Under the compacts of free association, citizens of the FAS are exempt  from meeting the visa and labor certification requirements of the  Immigration and Nationality Act as amended. The amended compacts’ enabling legislation provides for Interior to  allocate the $30 million in grants to affected jurisdictions on the basis of  their compact migrant population. Each affected jurisdiction is to receive  its portion of the $30 million per year in proportion to the number of  compact migrants living there, as determined by an enumeration to be  undertaken by Interior and supervised by the U.S. Census Bureau  (Census) or another organization at least every 5 years.the population to be enumerated as persons, or those persons’ children  under the age of 18, who pursuant to the compacts are admitted to, or  resident in, an affected jurisdiction. The combined data from Census’s 2005-2009 American Community  Survey and the 2008 required enumerations in Guam and the CNMI  estimated that approximately 56,000 compact migrants quarter of all FAS citizens—lived in U.S. areas, with the largest  populations in Guam and Hawaii. On the basis of these combined data, we estimate that approximately 68  percent of compact migrants were from the FSM, 23 percent were from  the Marshall Islands, and 9 percent were from Palau. Guam and Hawaii Report Rising Compact Costs, Primarily for Education and Health

For 2004 through 2010, the affected jurisdictions’ reports to Interior show  more than $1 billion in costs for services related to compact migrants. The affected jurisdictions reported impact costs for education, health,  public safety, and social services. Education accounted for the largest  share of reported expenses in all three jurisdictions, and health care costs  accounted for the second-largest share overall (see table 1). Compact Impact Estimates Have a Number of Weaknesses

We identified a number of weaknesses related to accuracy, adequacy of  documentation, and comprehensiveness in affected jurisdictions’  reporting of compact impacts to Interior from 2004 through 2010. Guam, Hawaii, and the CNMI, among other U.S.  states and territories, receive federal funding for programs that  compact migrants use; however, not all compact impact reports  accounted for this stream of funding and included costs in compact  impact estimates for programs that federal funding had partially  addressed. Revenue. For example, Hawaii did  not provide estimated costs to Interior in 2005 and 2006, although it  included partial costs incurred in those years in its 2007 and 2008 reports. Existing Compact Impact Reporting Guidelines Have Gaps and Generally Are Not Used

Guidelines that Interior developed in 1994 for compact impact reporting  do not adequately address certain concepts key to reliable estimates of  impact costs. However, the 1994 guidelines do not address certain  concepts, such as calculating revenue received from providing services to  compact migrants, including capital costs, and ensuring that data are  reliable and reporting is consistent. Several Hawaii and CNMI officials from the reporting local government  agencies we met with, as well as Interior officials, were not aware of the  1994 guidelines and had not used them. In order to strengthen Interior’s ability to collect, evaluate, and submit  reliable information to Congress on compact impact, we recommended in  our November 2011 report that Interior disseminate guidelines to the  affected jurisdictions on producing reliable impact estimates, and call for  the affected jurisdictions to apply these guidelines when developing  compact impact reports. Interior agreed with our recommendation. We  continue to believe that providing more rigorous guidelines to the affected  jurisdictions and promoting their use for compact impact reports would  increase the likelihood that Interior can provide reliable information on  compact impacts to Congress. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

U.S. compacts with the FAS permit those three countries' citizens to migrate to the United States and its territories (U.S. areas) without regard to visa and labor certification requirements. Thousands of FAS citizens have migrated to U.S. areas (compact migrants)—particularly to Hawaii, Guam, and the CNMI. In fiscal year 2004, Congress appropriated $30 million annually for 20 years to help defray affected jurisdictions' costs for migrant services. Interior allocates the $30 million as compact impact grants in proportion to the number of compact migrants living in each affected jurisdiction. Although not required, affected jurisdictions may report impact costs to Interior, which submits any reports it receives to Congress.
This statement draws from GAO's November 2011 report on compact migrants and discusses challenges in identifying the impact of compact migrants on U.S. areas. For this statement, GAO assessed progress made by Interior to address the recommendation that it disseminate cost guidelines.

What GAO Found

Data from the U.S. Census Bureau (Census) show that migrants from the freely associated states (FAS)—the Federated States of Micronesia (FSM), the Marshall Islands, and Palau—reside throughout U.S. areas. GAO's 2011 report found that Census estimates that roughly 56,000 compact migrants—nearly a quarter of all FAS citizens—were living in U.S. areas in 2005 to 2009. About 58 percent of compact migrants lived in areas that Congress defined in the amended compacts' enabling legislation as affected jurisdictions: American Samoa, Hawaii, Guam, and the Commonwealth of the Northern Mariana Islands (CNMI).
For fiscal years 2004 through 2010, Hawaii, Guam, and the CNMI reported more than $1 billion in costs associated with providing education, health, and social services to compact migrants—far in excess of the $210 million in compact impact grants over that time period. The affected jurisdictions reported impact costs for education, health, public safety, and social services to the Department of the Interior (Interior). Education accounted for the largest share of reported expenses in all three jurisdictions, and health care costs accounted for the second-largest share overall.
However, assessed against best practices for cost estimation, these cost estimates contain a number of limitations with regard to accuracy, adequate documentation, and comprehensiveness, affecting the reported costs' credibility and preventing a precise calculation of total compact impact on the affected jurisdictions. For example, some jurisdictions did not accurately define compact migrants, account for federal funding that supplemented local expenditures, or include revenue received from compact migrants.
Interior developed guidelines in 1994 for reporting compact impact. However, several officials from the reporting local government agencies, as well as Interior officials, were not aware of the guidelines and had not used them. Moreover, the 1994 guidelines do not address certain concepts that are essential for reliable estimates of impact costs, such as calculating revenue received from providing services. Providing more rigorous guidelines to the affected jurisdictions that address concepts essential to producing reliable impact cost estimates and promoting their use for compact impact reports would increase the likelihood that Interior can provide reliable information on compact impacts to Congress. Although Interior took initial steps to implement GAO's recommendation in 2012, it has not yet provided updated guidelines for estimating compact cost impacts.

What GAO Recommends

GAO is not making new recommendations in this statement. In its 2011 report, GAO recommended that Interior disseminate adequate guidance for estimating compact cost impacts and call for the affected jurisdictions to apply these guidelines, among other steps needed to assess and address the impact of the growing compact migration. Interior concurred with the recommendation on providing adequate guidance for estimating compact cost impacts.