United States General Accounting Office

GAO Report to the Honorable

Dianne Feinstein

September 1998 INS USER FEE

REVISIONS

INS Complied With

Guidance but Could

Make Improvements

GAO/GGD-98-197

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-280630 

September 28, 1998

The Honorable Dianne Feinstein

United States Senate

Dear Senator Feinstein:

The Immigration and Naturalization Service (INS) is authorized to charge

user fees to recipients of certain INS services (e.g., processing an alien’s

application for naturalization). The fees that INS charges for its services are

to recover the costs it incurs. On the basis of a 1997 study,1 INS proposed

increasing the fees it charges users for many of its services. Subsequently,

INS issued a proposed rule soliciting comment on its fee revisions and, in

August 1998, issued a final rule2

 raising the fees; some of these fees will

more than double. In fiscal year 1997, INS collected and deposited about

$624 million in application fees into the Immigration Examinations Fee

Account (IEFA). (App. I contains INS’ current and new application fee

schedule.)

This report responds to your request that we review INS’ fee increase

proposal. Specifically, we agreed with your office to examine (1) the

extent to which INS’ methodology for computing the proposed application

fees complied with federal user fee requirements and used generally

accepted statistical sampling procedures and (2) whether INS recognized

implemented and proposed changes to the naturalization process in its

application fees.

Results in Brief On the basis of its user fee study, INS revised the fees it charges for 30

types of immigration and naturalization applications. We believe, on the

basis of our discussions with Office of Management and Budget (OMB) staff

and our review of INS’ efforts to identify the costs associated with

processing applications, that INS complied, to the extent it was able, with

OMB user fee guidance. OMB guidance requires agencies to recover,

whenever possible, the full cost of providing their services. However,

according to its 1997 fee study report, INS was unable to determine its full

cost for processing applications because (1) INS’ financial management

information system does not provide actual cost data, including items such

as depreciation and support service costs from other INS functions, and

(2) INS excluded certain cost items, such as unfunded pension liability and

1

Immigration Examinations Fee Account (IEFA) Study, Immigration and Naturalization Service,

July 30, 1997.

2

Federal Register, Volume 63, Number 157, August 14, 1998.

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postretirement life insurance and health benefits costs, because INS said it

lacked guidance on how to treat them. Had INS been able to determine

these costs and include them in its fee computation, the revised fees could

have been set at a higher level.

INS’ initial plan for sampling the processing of applications at regional

service centers and selected district offices and by selected personnel to

determine how long it took to process various applications incorporated

generally accepted statistical sampling procedures. However, some of the

changes INS made for operational reasons to its planned statistical sample

during implementation undermined scientific sampling principles and

adversely affected INS’ ability to project the study’s results to all

application processing sites. We are unable to determine the impact of

these changes on the revised user fees.

INS is reengineering the way it processes naturalization applications.

Changes to the naturalization process are intended to improve the

integrity of the process and make it more efficient and customer oriented.

A few changes have recently been implemented. For example, as of

April 15, 1998, all naturalization applications are to be mailed directly to

INS service centers rather than routed through INS district offices. Since

these changes took place after INS’ fee study, the fee revisions do not

recognize these changes. INS officials said INS is planning to initiate the

next IEFA user fee review early in fiscal year 1999 and, at that time, the

study will recognize any naturalization process or other process changes

that have taken place.

Background The fiscal year 1989 Department of Justice Appropriation Act established

the IEFA,

3

 which was to be used to reimburse any appropriation for

expenses incurred in providing immigration adjudication and

naturalization services. In 1990, Congress added a provision allowing the

fees for providing adjudication and naturalization services to be set at a

level that would ensure recovery of the full costs of providing such

services, including the costs of similar services provided to asylum

applicants but without a charge to such applicants.4

 To recover the costs

of providing services to asylum applicants, INS charges all other

immigration and naturalization applicants a surcharge.

3

Public Law No. 100-459, 102 Stat. 2186, 2203 (1988).

4

Department of Justice Appropriation Act, 1991, Public Law No. 101-515, 104 Stat. 2101, 2121 (1990).

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In subsequent years, according to INS officials, Congress directed that

additional services that traditionally had been paid from appropriated

accounts were to be paid from the IEFA. For example, in fiscal year 1996,

Congress directed that the costs of the Cuban-Haitian Entrant Program

from the Community Relations Service Appropriation be borne by the IEFA.

INS officials said that this transfer required the IEFA to absorb $10 million in

unreimbursed services. Similarly, in fiscal year 1997, Congress required

that approximately $57 million in costs for asylum applications and INS’

automated application processing system, which had been funded by the

Violent Crime Reduction Trust Fund, be paid from the IEFA.

INS collects fees and processes applications at 4 regional service centers

and 33 district offices. At the time of its fee study, INS processed almost all

applications that required an applicant interview (e.g., naturalization) at its

district offices. Generally, applications not requiring an interview are

processed at its service centers. According to INS budget officials, in fiscal

year 1997, INS collected and deposited about $624 million in application

fees into the IEFA. The IEFA comprises approximately 16 percent of INS’

estimated total fiscal year 1998 budget of about $3.8 billion.

