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. In 1947, the United States entered into a trusteeship with the United Nations and became the administering authority of the FSM, the Marshall Islands, and Palau. The four states of the FSM voted in 1978 to become an independent nation, and the Marshall Islands established a constitutional government and declared itself a republic in 1979. Both the FSM and the Marshall Islands remained subject to the authority of the United States under the trusteeship agreement until 1986, when a Compact of Free Association went into effect between the United States and the two nations. In 1994, Palau also entered a Compact of Free Association with the United States and became a sovereign state. Under the compacts, FAS citizens are exempt from meeting the visa and labor certification requirements of the Immigration and Nationality Act (INA) 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. In addition, under the compacts, the United States provided economic assistance, and access to certain federal services and programs, among other things. Also 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. A further compact-related agreement with the Marshall Islands secured the United States access to the U.S. military facilities on Kwajalein Atoll, which are used for missile testing and space tracking activities. In the 1986 compacts’ enabling legislation, Congress stated that it was not its intent to cause any adverse consequences for United States 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. The legislation also required the President to report and make recommendations annually to the Congress regarding adverse consequences resulting from the compact and provide statistics on compact migration. In November 2000, Congress made the submission of annual impact reports optional and shifted the responsibility for preparing compact impact reports from the President, with Interior as the responsible agency, to the governors of Hawaii and the territories. In December 2003, Congress approved the amended compacts with the FSM and the Marshall Islands and took steps in the amended compacts’ enabling legislation to address compact migrant impact in U.S. areas. The 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 authorized and appropriated $30 million 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, due to the residence of compact migrants in their jurisdiction. Interior’s Office of Insular Affairs (OIA) reviews the affected jurisdictions’ annual proposals for the use of the funds and provides them to affected jurisdictions as grants. Grants are to be used only for health, educational, social, or public safety services, or infrastructure related to such services due to the residence of compact migrants. Under the amended compacts’ enabling legislation, the affected jurisdictions are to receive their portion of the $30 million per year through 2023 in proportion to the number of compact migrants living there, as determined by an enumeration to be undertaken by Interior and supervised by Census or another organization at least every 5 years beginning in fiscal year 2003. The act permits Interior to use up to $300,000 of the compact impact funds, adjusted for inflation, for each enumeration. The legislation 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 as of the date of the most recently published enumeration. In contrast to the original compacts’ enabling legislation, 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. 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. The amended compacts require that the sector grants be targeted to sectors such as education, health care, the environment, public sector capacity building, private sector development, and public infrastructure, or for other sectors as mutually agreed, with priority given to education and health. The amended compacts also established two management committees, the U.S.-Federated States of Micronesia Joint Economic Management Committee and the U.S.-Republic of the Marshall Islands Joint Economic Management and Financial Accountability Committee. Each committee has two FAS representatives and three U.S. representatives from, respectively, Interior, the Department of State, and the Department of Health and Human Services, with the Interior representative serving as chair. These committees review and approve compact grant allocations and performance objectives for the upcoming year on an annual basis and may attach conditions to the grants. Figure 1 shows the locations of the FAS and the affected jurisdictions. Census has gathered data through multiple efforts that can be used to describe aspects of the FAS migration to U.S. areas. Data are currently available through Census’s decennial censuses, which cover all U.S. areas, and its American Community Survey (ACS), which covers the 50 states, the District of Columbia and Puerto Rico. In addition, under agreements with Interior, Census has conducted special enumerations of compact migrants in affected jurisdictions, such as in 2003 and the 2008 enumeration required by the amended compacts’ enabling legislation. The next such required enumeration must occur by 2013. The decennial census is an enumeration of the U.S. population that is constitutionally required every 10 years. The 2010 decennial census data was gathered as of a specific day: April 1, 2010.  The 2010 decennial census in the 50 states is a 10-question survey that gathers limited demographic data such as sex, age, and race. The 2010 decennial census race question provided multiple choices for respondents to identify the race of each member of the household, with one choice being “Other Pacific Islander.” Respondents could identify multiple races for each individual and could further identify themselves by writing in a specific race. The decennial census in the 50 states does not collect respondents’ place of birth or year of entry, both of which are needed to identify those who arrived during the period of the compacts and are defined as compact migrants by the amended compacts’ enabling legislation.  Unlike the census in the 50 states, the decennial census in the insular areas—including Guam and the CNMI—is a detailed survey that collects a variety of demographic and economic information including respondents’ place of birth and year of entry, both of which are needed to identify compact migrants. Begun in 2005, the ACS uses a series of monthly samples to produce data for the same small areas of the United States (census tracts and block groups) used in the decennial census and formerly surveyed via the decennial census long form. To conduct the ACS, Census mails survey forms to selected households and, if a household does not respond, follows up by telephone and sometimes in person. Census then uses the information obtained from the surveys to estimate results for the entire population of larger areas that have a determined level of statistical precision. The ACS collects a variety of demographic and economic information on an ongoing basis, including data such as place of birth and year of entry that can be used to identify compact migrants. The ACS reports estimates from individual or multiple years of data rather than point-in-time counts, such as the decennial census provides. Interior has conducted four sets of enumerations of compact migrants in affected jurisdictions. The 1993, 1998, and 2003 surveys used the “snowball” technique; Census, working under an interagency agreement with Interior, employed a two-pronged approach in 2008. In the snowball technique used by Census for the 2003 survey and by prior surveys, trained workers who spoke the FAS languages asked the respondent in compact migrant households for referrals to other compact migrant households until they had surveyed every identified compact migrant. The surveys provided a count of compact migrants and demographic information such as employment, occupation, education, and reasons for migration. The snowball technique is a nonprobability method.  The two-pronged approach used one approach in Guam and the CNMI and another in Hawaii. In Guam and the CNMI, Census designed a block sample probability surveyand collected only the data needed to establish whether the respondents and th eir children could be classified as compact migrants. Census used the survey results to produce an estimate for each affected jurisdiction’s population. data from the 2005, 2006, and 2007 ACS needed to identify migrants and their children. In the CNMI, Census surveyed only the island of Saipan. Because few migrants and approximately 10 percent of the total CNMI population live on the CNMI’s other inhabited islands Census estimated the migrant population on the other islands using data from the 2000 decennial census. Interior for both enumerations. Census and Interior officials did not retain a record of the cost of the 2003 snowball enumeration, but in 2011 the director of the 2003 effort estimated the cost at $400,000 to $500,000, including Census headquarters and field costs but excluding the cost of a final report. In 2008, the two-pronged approach cost approximately $1.3 million, including headquarters and field costs and the cost of final reporting. The combined data from Census’ 2005-2009 ACS and the 2008 required enumerations in Guam and the CNMI estimated approximately 56,000 compact migrants—nearly a quarter of all FAS citizens—living 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. According to ACS data, nine mainland states had estimated compact migrant populations of more than 1,000. (See fig. 2.) In comments on a draft of this report, the government of Arkansas stated that it had serious doubts about the accuracy of the ACS estimate for Arkansas shown in figure 2, particularly in comparison to the higher count implied by 2010 decennial Census data and school enrollment data from Springdale, Arkansas. See appendix IV for a discussion of the differences between these data sources, and see appendix II for the varying estimates in Arkansas. 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. According to these estimates, although the FSM produced the highest number of migrants, Marshallese predominated in Arizona, Arkansas, California, and Washington. See appendix III for Census’s 2005-2009 ACS estimates of compact migrants by U.S. area and FAS of origin. Census has also published the 2010 decennial census counts of Pacific Islanders, with respondents identifying themselves by race, for the 50 U.S. states. Decennial census data include published state-level information on the Marshallese population and will provide counts of ethnicities from the FSM and Palauans in the future. According to these data, there are more than 1,000 Marshallese identified by race in five states, with the largest number in Hawaii and Arkansas. See appendix IV for information on the Marshallese population gathered through the 2010 decennial census in the 50 states. Surveys that Interior conducted in affected jurisdictions from 1993 through 2008 show growth in the compact migrant populations in Guam and Hawaii. In the CNMI, the compact migrant population declined between 2003 and 2008, mirroring a general decline in the CNMI population. (See fig. 3.) From 2003 through 2008, the percentage of the total compact migrant population grew in Guam and Hawaii. In 2008, compact migrants represented approximately 12 percent of the total population in Guam and one percent of the total population of Hawaii. (See fig. 4.) Census’s 2003 survey of compact migrants in the affected jurisdictions found that most migrated to the affected jurisdictions for employment or to accompany migrating relatives. Employment was the most common reason for migration in Guam and CNMI, followed by accompanying relatives. In Hawaii, slightly more migrants identified accompanying relatives than employment as their reason for migration. In Guam and the CNMI, less than 1 percent of migrants cited medical reasons for migration; in Hawaii, 10 percent cited medical reasons. Census’s 2008 survey did not ask about reasons for migration. However, during our interviews in 2011, compact migrants and officials from FAS embassies and consulates identified employment opportunities, educational opportunities, accompanying relatives, and access to health care as reasons for migration, similar to the findings from Census’s previous surveys. The two-pronged 2008 enumeration, on which the current allocation of compact impact grants is based, had certain strengths and limitations. Strengths of the 2008 enumeration included its reliance on available data in Hawaii, lowering the enumeration’s cost, and its use of a probability method in all jurisdictions that allows Census to statistically calculate the quality of the data and report margins of error for the enumerations in all three jurisdictions. Limitations of Census’s approach for the 2008 enumeration included its use of two different methods and its use of data from two different time periods, both of which affect the perceived fairness and usefulness of the enumerations. In addition, data resulting from the 2008 approach has limited comparability with data from the prior surveys and includes limited demographic information, limiting the usefulness of the 2008 data for purposes other than the required enumeration.  Use of two different methods. The data produced by block sampling in Guam and the CNMI and the ACS tabulations in Hawaii that were used for the 2008 enumeration are not fully comparable among the affected jurisdictions.  Use of data from different time periods. Because the 2008 enumeration used data from two different time periods—2008 for Guam and the CNMI and 2005 to 2007 for Hawaii—the enumerations for the respective jurisdictions do not reflect the continuing migration to Hawaii after 2007 but do reflect such migration to Guam and the CNMI. The effect of the earlier time frame is to undercount the compact migrants in Hawaii relative to the counts in Guam and the CNMI.  Limited comparability with prior enumeration. The shift in approaches from prior enumerations to 2008 limits Interior’s and affected jurisdictions’ ability to draw inferences from trends in the data. Some differences in the counts for those years may be attributable to the change in methodology rather than changes in the populations. However, using the same methodology at different points in time does not guarantee comparability of data across time.  