Foreign Relations: Migration From Micronesian Nations Has Had	 
Significant Impact on Guam, Hawaii, and the Commonwealth of the  
Northern Mariana Islands (05-OCT-01, GAO-02-40).		 
								 
Migration from Freely Associated States (FAS), collectively, the 
Federated States of Micronesia (FSM), the Republic of the	 
Marshall Islands (RMI), and Palau, has clearly had a significant 
impact on Guam, Hawaii, and the Commonwealth of the Northern	 
Mariana Islands (CNMI). Compact of Free Association migrants have
required local expenditures in health and education, and have	 
particularly affected the budgetary resources of Guam and the	 
CNMI. The budgetary impact on Hawaii is relatively smaller but is
expected to grow as Hawaii absorbs health care costs once covered
by the U.S. federal government. Public health is an important	 
concern for all three U.S. island areas. The Compact allows FAS  
migrants who have limited financial means to enter the United	 
States with few restrictions and U.S. island areas are absorbing 
much of the health care costs of this population. Furthermore,	 
Guam, Hawaii, and the CNMI can be expected to continue to	 
experience Compact impact as long as current poor economic	 
conditions persist in the RMI and the FSM. Targeting future U.S. 
assistance to the FSM and the RMI for education and health	 
purposes could reduce some of the motivation to migrate and	 
improvements in migrant health and education status might be	 
expected to reduce migrant impact on U.S. destinations. 	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-40						        
    ACCNO:   A02123						        
  TITLE:     Foreign Relations: Migration From Micronesian Nations Has
             Had Significant Impact on Guam, Hawaii, and the Commonwealth of  
             the Northern Mariana Islands                                     
     DATE:   10/05/2001 
  SUBJECT:   Cost control					 
	     Education or training				 
	     Employment 					 
	     Foreign governments				 
	     Health care services				 
	     Immigration or emigration				 
	     International agreements				 
	     Compact of Free Association			 
	     English as a Second Language Program		 
	     Guam						 
	     Hawaii						 
	     Marshall Islands					 
	     Micronesia 					 
	     Northern Mariana Islands				 
	     Palau						 
	     Trust Territory of the Pacific Islands		 

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GAO-02-40
     
a

GAO United States General Accounting Office

Report to Congressional Requesters

October 2001 FOREIGN RELATIONS Migration From Micronesian Nations Has Had
Significant Impact on Guam, Hawaii, and the Commonwealth of the Northern
Mariana Islands

GAO- 02- 40

Page i GAO- 02- 40 Micronesian Migration Letter 1

Results in Brief 3 Background 5 Thousands of FAS Citizens Have Migrated to
U. S. Island Areas

Under the Compact for Employment Opportunities but Live in Poverty 10
Compact Migration Has Cost U. S. Island Areas Hundreds of

Millions of Dollars, While Population Growth of the FSM and the RMI Has
Slowed 16 Use of Options Available to Address Impact Has Not Satisfied U. S.

Island Governments 23 Changes in Compact Assistance and Provisions Might
Affect

Migration Levels and Impact 30 Conclusions 33 Recommendation for Executive
Action 34 Agency Comments 34

Appendix I Objectives, Scope, and Methodology 36

Appendix II FAS Migrant Population Data Collection 40

Appendix III Comments From the Department of the Interior 43

Appendix IV Comments From the Department of State 46

Appendix V Comments From the Government of the Federated States of
Micronesia 50

Appendix VI Comments From the Government of the Republic of the Marshall
Islands 57 Contents

Page ii GAO- 02- 40 Micronesian Migration Appendix VII Comments From the
Government of Guam 71

Appendix VIII Comments From the Government of Hawaii 79

Appendix IX Comments From the Government of the Commonwealth of the Northern
Mariana Islands 100

Appendix X GAO Contacts and Staff Acknowledgments 104

Tables

Table 1: FAS Migrants in Guam and Hawaii (1997) and the CNMI (1998) by When
Migrated (Before or After Compact Implementation) 11 Table 2: Proportion of
FAS Migrants Living Below the Poverty

Level in Guam and Hawaii (1997) and the CNMI (1998) 14 Table 3: Compact
Impact Estimates for Guam, Hawaii, and the

CNMI, 1986- 2000 17

Figures

Figure 1: Location and Population of the Federated States of Micronesia, the
Republic of the Marshall Islands, and the Republic of Palau, as well as the
U. S. Areas of Guam, Hawaii, and the Commonwealth of the Northern Mariana
Islands 6 Figure 2: Year of FAS Migrant Arrival in Guam, Hawaii, and the

CNMI, pre- 1980- 1997/ 98 13

Page iii GAO- 02- 40 Micronesian Migration Abbreviations

CNMI Commonwealth of the Northern Mariana Islands FAS Freely Associated
States FSM Federated States of Micronesia INS Immigration and Naturalization
Service OIA Office of Insular Affairs RMI Republic of the Marshall Islands
UN TTPI United Nations Trust Territory of the Pacific Islands

Page 1 GAO- 02- 40 Micronesian Migration

October 5, 2001 The Honorable James V. Hansen Chairman Committee on
Resources

The Honorable Tom Lantos Ranking Minority Member Committee on International
Relations

The Honorable Jim Leach Chairman, Subcommittee on East Asia and the Pacific
Committee on International Relations

The Honorable Doug Bereuter House of Representatives

The United States is party to international agreements, in the form of
Compacts of Free Association, that include provisions granting the citizens
of three small Pacific Island nations the right to live and work in the
United States. One of these Compacts was enacted in 1986 with the Federated
States of Micronesia and the Republic of the Marshall Islands, while the
second Compact was implemented in 1994 with the Republic of Palau. Compact
enabling legislation states that, in approving the Compacts, the Congress
did not intend to cause any adverse consequences for U. S. territories,
commonwealths, or the state of Hawaii. While many of the provisions of the
Compact with the Federated States of Micronesia and the Republic of the
Marshall Islands, including those providing U. S. economic assistance, are
due to expire in 2001 and are being renegotiated, the Compact?s migration
provisions do not expire. 1 However, the governments of the U. S. island
areas of Guam (an unincorporated U. S. territory in the western Pacific),
Hawaii (a U. S. state), and the Commonwealth of the Northern Mariana Islands
(a self- governing commonwealth of the United States), have raised concerns
about the adverse financial and public health impact that they attribute to
the many citizens from the Compact nations that have availed themselves of

1 Compact provisions related to economic assistance, access to U. S. federal
services and programs, and certain of the Compact defense obligations are
due to expire in 2001. These provisions can continue from the 2001
expiration date to 2003 as provided in the Compact while negotiations are
under way but not completed.

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 02- 40 Micronesian Migration

Compact migration rights. 2 Therefore, the Department of State?s Director of
the Office of Compact Negotiations testified in June 2000 that he intends to
address migration in the context of the ongoing negotiations. 3 (As of
September 21, 2001, the Director of the Office of Compact Negotiations
resigned. He has not yet been replaced.)

You requested that we review the migration provisions of the Compact with
the Federated States of Micronesia and the Republic of the Marshall Islands
in order to assist the Congress in its review of any migration proposals
that may result from current Compact negotiations. In response, we (1)
identified migration under the Compact (migrant population size,
destinations, and characteristics), (2) assessed the impact of this
migration on U. S. island areas and the sending nations, 4 (3) determined
the use of available options to address impact on U. S. island areas, and
(4) explored ways in which future changes in Compact provisions and
assistance levels might affect migration levels and impact. Our review
includes data on the Republic of Palau as U. S. island area governments have
included the cost of Palauan migrants in their financial impact estimates.

To meet these objectives, we reviewed the Compacts and laws that affect
migration, as well as data on the number, destinations, characteristics, and
impact of migrants from the Federated States of Micronesia, the Republic of
the Marshall Islands, and the Republic of Palau to U. S. island areas.
Although these data were collected using the best approach available, we
note that the data on the number of migrants may be an undercount and are
now several years old. We interviewed officials from the governments of the
United States, the Federated States of Micronesia, the Republic of the
Marshall Islands, the Republic of Palau, Guam, Hawaii, and the Commonwealth
of the Northern Mariana Islands regarding migration under the Compacts of
Free Association and its impact. We also spoke with migrant community
representatives in the three U. S. island areas.

2 We use the term ?U. S. island areas? to refer collectively to Guam,
Hawaii, and the Commonwealth of the Northern Mariana Islands. We view this
term as a neutral, concise reference to three locations that each have a
different political status.

3 Direct economic assistance provided for in the Palau Compact does not
expire until 2009, and that Compact?s migration provisions do not have an
expiration date. 4 We did not include the continental United States in this
report because (1) compensation for migrant impact is not available to U. S.
mainland states in the Compact?s enabling legislation and (2) no data
regarding the size of the Micronesian migrant population on the U. S.
mainland have been available during the course of our work.

Page 3 GAO- 02- 40 Micronesian Migration

(Further details regarding our scope and methodology are provided in app.
I.)

Thousands of citizens from the Federated States of Micronesia, the Republic
of the Marshall Islands, and the Republic of Palau have availed themselves
of the migration rights provided under the Compacts. Almost 14,000 migrants
were living in Guam and Hawaii in 1997 and the Commonwealth of the Northern
Mariana Islands in 1998, according to Department of the Interior surveys.
Guam had the most Compact migrants at 6,550, followed by Hawaii with 5,500
and the Commonwealth with 1,755. There were substantially more migrants
living in these U. S. areas who arrived under the Compacts of Free
Association than there were those who arrived prior to Compact
implementation. For the migrants surveyed, the destination for migrants
shifted from the Commonwealth of the Northern Mariana Islands in the early
1980s to Guam from the mid- 1980s to mid- 1990s, and to Hawaii in more
recent years. 5 Compact migrants moved to U. S. island areas primarily for
employment and education opportunities and as dependents of employed
migrants. The data show that Compact migrants surveyed were working in jobs
that required few skills and paid low wages, and most (over 50 percent) were
living in poverty in all three U. S. island areas. Finally, most Compact
migrants were not highly educated.

The governments of Guam, Hawaii, and the Commonwealth of the Northern
Mariana Islands have identified significant Compact migration impact. The
three U. S. areas have collectively reported at least $371 million in costs
to local governments for 1986 through 2000 that are associated with migrants
from the Federated States of Micronesia, the Republic of the Marshall
Islands, and the Republic of Palau, with Guam?s estimate accounting for
close to half of the total amount. All three U. S. island areas have shown
that costs have been concentrated in the areas of health and education.
Further, all three U. S. areas have raised concerns about public health
problems associated with Compact migrants. Concerning impact on sending
nations, population growth in the Federated States of Micronesia has
essentially stopped in recent years, while falling to under 2 percent
annually in the Republic of the Marshall Islands, reportedly due to out-
migration. Government officials in these Micronesian countries view out-
migration as a key safety valve to easing

5 Migration is, reportedly, increasingly targeted at the U. S. mainland,
although there are no data to support this view. Results in Brief

Page 4 GAO- 02- 40 Micronesian Migration

problems associated with limited economic opportunities in these small
nations.

The U. S. government?s use of options available to address Compact migration
impact has not satisfied the governments of Guam, Hawaii, or the
Commonwealth of the Northern Mariana Islands. One of these options,
financial compensation, has provided funding through fiscal year 2001 for
Guam and the Commonwealth of the Northern Mariana Islands of $41 million and
$3. 8 million, respectively. These amounts are much less than the financial
impact estimated by the two U. S. island governments. Hawaii has received no
compensation. All three U. S. areas believe additional funding is in order.
The second option, which allows for nondiscriminatory limitations to be
placed on the right of Compact migrants to establish continuing residence in
a territory or possession of the United States, was enacted in September
2000. U. S. government officials have reported that this action is expected
to have limited impact due to insufficient resources to enforce the
limitations. Compact impact reports, a tool available to assist the U. S.
government in determining whether and how to address impact, have not been
prepared annually by the Department of the Interior as required and do not
easily allow comparisons across U. S. island area data to determine relative
impact.

