COMPACTS OF FREE 

ASSOCIATION

Guidelines Needed to 

Support Reliable 

Estimates of Cost 

Impacts of Growing 

Migration

Statement for the Record of David B. Gootnick, 

Director, International Affairs and Trade

Statement for the Record

To the Committee on Energy and 

Natural Resources, U.S. Senate

For Release on Delivery 

Expected at 9:30 a.m. EDT 

Thursday, July 11, 2013

GAO-13-773T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-773T, a statement for 

the record to the Committee on Energy and 

Natural Resources, U.S. Senate

July 2013

COMPACTS OF FREE ASSOCIATION

Guidelines Needed to Support Reliable Estimates of 

Cost Impacts of Growing Migration

Why GAO Did This Study

U.S. compacts with the FAS permit 

those three countries’ citizens to 

migrate to the United States and its 

territories (U.S. areas) without regard 

to visa and labor certification 

requirements. Thousands of FAS 

citizens have migrated to U.S. areas 

(compact migrants)—particularly to 

Hawaii, Guam, and the CNMI. In fiscal 

year 2004, Congress appropriated $30 

million annually for 20 years to help 

defray affected jurisdictions’ costs for 

migrant services. Interior allocates the 

$30 million as compact impact grants 

in proportion to the number of compact 

migrants living in each affected 

jurisdiction. Although not required, 

affected jurisdictions may report impact 

costs to Interior, which submits any 

reports it receives to Congress.

This statement draws from GAO’s 

November 2011 report on compact 

migrants and discusses challenges in 

identifying the impact of compact 

migrants on U.S. areas. For this 

statement, GAO assessed progress 

made by Interior to address the 

recommendation that it disseminate 

cost guidelines.

What GAO Recommends

GAO is not making new 

recommendations in this statement. In 

its 2011 report, GAO recommended 

that Interior disseminate adequate 

guidance for estimating compact cost 

impacts and call for the affected 

jurisdictions to apply these guidelines, 

among other steps needed to assess 

and address the impact of the growing 

compact migration. Interior concurred 

with the recommendation on providing 

adequate guidance for estimating 

compact cost impacts.

What GAO Found

Data from the U.S. Census Bureau (Census) show that migrants from the freely 

associated states (FAS)—the Federated States of Micronesia (FSM), the 

Marshall Islands, and Palau—reside throughout U.S. areas. GAO’s 2011 report 

found that Census estimates that roughly 56,000 compact migrants—nearly a 

quarter of all FAS citizens—were living in U.S. areas in 2005 to 2009. About 58 

percent of compact migrants lived in areas that Congress defined in the 

amended compacts' enabling legislation as affected jurisdictions: American 

Samoa, Hawaii, Guam, and the Commonwealth of the Northern Mariana Islands 

(CNMI). 

For fiscal years 2004 through 2010, Hawaii, Guam, and the CNMI reported more 

than $1 billion in costs associated with providing education, health, and social 

services to compact migrants—far in excess of the $210 million in compact 

impact grants over that time period. The affected jurisdictions reported impact 

costs for education, health, public safety, and social services to the Department 

of the Interior (Interior). Education accounted for the largest share of reported 

expenses in all three jurisdictions, and health care costs accounted for the 

second-largest share overall.

However, assessed against best practices for cost estimation, these cost 

estimates contain a number of limitations with regard to accuracy, adequate 

documentation, and comprehensiveness, affecting the reported costs’ credibility 

and preventing a precise calculation of total compact impact on the affected 

jurisdictions. For example, some jurisdictions did not accurately define compact 

migrants, account for federal funding that supplemented local expenditures, or 

include revenue received from compact migrants.

Interior developed guidelines in 1994 for reporting compact impact. However, 

several officials from the reporting local government agencies, as well as Interior 

officials, were not aware of the guidelines and had not used them. Moreover, the 

1994 guidelines do not address certain concepts that are essential for reliable 

estimates of impact costs, such as calculating revenue received from providing 

services. Providing more rigorous guidelines to the affected jurisdictions that 

address concepts essential to producing reliable impact cost estimates and 

promoting their use for compact impact reports would increase the likelihood that 

Interior can provide reliable information on compact impacts to Congress. 

Although Interior took initial steps to implement GAO’s recommendation in 2012, 

it has not yet provided updated guidelines for estimating compact cost impacts.

