Located just north of the equator in the Pacific Ocean are the two island nations of the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI) (see fig. 1). The FSM, which is comprised of the states of Pohnpei, Chuuk, Yap, and Kosrae, had a population of about 107,000 in 2000, while the RMI had a population of 50,840 in 1999, based on the most recent census data. In 1947, the United Nations created the Trust Territory of the Pacific Islands (UN TTPI). The United States entered into a trusteeship with the United Nations Security Council and became the administering authority of the four current states of the FSM, as well as the Marshall Islands, Palau, and the Northern Mariana Islands. The UN TTPI made the United States responsible financially and administratively for the region. The four states of the FSM voted in a 1978 referendum to become an independent nation, while the Marshall Islands established its constitutional government and declared itself a republic in 1979. Both locations remained subject to the authority of the United States under the trusteeship agreement until 1986. Late that year, an international agreement called the Compact of Free Association went into effect between the United States and these two new nations and provided for substantial U.S. direct economic assistance for 15 years in order to help both countries move toward a goal of economic self-sufficiency. The Department of the Interior’s Office of Insular Affairs (OIA) has been responsible for disbursing and monitoring this direct economic assistance, which totaled almost $1.6 billion from 1987 through 1998. In 2000 we reported that both nations have made some progress in achieving economic self-sufficiency but remain heavily financially dependent upon the United States. In addition to economic assistance, under the Compact the United States provided access to federal services and programs, an obligation to defend the two Pacific Island nations, and migration rights. For its part, the United States received defense rights in these two countries under the Compact. The Compact exempts FSM and RMI citizens migrating to the United States from meeting U.S. passport, visa, and labor certification requirements of the 1952 Immigration and Nationality Act, as amended (P.L. 82-414). The same migration provisions are included in the 1994 Compact with the Republic of Palau. The migration provisions of the two Compacts also allow FSM, RMI, and Palau (or, collectively, Freely Associated States–FAS) migrants to enter into, lawfully engage in occupations, and establish residence in the United States (including all U.S. states, territories, and possessions) without limitations on their length of stay. U.S. Immigration and Naturalization Service (INS) officials have stated that these rights granted to FAS migrants are unique; there are no other nations whose citizens enjoy this degree of access to the United States. At the time of the original negotiations, the U.S. Compact negotiator stated that the Compact’s migration rights were meant to strengthen ties between the United States and the Freely Associated States. All Compact migrants in the United States are legally classified as “nonimmigrants,” a status that typically signifies nonpermanent visitors such as tourists or students. However, while not legally classified as such, Compact migrants can behave similarly to “immigrants,” in that they can stay in the United States as long as they choose with few restrictions.Compact migrants can become U.S. citizens by applying for legal permanent resident status under standard immigration procedures. The Congress authorized compensation in the Compacts’ enabling legislation for U.S. island areas that might experience increased demands on their educational and social services by Compact migrants from these Pacific Island nations. Further, the legislation required the President to report and make recommendations annually to the Congress regarding adverse consequences resulting from the Compact. The Department of the Interior’s OIA has been responsible for collecting information regarding Compact impact on U.S. island areas. Interior stated in 1989 correspondence with the government of Guam that “social services” eligible for impact compensation include public health and public safety services, and that the cost of services provided by private or nongovernment agencies are not eligible for reimbursement. In addition to authorized financial compensation, the Compact provided another option for addressing the impact of migrants: certain nondiscriminatory limitations may be placed on the rights of these migrants to remain in U.S. territories and possessions. While Compact migrants can travel to any U.S. area (including the U.S. mainland), U.S. areas that have drawn migrants due to their close proximity are Guam, the Commonwealth of the Northern Mariana Islands (referred to as the CNMI), and the State of Hawaii. Hawaii had the largest year 2000 total population of the three U.S. island destinations, at 1,211,537, while the populations of Guam and the CNMI were 154,805 and 69,221, respectively. All three locations have opportunities in the areas of employment, education, health care, and social services that have attracted FAS migrants. Since the two Compacts were enacted, thousands of FAS citizens have migrated to U.S. island areas in the Pacific. According to the 1997 and 1998 OIA surveys, Guam had the highest number of Compact migrants at 6,550, followed by Hawaii and the CNMI. For those surveyed, the destination for migrants shifted from the CNMI prior to 1985 to Guam over the next decade, shifting to Hawaii in the mid-1990s (and now, reportedly, to the U.S. mainland). It is primarily for employment opportunities that migrants have been moving to U.S. areas, with more dependent family members of employed workers migrating since implementation of the Compacts. Educational opportunities have also served as a motivation to migrate. The majority of migrants were living in poverty in all three U.S. areas, with the CNMI having the lowest migrant poverty rates. Of note, the CNMI had the highest percentage of working age FAS migrants participating in the labor force at over 65 percent. In the three U.S. areas, many Compact migrants were working in jobs that required few skills and paid low wages, such as cleaning or food services. In addition, Compact migrants surveyed were not highly educated, with few having college degrees and just over 50 percent having graduated from high school. Thousands of FAS citizens have moved to U.S. areas in the Pacific under the Compacts, with the highest number of Compact migrants living in Guam. According to OIA surveys, about 6,550 and 5,500 Compact migrants were living in Guam and Hawaii, respectively, in 1997, while 1,755 were living in the CNMI in 1998 (see table 1). This sums to more than 13,800 persons--far more than the 2,500 migrants living in these three U.S. areas who arrived prior to the Compacts. FAS migrants, which include those who arrived prior and subsequent to implementation of the Compacts, accounted for about 5 percent of Guam’s total population and around 4 percent of the CNMI’s total population. In contrast, they accounted for only 0.5 percent of Hawaii’s total population. There were substantially fewer Palauans living in the CNMI in 1998 who came during the Palau Compact period (1995-1998) than there were those who arrived prior to the Compact. In addition, while there are very few pre-Compact or Compact Marshallese migrants living in either Guam or the CNMI, more than 35 percent of all Compact migrants living in Hawaii were Marshallese in 1997. Forty percent of all FAS migrants in U.S. island areas at the time of the surveys were born in the FSM state of Chuuk, the poorest state in the FSM. These data may be an undercount of FAS migrants due to the methodology used to collect the information (see app. II). OIA 1997 and 1998 data show that FAS migrants surveyed migrated to Guam, Hawaii, and the CNMI at different points in time. As shown in table 1, the CNMI had the highest number of combined pre-Compact migrants from the FSM, the RMI, and Palau present in 1998 (1,192, compared to 730 for Guam and 610 for Hawaii). At the time of the OIA surveys in 1997 and 1998, the CNMI had received and retained slightly more migrants from the FSM, the RMI, and Palau (combined) for several years prior to 1985. The destinations of migrants from the FSM, the RMI, and Palau then shifted, with substantially more migrating to Guam over the next decade, then shifting to Hawaii in the mid 1990s (see fig. 2). Of note, migration flows under the Compacts appear to have followed traditional migration patterns, with young males migrating first for employment, followed by migration of family members. Employment was the key reason cited by FAS migrants in the 1997 and 1998 OIA surveys for coming to Guam and the CNMI, totaling about 40 percent for each (totaling more than 3,500 migrants). Migrants from the FSM and the RMI explained to us that they moved to the U.S. areas to find a job, given the lack of employment opportunities at home. In addition, over 20 percent of FAS citizens moved to Guam and the CNMI as dependents. In Hawaii, FAS migrants also chose employment and being dependents of an employed worker as key reasons for migrating (at 15 percent and 11 percent, respectively) as well as medical care (at 6 percent) in the OIA survey. However, a greater proportion of RMI migrants in Hawaii came for medical reasons (10 percent) than for employment (7 percent). Educational opportunities at both the college and high school levels have also served as motivations for migration, according to interviews with migrant communities and FAS officials in the three U.S. areas. The University of Hawaii has provided data to us showing that FAS student enrollment had risen since the Compacts were implemented. Specifically, FAS student enrollment in the University of Hawaii increased from 54 students in 1986 to 292 students in 1999. There were considerable differences in poverty rates and employment levels between the three U.S. island areas and among the migrant groups. For example, the CNMI had the lowest rate of FAS migrants living in poverty, at about 51 percent, compared to 67 percent in Guam (see table 2). Poverty rates were generally higher for Compact migrants than they were for migrants that arrived prior to the Compacts. Labor force participation (those able and willing to work) and employment of migrants (those actually employed) differed between the three U.S. areas. Labor force participation and employment levels were the lowest in Hawaii, with 46 percent of working-age FAS migrants in the labor force and 39 percent employed. In contrast, in the CNMI, nearly 66 percent of working-age FAS migrants reported that they were in the labor force, and nearly 60 