces rendered by community-based 

organizations and qualified designated entities prior to the application approval date caused 

dificulties. 

States were unable to access minimal eligible legalzed alien information in the Immgrtion 

and Natualization Service (IS) files. 

Some States ' systems and procedurs to identify eligible legalized aliens were nonexistent or 

only in developmental stages at the time of this review. 

The SUAG funds allotted to the States greatly exceed actual expenditures to date. 

Out of $2 billon appropriated in FYs 1988 and 1989, as of June 30, 1989, only 20 percent has 

been drwn down by the States or set aside for reimbursement of Federa expenditures. This 

discrepancy makes the program extrmely vulnerable to potential waste. 
. /

RECOMMENDATIONS 

The FSA should make its application and grant award process more orderly. Specifcally 

FSA should 


provide definitive wrtten instrctions on the SLIAG application requirements 

and establish a dialogue with the States on SLIAG policy, compliance, and 

reportg issues to minimize the confusion that occured in the initial application 

process; 

ensur that suffcient time is allotted to the application process, including the 

State s initial application, FSA' s review and formal comment, the States 

consideration of FSA comments, negotiation of disputes, and submission of 

revised applications for FSA approval; 

revise the grant award process for approved applications so that the notice of 

grant award reaches the States prior to the beginning of the fiscal year; and 

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

services are denied in the initial application process. 

The FSA should reconsider its positin to classif certain public health services as public 

assistance and make approprie adjustments to this positon. 

The FSA and the INS should further clarify what is meant by ''public charge" and widely 

disseminate this information to the aliens who have raised concerns about their resident 

status. 

The FSA should analyze the effect of its policy to deny retroactive payment to 

community-based organizatins and qualifed designated entities for services rendered in 

good faith, and determine whether a modifcation to its position would be warranted. 

The FSA should arrange for INS to conduct matches of State and INS records to permit the 

State to make retroactive determinations of SLIAG eligibility for program services that meet 

SLIAG funding requirements. 

The FSA should follow-up with the States to ensure proper procedures and systems have 

been implemented to account for SLIAG expenditures. 

billon 

until an accurate assessment can be made of State financial needs under SLIAG. 

Alternatively, the appropriations for FYs 1990 and should each be reduced by $500 

The FSA should request the Congress to suspend the FY 1991 appropriation of $1 

1991 

million. 
. ,.. . \.. . ;.... .

FSA COMMENTS 

The FSA commented on the drt report. They generaly agreed with our findings and 

recommendations and reported having taken a number of steps to improve implementation of 

SLIAG. We moded the report to reflect certn concerns and factual matters, mostly of a 

technical natue, which they rased. Their comments ar included verbatim in Appendix B. 

CONGRESSIONAL ACTION 

Since issuance of the draftreport, legislation was enacted (PL 101-166) that reduced the FY 

1990 SLIAG funding level by $555,299,00. 
............. ................................ ................... ... 

. . :. ............................................. ,,,;......... .............. ....... ,:., ,,; ;, ... .................... 

TABLE OF CONTENTS 

EXECUTIVE SUMMARY 

INTRODUCTION ............ ............. ............... ..... ... ...... 1


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


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


FSA COMMENTS AND OIG RESPONSE 


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


APPENDICES 

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


APPENDIX B: FSA' s Comments .....8......."..........I1........I1.....II..IIII.IIIUIIIII........... 8 - 1

. ,_. ,:., .. ,. ;, . _.. __ .:,_. . .. .

n .. 

INTRODUCTION


PURPOSE 

The Famy Support Admnistrtion (FSA) requested that the Offce of Inspector General 

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

effectiveness of the States' implementation of the State Legalzation hnpact Assistance Grants 

(SLIAG) progr awarded under the hngrtion Reform and Control Act (ICA) of 1986. 

These inspections included reviewing mechanisms in place to identiy these fuds and 

determe whether present or projected policies and procedurs adhere to FSA guidelines. 

The FSA also was interested in identig potential problems early in the process and any 

goo practices which could be shar with al States. Ths report presents an overview of 

those issues identified that reuir FSA's attention and a summar of the goo practices found 

durg this inspection. 

BACKGROUND 

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

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

status). 

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

assistace servces sigificantly. It wil also increase the demand for State educational 

servces as these new residents obtain English language and civic skills needed to become 

S. citizens. 

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

assistace, and educational services to eligible legalized aliens, IRCA authorized $1 bilion 

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

identiied as the "Federa offset." With few exceptions, eligible legalized aliens are ineligible 

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

Chidrn (AFC), Food Stamps, and Medicaid. The "Federal offset" is the estimated cost to 

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

who are eligible for them. In FY 1988, the law provided $928.5 millon to be allocated to 

States. 

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

Assistace, which is responsi le for approving applications and admnistering the program. 

The application must be approved in tota for a State to receive any SLIAG funds. The FSA 

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

estimate costs and veriy actual costs. 
., ,.,. ,_ .__. ., , .,,.. , ... . _..... ..... 

u, . 

The basic requiment for States to claim reimbursement is that costs must be alowable, 

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

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

areas specifcaly for eligible legalzed aliens. However, States may create new or additional 

education progrs for eligible legalzed aliens. States may also claim reimbursement for 

progr admnistrative and SLIAG admistrative costs. 

The SLIAG funds may be used to pay any SLIAG-related cost, which is defined in regulation 

at 45 CP 402.2 as the expenditue of funds (whether State, local, or SLIAG) for any purose 

for which SLIAG reimbursement would be alowable. State and local governments are not 

requied to spend their own funds before drawing down SLIAG funds. The maximum SLIAG 

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

alen. Determing progr admnistrtive costs should be made in accordance with the final 

regulation at 45 CPR 402.22. 

The FSA is responsible for admstering the program. Because SLIAG was a new program, 

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

norm diculties encountered in creatig new processes and procedures, FSA recognized 

that SLIAG would have unique problems. Among them are the diversity of program which 

SLIAG encompasses, cultual and language barers associated with the service population 

maitaning confidentiality of informtion, and the extremely short tie frames for the grant 

award process. 

METHODOLOGY 

The FSA selected nine States and the Distrct of Columbia for the inspection because of the 

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

amount of the grt. The nine States are Arzona, Calfornia, Colorado, Florida, llinois, 

Massachusetts, New York, Texas, and Washington. This report provides an overview of the 

States ' implementation of the SLIAG progr as of August 1988. 