Affected Jurisdictions’ Reported Compact Impact, by Sector, 2004-2010

Sector Guam Hawaii CNMI Total

Educational services $201,080,392 $291,063,024 $25,426,059 $517,569,475

Health services $65,374,486 $237,888,693 $10,700,277 $313,963,456

Public safety services $55,561,983 $7,641,537 $17,862,038 $81,065,558

Social services $4,532,431 $92,159,026 $1,527,730 $98,219,187

Total $326,549,292 $628,752,280 $55,516,104 $1,010,817,676

Source: GAO analysis of affected jurisdictions’ compact impact reports for 2004 through 2010.

Note: The reported costs are in nominal dollars, unadjusted for inflation.

View GAO-13-773T For more information, 

contact David B. Gootnick at (202) 512-3149 

or gootnickd@gao.gov.
Page 1 GAO-13-773T 

July 11, 2013

Chairman Wyden, Ranking Member Murkowski, and Members of the 

Committee:

I am pleased to submit this statement about our previous work on the 

impact of migration under provisions of the compacts of free association.1

Three Pacific island nations—the Federated States of Micronesia (FSM), 

the Republic of the Marshall Islands, and the Republic of Palau—have 

entered into compacts with the United States. Compact goals included 

achieving self government, promoting economic advancement, and 

securing security and defense rights. In addition, the compacts provide for 

citizens of these freely associated states (FAS) to enter and reside 

indefinitely in the United States, including its territories. Since the 

compacts went into effect—in 1986 for the FSM and the Marshall Islands 

and in 1994 for Palau—thousands of migrants from these countries have 

established residence in U.S. areas, particularly in Guam, Hawaii, and the 

Commonwealth of the Northern Mariana Islands (CNMI).2

In 2003, Congress approved amended compacts with the FSM and the 

Marshall Islands.3 In the amended compacts’ enabling legislation, 

Congress extended additional economic assistance to the two countries 

and authorized and appropriated $30 million annually for 20 years for 

grants to Guam, Hawaii, the CNMI, and American Samoa, which it 

deemed “affected jurisdictions,” to help defray the cost of services to 

compact migrants.4

 1

GAO, Compacts of Free Association: Improvements Needed to Assess and Address 

Growing Migration, 

Congress directed the Department of the Interior 

GAO-12-64 (Washington, D.C.: Nov. 14, 2011). We also previously 

reported on compact migrants and their impact in Foreign Relations: Migration From 

Micronesian Nations Has Had Significant Impact on Guam, Hawaii, and the 

Commonwealth of the Northern Mariana Islands, GAO-02-40 (Washington, D.C.: Oct. 5, 

2001). 

2

In this report, “U.S. areas” refers to the 50 U.S. states; the U.S. insular areas (Guam, the 

CNMI, American Samoa, and the U.S. Virgin Islands); Puerto Rico; and the District of 

Columbia. 

3

Compact of Free Association Amendments Act of 2003, Pub. L. No.108-188, December 

17, 2003. In this testimony, the act is referred to as “the amended compacts’ enabling 

legislation.”

4

Because of American Samoa’s small reported FAS population—estimated at 15 in a 

2008 enumeration—we did not address compact migrants in American Samoa in our 2011 