percent were employed. Guam was in the middle, with 58 percent in the labor force and 52 percent employed. Compact migrants who found employment in U.S. areas had primarily private sector jobs requiring few skills and paying low wages. U.S. island government officials and migrant community members told us that Compact migrants often accept jobs that local workers refuse to take. An official representing the garment manufacturing industry in the CNMI noted that FAS employees are good workers and are rarely absent from work. In Guam (1997), Compact migrants largely worked in retail (drinking and eating establishments), hotels and motels, and construction, according to the OIA surveys. In Hawaii (1997), Compact migrants also largely worked in retail, followed by agriculture and business services (such as cleaning). In contrast, Compact migrants in the CNMI (1998) largely worked in apparel manufacturing, followed by retail, hotels and motels, and transportation and communications. Compact migrants have obtained limited education, according to the 1997 and 1998 OIA surveys. Just over half of all Compact migrants age 25 and older had received their high school diplomas, less than 2 percent had earned 4-year college degrees, and less than 4 percent had earned 2-year community college degrees. The 1997 and 1998 OIA surveys show that Hawaii had the largest portion of Compact migrants with high school degrees, at 55 percent, while about 50 percent of Compact migrants in Guam and 44 percent in the CNMI had high school degrees. Moreover, the percentage of FAS migrants from the FSM in Guam with high school degrees decreased during the 1990s, while rising and falling over this time period in the CNMI. According to OIA survey data, a larger portion of FAS migrants from Palau had high school degrees than other FAS migrants. Guam, Hawaii, and the CNMI governments have identified significiant Compact migration impact. The three U.S. island areas have estimated costs to local governments of at least $371 million for 1986 through 2000 that are associated with services provided to migrants from the FSM, the RMI, and Palau. All three U.S. island areas have reported that costs have been concentrated in the areas of health and education, though other costs have also been identified. Finally, concerns have been raised by all three U.S. areas, though primarily Hawaii, about public health problems associated with Compact migrants. Of note, U.S. island area impact estimates do not include the positive impact of FAS migrants. While all three U.S. island area governments have acknowledged that FAS migrants have had positive impacts, such as contributing to the tax base and filling employment needs, the Compact’s enabling legislation specifically requires reports on adverse impact and does not request information regarding positive impact. Regarding the impact of migration on the FSM and the RMI, the populations of both nations have shown reduced growth in recent years despite continued high birth rates, and government officials in both countries view the Compact’s migration provisions as critical to providing migrants with economic opportunities that are not available in these small countries. The governments of Guam, Hawaii, and the CNMI, which have estimated Compact migrant impact that collectively totals between $371 million and $399 million, have determined that the cost of FAS migrants to the local governments has been significant. Guam’s total estimate for the entire Compact period (1986-2000) accounts for about half ($180 million) of the total impact estimate range for all three areas (see table 3). The CNMI also has impact estimates for the entire Compact period and has a total impact estimate range of $105 million to $133 million. Hawaii has prepared estimated impact costs only for 1996 through 2000, though these reports identify some costs for earlier years. Thus, for the most part, Hawaii does not have estimates for 10 years that are covered by the other two areas (1986-1995). Hawaii has identified about $86 million in total impact costs. Costs for the three areas have been focused in the areas of health care and education, though public safety and welfare costs have also been identified. While the reported impact costs of Guam and Hawaii have been increasing over time, the CNMI’s impact estimates decreased by almost 40 percent from fiscal year 1998 to fiscal year 2000. This reduction is reportedly due to a decreasing presence of FAS migrants in the CNMI. The 2000 impact estimates prepared by the three areas showed that impact amounts represented about 7 percent, 0.5 percent, and 4 percent of the budget revenues of Guam, Hawaii, and the CNMI, respectively, for that year. The health care systems of the FSM and the RMI are viewed by U.S. and U.S. island area governments as inadequate to meet the needs of the population, providing incentive to travel or move to the United States in order to receive appropriate health care. Health costs were the greatest area of impact for the CNMI in 2000. In that year, 43 percent ($4 million) of all identified CNMI impact costs were related to health care. Emergency, general, dental, and pediatric care provided by the CNMI Department of Public Health (the government agency responsible for providing health services and administering the Community Health Center) were identified as high-cost migrant services. According to a CNMI Department of Public Health Services official, neonatal intensive care is a key issue for FAS migrants. This official reported that expectant mothers often have no insurance and have no prenatal care at all until they arrive at the Community Health Center, ready to deliver. Guam’s largest single area of impact in health in its 2000 impact assessment was identified as unpaid services by Guam Memorial Hospital (which receives government funding) to FAS patients, totaling over $5.4 million in 2000. Officials from Guam Memorial Hospital expressed frustration with FAS patients and noted that these patients often rely on the hospital’s emergency room for primary health care and that many conditions treated are not urgent. The emergency room treats about 3,000 patients per month; about 350 of those patients (12 percent) are FAS patients (compared with FAS representation of 5 percent of Guam’s population). As in the CNMI, problems with expectant FAS mothers arriving at the hospital close to delivery and with no prior prenatal care were mentioned. The Governor of Guam told us that in his view the U.S. naval hospital on Guam is underutilized and could provide care for FAS migrants. Hawaii’s government health-related cost of $3.7 million in 2000 went to support FAS migrants who, as of April 2000, no longer receive federal health benefits due to welfare reform legislation. These health benefits for FAS migrants are now funded solely by the state. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, as amended, (P.L. 104-193), referred to as the Welfare Reform Act, cut certain federal public benefits to some legal aliens, including migrants who enter under the Compact. Medicaid, a program to provide funding to low-income individuals for health care and whose costs are shared between the federal and state governments, is one of the federal programs that is no longer available to FAS migrants. This loss of eligibility has been cited as a reason for expected increases in impact costs for Hawaii, as the state has decided to provide state funding in place of lost federal funds. An Hawaii Department of Health official noted that it is illogical for the United States to make migration to the United States easily accessible for poor FAS citizens but then make health care difficult to obtain. Inadequate school systems in the FSM and the RMI are viewed by FAS and U.S. island governments as another reason for migration. For example, an RMI government official said that RMI schools are very bad, with insufficient supplies and unqualified teachers, and Marshallese citizens migrate in search of better educational opportunities. According to education officials in Guam and the CNMI, there is an incentive for FSM students to come to those two U.S. locations for public education, as teachers in the FSM do not have 4-year university degrees and the education infrastructure is inadequate. In parts of the FSM only a portion of students are selected to attend high school. Some portion of the students who are not selected, as well as those who live in areas with insufficient school facilities, then reportedly move to U.S. areas to attend high school. FSM and RMI migrants told us that they moved to U.S. areas to attend school themselves or to enroll their children in school. Guam’s and Hawaii’s costs in 2000 were primarily in public education, at $17 million and $10.6 million, respectively (54 percent and 58 percent of total estimated impact). The CNMI’s education costs were $2.8 million (31 percent of total impact costs) in 2000. In their most recent impact reports, FAS students accounted for about 11 percent, 1 percent, and 9 percent of the total student population in Guam, Hawaii, and the CNMI. Officials from the Departments of Education in Guam and Hawaii noted that FAS students have a tendency to be rather transient, entering and leaving school a few times each year. Moreover, education officials in Guam and the CNMI said that some FAS students have never been in a school classroom prior to moving to a U.S. area. This makes their integration into the school system difficult. Calculations prepared by the U.S. island governments may have underestimated certain education costs, as not all students and not all costs were captured. For example, officials from the Hawaii Department of Education told us that, rather than calculating costs for all FAS students, they only estimated costs associated with FAS students who participated in the state’s English as a Second Language program. Further, education officials in all three U.S. locations told us that, while education costs were calculated based on an average cost per student for the entire student population, FAS students have higher costs than other students due to poor language and other skills. None of the areas quantified the costs associated with additional efforts required to assist FAS students. The three island areas have also identified other Compact impact costs, though all were small in comparison to those related to health and education and accounted for about 25 percent or less of total impact costs in the most recent impact estimates. For fiscal year 2000, Guam identified $4.6 million in costs related to public assistance programs and the Department of Corrections. For 2000, Hawaii estimated $3.2 million in welfare assistance provided to FAS migrants. Finally, for fiscal year 2000, the CNMI calculated an additional $2.4 million, which is almost entirely