[Congressional Record Volume 142, Number 37 (Monday, March 18, 1996)]
[House]
[Pages H2317-H2319]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 CBO UNFUNDED MANDATE REPORT ON H.R. 2202, IMMIGRATION IN THE NATIONAL 
                          INTEREST ACT OF 1995

                                         House of Representatives,


                                   Committee on the Judiciary,

                                   Washington, DC, March 15, 1996.
     Hon. Newt Gingrich,
     The Speaker, House of Representatives,
     Washington, DC.
       Dear Mr. Speaker: The Committee on the Judiciary has 
     received further costs estimates from the Congressional 
     Budget Office relating to intergovernmental and private 
     sector mandates cost estimates for the ``Immigration in the 
     National Interest Act of 1995'' (H.R. 2202). I am placing 
     this letter in the Congressional Record so that all members 
     may have the benefit of this information.
           Sincerely,
                                                    Henry J. Hyde,
     Chairman.
                                                                    ____

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                   Washington, DC, March 13, 1996.
     Hon. Henry J. Hyde,
     Chairman, Committee on the Judiciary, House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed intergovernmental and private sector 
     mandates cost estimates for H.R. 2202, the Immigration in the 
     National Interest Act of 1995. CBO provided a federal cost 
     estimate for this bill on March 4, 1996.
       This bill would impose both intergovernmental and private 
     sector mandates, as defined in Public Law 104-4.

[[Page H2318]]

       If you wish further details on this estimate, we will be 
     pleased to provide them.
           Sincerely,
                                                  June E. O'Neill,
     Director.
                                                                    ____



    congressional budget office estimated cost of intergovernmental 
                                mandates

       1, Bill number: H.R. 2202.
       2. Bill title: Immigration in the National Interest Act of 
     1995.
       3. Bill status: As ordered reported by the House Committee 
     on the Judiciary on October 24, 1995.
       4. Bill purpose: H.R. 2202 would make many changes and 
     additions to federal laws relating to immigration. A number 
     of provisions in the bill, particularly those in titles V and 
     VI, could have a significant impact on state and local 
     governments. Provisions in these two titles would restrict 
     the number of legal entrants to the United States in the 
     future and limit the eligibility of many aliens for public 
     benefits. Title VI would also authorize state and local 
     governments to implement measures to minimize or recoup costs 
     associated with providing certain benefits to legal and non-
     legal aliens. Other titles contain provisions that would 
     affect the hiring procedures of some state, local, and tribal 
     governments and preempt state and local privacy rules 
     relating to non-legal aliens who use public services.
       5. Intergovernmental mandates contained in the bill: H.R. 
     2202 would require that state and local governments:
       Deny eligibility in most state and local means-tested 
     benefit programs to non-legal aliens, including those 
     ``permanently residing under color of law'' (PRUCOL). 
     (PRUCOLs are aliens whose status is usually transitional or 
     involves an indefinite stay of deportation);
       Deny non-legal aliens and PRUCOLs the right to receive 
     grants, enter into contracts or loan agreements, or receive 
     or renew professional or commercial licenses;
       Distribute means-tested benefits only through individuals 
     who, on the basis of their immigration status, are themselves 
     eligible for the program;
       Request reimbursement from a sponsor if notified that a 
     sponsored alien has received benefits from a state or local 
     means-tested program; and
       Impose no restrictions on the exchange of information 
     between state or local governmental entities or officials and 
     the Immigration and Naturalization Service (INS) regarding 
     the immigration status of individuals.
       In addition, H.R. 2202 would require state, local, and 
     tribal government personnel offices in at least five states 
     to confirm, through a toll-free telephone number (or other 
     electronic media), the identity, social security number, and 
     work eligibility of all employees within 3 days of hiring. 
     The bill would also require that state and tribal agencies 
     distributing unemployment benefits assure that recipients 
     have proper employment authorization.
       6. Estimated direct costs to State, local, and tribal 
     governments: (a) Is the $50 million annual threshold 
     exceeded? No.
       (b) Total direct costs of mandates: CBO estimates that the 
     mandates in this bill would impose direct costs on state and 
     local governments totaling less than $20 million annually. 
     The direct costs of the mandates in H.R. 2202 result 
     primarily from a provision in the bill that places 
     restrictions on the distribution of means-tested benefits. 
     This provision would increase the costs associated with 
     administering these programs. The bill's other mandates, as 
     explained at the end of the following section, would have 
     little or no direct impact on the budgets of state, local, or 
     tribal governments.
       (c) Estimate of necessary budget authority: Not applicable.
       7. Basis of estimate: For the purposes of preparing this 
     estimate, CBO contacted state and local governments and 
     public interest groups representing these governments. We 
     included in our survey the seven states most significantly 
     affected by immigration in an effort to assess the impact of 
     this legislation on those states in particular. We also 
     contacted local governments with large immigrant populations 
     as well as other state governments to understand the 
     administrative challenges they would face if this legislation 
     is enacted. CBO used federal public welfare caseload data and 
     state and local estimates of per case administrative costs to 
     project the direct costs of the mandate. We assume that H.R. 
     2202 would be enacted by August 1, 1996.