A reduction in the level of future Compact assistance could spur migration,
while targeting assistance to health and education sectors could reduce some
motivations to migrate. For example, significant reductions in aid that
reduce government employment would be expected to increase migration. In
contrast, targeting future U. S. assistance to the Federated States of
Micronesia and the Republic of the Marshall Islands for education and health
purposes might reduce some of the motivation to migrate (although migration
will continue as long as employment opportunities in both countries remain
limited). Further, improvements in migrant health and education status would
be expected to reduce adverse migrant impact in U. S. destinations.

In this report, we are making a recommendation to the Secretary of State
regarding the use of future Compact assistance for health and education to
reduce adverse Compact impact in Guam, Hawaii, and the Commonwealth of the
Northern Mariana Islands.

We provided a draft of this report to the Department of the Interior, the
Department of State, and the Immigration and Naturalization Service, as well
as to the governments of the Federated States of Micronesia, the Republic of
the Marshall Islands, the Republic of Palau, Guam, Hawaii, and

Page 5 GAO- 02- 40 Micronesian Migration

the Commonwealth of the Northern Mariana Islands. The government of the
Republic of Palau did not provide comments. The Immigration and
Naturalization Service provided technical comments and generally agreed with
the substance of the report. Agencies and governments that provided written
comments generally agreed with our findings, but each had concerns regarding
the scope and content of various issues addressed in the report. Of those
who addressed our recommendation, State agreed with us, Guam and the
Commonwealth stated that the recommendation should address the lack of
employment in the Pacific Island nations, Hawaii proposed that health and
education funding be provided only under strict grant conditions, and the
Federated States of Micronesia felt that the recommendation was unnecessary.
Where appropriate, we made technical changes that incorporated minor
comments.

Located just north of the equator in the Pacific Ocean are the two island
nations of the Federated States of Micronesia (FSM) and the Republic of the
Marshall Islands (RMI) (see fig. 1). The FSM, which is comprised of the
states of Pohnpei, Chuuk, Yap, and Kosrae, had a population of about 107,000
in 2000, 6 while the RMI had a population of 50,840 in 1999, based on the
most recent census data. 7

6 This figure of 107, 000, provided to us by the FSM Department of Foreign
Affairs, is considerably lower than the 1999 population estimate of 116,268
previously provided to us by the FSM government in September 2000. The FSM
Department of Economic Affairs is finalizing the FSM 2000 census results and
has not yet released the exact FSM population figure.

7 The Republic of Palau, located west of the FSM, had a population of 19,
129 in 2000. Background

Page 6 GAO- 02- 40 Micronesian Migration

Figure 1: Location and Population of the Federated States of Micronesia, the
Republic of the Marshall Islands, and the Republic of Palau, as well as the
U. S. Areas of Guam, Hawaii, and the Commonwealth of the Northern Mariana
Islands

Note 1: All population figures are for the year 2000, except for the 1999
Republic of the Marshall Islands figure.

Note 2: Circles around each location illustrate the general vicinity of each
island area. They do not correspond to territorial boundaries or exclusive
economic zones.

In 1947, the United Nations created the Trust Territory of the Pacific
Islands (UN TTPI). The United States entered into a trusteeship with the
United Nations Security Council and became the administering authority of
the four current states of the FSM, as well as the Marshall Islands, Palau,
and the Northern Mariana Islands. The UN TTPI made the United States
responsible financially and administratively for the region. The four states
of the FSM voted in a 1978 referendum to become an independent nation, while
the Marshall Islands established its constitutional

Page 7 GAO- 02- 40 Micronesian Migration

government and declared itself a republic in 1979. 8 Both locations remained
subject to the authority of the United States under the trusteeship
agreement until 1986. Late that year, an international agreement called the
Compact of Free Association went into effect between the United States and
these two new nations and provided for substantial U. S. direct economic
assistance for 15 years in order to help both countries move toward a goal
of economic self- sufficiency. The Department of the Interior?s Office of
Insular Affairs (OIA) has been responsible for disbursing and monitoring
this direct economic assistance, which totaled almost $1.6 billion from 1987
through 1998. 9 In 2000 we reported that both nations have made some
progress in achieving economic self- sufficiency but remain heavily
financially dependent upon the United States. 10 In addition to economic
assistance, under the Compact the United States provided access to federal
services and programs, an obligation to defend the two Pacific Island
nations, and migration rights. For its part, the United States received
defense rights in these two countries under the Compact.

The Compact exempts FSM and RMI citizens migrating to the United States from
meeting U. S. passport, visa, and labor certification requirements of the
1952 Immigration and Nationality Act, as amended (P. L. 82- 414). The same
migration provisions are included in the 1994 Compact with the Republic of
Palau. The migration provisions of the two Compacts also allow FSM, RMI, and
Palau (or, collectively, Freely Associated States- FAS) migrants to enter
into, lawfully engage in occupations, and establish residence in the United
States (including all U. S. states, territories, and possessions) without
limitations on their length

8 The Commonwealth?s current status is based on the Covenant to Establish a
Commonwealth for the Northern Mariana Islands in Political Union with the
United States. This agreement was negotiated by representatives of the
United States and the Northern Mariana Islands and signed in 1975. The
Covenant was signed by the President and approved by the Congress in 1976,
and the first constitutional government of the Commonwealth of the Northern
Mariana Islands took office in 1978. The Covenant was fully implemented in
1986. Palau was the last UN TTPI district and was administered by the United
States until 1994 when its Compact of Free Association went into effect, and
Palau became a sovereign state.

9 Total U. S. Compact assistance- direct funding, program assistance, and
federal services- to the two countries for fiscal years 1987 through 2001 is
estimated to be at least $2. 6 billion.

10 See Foreign Assistance: U. S. Funds to Two Micronesian Nations Had Little
Impact on Economic Development (GAO/ NSIAD- 00- 216, Sept. 22, 2000).

Page 8 GAO- 02- 40 Micronesian Migration

of stay. 11 U. S. Immigration and Naturalization Service (INS) officials
have stated that these rights granted to FAS migrants are unique; there are
no other nations whose citizens enjoy this degree of access to the United
States. At the time of the original negotiations, the U. S. Compact
negotiator stated that the Compact?s migration rights were meant to
strengthen ties between the United States and the Freely Associated States.
12

All Compact migrants in the United States are legally classified as

?nonimmigrants,? a status that typically signifies nonpermanent visitors
such as tourists or students. 13 However, while not legally classified as
such, Compact migrants can behave similarly to ?immigrants,? in that they
can stay in the United States as long as they choose with few restrictions.
14 Compact migrants can become U. S. citizens by applying for legal
permanent resident status under standard immigration procedures. 15

The Congress authorized compensation in the Compacts? enabling legislation
for U. S. island areas that might experience increased demands on their
educational and social services by Compact migrants from these Pacific
Island nations. Further, the legislation required the President to report
and make recommendations annually to the Congress regarding

11 The possibility of allowing migration to the United States had been
previously recommended. A 1963 U. S. government report to President Kennedy
on the political, economic, and social problems faced by Micronesia noted
that ?it is essential that the safety valve of legally unlimited (and
possibly financially- aided) immigration to the United States be
established.? See A Report of the U. S. Government Survey Mission to the
Trust Territory of the Pacific Islands, Solomon, Anthony V., Washington, D.
C., 1963.

12 Interior noted during a hearing on the Compact in 1986 that about 4
percent of the FAS population was living in U. S. territories as students
and another 3 percent was in U. S. territories as migrants, and this degree
of FAS presence was not expected to change after the Compact was enacted.

13 While citizens of Compact nations who move to U. S. areas are legally
classified as

?nonimmigrants,? we refer to them by the commonly used term ?migrants?
throughout this report.

14 For example, certain aliens, including FAS migrants, may be removed from
the country if they have committed certain crimes, pose a public health
risk, or have become a public charge under certain circumstances.

15 Few migrants from FAS countries take action to become U. S. citizens. For
example, according to INS data, 14 Palauans, 7 FSM citizens, and 1 RMI
citizen became naturalized U. S. citizens in 1998.

Page 9 GAO- 02- 40 Micronesian Migration

adverse consequences resulting from the Compact. 16 The Department of the
Interior?s OIA has been responsible for collecting information regarding
Compact impact on U. S. island areas. Interior stated in 1989 correspondence
with the government of Guam that ?social services? eligible for impact
compensation include public health and public safety services, and that the
cost of services provided by private or nongovernment agencies are not
eligible for reimbursement. In addition to authorized financial
compensation, the Compact provided another option for addressing the impact
of migrants: certain nondiscriminatory limitations may be placed on the
rights of these migrants to remain in U. S. territories and possessions.

While Compact migrants can travel to any U. S. area (including the U. S.
mainland), U. S. areas that have drawn migrants due to their close proximity
are Guam, the Commonwealth of the Northern Mariana Islands (referred to as
the CNMI), and the State of Hawaii. Hawaii had the largest year 2000 total
population of the three U. S. island destinations, at 1,211,537, while the
populations of Guam and the CNMI were 154,805 and 69,221, respectively. All
three locations have opportunities in the areas of employment, education,
health care, and social services that have attracted FAS migrants.

16 As of November 2000, the responsibility for preparing impact reports has
shifted from the President (with the Department of the Interior as the
responsible agency) to the governors of the affected U. S. island areas.

Page 10 GAO- 02- 40 Micronesian Migration

Since the two Compacts were enacted, thousands of FAS citizens have migrated
to U. S. island areas in the Pacific. According to the 1997 and 1998 OIA
surveys, 17 Guam had the highest number of Compact migrants at 6,550,
followed by Hawaii and the CNMI. 18 For those surveyed, the destination for
migrants shifted from the CNMI prior to 1985 to Guam over the next decade,
shifting to Hawaii in the mid- 1990s (and now, reportedly, to the U. S.
mainland). It is primarily for employment opportunities that migrants have
been moving to U. S. areas, with more dependent family members of employed
workers migrating since implementation of the Compacts. Educational
opportunities have also served as a motivation to migrate. The majority of
migrants were living in poverty in all three U. S. areas, with the CNMI
having the lowest migrant poverty rates. Of note, the CNMI had the highest
percentage of working age FAS migrants participating in the labor force at
over 65 percent. In the three U. S. areas, many Compact migrants were
working in jobs that required few skills and paid low wages, such as
cleaning or food services. In addition, Compact migrants surveyed were not
highly educated, with few having college degrees and just over 50 percent
having graduated from high school.

Thousands of FAS citizens have moved to U. S. areas in the Pacific under the
Compacts, with the highest number of Compact migrants living in Guam.
According to OIA surveys, about 6,550 and 5,500 Compact migrants were living
in Guam and Hawaii, respectively, in 1997, while 1,755 were living in the
CNMI in 1998 (see table 1). This sums to more than 13,800 persons-- far more
than the 2,500 migrants living in these three U. S. areas

17 See The Status of Micronesian Migrants in 1998: A Study of the Impact of
the Compacts of Free Association Based on Censuses of Micronesian Migrants
to Hawaii, Guam, and the Commonwealth of the Northern Mariana (Rev.)
(Washington, D. C.: U. S. Department of the Interior, Office of Insular
Affairs, Jan. 15, 1999). While similar surveys identifying Micronesian
migrants were undertaken for U. S. island areas for 1992 and 1993, this
report focuses on the most recent data contained in the report cited above.
These data were collected in 1997 (for Guam and Hawaii) and 1998 (for the
CNMI). Moreover, these data represent a ?snapshot? of the FAS migrant
communities living in Guam and Hawaii in 1997 and the CNMI in 1998. These
data do not represent all FAS migrants who ever lived in a U. S. island
area, as some may have moved elsewhere by the time of the survey and may
have different characteristics than migrants who remained in U. S. areas.