OMB Circular A-25 OMB Circular A-25, “User Fees,” establishes federal policy regarding fees

assessed for government services and provides information on the scope

and types of activities that are subject to user fees. Circular A-25 states

that, as a general policy, a user charge will be assessed against each

identifiable recipient for special benefits derived from federal activities

beyond those received by the general public. The circular requires that the

imposed charge should, whenever possible, recover the full cost to the

government for providing the special benefit, or in limited circumstances,

its market price. Full cost is defined in the circular as all direct and

indirect costs to any part of the federal government. Moreover, the circular

states that “ . . . full cost shall be determined or estimated from the best

available records of the agency, and new cost accounting systems need not

be established solely for this purpose.” Agencies imposing user fees are

responsible for reviewing the charges every 2 years in part to ensure that

existing charges are adjusted to reflect unanticipated changes to costs.

Activity-Based Costing The Federal Accounting Standards Advisory Board, which was established

by the Department of the Treasury, OMB, and the Comptroller General,

recommends accounting standards for the federal government, including

standards on how to determine the costs of government services. Once the

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Director of OMB, the Secretary of the Treasury, and the Comptroller

General approve Federal Accounting Standards Advisory Board

recommendations, they are issued by the General Accounting Office and

by OMB as Statements of Federal Financial Accounting Standards (SFFAS).

SFFAS No. 4,5 which was issued in final in July 1995, sets forth managerial

cost accounting concepts and standards to be followed in the federal

government. In addressing the selection of a costing methodology, SFFAS

No. 4 notes that its standard does not require the use of a particular type of

costing system or costing methodology. Instead, SFFAS No. 4 notes that

agency and program managements are in the best position to select the

type of costing system that would meet their needs. However, the standard

requires that whatever system is adopted should be appropriate to the

agency’s operating environment and should be used consistently.

SFFAS No. 4 also notes that several costing methodologies have been

successful in the private sector and in some government entities. Among

those discussed was activity-based costing (ABC)—the costing

methodology selected by INS for its fee study. According to SFFAS No. 4, ABC

focuses on the activities of a production cycle, on the basis of the premises

that an output6

 requires activities to produce, and activities consume

resources. ABC’s major processes are to (1) identify the activities

performed to produce outputs, (2) assign or map resources required to

carry out the activities, (3) identify the outputs for which the activities are

performed, and (4) assign activity costs to the outputs.

INS Study of the IEFA Fee

Schedule

In 1995, INS established a team to develop and conduct a study to

determine what, if any, changes were needed to the IEFA fee schedule. INS

had previously revised its user fees in 1994. Starting in the spring of 1996,

the fee study team was comprised of INS personnel and contracted

technical staff from McNeil Technologies, Inc., and Coopers & Lybrand

L.L.P.7 INS identified which fees should be revised by studying all types of

applications with an annual adjudicated volume of 10,000 or more (26

5

SFFAS No. 4, “Managerial Cost Accounting Concepts and Standards for the Federal Government,” sets

forth managerial cost accounting standards aimed at providing reliable and timely information on the

full cost of federal programs, their activities, and their outputs. Although issued in final in July 1995,

SFFAS No. 4 became effective in fiscal year 1998.

6

Outputs for INS are (1) the notification to the applicants of INS’ decision to approve or disapprove

their immigration and naturalization applications and (2) in the case of the Application for

Naturalization, the naturalization ceremony.

7

In July 1998, Coopers & Lybrand L.L.P. merged with Price Waterhouse to become

PricewaterhouseCoopers L.L.P. We use the company’s former name for the purposes of this report.

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large-volume applications).8 INS chose large-volume applications so it

could perform random sampling to statistically project the study’s results

to the universe of similar applications. INS applied the ABC methodology to

determine its costs to provide immigration adjudication and naturalization

services.

On the basis of the fee study, INS concluded that the 26 large-volume

application fees needed to be increased to reflect the full processing costs.

INS also proposed increases for the types of applications with annual

adjudicated volumes below 10,000 (4 small-volume applications).9

 For

these four application types, INS determined that the processing activities

were similar to certain large-volume applications and, on the basis of these

similarities, established the new fees.10

Using the ABC methodology, INS developed processing models for the

large-volume applications to be studied. On the basis of interviews and

observations at INS service centers and district offices, the study team

identified the activities that made up the application process and

diagrammed the flow of applications from receipt through their

adjudication process. For example, the study identified six common

activities (e.g., receive application/petition, manage records, and respond

to inquiry) and two unique activities (i.e., adjudicate application and issue

end product). Each activity included a number of identified tasks. For

example, the activity referred to as “receive application/petition” would

include various tasks, such as get the mail, open the mail, and affix the

date stamp. Using the flow diagrams and a statistical sampling plan that it

had developed, the study team selected various sites, observed selected

employees, and timed how long it took them to accomplish various tasks

in the application processing cycle.

