An estimated 5 million illegal aliens resided in the United States in 1996, according to INS. Official estimates, however, are not available on the number of children born to illegal aliens in the United States. Illegal alien parents may apply on behalf of their children for those federal welfare benefits to which their children are entitled as citizens. A household composed of an illegal alien parent and a citizen child gains access to federal welfare benefits by virtue of the child’s eligibility. The AFDC, Food Stamp, and SSI programs generally do not provide direct payment of benefits to minors—children under 18—requiring that their benefits be paid through an authorized representative payee, typically the custodial parent. In such cases, the citizenship status of the parent is not a consideration in deciding who the payee should be. The rationale is that the parent of an eligible child is in the best position to make decisions on how benefits should be spent on behalf of his or her child. For housing assistance, HUD provides funds to a public housing authority or owner of a housing unit to subsidize the rent for an eligible household. Under HUD rental programs, a household composed of an illegal alien and a citizen would be eligible for assistance if the citizen met eligibility criteria and assistance was available. Although illegal alien parents are not eligible for assistance, their income and assets are taken into account when determining the eligibility of and benefit amounts for their citizen children. Table 1 shows the average monthly benefit amounts under the various programs. Recipients often receive assistance from more than one program. In 1995, about 87 percent of AFDC households also received Food Stamp benefits and 31 percent received housing assistance. No individual may receive both AFDC and SSI benefits. The 1996 welfare reform legislation made sweeping changes to welfare programs for needy families, but it did not directly affect the eligibility of illegal aliens’ citizen children. Although TANF block grants, which replaced AFDC, will allow states more flexibility in structuring their programs, federal and state officials stated that U.S. citizen children of illegal aliens will remain eligible for assistance. The provision in the welfare reform law that requires reporting of illegal aliens to INS, however, may have an impact in the longer term. Prior to the legislation, AFDC, SSI, and housing assistance programs generally were not required to report illegal aliens to INS. The new provision requires that states operating TANF programs, the Commissioner of SSA, and the Secretary of HUD periodically provide information to INS on any individual they know is unlawfully in the United States. Federal officials stated that an interagency workgroup is presently determining what level of evidence will be required to establish that someone is known to be unlawfully present in the United States, as well as reporting procedures. No time frame, however, was available for when agencies and states are to begin reporting known illegal aliens to INS. If the final regulations for this reporting affect illegal aliens acting as payees for their U.S. citizen children, some illegal aliens could be discouraged from seeking benefits for their eligible children. Also, the Congress is considering legislation that would deny citizenship to children born in the United States to a parent who is not a citizen or lawful permanent resident. In fiscal year 1995, an estimated $1.13 billion—$700 million under the AFDC program and $430 million in Food Stamp benefits—was provided to households in which either the head of household or his or her spouse was an illegal alien. These benefits were provided to illegal alien parents for the well-being of their U.S. citizen children. The payments represent about 3 percent of total AFDC benefit costs and about 2 percent of total Food Stamp benefit costs. Approximately 153,000 AFDC households—with 300,000 citizen children—and 224,000 Food Stamp households—with 428,000 citizen children—had an illegal alien as the head of household or spouse of the head of household. In many cases, these estimates reflect the same households and citizen children, since 94 percent of the AFDC households with an illegal alien parent also received Food Stamp benefits and 65 percent of the Food Stamp households with an illegal alien parent also received AFDC. A summary of estimated benefits provided to these households in fiscal year 1995, by program, is shown in table 2. About 77 percent of AFDC and 78 percent of Food Stamp households with an illegal alien parent had one or two citizen children; the remaining households had three or more citizen children receiving benefits. In addition, while most of the illegal alien parent households had only citizen children in the households, a significant portion—23 percent of AFDC and 29 percent of Food Stamp recipients—had both eligible citizen children and noneligible illegal alien children. SSA does not have any comprehensive data on the number of U.S. citizen children of illegal aliens receiving SSI benefits. Based on the limited data available, we estimated that as of December 1996, at least 3,450 disabled U.S. citizen children of illegal aliens received benefits at an annualized federal benefit cost of about $17.6 million. SSA officials explained that readily available data cannot be used to accurately estimate the total