18 Throughout this data discussion, we use the term ?Compact? migrants to
refer to migrants who moved to U. S. areas after implementation of the
Compacts, while we use the term ?pre- Compact? migrants to identify those
migrants who moved to U. S. areas prior to the Compacts. When referring to
all migrants, regardless of when they moved to a U. S. area, we use the term
?FAS? migrants. Of note, the term ?Compact? migrant also includes all U. S.-
born children (who are, thus, U. S. citizens by birth) of all migrants
unless otherwise noted. Thousands of FAS

Citizens Have Migrated to U. S. Island Areas Under the Compact for
Employment Opportunities but Live in Poverty

Almost 14,000 Compact Migrants Were Living in U. S. Island Areas by 1997/ 98

Page 11 GAO- 02- 40 Micronesian Migration

who arrived prior to the Compacts. FAS migrants, which include those who
arrived prior and subsequent to implementation of the Compacts, accounted
for about 5 percent of Guam?s total population and around 4 percent of the
CNMI?s total population. In contrast, they accounted for only 0.5 percent of
Hawaii?s total population. There were substantially fewer Palauans living in
the CNMI in 1998 who came during the Palau Compact period (1995- 1998) than
there were those who arrived prior to the Compact. In addition, while there
are very few pre- Compact or Compact Marshallese migrants living in either
Guam or the CNMI, more than 35 percent of all Compact migrants living in
Hawaii were Marshallese in 1997. Forty percent of all FAS migrants in U. S.
island areas at the time of the surveys were born in the FSM state of Chuuk,
the poorest state in the FSM. These data may be an undercount of FAS
migrants due to the methodology used to collect the information (see app.
II).

Table 1: FAS Migrants in Guam and Hawaii (1997) and the CNMI (1998) by When
Migrated (Before or After Compact Implementation)

Guam (1997) Hawaii (1997) CNMI (1998) Total (all U. S. areas)

Migrant group FSM RMI Palau Total FSM RMI Palau Total FSM RMI Palau Total

Pre- Compact 270 2 458 730 232 185 193 610 289 18 885 1,192 2,532

Compact 6, 325 123 102 6,550 3,312 2,070 127 5,509 1,503 74 178 1,755 13,814

- Adult and Child Migrants 5,254 105 87 5,446 2,853 1,839 123 4,815 995 43
146 1,184 11,445

- U. S.- born Children of Migrants 1,071 18 15 1,104 459 231 4 694 508 31 32
571 2,369

Total 6,595 125 560 7,280 3,544 2,255 320 6,119 1,792 92 1,063 2,947 16,346

Note 1: ?Pre- Compact? migrants include all FAS citizens, adults and
children, who moved to Guam, Hawaii, and the CNMI prior to the
implementation of the Compacts (1986 or earlier for the FSM and the RMI,
1994 or earlier for Palau). ?Compact? migrants include (1) all FAS citizens,
adults and children, who moved to Guam, Hawaii, and the CNMI after the
implementation of the Compacts and (2) all children who were not born in a
FAS state (according to the survey administrator, almost all of these
children were born in the United States) and who have at least one FAS- born
migrant parent. All these children of FAS migrants are included in this
category whether their parents migrated to a U. S. area before or after the
Compacts were implemented, because it is often difficult to determine their
status. For example, if a child has one FAS parent who migrated prior to a
Compact?s implementation and another parent who migrated after a Compact was
implemented, it is difficult to determine how to categorize this child. OIA
accepts this group of children as part of the FAS population who are in U.
S. areas as a result of the Compact.

Note 2: These data, as well as data presented in all tables and figures in
this section, represent a ?snapshot? of the FAS migrant communities living
in Guam and Hawaii in 1997 and the CNMI in 1998. These data do not represent
all FAS migrants who ever lived in a U. S. island area, as some of these
migrants may have moved elsewhere by the time of the survey and may have
different characteristics than migrants who remained in U. S. areas.

Page 12 GAO- 02- 40 Micronesian Migration

Source: The Status of Micronesian Migrants in 1998: A Study of the Impact of
the Compacts of Free Association Based on Censuses of Micronesian Migrants
to Hawaii, Guam, and the Commonwealth of the Northern Mariana Islands (Rev.)
(Washington, D. C.: U. S. Department of the Interior, Office of Insular
Affairs, Jan. 15, 1999).

OIA 1997 and 1998 data show that FAS migrants surveyed migrated to Guam,
Hawaii, and the CNMI at different points in time. As shown in table 1, the
CNMI had the highest number of combined pre- Compact migrants from the FSM,
the RMI, and Palau present in 1998 (1,192, compared to 730 for Guam and 610
for Hawaii). At the time of the OIA surveys in 1997 and 1998, the CNMI had
received and retained slightly more migrants from the FSM, the RMI, and
Palau (combined) for several years prior to 1985. The destinations of
migrants from the FSM, the RMI, and Palau then shifted, with substantially
more migrating to Guam over the next decade, then shifting to Hawaii in the
mid 1990s (see fig. 2). Of note, migration flows under the Compacts appear
to have followed traditional migration patterns, with young males migrating
first for employment, followed by migration of family members. FAS Migrant
Destinations

Shifted From the CNMI to Guam to Hawaii

Page 13 GAO- 02- 40 Micronesian Migration

Figure 2: Year of FAS Migrant Arrival in Guam, Hawaii, and the CNMI, pre-
1980- 1997/ 98

Source: The Status of Micronesian Migrants in 1998 (Rev.), Jan. 15, 1999.

Employment was the key reason cited by FAS migrants in the 1997 and 1998 OIA
surveys for coming to Guam and the CNMI, totaling about 40 percent for each
(totaling more than 3,500 migrants). Migrants from the FSM and the RMI
explained to us that they moved to the U. S. areas to find a job, given the
lack of employment opportunities at home. In addition, over 20 percent of
FAS citizens moved to Guam and the CNMI as dependents. In Hawaii, FAS
migrants also chose employment and being dependents of an employed worker as
key reasons for migrating (at 15 percent and 11 percent, respectively) as
well as medical care (at 6 percent) FAS Migrants Came

Largely for Employment and Education Opportunities, and as Dependents

Page 14 GAO- 02- 40 Micronesian Migration

in the OIA survey. 19 However, a greater proportion of RMI migrants in
Hawaii came for medical reasons (10 percent) than for employment (7
percent). Educational opportunities at both the college and high school
levels have also served as motivations for migration, according to
interviews with migrant communities and FAS officials in the three U. S.
areas. The University of Hawaii has provided data to us showing that FAS
student enrollment had risen since the Compacts were implemented.
Specifically, FAS student enrollment in the University of Hawaii increased
from 54 students in 1986 to 292 students in 1999.

There were considerable differences in poverty rates and employment levels
between the three U. S. island areas and among the migrant groups. For
example, the CNMI had the lowest rate of FAS migrants living in poverty, at
about 51 percent, compared to 67 percent in Guam (see table 2). Poverty
rates were generally higher for Compact migrants than they were for migrants
that arrived prior to the Compacts. 20

Table 2: Proportion of FAS Migrants Living Below the Poverty Level in Guam
and Hawaii (1997) and the CNMI (1998) Guam (1997) Hawaii (1997) CNMI (1998)
Migrant group FSM RMI Palau Total FSM RMI Palau Total FSM RMI Palau Total

PreCompact 61.5%

(166) 100.0%

(2) 56.8%

(260)

58.6%

(428) 31.9%

(74) 57.3%

(106) 25.4%

(49)

37.5%

(229) 52.9%

(153) 38.9%

(7) 38.4%

(340)

41.9% (500)

Compact 67.3 (4,258)

91.9 (113)

59.8 (61)

67.8

(4,432) 54.6

(1,810) 71.9

(1,489) 44.1

(56)

60.9

(3,355) 58.5

(880) 58.1

(43) 47.8

(85)

57.4

(1,008)

Total 67.1%

(4,424)

92.0%

(115)

57.3%

(321)

66.8%

(4,860)

53.2%

(1,884)

70.7%

(1,595)

32.8%

(105)

58.6%

(3,584)

57.6%

(1,033)

54.3%

(50)

40.0%

(425)

51.2%

(1,508) Note: The numbers in parentheses represent the actual number of
migrants living in poverty at the time of the surveys, whereas the
percentages represent the proportion of migrants living in poverty at the
time of the surveys.

Source: The Status of Micronesian Migrants in 1998, Jan. 5, 1999.

19 It is important to note that more than 50 percent of those interviewed in
Hawaii chose the

?other? option for the OIA survey question regarding reasons for migrating.
?Education?

was not provided as an option for migrants to choose in the OIA survey
instrument. While some migrants we interviewed explicitly stated that
educational opportunities were their main reason for migrating, it is
unknown how many of those surveyed would have chosen this answer instead of
?other? in the OIA surveys, especially on Hawaii. Moreover, while the
summary discussion of reasons for migrating in the OIA survey explicitly
states that education was the primary reason for migration to Hawaii, we
found that such a conclusion was not consistent with the underlying data of
the survey.

20 Poverty levels were determined based on the U. S. nationwide standard
established by the U. S. Census Bureau and adjusted annually for family
size. FAS Migrants Live in

Poverty; Almost Half Were Employed but Had Low Skill Jobs

Page 15 GAO- 02- 40 Micronesian Migration

Labor force participation (those able and willing to work) and employment of
migrants (those actually employed) differed between the three U. S. areas.
Labor force participation and employment levels were the lowest in Hawaii,
with 46 percent of working- age FAS migrants in the labor force and 39
percent employed. In contrast, in the CNMI, nearly 66 percent of working-
age FAS migrants reported that they were in the labor force, and nearly 60
percent were employed. Guam was in the middle, with 58 percent in the labor
force and 52 percent employed.

Compact migrants who found employment in U. S. areas had primarily private
sector jobs requiring few skills and paying low wages. U. S. island
government officials and migrant community members told us that Compact
migrants often accept jobs that local workers refuse to take. 21 An official
representing the garment manufacturing industry in the CNMI noted that FAS
employees are good workers and are rarely absent from work. In Guam (1997),
Compact migrants largely worked in retail (drinking and eating
establishments), hotels and motels, and construction, according to the OIA
surveys. In Hawaii (1997), Compact migrants also largely worked in retail,
followed by agriculture and business services (such as cleaning). In
contrast, Compact migrants in the CNMI (1998) largely worked in apparel
manufacturing, followed by retail, hotels and motels, and transportation and
communications.

Compact migrants 22 have obtained limited education, according to the 1997
and 1998 OIA surveys. Just over half of all Compact migrants age 25 and
older had received their high school diplomas, less than 2 percent had
earned 4- year college degrees, and less than 4 percent had earned 2- year
community college degrees. The 1997 and 1998 OIA surveys show that

21 Government officials in Guam and migrants in the CNMI reported that
locals do not want to take low- end jobs (especially jobs outside in the
heat of the sun, such as landscaping jobs and construction). However, Guam
government officials told us that as Guam?s unemployment rate has reached
about 15 percent in recent years, the demand for FAS workers may have
decreased. While CNMI officials also reported a negative change in local
economic conditions, the garment manufacturing industry in the Commonwealth
wants to employ FAS migrants, as these workers count toward the 20- percent
?local workforce? requirement in an industry that mainly employs foreign
workers. Further, CNMI government officials have reported that it is far
more cost effective to hire a FAS citizen, given the immigration filing
expenses and other costs associated with hiring other foreign workers.