report.
Page 2 GAO-13-773T 

(Interior) to divide these compact impact grants among the affected 

jurisdictions in proportion to the most recent enumeration of compact 

migrants residing in each jurisdiction. Since 1986, affected jurisdictions 

have submitted to Interior compact impact reports that include 

descriptions of, and estimated costs for, education, health, public safety, 

and social services that local government agencies provided to compact 

migrants. However, affected jurisdictions have expressed continuing 

concerns that they do not receive adequate compensation for the growing 

cost of providing government services to compact migrants. In addition, 

thousands of compact migrants have moved to other states that are not 

eligible to receive compact impact grants. My statement draws from our 

November 2011 report on compact migrants and will discuss challenges 

in assessing the impact of compact migrants on U.S. areas.5

For our 2011 report’s discussion of the impact of compact migrants, we 

reviewed previous reports on compact migration and cost estimation, 

Interior’s impact reports, as well as the supporting documentation and 

methodologies used to prepare impact reports. We also interviewed 

Interior and local government officials. To assess compact impact cost 

reporting, we reviewed affected jurisdictions’ impact reports since 2004 

and compared these reports to cost estimation criteria.6

We conducted this work in accordance with generally accepted 

government auditing standards. Those standards require that we plan 

To assess 

Interior’s guidance on compact impact reporting, we reviewed the 

requirements in the amended compacts’ enabling legislation and Interior’s 

existing guidelines. To describe compact migrants’ role in the economy, 

we used data from earlier FAS migrant surveys, supplemented where 

possible with additional information from local agencies and other 

literature. For this statement, in June 2013, we updated and assessed 

progress made by Interior on the recommendation in the 2011 report that 

Interior disseminate adequate guidance on estimating compact cost 

impacts. Our 2011 report contains a detailed description of its scope and 

methodology.

 5

GAO-12-64. 

6

GAO, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: March 2009) and 

OMB Circular No. A-94, Guidelines and Discount Rates for Benefit-Cost Analysis of 

Federal Programs, revised October 29, 1992.
Page 3 GAO-13-773T 

and perform the audit to obtain sufficient, appropriate evidence to provide 

a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our audit objectives.

The FSM, the Marshall Islands, and Palau are among the smallest 

countries in the world. In 2008, the three FAS had a combined resident 

population of approximately 179,000—104,000 in the FSM, 54,000 in the 

Marshall Islands, and 21,000 in Palau.

Under the compacts of free association, citizens of the FAS are exempt 

from meeting the visa and labor certification requirements of the 

Immigration and Nationality Act as amended. The migration provisions of 

the compacts allow compact migrants to enter the United States 

(including all U.S. states, territories, and possessions) and to lawfully 

work and establish residence indefinitely.7

The December 2003 amended compacts’ enabling legislation restated 

Congress’s intent not to cause any adverse consequences for the areas 

defined as affected jurisdictions—Guam, Hawaii, the CNMI, and 

American Samoa. The act also authorized and appropriated $30 million 

In the 1986 compacts’ enabling 

legislation, Congress stated that it was not its intent to cause any adverse 

consequences for U.S. territories and commonwealths and the state of 

Hawaii. Congress further declared that it would act sympathetically and 

expeditiously to redress any adverse consequences and authorized 

compensation for these areas that might experience increased demands 

on their educational and social services by compact migrants from the 

Marshall Islands and the FSM.

 7

Under the compacts, the United States has a responsibility for the defense of the FAS, 

and the compacts provide the United States with exclusive military use rights in these 

countries. In addition, under the compacts, the United States provided economic 

assistance and access to certain federal services and programs, among other things. 

Under the initial compacts with the FSM and the Marshall Islands, the United States 

provided $2.1 billion in economic assistance to these governments. Under the amended 

compacts, the United States will provide an estimated combined total of $3.6 billion in 

economic assistance, much of it in a form known as “sector grants,” in annually 

decreasing amounts from 2004 through 2023. For more information about U.S. assistance 

provided under the amended compacts, see Compacts of Free Association: Micronesia’s 

and the Marshall Islands’ Use of Sector Grants, GAO-07-514R (Washington, D.C.: May 

25, 2007). We plan to publish an additional report on the use of these funds in September 

2013. 

Background
Page 4 GAO-13-773T 

for each fiscal year from 2004 to 2023 for grants to the affected 

jurisdictions, to aid in defraying costs incurred by these jurisdictions as a 

result of increased demand for health, educational, social, or public safety 

services, or for infrastructure related to such services specifically affected 

by compact migrants resident in the affected jurisdictions.8

Figure 1 shows the locations of the FAS and the affected jurisdictions.

 8

Beginning in fiscal year 2010, Interior was to annually award approximately $16.8 million 

to Guam, $11.2 million to Hawaii, and $1.9 million to the CNMI.
Page 5 GAO-13-773T 

Figure 1: Locations of Freely Associated States and Affected Jurisdictions

Note: Circles around each location illustrate the general vicinity of each island area. They do not 

correspond to territorial boundaries or exclusive economic zones.