Limited collection of demographic data. In 2008, Census did not collect information on characteristics of compact migrants in Guam and the CNMI beyond that required for the enumerations. Collected ACS demographic data on characteristics such as employment, income, and age distribution may not be statistically reliable for populations as small as that of compact migrants in Hawaii. The numbers of compact migrants found by the ACS in each year’s Hawaii survey are very small. For example, the 2006 ACS identified, by place of birth and arrival after the compact’s effective date, 55 persons from the FSM, 30 persons from the Marshall Islands, and 3 from Palau. The ACS for 2005-2007 identified a cumulative total of 295 compact migrants, from which Census estimated the total reported population. Affected jurisdictions expressed concerns about the potential accuracy and fairness of the 2008 enumeration approach. Guam, Hawaii, and CNMI officials expressed a preference for the snowball method that was used for the prior enumeration, stating that it was a more suitable approach to enumerating compact migrants. Further, though the snowball method used in the past had undercounted migrants, these officials were concerned that the 2008 approach would also miscount. Both Guam and CNMI officials stated that the compact migrant population changed addresses frequently, potentially affecting the sampling methodology and leading to a miscount. Hawaii expressed concern that the use of ACS data for the state from earlier years would not reflect recent migration and, in contrast to the special survey to be conducted in Guam and the CNMI, would eliminate Hawaii’s local input into the survey while permitting such input from Guam and the CNMI. However, Guam and the CNMI also stated that implementation of the survey was rushed and they had only limited opportunity to provide such input. In addition, Guam, Hawaii, and CNMI officials expressed concern that the approach chosen for 2008 would provide fewer demographic data. Led by the University of Hawaii, the Hawaii Governor’s office prepared an unsolicited proposal to Interior to conduct a snowball survey in all three affected jurisdictions. Responding to the affected jurisdictions’ concerns, Census officials stated that the snowball method was statistically insufficient and was unlikely to meet statistical survey criteria established by OMB in 2006. These criteria require agencies initiating a new statistical survey to document the precision required of the estimates (e.g., the size of differences that need to be detected). Interior offered to adopt Hawaii’s proposal if all affected jurisdictions agreed to it; however, Guam and the CNMI did not agree to the proposal. In addition, Interior cited Census’s independence as an advantage of its conducting the enumerations. Officials in all three affected jurisdictions, however, remained dissatisfied with the 2008 enumeration approach. (See app. V for attributes of the 2008 approach compared with the approach used for the prior enumeration.) Although Interior has not yet selected an approach for its 2013 enumeration of compact migrants in the affected jurisdictions, Interior and Census officials are discussing a preliminary approach that would have strengths and limitations similar to those we found in the 2008 approach. As of July 2011, according to Census officials, no agreement was in place for Census to conduct this work. However, according to both Interior and Census officials, if Interior employs Census for the 2013 enumeration, Census would again deploy a two-pronged approach, using the 2010 decennial census results for Guam and the CNMI and the ACS for Hawaii. Interior has not determined the cost of the preliminary approach or weighed its strengths and limitations. Our analysis shows that the strength of the preliminary 2013 approach would be its low cost; because it would draw solely from existing Census data, it would require no new data collection. However, it would have limitations similar to those we found in the 2008 approach, compromising both its fairness as a basis for distributing compact impact funds as well as the usefulness of the data it produces.  Use of two different methods. Using the counts provided through the full enumeration contained in the 2010 census in Guam and the CNMI produces single numbers for these jurisdictions. In Hawaii, use of the ACS would provide an estimated total based on a sample with calculated level of precision.  Use of data from different time periods. The preliminary approach would use data from April 1, 2010 for Guam and the CNMI and from multiple ACS monthly samples at different points in time for Hawaii.  Limited comparability with prior data. The change in enumeration method for Guam and CNMI would limit the comparability of the 2008 and 2013 enumerations.  Limited collection of demographic data. Detailed demographic data could be produced for compact migrants in Guam and CNMI, because the 2010 decennial census in those locations collected such data. However, as in 2008, demographic data from the ACS in Hawaii could lack statistical reliability because of the small number of migrants included in the ACS sample. In addition, the 2010 census and the ACS may provide different coverage of the compact migrant populations. The 2010 census collection followed a widespread campaign by Census and community groups to encourage participation, while the ACS collection efforts are not accompanied by this level of outreach. For 2004 through 2010, the affected jurisdictions’ reports to Interior show more than $1 billion in costs for services related to compact migrants. During that period, Guam’s reported costs increased by nearly 111 percent, and Hawaii’s costs increased by approximately 108 percent. The CNMI’s reported costs decreased by approximately 53 percent, reflecting the decline in the CNMI compact migrant population. Figure 5 shows compact impact costs reported by the affected jurisdictions for 1996 through 2010. For more details, see appendix VI. The affected jurisdictions reported impact costs for educational, 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.) Our analysis of data in affected jurisdictions’ impact reports for 2004 through 2010 found that, reflecting the growing numbers of compact migrants, annual costs for educational services across all jurisdictions increased from approximately $46 million to $89 million, or by 93 percent. Annual costs for health services across all jurisdictions increased from approximately $33 million to $54 million, or by 66 percent. The affected jurisdictions’ impact reports, numerous studies, federal and state officials, and officials from affected jurisdictions have identified several other factors, in addition to growing migrant populations, that contribute to the cost of providing public services to compact migrants.  Educational services. Compact migrant school children generally lag academically owing to (1) poor-quality schools in the FAS; (2) limited language skills and experience with a school environment; and (3) difficulties in involving parents in their children’s education, due to language barriers. Various officials from affected jurisdictions, Interior, and service providers said these factors increase the resources required to provide educational services to compact migrants relative to other students.  Health services. FAS citizens have high rates of obesity; diabetes; hypertension; cardiovascular disease; and communicable diseases such as tuberculosis, Hansen’s disease, and sexually transmitted diseases. The Department of the Interior’s Inspector General has reported on inadequate health care systems in the FAS, which can lead to the prevalence of these health issues among FAS citizens. These health factors also lead some FAS citizens to migrate in order to gain access to the U.S. health care system. In U.S. areas, compact migrants’ low household incomes may lead many migrants to rely on public health services.  Social services. Like many other migrant populations, compact migrants often face challenges related to homelessness, reliance on public housing, and crowded living conditions. Various officials in Guam and Hawaii also cited compact migrants’ limited eligibility for a number of federal programs, particularly Medicaid, as a key contributor to the cost of compact migration borne by the affected jurisdictions. Table 2 shows compact migrants’ eligibility status for selected federal benefit programs. In some cases, affected jurisdictions have provided services for compact migrants at local expense that are similar to those available to U.S. citizens. For example, Guam, Hawaii and the CNMI provide funding for medical services that, prior to 1996, were available through Medicaid to low-income non-U.S. citizen compact migrants. U.S.-born children of compact migrants are eligible as citizens for the benefits available to them as U.S. citizens. We identified a number of weaknesses in affected jurisdictions’ reporting of compact impacts to Interior from 2004 through 2010 related to accuracy, adequacy of documentation, and comprehensiveness. Examples of such weaknesses include the following (see appendix VI for more details).  Definition of compact migrants. For several impact reports that we examined, the reporting local government agencies (state and territorial agencies in the affected jurisdictions) did not define compact migrants according to the criteria in the amended compacts enabling legislation when calculating service costs. 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. States and territories receive federal funding for specific programs that offsets a portion of the costs of providing services to compact migrants. However, two of the three affected jurisdictions’ public school systems and health agencies did not account for these offsets in their impact reporting, thus overstating reported compact impact costs.  Revenue. Multiple local government agencies that receive revenues, such as user fees, associated with services provided to compact migrants did not consider them in their compact impact reports, thus overstating reported costs.  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 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.  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. Hawaii reported in 2008 that several costly diseases are overrepresented within the compact migrant population. Using the average cost may either overstate or understate the true cost of service provision. In some cases—for example, the provision of health services—the service cost for each compact migrant could be determined. However, a number of agencies apply a range of approaches, such as using the simple average cost (e.g., cost per student) or factoring in higher costs if additional or more costly services are used.  Discretionary costs. Some compact impact costs local government agencies reported were for benefits or services provided at the discretion of the affected jurisdiction.  Data reliability. One local government agency used data on compact migrants that were found to be in error in a subsequent compilation of their impact reporting and caused an overstatement of total costs in its impact reporting. A number of local government agencies did not disclose their methodology, including any assumptions, definitions, and other key elements, for developing impact costs making it difficult to evaluate reported costs. For those years when the affected jurisdictions submitted impact reports to Interior, not all local government agencies in the jurisdictions included all compact impact costs for those years. Between the affected jurisdictions the scope of reporting differed, with one jurisdiction not reporting cost related to police services. Guidelines that Interior developed in 1994 for compact impact reporting for Guam and the CNMI 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, 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. 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 was in possession of the guidelines, said that the bureau attempts to adhere to them when preparing compact impact cost estimates. The bureau does not provide these guidelines in its annual letter to the agencies when requesting compact impact costs since the agencies do not submit their reports for Interior directly. The bureau said it applies the guidelines to the data it receives from the agencies prior to submitting the final report to Interior. However, we found some cases where the bureau and local Guam agencies did not follow the guidelines. Interior’s reporting to Congress on compact impacts reported by the affected jurisdictions has been limited. The amended compacts’ enabling legislation requires Interior, if it receives compact impact comments from the Governor of an affected jurisdiction by February 1, to submit a report with specific required elements on compact impact to Congress no later than May 1 of that year. As of August 2011, Interior had submitted one required report to Congress in 2010 but had not submitted any reports in 2004 through 2009, although at least one affected jurisdiction had reported compact impacts to Interior in each of those years. Although Interior officials stated they were preparing their 2011 congressional report, as of August 2011 it had not been submitted. Interior’s 2010 report did not address all elements required by the amended compacts’ enabling legislation: Interior’s report lacked information from the Guam and Hawaii governors’ compact impact reports regarding increasing compact migrant costs, the types of services being used, and the associated costs for each local government agency. Interior’s report did not analyze the impact cost information provided by the two governments. However, Interior noted that the affected jurisdictions’ compact impact reports do not calculate compact migrants’ contributions. Interior’s report did not state its views on recommendations for corrective action, such as Hawaii’s suggestion to authorize compact migrant eligibility for all federal assistance programs to reduce impact. However, Interior relayed requests from the governors of Guam and Hawaii for additional funds and provided a summary of Interior’s compact impact funding provided to Guam and Hawaii. In August 2011, Interior reminded affected jurisdictions of their option to submit annual compact impact reports and identified a point of contact at Interior to which the reports may be submitted. Interior also noted that it is currently developing a process to ensure timely submissions to Congress. Compact migrants participate in local economies through their participation in the labor 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. According to data from the 2003 Surveys of Micronesian Migrants, the majority of compact migrants participated in CNMI’s and Guam’s labor force and over 40 percent participated in Hawaii’s labor force. However, compact migrants generally participate in the labor force at lower rates than the general population. The 2003 data also showed that compact migrants from the Marshall Islands generally had lower labor force participation rates than compact migrants from the FSM and Palau. Compact migrant workers generally work in low-skilled occupations. According to data from the 2003 survey, the majority of compact migrant workers work in the private sector as (1) operators, fabricators, and laborers; (2) service workers; and (3) technical, sales, and administrative support. Guam and Hawaii do not have more recent data on compact migrant workforce