2000 Census: Complete Costs of Coverage Evaluation Programs Are Not Available
Released: 2002-11-07T00:00:00

Letter

Background

Early in the 2000 Census cycle, the U.S. Census Bureau was researching coverage measurement options for the 2000 Census, including the Post Enumeration Survey (PES) methods used in past decennial censuses. The bureau explored a number of design options aimed at improving data accuracy while controlling costs. In 1993, the bureau was also evaluating the feasibility of conducting a one-number census, which combines the features of both the traditional head count and statistical methods to produce a single count before the mandated deadlines.

In May 1995, the bureau announced that it would conduct a sample survey of 750,000 housing units, called Integrated Coverage Measurement (ICM), to estimate how many housing units and people it would miss or count more than once in the 2000 Census. In this initial design for the 2000 Census, the bureau planned to use statistical methods to integrate the results of this survey with the traditional census enumeration to provide a one-number census by December 31, 2000. The U.S. Supreme Court ruled in January 1999 that 13 U.S.C. 195 prohibited the use of statistical sampling to generate population data for reapportioning the U.S. House of Representatives. However, the court’s ruling did not prohibit the use of statistical sampling for other purposes, such as adjusting formulas to distribute billions of dollars of federal funding to state and local governments.

Following the Supreme Court ruling, the bureau abandoned certain statistical aspects of the ICM program, and announced the A.C.E. program to assess the quality of the population data collected in the 2000 Census, using a smaller sample of 300,000 housing units. The bureau conducted A.C.E., which corresponded to the PES in past censuses and the ICM in the original 2000 Census Plan, to measure and correct the overall and differential coverage of the U.S. resident population in the 2000 Census. Although A.C.E. was generally implemented as planned, the bureau found that A.C.E. overstated the census net undercount. This was due, in part, to errors introduced during matching operations and from other remaining uncertainties. The bureau has reported that additional review and analysis would be necessary before any potential uses of A.C.E. data could be considered.

Due to uncertainties or errors in the A.C.E. survey results, the acting director of the bureau decided in separate decisions in March 2001 and October 2001 that the 2000 Census tabulations would not be adjusted for any purpose, including distribution of billions of dollars in federal funding.

These decisions were consistent with those for the 1990 Census, which was not adjusted due to other problems. According to senior bureau officials, the bureau is continuing to evaluate issues related to A.C.E. and the census, and the results of its evaluation are expected to influence the bureau’s planning for the 2010 Census.

Bureau Appropriations and Accounting

The bureau receives two appropriations from the Congress: (1) salaries and expenses and (2) periodic censuses and programs. The salaries and expenses appropriation provides 1-year funding for a broad range of economic, demographic, and social statistical programs. The periodic censuses and programs appropriation includes primarily no-year funding to plan, conduct, and analyze the decennial censuses every decade and for other authorized periodic activities. Since fiscal year 1996, the bureau has prepared its annual budget request for the 2000 Census in eight broad frameworks of effort that were submitted to the Office of Management and Budget (OMB) and the Congress. For management, program, financial, staffing, and performance purposes, frameworks are further divided by the bureau into activities and then projects within these activities.

The bureau accounts for the costs of conducting the ICM/A.C.E. programs in its Commerce Administrative Management System (CAMS), which became operational in fiscal year 1997. Bureau financial management reports generated by CAMS have provided appropriated amounts, expended and obligated amounts, and variances to a project level from fiscal year 1997 to the current period. The ICM/A.C.E. programs are an activity comprised of eight projects contained within three frameworks. Fiscal year 1996 was the first year the bureau set up a specific project code to identify ICM program costs through fiscal year 1999. However, it was difficult to identify the change to the A.C.E. program beginning in fiscal year 2000 because the bureau did not change many of the project descriptions in CAMS from the ICM program. As discussed in our December 2001 report, we identified specific control weaknesses for fiscal year 2000 related to the lack of controls over financial reporting and financial management systems.