How the Proposed IEFA

Fees Were Calculated

To arrive at the proposed IEFA fee amounts, INS first calculated the total

time needed to process a single application—its cycle time—by adding the

resultant cycle times for each of the activities that comprised the

processing of that application. INS then multiplied the total cycle time of

the single application by the estimated number of applications that were

8

Application volumes were derived from fiscal year 1995 data on reported completions. According to

INS’ fee study, applications with annual volumes that were larger than 10,000 represented 99.5 percent

of all applications processed. Because some of the applications’ processing activities were similar, INS

aggregated their volumes to achieve volumes of 10,000 or more. For purposes of this report, we refer

to these applications as 26 large-volume applications. See appendix I for a list of these applications.

9

See appendix I for a list of the four small-volume applications.

10INS is completing a study to set the fees for four additional small-volume applications.

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expected to be received. Using this calculation, INS derived the total

estimated cycle time to be spent processing a single application type. By

adding the total cycle times for each of the 26 large-volume application

types, INS determined the total time spent by staff processing all

applications.

Using the above information, INS then calculated the percentage of total

time needed to process each application type to the total processing time

for all application types. INS then applied the resultant percentages for

each application type against the IEFA budget, which had been adjusted to

include certain unfunded items. The application of the percentages to the

budget determined the total cost for processing an application by type. By

dividing the result by the estimated number of applications to be received,

INS determined a unit cost for each application by type. To this amount, INS

added a pro rata cost for processing waivers and asylee applications (i.e.,

applications for which fees are not charged) to develop a fee for each

application type.11

According to Circular A-25, the fees charged are to be reviewed every 2

years and adjusted as costs change or as more precise cost determination

processes become available. In August 1998, on the basis of the 1997 fee

study, INS published its new fees in the Federal Register. Except for the

Application for Naturalization fee, the implementation of which is being

delayed until January 15, 1999, the application fees are scheduled to

become effective on October 13, 1998. The implementation of the

Application for Naturalization fee is being delayed to permit the full

implementation of INS’ plan to address naturalization processing, which the

INS Commissioner pledged to improve before implementing a revised fee.

Objectives, Scope,

and Methodology

To achieve our first objective—examine the extent to which INS’

methodology for computing the proposed fees complied with federal user

fee requirements and used generally accepted statistical sampling

procedures—we examined whether INS (1) followed legislative

requirements and federal guidance in setting application fees and (2) used

generally accepted social science techniques for statistical sampling in its

fee study. We reviewed applicable legislation governing federal user fees

and OMB cost accounting requirements. To help assess INS’ compliance

with Circular A-25, we talked to OMB staff responsible for user fee guidance

who provided their perspective on INS’ adherence to the circular. We

examined the costing methodology that INS used to determine the user fee

11The fees for each application type were rounded to the nearest $5.

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amounts and how that methodology was applied. We also examined INS’

sampling plan and how it was implemented to select application

processing sites and personnel for observation. We compared the

sampling plan to sound social science procedures. Such procedures

included (1) the identification of a known universe of application

processing sites and the use of unbiased sampling procedures to randomly

select sites from this universe, (2) full disclosure of study procedures and

limitations, and (3) procedures to ensure the statistical validity of the data

used and appropriate generalization on the basis of the data gathered and

analyzed.

Moreover, we interviewed key officials from the INS Office of Budget, Fee

Policy and Rate Setting Branch. This branch was responsible for the 1997

IEFA fee study and the proposed revisions to the user fees. In addition, we

interviewed key contractor participants on the fee study team from

Coopers & Lybrand L.L.P. We also interviewed a consultant from Steeples

and Associates who provided statistical analysis. These INS and contractor

officials discussed the procedures and the accounting and statistical

methodology used to conduct the INS 1997 study and the subsequent

statistical analysis of the study’s results. The officials provided us with

information and documentation on (1) how INS determined which

immigration applications to examine for a rate review, (2) the selection

and application of the accounting methodology that was used to determine

the revised fees, (3) the sampling procedures that were used to select the

locations for the study and the personnel to observe processing

applications, and (4) the methodology and procedures used to aggregate

and formulate the final proposed fee schedule.

In addition, we analyzed the IEFA fee study report. This report lays out the

basis for the increases to the revised IEFA fees and describes the

accounting and statistical methodology used by INS to determine the fee

schedule adjustments. We also analyzed the key policy guidance followed

by INS to determine these new fees. The guidance analyzed included

(1) Circular A-25, Revised, which provides information on the types of

activities that are subject to user fees and the basis for setting these fees;

(2) SFFAS No. 4, which sets forth managerial cost accounting concepts and

standards for the federal government; (3) Department of Justice guidance

on user fee programs; and (4) INS guidance on user fee programs.