participation, but CNMI Department of Finance data show that, on average, compact migrants comprised 2.3 percent of the CNMI workforce from 2004 through 2009 and had income 14 percent higher than other workers. Persons born in the FAS may also serve in the U.S. armed services and, as of August 2011, 381 were serving on active duty. Compact migrants participate in local economies through taxation, but reliable data quantifying their effect are not available. Guam and Hawaii do not collect data on the ethnicity of taxpayers or other information that could be used to disaggregate the taxes paid by compact migrants from overall receipts. However, for Guam, our estimates show that compact migrant workers paid $971 less (68 percent less) per capita in taxes than other workers in 2009. Approximately 60 percent of this difference results from compact migrant workers’ being much less likely to be employed in Guam’s higher paying public sector. The remaining difference results from the higher number of exemptions that compact migrant workers could claim, on average, for family members when filing taxes. Alone among affected jurisdictions, the CNMI collects data on citizenship that could be used to identify the taxes paid by compact migrants. However, the data provided by the CNMI include only the amount of taxes withheld and not the amount ultimately paid. These data may overestimate the amount of taxes paid, since a portion of taxes withheld may be returned to the taxpayer. Compact migrants contribute to the local economy by consuming local goods and services and by spending remittances that they receive from their home islands in affected jurisdictions. Their total consumption and economic effect may be reduced if they remit some of their income to their home islands. Data from 1998 suggest that compact migrants generally consume less of their income than does the general population; however, since that time, no data quantifying consumption by compact migrants has been published. Compact migrants we met with confirmed that they send remittances to their home islands; however, estimates and methodologies for remittances have many limitations and vary significantly across sources, calling their reliability into question. From fiscal years 2004 through 2010, the $30 million in annual compact impact grants, which Interior has awarded in accordance with the enumerations of compact migrants, have addressed a portion of each jurisdiction’s reported impact costs. Of the $210 million in impact grants, approximately $102 million was provided to Guam, $75 million to Hawaii, and $33 million to the CNMI (see fig. 6). In their compact impact reports to Interior, the governors of Guam and Hawaii have highlighted the gaps between their reported impact costs and the amounts of the compact impact grants, requesting that the federal government provide additional support. Interior has approved affected jurisdictions’ applications for compact impact grants to be used for general support of local budgets, projects, and for specific departmental purchases in the areas of health, education, public safety, and social services.  Guam. 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.  Hawaii. 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.  CNMI. 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. See appendix VII for a description of Interior’s grant reviews and a list of compact impact grants to the affected jurisdictions from fiscal years 2004 to 2011. Compact migrants confront complex challenges related to the compact migrants’ unfamiliarity with local language and culture, limited job skills, and difficulty in accessing available services, according to various government officials, services providers, and compact migrants. Compact impact grants are generally not used to directly target these complex challenges. However, a report by the Hawaii Compacts of Free Association Taskforce released in 2008 recommended a review of the allocation and use of compact grants that the state received from Interior to determine whether there is a way to spend compact impact grants that would have a more effective long-term impact. Officials, providers, and migrants identified the following needs: Language and cultural assistance. Guam education, health, and social service officials reported, among other challenging cultural gaps facing arriving migrants, the need for interpreters to assist patients and families. Hawaii health providers noted that language and cultural barriers compromise care delivery. In addition, the Hawaii Taskforce report identified a need to develop translation and interpreter resources. A number of compact migrants in Guam and Hawaii identified language and cultural issues as a source of difficulty in using government services and identified a need for translators and language tutors. Job training. The Governor of Guam noted that FSM migrants in Guam face challenges due to their lack of job skills and education. Various members of the compact migrant community in Hawaii also cited lack of job skills as a challenge and said that job training is needed to help migrants gain employment. Access to basic services. Hawaii officials identified lack of coordination of services as a challenge. Various FAS officials noted that their citizens are at times frustrated in their attempts to obtain basic documents such as social security numbers and driver’s licenses from officials who are unaware of the compact provisions for compact migrants. In addition, several compact migrants in Hawaii noted that compact migrants are often unaware of available benefits. To more directly address these needs, various government officials, service providers, and compact migrants suggested the establishment of centers offering multiple services to migrants. In Guam, the Center for Micronesian Empowerment provides culture, language, and job skills training, as well as help in finding employment, to both arriving and resident compact migrants. According to one of the center’s founders, the language and cultural training has reduced employee attrition in companies that hire the trainees, and migrants who receive job skills training are almost guaranteed to find employment. Guam officials also noted that Interior grants had previously funded another resource center for FAS citizens that supported migrant efforts to assimilate and provided outreach and services to newly arriving migrants.  The Hawaii Taskforce report recommended the establishment of multipurpose cultural outreach service centers or mobile service delivery centers, among other options, to standardize service delivery processes and promote accessibility.  A senior official at the Hawaii State Department of Health advocated a “one-stop” service center approach for migrants with medical and other government services, with staff who can assist with language and cultural issues. Kokua Kalihi Valley, a community nonprofit in Hawaii, includes elements of such an approach, providing health, social, and youth services, among others, to compact migrants.  Several compact migrants in Hawaii suggested the establishment of a community center to help people adjust and acclimate—for example, by teaching them how to work with schools and access services. Sector grants awarded in fiscal years 2004 through 2010 may have helped mitigate compact impact by supporting the health and education sectors and, in some instances, directly targeted issues related to compact impact in the affected jurisdictions. In 2001, we reported that targeting assistance to the health and education sectors in the FSM and the Marshall Islands might lessen compact migration and its impact in the affected jurisdictions. For example, better education systems in the FSM and the Marshall Islands might reduce the motivation to migrate and enable those who do migrate to better succeed in U.S. schools. Also, targeting health spending where health services are limited might reduce the number of citizens who travel to the United States seeking medical care. Further, programs aimed at improving the health status of FAS citizens might reduce the impact of migrating citizens on the U.S. health care system. Under the amended compacts, the U.S.-Micronesia and U.S.-Marshall Islands joint management committees, chaired by Interior, annually review and approve sector grants that allocate funds primarily for education, health, and infrastructure. The amended compacts and related agreements outline the joint management committees’ responsibilities as including allocating sector grants and recommending ways to increase the effectiveness of sector grant assistance. Based on the joint management committees’ annual approval of sector grants, Interior has made available approximately $808 million in sector grant funds in fiscal years 2004 through 2010. (See table 3 for sector grant allocations approved for fiscal year 2011.) In allocating sector grants for fiscal years 2004 through 2010, the joint management committees did not formally address the needs of compact migrants or their impact on U.S. states and territories, according to Interior officials. In 2011, the committees formally placed compact impact on their annual meeting agendas; however, as of September 2011 they had not allocated 2012 sector grant funding to directly address issues that concern the compact migrants or the affected jurisdictions. The amended compacts indicate that the sector grants are to be used for sectors such as education, health care, the environment, public sector capacity building, and private sector development in the FSM and Marshall Islands but may be used for other sectors as mutually agreed, with priorities in the education and health care sectors. We found some examples of grants that directly address compact migrants’ needs in affected jurisdictions and thus respond to some of the affected jurisdictions’ concerns.  For fiscal years 2010 and 2011, three of the four states of the FSM agreed to use a total of approximately $842,000 of supplemental education grants to fund the Center for Micronesian Empowerment, which assists Micronesians in Guam with language and culture training, developing job skills, and finding employment.  For fiscal years 2009 and 2010, Interior awarded approximately $3.4 million in health sector grants to the FSM and the Marshall Islands to address an outbreak of multidrug-resistant tuberculosis—a public health concern and a costly communicable disease that has occurred among migrants in the affected jurisdictions. During our visits to the affected jurisdictions in February 2011, the Governor of Guam identified a need to use sector grants in the FSM to improve education and health services to reduce compact impact in Guam, noting that he and the President of the FSM had discussed ways to work together to improve assimilation of migrants from the FSM in Guam. FSM migrants in Guam identified a need for cultural education and job training at home before citizens migrate to the United States. In Hawaii, officials identified the need to address health and social issues in the FSM and the Marshall Islands to better prepare FAS citizens considering migration and reduce the need for migrants to seek health and social services in Hawaii. In addition, compact migrants in Hawaii suggested that U.S. grant funds currently going to the FSM and the Marshall Islands be used to establish a compact migrants’ cultural center in Hawaii. In May 2011, Members of Congress wrote to Interior and the Department of State asking that a portion of sector grants be used to fund a program to prepare FAS citizens for migration and to establish and operate dialysis treatment facilities in the FSM and the Marshall Islands so that patients will not seek treatment in the United States. In their annual meetings held in August and September of 2011, both joint management committees formally placed compact impact and fiscal year 2012 sector grants on their agendas, but neither committee allocated sector grants that directly address compact migration. Although the compact migrant population represents a tiny fraction of migrants in the United States, the population can have significant impacts on the U.S. communities where they reside. To help defray costs of providing services to compact migrants, Congress has appropriated compact impact funds that Interior allocates to the affected jurisdictions in proportion to the required periodic enumerations of compact migrants. However, developing a cost-effective enumeration approach that is fair, is accepted as credible by affected jurisdictions, and produces additional demographic data remains a challenge. Thorough consideration of the strengths, limitations, and costs of the preliminary approach for the 2013 enumeration, as well as the concerns of affected jurisdictions, would enhance Interior’s ability to select a credible and reliable approach. Although the affected jurisdictions have reported rising costs of addressing compact migrants’ needs for health, education, and social services, the jurisdictions’ estimates of these costs have weaknesses that affect their reliability. Moreover, Interior’s 1994 guidelines for reporting compact impact do not address certain concepts, such as defining compact migrants and calculating revenues, that are essential for reliable estimates of impact costs. Providing more rigorous guidelines to the affected jurisdictions that address concepts essential to producing reliable impact estimates and promoting their use for compact impact reports would increase the likelihood that Interior can provide reliable information on compact impacts to Congress. Interior’s compact impact grants have generally been used for affected jurisdictions’ budget support, projects, and purchases in the areas of education, health, and public safety. Meanwhile, government officials, service providers, and compact migrants noted the complex challenges confronting both service providers and migrants and suggested approaches to directly address these challenges. For example, centers offering multiple services could address migrants’ needs for basic services as well as facilitate provision of services and improve migrants’ access. One affected jurisdiction also noted the need to review the allocation and uses of the grants to determine whether they could be spent in a way that would increase their long-term effectiveness. Given that compact impact grants only partially offset the affected jurisdictions’ reported rising impact costs, Interior working with the affected jurisdictions to identify alternative uses of the grants could more effectively address compact impact. Available data suggest that about 56,000 citizens of the FSM, the Marshall Islands, and Palau—nearly a quarter of all FAS citizens—reside in the United States and its territories under provisions of the U.S. compacts with those countries. In Guam and Hawaii, officials have advocated the use of sector grants to reduce the impact of compact migration by improving education, health, and social services in the FSM and the Marshall Islands, and compact migrants cited the need for assistance in adapting to life after migration. The joint U.S. - FSM and U.S. - Marshall Islands committees’ allocations of sector grants since 2003 have supported the health and education sectors in the FSM and the Marshall Islands and may indirectly help to mitigate compact impact in the affected jurisdictions. The committees have included compact impact on their recent agendas; however, they have not yet considered potential uses of the grants to directly address the issues that concern compact migrants or the affected jurisdictions. We recommend that the Secretary of the Interior take the following four actions: In order to select the most appropriate approach for its next enumeration of compact migrants, fully consider the strengths and limitations of its preliminary approach for 2013, weighing the cost of the approach with the need for data that will be fair as well as useful to the affected jurisdictions. In order to strengthen its ability to collect, evaluate, and transmit reliable information to Congress, disseminate guidelines to the affected jurisdictions that adequately address concepts essential to producing reliable impact estimates, and call for the affected jurisdictions to apply these guidelines when developing compact impact reports. In order to promote the most effective use of compact impact grants, work with the affected jurisdictions to evaluate the current use of grant funds and consider alternative uses of these grants to reduce compact impact. In order to help mitigate compact impact and better assist FSM and Marshall Islands citizens who migrate to the United States, work with the U.S.