Pror to conducting the inspection, the OIG developed strctud discussion guides for each 

major program activity at the State and local levels. In conducting the reviews, interviews 

were held with officials from public assistance, public health assistace, and education. 
.. 

_. _ :;, ,., ,

ORGANIZATIONAL STRUCTURE 

The organization admistering SLIAG is slightly different in each State. The areas of public 

assistace, public health assistance, and education were assigned to appropriate agencies at the 

State level. Public assistance was assigned to the primar public assistance agency within the 

specifc State. Public health assistace was generaly assigned to the Deparent of Health or 

corrsponding agency within each State. The State s Deparment of Education must be 

responsible for SLIAG funds used for educational services. The assignent of functional 

responsibilties to the components accounts for most of the varance in organizational strcture 

among States. 

Each State designated a single point of contact to admnister and coordinate the SLIAG 

progr. The single point of contact was usualy the grtee agency, with some States 

selectig an agency or person to handle the admnistrative duties separately from the normal 

public assistace, public health assistance, and education functions. The majority of States, 

however, had assigned the admnistrative and grantee functions to the entity in charge of 

public assistace. 
FINDINGS AND RECOMMENDATIONS


Both FSA and the States were commtted to identiying problems and developing effective 

solutions for them. 

FINDING: Since 1987, FSA has held natonal conferences and issued informaton to 

States on implementing the SUAG program. 

The FSA held several national conferences beginning in 1987 to share 

information with States on SLIAG legislation, the implications for States, the 

application process, and the documentation of costs. 

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

demographic data from the Immigration and Naturlization Service (IS). 

FINDING: The States developed innovative approaches to effectively and efficiently 

implement the SUAG program. 

We identified may goo practices developed by the States to make the implementation of 

SLIAG more effcient. They are classified into four aras briefly descrbed below. A 

cOIlplete explanation of the specifc goo practices appear in the appendi of this report. 

Guidelines for Administration: States developed new methods and procedures 

to handle the addtional adistrative responsibilties that arose in the SLIAG 

program. Many States formed special commttees and groups to deal with the 

varous aspects of SLIAG program admnistrtion. 

Systems to Identify Eligible Legalized Aliens: Many States have implemented 

innovative methods to effciently identify the eligible legalized aliens who 

qualify for services under the SLIAG program. 

Controls for the Distribution of Funds: Systems have been developed in 

many States to more effectively control funds. 

Innovative Approaches to Education: Education progrs designed for 

eligible legalized aliens are allowed under SLIAG. Several States have 

developed unique progrs and classes to educate legalized aliens. 
. . . . .,. ;, 

Neverteless, we found inefficiencies and vulnerabilties needing attention by FSA and the 

States. 

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

for the States. Also, the FSA's application review process interfered with the States' ability 

to plan for services. 

Delay in FSA issuing the implementing regulation resulted in the States' having 

insufficient time to properly plan for SLIAG. 

Numerous policy misinterpretations and disagreements resulted because the FSA 

did not provide definitive written instrctions to assist the States in 

understandig SLIAG application requirements. 

The tie frmes for States submittng the initial SLIAG applications, FSA 

review and comment, and revision of the applications were too short. 

hnplementing SLIAG-funded programs was delayed because of a significant 

delay in notifying the States of the grant awar. 

No formal appeals process exists if program costs are denied in the first level 

reVIew. 

Accordig to fmal regulations published March 10, 1988, States had to submit the FY 1988 

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

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

Applications were to contain brief descrptions of the States progrs or services, estimates 

of the States' SLIAG-related costs for each program or activity for that parcular fiscal year 

(includig inormation of the number of eligible legalized aliens residing in the State), and a 

brief explanation of the methodology used to estimate these costs. 

RECOMMENDATION: The FSA should make its application and grant award process 

more orderly. Specifcally, FSA should 

provide definitive wrtten instrctions on the SLIAG application requirements 

and establish a dialogue with the States on SLIAG policy, compliance, and 

reporting issues to minimize the confusion that occurred in the initial application 

process; 

ensure that sufficient time is allotted to the application process, including the 

States' initial application, FSA' s review and fonnal comment, the States 
, , . . :

, , . .... 

consideration of FSA comments, negotiation of disputes, and submission of 

revised applications for FSA approval; 

revise the grant award process for approved applications so that the notice of 

grant award reaches the States prior to the beginning of the fiscal year; and 

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

services are denied in the initial application process. 

FINDING: The FSA' s definiton o/public assistance includes some public health activities. 

This created administrative and service delivery problems for States' public health agencies. 

Severa program admnistered by the entity responsible for public health assistance under 

SLIAG are considered public assistance progrs for SLIAG reimbursement puroses. The 

distiction is important because the identication of a service as public assistance requires the 

documentation of costs incurd for individual eligible legalized aliens served. If a program 

or servce is considered public health, the population ratio method for establishing costs can 

be used. Applying this method, costs ar determed by the percentage of eligible legalzed 

alens in a service population to al members of the relevant service population. Ths 

percentage is applied to total progr costs to determe how much can be reimbursed with 

SLIAG funds. 

Whle there is no quarel with the logic of FSA's definition of public assistance versus public 

health, the distiction creates serious adnistrtive and service delivery problems for public 

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

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

document costs. Public health offcials ar concerned that asking patients about their legal 

status wil seriously afect the wilingness of patients who are ilegal residents to access public 

health servces. These people often enter the countr with highly contagious diseases such as 

Hepatitis B and need treatment immediately. The effect of this policy on the public health in 

general is not known at this time. 

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

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

FINDING: Conflicting interpretations of the term "public charge" has caused 

uncertainties for the aliens as to what servces they are entitled to receive without fear of 

deportation. 

Another situation causing concern for the States, regards the definition of the "public charge. 

Par of the eligible legalized alien population is afd to apply for public assistance for fear of 

being considered a "public charge." This, they believe, could jeopardize their chances for 

permanent resident alien or citizenship status. In addition, some qualified designated entities 

are tellng aliens not to apply for SLIAG-related programs for the same reason. This situation 
. . ..., ,,,, , ,,: . 

. J' .' 

has caused uncertainties in the alen population regarding benefits they may be entitled to and 

whether acceptig these benefits would subject them to possible deportation if they 

identied as a "public charge. 