       Mandate with significant costs--distribution requirements

       H.R. 2202 would impose administrative costs on state and 
     local agencies responsible for public welfare programs that 
     benefit children. The bill would require that benefits be 
     distributed through a person who meets the eligibility 
     requirements for the same benefits on the basis of his/her 
     immigration status. This requirement appears to target 
     parents or guardians who are not lawfully in this country 
     themselves but who have dependent children who are citizens 
     or who otherwise qualify for benefits. In such cases, state 
     or local agencies responsible for providing benefits would 
     have to establish alternate delivery mechanisms to ensure 
     that eligible children receive the benefits.
       This provision would primarily affect Aid to Families with 
     Dependent Children (AFDC) and Food Stamps, means-tested 
     federal programs that are administered at the state and local 
     levels. In both, state and local governments share 
     administrative costs equally with the federal government. 
     However, Public Law 104-4 defines requirements affecting 
     these entitlement programs as mandates only if the states and 
     localities ``lack authority to amend their financial or 
     programmatic responsibilities'' for the programs. Thus, 
     mandate costs encompass only the additional administrative 
     expenditures in states lacking the flexibility to alter the 
     structure of their programs to offset the additional costs of 
     the requirement.
       To determine the potential cost of this requirement, CBO 
     examined analogous cases in programs when a guardian or 
     parent is unfit to receive benefits. When these circumstances 
     arise, agencies channel the benefits through a person or 
     organization, referred to as a representative payee, who 
     agrees to take on the responsibility of delivering the 
     benefits to the recipient. State and local agencies can spend 
     up to several hundred dollars per case to find a 
     representative payee and often must pay an ongoing fee to 
     such a person. In determining the potential cost of 
     compliance with this mandate, CBO estimated that annual costs 
     would average less than $250 per case for the approximately 
     140,000 cases affected by the requirement. State and local 
     governments would bear half of these costs. Because AFDC and 
     the Food Stamp program are usually administered by the same 
     state or local agency, CBO assumed that only one 
     representative payee per case would be necessary to cover 
     both programs. On this basis, CBO estimates that the mandates 
     in this bill would impose direct costs on state and local 
     governments totaling less than $20 million annually.

                   Mandates with insignificant costs

       Most of the mandates in H.R. 2202 would not result in 
     measurable budgetary impacts on state, local, and tribal 
     governments. In some cases--eligibility restrictions based on 
     legal status--the bill's requirements simply restate current 
     law for many of the jurisdictions with large alien 
     populations and thus result in little costs or savings. In 
     others--sponsor reimbursements and unemployment benefit 
     screening--broadly drafted language would allow states and 
     localities discretion as to how much effort they spend on 
     certain requirements. A few provisions would result in minor 
     administrative costs for some state and local governments--
     employee verification and preemption of laws restricting the 
     flow of information to and from the INS--but even in 
     aggregate, CBO estimates these amounts would be 
     insignificant.
       8. Appropriation or other Federal financial assistance 
     provided in bill to cover mandate costs: None.
       9. Other impacts on State, local and tribal governments: 
     H.R. 2202 contains many additional provisions affecting 
     public benefits to aliens that, while not mandates, could 
     have significant impacts on the budgets of state and local 
     governments. On balance, CBO expects that these provisions 
     would result in an overall net savings to state and local 
     governments.

                     Means-tested Federal programs

       H.R. 2202 would result in significant savings to state and 
     local governments by reducing the number of illegal aliens 
     receiving means-tested benefits through federal programs, 
     including Medicaid, AFDC, and Supplemental Security Income 
     (SSI). These federal programs are administered by state or 
     local governments and have matching requirements for 
     participation. Thus, reductions in caseloads would reduce 
     state and local, as well as federal, outlays in these 
     programs. CBO estimates that the savings to state and local 
     governments would exceed $750 million over the next five 
     years.
       H.R. 2202 would lower alien caseloads in means-tested 
     federal programs primarily by placing stricter eligibility 
     requirements on future legal entrants. The bill would 
     lengthen the time sponsored aliens must wait before they can 
     go on AFDC or SSI, and, most notably, apply such a waiting 
     period to the Medicaid program. H.R. 2202 would also deny 
     means-tested benefits to PRUCOLs. The remaining savings would 
     come from restrictions on the number of legal entrants, 
     particularly refugees who often rely on welfare upon their 
     arrival in this country. Illegal aliens are currently 
     ineligible for most federal assistance programs and would 
     remain so under the proposed law.