The amended compacts’ enabling legislation provides for Interior to 

allocate the $30 million in grants to affected jurisdictions on the basis of

their compact migrant population. Each affected jurisdiction is to receive 

its portion of the $30 million per year in proportion to the number of 

compact migrants living there, as determined by an enumeration to be 

undertaken by Interior and supervised by the U.S. Census Bureau 
Page 6 GAO-13-773T 

(Census) or another organization at least every 5 years.9

The combined data from Census’s 2005-2009 American Community 

Survey and the 2008 required enumerations in Guam and the CNMI 

estimated that approximately 56,000 compact migrants

The act defines 

the population to be enumerated as persons, or those persons’ children 

under the age of 18, who pursuant to the compacts are admitted to, or 

resident in, an affected jurisdiction. The amended compacts’ enabling 

legislation permits, but does not require, affected jurisdictions to report on 

compact migrant impact. If Interior receives such reports from the affected 

jurisdictions, it must submit reports to Congress that include, among other 

things, the governor’s comments and administration’s analysis of any 

such impacts.

10

 9

Census conducted these enumerations in 2003 and 2008 and plans to conduct a third in 

2013. Previous Interior and Census surveys had enumerated the migrant population in 

1992-1993 and 1997-1998.

—nearly a 

quarter of all FAS citizens—lived in U.S. areas, with the largest 

populations in Guam and Hawaii. An estimated 57.6 percent of all 

compact migrants lived in affected jurisdictions: 32.5 percent in Guam, 

21.4 percent in Hawaii, and 3.7 percent in the CNMI, while nine mainland 

states each had an estimated compact migrant population of more than 

1,000. (See fig. 2.)

10Census’s 2005-2009 American Community Survey and 2008 enumerations estimated 

the total number of compact migrants in U.S. states and territories as ranging from 49,642 

to 63,048, with a 90 percent confidence interval; that is, Census is 90 percent confident 

that the true number of compact migrants falls within that range. For additional detail on 

these Census estimates, see pages 12 through 18 of GAO-12-64. 
Page 7 GAO-13-773T 

Figure 2: Estimated Numbers of Compact Migrants in U.S. Areas, 2005-2009

Notes:

a

The Guam and CNMI estimates are from 2008 Census enumerations; the remaining estimates are 

from the 2005-2009 Census American Community Survey.
Page 8 GAO-13-773T 

b

On the basis of these combined data, we estimate that approximately 68 

percent of compact migrants were from the FSM, 23 percent were from 

the Marshall Islands, and 9 percent were from Palau. Surveys conducted 

in affected jurisdictions from 1993 through 2008 show growth in the 

compact migrant populations in Guam and Hawaii. In the CNMI, from 

2003 to 2008, the compact migrant population declined. Over the same 

period, the total compact migrant population in Guam and Hawaii grew as 

a percentage of their total populations. The estimated number of compact 

migrants in Guam increased from 9,831 in 2003 to 18,305 in 2008. In 

2003, compact migrants represented approximately 6 percent of Guam’s 

total population, but by 2008 they had increased to approximately 12 

percent. Compact migrants in Hawaii increased during the same period 

from an estimated 7,297 to 12,215 and represented approximately 1 

percent of Hawaii’s total population in 2008.

Census suppressed the estimated values of remaining states to protect the confidentiality of 

individual respondents; we do not know how many of the remaining states contain migrants.

An analysis of 2010 decennial census race data also shows growth in the 

population of FAS-related persons throughout the United States, with the 

U.S. population of FAS-related persons more than tripling from 17,380 in 

2000 to 55,286 in 2010.11

 11We use “FAS-related persons” to refer to individuals reporting that they are of one of the 

FAS races and only that race (e.g., Pohnpeian, Chuukese, Marshallese, Palauan) in the 

2010 decennial census. There are substantial differences between the decennial census 

counts based on reported race and the Census estimates of compact migrants derived 

from the 2005-2009 American Community Survey and 2008 migrant enumerations. For 

example, the 2010 decennial census counted 21,226 persons reporting they were solely 

of an FAS race in Hawaii, while the 2005-2009 American Community Survey estimated 

12,060 compact migrants in the state. On the U.S. mainland, the 2010 decennial census 

counted 4,302 persons reporting they were solely of an FAS race in Arkansas, while the 

American Community Survey estimated 1,155 compact migrants in the state. There are 

multiple definitional and methodological reasons why these numbers are not comparable. 