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

public charge" and widely disseminate this information to the aliens who have raised 

concerns about their resident status. 

FINDING: The FSA' s policy of denying payments for services rendered by 

community-based organizatins and qualifed designated enties prior to the application 

approval date caused difficulties. 

Some community-based organizations and qualed designated entities have provided health 

and educational servces to eligible legalized aliens with the understanding they would be 

reimbursed for these services by the State. The FSA, however, has established a policy that 

services rendered prior to the approved application date could not be reimbursed. This has 

placed a financial burden on these providers, who have rendered the service believing they 

would be reimbured, but may not get paid for it. 

RECOMMENDATION: The FSA should analyze the effect of its policy to deny retroactive 

payment to community-based organizations and qualifed designated entities for services 

rendered in good faith, and determine whether a modifcation to its position would 

warranted. 

FINDING: States were unable to access minimal eligible legalized alien information in 

INS files. 

State records generaly do not provide for identication of eligible legalized alien status. 

Although the INS data files contai this information, it is unavailable to other agencies due to 

unesolved issues coverig confdentialty and trsfer provision issues. Inabilty to obtai 

legalzed alien informtion from the INS fies prevents the States from perfonnng retroactive 

identication of services provided to recipients who mayor may not be eligible legalized 

aliens. Recent informtion obtained though contacts with FSA indicate that FSA is workig 

with INS to establish a way to match fies so statistical data can be obtaied, but not specific 

eligible legalized alien data. 

RECOMMENDATION: The FSA should arrange for INS to conduct matches of State and 

INS records to permit the State to make retroactive determinations of SLIAG eligibility for 

program services that meet SLIAG funding requirements. 

FINDING: Some States' systems and procedures to identify eligible legalized aliens were 

nonexistent or only in developmental stages of implementation at the time of this review. 
.. , ::,

The following items descrbe the major systems and procedures that were absent or not in full 

operation at the tie of the review. These problems were not found in every State. 

Guidelies for detennning allowable costs for public health and education were 

lackig. 

Systems to identiy individual eligible legalized aliens and validate costs of 

services rendered were lacking, parcularly for public health assistace. 

Methods for determing and documentig admnistrative costs had not been 

developed at the time of the review. 

Planed modcations of accountig systems to control SLIAG expenditus and 

disbursements had not been implemented. 

Necessar operatig agrements between the State, counties, and major 

providers contaning the details for implementing SLIAG had not yet been 

formalzed. 

Formal procedures for periodc reviews of cash balances had not been developed. 

RECOMMENDATION: The FSA shouldfoHow-up with the States to ensure proper 

procedures and systems have been implemented to account for SLIAG expenditures. 

FINDING: The SUAG funds allotted to the States greatly exceed actual expenditures to 

date. 

The hngrtion Reform and Control Act of 1986 provided up to $1 bilion dollars per year 

for Fiscal Year 1988 though 1991 , less an offset for certn Federa costs for eligible 

legaled aliens. The States have until the close of Fiscal Year 1994 to obligate SLIAG funds 

alotted to them durng the grt period. 

As of June 30, 1989, only about 20 percent of the $2 bilion appropriated for Fiscal Years 

1988 and 1989 has been drwn down by the States or set aside for reimburement of Federal 

expenditures. The States indicate the low costs claied to date are due, at least in par, to 

delays in implementig the SLIAG progr. Though our findings support this position, the 

SLIAG costs are also afected at least as much by the size of the eligible legalized alien 

population and the number of them receiving benefits. 

Fewer ilegal aliens applied for legalized alien status than had been anticipated in the passage 

of the hngration Reform and Control Act. Though May 12, 1989, only 1.7 milion aliens 
had applied for amesty under the eligible legalzed aliens provision of the Act. This is below 

the estiated 2 to 4 millon that were originaly expected to be eligible for SLIAG related 

services. 

Of much greater signifcance, however, is the fact that information to date indicates that 

claims for services ar far below original estimates. 

In order to get a better handle on this situation, we obtaied information from the Office of the 

Assistat Secretar for Management and Budget about the rate of expenditue of SLIAG 

funds in FY s 1988 and 1989. We found that: 

Of the $928.5 milion allocated to the States for FY 1988 and the $645 milion 

origially allocated for FY 1989, the States have requested reimbursement for 

only $216.7 millon though June 30, 1989. Of this, $210 is from FY 1988 

appropriations, and $6.7 from FY 1989. 

Of the $1 bilion approprated for FY 1989, $355 millon had origially been 

reservedfor Federa expenses. However, claims for the Federa porton of the 

progr were far lower than origially expected and, durng the mid-session 

budget review, the Deparent reduced its estimate to only $100 milion. This 

furer demonstrates the degre to which the demand for SLIAG services is 

faling behind appropriated resources. Moreover, it provides a windfall to the 

States by mang available an additional $255 millon in FY 1989 that had not 

previously been allocated to them. This windfall should furter reduce the need 

for SLIAG funds in FYs 1990 and 1991. 

The graph on page 11 shows the relationship of appropriations to curent expenditues under the SLIAG program. 


We recognze that this early infonnation, parcularly since FY 1988 was the fIrst year of 

SLIAG implementation, provides a limited basis for estiating the needs of the States in 

futue fiscal years. At the same time, we believe that it would be unwise to postpone for 

several years any adjustments necessar to bring appropriations for ths progr more in line 

with actual progr needs. Over-obligating of funds makes the program extrmely vulnerable 

to waste. It can lead to situations which promote approval of frivolous or unnecessar 

expenditus or in claiming reimburement for items, such as computers and admnistrative 

expenses, which ar shared by severa other progrs and the value of which is marginal, at 

best to SLIAG. The only ways to avoid such waste ar to intensify program audits or to bring 

the obligational authority more in line with expected expenditures. There are no sufficient 

audit resources to rely exclusively on that approach. 
In enactig the SLIAG program the Congrss took the unusual step of appropriating funds in 

advance for 4 year$l billon for each of FY s 1988 though 1991. Since unobligated funds 

from one year can be caned over to the next, the proper amount of obligational authority can 

be achieved simply by askig the Congress to withdrw a reasonable amount from futur 

appropriations. 

In view of the extremely low rate of clais for reimbursement received thus far coupled with 

the lower than expected legalzed alien population, it would not be unrasonable to reduce the 

SLIAG appropriations substatially. 