Regarding our second objective—determine whether INS will reassess

service costs for changes it plans to make to the citizenship process—we

interviewed officials from INS’ Office of Naturalization Operations and

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Coopers & Lybrand L.L.P. The officials provided us with information on

the basis for redesigning the naturalization process, the status of their

reengineering efforts, and the projected benefits to be accrued from this

effort. We then contacted key Fee Policy and Rate Setting Branch

members to determine whether they planned to incorporate the costs of

the newly developed naturalization processing revisions into the

Immigration Examinations Fee Schedule and what the projected impact

revisions would have on these fees. We also obtained and reviewed key

studies dealing with this topic, including A Blueprint for the New

Naturalization Process (Summary Report) issued by INS in conjunction

with Coopers & Lybrand L.L.P. on September 30, 1997.

To provide information addressing these issues before the user fee

revisions are implemented, we did not determine the validity of (1) the

data INS collected and used to compute the new fees and (2) the databases

INS used for budget and application processing projections.

We did our work from June 1998 through August 1998 in Washington, D.C.,

in accordance with generally accepted government auditing standards. We

requested comments on a draft of this report from the Attorney General or

her designees. Responsible INS officials provided oral comments at a

meeting on September 9, 1998. These comments are discussed near the

end of this report.

To the Extent It Was

Able, INS Followed

Federal User Fee

Guidance

On the basis of its study, INS is revising the fees for 30 types of applications

for immigration and naturalization services. On the basis of our

discussions with OMB staff and our review of INS’ efforts to identify the

costs associated with processing applications, we believe that INS

complied, to the extent it was able, with OMB user fee guidance. In the

determination of appropriate user fees, Circular A-25 requires that the user

fees imposed should recover, whenever possible, the full cost to the

government for providing an identifiable recipient with special benefits

beyond those received by the public.

To identify its full cost of providing naturalization services, INS used the

ABC methodology. SFFAS No. 4 recognizes ABC as one of a number of

appropriate costing methodologies used in cost accounting and cost

studies. However, according to its 1997 fee study report, INS was unable to

determine the full costs it incurs for processing applications because

(1) INS’ financial management information system cannot provide actual

cost data, including such items as depreciation and support service costs

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from other INS functions, and (2) INS excluded certain costs items, such as

unfunded pension liability and postretirement life insurance and health

benefits costs,12 because explicit guidance on how to treat them had not

been promulgated.

According to INS officials, its financial management information system

does not provide actual cost data. According to them, the best data source

INS had available for its analysis was the President’s Fiscal Year 1998

Budget13 for the IEFA. To recognize certain costs that were not covered in

the estimated IEFA portion of the budget, INS adjusted that amount by

adding to it estimates of certain unfunded costs, including unused annual

leave carryover, contingent liabilities, and bad debt expenses. However,

INS was not able to calculate other cost items typically included in

determining full costs. These cost items included unfunded pension

liability and postretirement life insurance and health benefits costs;

depreciation expenses; support service costs from other INS functions

(e.g., supply costs, utilities, insurance, travel, and rents); and some

inter-entity costs, which did not include reimbursable agreements (e.g.,

services provided to INS by other government agencies, i.e., the

Department of State).

INS’ fee study recognizes that these costs were not included and attributes

their omission to such factors as the lack of an adequate financial

management information system, time and cost constraints to develop

certain information,14 or the lack of Office of Personnel Management and

OMB guidance on how certain costs are to be incorporated into the fees.

Had INS been able to calculate these amounts and include them in its fee

calculations, the unfunded pension liability and postretirement life

insurance and health benefits costs, depreciation expenses, support

service costs, and inter-entity costs could have increased the fees. INS

officials indicated that future user fee studies would address these items

but that INS was awaiting guidance from the Office of Personnel

Management.

12These costs, like for other government agencies, are funded, in part, by appropriations to the Office

of Personnel Management.

13It should be noted that the amount used was an estimate of anticipated collections for fiscal year

1998, rather than the most recent data collection data. Budgets that were based on estimated

collections have not always proved reliable in the past.

14INS officials said that although certain items, such as support service costs from other INS functions,

could be determined, because of their small impact on the total fees and the time it would have taken

to determine them, INS did not believe it would be cost efficient to try and develop this information.

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An OMB staff person who was responsible for reviewing INS’ study said that

INS complied, to the extent it was able, with user fee setting guidance.

Furthermore, he said that OMB’s goal is for agencies to achieve complete

compliance with the full cost requirement. He also noted that Circular

A-25 does not require agencies to include in their fee calculations costs

that their financial information management systems do not capture.

Subsequent to INS’ fee study, OMB issued a memorandum15 to federal

agencies’ chief financial officers and inspectors general addressing the

need to determine inter-entity costs for purposes related to SFFAS No. 4 and

provided interim guidance on incorporating inter-entity costs into their

financial statements. According to the memorandum, OMB believes that

significant progress toward the full cost accounting standard can be made

by recognizing several major categories of costs that are paid by one

agency but reported by another agency. Among those costs that OMB is

asking agencies to recognize are costs funded by the Office of Personnel

Management, such as employees’ pension, health and life insurance, and

other benefits for retired employees. For information needed to calculate

these items, OMB directs agencies, where applicable, to consult with the

Office of Personnel Management. Moreover, OMB asks agencies not to

recognize any other inter-entity costs until OMB can provide further

guidance. While OMB staff stated that the purpose of the memorandum was

to provide guidance for developing full cost information for financial

statement reporting purposes, we believe this cost information could be

used by INS in developing full cost data that would be helpful in calculating

appropriate user fees in accordance with Circular A-25.