For a full discussion of these issues, see appendix IV of GAO-12-64. 
Page 9 GAO-13-773T 

For 2004 through 2010, the affected jurisdictions’ reports to Interior show 

more than $1 billion in costs for services related to compact migrants.12

During this period, Guam’s annual reported costs increased by nearly 111 

percent, and Hawaii’s by approximately 108 percent. The CNMI’s 

reported annual costs decreased by approximately 53 percent, reflecting 

the decline in the CNMI compact migrant population. During the same 

period, the amended compacts’ enabling legislation provided $210 million 

in impact grants—approximately $102 million to Guam, $75 million to 

Hawaii, and $33 million to the CNMI.13 Figure 3 shows compact impact 

costs reported by the affected jurisdictions for 1996 through 2010.14

 12For 1986 through 2003, affected jurisdictions reported total compact impact costs of 

approximately $540 million to $568 million (unadjusted for inflation). 

13In addition, from 1992 through 2003, Guam received approximately $53 million, Hawaii 

received $7 million, and the CNMI received $6.6 million from funds appropriated to Interior 

for grants to address compact impact. The largest annual compact impact grants to Guam 

in fiscal years 2005 through 2010 supported public school construction and maintenance. 

Most other compact impact grants to Guam funded health and public safety purchases, 

such as the purchase or renovation of facilities, emergency vehicles, and medical 

supplies, among many others. All compact impact grants to Hawaii in fiscal years 2004 

through 2010 were provided to its Department of Human Services to offset the cost of 

state-funded medical services. Compact impact grants to the CNMI in fiscal years 2004 

through 2010 supported the operations of several CNMI government departments, such 

as the Departments of Public Health and Public Safety, and the public school system. 

14Guam published its most recent estimate of the impact of compact migration in January 

2013. In its January report, Guam estimated that its fiscal year 2011 impact was $95.3 

million and its fiscal year 2012 impact was $125 million. CNMI estimated a 2011 impact of 

approximately $2.5 million and a 2012 impact of approximately $5.6 million in its 2012 

compact impact grant application. We have not assessed the reliability of these more 

recent estimates. Hawaii has not compiled updated compact impact estimates since its 

2011 report.

Guam and Hawaii 

Report Rising 

Compact Costs, 

Primarily for 

Education and Health
Page 10 GAO-13-773T 

Figure 3: Reported Compact Impact Costs, 1996-2010

Notes: 

For 1986 through 1995, Guam reported total costs of $60.6 million, Hawaii reported total costs of 

$23.4 million, and the CNMI estimated total costs at $43.7 to $71.7 million. For 1996 through 2003, 

Guam reported total costs of $175.3 million, Hawaii $162 million, and the CNMI $74.7 million. For 

1986 through 2003, affected jurisdictions reported total compact impact costs of approximately $540 

to $568 million (unadjusted for inflation).

The reported costs are in nominal dollars, unadjusted for inflation.

The affected jurisdictions reported impact costs for education, health, 

public safety, and social services. Education accounted for the largest 

share of reported expenses in all three jurisdictions, and health care costs 

accounted for the second-largest share overall (see table 1). Several 

officials in Guam and Hawaii cited compact migrants’ limited eligibility for 

a number of federal programs, particularly Medicaid, as a key contributor 
Page 11 GAO-13-773T 

to the cost of compact migration borne by the affected jurisdictions.15

While their parents may not be eligible for some programs, U.S.-born 

children of compact migrants are eligible as citizens for the benefits 

available to them as U.S. citizens.16

Table 1: Affected Jurisdictions’ Reported Compact Impact, by Sector, 2004-2010

Sector Guam Hawaii CNMI Total

Educational services $201,080,392 $291,063,024 $25,426,059 $517,569,475

Health services $65,374,486 $237,888,693 $10,700,277 $313,963,456

Public safety services $55,561,983 $7,641,537 $17,862,038 $81,065,558

Social services $4,532,431 $92,159,026 $1,527,730 $98,219,187

Total $326,549,292 $628,752,280 $55,516,104 $1,010,817,676

Source: GAO analysis of affected jurisdictions’ compact impact reports for 2004 through 2010.

Note: The reported costs are in nominal dollars, unadjusted for inflation.

We identified a number of weaknesses related to accuracy, adequacy of 

documentation, and comprehensiveness in affected jurisdictions’

reporting of compact impacts to Interior from 2004 through 2010.17

Examples of such weaknesses include the following.