We also queried the States we had previously reviewed to obta their assessments of the 

demand for SLIAG services as of July 1989. With few exceptions, they reported that demand 

is less than origialy expected, parcularly for public assistance. Aside from the 

implementation delays previously reported, the States attrbute this reduced demand to their 

inabilty to identi legalzed alens for whom servces rendered are reimbursable under 

SLIAG and to alens' reluctace to apply for public assistance. 

RECOMMENDATION: The FSA should request the Congress to suspend the FY 1991 

billion until an accurate assessment can be mad 0/ State financial 

needs under SLIG. Alternatively, the appropriatons/or FYs 1990 and 1991 should each 

approprition 0/ $1 

be reduced by $500 miUion. 
. .

SLIAG Appropriations Far Exceed Expenditures 

$ Billons


1.2 Appropriations 

1.1 

State Claims
Federal Outlays


unobligated funds 

carried over


1988 1989 1990 1991 1992' 1993 1994 

Fiscal Year 
. ,.

_. ._,_. . . . ... . , , . _. . 

-.w 'u_ 

FSA COMMENTS AND OIG RESPONSE 

The FSA commented on the drt report. They generaly agrd with our findigs and 

recommendations and have taken a number of steps to improve implementation of the SLIAG 

progr, includig clarfyng progr policies and procedurs. We have modfied cert 

aspects of the report based on FSA' s comments. Following is a summ of specifc issues 

raised by FSA and our response to them. 

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

assistace and public health assistance services. Early estiates indicated that large numbers 

of alens would qualfy to access the SLIAG program. The report recognzed that information 

obtaned durg the review detennned that substatial incrases in workloads and 

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

recent discussions with States ' offcials that demand for servces nationaly is faling behind 

earlier projections. 

We reportd that no formal appeals proess exists if program costs ar denied in the first level 

review. We agree with FSA' s statement that the Grant Appeals Board does h ve jursdiction 

over matters for withholdig and repayment of SLIAG funds. However, it was the States 

concern that an effective appeals mechanism be in place for issues involving programs or 

costs at the first level of FSA' s review in the application process. 

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

adstrative and service delivery problems for public health agencies. The 010 

recommended that FSA reconsider this position. 

The FSA replied that they see this priary as an issue of cost identication and that they wil 

work with the States to develop methods of documentig costs which ar consistent with 

FSA' s responsibilties as stewar of public funds. We believe that FSA's actions to identify 

alternative methods is responsive to our concerns. 

We continue to believe that a strct interpretation which permts public health costs to be 

claied only for specific eligible legalzed alens is burdensome to the States and, in many 

cases, would require considerable revisions to the States' system or statutory requirments. 

However, we do agre that FSA's use of alternative systems, such as the Cost Documentation 

System and a revised population ratio method system which reflects usage, would enhance 

cost effectiveness without requirng States to develop new systems or make considerable 

revisions to present systems. The population ratio method could be revised to consider not 

only eligible legalzed alens in the service population but usage of those services . by the 

eligible legalized alien population based on information already obtaned from program 

experience. Where appropriate, other alternatives might be used which would produce a more 
efficient system for the States and addrss congressional intent that the States would not be 

required to establish new or elaborate systems. 

Although the responsibilty for the determnation of whether individuals wil become public 

charges rests with the INS, we recognize the effort FSA has made to communicate to the 

States al information provided by INS on this subject. 

At the tie of our review, the States were clearly under the impression that FSA would 

disapprove claims for services rendered by community-based organizations and qualified 

designated entities prior to the approval of the State s application. In their response, FSA has 

stated they have no policy on retroactive denials of payments for such services by these 

contrctors. Since our review, FSA has clared this issue and advised States which enter into 

contrcts that all costs incurd before the date of execution of the contrct must be fully 

documented. 

The FSA commented that several of the good practices descrbed under "Guidelines for 

Admistration" and "Systems to Identi Eligible Legalized Aliens" appear to be inconsistent 

with statutory and regulatory requirements. Under closer review, we found no inconsistencies. 

However, we did modfy our descrption of these goo practices to resolve FSA's concerns. 

The FSA made numerous comments to clarfy certain matters of fact, policy, or procedur. 

We have included these comments verbati in Appendi B. 
,,:._ ,,, 

CONGRESSIONAL ACTION


We reommended that FSA request Congrss to either suspend the FY 1991 SLIAG 

appropriations of $1 billion or reduce each of the FY s 1990 and 1991 appropriations by $500 

millon. Since issuance of the draft report, legislation was enacted (PL 101- 166) that reduced 

the FY 1990 SLIAG funding level by $555,299,00. 
APPENDIX A 

GOOD PRACTICES 

Each State included in this review had developed and implemented procedures and/or program to enhance the effcient operation and adnistration of the SLIAG progr. These 

goo practices are organized into four categories and are descrbed below. 

GUIELINES FOR ADMITRATION: States developed new methods and procedures 

to handle the addtional admnistrtive responsibilties that arose in the SLIAG progr. 

These procedurs include 

formg internal advocacy and work grups to faciltate and refine SLIAG 

implementation; 

designating a single point of contact that is separate from the public assistance, 

public health assistance, and education functions to alow grater visibilty; 

establishing a workig advisory group to resolve policy issues and assure State 

deparents are in compliance with SLIAG policies; 

sureyig the State s public assistace, public health assistace, and educational 

servces to assess the organizational needs in implementing SLIAG; 

utilizing a centralized intake proess for all noncitizen applicants for assistance 

to assur adequate and accurate delivery of generally available servces; and 

establishing effective accounting and reportng systems. 

SYSTEMS TO IDENTIF ELIGffLE LEGALIZED ALIENS: A challenge facing the 

States in implementig SLIAG has been the identication of eligible legalized aliens. The 

States have established varous crative methods for fmding and communicating with this population. These methods include 

using the assigned alien identification number frm the 1-688 Card (Temporar 

Resident Card) to verify eligible legalized alien status, and assure that only the 

intended population is using SLIAG-funded education programs; 
contracting with an independent consultig fInn to develop a system to identify 

eligible legalized aliens and document costs; 

maintaining computerized eligibilty data to faciltate the verification process for 

SLIAG-funded services; 

using radio broadcasts in foreign languages to inform the public, including 

eligible legalzed aliens, of available services; 

developing a map showing the concentration of eligible legalized aliens by ZIP 

code to identiy servce delivery centers most affected by SLIAG; 

instrcting local offces to maintain a listofindividuals detennned eligible for 

SLIAG-funded services; 

requirg organizations offering educational servces to eligible legalized aliens 

to develop significant outrach and public relations activities; 

developing tl special cod that identifies an individual as an eligible legalized 

alien; 

using a separate form in the norm enrollment process to identify school aged 

eligible legalized aliens; and 

conducting workshops to acquaint school offcials who are working under 

SLIAG with the varous INS cards. 