Scope and Methodology

To meet the objective of responding to seven questions concerning ICM/A.C.E. program life cycle costs, we reviewed and analyzed budget and program data for all coverage measurement programs that existed during the 2000 Census (for fiscal years 1991 to 2003), which included the ICM and A.C.E. programs. We did not audit budget and other financial data provided by the bureau. We also reviewed planning and methodology documents and other available information in order to determine the history of the programs. Also, we identified ICM and A.C.E. project accounts and analyzed amounts by fiscal year using the financial management reports generated by CAMS. We discussed the results of our analysis with senior bureau officials and interviewed bureau officials to obtain their views and observations regarding the ICM and A.C.E. programs. It was not our objective to assess the efficiency of expenditures and obligations against planned budget appropriations.

We encountered several limitations in the scope of our work on this assignment as follows.

We were unable to determine the complete life cycle costs of the ICM/A.C.E. programs because the bureau considered any ICM/A.C.E. related costs from fiscal years 1991 through 1995 as part of its general research and development programs and thus did not separately track these costs. Although some costs were tracked in fiscal year 1996, the bureau still considered these costs as research and development and did not include these costs as ICM/A.C.E. program costs.

We were further unable to identify ICM/A.C.E. portions of costs, such as evaluations and data processing, which the bureau included with other 2000 Census programs.

Our work was performed in Washington, D.C. and at U.S. Census Bureau headquarters in Suitland, Maryland, from February 2002 through July 2002. Our work was done in accordance with U.S. generally accepted government auditing standards. On November 17, 2002, the Department of Commerce provided written comments on a draft of this report and we have reprinted the comments in appendix II. Technical comments were also provided by the department and incorporated into the report where appropriate, but have not been reprinted.

Life Cycle Costs

Although the bureau tracked some costs of conducting the ICM/A.C.E. programs, we found that the bureau did not identify the complete life cycle costs of the programs due to the following three factors.

First, the bureau only tracked the costs of conducting the ICM/A.C.E. programs, which covers the period from fiscal year 1997 through 2003. Although life cycle costs for the 2000 Census cover a 13-year period from fiscal years 1991 through 2003, senior bureau officials said that the ICM/A.C.E. program was not viable for implementation until fiscal year 1997. Therefore, the bureau considered costs from earlier years as part of its general research and development programs and the bureau did not assign unique project codes to identify ICM/A.C.E. programs and related costs in its financial management system.

Second, although $3.6 million of fiscal year 1996 obligated costs were identifiable in the bureau’s financial management system as an ICM special test, the bureau did not consider these costs as part of the ICM/A.C.E. programs. Instead, these costs were considered general research and development. However, because the bureau separately identified these costs as ICM program costs, we have included the $3.6 million as part of the ICM/A.C.E. program costs we could identify in this report.

Finally, we were unable to identify the ICM/A.C.E. portions of costs, such as evaluations and data processing, which the bureau included with other 2000 Census programs. For example, in late fiscal year 2000 and after, the bureau did not separate A.C.E. evaluations from its other 2000 Census evaluations in its financial management system. Bureau officials stated that the contracts for evaluations included overall 2000 Census and A.C.E. evaluations, and did not have a separate code identifying A.C.E. costs. Similarly, the bureau did not capture all costs for items such as data processing by programs like ICM/A.C.E. These type of operations were conducted for the 2000 Census overall, were budgeted by framework, were not separated by program in the bureau’s financial management system, and were not allocated back to individual projects. Therefore, we were unable to identify these types of costs for the ICM/A.C.E. programs.

Seven Issues Related To ICM/A.C.E. Programs

Due to the limitations in the bureau’s data, our responses to the seven specific questions identified in your request do not include all ICM/A.C.E. life cycle costs and are limited to available cost information covering fiscal years 1996 through 2003, except where indicated, and exclude such costs as A.C.E. evaluations and some data processing. The following sections include our responses to the seven questions on ICM/A.C.E. program life cycle costs. 1. What were the original estimated life cycle costs for the ICM/A.C.E. programs?

The bureau originally estimated the costs of conducting the ICM program to be about $400 million when it planned to use statistical methods to integrate the results of a survey based on 750,000 housing units with the traditional census enumeration to provide a one-number census. This original estimate included fiscal years 1997 through 2003. However, this estimate was incomplete, as the bureau did not include program costs prior to fiscal year 1997 because it considered them as general research and development costs. The bureau also combined costs for A.C.E. evaluation and data processing with other program costs in different frameworks.