INS Made

Adjustments to Its

Sampling Plan That

Undermined Scientific

Sampling Principles

To collect data on the amount of time it took INS to process applications

(application cycle time), INS’ study team developed a statistical sampling

plan that was based on scientific probability sampling. The cycle times

provided the means of assigning activity costs to each application using

the ABC methodology. Applications to be timed were to have had a “known

chance”16 of being selected into the sample. First, sites were to be

randomly chosen. Second, employees in each site who processed

applications were to be randomly selected and timed while completing

certain activities. INS intended for the study results to be generalized to all

INS application processing sites nationwide. However, several judgmental

15“Technical Guidance for the Implementation of Managerial Cost Accounting Standards for the

Federal Government,” Office of Management and Budget, April 6, 1998.

16A “known chance” means that each application was eligible to be included in the sample, and,

theoretically, this chance could be computed.

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changes made to (1) INS’ initial sample of randomly selected sites and

(2) the procedures used to select employees to be observed during the

study’s implementation adversely affected INS’ ability to project the study’s

results to all processing sites.

Stratification and Site

Selection

The methodology INS used to select application processing sites included

both random selections and nonrandom judgmental selections. While INS

provided operational reasons for including the judgmental selections, their

inclusion undermined the scientific basis for making statistical inferences

about all INS processing sites. Thus, INS’ projection of its study results to INS

offices as a whole and its claim that these results are representative is not

appropriate.

To select the sample of sites, INS grouped sites into strata that were based

on the annual number of applications the sites processed. INS divided

district offices into small, medium, and large office strata and then

randomly selected seven sites from the three strata. INS selected Miami,

FL, and Los Angeles, CA, to represent large offices; Honolulu, HI, Phoenix,

AZ, and San Antonio, TX, to represent medium offices; and Kansas City,

MO, and Omaha, NE, to represent small offices. INS grouped service

centers into a separate stratum and judgmentally selected the Nebraska

Service Center.

After the initial random selection of district office sites, INS made several

adjustments to the sample. INS judged that offices in the Eastern Region

were underrepresented. To compensate for this situation, INS randomly

selected the Boston District Office from a pool of district offices in the

northeast and added it to the large district office selections. In addition, it

removed the Honolulu District Office from the sample, because of the high

costs of travel to Hawaii, and randomly selected the Philadelphia District

Office from the remaining offices in the medium district office stratum to

replace Honolulu. Moreover, INS added the Baltimore District Office to the

sample because the district office was piloting an automated application

processing system that it plans to roll out over time to other offices. INS

wanted to determine how this system would affect the processing of

applications.

During the study, INS for various reasons made additional sampling

adjustments, some of which affected the randomness of the sample. For

example, (1) sample sizes of timings at specific sites were increased to

better ensure that the total number of timings needed could be obtained;

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(2) a visit to the Toronto, Ontario (Canada) preinspection site (judgmental

selection) was added to observe the processing of an application that was

not processed at any other INS site; and (3) the Buffalo (NY) District Office

was judgmentally added to gather timings of applications for which too

few had been obtained at other sites. Although the above changes may

appear to be reasonable, some adversely affected the projectability of the

study’s results to all sites.

Selection of Employees for

Observation

The methodology to select employees within service centers and district

offices also used both random and nonrandom samplings. The plan to

sample employees for observation and applications for timing was based

on selecting employees randomly by using a random numbers table and

establishing a specific quota of timings needed at each selected office.

However, judgmental changes that INS made during study implementation

about how employees would be selected for observation were not

appropriate for making statistical inferences about the time employees

take to process applications. Therefore, the nationwide projections about

the processing of the types of applications studied could be affected by

these nonrandom selection procedures.

In general, INS decided to observe the minimum number of employees

necessary to obtain the specified quota of timings for each site; therefore,

when the quota was obtained, data collection stopped, regardless of the

number of timings obtained from different employees. Additionally, to

obtain the quotas in the shortest time possible, team members were

instructed to observe, whenever possible, other employees who processed

the same type of applications and who sat in proximity to the selected

employee and to time their activities as well. Therefore, employees who

worked next to each other could have had higher probabilities of having

timings recorded than employees who worked alone.

No Empirical Basis for

Knowing the Validity of the

Study’s Estimates

For several reasons, INS is unable to determine the precision of the study’s

estimated times for processing the various applications. Using a

nonprobability sample has two important implications.