CONTROLS FOR THE DISTRffUTION OF FUNDS: Systems have been developed in 

many States to more effectively control funds. These systems include 

establishing a reimbursement cap for each hour of attendace by eligible 

legalized aliens in educational facilties and using this to account for, limit, and 

avoid duplicate bilings for educational services;


displaying the costs allowable for SLIAG fundig on the stadad application for 

educational providers; 

modifying existing automated accounting systems to accommodate SLIAG and 

prevent reimburement for unallowable expenditurs; 
establishing formal contracts, grts, or operating agreements between service 

providers and the State agency; 

using an automated account to determne if SLIAG funds are being disbursed as 

planned or if excesses may accumulate; and 

ensurng providers contracted to perform educational services claim only diect 

adistrative personnel costs to the maimum of eight percent of the 

contractor s total funding. 

INNOVATIV APPROACHES TO EDUCATION: Of the thee areas covered by SLIAG 

(public assistance, public health assistance, and education), education is the only one where 

new program designed specifically for eligible legalized alens under SLIAG can be 

established. Goo practices designed to fulfill the educational needs of eligible legalized 

alens include


designg new education programs to assist eligible legalized aliens in becoming 

lawful permanent residents; 

sendig eligible legalzed aliens though a pre-appraisal proess to assess their 

educational needs and refer them to the appropriate progrs and program 

levels; and 

contractig with a varety of educational service providers to conduct 

SLIAG-related educational programs. 

A- 3

_ , . .. . .

APPENDIX B


FSA' S COMMENTS 
.

.. .... .!p. 

I'EPARTMENTOF HEALTH Ia HUMAN SERVIr.F	 Family Supp rt Administration 

Memorandum 

September& 26. 1989 ...a.... 

From: Acting Assistant Secretary 

for Family Support 

St'bjl!r;f:	 OIG Draft. Report: Implementation of the State Legalization 

Impact Assistance Grants Under the Immigration Reform and 

Control Act of 1986 - Overview (OAI-07-88-00440) 

To: 

Richard P. Kusserow


Inspector General


Attached are the Family Support Administration comments on


the above report. Many of our coments are technical 

nature due to' the complexity of the legislation and the 

fact that the SLIAG program was very new at the time of the 

We appreciate the assistance and cooperation we have


received from you in response to our request to conduct this


round of reviews of the SLIAG program. The reports we


received are very useful to us in understanding how States


are implementing the progr


Catherine Bertini


Attachment 
. . . .

OIG DRA REPORT: 

Implementation of the state Lealization Impact Assistance Grants


Unde the Immigration Refora and Control Act of 1986 ­
 overview


The Family Suppo t Administration' s comments are divided into
 three sections: Comments on background information and other


narrative material that does not relate directly to the draft
 report' s findings, comments on the findings, and responses to the 

draft report t s recommendations. 

Narrative: 

Page i (Executive sumary) -- The draft report says that SLIAG 

funds may be used for "educational services designed to assist 

eligible legalized aliens to attain a satisfactory level of perfo ance in school and to achieve English language proficiency 

and citizenship skills necessary to become permanent residents. 

The final report should make clear that, by regulation, SLIAG 

funds may be used to provide adults any educational service 

authorized by the Adult Education Act. 

Page 1 (Background) -- The draft report says, "This new 

population will increase the demand for state public assistance 

and public health assistance services significantly. The draft 

report isn 't cl ar whose conclusion this is or upon what data and. 

analysis the conclusion is based. The final report should 

clarify these points. 

In the course of implementing SLIAG, we have discovered that 

neither state and local public health programs nor, with few 

exceptions, public assistance programs, inquire about legal status. This suggests that at least some aliens were using 

these services before legalization and that newly legalized

aliens do not .represent a "new population" for public assistance 

and public health assistance services. Preliminary cost data 

from states suggests that newly legalized aliens are accessing 

public assistance services at rates far lower than the general population. There are indications that a backlog of public . health needs existed and was identified during the medical 

examinations required of all applicants for legalization. 

However, there is no data to suggest that', other than this 

temporary bulge in demand for public health services, newly 

legalized aliens will generate a significant increase in demand 

for public health assistance or public assistance services. 

Page 2 (Background) -- The draft report says that reimbursement 

for public assistance and public health assistance "is limited 

only to the amount of state and local funds expended for SLIAGrelated costs. SLIAG funds may be used to pay any SLIAG-related 

cost, which is defined in regulation at 4S CFR 402. 2 as the 

expenditure of funds (whether state, local, or SLIAG) for any 

purpose for which SLIAG reimbursement would be allowable. The 
final report should make clear that state and local governments


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


SLIAG funds. 

Page 3 (Organiza ional structure) -- The draft report says that 

state departments of education are "usually responsible for ducation matters. In fact, IRCA specifies that SLIAG funds to

must be paid to the state be used for educational services 


educational agency, which, in turn, may provide services through
 profit local educational agencies or other public or private non-


organizations. The final report should make clear that state


educational agencies must be responsible for SLIAG funds used


for educational services.


Pages 12-13 (Good Practices) -- Several of the "good practices"


described under "Guidelines for Administration" and "systems to


Identify Eligible Legalized Aliens, " as described, appear to be


inconsistent with statutory and regulatory requirements. One 

such recommended practice is, "surveying the state' s public


assistance, public health assistance, and educational services to


assess the overall needs in providing assistance to eligible
 legalized aliens. " A survey of the needs of eligible legalized 

aliens for public assistance or public health assistance would


not be an allowable use of SLIAG funds because public assistance


and public health assistance activities that reoeive SLIAG funds


must be generally available. No public assistance or public


health activity, including a needs survey, that is targeted


specifically to eligible legalized aliens could be funded through


SLIAG. (The "generally available" requirement does not apply to

educational services. 