                 Means-tested State and local programs

       It is likely that some aliens displaced from federal 
     assistance programs would turn to assistance programs funded 
     by state and local governments, thereby increasing the costs 
     of these programs. While several provisions in the bill could 
     mitigate these costs--strengthening affidavits of support by 
     sponsors, allowing the recovery of costs from sponsors, and 
     authorizing agencies to ``deem'' or consider a sponsor's 
     income when determining alien eligibility for programs--CBO 
     expects that such tools would be used only in limited 
     circumstances in the near future. At some point, state and, 
     particularly, local governments become the providers of last 
     resort, and as such, we anticipate that they would face added 
     financial pressures on their public assistance programs that 
     would at least partially offset the savings they realize from 
     the federal programs.

                       Emergency medical services

       H.R. 2202 would offer state and local governments full 
     reimbursement for the costs of providing emergency medical 
     services to non-legal aliens and PRUCOLs on the condition 
     that they first verify the identity and

[[Page H2319]]

     immigration status of such individuals with the INS. Existing 
     law requires that state and local governments provide these 
     services and, under current matching requirements, pay 
     approximately half of the costs. While no reliable totals are 
     available of the amounts currently spent to provide the 
     services, areas with large alien populations claim that this 
     requirement results in a substantial drain on their budgets. 
     For example, California, with almost half the country's 
     illegal alien population, estimates it spends over $350 
     million each year on these federally mandated services. Full 
     federal reimbursement of emergency medical costs would result 
     in significant savings to state and local governments.
       Practical issues surrounding the verification requirement, 
     however, call into question the ability of states and 
     localities to collect the additional funds. Emergency 
     patients often show up with no insurance and little other 
     identification; therefore, if the INS drafted stringent rules 
     for verification, we expect that few providers could qualify 
     for full reimbursement. On the other hand, if the INS 
     required only minimal identification, state and local 
     governments could realize significant savings.
       10. Previous CBO estimate: CBO provided a preliminary 
     analysis of mandate costs to state and local governments as 
     part of the federal cost estimate dated March 4, 1996. The 
     initial conclusions presented in that estimate have not 
     changed.
       11. Estimate prepared by: Leo Lex and Karen McVey.
       12. Estimate approved by: Robert A. Sunshine for Paul N. 
     Van de Water, Assistant Director for Budget Analysis.
                                                                    ____



    congressional budget office estimate of costs of private sector 
                                mandates

       1. Bill number: H.R. 2202.
       2. Bill title: Immigration in the National Interest Act of 
     1995.
       3. Bill status: As ordered reported by the House Committee 
     on Judiciary on October 24, 1995.
       4. Bill purpose: H.R. 2202 would make many changes and 
     additions to federal laws relating to immigration.
       5. Private sector mandates contained in the bill: The bill 
     would impose new requirements on the private sector in 
     several titles. Generally speaking, the private sector 
     mandates in H.R. 2202 lie in four areas: (1) provisions that 
     affect aliens within the borders of the United States, (2) 
     provisions that affect individuals who sponsor aliens and 
     execute affidavits of support, (3) provisions that affect the 
     transportation industry, and (4) provisions that affect 
     employers of aliens. In addition, a few provisions would 
     reduce existing mandates on employers and offset marginally 
     some of the costs imposed by new mandates.
       6. Estimated direct cost to the private sector: Assuming 
     H.R. 2202 were enacted this summer, CBO estimates that the 
     direct costs of private sector mandates identified in this 
     bill would be minimal through 1999. However, the direct costs 
     associated with new private sector mandates would exceed $100 
     million in 2000, $300 million in 2001, and $600 million in 
     2002. The lion's share of those costs would be imposed on 
     sponsors of aliens who execute affidavits of support; such 
     costs are now borne by the federal government and state and 
     local governments for the provision of benefits under public 
     assistance programs.