• First, it is not clear to what universe of INS application processing sites INS’

observations can be generalized. For example, Hawaii was excluded from

the initially drawn sample due to travel costs. It is not clear whether INS

would have excluded other offices, such as Anchorage, AK, or San Juan,

PR, due to high travel costs had they been selected. To have precluded this

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problem, INS should have specified before its initial selections which

offices were eligible for data collection and which were not. INS then

should have specified that its projections only referred to eligible offices.

• Second, even if INS had defined a universe of sites, its timings of employee

activities cannot be adjusted to adequately represent all employees who

process applications, because of the judgmental changes made in the way

employees were selected for observation.

Additionally, the data collection database did not provide sufficient

information about the observations or the sample design to enable

calculation of sampling errors or to evaluate the accuracy of the fees. For

example, observations cannot be distinguished by individual employees in

the database, nor can the times for specific work tasks be separated. In

part, according to INS, this was due to the nature of its work and the way

some activities are performed at various offices, such as sorting mail and

batching applications of the same type.

We are not able to evaluate the precision17 of the estimates of the amount

of time needed to complete the application forms, nor the fees upon which

these are based. Had INS repeated the surveys under essentially the same

conditions, we do not know whether the resultant fees would have been

similar or different from the ones derived from this study.

17The study provided estimates of precision for the timings of each of the activities observed, but the

study did not provide precise estimates for individual forms—the levels at which fees are set. Because

the estimation formula used considered only the number of forms for which timings were observed

and not that these estimates came from a much smaller number of employees whose average task

completion times may differ, the precision of the activity estimates is likely to be overstated.

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INS Is to Assess the

Costs for the New

Naturalization Service

Process as Part of

Routine Fee Review

To increase its productivity while ensuring the fairness and integrity of the

naturalization process, INS has begun implementing changes to the

process.18 INS determined the need for a reengineered naturalization

process because of (1) integrity problems relating to the fingerprinting of

alien applicants,19 (2) continued customer service problems, and (3) a

projected increase of new applications in 1998. To address these issues, in

March 1997, Justice awarded a 2-year contract to Coopers & Lybrand

L.L.P. to develop a plan to reengineer the naturalization process and,

according to a Coopers & Lybrand L.L.P. official, to assist with the new

process’ implementation and evaluate the new process once it has been

implemented. On September 30, 1997, INS and Coopers & Lybrand L.L.P.

issued the summary report outlining the concept for a new naturalization

process.

Partly on the basis of the Coopers & Lybrand L.L.P. study, INS is now in the

process of implementing a number of improvements to the immigration

naturalization process. According to INS officials, the majority of the

improvements that are being implemented are to be paid from the IEFA.

The officials said that both the costs and resulting efficiencies derived

from the new processes will be reflected in future revisions to the user

fees generated by the next and succeeding biennial IEFA user fee studies.

Progress and Plans for

Implementing the

Reengineered

Naturalization Process

According to INS, its specific goals for the new naturalization process are

to establish a framework that will allow INS to (1) make the correct

eligibility decisions regarding who is qualified to become a naturalized

citizen, (2) make decisions in reasonable time frames, (3) conduct the

naturalization process consistently, (4) design a cost-effective

naturalization process, and (5) improve customer satisfaction. To achieve

these goals, INS has completed some changes and is in the process of

18Aliens who apply to INS to become naturalized citizens generally have to meet certain requirements,

such as residing in the United States for at least 5 years as legal permanent residents, demonstrating a

knowledge of the English language and American civics, and being of good moral character. To

demonstrate adequate knowledge of English and civics, aliens are tested by INS. To determine

whether aliens applying for citizenship have been convicted of a crime that would preclude them from

being naturalized, INS submits the aliens’ fingerprints to the Federal Bureau of Investigation to

determine if the aliens have criminal history records on file. Depending on the type of offense and

punishment imposed and the timing of their arrest and/or convictions, aliens with criminal history

records may be denied citizenship.

19To ensure that INS received the correct criminal history record for that alien, Congress prohibited

INS from accepting fingerprint cards for benefit applications unless the fingerprints are taken by INS,

designated law enforcement agencies, or military installations. In the past, aliens were permitted to

submit a set of fingerprints on a fingerprint card with their applications without INS’ being able to

verify whose fingerprints were submitted.

Page 14 GAO/GGD-98-197 INS User Fee Revisions
B-280630 

implementing several others to the naturalization process. Some of the

important changes include the following:

• Through many sources, such as INS’ forms centers, community-based

organizations, and the Internet, INS plans to distribute naturalization

packets containing information that explains naturalization eligibility

requirements and how the process works. INS believes this information will

help reduce application processing times and the current backlog of

applications by (1) improving qualified aliens’ compliance with INS

documentation requirements and (2) reducing unqualified aliens’

submissions of naturalization applications.

• As of April 15, 1998, INS completed its implementation of a nationwide

direct-mail system that routes all naturalization applications directly to INS

service centers, rather than through INS’ district offices. INS expects this

system to expedite processing times because (1) the service centers are

centralized and better equipped to handle upfront receipt and processing

of applications than district offices and (2) district offices will be able to

focus their efforts on alien interviews and case completion

responsibilities.