The U.S. Supreme Court ruled in January 1999 that statistical sampling could not be used to generate population data for reapportioning the House of Representatives. As a result of the ruling, in June 1999, as part of its amended fiscal year 2000 budget request, the bureau decreased the ICM/A.C.E. program by about $214 million, due to a reduction in the sample size from 750,000 to 300,000 housing units. We could not identify from bureau records an original estimate for only A.C.E. life cycle costs for completing the scaled-back survey. 2. What was the source and support for $400 million in life cycle costs reported by the bureau for the ICM/A.C.E. programs?

In 1995, the bureau estimated life cycle costs for the 2000 Census in 13 frameworks; however, bureau documents did not break out the frameworks into activities and projects. The first evidence for the $400 million cost estimate for conducting the ICM/A.C.E. program for the 2000 Census was submitted as part of the original fiscal year 2000 budget justification for overall census operations to the Congress in February 1999. This original budget was prepared based on the initial design for ICM, which planned to incorporate statistical methods to integrate the results of a survey based on 750,000 housing units with the traditional census enumeration to provide a one-number census. 3. How were ICM/A.C.E. program costs estimated?

According to bureau officials, estimates of ICM/A.C.E. costs are based on assumptions about the needs for headquarters and support staff and related benefits, contractual services, travel, office space, and equipment costs necessary to conduct and support operations of the program. The bureau used an electronic cost model to calculate many of the estimates for the ICM/A.C.E. programs.

For personnel costs, the A.C.E. program costs were divided into costs for data collection and costs for headquarters full-time equivalent (FTE) staff and support staff as follows.

The A.C.E. field staff needed to conduct each A.C.E. data collection operation included enumerators, crew leaders, field operations supervisors, and assistants. The cost model was designed to estimate the number of field staff positions, hours, FTEs, salary costs, and mileage costs. In the cost model, each operation had its own distinct production assumptions based on the data collection needs for that operation. Based on operational needs, the bureau determined the assumptions for production rates, mileage rates, production and training days, and hours worked per day.

The magnitude of the A.C.E field production labor was determined by the A.C.E. field operation workload. Based on the workload, the number of A.C.E. enumerators was calculated for each operation. Then, based on the number of enumerators, the bureau determined the number of crew leaders, field operations supervisors, and assistants needed. The number of production positions became the bureau’s basis for the number of staff to be trained. The number of positions, both production and trainee, was then used to estimate the salary cost as a function of the total production and trainee hours and applicable labor rates.

Once labor rates were determined, a percentage was used to calculate benefit costs.

For nonpersonnel costs, the bureau estimated the costs based on the following.

Contract costs were estimated based upon procurement needs for goods and services, including contractors hired to assess the feasibility of A.C.E. operations and to evaluate the results of the program.

Travel costs were estimated using the numbers of production and trainee positions to calculate the average miles per case and the mileage reimbursement rate.

Office space estimates were based on the number of people who needed space, the number of square feet per person, and the cost per square foot.

Equipment and supply costs were based on the needs of each employee and the specific needs of each A.C.E. operation. This included laptop computers that were provided to field data collection staff to conduct interviews and to monitor the operational progress of the program. 4. How much did Census budget for the ICM/A.C.E. programs?

As shown in figure 1, we identified from bureau records budgeted amounts of $276.5 million for conducting the ICM/A.C.E. programs. Of this amount, $64.2 million was for the ICM program from fiscal year 1996 through 1999, and $212.3 million was for the A.C.E. program from fiscal year 2000 through 2003. Also, see table 1 in appendix I for additional details of ICM/A.C.E. budgeted costs by framework and project. 5. What were the obligated life cycle costs for the ICM/A.C.E. programs?

As shown in figure 2, we identified from bureau records obligated amounts of $206.9 million, of which $58.4 million was for the ICM program from fiscal year 1996 through 1999, and $148.5 million was for the A.C.E. program for fiscal years 2000 and 2001. We did not include obligated costs for fiscal year 2002 as they are not yet final and fiscal year 2003 obligations have yet to be incurred. Also, see table 2 in appendix I for additional details of obligated costs for the ICM/A.C.E. programs.