attributable to its Department of Public Safety (which includes police, fire, and corrections services). In addition to financial costs, public health concerns have been raised as migrant impacts, particularly by Hawaii, due to the number of Compact migrants with communicable diseases entering U.S. island areas. For example, in its 1997 impact assessment, Hawaii stated that public health was the state’s most pressing concern and noted a recent outbreak of Hansen’s Disease (leprosy) on the island of Hawaii. A CNMI Department of Public Health Services official also told us that the number of cases of tuberculosis and Hansen’s Disease diagnosed for FAS citizens is increasing, and a Guam Department of Public Health and Social Services official reported that concerns exist regarding communicable diseases, low immunization rates, and noncompliance with treatment regimens for FAS migrants. Hawaii Department of Health officials told us that controlling communicable disease problems within FAS communities can be difficult; migrants do not seek regular medical attention and so require extensive outreach from the Department in order to identify and effectively treat communicable diseases. Further, Department officials noted that health screenings of Compact migrants are not required for entry into the United States, preventing the identification and treatment of communicable diseases prior to arrival in a U.S. area. INS officials confirmed that health screenings are not required of Compact migrants, nor are they enforced for any nonimmigrant group. INS officials told us that the agency “is the first line of defense” for identifying travelers to the United States who may have communicable health problems. They acknowledged, however, that INS officers are not trained or legitimately qualified in this area, and it is difficult for them to identify travelers with health problems. The populations of both nations have been affected by the out-migration provided for under the Compact. From 1989 to 1994, the FSM population grew 1.9 percent annually, from 95,740 to 105,506. During the next 5-year period, the FSM population grew by only about 1,500 people (.2 percent annually) to reach about 107,000. This very small increase demonstrates that the FSM population has almost stopped growing in recent years, reportedly due to out-migration. Birth rates remain high in both countries. FSM government officials expressed the view that migration rates are increasing and cited a reduction in government jobs following cuts in U.S. funding as a key reason why FSM citizens have migrated in recent years, in addition to employment and education opportunities and access to health care. Because of out-migration, population growth in the RMI since 1988, when the population was 43,380, has slowed considerably to 1.5 percent annually. This is the lowest rate of growth since 1958. The 1999 RMI census reported 50,840 persons in the RMI, which was about 10,000 fewer people than the RMI government had projected. Emigration is reported as the primary reason for the lower population growth. RMI government officials told us that the rate of migration out of the RMI has increased over the past 5 years and cited the recent public sector reform program, which eliminated government jobs, as a key reason for this increase. Government officials from the FSM and the RMI view the Compact’s migration rights as key to easing problems associated with limited economic opportunities and population growth on these small island nations. While the RMI government does not have an official policy regarding migration, it has published a document encouraging overseas employment, and a recent draft planning document suggested that the government “encourage the emigration of whole families, equivalent to the annual population increase (1,500-2,000 persons) to permanent residence overseas.” The FSM government does not have an official policy on emigration. The Compact and its enabling legislation include two options to address the impact of migrants. The law, which states that the Congress will act “sympathetically and expeditiously” to redress adverse consequences of Compact implementation, provided authorization for appropriation of funds to cover the costs incurred, if any, by Hawaii, Guam, and the CNMI resulting from any increased demands placed on educational and social services by migrants from the FSM and the RMI. Guam has received about $41 million in compensation and the CNMI has received almost $3.8 million. Hawaii has received no compensation. Further, the Compact states that nondiscriminatory limitations may be placed on the rights of Compact migrants to establish “habitual residence” (continuing residence) in a territory or possession of the United States. Such limitations went into effect in September 2000 and are viewed by INS officials we interviewed as difficult to enforce and, therefore, unlikely to have much impact. The extent to which these two options have been used has not met with the satisfaction of any of the three U.S. island area governments, who believe, among other things, that additional funding for impact costs is necessary. Compact enabling legislation required the President (who designated the Department of the Interior as the responsible agency) to prepare annual Compact impact reports and submit them to the Congress. While these reports do not require any action, they can serve as a tool to assist the U.S. government in determining whether and how to address Compact impact. However, only seven of these reports have been prepared during the 15-year Compact period. Further, Interior has taken limited action to ensure that U.S. island areas estimate impact costs consistently, resulting in reports that contain varying information for each U.S. island area and do not easily allow comparisons to determine relative impact across locations. Two specific options are available in the Compact and its enabling legislation to address Compact impact: financial compensation and limitations on the rights of FAS migrants to establish continuing residence in a U.S. territory or possession. U.S. government use of these options has not satisfied the Guam, Hawaii, or CNMI governments. Financial compensation provided to Guam, Hawaii, and the CNMI to address migration impact has been far less than the impact estimated by the three area governments and submitted to Interior. Since the Compact with the FSM and the RMI was enacted through 2001, the U.S. government has provided approximately $41 million in impact compensation to Guam, compared with the $180 million in increased costs the territory has estimated it has incurred from 1986 through 2000 (i.e., about 23 percent of total estimated impact costs). The Commonwealth of the Northern Mariana Islands has received $3.8 million in compensation from 1986-2001 compared with $105 million to $133 million in estimated costs from 1986- 2000 (less than 4 percent of total costs). While Hawaii has estimated $86 million in Compact impact costs, the state has received no compensation. The Compact’s enabling legislation does not require compensation. Rather, it authorizes appropriations to cover certain impact costs and notes that the Congress will act “sympathetically and expeditiously” to redress adverse consequences. An OIA official noted that the reality of budget constraints has prevented compensation to the extent that impact has been incurred. However, government officials from Guam, Hawaii, and the CNMI have expressed frustration that these island areas are bearing the costs of a federal decision to allow unrestricted migration through the Compact and believe that compensation levels have been inadequate. Compensation funding received by Guam has not, for the most part, been used in the areas of health and education—the areas that have experienced the greatest migrant impact. As a result of U.S. legislative requirements, the government of Guam was directed to use a majority of its impact compensation funding for capital improvement projects. For fiscal years 1996 through 2001 (when more than $35 million was specifically provided to Guam through legislative action rather than through OIA’s technical assistance account), we determined that Guam has spent or plans to spend almost $10 million for road paving, almost $8 million for water projects, more than $4 million for equipment for Guam Memorial Hospital, and more than $4 million for gyms. Prior to 1996, Guam received about $850,000 received from OIA’s technical assistance account for a Compact Impact Information and Education Program, established by the government of Guam to “develop and implement information, educational, and organizational activities to assist FSM and RMI citizens in receiving the support and assistance cultural integrity, integration, equity, and productivity.” This program is no longer operating. In addition to funding for Guam Memorial Hospital listed above, Guam has also used earlier impact funding in ways that directly addressed Compact migrant impact costs. For example, Guam used $600,000 received from OIA’s technical assistance account in 1994 to partially reimburse expenditures made by the Department of Public Health for assistance provided to FSM and RMI citizens. According to a CNMI government official, the CNMI has used, or is planning to use, most of its compensation funding for agencies affected by Compact migration impact: the Department of Public Health, the Department of Public Safety, and the Public School System. The governments of Guam and the CNMI believe that restricting the use of compensation funding to capital improvement projects does not target the money where it could be best used. A second option available to address Compact impact—limiting the length of stay in some U.S. areas of certain Compact migrants—was implemented 14 years after the Compact went into effect, and its enforcement and impact may be limited, according to the INS. The Compact states that nondiscriminatory limitations can be placed on the rights of Compact migrants to establish “habitual residence” in U.S. territories or possessions. However, because the CNMI already controls its own immigration and Hawaii is not a territory or possession, Guam is the only potential beneficiary of such limitations for all practical purposes.Habitual residence limitations for Guam, as well as certain other limitations on all aliens living in the United States, are the only means of regulating the ability of Compact migrants to stay in U.S. areas indefinitely. In its annual impact reports, OIA’s one consistent recommendation for reducing impact has been to implement habitual residence restrictions. Immigration legislation passed in 1996 states that not later than 6 months after the date of enactment of the act, the Commissioner of Immigration and Naturalization shall issue regulations governing