U.S. Citizenship and Immigration Services (USCIS), an agency within the Department of Homeland Security (DHS), performs multiple functions including the adjudication of immigration and naturalization petitions and refugee and asylum claims, as well as other immigration-related services. USCIS currently funds over 95% of its budget by charging user fees to petitioners for its services. The agency and its predecessor, the former Immigration and Naturalization Service (INS), have had the legal authority to do so since at least the passage of the Immigration and Nationality Act of 1952 (INA). In 1988, Congress created the Immigration Examinations Fee Account, which made the portion of USCIS's budget collected from user fees no longer subject to annual congressional approval. This budgetary structure has attracted congressional attention as the result of President Obama's recent executive action on immigration. Among its other provisions, the action would expand the current use of deferred action that some estimate could affect up to 5 million unauthorized aliens living in the United States. USCIS would process all new deferred action petitions, the cost of which would be paid for through user fees. Some Members of Congress oppose the executive action, particularly its expansion of existing deferred action provisions. However, because USCIS's funding is largely independent of the annual appropriations process, Congress cannot use that process to halt the deferred action programs contained in the President's executive action. If Congress wanted to alter existing statutory provisions governing the collection of user fees in the Immigration Examinations Fee Account, the availability of user fees for expenditure, or the prohibition of user fees for certain purposes, it would need to enact legislation. Apart from the agency's accountability to Congress, other issues may merit congressional attention. These include the agency's capacity to handle surges in application volume while maintaining stable service levels for the rest of its caseload; whether the underlying reasoning used to establish petition fees continues to be appropriate; whether current fees are at a level where they may be affecting or altering both the pool of applicants who apply for benefits and the pool of lawful permanent residents who decide to naturalize; and the pace and progress of information technology modernization within an agency that remains reliant upon paper copies of petitions and documents. This report begins with a brief overview of USCIS functions. It then describes the agency's budgetary structure, including its three primary fee accounts for processing user fees. It discusses how the agency calculates user fees for particular immigration services and benefits. The report closes with a discussion of issues for Congress. USCIS was established with the Homeland Security Act of 2002 and assumed responsibility for the immigration service functions of the federal government on March 1, 2003. USCIS has over 200 offices around the world and employs roughly 19,000 employees and contractors within four directorates and nine program offices. Processing petitions and applications, which is most of the agency's workload, occurs in four major USCIS Service Centers and 83 Field Offices in the United States, Puerto Rico, and Guam. Three major activities dominate USCIS functions: adjudication of immigration petitions, adjudication of naturalization petitions, and consideration of refugee and asylum claims and related humanitarian and international concerns. USCIS also provides a range of immigration-related services, such as employment authorizations and change-of-status petitions. While most costs are directly related to the agency's processing functions, other costs, such as administrative overhead, support these functions indirectly. Of the activities listed below, only humanitarian functions generally have no associated fee. Immigration Adjudication : USCIS processes roughly 6 million petitions each year, including about 1 million for permanent status and 5 million for temporary nonimmigrant status. USCIS adjudicators determine the eligibility of immediate relatives and other family members of U.S. citizens and lawful permanent residents (LPRs); employees that U.S. businesses have demonstrated that they need (and their immediate family members); and other foreign nationals who meet specified criteria. They also must determine whether a foreign national in the United States on a temporary visa (i.e., a nonimmigrant) is eligible to change to another nonimmigrant status or adjust to LPR status. Work Authorization : USCIS adjudicates work authorizations for aliens who meet certain conditions. Employment Verification : USCIS is responsible for the Electronic Employment Eligibility Verification (E-Verify) program used by employers to ensure that their employees possess lawful status to work in the United States. Since FY2007, congressional appropriations have supported the E-Verify program. International Services : The USCIS Office of International Affairs adjudicates refugee applications and conducts background and record checks related to some immigrant petitions abroad. The largest component of this program is the asylum officer corps, a small but occasionally high-profile part of USCIS's workload, whose members