-FSM and U.S.-Marshall Islands joint management committees to consider uses of sector grants that would address the concerns of FSM and Marshallese migrants and the affected jurisdictions. We provided a draft of this report to the Department of the Interior; the Department of State; the Census Bureau; and the governments of Guam, Hawaii, the CNMI, Arkansas, the FSM, Marshall Islands, and Palau for review. All except the Department of State provided written comments, which we have summarized below with our responses. See appendixes VIII through XVI for reproductions of the comments, along with our detailed responses. Interior generally agreed with our findings and the recommendations that it fully consider the strengths and limitations of enumeration approaches and that it disseminate guidelines on impact estimates. However, Interior disagreed with our recommendation that it work with the affected jurisdictions to evaluate the use of compact impact grant funds and consider alternative uses. Interior stated that the amended compacts’ enabling legislation authorizes broad uses of compact impact grants and that it has chosen to respect the funding priorities of the governors. Further, Interior stated that it did not believe that practical gains can be made by proposing alternatives. We believe Interior should not rule out the possibility of practical gains through a consideration of alternate uses of the grant funds. During our review, government officials and service providers suggested alternative uses of compact impact funding that may more directly address compact impact, such as measures to reduce certain health costs through the provision of preventive care. The governors of Guam and the CNMI agreed with this recommendation, and the governor of Hawaii noted that ideas to increase long-term capacity or efficiency of resources could be of great benefit to the affected jurisdictions. We retain our recommendation for Interior to work with governors to evaluate their current use of funds and to consider alternative uses. Interior agreed with our recommendation that it work with the U.S.-FSM and U.S.-Marshall Islands joint management committees to consider uses of sector grants that would address the concerns of compact migrants and the affected jurisdictions, subject to the funds being used within the FAS. However, Interior stated that our draft report implied that compact sector grant funds should be shifted from providing assistance to the FAS governments to providing assistance to FAS citizens living in the affected jurisdictions, an action that Interior sees as inconsistent with the compacts and their enabling legislation. We agree with Interior that compact sector grants are to support the governments of the FSM and the Marshall Islands by providing grant assistance to be used in certain sectors such as education and health care, or for other sectors as mutually agreed. We expect that compact sector grant awards will be provided consistent with the terms of the compacts and the amended compacts’ enabling legislation; we do not intend to imply that funds should be shifted from FAS governments to FAS migrants. In response to Interior’s concern, we clarified that our findings and recommendation highlight the opportunity for the joint management committees to consider the use of sector grants to the FSM and Marshall Islands in ways that address the concerns of FAS citizens—whether they are in the FAS or in U.S. areas—and the concerns of the affected jurisdictions. The recommendation supports consideration of the use of sector grants in ways that respond to the concerns of FSM and Marshall Islands migrants and the affected jurisdictions. Census did not comment on our report’s recommendations but offered a number of largely technical comments on our findings, which we have addressed as appropriate. Census disagreed with our assessment of the limitations of the 2008 enumeration methodologies. However, our findings indicate that the 2008 Guam and CNMI surveys are not comparable with the ACS estimates for Hawaii in terms of their sampling methods and reporting period. In addition, as our report notes, migration is continuing, and Hawaii ACS data does not include nearly a year of additional migration that may be captured in the Guam and CNMI totals. Regarding its varying estimates of compact migrants in Arkansas, Census stated that the different estimates are not based on the same criteria and therefore should not be compared. We agree that the surveys have different bases for identification, and we identify several reasons for these differences in appendix IV of the report. We have also noted Arkansas’s and Hawaii’s observations about the accuracy and reliability of the ACS data. The government of Hawaii generally agreed with our recommendations and made several related observations. In particular, in response to our recommendation that Interior disseminate guidelines to the affected jurisdictions for estimating compact impact, the government of Hawaii said it would be willing to consider using such guidelines if they do not create undue burdens. Regarding our recommendation that Interior work with the affected jurisdictions to evaluate current uses of compact impact grants and consider alternative uses, the government of Hawaii noted that it had always used compact impact assistance for direct services to compact migrants, and said it had done so efficiently and effectively. However, Hawaii noted that ideas to increase long-term capacity or efficiency, or proposals to strengthen support infrastructure, could be of future benefit. The government of Hawaii stated that a portion of the sector grants to the FAS might be more effectively used to provide services to their compact migrants and suggested that affected jurisdictions provide input on the use of sector grants. The government of Guam agreed in principle to the four recommendations in our report. Regarding the required enumerations of compact migrants, the government of Guam stated that Interior’s decision not to use the enumerations to collect additional demographic data has resulted in the loss of valuable information. The government of Guam also welcomed legislative proposals for federal impact aid for education and restoration of Medicaid eligibility. Regarding our recommendation to consider uses of sector grants to address compact impact, the government of Guam cautioned that while such use may lessen impact on affected jurisdictions, diverting them from use within the FAS must be carefully weighed. The government of Guam also stated that the report does not discuss some options available in the amended compacts' enabling legislation to address compact impact, including: direct financial compensation to affected jurisdictions, nondiscriminatory limits on migration, and debt relief to offset previous costs. Our report notes the authorization of additional appropriations but does not address limits on migration. We added a note to the report to describe the debt relief provision but also note that it expired on February 28, 2005. The government of the CNMI generally agreed with our findings and recommendations and stated that Interior should consult with the CNMI on developing cost guidance based on Interior Inspector General, Office of Management and Budget, and GAO guidance. The government of the CNMI also recommended that Congress provide additional appropriations to redress the outstanding costs for services provided to compact migrants from past years to the present. The government of Arkansas generally agreed with our findings but expressed serious reservations about the ACS data shown in figure 2 of our report. The government of Arkansas asked that figure 2 show Census’s 2010 decennial census count based on race rather than the estimate of compact migrants based on ACS 2005-2009 data. We agree that there are differences between the counts and list some of the reasons for the differences in appendix IV. We have added additional text to the report body to present Arkansas’s concerns and more thoroughly describe the differences between the data sources. The government of the FSM commented that weaknesses we identified in affected jurisdictions’ impact cost reporting, combined with the lack of information on the positive contributions of compact migrants, leaves the net impact unknown. The FSM asked that the service of its citizens in the U.S. armed forces be recognized in our report. In response, we obtained information on the number of FAS-born persons on active duty in the armed forces and have included it in the report. Further, the FSM expressed concern that disagreements regarding the compact migrant enumerations will continue and requested that parties involved in the 2013 enumeration reach an agreement on the best approach. The government of the Marshall Islands stated that a methodology should be developed to calculate net compact impact and requested that the contributions of Marshall Islands citizens in the U.S. armed forces be recognized in our report. The government of the Marshall Islands commented that it views the immigration privileges under the compact as a cornerstone of its free association with the United States and that any changes to them will lead to a deterioration in the relationship between the United States and the Marshall Islands. The government of the Marshall Islands also cited specific steps it has taken to address compact migrant impact, including establishing a task force working on and implementing a program to address communicable diseases, and producing a video for Marshallese that describes intending migrants’ rights, duties, and responsibilities while living in the United States. Regarding the recommendation that Interior work with the U.S.-FSM and U.S.-Marshall Islands joint management committees to consider uses of sector grants, the government of the Marshall Islands stated that the amended compact provides only for uses of the grants in the Marshall Islands. We clarified some statements and our recommendation in response to this observation. The government of the Marshall Islands further stated that the amended compacts’ enabling legislation authorized additional appropriations for grants to affected jurisdictions to offset impact and that it is the responsibility of Congress to compensate affected jurisdictions for any adverse impact. The government of Palau generally agreed with our findings. Palau also emphasized that positive compact impact should be determined and asked that the contributions of Palau’s citizens in the U.S. armed forces be recognized in our report. The government of Palau commented that our report does not adequately explore whether compact impact differs among FAS citizens. However, we found that not all local government agencies reported compact impact costs by FAS country, limiting our ability to perform such an analysis. Finally, the government of Palau stated that some persons who entered the United States after the date of the compacts may be lawfully present under authorities other than those of Section 141 of the compact and therefore would not count towards compact impact. We agree and have noted this in the report. We are sending copies of this report to the Secretary of the Interior, the Secretary of State, and the Director of the U.S. Census Bureau. In addition, this report will be available at no charge on GAO’s Web site at http://www.gao.gov. If you or your staffs have any questions about this report, 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 report. Key contributors to this report are listed in appendix XVII. This report describes migration to U.S. areas from the Federated States of Micronesia (FSM), the Marshall Islands, and Palau under those countries’ compacts of free association with the United States; reviews approaches to enumerating these compact migrants; evaluates reporting of these migrant’s impact on Guam, Hawaii, and the Commonwealth of the Northern Mariana Islands (CNMI); and reviews Department of the Interior (Interior) grants related to compact migration. In addition, appendix II provides information on the growing Marshallese compact migrant population in Arkansas and its impact. To describe compact migration to U.S. areas, we reviewed survey data from 1993 through 2010. As part of this review, to approximate the dispersion of compact migrants, we arranged with the U.S. Census Bureau (Census) to purchase a special tabulation of multiyear American Community Survey (ACS) data gathered from 2005 through 2009. These state estimates represent migrants if they are present in sufficient numbers to be reportable; state estimates are unreportable when fewer than 50 people respond in each category of cross-tabulated data. Census also applies statistical disclosure avoidance techniques to the tabulated data to protect respondent confidentiality, such as suppressing the number and location of compact migrants. The new tabulation mirrors the one used by Census to estimate the number of compact migrants in Hawaii in 2008 using ACS data. To determine the trend of migrants as a percentage of the populations of affected jurisdictions and identify reasons for migration, we reviewed our previous report on compact migrant impact and analyzed the information presented in previous enumerations. To estimate the populations of affected