22 OIA survey data for the ?U. S.- born children of migrants? category show
that there were few people who had reached adulthood in this category
responding to the educational attainment questions. Therefore, we have
excluded the ?U. S.- born children? category from the discussion of Compact
migrant education levels. Compact Migrants Are Not

Highly Educated

Page 16 GAO- 02- 40 Micronesian Migration

Hawaii had the largest portion of Compact migrants with high school degrees,
at 55 percent, while about 50 percent of Compact migrants in Guam and 44
percent in the CNMI had high school degrees. Moreover, the percentage of FAS
migrants from the FSM in Guam with high school degrees decreased during the
1990s, while rising and falling over this time period in the CNMI. According
to OIA survey data, a larger portion of FAS migrants from Palau had high
school degrees than other FAS migrants. 23

Guam, Hawaii, and the CNMI governments have identified significiant Compact
migration impact. The three U. S. island areas have estimated costs to local
governments of at least $371 million for 1986 through 2000 that are
associated with services provided to migrants from the FSM, the RMI, and
Palau. All three U. S. island areas have reported that costs have been
concentrated in the areas of health and education, though other costs have
also been identified. 24 Finally, concerns have been raised by all three U.
S. areas, though primarily Hawaii, about public health problems associated
with Compact migrants. Of note, U. S. island area impact estimates do not
include the positive impact of FAS migrants. 25 While all three U. S. island
area governments have acknowledged that FAS migrants have had positive
impacts, such as contributing to the tax base and filling employment needs,
the Compact?s enabling legislation specifically requires reports on adverse
impact and does not request information regarding positive impact. Regarding
the impact of migration on the FSM and the RMI, the populations of both
nations have shown reduced growth in recent years despite continued high
birth rates, and government officials in both countries view the Compact?s
migration provisions as critical to providing migrants with economic
opportunities that are not available in these small countries.

23 Also of interest, in all three U. S. island areas, at least 70 percent of
the Compact migrant population was under the age of 30 when the surveys were
conducted. 24 Compact impact estimates in the CNMI have been primarily in
the health and education areas in recent years; public safety costs had
exceeded education costs until 1999. 25 The CNMI?s impact estimate for 1996
was an exception and quantified $3. 6 million in positive benefits from FAS
migrants. Compact Migration

Has Cost U. S. Island Areas Hundreds of Millions of Dollars, While
Population Growth of the FSM and the RMI Has Slowed

Page 17 GAO- 02- 40 Micronesian Migration

The governments of Guam, Hawaii, and the CNMI, which have estimated Compact
migrant impact that collectively totals between $371 million and $399
million, have determined that the cost of FAS migrants to the local
governments has been significant. Guam?s total estimate for the entire
Compact period (1986- 2000) accounts for about half ($ 180 million) of the
total impact estimate range for all three areas (see table 3). The CNMI also
has impact estimates for the entire Compact period and has a total impact
estimate range of $105 million to $133 million. Hawaii has prepared
estimated impact costs only for 1996 through 2000, though these reports
identify some costs for earlier years. Thus, for the most part, Hawaii does
not have estimates for 10 years that are covered by the other two areas
(1986- 1995). Hawaii has identified about $86 million in total impact costs.
Costs for the three areas have been focused in the areas of health care and
education, though public safety and welfare costs have also been identified.
While the reported impact costs of Guam and Hawaii have been increasing over
time, the CNMI?s impact estimates decreased by almost 40 percent from fiscal
year 1998 to fiscal year 2000. This reduction is reportedly due to a
decreasing presence of FAS migrants in the CNMI. The 2000 impact estimates
prepared by the three areas showed that impact amounts represented about 7
percent, 0.5 percent, and 4 percent of the budget revenues of Guam, Hawaii,
and the CNMI, respectively, for that year. 26

Table 3: Compact Impact Estimates for Guam, Hawaii, and the CNMI, 1986- 2000

Dollars in millions a

Year Guam Hawaii b CNMI Total

1986- 95 $69.8 $23.4 c $43.7-$ 71.7 d $136.9-$ 164.9

1996 16.9 6. 4 11.0 e 34.3

1997 16.9 f 12.2 13.7 42.8

1998 21.9 12.4 15.1 49.4

1999 23.0 14.1 12.3 49.4

2000 31.5 17.5 9. 2 58.2 Total $180 $86 $105-$ 133 $371-$ 399

a The data in this table cannot be converted into constant dollars, since
some of the impact data reported by the U. S. island governments are not
assigned to specific years.

26 The budgetary impact is clearly largest for Guam and the CNMI. However,
the Compact?s enabling legislation says that compensation may be provided
for increased demands in certain areas; there is no stated threshold
regarding impact on total government operations that must be reached in
order to obtain compensation. U. S. Island Areas Reported

Significant Adverse Compact Impact, Primarily in the Areas of Health and
Education

Page 18 GAO- 02- 40 Micronesian Migration

b While Guam and the CNMI have calculated costs on a fiscal year basis,
Hawaii?s costs are a combination of fiscal year and calendar year costs. c
This figure represents Hawaii?s education and inmate incarceration costs for
FAS migrants for 1988-

95 that were provided in later estimate reports. d This 1986- 95 impact cost
range was provided in a 2000 CNMI congressional testimony.

e This figure was calculated by the Hay Group/ Economic Systems, Inc., for
the government of the CNMI. f This figure was calculated by Ernst & Young,
LLP for the government of Guam. The government of

Guam estimates for 1996, 1998, and 1999, were derived from the 1997 Ernst &
Young calculations, though costs associated with the hospital that receives
government funding were added beginning in 1998.

Source: Yearly impact reports of Guam (1987- 95, 1997, and 2000), Hawaii
(1996- 2000), and the CNMI (1996- 2000), supplemented by additional totals
provided by Guam and the CNMI for years when separate impact reports were
not prepared.

The health care systems of the FSM and the RMI are viewed by U. S. and U. S.
island area governments as inadequate to meet the needs of the population,
providing incentive to travel or move to the United States in order to
receive appropriate health care. 27 Health costs were the greatest area of
impact for the CNMI in 2000. In that year, 43 percent ($ 4 million) of all
identified CNMI impact costs were related to health care. Emergency,
general, dental, and pediatric care provided by the CNMI Department of
Public Health (the government agency responsible for providing health
services and administering the Community Health Center) were identified as
high- cost migrant services. According to a CNMI Department of Public Health
Services official, neonatal intensive care is a key issue for FAS migrants.
This official reported that expectant mothers often have no insurance and
have no prenatal care at all until they arrive at the Community Health
Center, ready to deliver.

Guam?s largest single area of impact in health in its 2000 impact assessment
was identified as unpaid services by Guam Memorial Hospital (which receives
government funding) to FAS patients, totaling over $5.4 million in 2000. 28
Officials from Guam Memorial Hospital expressed frustration with FAS
patients and noted that these patients often rely on the hospital?s
emergency room for primary health care and that many conditions treated are
not urgent. The emergency room treats about 3,000

27 The Compact with the FSM and the RMI acknowledged this situation by
including a provision that provides funding to send FSM and RMI citizens
abroad for medical care via a medical referral system.

28 Guam also identified $2.1 million in Medicaid costs and $2. 4 million for
its local Medically Indigent Program. Health Care Costs

Page 19 GAO- 02- 40 Micronesian Migration

patients per month; about 350 of those patients (12 percent) are FAS
patients (compared with FAS representation of 5 percent of Guam?s
population). As in the CNMI, problems with expectant FAS mothers arriving at
the hospital close to delivery and with no prior prenatal care were
mentioned. The Governor of Guam told us that in his view the U. S. naval
hospital on Guam is underutilized and could provide care for FAS migrants.

Hawaii?s government health- related cost of $3.7 million in 2000 went to
support FAS migrants who, as of April 2000, no longer receive federal health
benefits due to welfare reform legislation. These health benefits for FAS
migrants are now funded solely by the state. The Personal Responsibility and
Work Opportunity Reconciliation Act of 1996, as amended, (P. L. 104- 193),
referred to as the Welfare Reform Act, cut certain federal public benefits
to some legal aliens, including migrants who enter under the Compact.
Medicaid, a program to provide funding to low- income individuals for health
care and whose costs are shared between the federal and state governments,
is one of the federal programs that is no longer available to FAS migrants.
This loss of eligibility has been cited as a reason for expected increases
in impact costs for Hawaii, as the state has decided to provide state
funding in place of lost federal funds. 29 An Hawaii Department of Health
official noted that it is illogical for the United States to make migration
to the United States easily accessible for poor FAS citizens but then make
health care difficult to obtain. 30

29 While Guam and the CNMI stopped submitting Medicaid claims for FAS
patients in 1997, Hawaii disputed the exclusion of Compact migrants from the
program and continued to submit Medicaid claims and receive federal funding
for these patients. Following meetings and correspondence with the U. S.
Department of Health and Human Services? Health Care Financing
Administration (the agency responsible for administering the Medicaid
program and recently renamed the Center for Medicare and Medicaid Services),
Hawaii agreed to comply with the Welfare Reform Act, effective April 2000.
This issue is more important for Hawaii than for Guam and the CNMI, as the
state?s access to federal funds under Medicaid is unlimited, while both Guam
and the CNMI have caps on federal funds for Medicaid. Because Guam?s and the
CNMI?s Medicaid caps were exceeded prior to the Welfare Reform Act, the
impact of the act and the subsequent FAS migrant loss of Medicaid
eligibility is less relevant for these two U. S. areas as the amount of
federal funding has not changed for them.

30 Further, Hawaii, which does not have a state- funded hospital, has
reported that several private health care facilities have experienced bad
debt and have outstanding accounts receivable from FAS patients. While these
private sector costs are not included in our report?s local government
impact estimates, they are addressed in Hawaii?s impact estimate reports as
costs that are significant.

Page 20 GAO- 02- 40 Micronesian Migration

Inadequate school systems in the FSM and the RMI are viewed by FAS and U. S.
island governments as another reason for migration. For example, an RMI
government official said that RMI schools are very bad, with insufficient
supplies and unqualified teachers, and Marshallese citizens migrate in
search of better educational opportunities. According to education officials
in Guam and the CNMI, there is an incentive for FSM students to come to
those two U. S. locations for public education, as teachers in the FSM do
not have 4- year university degrees and the education infrastructure is
inadequate. In parts of the FSM only a portion of students are selected to
attend high school. Some portion of the students who are not selected, as
well as those who live in areas with insufficient school facilities, then
reportedly move to U. S. areas to attend high school. FSM and RMI migrants
told us that they moved to U. S. areas to attend school themselves or to
enroll their children in school.

Guam?s and Hawaii?s costs in 2000 were primarily in public education, at $17
million and $10.6 million, respectively (54 percent and 58 percent of total
estimated impact). The CNMI?s education costs were $2.8 million (31 percent
of total impact costs) in 2000. In their most recent impact reports, FAS
students accounted for about 11 percent, 1 percent, and 9 percent of the
total student population in Guam, Hawaii, and the CNMI. 31 Officials from
the Departments of Education in Guam and Hawaii noted that FAS students have
a tendency to be rather transient, entering and leaving school a few times
each year. Moreover, education officials in Guam and the CNMI said that some
FAS students have never been in a school classroom prior to moving to a U.
S. area. This makes their integration into the school system difficult.