interview and screen asylum applicants. Fraud Detection and National Security : USCIS must confirm that all applicants are eligible for the particular immigration status they are seeking, or alternatively, determine they should be rejected because they fail to meet other legal requirements. USCIS established the Office of Fraud Detection and National Security at the agency's inception in 2003 to work with the appropriate law enforcement entities to handle foreign nationals whose applications and petitions trigger national security and criminal database notifications and to identify systemic fraud in the application process. Many such duties formerly performed by the INS enforcement arm are now the responsibility of DHS's Immigration and Customs Enforcement (ICE). Civic Integration : USCIS promotes instruction and training on citizenship rights and responsibilities and provides immigrants with the information and tools necessary to successfully integrate into American civic culture. This includes maintaining a Citizenship Resource Center website and managing the Immigrant Integration Grants Program, which assists public or private nonprofit organizations that provide citizenship instruction and naturalization application services to LPRs. Naturalization : USCIS is responsible for naturalization, a process that grants U.S. citizenship to LPRs who fulfill the related requirements established by Congress in the Immigration and Nationality Act of 1952 (INA). Adjudicators must determine whether aliens have continuously resided in the United States for a specified period; possess good moral character, are able to read, write, speak, and understand English; and possess a basic knowledge of U.S. civics and history. USCIS's workload can fluctuate considerably from year to year. To facilitate planning, USCIS regularly projects total application workload volume and associated user fees based on which applicants pay fees or receive exemptions. While USCIS makes such projections by using modeling techniques and by anticipating filing trends and events that may influence volume, the agency's final tallies are influenced by factors such as shifts in U.S. immigration policy, the economy, and international political events, all of which can affect the decisions of people abroad who consider immigrating to the United States. USCIS continues to process petitions in a paper-based form. This mode of operation generates complaints of lost files. Many observers comment that it is entirely outmoded to meet the growing workload and challenges facing the agency. Since 2008, USCIS has been implementing a long-term project to modernize its systems and processes in an effort to improve information sharing, workload capacity, and system integrity (see " IT Modernization and Client Service " below). Referred to as the USCIS Transformation, the project is expected to transition the paper-based system to a digital format managed and accessed online by USCIS and users. Over two decades ago, the budgetary structure of USCIS's predecessor agency, the former INS, was transformed when the Immigration Examinations Fee Account (IEFA) was created to fund the agency's activities and operations. Since the creation of USCIS in 2003, the agency has been largely dependent upon fees to fund its operations. The agency has two other smaller accounts described below that were created to receive monies to support specific purposes both within and outside USCIS: the H-1B Non-Immigrant Petitioner Fee Account and the H-1B and L Fraud Prevention and Detection Fee Account. USCIS also receives a small portion of its budget through appropriations. USCIS receives direct appropriations through the annual DHS appropriations process. In earlier years, appropriations funded temporary special projects such as backlog reduction. More recently, appropriations have exclusively funded E-Verify and immigrant integration grants. (See Appendix A for a brief history of USCIS fee-funding.) In FY2014, direct appropriations constituted less than 4% of USCIS's budget ( Figure 1 ). USCIS funds the processing and adjudication of immigrant, nonimmigrant, refugee, asylum, and citizenship benefits through its user fees deposited into the Immigration Examination Fee Account (IEFA). This account is not subject to annual congressional approval. The INA states that user fees be set at a level that ensures recovery of the full costs of providing adjudication and naturalization services, including similar services to those people who are not charged, such as asylum applicants. User fees can also be set at levels to cover "costs associated with the administration of the fees collected." Further, the INA provides that deposited funds remain available until expended "for expenses in providing immigration adjudication and naturalization services and the collection, safeguarding and accounting for fees deposited in and funds reimbursed from the 'Immigration Examinations Fee Account.'" As such, the authority to set user fee levels and expend user fees is controlled outside the annual appropriations process and does not depend on annual action by Congress. In 1998, Congress passed the American Competitiveness and Workforce Improvement Act (ACWIA), which, among other provisions, temporarily increased the number of temporary skilled H-1B workers admitted to the United States.