jurisdictions, FSM, and the Marshall Islands in 2003 and 2008, we used the 1999 Marshall Islands census, an estimate from the Marshall Islands’ embassy to the U.S. for the 2011 population, and 2000 and 2010 censuses for the FSM and the affected jurisdictions, assumed that the population changed at a constant rate, and interpolated the population counts for the years in between. The 1993 and 1998 estimates of affected jurisdiction population are existing Census estimates. To assess Interior and Census approaches to enumerating compact migrants in affected jurisdictions, we reviewed the requirement for the enumerations in the amended compacts’ enabling legislation. In addition, we interviewed Census and Interior officials and officials in affected jurisdictions who had contacted or worked with Census and Interior as they developed the 2003 and 2008 enumerations. We also reviewed affected jurisdictions’ written critiques of the enumerations. We reviewed Office of Management and Budget (OMB) survey criteria, and we compared the surveys to these criteria by reviewing the reported methodology of the 2003 survey and the supporting documents for the 2008 survey such as the enumerator’s manual, Census’s source and accuracy statement, and Census quality control review documents. We also conducted a literature review to identify existing studies of the uses and limitations of the various methods for enumerating populations such as compact migrants. To compile the compact impact costs reported by the governments of Guam, Hawaii, and the CNMI, we used the most recent data that they submitted to Interior for 1986 through 2010, Interior’s 2010 compact impact report to Congress, and data from our previous report. We then categorized the reported costs using the categories that the amended compacts’ enabling legislation defines as eligible for compact impact funding—education, health, public safety, and social services and infrastructure related to such services—to identify the main sources of compact impact reported by the affected jurisdictions. For additional context, we reviewed the narrative of the reports submitted by affected jurisdictions and interviewed compact migrants and officials in affected jurisdictions. To identify the eligibility of compact migrants for selected federal programs that may help address the compact impact on affected jurisdictions, we reviewed existing legislation and discussed our findings with officials from affected jurisdictions and subject matter experts. To evaluate the affected jurisdictions’ estimates of compact impact costs, we compared the costs that the affected jurisdictions had reported to Interior since 2004 with cost estimation criteria that we developed based on OMB guidelines as well as our own guidance on cost -benefit analyses, a previous report on costs associated with illegal alien schoolchildren, and requirements in the amended compacts’ enabling legislation. We identified the methodologies used by local government agencies in the affected jurisdictions to develop their compact impact costs and determined their limitations by reviewing the compact impact reports; interviewing officials from many of the reporting agencies in affected jurisdictions; and collecting information from the Guam and the CNMI’s single audit reports. Using our cost criteria, we developed questions and circulated them to affected jurisdictions’ reporting agencies, providing them an opportunity to further explain how they derived their estimates. Not all agencies responded to these questions; therefore, additional examples beyond the ones we have identified may exist. Table 8 includes Hawaii’s most recent reported compact impact costs which were submitted to Interior in August 2011. However, our analysis of compact impact reporting does not include this information. Officials from Hawaii’s Department of Human Services, Department of Health, and Department of Education said that their reporting methodologies had generally not changed since their last report, which was submitted in 2008 and which we included in our analysis. However, the Department of Education said that it excluded federal funds from its 2008 through 2011 compact impact costs and corrected its reporting error regarding the number of compact students for 2006 through 2008. In addition, the Department of Health said that the Tuberculosis Branch changed its methodology and the Family Health Services Division changed its presentation of the data to show excluded federal funds. To identify federal funding received by Guam and the CNMI for programs serving compact migrants, we analyzed single audit reports from 2005 through 2009 in the CNMI and from 2004 through 2008 in Guam. To assess Interior’s guidelines on compact impact reporting, we reviewed the requirements contained in the amended compacts’ enabling legislation, and we identified and reviewed Interior’s 1994 compact impact reporting guidelines and the Interior Office of Inspector General’s 1993 report that prompted the creation of these guidelines. We also interviewed officials from the affected jurisdictions and Interior regarding their use of these guidelines to develop cost estimates. To assess Interior’s compliance with the congressional reporting requirements of the amended compacts’ enabling legislation, we reviewed the legislation, met with Interior officials, and assessed the Interior’s 2010 report to Congress against the specific elements required in the legislation. To describe compact migrants’ participation in local economies, we generally used data from the Micronesian surveys in 1997 and 2003 as reported in the 2008 report of the 2003 survey, supplementing these data where possible with additional information from local and natio nal agencies and other literature. To determine whether additional data on the compact migrants’ role in the economy exist, we contacted agencies from affected jurisdictions that address labor and taxation and reviewed reports and data sets. These sources of additional information and data include the following:  To describe compact migrant health status and the health and education systems in the FAS, we reviewed and summarized published literature.  To describe compact migrants’ contributions to the labor market in the CNMI, we analyzed data from the CNMI Department of Finance for 2001 through 2009, comparing the size of the compact migrant labor force to the size of the overall CNMI labor force and the income of the compact migrants to that of the general population.  To compare the amount of taxes paid by compact migrants with the amount paid by the general population in Guam, we used data from the 2008 and 2009 Guam Annual Census of Establishments, the 2008 and 2009 Guam Current Employment Reports, the 2008 Guam Statistical Yearbook, and the 2008 migrant survey. These data allowed us to estimate under certain assumptions the number of compact migrants and others working in the private and public sectors, their average wages, and taxes paid. The method we used to prepare this estimate drew on a method first outlined by an official in the Guam Bureau of Statistics and Plans.  To estimate the amount of remittances that migrants sent and received while in the U.S. areas, we analyzed data from the Inter- American Dialogue, the fiscal year 2008 Economic Reviews of the FSM and the Marshall Islands, and data reported in the 2008 report of the 2003 survey. Because of the limitations and significant variation in the estimates provided by these three sources, we determined that these data were not sufficiently reliable for our purposes.  To determine the number of FAS-born persons serving in the U.S. armed forces, we requested a special tabulation from the Department of Defense’s Active Duty Personnel Master and Reserve Components Common Personnel Data System. To review Interior’s compact impact grants, we reviewed our previous report on Interior grant management, the requirements of the amended compacts’ enabling legislation, and Interior’s 2010 Financial Assistance Manual. We assessed the management of the grants against the legislation and manual by reviewing Interior’s compact impact grant files for Guam, Hawaii, and the CNMI for fiscal years 2004 through 2011. In each grant file, we reviewed grant narratives and correspondence and collected the grant name, number, amount, description, status, remaining balance, and purpose, as well as any funding redirections or deobligations. To determine the extent to which compact sector grants may address compact impact, we interviewed compact migrants and Interior and affected jurisdiction officials and collected grant allocation data from Interior for compact sector grants. We then discussed the nature of sector grants and compact impacts in the affected jurisdictions with Interior officials to identify the amount and purpose of compact sector grants that could be linked to addressing compact migrant impact. To provide information on the migrant population and impact in Arkansas, we met with state and Springdale, Arkansas officials and with employers and migrants. We reviewed existing Census population reports and the Census tabulation of ACS data as well as existing Arkansas government reporting and published literature on Arkansas’s compact migrant impact. Although the amended compacts’ enabling legislation does not define Arkansas as an affected jurisdiction and the state government therefore does not submit reports to Interior, we compiled data available for 2004 through 2010 from the Arkansas Department of Health, Arkansas Department of Correction, and the Springdale School District. We then assessed the limitations of these data in the same manner as we assessed the data for affected jurisdictions. We conducted this performance audit from September 2010 through October 2011 in accordance with generally accepted government auditing standards. Those standards require that we plan 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. In response to congressional interest, this case study reviews existing enumerations of the compact migrant population of Arkansas and their impact. Arkansas’s compact migrant population is almost exclusively from the Marshall Islands and is concentrated in the rapidly growing northwest Arkansas counties of Benton and Washington (see fig. 7). The amended compacts’ enabling legislation does not define Arkansas as an affected jurisdiction; therefore, the state is not eligible to receive compact impact grants, and data on Arkansas’s migrant population and impact are limited in comparison to data for the affected jurisdictions. Tabulations of data from the 2005-2009 ACS show an estimated 1,150 (with a 90 percent confidence interval of 933 to 1,367) Marshallese compact migrants living in Arkansas. The 2010 decennial census reports that 4,324 persons in Arkansas responding to the race question on the 2010 form identified themselves as Marshallese. Additionally, in 2009 and 2010, the Springdale School District reported that 1,323 and 1,579 students, respectively, identified as Pacific Islanders when enrolling in Springdale schools. In comments on a draft of this report, the government of Arkansas stated that it had serious doubts about the count of Arkansas migrants using ACS data and Census commented that the estimates described here are not based on the same criteria and should not be compared. See appendix IV of this report for a further discussion of the differences between ACS and 2010 decennial census data. Concerns in Arkansas regarding compact migrants are similar to those expressed by officials in affected jurisdictions. Arkansas government officials and service providers cited the following concerns: migrant students lagging academically behind their peers; low levels of family involvement in education; the prevalence of communicable and noncommunicable diseases; reluctance of migrants to use preventive health care; language barriers; cultural barriers; and crowded living conditions. To address some of these concerns, Northwest Arkansas local government and social service agencies have begun to offer services to the Marshallese community in recent years. For example:  The Springdale School District has provided supplemental tutoring and employs two Marshallese translators.  The Jones Center for Families, a nonprofit community service organization, employs a Marshallese Community Outreach Coordinator and has helped facilitate the activities of the Gaps in Services to Marshallese Task Force, a network of interested individuals headed by a retired Jones Center employee.  The task force has used grants from the Centers for Disease Control and Prevention and the Arkansas Minority Health Commission to survey the health concerns of Marshallese and prepare an outreach booklet and DVD to aid Marshallese migrants in adapting to life in the state.  The Washington County Department of Health dedicates four staff to its Marshallese Outreach Team and will add two more staff when it opens the Marshallese outreach clinic in 2011.  Some local agencies noted that they work in cooperation with the Marshall Islands consulate in Springdale. Opened in 2008, this consulate is the only FAS consulate in the continental United States. Data provided by Arkansas state officials for 2004 through 2010 identified approximately $51 million in costs for education, health, and public safety services to compact migrants (see table 4). Available data from Arkansas are not comparable with data from affected jurisdictions. Arkansas does not collect data on a number of costs reported by Guam, Hawaii, and the CNMI, particularly costs for social services. In addition, not all Arkansas state agencies compiled their cost data on compact impact annually, whereas the affected jurisdictions have generally compiled their data annually. Education. The estimated education service costs are for the Springdale School District, where most Marshallese school children live. The estimate for Springdale is based on average per-pupil expenditures, similar to some of the affected jurisdictions’ cost estimates. However, these expenditures may overstate actual costs to the extent there is excess capacity in the schools to absorb a marginal increase in population. The estimates may also understate actual costs by not including higher than average costs for additional services to Marshallese, such as language education. Finally, student population data prior to 2009 are incomplete. Health. Arkansas estimated costs for health services to compact migrants by compiling costs for the population identified as of Pacific Islander ethnicity; as a result, Arkansas’s estimates may overstate compact migrant health costs by including services to Pacific Islanders who are not compact migrants. However, the estimates do not include costs for the Arkansas Women, Infants and Children Program and were not complete for all years for tuberculosis and sexually transmitted disease treatment, potentially leading to an underestimate of total costs. Social services. Arkansas does not track the use of some state-funded services by ethnicity and therefore could not estimate the costs of providing these services to compact migrants. However, officials stated that compact migrants are eligible for programs such as the state’s Division of Developmental Disabilities Services; Division of Youth Services; and ARKids First, which provides health insurance to low- income U.S.