These issues include the government costs of providing benefits and services to illegal aliens and the impact illegal aliens’ presence has on the employment of U.S. workers. Scope and Methodology

To examine the costs of elementary and secondary education, Medicaid, and adult incarceration associated with illegal aliens residing in California, we evaluated the reasonableness of the assumptions and methodologies underlying the cost estimates published by the state of California in its January and September 1994 studies and the Urban Institute in its Fiscal Impacts study. We also reviewed the revenue estimates for illegal aliens contained in California’s September study and the Fiscal Impacts study. Cost Estimates Are Questionable Due to Limited Data and Varied Assumptions

As of September 1994, California estimated that it will spend $2.35 billion on elementary and secondary education, Medicaid, and adult incarceration for illegal aliens in fiscal year 1994-95. However, differences between legalized and illegal aliens’ use of Medicaid may also explain why California’s estimate was higher. The study provided an estimate ranging from a low of $528 million to a high of $1.4 billion, with a median estimate of $878 million. Federal Efforts Aimed at Improving Cost and Revenue Estimates

Recognizing the problems associated with estimating the fiscal impact of illegal aliens, OMB and the Department of Justice requested the Fiscal Impacts study to help the federal government assess states’ requests for reimbursement of illegal alien costs. The study represents an initial effort to standardize and improve states’ methodologies for estimating selected costs and revenues. To estimate per capita tax payments for legal residents in California, we used Census Bureau data on revenue collected from California residents for each of the five types of revenues and divided these amounts by the size of California’s population.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the fiscal impact of illegal aliens residing in California, focusing on: (1) the Governor of California's 1994 and 1995 budget estimates for elementary and secondary education, Medicaid benefits, and adult incarceration; (2) the estimates of revenues attributable to illegal aliens; and (3) federal efforts to improve estimates of the fiscal impact of illegal aliens residing in California.

What GAO Found

GAO found that: (1) there are limited data on California's illegal alien population's size, use of public services, and tax payments and a lack of consensus on the appropriate methodologies, assumptions, and data sources to use in estimating the costs and revenues for illegal aliens in California; (2) using the most reasonable assumptions, it adjusted California's revised estimates on the costs of elementary and secondary education and adult incarceration for illegal aliens; (3) while its overall adjusted cost estimate of $2.35 billion agreed with the state's revised estimate, the component estimates differed; (4) the estimates of revenues attributable to illegal aliens ranged from $500 million to $1.4 billion, but data limitations prevented it from judging the reasonableness of the revenue estimates; and (5) although the Urban Institute has attempted to standardize and improve states' methodologies for estimating illegal aliens' costs to the public, many differences still remain that will require further consensus.