   Title III--Inspection, apprehension, detention, adjudication, and 
             removal of inadmissible and deportable aliens

       Title III (new section 241) of the bill would impose new 
     mandates on the transportation industry, in particular, those 
     carriers arriving in the U.S. from overseas. Agents that 
     transport stowaways to the U.S., even unknowingly, would be 
     responsible for removing them and for the costs associated 
     with their removal. In addition, carriers of stowaways would 
     be responsible for any personal care required by illegal 
     aliens because of a mental or physical condition.
       This mandate is not expected to impose large costs on the 
     transportation industry. Over the last two years, only about 
     2000 stowaways have been detained in total.

             Title VI--Restrictions on benefits for aliens

       Title VI would impose new requirements on citizens and 
     permanent residents who execute affidavits of support for 
     legal immigrants. At present, immigrants who are expected to 
     become public charges must obtain a financial sponsor who 
     signs an affidavit of support. A portion of the sponsor's 
     income is then ``deemed'' to the immigrant for use in the 
     means-test for several federal welfare programs. Affidavits 
     of support, however, are not legally binding documents. H.R. 
     2202 would make affidavits of support legally binding, expand 
     the responsibilities of financial sponsors, and place an 
     enforceable duty on sponsors to reimburse the federal 
     government or states for benefits provided in certain 
     circumstances.
       Supporting aliens to prevent them from becoming public 
     charges would impose considerable cost on sponsors, who are 
     included in the private sector under the Unfunded Mandates 
     Reform Act of 1995. Assuming this bill were enacted this 
     summer, sponsors of immigrants would face over $20 million in 
     additional costs in 1998. Costs would grow quickly, however. 
     Over the period from 1998 to 2002, assuming that affidavits 
     of support would be enforced, the costs to sponsors would 
     exceed $100 million annually and would total $1 billion 
     during the first five years that the mandate is effective.

                  Title VIII--Miscellaneous provisions

       Title VIII would impose new private sector mandates on 
     employers who hire temporary non-immigrant workers. Under 
     section 806, if an employer within a certain period following 
     or preceding the laying-off of American workers files an 
     application for an H-1B non-immigrant worker, that employer 
     would be required to pay a wage to the non-immigrant that is 
     at least 110 percent of the average of the last wage earned 
     by all such laid-off workers. The costs associated with that 
     mandate are dependent on how often H-1B workers are used to 
     replace laid-off workers. In addition, section 806 contains 
     provisions that would reduce mandates imposed on employers 
     that are classified as non-H-1B dependent employers that 
     would offset somewhat the costs of new mandates in that 
     section.
       Although no specific information exists on the extent of 
     this practice, available data suggests that the new mandate 
     to pay 110 percent of the average wage would not be 
     particularly costly. About 65,000 H-1B visas are awarded each 
     year. H-1B workers can stay in the U.S. for three years (or 
     six years if awarded a one-time extension). Therefore, at 
     most 390,000 H-1B workers are in the country at any one time, 
     although the total number is probably less than that. The 
     exact number is difficult to determine for several reasons:
       Canadians are not required to obtain H-1B visas to become 
     non-immigrant workers (although they do require approval from 
     the federal government) and are thus not counted.
       Some H-1B workers return home for temporary visits and must 
     therefore obtain an additional H-1B visa. This means that on 
     average, there is more than one H-1B visa issued per each 
     non-Canadian non-immigrant worker.
       No record is kept of when H-1B workers leave the United 
     States.
       According to a survey conducted in 1992 by the Immigration 
     and Naturalization Service, close to 70 percent of H-1B 
     workers are professionals--mainly health professionals, 
     engineers, and computer scientists. Data from the Department 
     of Labor in 1994 suggests an even greater concentration in 
     the health professions.
       Because the occupations of most H-1B workers are not 
     subject to widespread layoffs, and given the total number of 
     H-1B workers probably extant in the United States, CBO 
     concludes that the total cost of this mandate would not be 
     substantial.

                            Other provisions

       Several other provisions in H.R. 2202 would impose new 
     mandates on citizens and aliens but would result in little or 
     no monetary cost. For example, Title IV would require aliens 
     to provide additional information to the Attorney General or 
     the Immigration and Naturalization Service. Title VI contains 
     a new mandate that sponsors would be required to notify the 
     federal government and states of any change of address.
       7. Previous CBO estimate: CBO provided a preliminary 
     analysis of mandate costs to the private sector as part of 
     the federal cost estimate dated March 4, 1996. The initial 
     conclusions presented in that estimate have not changed.
       8. Estimate prepared by: Dan Mont and Matt Eyles.
       9. Estimate approved by: Joseph R. Antos, Assistant 
     Director for Health and Human Resources.

                          ____________________