-citizen children of compact migrants. Unlike affected jurisdictions, Arkansas does not provide Medicaid equivalent services to noncitizen compact migrants. As in affected jurisdictions, Arkansas compact migrants contribute to the local economy through payment of taxes and participation in the labor market. Taxes. Marshallese are subject to federal, state, and local taxes; however Arkansas does not disaggregate the tax revenue by ethnic categories or citizenship and there are no data on consumption and remittances. Labor market. Marshallese fill a significant niche in the local poultry industry. According to employers in northwest Arkansas, Marshallese represent between 14 and 37.9 percent of the total workforce at some plants of major poultry producers, such as Tyson, Cargill, and George’s. Tyson officials in Springdale stated that they have begun referring some Marshallese job applicants to plants elsewhere in Arkansas and in Oklahoma. In addition, Tyson may begin recruiting workers in the Marshall Islands. According to Marshall Islands officials, Tyson representatives have visited the Marshall Islands. Table 5 shows the estimated population of the compact migrants from each FAS in the U.S. states based on tabulations of Census’ 2005-2009 ACS. Taking into account sampling uncertainty, the table shows the lower-bound and upper-bound population interval that corresponds to a 90 percent confidence interval. Estimates of compact migrants from each FAS in Guam and the CNMI, using data from Census’s 2008 survey of compact migrants, are shown for comparison. The 2010 decennial census identified 22,434 Native Hawaiian or Pacific Islanders—alone or in combination with another race—who identified themselves specifically as Marshallese residing in the 50 U.S. states in 2010. The largest Marshallese populations were in Hawaii, Arkansas, and Washington, which together accounted for 62 percent of the total reported Marshallese residing in the 50 states. See table 6. As of September 2011, Census has not released a separate count of U.S. residents who identified themselves as one of the FSM ethnicities or Palauan, but plans to do so between December 2011 and April 2012. As of November 2011, Census race data for Guam and the CNMI had yet to be released. The number of Marshallese reported by the 2010 decennial census differs from estimates of Marshallese compact migrants derived from the Census 2005-2009 ACS. For example, the 2010 census reported 7,412 Marshallese in Hawaii and 4,324 in Arkansas, while the ACS tabulation estimates 3,535 and 1,150 Marshallese compact migrants in Hawaii and Arkansas, respectively. The census counts are not meant to be compared with ACS 5 year estimates of compact migrants and several factors may explain the differences:  The ACS and 2010 census figures use different definitions. The ACS compact migrant estimates include only those born in the Marshall Islands who arrived in the United States under the terms of the compact after 1986 and their children. The census counts are defined by the respondents’ reported race and not limited by the post-1986 time frame of the compact.  The ACS and 2010 census figures have different time frames. The ACS estimates are based on data collected from 2005-2009 and do not include compact migrants to U.S. areas in 2010. In addition, the ACS estimate does not include births that are included in the 2010 counts.  The ACS and 2010 census use different approaches. The 2010 census attempts to reach all persons in the United States, while the ACS is a sample of the population. The sampling method used by the ACS was not specifically designed to make estimates of a population as small as the compact migrants.  The ACS and 2010 census have different levels of outreach. Census ran extensive public service announcements of the 2010 survey, and local governments and community groups encouraged participation. However, Census does not conduct a similar public campaign to encourage participation in the ACS. Table 7 shows key attributes, related to survey design, coverage, nonresponse, measurement, and sampling error, for the 2003 and 2008 Census approaches to enumerating compact migrants. 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 (see table 8 for costs reported for 1986 through 2010). However, assessed against best practices for cost estimation, the 2004-2010 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. Best practices and guidance state, among other things, that to be credible, cost estimations should be characterized by accuracy, adequate documentation, and comprehensiveness.  Accuracy. Estimates should contain few errors and reflect actual costs.  Adequate documentation. Cost estimates should include a detailed description of the derivation of the reported costs, such as the source data used, the calculations performed and their results, and the methodology used. Cost estimates should be captured in such a way that the data can be traced back to, and verified against, their sources, so that estimates can be replicated and updated.  Comprehensiveness. Estimates should be structured in sufficient detail to ensure that cost elements are neither omitted nor double counted and should include documentation of all assumptions. We found a number of limitations affecting the credibility of cost estimates in the compact impact reports (2004-2010) that we reviewed. (See appendix I for a description of our methodology in evaluating the cost estimates.) Definition of compact migrants. Several local government reporting agencies that responded to our inquiries did not define compact migrants according to the criteria in the amended compacts’ enabling legislation and, as a result, may have either overcounted or undercounted costs. The legislation 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 as of the date of the most recently published enumeration. By counting compact migrants based on their ethnicity or language, agencies may have overcounted by including those present prior to the compacts; by identifying compact migrants by their citizenship, agencies may have undercounted, because they would have excluded compact migrants’ U.S.-born children under the age of 18. For example, school administrative data from each of the affected jurisdictions show a potential for overcounting by identifying compact migrant children by means of ethnicity (as in Guam and the CNMI) or the language spoken at home (as in Hawaii). According to the 2003 Census survey data, approximately 32 percent of FAS citizens identified in the CNMI, 10 percent of those identified in Guam, and 13 percent of those identified in Hawaii were not part of the defined impact population. Therefore, the number of children used to estimate impacts may also be overstated. 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. For example, the Hawaii Department of Education reported as compact impact the cost of programs that federal funding had partially addressed. In addition, Guam and the CNMI’s single audit reports show that these jurisdictions have received federal revenue from various agencies such as the U.S. departments of Health and Human Services (HHS), Agriculture, and Homeland Security. To the extent that revenue for these programs 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, in fiscal years 2004 through 2008, Guam received an annual average of $1,027,825 from HHS for the Consolidated Health Centers program, an amount based partly on the number of beneficiaries in Guam. Based on Guam’s resident and compact migrant populations in 2008, services to compact migrants accounted for a $112,942 share of that amount—equal to 16 percent of compact migrant impact costs reported by the Guam Bureau of Primary Care Services. However, in reporting impact costs, the Guam Bureau of Primary Care Services did not deduct the HHS funding that was used for compact migrants. Revenue. Multiple local government agencies that receive fees as a result of providing services to compact migrants did not consider them in their compact impact reports. For example, the CNMI Department of Public Health and Guam Department of Mental Health and Substance Abuse did not include payments received from compact migrants into their costs. This exclusion of revenue may cause an overstatement of the total impact reported. Capital costs. Many local government agencies, such as the CNMI Public School System, did not include capital costs in their annual compact impact reporting. This exclusion can cause an understatement of total costs of providing services to compact migrants. Per person costs. Many local government agencies estimated impact costs based on average, rather than specific, costs of providing services to compact migrants, possibly leading to under or overestimations. For example, the CNMI Department of Public Health based the cost of providing healthcare services to compact migrants on the number served out of the total patient load instead of totaling each patient’s specific costs. However, other agencies more comprehensively accounted for costs by including additional compact impact expenses beyond the average costs. For example, the Hawaii Department of Education included language training costs in its reported per pupil expenditures. Alternatively, the CNMI Public School system did not include special services such as language training or translation which suggests an underestimation. Discretionary costs. Some compact impact costs reported by local government agencies were for benefits or services provided at the discretion of the affected jurisdiction. Data reliability. In one case, we found a discrepancy between the data reported and the data provided during this review. According to the Hawaii Department of Education, this discrepancy resulted from a system error that caused a double counting of Marshallese students over a 5- year period, which resulted in an overestimation of impact costs. For its 2011 impact report, the Department of Education said it excluded federal funds from its 2008 through 2011 compact impact costs and corrected the reporting error made regarding the number of compact students for 2006 through 2008. Many local government agencies did not report their methodologies for estimating costs of providing services to compact migrants under the compacts. For example, the Hawaii Department of Human Services did not provide a detailed description of how it derived its estimates. As a result, it is difficult to determine whether the reported figures are accurate. Further, some agency methodologies vary between affected jurisdictions. For example, Guam prorates police costs based on the percentage of compact migrants in the total population, and the CNMI prorates its police costs based on the percentage of total arrests that are FAS citizens. The Guam Bureau of Statistics and Plans said it documented its methodologies in its 1995 compact impact report and applied these approaches in calculating its compact impact costs. However, these methodologies were not discussed in Guam’s annual reports from 2004 to 2010 and were generally not used by the reporting agencies. Hawaii has not submitted annual compact impact reporting each year and is not required to do so, but for those years when affected jurisdictions submitted impact reports to Interior, not all local government agencies included all compact impact costs. However, some agency costs were reported in subsequent fiscal year reports. 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 the year they are submitted, the compact impact reports could understate Hawaii’s 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. Interior distributed the compact impact grants to the affected jurisdictions in 2004 through 2010 as follows:  From fiscal year 2004 through 2009, based on the results of 2003 enumeration, Interior annually awarded approximately $14 million to Guam, $10.6 million to Hawaii, and $5.2 million to the CNMI. In fiscal year 2010, having recalculated the division of funds based on the results of the 2008 enumeration, Interior awarded approximately $16.8 million to Guam, $11.2 million to Hawaii, and $1.9 million to the CNMI. The amended compacts’ enabling legislation and Interior’s Office of Insular Affairs’ Financial Assistance Manual guide the administration and management of compact impact grants. An official at Interior said the agency uses the same grant management process for compact impact funds as it does its other grants. To implement these requirements, Interior has reviewed and at times questioned whether the proposed uses of compact impact grant funds were in keeping with the amended compacts’ enabling legislation. While the vast majority of Interior reviews resulted in approvals, Interior questioned some uses in Guam and the CNMI. Specifically: Interior initially viewed Guam’s fiscal 2010 request to fund a Community Pool Complex and Fitness Trail as only distantly connected to compact migrants. Ultimately, Interior accepted Guam’s justification that it could improve the health of migrants by reducing obesity and provide a healthy outlet for youth, thereby reducing public safety concerns. In fiscal year 2011, Interior approved the use of compact impact grant funds for Guam Memorial Hospital Authority (GMHA), but restricted their use to future purchases rather than paying past bills, contrary to previous Interior practice. According to an Interior official, this change was made in order to strengthen the link between migrant impacts and compact funds and to stop “bandaging” the chronic financial issues of GMHA. In fiscal year 2006, Interior denied a CNMI grant proposal to use $400,000 for the Marianas Visitors Authority and $500,000 for Financial Control/Economic Recovery Initiatives. An Interior official said the agency did not retain documentation of the specific nature of these grant requests or why it denied them. As of August 2011, Guam had approximately $14.2 million in compact impact grant funds available from fiscal years 2004 to 2011 that it had yet to draw down from Interior. Both Hawaii and the CNMI have fully drawn down prior fiscal year funds. See table 9 for a complete list of Interior compact impact grant awards by jurisdiction and fiscal year. 1. The Department of the Interior suggested that our report’s use of the terms “compensation” and “reimbursement” to describe compact impact funds could give the impression that these funds were intended to fully reimburse the affected jurisdictions for their added expenses when the amended compacts' enabling legislation states that compact impact grants are “to aid in defraying costs incurred by affected jurisdictions as a result of increased demands placed on health, educational, social, or public safety services or infrastructure related to such services due to the residence in affected jurisdictions” of compact migrants. We have modified the text to make our characterization of the act’s intent clearer. Also in response to this comment, as well as comments received from Guam, we have cited additional provisions of the amended compacts’ enabling legislation that authorize funds to address compact impact. As the affected jurisdictions may view the law as implying a reimbursement, we have kept such a characterization when it reflects the viewpoint of the affected jurisdiction. 