rights of “habitual residence” in the United States under the terms of the Compacts. These regulations were not implemented until 4 years later, in September 2000, and define habitual residents, in part, as those FAS migrants who have been in a U.S. territory (i.e., Guam) for a total of 365 cumulative (i.e., not consecutive) days. The regulations provide that, in part, habitual residents are subject to removal if they are not, and have not been, self-supporting for a period exceeding 60 consecutive days for reasons other than a lawful strike or other labor dispute involving work stoppage, or have received unauthorized public benefits by fraud or willful misrepresentation. “Self- supporting” is defined, in part, as having a lawful occupation of a current and continuing nature that provides 40 hours of gainful employment each week, or (if unable to meet the 40-hour employment requirement) having lawfully derived funds that meet or exceed 100 percent of the official poverty guidelines for Hawaii. Officials from INS believe that these regulations will be difficult to enforce and so will have little impact in Guam. They have stated that this is primarily due to the fact that Compact migrants, like all other nonimmigrants, are not tracked once they arrive in a U.S. area because the INS cannot devote the resources necessary to do so. There is no way of knowing where a Compact migrant is living unless, for example, the migrant is arrested for a crime and reported to the INS. An INS official in Guam reported that the INS has taken no specific action there to enforce the habitual residence regulations. A Guam government official said that while the issuance of the regulations puts the INS more “on track,” there is still the problem of tracking migrants, and the INS will not be able to deal with tracking habitual residents in Guam. This official also expressed the view that the regulatory language that the INS will share migrant entry data with Guam, which can assist in collaborative tracking and enforcement efforts, on an “as-needed basis” is too limited. Finally, this official noted that even if a habitual resident is deported from Guam, this person can reenter under a different name (and will thus avoid detection by the INS as a migrant that should be denied entry). The CNMI controls its own immigration and so has had the option to unilaterally impose nondiscriminatory limitations on habitual residence since the Compacts with the FAS countries were implemented. The Governor of the CNMI told us that it would be very hard for the CNMI to take such action, for social and cultural reasons. Nonetheless, the CNMI is now studying the issue and considering whether to establish limitations on habitual residents. A Department of the Interior official told us that OIA told the CNMI to wait to issue habitual residence limitations until the INS had issued its regulations. This way, the CNMI could draft its limitations in conformity with those of the INS, resulting in a single policy regarding habitual residence. One tool available to the U.S. government in determining whether and how to address the effect of the Compacts is the impact reports required in Compact enabling legislation. These reports are to discuss, among other things, the adverse consequences of migration under the Compacts.However, OIA, despite the legal requirement for Interior to report annually to the Congress on impact and provide recommendations to address this impact, has only prepared reports in 1989 and 1996-2001. OIA officials told us that no reports were prepared between 1989 and 1996 because the Congress was not interested in this issue. OIA also noted that while impact reports were not submitted to the Congress, mention was made of Compact impact as part of OIA’s annual appropriations hearing. OIA has based its assessments of impact on the estimates prepared by the governments of Guam, Hawaii, and the CNMI. It has also based its reports on the previously discussed FAS migrant population surveys it has funded using technical assistance from the U.S. Bureau of the Census. These reports have found that Compact impact has been substantial and have included general recommendations for addressing impact such as proposing the establishment of nondiscriminatory limitations on the long- term residency of Compact migrants. In November 2000, amendments to the Organic Act of Guam (P.L. 106-504) changed the party responsible for reporting on impact from Interior to the governors of Hawaii and U.S. territories or commonwealths. OIA has also not ensured that the three U.S. islands areas use, to the extent possible, uniform approaches to calculate impact. Interior issued guidelines in 1994 on how to calculate impact costs and which costs to include. These guidelines were issued in response to a 1993 report by the Department of the Interior’s Office of the Inspector General that recommended that OIA develop and disseminate guidelines and procedures for use in determining Guam’s Compact impact costs. These guidelines, which were drafted in the context of reviewing a Guam impact assessment for 1993, addressed key areas such as health and education. The guidelines also stated that a “baseline” population of migrants who were on Guam prior to the Compact (and whose impact thus, in Interior’s view, cannot be easily attributed to the Compact) should be subtracted from Guam’s impact estimate. Guam subsequently took action to implement OIA’s guidelines. However, while an OIA official reported that he submitted these guidelines to the CNMI, officials from the CNMI could not confirm ever receiving such guidelines and stated that their impact assessments have not been based on OIA guidelines. An Hawaii State official said that while the state did not receive written guidelines from OIA, verbal discussions were held regarding issues such as using per student costs for education estimates. Further, OIA has not provided consistent review of impact estimates submitted by the three U.S. island area governments. For example, while OIA has instructed Guam and the CNMI in its annual reports and elsewhere to remove pre-Compact migrants from impact estimates (i.e., subtract a “baseline”), no such guidance has ever been provided to Hawaii in OIA’s annual reports, despite the fact that Hawaii has estimated costs for all FAS migrants living in the state and had a pre-Compact migrant population that was roughly comparable to that of Guam. In addition, OIA’s 1999 impact report mentioned Hawaii’s lost revenues resulting from the fact that FAS college and university students pay resident tuition, after having noted in its 1994 guidelines that higher education costs could not be justified for Guam. OIA has also not addressed the fact that many of Guam’s impact estimates do not include Palauans (while estimates for the other two areas do include this group of migrants) and that Hawaii no longer includes public safety costs in its assessments. As a result, all three areas have included different areas of impact and have defined the impact population differently and impact estimates, though providing valuable data, do not easily allow comparisons across U.S. island areas to determine actual relative impact. OIA itself noted in its impact report for 2000 that determining the costs of providing services to migrants has become increasingly difficult, in part, because “here is no consistent methodology among U.S. areas for measuring the cost of providing services to migrants” and “he type of impact and the concerns vary among the reporting areas.” Changes in the level of future U.S. economic assistance may alter the rate of migration. For example, significant reductions in aid to the FSM and the RMI that reduce government employment would be expected to spur migration. On the other hand, targeting future U.S. assistance to the FSM and the RMI for education and health purposes could reduce some of the motivation to migrate (although migration will continue as long as employment opportunities in both countries remain limited). Further, improvements in migrant health and education status would be expected to reduce migrant impact in U.S. destinations. Thus, changes in future U.S. assistance could have repercussions for the FSM and the RMI, as well as any U.S. location receiving migrants. Additionally, changes in Compact provisions, such as requiring health screening, could reduce the impact of migrants on U.S. areas, though government officials from the two Pacific Island nations do not view migration provisions as subject to renegotiation. To date, no formal demographic or economic analysis of changes in economic assistance has been completed. However, officials in the United States, the FSM, and the RMI draw on their past experience with Compact migration to project how proposed changes in Compact assistance could affect migration levels. Additionally, they also have views on how changes in health and education may affect the impact of migrants on U.S. destinations. Officials in U.S. island areas seeking to reduce adverse impact advocate certain changes in Compact assistance and in migration provisions. Past reductions in U.S. assistance appeared to promote migration, and future reductions could be expected to have a similar impact. Reductions in U.S. assistance to the FSM and the RMI occurred twice during the Compact. The second reduction occurred in October 1996 and lowered U.S. Compact funds for government operations by 17 percent in the FSM and 9 percent in the RMI. Both countries reduced their public sectors: FSM government employment fell by 24 percent between 1995 and 1997, while the RMI reduced government employment by 36 percent between 1995 and 2000. Reduced Compact funding increased migration, according to FSM and RMI government officials and migrants we met with. Regarding the current negotiations, FSM and RMI officials project increased migration if the United States reduces its assistance to their nations. For example, the FSM analysis of proposed lower U.S. assistance levels concludes: “The economy would be caught in a vicious circle of low growth, compounded by a series of shocks requiring downward adjustment, loss of real incomes, unemployment, and outward migration.” An OIA official noted that a reduction in Compact funding may lead to greater migration, but only very marginally. Officials from the FSM and the RMI believe that migration will tend to favor the U.S. mainland, bypassing Guam, Hawaii, and the CNMI. Efforts to target assistance to the health and education sectors in the FSM and the RMI might reduce migration levels and the impact of migration on the U.S. areas. The U.S. Compact negotiator testified before the Congress in June 2000 that the United States intends to provide future funds in targeted grants that would include the areas of health and education. An emphasis on health spending