As shown in figure 3, of the $206.9 million of obligated ICM/A.C.E. program costs through fiscal year 2001, 65 percent or about $135 million were for salaries and benefits. The next largest category was for contractual services, which constituted about $22.3 million or 11 percent of ICM/A.C.E. program costs. The third largest category was for equipment, which constituted about $22 million, or 11 percent of ICM/A.C.E. program costs. Other costs - including office space, travel, and supplies - made up about $27.6 million or 13 percent of program costs. 6. Were there any budgeted funds for the ICM/A.C.E. programs not used as of the end of fiscal year 2001, and if so, how much?

About $57.7 million of budgeted funds that we identified from bureau records for the ICM/A.C.E. programs were not obligated through fiscal year 2001.

For fiscal years 1996 and 1997, there were no unused funds for the ICM program.

For fiscal year 1998, about $2.7 million remained unobligated for the ICM program because of the following reasons. $1.5 million was due to the dress rehearsal housing unit follow-up workload being smaller than anticipated; a bureau bonus program not being implemented although budgeted; and less mileage reimbursement than budgeted under project code 6205 (ICM Dress Rehearsal). $400,000 was due to unused budgeted funds for salaries related to project code 6352 (ICM Coverage Measurement). $400,000 was due to unused budgeted funds for salaries and a delay in awarding contract services under project code 6444 (ICM Procedures and Training). $400,000 was due to unused budgeted funds for regional office manager and assistant manager salaries and travel costs due to delays in hiring under project code 6480 (ICM Collection).

For fiscal year 1999, about $3.6 million budgeted for the ICM program remained unobligated due to the following reasons.

About $2.3 million related to project code 6480 (ICM Collection) was not used, including $1.6 million due to unspent salaries related to hiring delays, hiring fewer staff than authorized for selected positions, and hiring qualified candidates at less than budgeted levels. Another $0.7 million was due to less mileage reimbursement than budgeted.

About $1.2 million was due to equipment costs and hardware for 2000 being less than budgeted under project code 6608 (ICM Processing).

For fiscal year 2000, about $42.5 million remained unobligated for the A.C.E. program, consisting of almost $40 million for project code 6480 (A.C.E. Collection), which was budgeted for the program but was not used primarily because of the following reasons.

About $32 million was due to unspent salaries and benefits for office staff in field offices from hiring fewer positions and hiring at lower grades than budgeted and from lower data collection costs due to a reduction in cases requiring personal visits.

About $4 million was due to the fact that contract obligations for laptop computers and support services were less than budgeted.

About $2 million resulted from lower GSA rents than budgeted.

For fiscal year 2001, about $8.9 million of unobligated funds remained for the A.C.E. program, consisting mostly of $6.4 million for project code 6480 (A.C.E., Collection), which was budgeted for the program but was not used. 7. What were the ICM/A.C.E. program-related costs for the bureau dress rehearsal in fiscal year 1998?

As shown in appendix I, the ICM program-related costs for the 1998 dress rehearsal were captured under project code 6205 (ICM Dress Rehearsal). Of the total $10.8 million budgeted, we were able to identify obligations of $9.4 million from bureau records. Most of these obligations were incurred in fiscal year 1998, with some follow-up amounts in the first quarter of fiscal year 1999. According to bureau officials, the dress rehearsal project activities included data collection and case management, data processing, and implementation of estimation operations. This project also covered the implementation of ICM and some elements of A.C.E. at the Sacramento, California, and Menominee County, Wisconsin dress rehearsal sites.

Agency Comments and Our Evaluation

The Department of Commerce comments expressed disagreement with how we presented answers to the seven questions in the report, but did not comment on the substance of our answers. It said that our report’s conclusions imply financial management or reporting failures and suggest specific control weaknesses in the bureau’s financial management systems. It also said we inferred an inability to properly manage from large unexplained discrepancies between budgeted and obligated amounts for the ICM/A.C.E. programs. Our answers were not prepared with the intent of drawing conclusions beyond the information presented and we did not make interpretive conclusions or qualitative judgments about the ICM/A.C.E. programs. Although not within the scope of this report, our December 2001 report identified internal control weaknesses for fiscal year 2000 related to the bureau’s lack of controls over financial reporting and financial management systems.

The department’s written comments and our more detailed evaluation of its concerns are presented in appendix II.