2. The Department of the Interior stated that the record of the compact negotiations, the compact agreements, and the amended compacts’ implementing legislation do not support the use of sector grants to provide assistance to FAS expatriates living in affected jurisdictions. Interior stated that the compact provides sector grants to support FAS government activities in-country and that the few training programs taking place outside of the FAS are the result of the FAS governments’ choices in the use of sector grants. We agree with Interior that the sector grants listed in the compacts are to support the governments of the FSM and the Marshall Islands by providing grants in certain sectors such as health care and education; however, we note that the compacts allow grants to fund other sectors as mutually agreed and we have added this text to our description of compact economic assistance. Currently, limited FSM compact grant funds are being used to support worker training in Guam, addressing a concern of compact migrants in Guam as well as the Guam government. According to the Center for Micronesian Empowerment, approximately 45 percent of its trainees in Guam are compact migrants residing in Guam. 3. The Department of the Interior did not agree with our recommendation that it work with affected jurisdictions to evaluate the current use of compact impact grant funds and consider alternative uses. Interior observed that the amended compacts' enabling legislation authorizes broad uses and that it has chosen to respect the priorities of governors. Interior further stated that it does not believe there would be any practical gains from proposing alternative uses. We believe this position overlooks opportunities to respect the priorities of the governors while at the same time working with the governors to review their current use of funds and consider alternatives uses. In the course of our review we identified alternative grant uses for consideration. We found that government officials, service providers, and compact migrants in the affected jurisdictions identified a significant need for language and cultural assistance, job training, and improved access to basic services for compact migrants. The sources suggested that migrant needs could be addressed by, for example, establishing centers that offer such services. This may also help reduce some of the negative impact from compact migration. For example, more translators could result in more effective health treatment. Other alternative uses may also offer practical gains. For example, health experts have advocated for the adoption of primary health care as a more cost-effective strategy for providing health care in the Pacific Islands. This adoption would address the need for preventive care among Micronesians and Marshallese in Hawaii—studies have shown that the Marshallese in Hawaii do not generally seek preventive care and only seek professional health care when they experience a certain level of pain. 4. The Department of the Interior stated that it believes compact sector grants are limited to use within the FAS; however, Interior agreed that some activities may be related both to sector grant priorities and to programs that would better prepare migrants to live and work in the United States. Interior stated that our report implies that compact sector grant funds should be shifted from providing assistance to the FAS governments to providing assistance to FAS citizens living in affected jurisdictions, an action that Interior sees as inconsistent with the compacts and their enabling legislation. We expect that compact sector grant awards will be provided consistent with the terms of the compacts and the amended compacts’ enabling legislation; we do not intend to imply that funds should be shifted from the FAS governments to FAS migrants. In response to Interior’s concern, we clarified that our findings and recommendation highlight the opportunity for the joint management committees to consider the use of sector grants to the FSM and Marshall Islands in ways that address the concerns of FAS citizens—whether they are in the FAS or in U.S. areas—and the concerns of the affected jurisdictions. The recommendation supports consideration of the use of sector grants in ways that respond to the concerns of FSM and Marshall Islands migrants and the affected jurisdictions. 1. Census emphasized that the migrant survey content was purposely chosen to enumerate compact migrants while minimizing costs and maximizing respondent participation. As our report notes, however, collecting only those data needed to enumerate migrants limited the collection of data that stakeholders such as affected jurisdictions would have found useful. 2. Census stated that, in contrast to our report’s findings, the 2008 Guam and CNMI surveys were designed to produce estimates with a similar coefficient of variation to the ACS estimates for Hawaii. However, the 2008 Guam and CNMI estimates are point-in-time estimates while the ACS is a multiyear estimate. As Census guidance on interpreting the ACS multiyear estimates states, “The ACS estimates the average of a characteristic over the year or period years, as opposed to the characteristic at a point in time” and “When comparing estimates across geographies or subpopulations, users should compare the same period length for each estimate.” Our findings do not suggest that the 2008 Guam and CNMI surveys are not comparable with the ACS estimates for Hawaii in terms of reliability, but rather are not comparable in terms of their sampling methods and reporting period. We show that the estimates have similar relative errors, as presented in appendix V. If the reported precision for the Guam and CNMI surveys is accurately estimated, and includes proxy respondents, the estimates have similar levels of precision. 3. Census recommended that the Department of the Interior adopt the two-pronged approach described in our report for the 2013 enumeration of compact migrants and stated that the approach would provide cost-effective required estimates. We agree that the low cost is a strength of this approach. As our report notes, however, the 2013 two-pronged approach will have limitations such as using data from different time periods, limited comparability with prior data, and limited collection of demographic data. 4. Census referred to a footnote in our draft report that indicated that the homeless population was not represented in the 2008 surveys. We have moved this discussion to appendix V and included an assessment of the varying coverage of the homeless population of the 2003 snowball, ACS, and 2008 migrant survey in Guam and the CNMI. 5. Census disagreed with our statement that the effect of using an earlier time frame of data in Hawaii relative to Guam and the CNMI results in an undercount of compact migrants in Hawaii relative to Guam and the CNMI. However, as our report notes, migration is ongoing, with approximately 7,000 persons estimated to have left the FSM and the Marshall Islands in 2007 and 2008. Other available data also indicate that the migrant population is growing. Because the Hawaii data do not include 2008 and the Guam and CNMI data are from the closing months of 2008, nearly a year of additional migration is captured in the Guam and CNMI totals that is not included in the Hawaii ACS data. Alexander and Navarro (2003) show that even the upper bound of the ACS multiyear confidence interval, an amount that is greater than the estimate, can lag behind the actual value for a growing small population at a given point in time. 6. Census stated that the frequent changing of address by the compact migrant population, cited by Guam and CNMI officials as potentially leading to a miscount, would not produce bias in the surveys as designed. We agree with Census’ comment that inaccurate migrant counts in the sample design would lead to lack of efficiency and not bias. However, we note that researchers inside and outside the Census Bureau studying the foreign-born population agreed that an assumption of complete coverage of legal immigrants and temporary migrants in the 2000 Census was unreasonable indicating the potential for coverage error and bias of the estimates based on the 2000 Census sampling frame. Further, migrants, especially those who frequently change address, are not only hard to count in the census, but they also are less likely to participate in other surveys, indicating the potential for nonresponse bias. Census further stated that it gave both Guam and CNMI an opportunity to provide local information that might improve the accuracy but that neither produced this information before the design had to be finalized. However, we note that both Guam and CNMI officials stated that, from their perspective, implementation of the survey was rushed and they had only limited opportunity to provide such input. 7. Regarding our statement about the change in enumeration method limiting the comparability of the 2008 and 2013 enumerations, Census stated that both methods would provide a comparable count, which is what is required for the purpose of determining funding. We note that the estimates across jurisdictions, within an enumeration, are not comparable. We note that estimates across enumerations are not comparable due to changing methodology and the lack of use of a method that is statistically designed to measure change over time. 8. Census asserted that its varying estimates of compact migrants in Arkansas are not based on the same criteria and therefore should not be compared. We agree that the surveys have different bases for identification and have identified several reasons for these differences in appendix IV. However, we have also noted Arkansas’ concerns about the accuracy of the ACS data. 9. Census disagreed with our observation that the ACS was not designed to make estimates of a population as small as the compact migrants and notes that concluding that the ACS cannot provide reliable estimates depends on which definition of “reliable” is used. We note that the Census Bureau did not determine the level of precision, or reliability, necessary for these estimates to be used for funding. As we show in appendix III, while the ACS can be used to detect the presence of compact migrants, the smaller the population, the less reliable the estimates will be, as indicated by the wide confidence intervals. In some cases, the estimates are so unreliable that we suppressed them. 10. In response to our observation that Census did not provide an unweighted response rate, Census stated that it is not usual for the agency to publish unweighted response rates. Our review of OMB Standards and Guidelines for Statistical Surveys indicates that both unweighted and weighted response rates should be calculated and reported. However, an unweighted response rate was not provided in Census Survey Documentation that we received for review. 11. Census disagreed with our statement that the use of proxy respondents indicates an overstatement of the response rate and asserts that proxy responses are generally accepted in household surveys and included in the response rate. Proxy respondents are substitutions for the intended sample member, and Census acknowledged that proxy responses are a potential source of nonsampling error due to the proxy respondent’s potential lack of knowledge of the sample respondent’s information. OMB guidelines and standards call for the calculation of response rates without substitutions, as well as overall response rates that include substitutions. 12. Census stated that the issues of nonresponse bias, as well as collection strategy and content, that we highlight regarding the 2008 survey effort were also present in the 2003 survey but are not listed for the 2003 survey. For the 2003 survey, we had no documentation of the nonresponse bias or the collection strategy and content information related to personal interviewers leaving contact information. We have noted Census’s comments in the report. 13. Census stated that final weights were used when calculating the variance estimates. While we acknowledge that final weights, including a nonresponse adjustment factor, were used when calculating variances, Census documentation does not indicate that variance estimates properly accounted for the variability due to the nonresponse adjustment factor, such as through the use of replicate weight methodologies, and thus will likely result in an underestimate of the variance. 1. The government of Hawaii stated that while the report sets out relative strengths and weaknesses of the different enumeration methodologies, it does not highlight the inherent inadequacies of the American Community Survey (ACS) for enumeration of small discrete groups such as compact migrants. Throughout the report we note the limitations of the ACS. As our report notes, ACS data have limited statistical reliability for populations as small as compact migrants in Hawaii. We further note in appendix V that ACS estimates are not equivalent to point-in-time estimates and may be biased due to nonresponse and coverage error. 2. The government of Hawaii stated that the report does not point out the discrepancies between the Census estimates in each affected jurisdiction and the utilization data for services provided by agencies in each jurisdiction, such as the number of compact migrant students enrolled in school. We did explore the use of school data in particular as a basis for evaluating the enumeration findings; however, we found that the schools identified compact migrant students by language (as in Hawaii) or ethnicity (as in Guam and the CNMI). These definitions do not match that contained in the amended compacts' enabling legislation and could include the children of persons with FAS ethnicity who were present in Hawaii prior to the compacts or the children of persons who were born in U.S. areas. For this reason, although they are informative in a general way, the difference between the school data and the enumeration data could result from methodological differences as well as from any potential miscount in the enumeration. 