in both countries, where health services are inadequate, might reduce the number of citizens who go to the three U.S. island areas, where health officials report that some migrants come specifically for medical treatment. For example, after the FSM state of Pohnpei stopped providing hemodialysis (blood purification), FSM citizens showed up more frequently for treatment in the CNMI. Further, improvements in FSM and RMI health care systems that better the health of migrants and improve access to quality health care might also reduce migration impact on U.S. areas. The State Department Compact negotiator has said that such targeted spending would reduce incentives to migrate and would ensure that those who do migrate are in a better position to contribute to their new communities. According to Hawaii health officials, Compact spending should go to ensure that the FSM and the RMI can offer competent basic primary health care, specifically for immunizations and prenatal care, and to address tuberculosis, Hansen’s Disease, hepatitis, and diabetes in an effort to reduce the incidence of these health problems in Hawaii. Regarding future U.S. Compact health care assistance, Guam health officials said health care funds should be spent on prenatal care, communicable, and vaccine-preventable diseases with the stipulation that it be provided with strict guidelines for its use. FSM officials report that migration might slow if FSM health care equaled that of the U.S. mainland. RMI officials believe that any increases in health spending would discourage migration as they noted that the better health care available in the United States is a motivation for migration. Increased Compact spending on education might reduce migrant impact costs. Hawaii education officials noted that FAS teachers often have limited credentials and that it takes migrant children 5-7 years to attain average literacy. Similarly, University of Hawaii faculty reported that FAS students required remedial course work. The implication of this is that better FAS education would enable FAS students to perform better in U.S. schools. Similarly, Guam believes that increased spending on education in the FAS would likely reduce migration demands on Guam’s education system. FSM officials believe that increased spending on education could reduce the migration of whole families and could improve economic opportunities in the FSM. However, they also reported that increased education funding would increase the number of people migrating to attend U.S. colleges. Similarly, RMI officials believe that increased education spending would discourage migration. One RMI official doubted that the RMI education system could be quickly fixed, which leaves migration as the best option. The U.S. Compact negotiator testified before the Congress in June 2000 that the United States intends to seek changes in Compact migration provisions to reduce the adverse impact on the United States. Two possible changes have been mentioned by the U.S. negotiator: establishing a system of health screening, to ensure that contagious individuals receive treatment in order to protect public health; and requiring a passport, in order to better screen out criminals, determine admissibility for entry to the United States, and facilitate entry for FAS travelers. Health officials in Hawaii believe that migrants should be screened prior to leaving the FSM and the RMI and only allowed to enter the United States if they are noninfectious. In Hawaii, public health nurses reiterated that many of the problems that have occurred in Hawaii are associated with treatable, but communicable, diseases. The FSM government does not believe that health screening is its responsibility or that it is practical. However, FSM officials believe that criminal migrants hurt the standing of all migrants, and the FSM is considering requiring a passport before leaving the FSM. RMI officials believe that health screening would be helpful to both the RMI and the United States; therefore, they support “minimal” screening for health problems. Regarding a passport requirement, INS officials support this option, although they have pointed out that a key issue would be to ensure that passports are secure. The possibility that the United States might seek restrictions on migration is of concern to both countries. The FSM has responded to the United States that FSM negotiators do not have the authority to discuss migration. Further, the FSM said that any changes made should be to “facilitate migration.” RMI government officials told us that the migration benefits are not up for renegotiation and that they are very important for the country, providing a “critical safety valve.” FAS migration has clearly had a significant impact on Guam, Hawaii, and the CNMI and has required government services in key areas. Compact migrants have required local expenditures in areas such as health and education and, further, have particularly affected the budgetary resources of Guam and the CNMI—U.S. island locations that have relatively small populations and budgets, and economies that have recently suffered economic setbacks. The budgetary impact on Hawaii is relatively smaller but can be expected to grow as Hawaii begins to absorb health care costs that were once covered by the U.S. government. Public health problems are also an important concern for all three U.S. island areas. Because the Compact allows FAS migrants who have limited financial means and ability to pay for health care to enter the United States with few restrictions, U.S. island areas are absorbing much of the health care costs of this poor population. Further, Guam, Hawaii, and the CNMI can be expected to continue to experience Compact impact as long as current poor economic conditions persist in the FSM and the RMI. Targeting future U.S. assistance to the FSM and the RMI for education and health purposes could reduce some of the motivation to migrate and improvements in migrant health and education status might be expected to reduce migrant impact in U.S. destinations. We recommend that the Secretary of State direct the U.S. Compact Negotiator to consider how to target future health and education funds provided to the FSM and the RMI in ways that also effectively address adverse migration impact problems identified by Guam, Hawaii, and the CNMI. For example, the U.S. Negotiator could consider whether a specified portion of the health sector assistance should be targeted at treating and preventing the communicable diseases in the FSM and the RMI that are a public health concern in Guam, Hawaii, and the CNMI. We received comments from the Department of the Interior, the Department of State, and the Immigration and Naturalization Service, as well as to the governments of the FSM, the RMI, Guam, Hawaii, and the CNMI. These agencies and governments generally agreed with our findings, but each had concerns regarding the scope and content of various issues addressed in the report. Of those who addressed our recommendation, State agreed with us, Guam and the CNMI stated that the recommendation should address the lack of employment in the Pacific Island nations, Hawaii proposed that health and education funding be provided only under strict grant conditions, and the FSM felt that the recommendation was unnecessary. Their comments and our responses can be found in appendixes III through IX. We are sending copies of this report to the Secretary of the Interior, the Secretary of State, the Commissioner of the Immigration and Naturalization Service, the President of the Federated States of Micronesia, the President of the Republic of the Marshall Islands, the President of the Republic of Palau, the Governor of Guam, the Governor of the state of Hawaii, the Governor of the Commonwealth of the Northern Mariana Islands and to interested congressional committees. We will also make copies available to other interested parties upon request. If you or your staff have any questions regarding this report, please call me at (202) 512-4128. Other GAO contacts and staff acknowledgments are listed in appendix X. Based on a request from the Chairman of the House Committee on Resources; the Ranking Minority Member of the House Committee on International Relations; the Chairman of the House Committee on International Relations, Subcommittee on East Asia and the Pacific; and Congressman Doug Bereuter, we (1) identified migration under the Compact (migrant destinations, population size, and characteristics); (2) assessed the impact of this migration on U.S. island areas and the sending nations; (3) determined the use of available options to address impact on U.S. island areas; and (4) explored ways in which future changes in Compact provisions and assistance levels might affect migration levels and impact. For our first objective, we reviewed data contained in surveys funded by the Department of the Interior’s Office of Insular Affairs (OIA) using assistance from a U.S. Bureau of the Census official. These surveys captured the number and characteristics of migrants from the Federated States of Micronesia (FSM), the Republic of the Marshall Islands (RMI), and the Republic of Palau in Guam (surveys for 1992 and 1997), Hawaii (survey for 1997), and the Commonwealth of the Northern Mariana Islands (CNMI) (surveys for 1993 and 1998). (Our review includes data for the Republic of Palau for our first two objectives because Palauan information regarding impact cannot be disaggregated from the other two Pacific Island nations. Further, the Compact of Free Association with Palau also allows for compensation for costs incurred by U.S. areas as a result of Palauan migrants.) We reviewed these surveys to identify the number of migrants that were living in these three U.S. island areas at the time the surveys were conducted, including migrants who moved before and after implementation of the Compacts of Free Association with the FSM and the RMI in 1986 and the Compact of Free Association with Palau in 1994. We also reviewed these data to identify key characteristics of these migrants such as their reasons for migrating, age and education levels, employment situation, and poverty status. We focused our assessment on the most recent survey data. We also reviewed additional documents, such as the 1995 CNMI census and a Guam assessment of Micronesians on the island in 1997, that contain data on migrants. The OIA surveys are the most recent and comprehensive data available that identify and describe FSM, RMI, and Palauan migrants in Guam, Hawaii, and the CNMI. We did not attempt to verify the accuracy of any of these data. The survey data appear to be an undercount of migrant population totals (see app. II). We discussed the strengths and weaknesses of the methodology used to collect the survey data with the U.S. Bureau of the Census official