Deloitte Consulting LLP 

U.S. Department of State

Bureau of Educational and Cultural Affairs 

Private Sector Exchange

Exchange Visitor Program 

User Fee Study (FY2013 – FY2014)

Executive Summary 

July 27, 2012
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Executive Summary

In 2012, Deloitte Consulting LLP conducted an independent study of the Exchange Visitor 

Program (EVP) user fees for the U.S. Department of State (Department), Bureau of Educational 

and Cultural Affairs (ECA), Directorate for Private Sector Exchange (ECA/EC). The scope of 

this review included Private Sector Exchange operations supporting the Exchange Visitor 

Program (EVP), and EVP activities performed within the Private Sector Exchange Directorate’s 

Office of Private Sector Designation. 

The main objective of the study was to determine the Fiscal Year (FY) 2013 and FY 2014 

Application Fee for Program Sponsor Designation or Redesignation and the Administrative 

Fee for Exchange Visitor (J-1 Visa Holder) Benefits. An accurate determination of these two 

fees (“user fees”) is vital to successful operations of the EVP, as the fees fund the full labor 

(salary) and ancillary costs of ECA/EC’s Office of Private Sector Designation, and the ancillary

costs of the planned new Office of Private Sector Exchange Program Administration and the 

ECA/EC Front Office, including four additional Full-time Employees (FTEs). 

EVP, Funding Sources, and User Fees

The Exchange Visitor Program (EVP) provides foreign nationals, utilizing the J-1 Exchange 

Visitor Visa (J-1 Visa), opportunities to participate in exchange programs in the United States. 

It is administered and overseen by the Directorate for Private Sector Exchange in the Bureau of 

Educational and Cultural Affairs (ECA/EC). ECA/EC is responsible for designating eligible 

U.S. government agencies and public and private organizations as EVP sponsors. Upon 

designation, ECA/EC is also responsible for the oversight of the EVP sponsors. ECA/EC is 

comprised of a Front Office and three supporting offices: the Office of Private Sector 

Designation, the Office of Exchange Coordination and Compliance, and pending re-organization 

approval, the Office of Private Sector Exchange Program Administration. Three different 

funding streams fund all of the ECA/EC units administering and overseeing the EVP, including 

all of the EVP’s program administration activities and the ECA/EC personnel conducting those 

activities. 

These funding streams are:

 Application Fee for Sponsor Designation or Redesignation and the Administrative 

Fee for Exchange Visitor (J-1 Visa Holder) Benefits: The Application Fee is paid by 

prospective and current EVP sponsors for Designation and Redesignation, respectively. 

The Administrative Fee is paid by EVP sponsors on behalf of J-1 participants seeking an 

administrative benefit related to their current exchange visitor program. Both fees 

primarily fund the Office of Private Sector Designation labor (salary) and ancillary costs 

(e.g., staff travel, communications, and utilities). Both fees also fund the Office of 

Exchange Coordination and Compliance ancillary costs and will fund the ancillary costs 

of the future Office of Private Sector Exchange Program Administration. 
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 SEVIS Fees paid by J-1 Visa Applicants and Participants to the U.S. Department of 

Homeland Security (DHS): These fees, via transfer on a reimbursable basis from DHS 

to the Department of State, fund the Office of Exchange Coordination and Compliance 

labor (salary) costs; and, in the future, will fund the Office of Private Sector Exchange 

Program Administration labor (salary) costs.

 Bureau of Educational and Cultural Affairs (ECA) Budget: Congressional 

appropriation funds support certain ECA/EC personnel salaries (or portions of salaries) 

and portions of salaries of Bureau of Education and Cultural Affairs Support Services 

personnel who assist the administration of the EVP.

This report only provides recommendations for the Application Fee for Sponsor Designation 

or Redesignation, and the Administrative Fee for Exchange Visitor (J-1 Visa Holder) Benefits. 

The report does not provide recommendations concerning the SEVIS fees paid by J-1 Visa 

applicants and participants to DHS (and transferred to the Department) that fund the labor 

(salary) costs of the ECA/EC’s Office of Exchange Coordination and Compliance, nor does it 

provide recommendations concerning the Bureau of Educational and Cultural Affairs (ECA) 

budget.