• Because of integrity concerns about fingerprints that aliens submitted to

INS with their applications, Congress mandated that INS be responsible for

taking naturalization applicants’ fingerprints.20 According to INS, it is now

overseeing alien fingerprinting, which is now done by a contractor located

in INS facilities.

Impact of the New

Naturalization Process on

the Immigration

Examinations Fee

Schedule

The new naturalization process is being substantially paid from the IEFA,

which, in turn, is funded through the collection of user fees. According to

INS officials, costs resulting from the reengineered naturalization process

will be reflected in INS’ budget. Moreover, changes in application

processing at the service centers and district offices are to be captured in

the ABC methodology when INS makes its biennial fee evaluation. INS

officials stated that they plan to initiate a new study of its user fees in early

fiscal year 1999.

INS officials told us that because the revised fees were calculated before

any reengineering changes were made, those changes are not reflected in

the fees. Furthermore, INS officials told us that they do not know whether

full implementation of the reengineered naturalization process will

increase or decrease the component fees in the immigration examination

20Designated state and local law enforcement agencies, and the Departments of State and Defense with

respect to applicants residing abroad, may also take fingerprints to be submitted with INS

applications.

Page 15 GAO/GGD-98-197 INS User Fee Revisions
B-280630 

fee schedule. For example, the cost of processing applications could

increase due to the cost of purchasing new computers and

telecommunications equipment, but this cost may be offset by a reduction

in personnel costs or, if application processing times improve, once the

present application backlog is reduced. INS officials believe that some of its

changes will help to reduce the existing application backlog while other

changes will systemically improve the naturalization process in the long

term.

Conclusions On the basis of our discussions with OMB staff and our review of INS’ efforts

to identify the costs associated with processing applications, we believe

that INS complied, to the extent it was able, with available OMB user fee

guidance that requires agencies to recover the full costs of providing

services. However, according to its 1997 fee study, INS was unable to

determine its full costs for processing applications because (1) INS’

financial management information system does not provide actual cost

data, including such items as depreciation and support service costs from

other INS functions, and (2) INS excluded certain cost items, such as

unfunded pension liability and postretirement life insurance and health

benefits costs, because it lacked guidance on how to treat them. Circular

A-25 does not require agencies to include in their fee calculations costs

that their financial information management systems do not capture. Had

INS been able to determine these costs and included them in its fee

computation, the revised fees could have been set at a higher level.

INS’ initial plan for sampling the processing of applications at regional

service centers and selected district offices and by selected processing

personnel to determine how long it took to process various applications

incorporated generally accepted statistical sampling procedures. However,

some of the changes INS made for operational reasons to its planned

statistical sample during implementation undermined scientific sampling

principles and adversely affected INS’ ability to project the study’s results

to all application processing sites. We are unable, however, to determine

the impact of these changes on the revised user fees.

INS is reengineering the way it processes naturalization applications.

Changes to the naturalization process are intended to improve the

integrity of the process and make it more efficient and customer oriented.

Some changes have already taken place while others are slated to take

place in the future. Since these changes took place after INS’ fee study, the

fee revisions do not recognize these changes, and INS does not know what

Page 16 GAO/GGD-98-197 INS User Fee Revisions
B-280630 

affect these changes will have on the user fee schedule. INS officials said

INS is planning to initiate the next IEFA user fee review early in fiscal year

1999. The costing methodology that INS plans to use in this

study—ABC—should capture whatever reengineering or other process

changes that have taken place at the time of the study.

Recommendation To improve confidence in the sampling methodologies used to determine

future immigration and naturalization fees, we recommend that the

Commissioner of INS ensure that future samples are consistent with

generally accepted social science techniques and that the statistical

integrity of the sampling plans are maintained throughout the study.

Agency Comments To obtain comments on a draft of this report, we met on September 9,

1998, with officials representing INS from the Offices of Budget,

Naturalization Operations, General Counsel, Congressional Affairs,

Adjudications, Internal Audit, and Public Affairs. Overall, the officials

agreed that the draft report was accurate and fair. They also provided

technical comments, which have been incorporated in this report where

appropriate.

As arranged with your office, we plan no further distribution of this report

until 30 days after the date of its publication, unless you release the report

or its contents before that time. After 30 days, we will send copies of this

report to the Chairmen and Ranking Minority Members of congressional

committees with jurisdiction over INS, the Attorney General, the

Commissioner of the Immigration and Naturalization Service, and other

interested parties.

Page 17 GAO/GGD-98-197 INS User Fee Revisions
B-280630 

Please contact me at (202) 512-8777 if you or your staff have any questions

concerning this report. Major contributors to this report are listed in

appendix II.