who was involved with the surveys, as well as with U.S. and Guam government and academic officials familiar with the methodology; all agreed that the survey methodology is subject to undercounting. Further, we found several specific instances during our review that indicated that the data may indeed be an undercount. In addition, the survey data we are using are primarily from 1997 and 1998, and the level of migration to these three U.S. island areas since that time is unknown. More current data from the U.S. 2000 census conducted by the U.S. Bureau of the Census that will identify the number and some characteristics of FSM, RMI, and Palauan migrants living in the three U.S. island locations were unavailable; these data, along with data on Pacific islander migrants on the U.S. mainland, are due to be released in late 2001. We began our work on this objective by reviewing the language contained in the Compacts’ enabling legislation addressing migrant impact. To then determine the amount of total Compact impact estimated by the governments of Guam, Hawaii, and the CNMI, we collected the reviewed impact estimates prepared by each of these three locations. In most cases, estimates were either prepared specifically for a certain year and provided detailed information for particular areas, such as the health and education sectors, or were prorated for a certain year based on other years’ estimates when detailed calculations for that year were not prepared. In a few cases, estimates were prepared that covered multiple years and were not tied to a specific year. Because of this, we were unable to convert the impact estimate totals into constant dollars. We identified impact estimate figures and all available supporting data for 1986-2000 for Guam, Hawaii, and the CNMI. We reviewed the estimates and the methodologies used to derive them with government officials who work in the areas of health, education, and public safety in all three locations, as well as U.S. government officials from OIA and the Department of State. We discussed impact with additional parties, including the governors of Guam and the CNMI and their staff, and staff from the governor’s office in Hawaii; FSM and RMI migrant community representatives; and private sector officials. We reviewed fiscal year 2000 budget figures for Guam, Hawaii, and the CNMI to identify the proportion of those figures represented by estimated impact amounts for that year. We also reviewed OIA’s annual impact reports for 1989 and 1996-2001 and the assessments of the three locations’ impact estimates contained therein. To review the impact of migration to U.S. areas on the FSM and the RMI, we held discussions with senior FSM and RMI government officials and reviewed FSM and RMI census documents. To review what actions have been taken that address impact, we reviewed the Compacts’ enabling legislation language regarding the authorization of appropriations to cover impact costs, as well as the Compacts’ language on the ability to place nondiscriminatory limitations on the length of stay in U.S. territories of certain migrants from the Freely Associated States (the FSM, the RMI, and Palau). We then identified all OIA technical assistance funding and specific legislative appropriations provided to Guam, Hawaii, and the CNMI to cover estimated impact costs. We discussed the amounts and how this funding has been spent with OIA, Guam, and CNMI government officials. We visited select capital improvement projects (gyms, roads, water projects, etc.) in Guam that have been supported with impact compensation funds. To review the implementation of nondiscriminatory limitations, we reviewed the September 2000 regulations on this issue put forth by the U.S. Immigration and Naturalization Service (INS). We then discussed the terms, enforceability, and potential impact of these regulations with INS officials in Washington, D.C., and Guam, as well as with Guam government officials. We also discussed the possibility of such limitations with officials from the CNMI government. To assess what actions have been taken by OIA to identify impact and communicate this impact to the Congress, we first reviewed the Compacts’ impact reporting requirement contained in the Compacts’ enabling legislation. We then collected and reviewed all available OIA impact reports, which included reports for 1989 and 1996-2001, as well as OIA’s 1994 guidelines for preparing impact estimates. We discussed the process for preparing, as well as the substance of, the reports and guidelines with the responsible OIA official. Such discussions covered issues such as the reasons for not issuing annual reports for each year following Compact implementation and the need to subtract a “baseline” population from impact estimates. We also discussed OIA’s reports with government officials from Guam, Hawaii, and the CNMI. To review how changes in the Compact’s economic assistance might affect migration, we reviewed development planning documents prepared by the FSM and the RMI in 2000 regarding population and migration policies. Further, we solicited views regarding possible changes in the Compact from senior officials from the FSM, the RMI, Guam, Hawaii, the CNMI, OIA, INS, and State as well educators, health professionals, business representatives, and the migrant communities. We conducted our work from October 2000 through June 2001 in accordance with generally accepted government auditing standards. The methodology used in the Department of the Interior’s Office of Insular Affairs (OIA) surveys to count the number and characteristics of Micronesians living in U.S. island areas, the “snowball” approach, results in an undercount of the actual migrant population from the Freely Associated States (FAS). While the OIA surveys captured many of the FAS migrants in Guam, Hawaii and the Commonwealth of the Northern Mariana Islands (CNMI), our analysis and review of the data found several illustrations of how the surveys likely undercounted the actual number of FAS migrants in U.S. island destinations. In order to count and characterize Micronesian migrants in Guam, Hawaii and the CNMI between the 1990 and 2000 U.S. population censuses, OIA utilized the services of U.S. Census Bureau staff to survey U.S island area Micronesian migrant populations in 1992, 1993, 1997, and 1998. The Census official leading the survey used a survey tool referred to as the “snowball” method of surveying special populations. The OIA survey administrator selected and trained FAS migrants, who had received at least high school diplomas and had passed special tests, to serve as “enumerators” to collect data on other migrants in each U.S. area. In Guam, Hawaii, and the CNMI, enumerators from each of the FAS countries identified and interviewed all migrants they knew of from their own countries, then asked these interviewees to identify all migrants from their home country they knew of living in the area, continuing on in this manner until no “new” migrants were identified. For example, Marshallese enumerators only interviewed Marshallese migrants. While the goal of the OIA surveys was to identify 100 percent of the migrants from each FAS nation living in the three U.S. areas, the Census Bureau official involved with the surveys acknowledged that a snowball count inevitably yields less than 100 percent of the actual population. Of note, the snowball data represent a “snapshot” of the FAS migrant communities living in Guam and Hawaii and the CNMI at the time of the surveys. The data do not represent all FAS migrants who ever lived in a U.S. island area, as some of these migrants may have moved elsewhere by the time of the survey and may have different characteristics from migrants who remained in U.S. areas. Experts whom we interviewed agree that this snowball methodology is the most appropriate strategy to enumerate FAS migrants living in U.S. areas in the Pacific. The snowball methodology generally yields higher quality information than a traditional census, and is reportedly less expensive. The advantages of the snowball methodology include: (1) distinguishing FAS subgroups from the larger population (as well as from one another); (2) providing the ability to shape the survey instrument to obtain desired information; and (3) minimizing the extent to which ethnic/racial bias and language barriers undermined the quality of the survey since the migrant enumerators were of the same ethnicity as the migrants they interviewed. However, the snowball method misses some individuals who are not connected or networked into the mainstream migrant communities. Thus, it may miss some of those that are living in remote locations/islands, or are in areas with political, economic, or racial tensions. Fears on Guam and Hawaii about being deported may have led some migrants either to not participate at all or to not fully disclose their personal information, according to interviews with FAS migrants in Guam and Hawaii. The snowball approach may also miss transient migrants as well as some who have assimilated into the U.S. areas. Based on our review of island government administrative data and interviews with migrants, we have found the following examples that suggest the OIA’s survey data appear to undercount of the actual population of FAS migrants in U.S. areas: While OIA’s 1998 census identified 92 Marshallese and their children living in the CNMI, a Marshallese migrant we met with in the CNMI in 2000 showed us a list of Marshallese families, which she explained totaled 260 persons. While there is a 2-year difference in the data, the population of RMI migrants is very stable, with few people coming or going in recent years, according to this Marshallese community representative. One of the Marshallese migrants living in Hawaii who assisted with OIA’s 1997 survey of FAS migrants estimated that the survey missed around 15 percent of the Marshallese population living on the Hawaiian island of Oahu. The OIA surveys report a smaller number of FAS students enrolled in public schools (kindergarten through grade 12) in each of the three U.S. areas than do the administrative data provided to us by each school district. An analysis of the data shows that: (1) in 1997, OIA counted only 1,205 ethnic FAS students in Guam, whereas Guam counted 3,009 ethnic FAS students; (2) in 1998, OIA counted only 422 FAS-born students in the CNMI, whereas the CNMI counted 575 FAS-born students; and (3) in 1997, OIA counted only 1,054 FAS-born students in Hawaii, whereas Hawaii’s Department of Education counted 1,283 FAS-born students in their English as a Second Language program alone. The possibility of an undercount on Guam is also illustrated by the discrepancies in the numbers of Palauans living on that island in 1997. An Ernst & Young report issued on the impact of Micronesian migration to Guam that compared the OIA 1997 survey with the 1995 census of Palauans on Guam, found 1,716 fewer Palauans in Guam in 1997 than in 1995 (dropping from 2,276 to 560 persons). Moreover, the report noted that confusion in the Palauan community as to why a survey was being conducted in 1997 (since a Palauan-only census was administered just 2 years prior in the form of the 1995 Census of Palauans on Guam) may have led to an undercount of Palauans on Guam in the OIA 1997 survey. The following are GAO’s comments on the Department of the Interior’s letter dated September 7, 2001. 