3. The government of Hawaii stated that it agrees that a portion of the sector grants given to the FAS might more effectively be used to provide services to compact citizens living in the affected jurisdictions and that the affected jurisdictions should provide input into the uses of the grants. In response to other comments, we clarified our recommendation regarding compact sector grants to not imply that the use of sector grants to address migration concerns should be in the affected jurisdictions. Our recommendation is to highlight the nexus between sector grants and the issues that concern the FAS, compact migrants and affected jurisdictions. We also report that the Federated States of Micronesia has used sector grant funds for activities in the affected jurisdiction of Guam. compacts, it seems compact migrants are treated as if they are citizens in that they have access to all federal and local services unless specifically barred; therefore, reimbursement is justified for all services rendered because they are provided on a nondiscriminatory basis. We believe that our recommendation that Interior prepare adequate cost guidance will help in determining compact impact costs. 1. The Arkansas Department of Health expressed serious doubts about the count of Arkansas migrants based on American Community Survey data and asked that 2010 census data be used to create figure 2 rather than the ACS data. We agree that there are differences between the count based on the ACS data and that based on 2010 decennial census data and have listed some of the reasons for the differences in appendix IV. We have added text to the report to more explicitly describe this appendix, the differences between the data sets, and Arkansas’s concerns. 1. The government of the FSM stated that our findings on compact migrant participation in local economies are not conclusive as to the net impact of migrants. The amended compacts' enabling legislation does not require the inclusion of such data in affected jurisdictions’ impact reports and complete data on compact migrants’ contribution to local economies does not exist. We provided available information on labor market participation, taxes, consumption, and remittances. 2. The government of the FSM stated the importance of clearly defining a compact migrant for the purposes of enumeration and reporting compact impact. As our report notes, Interior interprets the legislation's definition of a qualified nonimmigrant—which generally refers to a compact migrant living in an affected jurisdiction—as including those migrants' children under the age of 18 who are born in the United States; therefore, some U.S. citizens are included in the count of migrants. We have used Interior’s definition for our estimates of compact migrants and costs. As our report also notes, a number of reporting local government agencies in affected jurisdictions do not use the definition of compact migrants in the amended compacts' enabling legislation, which affects the reliability of their reported compact impact costs. 3. The government of the FSM cited the fact that its citizens are eligible to serve, and have served, in the armed forces and asked that we include them in the count of migrants. We have obtained data from the Department of Defense on persons born in the FAS who are on active duty in the U.S. armed forces and have added this to the report. 4. The government of the FSM referred to a statement in the draft report that migrants pay into the Medicaid program but do not receive benefits. This statement was in error and has been deleted from the report. 1. The government of the Marshall Islands stated that not including Marshallese citizen contributions to the economies of U.S. areas is a serious flaw that undermines the credibility of claimed compact impact costs. The Marshall Islands recommended that a methodology be developed that determines “net” compact costs. The amended compacts' enabling legislation does not require the inclusion of such data in affected jurisdictions’ impact reports and complete data on compact migrants’ contribution to local economies does not exist. We provided available information on labor market participation, taxes, consumption, and remittances. 2. The government of the Marshall Islands asked that the participation of Marshall Islands citizens in the armed forces of the United States also be taken into account. We have obtained data from the Department of Defense on persons born in the FAS who are on active duty in the U.S. armed forces and have added this to the report. 3. The government of the Marshall Islands noted that a number of Marshallese migrants attending public schools in the United States are U.S. citizens and that, while they may legally be included for purposes of compact impact costs, it questioned the inclusion of U.S. citizens in determining impact costs. As our report notes, Interior interprets the legislation’s definition of qualified nonimmigrant—which generally refers to a compact migrant living in an affected jurisdiction—as including those migrants’ children under the age of 18 who are born in the United States; therefore, some U.S. citizens are included in the count of compact migrants. The Census ACS tabulation we obtained for our estimates used Interior’s definition of a compact migrant. The ACS interviews current residents— that is, those in the house on the day of the interview who have been staying there for more than 2 months, regardless of the individuals’ usual residence. 4. The government of the Marshall Islands stated that it would be helpful to provide government leaders and decision makers with comparative information on emigration, or migration rates from other Pacific Island nations. This analysis was not part of the scope of our audit. 5. The government of the Marshall Islands stated that some of the data for enumerations for Marshallese in the state of Hawaii may be erroneous and overstated since some Marshallese only transit through Hawaii for a short period before moving to the U.S. mainland to accept employment. We do not have data to verify this assertion. 6. The government of the Marshall Islands stated that although there is discussion in the report regarding U.S.-Marshall Islands joint management committee taking action to deal with compact impact costs in affected jurisdictions in the United States, sector grants were never designed or funded for that purpose. In response to the government of the Marshall Islands and other comments, we clarified our recommendation regarding compact sector grants to not imply that the use of sector grants to address migration concerns should be in the affected jurisdictions. We also note that, though we did not find instances of the Marshall Islands using grant funds for activities in affected jurisdictions, the FSM has done so in Guam. 1. The government of Palau noted that our draft report’s use of the term “Micronesian” to refer to citizens of the Federated States of Micronesia may be confusing, as Micronesian also has a larger meaning related to persons living on multiple Pacific islands. We have reviewed the report and now refer to the Federated States of Micronesia as the FSM. In keeping with a commonly used definition, we use the term “Micronesia” to refer to the three compact nations. 2. The government of Palau stated that our report does not adequately address the lack of information regarding "positive impact" from compact migration. The amended compacts' enabling legislation does not require the inclusion of such data in affected jurisdictions’ impact reports, and complete data on compact migrants’ contribution to local economies does not exist. We provided available information on labor market participation, taxes, consumption, and remittances. 3. The government of Palau noted that FAS citizens serve in the U.S. armed forces. We have obtained data from the Department of Defense on persons born in the FAS who are on active duty in the U.S. armed forces and have added this to the report. 4. The government of Palau stated that most agencies have included capital costs in their impact reporting, thus contributing to a gross overstatement of the costs associated with migrants. However, in our review, we did not find cases where agencies included such capital costs in their impact reporting. Such costs could be legitimate and addressed by future Interior guidelines. 5. The government of Palau stated that our report does not adequately explore the differences in the impact between the three FAS. Not all local government agencies reported compact impact costs by FAS country, and this assessment was not included in the scope of our review. Complete data on compact migrants’ contribution to local economies does not exist; however, we provided available information on labor market participation, taxes, consumption, and remittances. If Interior implements our recommendation to disseminate adequate guidance on compact impact reporting to affected jurisdictions, assessing impact by FAS country may be a topic for Interior to address. 6. The government of Palau stated that our estimate of Palauan migrants is an accurate estimate, but that many Palauans emigrated before the compacts came into effect and, while ethnically Palauan, should not be considered in calculating the impact of FAS emigration. However, the Census tabulation and survey we used in estimating the number of Palauan compact migrants only included those who arrived in U.S. areas after the date of the Palau compact. Those who arrived in the United States prior to that date, and their children, are not included in our estimate. 7. The government of Palau noted that ethnic Palauans in the United States may be U.S. citizens, permanent resident aliens (Green Card holders), or members of the U.S. Armed Forces and their dependents, as well as compact migrants. As our report notes, Interior interprets the legislation’s definition of qualified nonimmigrant—which generally refers to a compact migrant living in an affected jurisdiction—as including those migrants’ children under the age of 18 who are born in the United States; therefore, some U.S. citizens are included in the count of migrants. However, we agree with Palau’s comment that some persons who entered the United States after the date of the compacts may be lawfully present in U.S. areas under authorities other than those of Section 141 of the compacts and have noted this in the report. In addition to the contact named above, Emil Friberg, Jr., Assistant Director; Keesha Egebrecht; Fang He; Reid Lowe; Mary Moutsos; Michael Simon; Sonya Vartivarian; Adam Vogt; Greg Wilmoth; and Monique Williams made key contributions to this report. Michael Derr, Bob Lunsford, and Jena Sinkfield provided additional technical assistance.

Summary: U.S. compacts with the freely associated states (FAS)--the Federated States of Micronesia (FSM), the Marshall Islands, and Palau--permit FAS 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 the Commonwealth of the Northern Mariana Islands (CNMI), Guam, and Hawaii, which are defined as affected jurisdictions. In fiscal year 2004, Congress appropriated $30 million annually for 20 years to help defray affected jurisdictions' costs for migrant services (compact impact). Though not required, affected jurisdictions can report these costs to the Department of the Interior (Interior), which allocates the $30 million as impact grants in proportion to compact migrant enumerations required every 5 years. This report (1) describes compact migration, (2) reviews enumeration approaches, (3) evaluates impact reporting, and (4) reviews Interior grants related to compact impact. GAO reviewed U.S. agency data, recent enumerations, impact reports, and grants and it also interviewed officials, employers, and migrants in the affected jurisdictions. Combined data from the U.S. Census Bureau's (Census) 2005-2009 American Community Survey (ACS) and the required enumeration in 2008 estimate that a total of roughly 56,000 compact migrants from the FSM, the Marshall Islands, and Palau--nearly a quarter of all FAS citizens--were living in U.S. areas. Compact migrants resided throughout U.S. areas, with approximately 58 percent of all compact migrants living in the affected jurisdictions. According to the 2008 required enumeration, compact migrant populations continued to grow in Guam and Hawaii and were roughly 12 percent of the population of Guam and 1 percent of the population of Hawaii. Working under agreements with Interior, Census used a different approach for the most recent enumeration than for prior enumerations, employing two methods in 2008: (1) a one-time survey in Guam and the CNMI and (2) a tabulation of existing multiyear ACS data for Hawaii. The affected jurisdictions opposed the change in approach. The 2008 approach allowed for determining the precision of the estimates but did not yield comparable results across jurisdictions or detailed information on compact migrants. Interior and Census officials have a preliminary plan for the required 2013 enumeration but Interior has not determined its cost or assessed its strengths and limitations. The methods used by affected jurisdictions to collect and report on compact impact have weaknesses that reduce their accuracy. 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. However, some jurisdictions did not accurately define compact migrants, account for federal funding that supplemented local expenditures, or include revenue received from compact migrants. Although Interior is required to report to Congress any compact impacts that the affected jurisdictions report to Interior, it has not provided the affected jurisdictions with adequate guidance on estimating compact impact. Compact migrants participate in local economies through employment, taxation and consumption, but data on these effects are limited. From fiscal years 2004 to 2010, Interior awarded approximately $210 million in compact impact grants to the affected jurisdictions, which used the funds primarily for budget support, projects, and purchases in the areas of education, health, and public safety. In Guam and Hawaii, government officials, service providers, and compact migrants discussed approaches to more directly address challenges related to migration by bridging language barriers, providing job training, and increasing access to services. The amended compacts also made available $808 million in sector grants for the FSM and the Marshall Islands from fiscal years 2004 to 2010. Sector grants are jointly allocated by the joint U.S.-FSM and U.S.-Marshall Islands management committees and have been used primarily in the FAS for health and education. Few sector grants directly address issues that concern compact migrants or the affected jurisdictions. The committees had not formally placed compact impact on their annual meeting agendas until 2011 and have not yet allocated any 2012 sector grant funds to directly address compact impact. GAO recommends that Interior assess the 2013 enumeration approach, disseminate adequate guidance on estimating compact impact, and encourage uses of grants that better address compact migrants' impact and needs. Interior generally agreed with the report but did not support the recommendation on grant uses.