Sincerely yours,

Norman J. Rabkin

Director, Administration of

 Justice Issues

Page 18 GAO/GGD-98-197 INS User Fee Revisions
Page 19 GAO/GGD-98-197 INS User Fee Revisions
Contents

Letter 1

Appendix I 

INS’ Current and

Revised Application

Fees Schedule

22

Appendix II 

Major Contributors to

This Report

24

Tables Table I.1: Twenty-Six Large-Volume Applications With Fee

Revisions

22

Table I.2: Four Small-Volume Applications With Fee Revisions 23

Abbreviations

ABC Activity-Based Costing

INS Immigration and Naturalization Service

IEFA Immigration Examinations Fee Account

OMB Office of Management and Budget

SFFAS Statements of Federal Financial Accounting Standards

Page 20 GAO/GGD-98-197 INS User Fee Revisions
Page 21 GAO/GGD-98-197 INS User Fee Revisions
Appendix I 

INS’ Current and Revised Application Fees

Schedule

The following tables show the immigration and naturalization application

fees that are currently being charged, the revised fees, and fiscal year 1995

annual volume for the various applications.

Table I.1: Twenty-Six Large-Volume Applications With Fee Revisions

Application

number Description Current fees Revised fees

Number of

applications

processed in

fiscal year 1995

I-90 Application to Replace Alien Resistration Card $75 $110 543,165

I-102 Application to Replace Nonimmigrant

Document

65 85 11,672

I-29a

I-129Ha

I-129La

Petition for Nonimmigrant Worker

Petition to Classify Nonimmigrant as

Temporary Worker/Trainee

Petition to Employ Intracompany

75

80

80

110

110

110

272,817

I-129F Petition for Alien Fiance(e) 75 97 258,399

I-130 Petition to Classify Status of Alien Relative for

Immigration Visa

80 110 369,611

I-131 Application for Travel Document 70 97 282,709

I-140 Immigrant Petition for Foreign Worker 75 115 55,115

I-485 Application to Register Permanent 130 220 357,567

I-539 Application to Extend Status - Change

Nonimmigrant Status

75 120 212,485

I-600a

I-600Aa

Petition to Classify Orphan as Immediate

Relative

Application for Advance Processing of

Orphan Petition

155

155

405

405

15,858

I-724b Waiver forms (6) 90-95b 170 30,809

I-751 Application to Remove on Residence 80 125 107,211

I-765 Application for Employment Authorization 70 100 847,040

I-817 Application for Voluntary Departure Under

Family Unity Program

80 120 26,806

I-824 Filing for Action on Approved Application or

Petition

30 120 30,744

N-400 Application for Naturalization 120 225 504,821

N-565 Application to Replace Naturalization

Citizenship Certificate

65 135 13,405

N-600 Application for Certificate of Citizenship 100 160 20,523

(Table notes on next page)

Page 22 GAO/GGD-98-197 INS User Fee Revisions
Appendix I 

INS’ Current and Revised Application Fees

Schedule

aFor these forms, INS did not have volume data by application. The volume data provided

represent the total volume for all forms in each group. To achieve a total volume larger than

10,000, INS combined the volumes of Forms I-600 and I-600A because the processing of these

forms was determined through discussions with field office personnel to be similar.

bINS uses Form I-724 as a generic term for six IEFA waiver forms. The six waiver forms, including

their current fees (established in 1994), are I-191 ($90), Application for Advance Permission to

Return to Unrelinquished Domicile; I-192 ($90), Application for Advance Permission to Enter as a

Nonimmigrant; I-193 ($95), Application for Waiver of Passport and/or Visa; I-212 ($95),

Application to Reapply for Admission into the U.S. After Deportation; I-601 ($95), Application for

Waiver on Grounds of Excludability; I-612 ($95), Application for Waiver of the Foreign Residence

Requirement. While the annual volumes for some of these forms had to have been less than

10,000, INS’ study treated them as 1 form for fee determination purposes because the process to

adjudicate them was similar.

Source: INS.

Table I.2: Four Small-Volume Applications With Fee Revisions

Application

number Description Current fees Revised fees

Number of

applications

processed in

fiscal year 1995

I-17 Application for School Approval $140 $200 1,401

I-526 Immigrant Petition by Alien Entrepreneur 155 350 409

I-829 Application for Filling Petition by

Entrepreneur to Remove Conditions

90 345 121

N-643 Application for Certificate of Citizenship on

Behalf of Adopted Child

80 125 6,549

Source: INS.

Page 23 GAO/GGD-98-197 INS User Fee Revisions
Appendix II 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

James M. Blume, Assistant Director

Robert P. Glick, Assignment Manager

Michael G. Kassack, Evaluator-in-Charge

James M. Fields, Senior Social Science Analyst

David P. Alexander, Senior Social Science Analyst

Sidney H. Schwartz, Senior Mathematical Statistician

Lauren M. Phillips, Intern

Accounting and

Information

Management Division,

Washington, D.C.

Larry J. Modlin, Assistant Director

Office of the General

Counsel, Washington,

D.C.

Jan B. Montgomery, Assistant General Counsel

(183623) Page 24 GAO/GGD-98-197 INS User Fee Revisions
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