In 1995, about 87 percent of AFDC households also received Food Stamp benefits and 31 percent received housing assistance. An Estimated $1.1 Billion Provided in AFDC and Food Stamp Benefits

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. 1.) 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. Detected Misrepresentation or Fraud Similar for Households Headed by Illegal Aliens and Other Households

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. Incidence and Types of Misrepresentation or Fraud Detected Similar for Illegal Alien Payees and the General AFDC Population

National studies on the nature and extent of misrepresentation or fraud by illegal aliens obtaining benefits for their citizen children are not available. This study uses the term “underground economy” to refer to a source of income from which individuals are paid in cash and their earnings are not reported to the Internal Revenue Service or the state. In addition, officials in California, Texas, and New York cited the difficulties of verifying income that individuals—both illegal aliens and citizens—derived from the underground economy. For each of the selected households headed by or whose spouse was an illegal alien, we obtained from the sample case file information on the dollar amount of benefits received by the recipient household for the sample month, projected the yearly dollar amount of such benefits received by the household, and confirmed that the benefits were received on behalf of U.S. citizen children in the household. Under the Food Stamp program, these states were Arizona, California, and Texas.
Why GAO Did This Study

Pursuant to a legislative mandate, GAO provided information on the extent to which means-tested public benefits are provided to illegal aliens for the use of eligible individuals, focusing on: (1) the extent and the locations that selected federal means-tested benefits are being provided to illegal aliens for use by their U.S. citizen children; and (2) the nature and extent of fraud or misrepresentation detected in connection with these benefits.

What GAO Found

GAO noted that: (1) in fiscal year (FY) 1995, about $1.1 billion in Aid to Families with Dependent Children (AFDC) and Food Stamp benefits were provided to households with an illegal alien parent for the use of his or her citizen child; (2) this amount accounted for about 3 percent of AFDC and 2 percent of Food Stamp benefit costs; (3) a vast majority of households receiving these benefits resided in a few states--85 percent of the AFDC households were in California, New York, Texas, and Arizona; (4) 81 percent of Food Stamp households were in California, Texas, and Arizona; (5) California households alone accounted for $720 million of the combined AFDC and Food Stamp caseloads; (6) although illegal aliens also received Supplemental Security Income (SSI) and Department of Housing and Urban Development housing assistance for their citizen children, data to develop estimates for these two programs were not available; (7) comprehensive national statistics on any misrepresentation or fraud perpetrated by illegal aliens receiving benefits on behalf of their citizen children are not available; (8) a few California counties' studies of AFDC households indicate that the rates and types of potential misrepresentation or fraud are similar both for households headed by illegal aliens and for the general welfare population; (9) in these studies, one of the most commonly cited types of misrepresentation or fraud was the underreporting of income; (10) income is a key factor in determining program eligibility and benefit amounts and, when underreported, can result in overpayment of benefits; and (11) the states visited by GAO had procedures in place to verify income, but officials said that verifying individuals' income from earnings obtained through the underground economy was very difficult--for both illegal aliens and for citizens--in part because these earnings are not documented or reported to state or federal databases used to verify employment or earnings.