Calculations prepared by the U. S. island governments may have
underestimated certain education costs, as not all students and not all
costs were captured. For example, officials from the Hawaii Department of
Education told us that, rather than calculating costs for all FAS students,
they only estimated costs associated with FAS students who participated in
the state?s English as a Second Language program. 32

31 Hawaii?s percentage is a low estimate, as this figure only includes FAS
students who participated in the state?s English as a Second Language
program. 32 While Hawaii understated its estimate of FAS migrant impact on
education in certain ways, it used too high a per pupil cost in its
calculations. Hawaii overstated cost by not excluding federal contributions
to Hawaii from its calculation of per pupil education cost. When federal
funds provided to Hawaii are excluded, costs are reduced from $6, 773 to
$6,112 per pupil, which represents state and local education costs.
Education Costs

Page 21 GAO- 02- 40 Micronesian Migration

Further, education officials in all three U. S. locations told us that,
while education costs were calculated based on an average cost per student
for the entire student population, FAS students have higher costs than other
students due to poor language and other skills. None of the areas quantified
the costs associated with additional efforts required to assist FAS
students. 33

The three island areas have also identified other Compact impact costs,
though all were small in comparison to those related to health and education
and accounted for about 25 percent or less of total impact costs in the most
recent impact estimates. For fiscal year 2000, Guam identified $4.6 million
in costs related to public assistance programs and the Department of
Corrections. For 2000, Hawaii estimated $3.2 million in welfare assistance
provided to FAS migrants. Finally, for fiscal year 2000, the CNMI calculated
an additional $2.4 million, which is almost entirely attributable to its
Department of Public Safety (which includes police, fire, and corrections
services).

In addition to financial costs, public health concerns have been raised as
migrant impacts, particularly by Hawaii, due to the number of Compact
migrants with communicable diseases entering U. S. island areas. For
example, in its 1997 impact assessment, Hawaii stated that public health was
the state?s most pressing concern and noted a recent outbreak of Hansen?s
Disease (leprosy) on the island of Hawaii. A CNMI Department of Public
Health Services official also told us that the number of cases of
tuberculosis and Hansen?s Disease diagnosed for FAS citizens is increasing,
and a Guam Department of Public Health and Social Services official reported
that concerns exist regarding communicable diseases, low immunization rates,
and noncompliance with treatment regimens for FAS migrants. Hawaii
Department of Health officials told us that controlling communicable disease
problems within FAS communities can be difficult; migrants do not seek
regular medical attention and so require extensive outreach from the
Department in order to identify and

33 Guam, Hawaii, and the CNMI have reported on operating costs of education,
but omitted the capital cost of providing facilities for FAS students. These
omitted costs can be substantial. For example, Guam reported an FAS student
population of 3,425, which, based on recent student to teacher ratios, could
require an additional 134 teachers. Recent school construction in Guam costs
about $500, 000 per teacher. Similarly, in Hawaii, 60 classrooms may be
required for teaching the 1,565 FAS students counted. In the 1999- 2000
school year, cost of Hawaii classroom construction averaged about $720, 000.
Other Costs

Public Health Concerns Were Also Cited as FAS Migrant Impact

Page 22 GAO- 02- 40 Micronesian Migration

effectively treat communicable diseases. Further, Department officials noted
that health screenings of Compact migrants are not required for entry into
the United States, preventing the identification and treatment of
communicable diseases prior to arrival in a U. S. area. INS officials
confirmed that health screenings are not required of Compact migrants, nor
are they enforced for any nonimmigrant group. INS officials told us that the
agency ?is the first line of defense? for identifying travelers to the
United States who may have communicable health problems. They acknowledged,
however, that INS officers are not trained or legitimately qualified in this
area, and it is difficult for them to identify travelers with health
problems. 34

The populations of both nations have been affected by the out- migration
provided for under the Compact. From 1989 to 1994, the FSM population grew
1.9 percent annually, from 95,740 to 105,506. During the next 5- year
period, the FSM population grew by only about 1,500 people (. 2 percent
annually) to reach about 107,000. This very small increase demonstrates that
the FSM population has almost stopped growing in recent years, reportedly
due to out- migration. Birth rates remain high in both countries. FSM
government officials expressed the view that migration rates are increasing
and cited a reduction in government jobs following cuts in U. S. funding as
a key reason why FSM citizens have migrated in recent years, in addition to
employment and education opportunities and access to health care.

Because of out- migration, population growth in the RMI since 1988, when the
population was 43,380, has slowed considerably to 1.5 percent annually. This
is the lowest rate of growth since 1958. The 1999 RMI census reported 50,840
persons in the RMI, which was about 10,000 fewer people than the RMI
government had projected. Emigration is reported as the primary reason for
the lower population growth. RMI government officials told us that the rate
of migration out of the RMI has increased over the past 5 years and cited
the recent public sector reform program, which eliminated government jobs,
as a key reason for this increase.

34 According to INS officials, if an INS officer who is processing foreign
entrants at a port of entry into the United States decides that a particular
entrant might have a health problem, the traveler will be referred to a
public health official. In accordance with the 1952 Immigration and
Nationality Act, as amended, this official will then examine the traveler
and will make a recommendation to the INS as to whether the traveler should
be allowed to stay in the country or should be removed, according to INS
officials. Migration From the FSM

and the RMI Led to Reduced Population Growth Rates in Both Countries

Page 23 GAO- 02- 40 Micronesian Migration

Government officials from the FSM and the RMI view the Compact?s migration
rights as key to easing problems associated with limited economic
opportunities and population growth on these small island nations. While the
RMI government does not have an official policy regarding migration, it has
published a document encouraging overseas employment, 35 and a recent draft
planning document suggested that the government ?encourage the emigration of
whole families, equivalent to the annual population increase (1,500- 2, 000
persons) to permanent residence overseas.? The FSM government does not have
an official policy on emigration. 36

The Compact and its enabling legislation include two options to address the
impact of migrants. The law, which states that the Congress will act

?sympathetically and expeditiously? to redress adverse consequences of
Compact implementation, provided authorization for appropriation of funds to
cover the costs incurred, if any, by Hawaii, Guam, and the CNMI resulting
from any increased demands placed on educational and social services by
migrants from the FSM and the RMI. 37 Guam has received about $41 million in
compensation and the CNMI has received almost $3.8 million. Hawaii has
received no compensation. Further, the Compact states that nondiscriminatory
limitations may be placed on the rights of Compact migrants to establish
?habitual residence? (continuing residence) in a territory or possession of
the United States. 38 Such limitations went into effect in September 2000
and are viewed by INS officials we

35 The RMI?s first 5- year development plan, 1985- 1989, said that
?selective emigration of youth for higher studies and employment overseas
will be promoted to ease the labor supply situation.

36 No recent studies have been conducted by the FSM or the RMI regarding
issues related to emigration, such as financial remittances from abroad and
the so- called ?brain drain? (the loss of educated professionals). However,
officials from the FSM government have estimated that financial remittances
of $3 million to $5 million are now being sent back to the FSM from abroad,
while RMI government officials believe there is a net outflow of funds from
the RMI to migrants abroad. While officials from the FSM and the RMI believe
that there is some brain drain as educated citizens leave, experts on
Micronesian migration believe that any brain drain that may be occurring in
these two countries does not currently include the most talented citizens.

37 Compensation is also authorized for American Samoa, though this U. S.
Pacific Island territory has never reported any Compact impact. In addition,
the Compact with Palau authorizes such compensation for impact resulting
from Palauan migrants.

38 According to the Compact, ?habitual residence? is defined as place of
general abode or a principal, actual dwelling place of a continuing or
lasting nature. Use of Options

Available to Address Impact Has Not Satisfied U. S. Island Governments

Page 24 GAO- 02- 40 Micronesian Migration

interviewed as difficult to enforce and, therefore, unlikely to have much
impact. The extent to which these two options have been used has not met
with the satisfaction of any of the three U. S. island area governments, who
believe, among other things, that additional funding for impact costs is
necessary. Compact enabling legislation required the President (who
designated the Department of the Interior as the responsible agency) to
prepare annual Compact impact reports and submit them to the Congress. While
these reports do not require any action, they can serve as a tool to assist
the U. S. government in determining whether and how to address Compact
impact. However, only seven of these reports have been prepared during the
15- year Compact period. Further, Interior has taken limited action to
ensure that U. S. island areas estimate impact costs consistently, resulting
in reports that contain varying information for each U. S. island area and
do not easily allow comparisons to determine relative impact across
locations.

Two specific options are available in the Compact and its enabling
legislation to address Compact impact: financial compensation and
limitations on the rights of FAS migrants to establish continuing residence
in a U. S. territory or possession. U. S. government use of these options
has not satisfied the Guam, Hawaii, or CNMI governments.

Financial compensation provided to Guam, Hawaii, and the CNMI to address
migration impact has been far less than the impact estimated by the three
area governments and submitted to Interior. Since the Compact with the FSM
and the RMI was enacted through 2001, the U. S. government has provided
approximately $41 million in impact compensation to Guam, compared with the
$180 million in increased costs the territory has estimated it has incurred
from 1986 through 2000 (i. e., about 23 percent of total estimated impact
costs). The Commonwealth of the Northern Mariana Islands has received $3.8
million in compensation from 1986- 2001 compared with $105 million to $133
million in estimated costs from 19862000 (less than 4 percent of total
costs). 39 While Hawaii has estimated $86 million in Compact impact costs,
the state has received no compensation.

39 While compensation figures cover the period of 1986- 2001, impact
estimates have been prepared by the three U. S. island governments to cover
the years 1986- 2000 (i. e., one less year than covered by compensation
funding). Two Options Are Available

to Address Impact; Their Usage Has Been Viewed as Inadequate by Guam,
Hawaii, and the CNMI

Financial Compensation

Page 25 GAO- 02- 40 Micronesian Migration

The Compact?s enabling legislation does not require compensation. Rather, it
authorizes appropriations to cover certain impact costs and notes that the
Congress will act ?sympathetically and expeditiously? to redress adverse
consequences. An OIA official noted that the reality of budget constraints
has prevented compensation to the extent that impact has been incurred.
However, government officials from Guam, Hawaii, and the CNMI have expressed
frustration that these island areas are bearing the costs of a federal
decision to allow unrestricted migration through the Compact and believe
that compensation levels have been inadequate.

Compensation funding received by Guam has not, for the most part, been used
in the areas of health and education- the areas that have experienced the
greatest migrant impact. As a result of U. S. legislative requirements, the
government of Guam was directed to use a majority of its impact compensation
funding for capital improvement projects. For fiscal years 1996 through 2001
(when more than $35 million was specifically provided to Guam through
legislative action rather than through OIA?s technical assistance account),
we determined that Guam has spent or plans to spend almost $10 million for
road paving, almost $8 million for water projects, more than $4 million for
equipment for Guam Memorial Hospital, and more than $4 million for gyms.
Prior to 1996, Guam received about $850,000 received from OIA?s technical
assistance account for a Compact Impact Information and Education Program,
established by the government of Guam to ?develop and implement information,
educational, and organizational activities to assist FSM and RMI citizens in
receiving the support and assistance [needed to maintain] cultural
integrity, integration, equity, and productivity.? This program is no longer
operating. In addition to funding for Guam Memorial Hospital listed above,
Guam has also used earlier impact funding in ways that directly addressed
Compact migrant impact costs. For example, Guam used $600,000 received from
OIA?s technical assistance account in 1994 to partially reimburse
expenditures made by the Department of Public Health for assistance provided
to FSM and RMI citizens. According to a CNMI government official, the CNMI
has used, or is planning to use, most of its compensation funding for
agencies affected by Compact migration impact: the Department of Public
Health, the Department of Public Safety, and the Public School System. The
governments of Guam and the CNMI believe that restricting the use of
compensation funding to capital improvement projects does not target the
money where it could be best used.