Study Objectives

The objectives of this study were to:

 Review the methodology developed and implemented during the Deloitte Consulting 

LLP Exchange Visitor Program Fee Study concluded in March 2010;

 Perform an updated analysis of current EVP activities and organizational structure;

 Identify and allocate costs of Office of Private Sector Designation operations to EVP 

services rendered;

 Verify that identified costs are accurately and correctly factored into the pricing process 

for EVP services performed by Directorate for Private Sector Exchange staff and per 

internal and external cost accounting guidance; 

 Develop cost assessments for the future Designation Processing System, the Local 

Coordinator Training Certification Module, and the new Office of Private Sector 

Exchange Administration;

 Provide information to senior managers of the Directorate for Private Sector Exchange to 

improve their ability to assure stakeholders that the cost and pricing of EVP-related 

services are fair and rational, and that the Directorate for Private Sector Exchange is 

operating efficiently and effectively;

 Provide recommendations for the FY 2013 and FY 2014 Application Fee for Sponsor 

Designation or Redesignation and the Administrative Fee for Exchange Visitor (J-1 Visa 

Holder) Benefits; and finally

 Present results, conclusions, and recommendations to the U.S. Department of State in 

both a final report and oral presentation.
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Methodology

In accordance with the Statement of Federal Finance and Accounting Standards No. 4 (SFFAS 4), 

Deloitte used an “activity-based costing'' (ABC) approach to develop a sustainable model to align 

the associated costs of the EVP to the specific services performed by the Office of Private Sector 

Designation on behalf of EVP applicants, sponsors, participants and other program stakeholders. 

ABC is a method of identifying the work that is performed, how resources are consumed by that 

work, and how that work contributes to the production of required outputs. This methodology

enabled the development of a cost model that factored in forecasts for expected demand of 

program services in the years when the fees are effective (FY2013 and FY2014) and would 

provide the program with adequate resources to meet that future program demand.

To obtain data needed for the cost model using the ABC methodology, a Labor Survey was 

conducted to determine the time spent by the Directorate for Private Sector Exchange personnel 

on EVP activities. Although both the Office of Private Sector Designation and the Office of 

Exchange Coordination and Compliance were surveyed, only the Office of Private Sector 

Designation’s survey results were taken into account when determining the two user fees. 

The results of the Labor Survey were analyzed in conjunction with Office of Private Sector 

Designation salary data (escalated for benefits) to determine the cost basis of activities 

supporting the EVP. Added to the cost basis were Directorate of Private Sector Exchange 

ancillary costs (including the projected ancillary costs of a planned, new third office and four 

additional FTEs in the ECA/EC Front Office), costs for the development of a new Designation 

Processing System and a new Learning Management System, and Bureau of Educational and 

Cultural Affairs and Department of State labor (salary) costs that support the EVP. 

The model then assigned direct costs and allocated indirect and General and Administrative 

(G&A) costs using allocation ratios to isolate direct, indirect, and G&A costs. The sum of direct, 

indirect and G&A costs for Designation and Redesignation Applications were divided by the 

projected number of FY 2013 and FY 2014 Designation and Redesignation Applications to 

determine the Application Fee for Sponsor Designation or Redesignation. To determine the 

Administrative Fee for Exchange Visitor (J-1 Visa Holder) Benefits, the sum of direct, indirect 

and G&A costs for Exchange Visitor Activity Counts were divided by the projected number of 

FY 2013 and FY 2014 Exchange Visitor Activity Counts; i.e., the expected number of benefit 

applications. 

Findings

The FY 2011 – FY 2012 EVP fees in place at the time the EVP Fee Study was conducted were: 

 $2,700.00 for the Application Fee for Sponsor Designation and Redesignation (hereafter 

referred to as Application Fee); and 

 $233.00 for the Administrative Fee for Exchange Visitor (J-1 Visa Holder) 

Administrative Benefits (hereafter referred to as Administrative Fee). 

The 2012 Deloitte Consulting LLP EVP Fee Study recommended EVP fees for the FY 2013 –

FY 2014 timeframe are:

 $3,981.65 for the Application Fee; and 

 $367.44 for the Administrative Fee.
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The increase in the FY 2013 and FY 2014 Application and Administrative Fees is primarily

attributable to three initiatives related to ongoing or planned process improvements and 

technology implementations. These initiatives aim to increase the efficiency and accuracy of the 

Designation and Redesignation Application review processes and the level of service provided to 

EVP sponsors by the Directorate for Private Sector Exchange. Costs assessments were

developed by Deloitte Consulting LLP for each initiative and added into the total cost basis that 

must be recovered by the two EVP fees. 