1. The report number has been changed from GAO-01-1028 to GAO-02-40. 2. We do not believe that it has become more difficult each year to measure the impact of Compact migration, and in fact may have become an easier task. For example, a Guam official told us that when the Compact was implemented, the territory could not quantify impact from available data; since that time, Guam agencies have collected the necessary data on FAS migrants. Further, the CNMI government has reported that it is now taking action to better review data in order to provide more specific information regarding FAS migrants and their use of public services. However, it is worth noting that over time the Department of the Interior will need to define the eligible Compact impact population as U.S.-born children of FAS migrants begin to have children of their own. The following are GAO’s comments on the Department of State’s letter dated August 22, 2001. 1. The report recognizes that machine-readable passports would facilitate entry of travelers, determinations of admissibility, and links to criminal databases. It is worth pointing out that criminals have been identified upon entry into the United States using other means. For example, the U.S. embassy in the RMI is providing the INS with a list of convicted RMI felons for determining admissibility at the port of entry. 2. This report examined Hawaii, Guam, and the CNMI because these destinations received the initial influx of Compact migrants, comprehensive surveys of these migrants had been conducted in each location, and impact compensation is authorized for each of the three locations. As acknowledged by the Department of State in its letter, we intend to undertake a review of migration to the mainland following publication of this report. 3. We maintain that our comments on p. 8 of the report are accurate: While FAS migrants are classified as nonimmigrants, their behavior is often like that of immigrants in that they can stay indefinitely in the United States with few restrictions. Further, the habitual residence restrictions cited in the Department of State letter only apply to Guam. The following are GAO’s comments on the letter from the government of the Federated States of Micronesia dated August 31, 2001. 1. We agree that the Compact’s migration provisions strengthen ties between the United States and the FSM and the RMI. As we discussed on p. 8 of this report, at the time of the Compact negotiations, the Compact negotiator stated that the migration rights were to strengthen ties between the United States and the Freely Associated States (FAS). The current Compact negotiator has reiterated this point, referring to the migration rights not only as an important "safety valve" for the FAS population, but as the "glue" between the nations. The negotiator further stated that because the children of FAS migrants born in the United States are U.S. citizens, ties between the United States and the FAS are further deepened. 2. As we reported on p. 16 of this report, the governments of Guam, Hawaii, and the CNMI all acknowledge that FAS migrants have had positive impacts such as contributing to the tax base and filling employment needs. However, the Compact enabling legislation specifically requires reports only on the adverse impact of the Compact. As noted on p. 16 of this report, the CNMI's impact estimate for 1996 quantified $3.6 million in positive benefits from the taxes paid by FAS migrants, compared with their reported cost of $11 million that year. The Congress authorized compensation in the Compact's enabling legislation for U.S. island areas that may have experienced increased demands on their educational and social services by Compact migrants, but did not include compensation for other impact costs, such as infrastructure. Consequently, the U.S. island areas are not submitting claims for total costs in their impact estimates. In addition, available data on investment and savings reported by FAS migrants in Department of the Interior surveys show that few migrants invest and save. For example, of 2,053 Compact FSM households surveyed, only 15 reported any interest, dividend, or net rental income in 1997 in Guam and Hawaii or 1998 in the CNMI. Reviewing the impact of Compact expenditures on U.S. companies is not within the scope of this review. 3. We believe our description of the number of FAS migrants and the income levels of these households is neither damning nor inaccurate. Surveys have identified thousands--about 14,000--of Compact FAS migrants in Guam, Hawaii, and the CNMI. FAS migrants reported their income in surveys conducted in Guam, Hawaii, and the CNMI. In total, about 61 percent of FAS migrants lived in households with income levels below the poverty level, based on the U.S. poverty definition. 4. We do not suggest that FSM migrants “choose” to live in poverty, but report that their employment has been primarily in private sector jobs requiring few skills and paying low wages. 5. Our report does not contain data on the number of FAS migrants on the U.S. mainland. As reported on p. 11 of this report, according to OIA surveys, FAS migrants accounted for about 5 percent of Guam’s total population in 1997 and around 4 percent of the CNMI’s total population in 1998. These migrants accounted for 0.5 percent of Hawaii’s population in 1997. As noted on p. 11, we believe that these figures underestimated the number of FAS migrants in these three U.S. locations. 6. Issues regarding U.S. employer recruitment were not raised by island government officials or FAS migrants concerning Guam, Hawaii, or the CNMI. We recognize that FSM officials have raised this issue regarding U.S. mainland employers who are recruiting FSM citizens for work. 7. The number of FAS citizens who return to the islands after schooling or a period of employment is not known. The FSM and RMI governments were not able to provide such data, although one FSM government official estimated that perhaps one-fourth of migrants return. 8. When reporting on OIA migrant survey information, we identified the FSM, the RMI, and Palau separately where notable data differences existed. For example, see table 1 on p. 11 and table 2 on p. 14. With respect to Compact impact estimates, we relied upon data provided to us by Guam, Hawaii, and the CNMI. These data often combined all FAS migrants, making it impossible for us to report on the impact of the three FAS nations separately. Guam, Hawaii, and the CNMI are eligible to receive Compact impact compensation for the impact of migrants from all three FAS nations. 9. The issue of FAS citizens who enlisted in the U.S. armed forces will be addressed in a separate GAO report on Compact defense and security issues. This report will be issued before the end of 2001. 10. As we reported on p. 13, the pursuit of educational opportunities was one of the motivations for migration, according to migrants and FAS government officials. OIA migrant surveys for Guam, Hawaii, and the CNMI did not ask FAS migrants whether education was a reason for migration, and thus contain no data on this issue. 11. The report’s recommendation was not drafted with the intent to end migration. The recommendation has two purposes. In addition to providing an option that could reduce some of the incentives to migrate, the recommendation also recognizes that improvements in the health and education systems in FAS nations could reduce the impact of migration on the receiving areas. 12. Consideration of alternatives available to the U.S. government to increase opportunities and improve conditions in FAS nations was beyond the scope of this report. 13. Our report does not contend that FAS migrants have introduced (i.e., provided the first case of) any communicable disease into the United States. However, Hawaii has repeatedly emphasized public health concerns regarding FAS migrants. According to a report prepared by Hawaii’s Department of Health and included in Hawaii’s January 31, 2001 Compact impact report, the FSM has the highest prevalence of Hansen’s Disease (leprosy) in the world, at 35 cases per 10,000 people. For 1992 through 1999, 151 cases of this disease were detected among the Marshall Islanders and Micronesians in Hawaii. Hawaii also identified cases of tuberculosis, pertussis, and hepatitis A occurring within the FAS population communities in the state. In addition, Guam and CNMI health officials also raised public health concerns regarding FAS migrants. 14. We believe this report is objective and fair. It reports on the migration experience under the Compact of Free Association relying on the best available data. The following are GAO’s comments on the letter from the government of the Republic of the Marshall Islands dated September 4, 2001. 1. This GAO report is one in a series of reviews of U.S. relations with the FSM and the RMI under the Compact of Free Association. Previously, we have published an assessment of the use, effectiveness, and accountability of U.S. Compact economic assistance. In addition to this migration report, forthcoming reviews cover the use, effectiveness, and accountability of U.S. domestic programs extended to both nations, as well as defense and security relations. Taken together, these reports will illustrate the larger context of the free association relationship between the three countries. 2. The determination of poverty levels is based on the U.S. nationwide standard as established by the U.S. Bureau of the Census. These levels are adjusted annually for family size. The measure of poverty is required for statistical purposes by the U.S. Office of Management and Budget in Statistical Policy Directive No. 14. We have added a footnote on p. 14, stating that poverty levels are based on the single U.S. standard discussed previously. Regarding education, our report does not state that FAS migrants are “uneducated.” Instead, we report that migrants have not been highly educated, based on OIA migrant survey data. According to U.S., Guam, and CNMI government reports, FAS migrants have lower educational levels than the overall population in Guam, Hawaii, and the CNMI. For example, 55 percent of Compact migrants over the age of 25 had high school degrees in Hawaii in 1997, while 84 percent of the total Hawaiian population over the age of 25 had a high school degree. 