A second option available to address Compact impact- limiting the length of
stay in some U. S. areas of certain Compact migrants- was implemented 14
years after the Compact went into effect, and its enforcement and
Nondiscriminatory Limitations

on Habitual Residence

Page 26 GAO- 02- 40 Micronesian Migration

impact may be limited, according to the INS. The Compact states that
nondiscriminatory limitations can be placed on the rights of Compact
migrants to establish ?habitual residence? in U. S. territories or
possessions. However, because the CNMI already controls its own immigration
and Hawaii is not a territory or possession, Guam is the only potential
beneficiary of such limitations for all practical purposes. 40 Habitual
residence limitations for Guam, as well as certain other limitations on all
aliens living in the United States, are the only means of regulating the
ability of Compact migrants to stay in U. S. areas indefinitely. In its
annual impact reports, OIA?s one consistent recommendation for reducing
impact has been to implement habitual residence restrictions.

Immigration legislation passed in 1996 states that not later than 6 months
after the date of enactment of the act, the Commissioner of Immigration and
Naturalization shall issue regulations governing rights of ?habitual

residence? in the United States under the terms of the Compacts. 41 These
regulations were not implemented until 4 years later, in September 2000, and
define habitual residents, in part, as those FAS migrants who have been in a
U. S. territory (i. e., Guam) for a total of 365 cumulative (i. e., not
consecutive) days. The regulations provide that, in part, habitual residents
are subject to removal if they are not, and have not been, self- supporting
for a period exceeding 60 consecutive days for reasons other than a lawful
strike or other labor dispute involving work stoppage, or have received
unauthorized public benefits by fraud or willful misrepresentation.
?Selfsupporting?

is defined, in part, as having a lawful occupation of a current and
continuing nature that provides 40 hours of gainful employment each week, or
(if unable to meet the 40- hour employment requirement) having lawfully
derived funds that meet or exceed 100 percent of the official poverty
guidelines for Hawaii.

Officials from INS believe that these regulations will be difficult to
enforce and so will have little impact in Guam. They have stated that this
is primarily due to the fact that Compact migrants, like all other
nonimmigrants, are not tracked once they arrive in a U. S. area because the
INS cannot devote the resources necessary to do so. There is no way of

40 While such regulations would also apply to the Commonwealth of Puerto
Rico and the American Virgin Islands, neither of these locations has
indicated that Compact migrants are present and creating an adverse impact.
These regulations would not apply to American Samoa as that U. S. territory
controls its own immigration.

41 The Illegal Immigration Reform and Immigrant Responsibility Act of 1996
(P. L. 104- 208).

Page 27 GAO- 02- 40 Micronesian Migration

knowing where a Compact migrant is living unless, for example, the migrant
is arrested for a crime and reported to the INS. An INS official in Guam
reported that the INS has taken no specific action there to enforce the
habitual residence regulations. A Guam government official said that while
the issuance of the regulations puts the INS more ?on track,? there is still
the problem of tracking migrants, and the INS will not be able to deal with
tracking habitual residents in Guam. This official also expressed the view
that the regulatory language that the INS will share migrant entry data with
Guam, which can assist in collaborative tracking and enforcement efforts, on
an ?as- needed basis? is too limited. Finally, this official noted that even
if a habitual resident is deported from Guam, this person can reenter under
a different name (and will thus avoid detection by the INS as a migrant that
should be denied entry).

The CNMI controls its own immigration and so has had the option to
unilaterally impose nondiscriminatory limitations on habitual residence
since the Compacts with the FAS countries were implemented. The Governor of
the CNMI told us that it would be very hard for the CNMI to take such
action, for social and cultural reasons. Nonetheless, the CNMI is now
studying the issue and considering whether to establish limitations on
habitual residents. A Department of the Interior official told us that OIA
told the CNMI to wait to issue habitual residence limitations until the INS
had issued its regulations. This way, the CNMI could draft its limitations
in conformity with those of the INS, resulting in a single policy regarding
habitual residence.

One tool available to the U. S. government in determining whether and how to
address the effect of the Compacts is the impact reports required in Compact
enabling legislation. These reports are to discuss, among other things, the
adverse consequences of migration under the Compacts. 42 However, OIA,
despite the legal requirement for Interior to report annually to the
Congress on impact and provide recommendations to address this

42 In addition to migration issues, Compact impact reports are to address
trade, taxation, labor laws, minimum wages, social systems and
infrastructure, and environmental regulation. Tool Available for

Assessing Whether and How to Address Impact Has Been Incomplete

Page 28 GAO- 02- 40 Micronesian Migration

impact, has only prepared reports in 1989 and 1996- 2001. 43 OIA officials
told us that no reports were prepared between 1989 and 1996 because the
Congress was not interested in this issue. OIA also noted that while impact
reports were not submitted to the Congress, mention was made of Compact
impact as part of OIA?s annual appropriations hearing. OIA has based its
assessments of impact on the estimates prepared by the governments of Guam,
Hawaii, and the CNMI. It has also based its reports on the previously
discussed FAS migrant population surveys it has funded using technical
assistance from the U. S. Bureau of the Census. These reports have found
that Compact impact has been substantial and have included general
recommendations for addressing impact such as proposing the establishment of
nondiscriminatory limitations on the longterm residency of Compact migrants.
In November 2000, amendments to the Organic Act of Guam (P. L. 106- 504)
changed the party responsible for reporting on impact from Interior to the
governors of Hawaii and U. S. territories or commonwealths. 44

OIA has also not ensured that the three U. S. islands areas use, to the
extent possible, uniform approaches to calculate impact. Interior issued
guidelines in 1994 on how to calculate impact costs and which costs to
include. These guidelines were issued in response to a 1993 report by the
Department of the Interior?s Office of the Inspector General that
recommended that OIA develop and disseminate guidelines and procedures for
use in determining Guam?s Compact impact costs. 45 These guidelines, which
were drafted in the context of reviewing a Guam impact assessment for 1993,
addressed key areas such as health and education. The guidelines also stated
that a ?baseline? population of migrants who

43 Interior was involved in a lawsuit brought by Guam in 1995 and joined by
Hawaii and the CNMI challenging the agency?s failure to issue annual impact
report as required in the Compact?s enabling legislation. The suit also
later challenged the sufficiency of the cumulative report that Interior
finally submitted in September 1996 while the lawsuit was ongoing.
Ultimately, the U. S. Court of Appeals for the Ninth Circuit held that the
adequacy of the 1996 report and any subsequent reports was not reviewable.
The Court also held that the injury asserted by the governments was not
redressable, because the annual report required by the Congress in the
Compact is primarily a tool for the Congress?s own use and neither provides
any legal consequences to the governments nor requires the Congress to act.

44 These governors may provide impact reports to Interior, which will then
review and forward these reports to the Congress with the comments of the
administration. 45 Audit Report: Impact of the Compact of Free Association
on the Government of Guam

(U. S. Department of the Interior, Office of the Inspector General, June
1993 [93- I- 1195]). At the time of this report, OIA was known as the Office
of Territorial and International Affairs.

Page 29 GAO- 02- 40 Micronesian Migration

were on Guam prior to the Compact (and whose impact thus, in Interior?s
view, cannot be easily attributed to the Compact) should be subtracted from
Guam?s impact estimate. Guam subsequently took action to implement OIA?s
guidelines. However, while an OIA official reported that he submitted these
guidelines to the CNMI, officials from the CNMI could not confirm ever
receiving such guidelines and stated that their impact assessments have not
been based on OIA guidelines. An Hawaii State official said that while the
state did not receive written guidelines from OIA, verbal discussions were
held regarding issues such as using per student costs for education
estimates.

Further, OIA has not provided consistent review of impact estimates
submitted by the three U. S. island area governments. For example, while OIA
has instructed Guam and the CNMI in its annual reports and elsewhere to
remove pre- Compact migrants from impact estimates (i. e., subtract a
?baseline?), no such guidance has ever been provided to Hawaii in OIA?s
annual reports, despite the fact that Hawaii has estimated costs for all FAS
migrants living in the state and had a pre- Compact migrant population that
was roughly comparable to that of Guam. In addition, OIA?s 1999 impact
report mentioned Hawaii?s lost revenues resulting from the fact that FAS
college and university students pay resident tuition, after having noted in
its 1994 guidelines that higher education costs could not be justified for
Guam. OIA has also not addressed the fact that many of Guam?s impact
estimates do not include Palauans (while estimates for the other two areas
do include this group of migrants) and that Hawaii no longer includes public
safety costs in its assessments. As a result, all three areas have included
different areas of impact and have defined the impact population differently
and impact estimates, though providing valuable data, do not easily allow
comparisons across U. S. island areas to determine actual relative impact.
46 OIA itself noted in its impact report for 2000 that determining the costs
of providing services to migrants has become increasingly difficult, in
part, because ?[ T] here is no consistent methodology among U. S. areas for
measuring the cost of providing services to migrants? and ?[ T] he type of
impact and the concerns vary among the reporting areas.?

46 OIA did attempt to calculate comparable impact estimates for the three U.
S. island areas for 1 year (1997 for Guam and the CNMI and 1999 for Hawaii)
that included only public education, health, and welfare costs and factored
out a pre- Compact migrant baseline. OIA?s estimates identified $12.8
million for Guam and $6.6 million for the CNMI in 1997, and $11.6 million
for Hawaii in 1999.

Page 30 GAO- 02- 40 Micronesian Migration

Changes in the level of future U. S. economic assistance may alter the rate
of migration. For example, significant reductions in aid to the FSM and the
RMI that reduce government employment would be expected to spur migration.
On the other hand, targeting future U. S. assistance to the FSM and the RMI
for education and health purposes could reduce some of the motivation to
migrate (although migration will continue as long as employment
opportunities in both countries remain limited). Further, improvements in
migrant health and education status would be expected to reduce migrant
impact in U. S. destinations. Thus, changes in future U. S. assistance could
have repercussions for the FSM and the RMI, as well as any U. S. location
receiving migrants. Additionally, changes in Compact provisions, such as
requiring health screening, could reduce the impact of migrants on U. S.
areas, though government officials from the two Pacific Island nations do
not view migration provisions as subject to renegotiation.

To date, no formal demographic or economic analysis of changes in economic
assistance has been completed. 47 However, officials in the United States,
the FSM, and the RMI draw on their past experience with Compact migration to
project how proposed changes in Compact assistance could affect migration
levels. Additionally, they also have views on how changes in health and
education may affect the impact of migrants on U. S. destinations. Officials
in U. S. island areas seeking to reduce adverse impact advocate certain
changes in Compact assistance and in migration provisions.