As agreed with your offices, unless you announce its contents earlier, we plan no further distribution of this report until 7 days after its issuance date. At that time, we will send copies to the Chairman and Ranking Minority Member of the Senate Committee on Governmental Affairs, the House Committee on Government Reform, and the House Subcommittee on Civil Service, Census, and Agency Organization. We will also send copies to the Director of the U.S. Census Bureau, the Secretary of Commerce, the Director of the Office of Management and Budget, the Secretary of the Treasury, and other interested parties. This report will also be available on GAO’s home page at http://www.gao.gov.

If you or your staffs have any questions concerning this report, please contact me at (202) 512-9095 or by e-mail at kutzg@gao.gov or Roger R. Stoltz, Assistant Director, at (202) 512-9408 or by e-mail at stoltzr@gao.gov. A key contributor to this report was Cindy Brown-Barnes.

Comments From the Department of Commerce

The following are GAO’s comments on the letter dated October 17, 2002, from the Department of Commerce.

GAO Comments

1. Our report does not make interpretive conclusions or qualitative judgments about the ICM/A.C.E. programs. With bureau assistance, we compiled unaudited budgeted and obligated amounts for projects that the bureau reported in its financial management system as being ICM/A.C.E. related. Our review of these reported costs indicated that life cycle costs of the ICM/A.C.E. programs were not complete due to three factors as discussed in the body of our report. One of the factors we cited that contributed to incomplete life cycle costs was $3.6 million of fiscal year 1996 obligated costs for an ICM special test. In its comments, the bureau pointed out that prior to fiscal year 1996 it had not defined the coverage measurement program, did not allocate any expenditures to the ICM project codes, and could not identify any costs prior to fiscal year 1996. Thus, it was the bureau’s decision to not track specific costs during this time period and to consider them as general research.

We also stated that $57.7 million of budgeted funds were not obligated or spent through fiscal year 2001, and, with input from bureau officials, we obtained reasons why these funds were not spent. The bureau did not take exception to these facts in its response and we noted no improprieties in this report.

Regarding a reference to specific control weaknesses in its financial management systems, the scope of this report did not include an assessment of internal control weaknesses in the bureau’s financial management systems. However, in a December 2001 report, we identified specific internal control weaknesses for fiscal year 2000 related to the bureau’s lack of controls over financial reporting and financial management systems.2. We still disagree with the bureau on this point, as we stated in the draft report. Because these costs were separately tracked by a specific ICM project code in the bureau’s financial management system, we included them in the costs of the ICM/A.C.E. programs that we could identify. 3. We did not cite discrepancies between the $400 million original cost estimate of the ICM/A.C.E. programs provided in early 1999 and the $277 million budgeted amount we identified for fiscal years 1996 through 2003. An objective of our report was to determine what were the original estimated life cycle costs for the ICM/A.C.E. programs. The earliest amount that we could identify from bureau records was $400 million and in our report we explained that this amount was estimated by the bureau before the January 1999 Supreme Court decision. As a result of this decision and as disclosed in our report, the bureau decreased the ICM/A.C.E. program by about $214 million due to a reduction in the sample size from 750,000 to 300,000 housing units. 4. We did not suggest that the difference between $277 million of budgeted life cycle costs and $207 million of obligated life cycle costs demonstrated the bureau’s inability to properly manage and record expenditures relating to the ICM/A.C.E. programs. As presented in our report, the budgeted amount of $277 million included fiscal years 1996 through 2003 and the obligated amount of $207 million included amounts for 2 fewer fiscal years (1996 through 2001). As the bureau pointed out in its response, it is too soon to determine obligated amounts for fiscal years 2002 and 2003 that were budgeted for $12.5 million. Variances for the remaining $57.7 million of unspent funds are discussed in comment 1. 5. The bureau agreed that it did not capture the life cycle costs of evaluations for the ICM/A.C.E. programs because evaluations for all 2000 Census programs were charged to one project code. However, the bureau believes that data processing costs were included in the life cycle costs of the ICM/A.C.E. programs and stated that not being able to identify portions of these costs is not demonstrative of a financial management or reporting failure. We agree with the bureau that some data processing costs were captured in the life cycle costs of the ICM/A.C.E. programs as evidenced by project codes for ICM/A.C.E. data processing for procedures, training, and processing as part of Framework 5. However, we do not believe that all data processing costs were included. Similar to evaluation costs, the bureau attributed much of its computer hardware and support costs to overall 2000 Census programs, and did not allocate costs to specific projects or programs.

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