The draft report also praises a system which utilizes a


centralized intake process for all noncitizen applicants for


assistance to assure adequate and accurate delivery of services.


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


system to ensure that the "generally available" requirements,


discussed above, for pUblic assistance and public health 

assistance were met, and that only allowable costs were charged


to SLIAG.


The draft report further endorses identification of areas of


concern from the alien population by establishing a bilingual
 toll free hotline. This description raises questions not only

regarding the "generally available" requirement, discussed above, 

but also regarding the extent to which hotline activities would


meet the statutory and regulatory definition for either public


assistance or public health assistance. 

It also is unclear what is meant by, "forming advocacy and work


groups to facilitate implementation of SLIAG and generate new


ideas. 

B-3

. .

Under "systems to Identify Eligible Legalized Aliens" on pages


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


assure that only the intended population is using SLIAG-funded


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


identifying eligible legalized aliens is to ensure that SLIAG


funds are being used in accordance with IRCA and Federal


regulations. Whether an individual is an eligible legalized


alien cannot affect eligibility for public assistance and public


health assistance activities for which SLIAG funds are used


because such activities must be generally available. Whether or


not educational services are limited to eligible legalized 

aliens, it would be necessary to determine the numer of eligible 

legalized aliens receiving services in order to determine the 

allowable a ount of SLIAG payment for such services.


The draft report also endorses the practice of using radio


broadcasts in foreign languages to inform eligible legalized
 aliens of available services. The final report should make clear 

which services are included. The cost of such messages directed


specifically to eligible legalized aliens could. be funded by 

SLIAG only to the extent that they related to availability of


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


the state educational agency' s a inistrati ve cost cap or the 

maximum payment provisions that apply to educational providers.


Similarly, the draft report includes under good practices a


requirement that organizations offering services to eligible


legalized aliens develop "significant outreach and public


relations activities. The cost of outreach designed .to inform


eligible legalized aliens of the availability of educational


services is allowable, but the cost of outreach directed


specifically to eligible legalized aliens regarding public


assistance and public health assistance activities would not be


allowable as a SLIAG-related cost because of the "generally 

available" requirement that IRCA applies to public assistance and


public health assistance activities. It is unclear what is meant 

by "public rel tions, " so we cannot determine whether such 

activities could be funded through SLIAG for any activity.


Finally, the draft report endorses an instruction to "social 

service districts to maintain a list of individuals eligible for 

SLIAG-funded services. The final report should make clear what 

this statement means, especially in light of the fact that 

social services" are not included in the range of activities for 

which SLIAG funds may be used. 

The final report should either present the practices described in


such a way to make clear that costs associated with the


activities in question are allowable or omit them from the list


of good practices. If the OIG is unable to determine


definitively that the activities meet SLIAG statutory and


B.4 
. 

regulatory criteria, we would request that the OIG forward to us

immediatel specific information about any such practices. 

FINDINGS AND RECOMMENDATIONS


FINDING: Since 1987, FSA has held national conferences and 

issued information to States on implementing the SLIAG program.


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


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 quidance 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 onsite technical


assistance. We have conducted initial program reviews of the


maj or states and are in the process of planning further


monitoring visits. We request that the final report reflect this


continuing dialogue with States. 

FINDING: The FSA application review process created a numer of 

significant problems for the Stat s. Also, the FSA I 

application review process interfered with the States' ability to 

plan for services. t. ­

COMM: The draft report says that the time period for 

submission, review, revision and approval of the initial


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


preferable to have had a longer period of time between the
 publication of the final. requlation and the deadline for 

submission and approval of FY 1988 and FY 1989 applications. 

However, the final report should note that, because of the way 

IRCA set up the allocation formula, one maj or reason for the 

compressed time frame was that we could not award funds to anyState until all States' applications .had been approved. In order 

for us to run fhe allocation formula, which IRCA requires to


include estimates of costs, we must have approved estimates for


. all States before we can calculate states' allocations.


The report says no formal appeals process exists if programs or
 costs are denied. The SLIAG regulation provides that the Grant 

Appeals Board has jurisdiction over issues related to the 

wi thholding and repayment of funds. For other matters, States 

may follow normal procedures for disagreeing with an -agency 

finding. 

RECOMMDATION: The FSA grant process should be made more

orderly. 

RESPONSE: The report should make clear that this recommendation


applies to the SLIAG grant process, not the overall FSA grant

process. We have already made a number of significant changes in


the application and grant award process. As the draft report


indicates, the timeframes for the FY 1988 and FY 1989


application processes were necessarily short. In effect, the


states and FSA had to complete two application processes in less


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


and FY 1991 application processes.


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, 1989. 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.


All comments on states' submissions now are written. We issued


extensive written guidance on the FY 1990 application process and 

the standards we will apply in reviewing applications. 

The draft report on page 5 recommends that we " revise the grant 

award process for approved application so that notice of grant 

award reaches the states prior to the beginning of the fiscal 

year. Under the regulation, that is not possible. For FY 1990, 

the deadline for submitting applications is October 1, 1989, and 

applications must be approvable by December 15, 1989. While 

cannot run the allQcation formula or award grants until all 

States' applications are approved, we expect to run the formula 

in January 1990. However, states have told us that, because they 

have FY 1988 and FY 1989 funding that they can carry over into them. For FY 1991, FY 1990, the delay will not be a problem for 

the deadline for filing applications is July 15, 1990, and

applications must be approvable by October 1, 1990. We expect 

to run the allocation formula and prepare grant awards early in

FY 1991. 

The draft report also recommends that we develop an appeals


process to use if programs or costs associated with providing


services are d nied in the initial application process. The 

Department' s Grant Appeals Boa d already has jurisdiction over funds. . Normal cases involving the repayment or withholding of 


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


with decisions made during the course of application review.


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


public health activities. This created administrative and


service delivery problems for states' public health agencies.


COMM: We question how the definitions of public health and 

public assistance create service delivery problems for state
 public health agencies. By statute and regulation, all programs 

or activities under both categories must be generally available. 

In practice, this means that SLIAG funds are available only to reimburse costs in ongoing, generally available programs. 
most programs, immigration status is not a condition of
 eli9ibilit (The draft report notes that undocumented aliens

access public health assistance services. If the alien is 

eligible for services, he or she would receive those services


regardless of wh ther they were reimbursed under SLIAG. The


final report should clarify this point.