Past reductions in U. S. assistance appeared to promote migration, and
future reductions could be expected to have a similar impact. Reductions in
U. S. assistance to the FSM and the RMI occurred twice during the Compact.
The second reduction occurred in October 1996 and lowered U. S. Compact
funds for government operations by 17 percent in the FSM and 9 percent in
the RMI. Both countries reduced their public sectors: FSM government
employment fell by 24 percent between 1995 and 1997, while the RMI reduced
government employment by 36 percent between

47 The Economic Management Policy Advisory Team of the FSM has developed an
economywide model of the FSM economy that will show how different U. S.
assistance levels will affect migration. The study was expected to be
completed in August 2001. Changes in Compact

Assistance and Provisions Might Affect Migration Levels and Impact

Reduced U. S. Assistance Could Spur Migration

Page 31 GAO- 02- 40 Micronesian Migration

1995 and 2000. 48 Reduced Compact funding increased migration, according to
FSM and RMI government officials and migrants we met with. Regarding the
current negotiations, FSM and RMI officials project increased migration if
the United States reduces its assistance to their nations. 49 For example,
the FSM analysis of proposed lower U. S. assistance levels concludes: ?The
economy would be caught in a vicious circle of low growth, compounded by a
series of shocks requiring downward adjustment, loss of real incomes,
unemployment, and outward migration.? An OIA official noted that a reduction
in Compact funding may lead to greater migration, but only very marginally.
Officials from the FSM and the RMI believe that migration will tend to favor
the U. S. mainland, bypassing Guam, Hawaii, and the CNMI.

Efforts to target assistance to the health and education sectors in the FSM
and the RMI might reduce migration levels and the impact of migration on the
U. S. areas. The U. S. Compact negotiator testified before the Congress in
June 2000 that the United States intends to provide future funds in targeted
grants that would include the areas of health and education. An emphasis on
health spending in both countries, where health services are inadequate,
might reduce the number of citizens who go to the three U. S. island areas,
where health officials report that some migrants come specifically for
medical treatment. For example, after the FSM state of Pohnpei stopped
providing hemodialysis (blood purification), FSM citizens showed up more
frequently for treatment in the CNMI. Further, improvements in FSM and RMI
health care systems that better the health of migrants and improve access to
quality health care might also reduce migration impact on U. S. areas. The
State Department Compact negotiator has said that such targeted spending
would reduce incentives to migrate and would ensure that those who do
migrate are in a better position to contribute to their new communities. 50
According to Hawaii health officials, Compact spending should go to ensure
that the FSM and the RMI

48 While the cut in U. S. funding for the RMI and the subsequent cut in
government jobs may appear disproportionate, we reported in our September
2000 report regarding FSM and RMI spending of U. S. Compact funds that by
the late 1990s the RMI had very little discretionary Compact funding due,
primarily, to debt service obligations.

49 This is not unique to the FAS. When New Zealand cut its support to the
Cook Islands by 60 percent during the 1990s, about one- fourth of the Cook
Island population migrated. 50 An OIA official told us that targeted health
and education spending could ease the impact of migrants, although it
probably would not reduce migration much. Targeting U. S. Assistance

to Health and Education Might Reduce Migration and Its Impacts

Page 32 GAO- 02- 40 Micronesian Migration

can offer competent basic primary health care, specifically for
immunizations and prenatal care, and to address tuberculosis, Hansen?s
Disease, hepatitis, and diabetes in an effort to reduce the incidence of
these health problems in Hawaii. Regarding future U. S. Compact health care
assistance, Guam health officials said health care funds should be spent on
prenatal care, communicable, and vaccine- preventable diseases with the
stipulation that it be provided with strict guidelines for its use. FSM
officials report that migration might slow if FSM health care equaled that
of the U. S. mainland. RMI officials believe that any increases in health
spending would discourage migration as they noted that the better health
care available in the United States is a motivation for migration.

Increased Compact spending on education might reduce migrant impact costs.
Hawaii education officials noted that FAS teachers often have limited
credentials and that it takes migrant children 5- 7 years to attain average
literacy. Similarly, University of Hawaii faculty reported that FAS students
required remedial course work. The implication of this is that better FAS
education would enable FAS students to perform better in U. S. schools.
Similarly, Guam believes that increased spending on education in the FAS
would likely reduce migration demands on Guam?s education system. FSM
officials believe that increased spending on education could reduce the
migration of whole families and could improve economic opportunities in the
FSM. However, they also reported that increased education funding would
increase the number of people migrating to attend U. S. colleges. Similarly,
RMI officials believe that increased education spending would discourage
migration. One RMI official doubted that the RMI education system could be
quickly fixed, which leaves migration as the best option.

The U. S. Compact negotiator testified before the Congress in June 2000 that
the United States intends to seek changes in Compact migration provisions to
reduce the adverse impact on the United States. Two possible changes have
been mentioned by the U. S. negotiator: establishing a system of health
screening, to ensure that contagious individuals receive treatment in order
to protect public health; and requiring a passport, in order to better
screen out criminals, determine admissibility for entry to Changes in
Compact

Migration Provisions Are Under Consideration

Page 33 GAO- 02- 40 Micronesian Migration

the United States, and facilitate entry for FAS travelers. 51 Health
officials in Hawaii believe that migrants should be screened prior to
leaving the FSM and the RMI and only allowed to enter the United States if
they are noninfectious. 52 In Hawaii, public health nurses reiterated that
many of the problems that have occurred in Hawaii are associated with
treatable, but communicable, diseases. The FSM government does not believe
that health screening is its responsibility or that it is practical.
However, FSM officials believe that criminal migrants hurt the standing of
all migrants, and the FSM is considering requiring a passport before leaving
the FSM. RMI officials believe that health screening would be helpful to
both the RMI and the United States; therefore, they support ?minimal?
screening for health problems. Regarding a passport requirement, INS
officials support this option, although they have pointed out that a key
issue would be to ensure that passports are secure. 53

The possibility that the United States might seek restrictions on migration
is of concern to both countries. The FSM has responded to the United States
that FSM negotiators do not have the authority to discuss migration.
Further, the FSM said that any changes made should be to ?facilitate

migration.? RMI government officials told us that the migration benefits are
not up for renegotiation and that they are very important for the country,
providing a ?critical safety valve.?

FAS migration has clearly had a significant impact on Guam, Hawaii, and the
CNMI and has required government services in key areas. Compact migrants
have required local expenditures in areas such as health and

51 Screening for criminals is successfully occurring without a passport
entry requirement. Since July 2000, the U. S. Embassy in the RMI has
provided INS with the names of convicted RMI felons. According to INS, these
data are used to identify inadmissible criminal aliens at the port of entry
and have barred several individuals from entering Hawaii.

52 Hawaii sought health screening prior to the approval of the Compact by
the Congress. In 1985 testimony during a Congressional oversight hearing,
the Director of Hawaii?s Department of Health advocated programs in the FSM
and the RMI to screen and implement control measures for diseases such as
tuberculosis and Hansen?s Disease and that programs be established in Hawaii
to screen and treat those who migrate to Hawaii.

53 INS has recently (July 18, 2001), issued a proposed rule to clarify the
entry requirements for citizens of Compact countries who have been adopted
by citizens or lawful permanent residents of the United States. In addition,
the proposed rule requires citizens of Compact countries who seek to enter
the United States as nonimmigrants under the Compact to present a passport
or similar travel document issued by the Compact country of which they are a
citizen in order to establish their entitlement to Compact privileges.
Conclusions

Page 34 GAO- 02- 40 Micronesian Migration

education and, further, have particularly affected the budgetary resources
of Guam and the CNMI- U. S. island locations that have relatively small
populations and budgets, and economies that have recently suffered economic
setbacks. The budgetary impact on Hawaii is relatively smaller but can be
expected to grow as Hawaii begins to absorb health care costs that were once
covered by the U. S. government. Public health problems are also an
important concern for all three U. S. island areas. Because the Compact
allows FAS migrants who have limited financial means and ability to pay for
health care to enter the United States with few restrictions, U. S. island
areas are absorbing much of the health care costs of this poor population.
Further, Guam, Hawaii, and the CNMI can be expected to continue to
experience Compact impact as long as current poor economic conditions
persist in the FSM and the RMI. Targeting future U. S. assistance to the FSM
and the RMI for education and health purposes could reduce some of the
motivation to migrate and improvements in migrant health and education
status might be expected to reduce migrant impact in U. S. destinations.

We recommend that the Secretary of State direct the U. S. Compact Negotiator
to consider how to target future health and education funds provided to the
FSM and the RMI in ways that also effectively address adverse migration
impact problems identified by Guam, Hawaii, and the CNMI. For example, the
U. S. Negotiator could consider whether a specified portion of the health
sector assistance should be targeted at treating and preventing the
communicable diseases in the FSM and the RMI that are a public health
concern in Guam, Hawaii, and the CNMI.

We received comments from the Department of the Interior, the Department of
State, and the Immigration and Naturalization Service, as well as to the
governments of the FSM, the RMI, Guam, Hawaii, and the CNMI. These agencies
and governments generally agreed with our findings, but each had concerns
regarding the scope and content of various issues addressed in the report.
Of those who addressed our recommendation, State agreed with us, Guam and
the CNMI stated that the recommendation should address the lack of
employment in the Pacific Island nations, Hawaii proposed that health and
education funding be provided only under strict grant conditions, and the
FSM felt that the recommendation was unnecessary. Their comments and our
responses can be found in appendixes III through IX.

We are sending copies of this report to the Secretary of the Interior, the
Secretary of State, the Commissioner of the Immigration and Recommendation
for

Executive Action Agency Comments

Page 35 GAO- 02- 40 Micronesian Migration

Naturalization Service, the President of the Federated States of Micronesia,
the President of the Republic of the Marshall Islands, the President of the
Republic of Palau, the Governor of Guam, the Governor of the state of
Hawaii, the Governor of the Commonwealth of the Northern Mariana Islands and
to interested congressional committees. We will also make copies available
to other interested parties upon request.

If you or your staff have any questions regarding this report, please call
me at (202) 512- 4128. Other GAO contacts and staff acknowledgments are
listed in appendix X.

Loren Yager Director, International Affairs and Trade

Appendix I: Objectives, Scope, and Methodology

Page 36 GAO- 02- 40 Micronesian Migration

Based on a request from the Chairman of the House Committee on Resources;
the Ranking Minority Member of the House Committee on International
Relations; the Chairman of the House Committee on International Relations,
Subcommittee on East Asia and the Pacific; and Congressman Doug Bereuter, we
(1) identified migration under the Compact (migrant destinations, population
size, and characteristics); (2) assessed the impact of this migration on U.
S. island areas and the sending nations; (3) determined the use of available
options to address impact on U. S. island areas; and (4) explored ways in
which future changes in Compact provisions and assistance levels might
affect migration levels and impact.

For our first objective, we reviewed data contained in surveys funded by the
Department of the Interior?s Office of Insular Affairs (OIA) using
assistance from a U. S. Bureau of the Census official. These surveys
captured the number and characteristics of migrants from the Federated
States of Micronesia (FSM), the Republic of the Marshall Islands (RMI), and
the Republic of Palau in Guam (surveys for 1992 and 1997), Hawaii (survey
for 1997), and the Commonwealth of the Northern Mariana Islands (CNMI)
(surveys for 1993 and 1998). (Our review includes data for the Republic of
Palau for our first two objectives because Palauan information regarding
impact cannot be disaggregated from the other two Pacific Island nations.
Further, the Compact of Free Association with Palau also allows for
compensation for costs incurred by U. S. areas as a result of Palauan
migrants.) We reviewed these surveys to identify the number of migrants that
were living in these three U. S. island areas at the time the surveys were
conducted, including migrants who moved before and after implementation of
the Compacts of Free Association with the FSM and the RMI in 1986 and the
Compact of Free Association with Palau in 1994. We also reviewed these data
to identify key characteristics of these migrants such as their reasons for
migrating, age and education levels, employment situation, and poverty
status. We focused our assessment on the most recent survey data. We also
reviewed additional documents, such as the 1995 CNMI census and a Guam
assessment of Micronesians on the island in 1997, that contain data on
migrants.