 15When the compacts were signed, FAS citizens were eligible for Medicaid; however, the 

Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) 

removed this eligibility. Hawaii chose to continue to provide equivalent services at its own 

expense. Current legislation in both the House (H.R. 912 and H.R. 1222) and Senate (S. 

744) would restore Medicaid eligibility for compact migrants. Guam and the CNMI, unlike 

states, are subject to annual caps on federal funds for Medicaid; once this cap is reached, 

each area must provide for the cost from its own funds. For further information, see GAO, 

U.S. Insular Areas: Multiple Factors Affect Federal Health Care Funding, GAO-06-75

(Washington, D.C.: Oct. 14, 2005). 

16See table 2 on page 27 of GAO-12-64 for an analysis of the eligibility status of compact 

migrants as of November 2011 for ten selected federal benefit programs, including Social 

Security programs, Medicare, the Children’s Health Insurance Program, Temporary 

Assistance to Needy Families, and the Supplemental Nutrition Assistance Program. 

17For a discussion of recommended cost estimation practices, see GAO-09-3SP. For 

federal cost estimation guidelines, see OMB Circular No. A-94.

Compact Impact 

Estimates Have a 

Number of 

Weaknesses
Page 12 GAO-13-773T 

• Definition of compact migrants. For several impact reports that we 

examined, the reporting local government agencies, when calculating 

service costs, did not define compact migrants according to the 

criteria in the amended compacts enabling legislation. For instance, 

some agencies defined and counted compact migrants using the 

proxy measures of ethnicity, language, or citizenship rather than the 

definition in the amended compacts’ enabling legislation. Using 

ethnicity or language as a proxy measure could lead to overstating 

costs, since neither measure would exclude individuals who came to 

the jurisdiction prior to the compact, while using citizenship as a proxy 

measure could lead to understating costs, since it would exclude U.S.-

born children of compact migrants.

• Federal funding. Guam, Hawaii, and the CNMI, among other U.S. 

states and territories, receive federal funding for programs that 

compact migrants use; however, not all compact impact reports 

accounted for this stream of funding and included costs in compact 

impact estimates for programs that federal funding had partially 

addressed. To the extent that federal revenue for programs in affected 

jurisdictions is based on population counts or data on usage, the 

presence of, and use of services by, compact migrants lead to federal 

offsets. For example, from 2004 to 2008, Hawaii developed its 

education impact costs by calculating a per-pupil expenditure 

multiplied by the number of compact migrant students enrolled each 

school year. However, federal funds received through several 

programs are included in these annual expenditures. If the federal 

funds component of per-pupil expenditures were subtracted from 

Hawaii’s education impact reporting, as well as a correction made to 

eliminate a data error that double-counted Marshallese students, it 

would reduce the total cost of services to compact migrants by 

approximately $61 million for 2004 through 2008 from $229 to $168 

million.18

• Revenue. Multiple local government agencies that receive fees as a 

result of providing services to compact migrants did not consider fees 

in their compact impact reports. Any exclusion of revenue may cause 

an overstatement of the total impact reported. Compact migrants also 

participate in local economies through their participation in the labor 

 18The Hawaii Department of Education excluded federal funds from its costs reported to 

Interior in August 2011. 

Accuracy
Page 13 GAO-13-773T 

force, payment of taxes, consumption of local goods and services, 

and receipt of remittances. Previous compact migrant surveys 

estimated compact migrants’ participation in the labor force, but 

existing data on other compact migrant contributions such as tax 

revenues, local consumption, or remittances are not available or 

sufficiently reliable to quantify their effects.

• Capital costs. Many local government agencies did not include 

capital costs in their impact reporting. Capital costs entail, for 

example, providing additional classrooms to accommodate an 

increase in students or constructing additional health care facilities. In 

cases where compact migration has resulted in the expansion of 

facilities, agencies understated compact migrant impact by omitting 

these costs.19

• Per person costs. A number of local government agencies used an 

average per-person service cost for the jurisdiction rather than 

specific costs associated with providing services to compact migrants. 

For example, one jurisdiction based the cost of providing health care 

services to compact migrants on the number of migrants served out of 

the total patient load instead of totaling each patient’s specific costs. 

Using the average cost may either overstate or understate the true 

cost of service provision.20

A number of local government agencies did not disclose their 

methodology for developing impact costs, including any assumptions, 

definitions, and other key elements, which makes it difficult to evaluate 

reported costs. Furthermore, some agency methodologies vary among

affected jurisdictions.