number of cases in which an illegal alien parent received benefits on behalf of citizen children because the citizenship status of payees is not uniformly identified in SSA’s automated systems. Similarly, HUD does not have any data that would allow for an estimate of the number of households in which illegal aliens are receiving rental housing assistance for the benefit of U.S. citizen children. Before June 1995, citizenship status was not considered when determining the eligibility of individuals for HUD’s various rental assistance programs and such information was not collected or maintained on participants. However, recently implemented regulations and provisions included in the immigration reform legislation prohibit HUD from providing rental assistance to persons other than U.S. citizens and certain qualified noncitizens. HUD has begun redesigning its automated databases and data collection instruments to capture information on participants’ citizenship and alien status. However, this process is ongoing and the agency is not yet able to report the level of assistance being provided to households composed of both illegal aliens and eligible U.S. citizen children. Most illegal aliens receiving AFDC or Food Stamp benefits on behalf of U.S. citizen children are located in only a few states. Over 85 percent of the households with children of an illegal alien parent receiving AFDC are located in California, Texas, New York, and Arizona. (See fig. 1.) The distribution of Food Stamp households with an illegal alien parent is only slightly different, with 54 percent of the cases in California, 23 percent in Texas, and 4 percent in Arizona. In addition, the majority of SSI cases of illegal alien payees for citizen children that records allowed us to identify were located in California and Texas. In California, households composed of an illegal alien parent and citizen children represented about 10 percent of the state’s AFDC and Food Stamp caseloads in 1995 and accounted for $720 million in AFDC and Food Stamp benefits combined. Other studies from the California counties of Los Angeles and Orange estimated that these households have constituted up to 20 percent of each county’s AFDC caseload in recent years. In the other states for which we developed estimates, illegal alien payee cases ranged from 4 to 7 percent of each state’s AFDC and Food Stamp caseloads. (See app. I for more details on the estimated number of households and benefits provided by state and the associated sampling errors.) Although procedures are in place to prevent and detect fraud, comprehensive national statistics on fraud perpetrated by illegal aliens serving as payees on behalf of their citizen children are not available. However, studies of AFDC households in a few California counties with large populations of illegal aliens serving as payees indicate that there is little difference in the rate and type of misrepresentation or fraud detected for them and other households receiving benefits. To prevent and detect misrepresentation or fraud, federal, state, and local agencies use various approaches in processing applications for benefits, ensuring the continued eligibility of recipients, and maintaining payment accuracy for the AFDC, Food Stamp, and SSI programs. While each of these programs has different goals, all require individuals or families to meet certain eligibility criteria. To establish program eligibility, proof of citizenship and a social security number typically must be presented for all applicants, including U.S. citizen children of illegal aliens. In addition, since these are means-tested programs, the income and resources of an applicant’s household cannot exceed specific limits set by each program. Benefits, based on total household income, are then computed for the eligible family members. The amount of household income and other resources are verified at the time of application and, for successful applicants, periodically thereafter to ensure continued eligibility and payment accuracy. Applicants must provide proof of income and resources such as pay stubs, vehicle registration forms, and rental agreements. For the AFDC, Food Stamp, and SSI programs, officials access the Income and Eligibility Verification System or use computer matching with other databases to corroborate information provided by applicants. In addition to the verification procedures used during the application process and periodic reviews, some states take further steps to aid in detecting and preventing misrepresentation or fraud. For instance, all AFDC applicants in New York City are required to participate in office interviews and home visits by investigative staff to validate application information. As a result of these investigations, approximately 35 percent of new applicants never received benefits, according to city officials. In California and Texas, cases are referred to investigators for additional reviews, including home visits, if fraud is suspected. Although the officials we spoke with generally agreed that intensive screening is effective, it is also resource intensive and costly. Under the AFDC and Food Stamp programs, all states have been required by federal regulations to conduct quality control reviews of a sample number of cases to ensure that benefit amounts are correct. These reviews include verification of eligibility and income data; if fraud is suspected, a referral for investigation is made.