The three initiatives are:

 Development of a Learning Management System (an expansion of the currently existing 

Local Coordinator Training Certification Module) needed to meet EVP local coordinator 

training requirements established in new or future EVP regulations 

 Development and implementation of the Designation Processing System, which consists 

of:

− Robust electronic content management system for storing and reviewing new and 

historical sponsor files

− Electric file migration of all hard copy sponsor files

− Complaint Management Workflow Module for tracking, managing, and reporting 

on all complaints and incidents reported to the Department; e.g., serious incidents 

reported by EVP sponsors and complaints reported by Exchange Visitors and any

interested persons on behalf of Exchange Visitors or of a general nature 

 Addition of a new Office of Private Sector Exchange Program Administration in the 

Directorate for Private Sector Exchange (ECA/EC) and the addition of four Full-time 

Equivalent employees (FTEs) in the ECA/EC Front Office, which will increase the 

ancillary costs factored into the cost basis

Conclusion

The 2012 Deloitte Fee Study successfully reviewed and updated all available aspects of the 2010 

Deloitte Fee Study, including the strategies, models, and methods used. These actions spanned 

the Activity Model, Labor Survey, Cost Accounting Model, and fee structure which were 

originally developed and implemented by the 2010 Deloitte Fee Study. The 2012 Deloitte Fee 

Study has provided recommendations drawn from our direct experience with both ECA/EC and 

the EVP and offered them for the consideration of ECA/EC senior management. 

Recommendations

Deloitte makes the following recommendations regarding the Directorate for Private Sector 

Exchange’s (ECA/EC) future operations of the Exchange Visitor Program (EVP): 

 Recommendation 1: The 2012 Deloitte Consulting LLP EVP Fee Study recommended 

EVP fees for the FY 2013 – FY 2014 timeframe are:

o $3,981.65 for the Application Fee; and 

o $367.44 for the Administration Fee.
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 Recommendation 2: Since there have been no significant changes in the general types 

of services provided by the Exchange Visitor Program, Deloitte recommends that 

ECA/EC continue to use the two existing fees, Application Fee and Administrative Fee 

as the mechanisms for recovering costs for services provided by the office.

 Recommendation 3: The 2012 Deloitte Fee Study, as well as prior EVP fee studies 

conducted on behalf of ECA/EC, has leveraged a traditional Activity-based Costing 

(ABC) approach for calculating the Application and Administrative Fees used to recover 

the ECA/EC’s costs of EVP-related operations. One aspect of this approach consists of 

ECA/EC staff recording their time spent conducting the set of activities defined in the 

Activity Model for a designated period of time. The time allocation information was 

then used to drive labor costs to activities, which roll up into one of the two fees. If 

activity level cost information is solely being used for the purposes of fee calculation 

and not for other management purposes, continuing to invest staff time required to 

complete the labor survey may not be necessary. This is because the organizational 

structure of ECA/EC is such that functional positions can be mapped directly to each of 

the fees. Therefore, labor cost can be directly mapped based on position title to the 

Application and Administrative Fees. This method would be considered a “Standard 

Costing” approach as defined by the Statement of Federal Financial Accounting 

Standards (SFFAS#4) for Managerial Accounting, where resources are directly mapped 

to outputs as opposed to activities which are then aligned to outputs. Adopting a 

standard costing approach in future EVP fee studies would reduce the level of effort 

required to complete future fee studies.

 Recommendation 4: Currently there is no formal process in place for (1) reconciling 

prior year revenues to estimated expenditures calculated to set out year fees, and (2) 

forecasting application volumes based on prior year. Establishing a formal process 

would help inform whether fluctuations in Application volume and the volume of 

Administrative Fee actions remain stable enough to support recovery of the full cost of 

ECA/EC operations. During the 2012 Deloitte Fee Study, Deloitte performed this type 

of reconciliation by calculating fees collected in FY2011 and comparing them to 

FY2011 expenditure estimates from the 2010 Deloitte Fee Study. Results indicated that 

projected expenditures and estimated collections from charged fees are well within an 

acceptable range. However, significant fluctuations in future EVP applications and EVP 

administration applications, volumes could impact the accuracy of the fees. This is 

especially important due to the fact that ECA/EC is now considering setting limitations 

on EVP application volumes by sponsor category as recommended in the 2012 ECA 

Office of Inspector General (OIG) Report.