3. We have added text on p. 23 to state that the RMI government does not have an official policy regarding migration. 4. We have modified the title of the report in recognition that “foreign relations” is a more appropriate way to classify the migration relationship between the United States and FAS nations. We continue to believe that the Compact economic and program assistance is most accurately referred to as “foreign assistance.” 5. We made the suggested change. 6. We made the suggested footnote change. 7. We made the suggested footnote change. 8. We did not make this change. The report states that migration is viewed as a “safety valve” by government officials; it does not state that this view constitutes a matter of official government policy. 9. While we did not alter this particular sentence, on p. 14 of the report we added text to note that, in Hawaii, a higher percentage of Compact RMI migrants reported that they migrated to Hawaii for medical reasons (10 percent) than reported moving for employment (7 percent). However, we note that 43 percent of Compact Marshallese surveyed chose “other” as their reason for migrating. 10. We have made some of the suggested changes. The following are GAO’s comments on the letter from the government of Guam dated August 30, 2001. 1. The data we present on p. 17 of the report regarding the impact of FAS migrants on Guam, Hawaii, and the CNMI include public safety costs. We acknowledge that FAS migrants create impact on the criminal justice system in Guam. For example, in Guam, where FAS migrants make up about 5 percent of the population, 12 percent of the cost of the corrections system was attributed to FAS migrants in fiscal year 2000. FAS migrants represented 26 percent of all convictions in fiscal year 1999/2000 in Guam. We did not separately discuss this area of impact in our report because it is smaller than the impact reported on the health and education systems. For example, for fiscal year 2000 public safety costs estimated by Guam was 6 percent of the total impact amount, compared with 54 percent for education and 40 percent for health and welfare. Reviewing the impact immigration to Guam from countries other than FAS nations was beyond the scope of this report. 2. The issues of economic development and employment opportunities in the FSM and the RMI have been addressed in a prior GAO report. In this review, we reported that the considerable funds provided to the FSM and the RMI under the Compact had resulted in little economic development. See Foreign Assistance: U.S. Funds to Two Micronesian Nations Had Little Impact on Economic Development (GAO/NSIAD-00-216, Sept. 22, 2000). We have not assessed the extent to which long-term stability in FAS nations can be created in the future through economic development and employment opportunities. 3. We maintain that the report’s recommendation provides an option that could reduce some of the incentives to migrate. For example, targeted investments for dialysis treatments would allow some FAS citizens to remain at home instead of moving to U.S. locations. Further, the recommendation also recognizes that improvements in the health and education systems in FAS nations could reduce the impact of migration on the receiving areas. For example, improved immunization in FAS nations could reduce the public health concerns currently voiced by Guam, Hawaii, and the CNMI with regard to FAS migrants. 4. OIA migrant survey data have shown that employment has been a key reason for FAS migration to Guam, Hawaii, and the CNMI since the Compacts were implemented. However, we noted on p. 15 of our report that “…Guam government officials told us that as Guam’s unemployment rate has reached about 15 percent in recent years, the demand for FAS workers may have decreased.” This development does not necessarily mean, however, that Guam is now viewed in FAS nations as a location without employment opportunities. For example, an elected Guam official pointed out to us that as difficult as the employment situation may be in Guam, conditions are worse in the FSM state of Chuuk (the poorest state in the FSM and the birthplace of the largest group of FAS migrants in Guam). 5. As Guam rightly states in its comments, our report does not address how the two options available in the Compact and its enabling legislation should be used to address the impact caused by the migration from FAS. As our report points out, however, the Compact’s enabling legislation does not require compensation for impact costs. Rather, it says that the Congress will act “sympathetically and expeditiously” to redress adverse consequences. As such, it is at the Congress’ discretion to compensate for Compact impacts. Similarly, since the INS recently instituted regulations on habitual residents in the territories, we felt it was premature to recommend further regulations until the results of the new regulations can be assessed. 6. We added language on p. 25 of this report noting that the Guam government believes that restricting the use of compensation funding to capital improvement projects does not target the money where it could be best used. The following are GAO’s comments on the letter from the government of the State of Hawaii dated August 31, 2001. 1. We recognize in our report that FAS migrant eligibility for Medicaid is an important issue for the state of Hawaii. As Hawaii noted in its letter, the Congress recently reinstated FAS citizen eligibility for federal housing programs; a similar reinstatement of eligibility for federal Medicaid benefits would require a congressional policy decision. 2. We have not undertaken an analysis to determine whether there might be sufficient potential Compact health sector funds to pay FAS debts to U.S. health care facilities or what the impact of such payments would be on the FAS health care systems. 3. We have discussed the possibility of requiring health screenings with Department of State officials. They informed us that such screenings are not feasible, as the Department does not have sufficient resources to administer such a system in FAS countries. Further, INS officials noted that requiring such screenings would be unfair treatment against FAS migrants, as nonimmigrants are not required to undergo health screenings. While we recognize that requiring health screenings would address a key concern for all three U.S. locations, we believe that the likelihood of the U.S. government implementing such a recommendation is low. 4. Financial compensation is not required under the Compact or its enabling legislation, but can be made at the discretion of the Congress. 5. While we agree that Hawaii has developed its own methodology for calculating impact, we note that Hawaii officials have told us that the state’s Department of Education includes pre-1986 migrants in its Compact impact estimates. 6. On p. 1 of our report, we have better highlighted the fact that Hawaii is a state with a different status than Guam and the CNMI. We then explain in a footnote that we chose the term “U.S. island areas” to refer collectively to a U.S. state, a U.S. territory, and a U.S. commonwealth. We view this term as a neutral, concise reference to the three locations. Further, we list “Guam, Hawaii, and the CNMI” in descending order based upon the number of FAS Compact migrants each location has received. 7. We have retained the footnote as is. We do not believe that Interior’s recalculation of Compact impact estimates for 1 year out of 15 merits inclusion in the body of the report. Further, we are not convinced that OIA’s approach to adjusting the data was valid. 8. We have modified the text to note that Hawaii has estimated $86 million in Compact impact costs, but has received no compensation to date. 9. We agree, and have recommended in a previous report that future Compact economic assistance include specific measures (including grant requirements) that will ensure the effectiveness of, and accountability over, future spending. See Foreign Assistance: U.S. Funds to Two Micronesian Nations Had Little Impact on Economic Development (GAO/NSIAD-00-216, Sept. 22, 2000). The following are GAO’s comments on the letter from the government of the Commonwealth of the Northern Mariana Islands dated August 29, 2001. 1. We added text in footnote 21 on p. 15, stating: “Further, CNMI government officials have reported that it is far more cost effective to hire a FAS citizen, given the immigration filing expenses and other costs associated with hiring other foreign workers.” 2. The report does not suggest that FAS migrant health costs are unimportant in the CNMI. In fact, on p. 18, we noted that health costs were the greatest impact for the CNMI in 2000. 3. We added language on p. 25 of the report, noting that the CNMI government believes that restricting the use of compensation funding to capital improvement projects does not target the money where it could be best used. 4. The issues of economic development and employment opportunities in the FSM and the RMI have been addressed in a prior GAO report. In this review, we reported that the considerable funds provided to the FSM and the RMI under the Compact had resulted in little economic development. See Foreign Assistance: U.S. Funds to Two Micronesian Nations Had Little Impact on Economic Development (GAO/NSIAD-00-216, Sept. 22, 2000). We have not assessed the extent to which long-term stability in FAS nations can be created in the future through economic development and employment opportunities. In addition to those named above, Tama Weinberg, Ron Schwenn, Mary Moutsos, and Rona H. Mendelsohn made key contributions to this report.

Summary: Migration from the Federated States of Micronesia, the Republic of the Marshall Islands, and Palau has had a significant impact on Guam, Hawaii, and the Commonwealth of the Northern Mariana Islands (CNMI). The health and education needs of these migrants have particularly affected the budgetary resources of Guam and the CNMI. The budgetary impact on Hawaii is smaller but is expected to grow as Hawaii absorbs health care costs once covered by the U.S. government. Public health is an important concern for all three U.S. island areas. Migrants from the region with limited financial means are able to enter the United States with few restrictions, and U.S. island areas are absorbing much of the health care costs of this population. Furthermore, Guam, Hawaii, and the CNMI can be expected to continue to experience migration as long as weak economic conditions persist in Micronesia and the Marshall Islands. Targeting future U.S. assistance to Micronesia and the Marshall Islands for education and health purposes could reduce some of the motivation to migrate. Improvements in migrant health and education status might be expected to reduce immigration to U.S. destinations.