Pag 6 of the draft report notes that "there is no quarrel with 

the logic of FSA' s definition of. public assistance versus public

health, " but does not explain that logic or why the OIG

recommends that FSA reverse - its logic. The final report should 

lain that the regulatory definitions of public assistance and 

public health assistance are based directly on section 204 of 

the Immigration Reform and Control Act of 1986 (IRCA), which 

crea ted SLIAG. . 

Programs of public assistance are defined as programs that


provide for cash, medical or other assistance.. . desianed to


meet the bas c subsistence or health needs of individuals


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


explicit inclusion of medical assistance under the public


assistance category, state or locally funded programs that


provide medical treatment to needy individuals are considered by


FSA to be p lic assistance.


IRCA defines programs of public health assistance as programs

which "provide public health services, including immunizations 

for immunizable diseases, testing and treatment for tuberculosis 

and sexually-transmitted diseases, and family planning services" 

(section 204 (j) (3) (A) ) These statutory definitions and the 

legislative histo indicate that Congress intended to allow 

certain traditional public health functions under the public 

heal th assistance category and medical assistance to the needy under the public assistance category. In implementing SLIAG, we 

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 

heal th 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 

IRCA. 

Regarding the draft report' s concern, on page 6, that aliens 

often enter the country with highly contagious diseases.. . and 

need treatment immediately, " the final report should note that


the treatment of dangerous contagious diseases, including


tuberculosis and sexually transmitted diseases, is included in


the statutory and regulatory definition of public health
 assistance. 

The public assistance/public health assistance categorization


issue is primarily one of cost documentation requirements, not

the allowability of costs associated with any particular health


e permit states to use the population ratio method to


establish costs for all programs that are allowable as publi 

heal th assistance, as defined in the statute and regulation 

governing SLIAG. . This method may be used to establish actual 

costs and involves merely performing a mathematical calculation 

with easily available aggregate population and program cost data. 

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, i. e., what the .statute 

program. 

defines as a public assistance program. To the contrary, the 

information that we have to date indicates that allowing use of 

atio method for these programs generally would

overstate costs; dramatically in some cases. However, we would 

be willing to allow use of the population ratio method for any 

the population 


program for which there is an
 emDirica1 basis to indicate that


doing so would not overstate costs. 

FSA realizes that many public assistance and public health 

programs do not routinely collect information on immigration 

status but has found many do collect social security numbers. 

That is why we funded and devoted substantial resources to 

developing a system that will match the social security numers 

of program participants with those of newly legalized aliens. 

This system gives states information on the numer of newly 

legalized aliens participating in a program and the cost of services to them. It is now available and allows States to 

establish costs for FY 1988 as well as current and future years. 

In May, we sent state SLIAG Single Points of Contact suggestions 

for other possible methods for establishing costs. None of these 

alternative methods requires setting up new administrative 

mechanisms or checking status of all program participants. 

We will continue to work closely with states to develop


methodologies fo document costs for all programs in its approved


applications. 

RECOMMDATION: The FSA should reconsider its position to 

classify certain public health - services as public assistance and


make appropriate adjustments to this position.


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


definitions of public assistance and public health assistance is


one of cost documentation. states would like to use the


population ratio method for all programs run by their health


departments. The final report should clarify whether the OIG is


recommending that we allow use of the population ratio in


programs where, as discussed above, its use would likely


overstate actual costs. 

We believe that using the population method for all programs run


by state h al th departments would be inconsistent with our 

responsibility to exercise fiscal responsibility in administering 

SLIAG funds. However, we recognize that some states may 

encounter difficplties in establishing actual costs, especially 

where ELAs are a small percentage of a State' s population or for


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


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


establish actual costs for each program in their approved


applications, consistent with our responsibilities as stewards of


public funds.


FINDING: Conflicting interpretation of the term "public charge"

has caused uncertainties for the al iens as to what services they

are entitled to , receive without fear of deportation. 

RECOMMATION: The FSA and the INS should further clarify what 

is meant by "public charge" and widely disseminate this


information to the aliens who have raised concerns about their


resident status. 


RESPONSE: Under IRCA and the Immigration and Nationality Act,


the INS alone is responsible for determining whether individuals


are likely to become public charges. FSA cannot establish policy


on this issue. Nor can FSA disseminate information directly to
 the alien population. INS is precluded by IRCA from providing 

names and addresses of eligible legalized aliens to outside


agencies. 

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


INS policy on the public charge issue. We note that the INS


Phase II regulation clarifies this issue. Additionally, INS 

representatives have made presentations at virtually all of our


workshops and conferences. At these meetings, States have been


able to ask questions and receive direct information from the


INS. We have communicated to States all information provided to


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


our policy of disseminating any relevant information that we
 receive. 

The Department also has indicated its support for a legislative


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


rants to inform temporary residents of the requirements for


adjustment to lawtul permanent resident status and of the rights


and responsibilities of lawful temporary residents. Such use is


not permitted under current l&w. 

FINDING: The FSA I s policy of denying payments for services 

rendered by community-based organizations and qualified 

designated entities prior to the application approval date caused 

difficulties. 
COMMNT: ,we have no such policy. Under the ,SLIAG regulation, 

any allowable public assistance or educational services cost 

incurred by a state since October 1, 1987 may be reimbursed with 

SLIAG funds. Any allowable public health assistance or SLIAG 

ost incurred after November 6, 1986 may be


reimbursed with SLIAG funds.
 administrative 

We have encouraged states that enter into contracts with an


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


costs covered under such contracts are properly documented.


RECOMMATION: The FSA should analyze the effect of its policy 

to deny retroactive payment to 'community-based organizations and 

qualified designated entities for services rendered in good

faith, and dete ine whether a modification to its position would


be warranted.


RESPONSE: As noted above, we have no such policy. 

FINDING: States were unable to access minimal eligible 

legalized alien information in INS files. 

RECOMMATION: The FSA should arrange for INS to conduct 

matches of State and INS records to permit the States to make 

retroactive determinations of eligibility for SLIAG service 

REPONSE: In March 1988, FSA conceived the idea of setting up a 

computerized matching system that would allow States to use 

social security numers of program participants instead of 

checking immigration status to document program participation by 

eligible legalized aliens. We received outstanding cooperation 

from the Social Security Ad inistration, the INS, and the General Services Administration. Barely 14 months after the idea was 

conceived, the system was set up, problems and concerns about 

confidentiality and system reliability were addressed and solved, 

and States were getting cost data from the system. 