 19In schools, the number of additional compact migrant students will likely have led to 

increased capital costs such as additional school space. According to school district data 

for the 2010-11 school year, in affected jurisdictions, migrants made up 21 percent of the 

student population in Guam, 12 percent in the CNMI, and 3 percent in Hawaii. 

20A further refinement is to consider the incremental cost of providing service to a compact 

migrant. If an agency has unused service capacity, the cost of serving an additional 

person would be less than the agency’s average service cost. However, if an agency is 

operating at capacity, serving compact migrants might require an expansion in agency 

operations, causing the cost of serving compact migrants to exceed the average service 

cost. For a discussion of these cost issues, see GAO, Illegal Alien Schoolchildren: Issues 

in Estimating State-by-State Costs, GAO-04-733 (Washington, D.C.: June 21, 2004). 

Documentation Adequacy
Page 14 GAO-13-773T 

For those years when the affected jurisdictions submitted impact reports 

to Interior, not all local government agencies in the affected jurisdictions 

included compact impact costs for those years. For example, Hawaii did 

not provide estimated costs to Interior in 2005 and 2006, although it 

included partial costs incurred in those years in its 2007 and 2008 reports. 

Without comprehensive data in each year, the compact impact reports 

could understate total costs. In addition, compact impact reporting has not 

been consistent across affected jurisdictions. For example, Guam and the 

CNMI included the cost of providing police services, while Hawaii did not.

Guidelines that Interior developed in 1994 for compact impact reporting 

do not adequately address certain concepts key to reliable estimates of 

impact costs. Developed in response to a 1993 recommendation by the

Interior Inspector General,21

Several Hawaii and CNMI officials from the reporting local government 

agencies we met with, as well as Interior officials, were not aware of the 

1994 guidelines and had not used them. Officials at the Guam Bureau of 

Statistics and Plans, which possessed the guidelines, said that the 

bureau attempts to adhere to them when preparing compact impact cost 

estimates. However, we found some cases where the bureau and other 

Guam agencies did not follow the guidelines.

the guidelines suggest that impact costs in 

Guam and the CNMI should, among other concepts, (1) exclude FAS 

citizens who were present prior to the compacts, (2) specify omitted 

federal program costs, and (3) be developed using appropriate 

methodologies. However, the 1994 guidelines do not address certain 

concepts, such as calculating revenue received from providing services to 

compact migrants, including capital costs, and ensuring that data are 

reliable and reporting is consistent.

In order to strengthen Interior’s ability to collect, evaluate, and submit 

reliable information to Congress on compact impact, we recommended in 

our November 2011 report that Interior disseminate guidelines to the 

affected jurisdictions on producing reliable impact estimates, and call for 

the affected jurisdictions to apply these guidelines when developing 

compact impact reports. Interior agreed with our recommendation. In 

 21U.S. Department of the Interior Office of Inspector General, Audit Report: Impact of the 

Compact of Free Association on the Government of Guam, Report No. 93-I-1195 (1993). 

Comprehensiveness

Existing Compact 

Impact Reporting 

Guidelines Have Gaps 

and Generally Are Not 

Used
Page 15 GAO-13-773T 

March 2012, Interior convened a meeting of the Presidents of the FAS 

and governors and senior officials from affected jurisdictions to 

collaboratively develop strategies to address policy issues concerning the 

compacts. At the meeting, Interior stated that it would work directly with 

the affected jurisdictions regarding the feasibility of developing uniform 

reporting guidelines, with Guam and Hawaii having leadership roles in the 

effort. As of June 2013, Interior had not prepared any new guidance. We 

continue to believe that providing more rigorous guidelines to the affected 

jurisdictions and promoting their use for compact impact reports would 

increase the likelihood that Interior can provide reliable information on 

compact impacts to Congress.

This concludes my statement for the record.

If you or your staff have any questions about this statement, please 

contact me at 202-512-3149 or gootnickd@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this statement. GAO staff who made key contributions 

to this statement include Emil Friberg, Jr. (Assistant Director); Ashley 

Alley; David Dayton; Martin De Alteriis; Keesha Egebrecht; Fang He; Reid 

Lowe, Mary Moutsos; Michael Simon; Sonya Vartivarian; and Monique 

Williams.

Contacts and Staff 

Acknowledgments

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