This recommendation is superfluous and should be omitted because


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


report was issued.


The final report should refrain from using the phrase, 

eligibility for SLIAG services. This phrase, used on page 

implies that there are activities funded totally by SLIAG or that 

services directed specifically to this population may be funded 

by SLIAG. That is true only for educational services. Public 

assistance and pUblic health assistance programs may receive 

SLIAG funds only if they are generally available, i. e., that 

status as a legalized alien is not a factor in determining 

program eligibility. Thus, there are no "SLIAG services" in the 

public assistance or public health assistance categories. 
. ..

FINDING: Some States' systems and procedures to identify
 eligible l galized aliens were nonexistent or only in


developmental stages at the time of this review.


RECOMMATION: The FSA should follow up with the states to


ensure proper prbcedures and systems have been implemented to


account for SLIAG services.


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


services. (For reasons discussed above, this phrase is


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


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


SLIAG funds properly. The FSA reviews State end-of-year reports 

to ensure that costs charged to SLIAG have been calculated properly. Additionally, we are monitoring states' use of SLIAG 

funds on an ongoing basis. In October 1988, we issued a


compendium of previous qui dance on acceptable methods to


calculate SLIAG-related costs and cautions 
I to States in

determining those costs. 

FINDING: SLIAG funds allotted to the States greatly exceed 

actual expenditures to date.


COMM: We agree with the OIG'S conclusion, that SLIAG funding 

and FY 1991 should be reduced. But we believe that 

the draft report' s discussion of this topic is premised on some 

basic misunderstandings of the SLIAG program. 

for FY 1990 

First, the draft report on page 8, says, " only 1. 7 ' million 

aliens had applied for amnesty under the eligible legalized


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


million that were originally expected to be eligible for SLIAG-


related services. The 1. 7 million refers only to applicants 

under section 245A of the Immigration and Nationality Act. The 

draft report omits Special Agricultural Workers that bring the total numer of applicants who, if granted status, would be 

eligible legalized aliens to 3. 1 million. The draft report also 

fails to note that Replenishment Agricultural Workers will be 

eligible legalized aliens. We do not at this time know whether


. or how many aliens will be granted legal status under the 

Replenishment Agricultural Worker program, but the Secretaries of 

Agriculture and Labor notified the INS that it should prepare to 

implement the program, and the numers could be substantial. 

Throughout the draft report, the OIG appears to approach SLIAG as 

a program that provides services to eligible legalized aliens. 

This is true only for the education component. IRCA limits use 

of SLIAG funds for public assistance and public health assistance 

programs to those that are "generally available, " i. e., those 

ongoing in which an individual' s status as a newly legalized 

alien does not affect eligibility. This means that, in these two 

program areas, there is no direct relationship between SLIAG 
. ,

. .

funding and service availability. Instead, SLIAG functions to


transfer Federal revenue to state and local governments to


reimburse costs that they incur in ongoing programs to provide


public assistance and pubiic health assistance services to this


population. 

As the OIG points out, states are having some difficulty


documenting costs, but we expect that ultimately they will be


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


costs through the Cost Documentation System, discussed below, or


through some of the alternative methods allowed by the
 regulation. Whenever these costs are established, Sta es will be 

able to draw down SLIAG reimbursement. Thus, we have a 

contingent liability.


We agree with the OIG that this contingent liability is likely to 

be substantially less than current state estimates which total approximately $3. 3 billion through FY 1994. (Under IRCA, states 

have through FY 1994 to obligate SLIAG funds. We also agree 

that there still is some uncertainty about the rate at which 

newly legalized aliens are accessing public services. But we 

strongly disagree that the level of drawdown to date is a good 

indicator of FY 1988 and FY 1989 costs. As States establish 

costs-, they can be expected to increase their drawdowns 

substantially. T tie our recommendations for SLIAG funding to 

drawdowns that dramatically understate allowable costs undermines 

the valid policy reasons for re-examining SLIAG funding levels. 

RECOMMDATION: FSA should request the Congress to suspend the 

FY 1991 appropriation of $1 billion until an accurate assessment 

can be made of state financial needs under SLIAG. Alternatively, 

the appropriations for FYs 1990 and 1991 should be reduced by 

$500 million. 

RESPONSE: As noted above, we believe States will incur costs 

that total nearly the amount made available under current law. 

However, there are good policy and budgetary reasons for reducing 

funding levels. We defer to the Secretary' s recommendations for . specific funding levels. 


The draft report suggests that providing States with


substantially more in funding than they have in legitimate costs


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


believe that reducing SLIAG funding for FY 1990 and FY 1991 eliminates that danger. States have substantially more funds 

than they can document in costs now We believe that the time of 

greatest danger for wasteful spending is now, when states do not 

know the full extent of their costs and when they may be seeking 

to generate costs to justify continued funding. This is why we 

already have begun an on-going monitoring program and will 

continue to monitor state programs closely to ensure that use of 

SLIAG funds is necessary, reasonable, and allocable to SLIAG. 
, 

.... . . ,_.

I '


We believe that a strong case can be made for reducing SLIAG 

funding fdr several reasons that do not relate to drawdown, or 

even to what the eventual total of state costs may be. First, 

the legislative histo indicates that Congress created SLIAG to

alleviate some of the fiscal 
 imDact it expected the legalization

program to create for state and local governments. Two of those 

anticipated impacts have occurred. The first is the temporary 

"bulge II in demand for public health services created when medical 

problems were identified in the physical examinations required of legalization applicants. The second impact on state and local 

governments is the need by "pre-82" aliens for educational


services in order to meet the English language and citizenship


requirements for permanent residency. Funding already made


available to states is more than sufficient to meet 
 he costs


generated by both of these factors. 

As noted above, . SLIAG funding has no direct effect on the 

availability of services to eligible legalized aliens. Once 

pre-82" aliens have met their permanent residence status, we 

question the extent to which newly legalized aliens should be

given continued preferential access to educational services.


For these reasons, we believe tha an examination of SLIAG 

funding needs, balanced with other higher priority needs , leads 

naturally to a decision to reduce SLIAG funding substantially for 

FY 1990 and FY 1991.