The OIA surveys are the most recent and comprehensive data available that
identify and describe FSM, RMI, and Palauan migrants in Guam, Hawaii, and
the CNMI. We did not attempt to verify the accuracy of any of these data.
The survey data appear to be an undercount of migrant population totals (see
app. II). We discussed the strengths and weaknesses of the methodology used
to collect the survey data with the U. S. Bureau of Appendix I: Objectives,
Scope, and

Methodology Migration Under the Compact

Appendix I: Objectives, Scope, and Methodology

Page 37 GAO- 02- 40 Micronesian Migration

the Census official who was involved with the surveys, as well as with U. S.
and Guam government and academic officials familiar with the methodology;
all agreed that the survey methodology is subject to undercounting. Further,
we found several specific instances during our review that indicated that
the data may indeed be an undercount. In addition, the survey data we are
using are primarily from 1997 and 1998, and the level of migration to these
three U. S. island areas since that time is unknown. More current data from
the U. S. 2000 census conducted by the U. S. Bureau of the Census that will
identify the number and some characteristics of FSM, RMI, and Palauan
migrants living in the three U. S. island locations were unavailable; these
data, along with data on Pacific islander migrants on the U. S. mainland,
are due to be released in late 2001.

We began our work on this objective by reviewing the language contained in
the Compacts? enabling legislation addressing migrant impact. To then
determine the amount of total Compact impact estimated by the governments of
Guam, Hawaii, and the CNMI, we collected the reviewed impact estimates
prepared by each of these three locations. In most cases, estimates were
either prepared specifically for a certain year and provided detailed
information for particular areas, such as the health and education sectors,
or were prorated for a certain year based on other years? estimates when
detailed calculations for that year were not prepared. In a few cases,
estimates were prepared that covered multiple years and were not tied to a
specific year. Because of this, we were unable to convert the impact
estimate totals into constant dollars. We identified impact estimate figures
and all available supporting data for 1986- 2000 for Guam, Hawaii, and the
CNMI. We reviewed the estimates and the methodologies used to derive them
with government officials who work in the areas of health, education, and
public safety in all three locations, as well as U. S. government officials
from OIA and the Department of State. We discussed impact with additional
parties, including the governors of Guam and the CNMI and their staff, and
staff from the governor?s office in Hawaii; FSM and RMI migrant community
representatives; and private sector officials. We reviewed fiscal year 2000
budget figures for Guam, Hawaii, and the CNMI to identify the proportion of
those figures represented by estimated impact amounts for that year. We also
reviewed OIA?s annual impact reports for 1989 and 1996- 2001 and the
assessments of the three locations? impact estimates contained therein. To
review the impact of migration to U. S. areas on the FSM and the RMI, we
held discussions with senior FSM and RMI government officials and reviewed
FSM and RMI census documents. The Impact of

Migration on U. S. Island Areas, the FSM, and the RMI

Appendix I: Objectives, Scope, and Methodology

Page 38 GAO- 02- 40 Micronesian Migration

To review what actions have been taken that address impact, we reviewed the
Compacts? enabling legislation language regarding the authorization of
appropriations to cover impact costs, as well as the Compacts? language on
the ability to place nondiscriminatory limitations on the length of stay in
U. S. territories of certain migrants from the Freely Associated States (the
FSM, the RMI, and Palau). We then identified all OIA technical assistance
funding and specific legislative appropriations provided to Guam, Hawaii,
and the CNMI to cover estimated impact costs. We discussed the amounts and
how this funding has been spent with OIA, Guam, and CNMI government
officials. We visited select capital improvement projects (gyms, roads,
water projects, etc.) in Guam that have been supported with impact
compensation funds. To review the implementation of nondiscriminatory
limitations, we reviewed the September 2000 regulations on this issue put
forth by the U. S. Immigration and Naturalization Service (INS). We then
discussed the terms, enforceability, and potential impact of these
regulations with INS officials in Washington, D. C., and Guam, as well as
with Guam government officials. We also discussed the possibility of such
limitations with officials from the CNMI government.

To assess what actions have been taken by OIA to identify impact and
communicate this impact to the Congress, we first reviewed the Compacts?
impact reporting requirement contained in the Compacts? enabling
legislation. We then collected and reviewed all available OIA impact
reports, which included reports for 1989 and 1996- 2001, as well as OIA?s
1994 guidelines for preparing impact estimates. We discussed the process for
preparing, as well as the substance of, the reports and guidelines with the
responsible OIA official. Such discussions covered issues such as the
reasons for not issuing annual reports for each year following Compact
implementation and the need to subtract a ?baseline? population from impact
estimates. We also discussed OIA?s reports with government officials from
Guam, Hawaii, and the CNMI.

To review how changes in the Compact?s economic assistance might affect
migration, we reviewed development planning documents prepared by the FSM
and the RMI in 2000 regarding population and migration policies. Further, we
solicited views regarding possible changes in the Compact from senior
officials from the FSM, the RMI, Guam, Hawaii, the CNMI, OIA, INS, and State
as well educators, health professionals, business representatives, and the
migrant communities. Options Available to

Address Impact Compact Changes That Might Affect Migration

Appendix I: Objectives, Scope, and Methodology

Page 39 GAO- 02- 40 Micronesian Migration

We conducted our work from October 2000 through June 2001 in accordance with
generally accepted government auditing standards.

Appendix II: FAS Migrant Population Data Collection

Page 40 GAO- 02- 40 Micronesian Migration

The methodology used in the Department of the Interior?s Office of Insular
Affairs (OIA) surveys to count the number and characteristics of
Micronesians living in U. S. island areas, the ?snowball? approach, results
in an undercount of the actual migrant population from the Freely Associated
States (FAS). While the OIA surveys captured many of the FAS migrants in
Guam, Hawaii and the Commonwealth of the Northern Mariana Islands (CNMI),
our analysis and review of the data found several illustrations of how the
surveys likely undercounted the actual number of FAS migrants in U. S.
island destinations.

In order to count and characterize Micronesian migrants in Guam, Hawaii and
the CNMI between the 1990 and 2000 U. S. population censuses, OIA utilized
the services of U. S. Census Bureau staff to survey U. S island area
Micronesian migrant populations in 1992, 1993, 1997, and 1998. The Census
official leading the survey used a survey tool referred to as the

?snowball? method of surveying special populations. The OIA survey
administrator selected and trained FAS migrants, who had received at least
high school diplomas and had passed special tests, to serve as

?enumerators? to collect data on other migrants in each U. S. area. In Guam,
Hawaii, and the CNMI, enumerators from each of the FAS countries identified
and interviewed all migrants they knew of from their own countries, then
asked these interviewees to identify all migrants from their home country
they knew of living in the area, continuing on in this manner until no ?new?
migrants were identified. For example, Marshallese enumerators only
interviewed Marshallese migrants. While the goal of the OIA surveys was to
identify 100 percent of the migrants from each FAS nation living in the
three U. S. areas, the Census Bureau official involved with the surveys
acknowledged that a snowball count inevitably yields less than 100 percent
of the actual population. Of note, the snowball data represent a ?snapshot?
of the FAS migrant communities living in Guam and Hawaii and the CNMI at the
time of the surveys. The data do not represent all FAS migrants who ever
lived in a U. S. island area, as some of these migrants may have moved
elsewhere by the time of the survey and may have different characteristics
from migrants who remained in U. S. areas.

Experts whom we interviewed agree that this snowball methodology is the most
appropriate strategy to enumerate FAS migrants living in U. S. areas in the
Pacific. The snowball methodology generally yields higher quality
information than a traditional census, and is reportedly less expensive. The
advantages of the snowball methodology include: (1) distinguishing FAS
subgroups from the larger population (as well as from one another); (2)
providing the ability to shape the survey instrument to obtain desired
Appendix II: FAS Migrant Population Data

Collection The Snowball Method

Appendix II: FAS Migrant Population Data Collection

Page 41 GAO- 02- 40 Micronesian Migration

information; and (3) minimizing the extent to which ethnic/ racial bias and
language barriers undermined the quality of the survey since the migrant
enumerators were of the same ethnicity as the migrants they interviewed.
However, the snowball method misses some individuals who are not connected
or networked into the mainstream migrant communities. Thus, it may miss some
of those that are living in remote locations/ islands, or are in areas with
political, economic, or racial tensions. Fears on Guam and Hawaii about
being deported may have led some migrants either to not participate at all
or to not fully disclose their personal information, according to interviews
with FAS migrants in Guam and Hawaii. The snowball approach may also miss
transient migrants as well as some who have assimilated into the U. S.
areas.

Based on our review of island government administrative data and interviews
with migrants, we have found the following examples that suggest the OIA?s
survey data appear to undercount of the actual population of FAS migrants in
U. S. areas:

 While OIA?s 1998 census identified 92 Marshallese and their children
living in the CNMI, a Marshallese migrant we met with in the CNMI in 2000
showed us a list of Marshallese families, which she explained totaled 260
persons. While there is a 2- year difference in the data, the population of
RMI migrants is very stable, with few people coming or going in recent
years, according to this Marshallese community representative.

 One of the Marshallese migrants living in Hawaii who assisted with OIA?s
1997 survey of FAS migrants estimated that the survey missed around 15
percent of the Marshallese population living on the Hawaiian island of Oahu.

 The OIA surveys report a smaller number of FAS students enrolled in public
schools (kindergarten through grade 12) in each of the three U. S. areas
than do the administrative data provided to us by each school district. An
analysis of the data shows that: (1) in 1997, OIA counted only 1,205 ethnic
FAS students in Guam, whereas Guam counted 3,009 ethnic FAS students; 54 (2)
in 1998, OIA counted only 422 FAS- born students in the CNMI, whereas the
CNMI counted 575 FAS- born students; and (3) in 1997,

54 OIA has stated that Guam?s administrative data on student enrollment
overcount the actual number of students enrolled in Guam schools because the
Guam Department of Education double- counts students who enroll in more than
one school during the school year. However, according to an official from
Guam?s Department of Education, their enrollment data do reflect a single
point in time (snapshot), which would indicate that these data are
comparable to OIA?s enrollment data. Examples of Possible

Undercount of the Actual Number of FAS Migrants

Appendix II: FAS Migrant Population Data Collection

Page 42 GAO- 02- 40 Micronesian Migration

OIA counted only 1,054 FAS- born students in Hawaii, whereas Hawaii?s
Department of Education counted 1, 283 FAS- born students in their English
as a Second Language program alone.

 The possibility of an undercount on Guam is also illustrated by the
discrepancies in the numbers of Palauans living on that island in 1997. An
Ernst & Young report issued on the impact of Micronesian migration to Guam
that compared the OIA 1997 survey with the 1995 census of Palauans on Guam,
found 1,716 fewer Palauans in Guam in 1997 than in 1995 (dropping from 2,276
to 560 persons). Moreover, the report noted that confusion in the Palauan
community as to why a survey was being conducted in 1997 (since a Palauan-
only census was administered just 2 years prior in the form of the 1995
Census of Palauans on Guam) may have led to an undercount of Palauans on
Guam in the OIA 1997 survey.

Appendix III: Comments From the Department of the Interior

Page 43 GAO- 02- 40 Micronesian Migration

Appendix III: Comments From the Department of the Interior

Note: GAO comments supplementing those in the report text appear at the end
of this appendix.

See comment 2. See comment 1.

Appendix III: Comments From the Department of the Interior

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Appendix III: Comments From the Department of the Interior

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The following are GAO?s comments on the Department of the Interior?s letter
dated September 7, 2001.

1. The report number has been changed from GAO- 01- 1028 to GAO- 02- 40. 2.
We do not believe that it has become more difficult each year to

measure the impact of Compact migration, and in fact may have become an
easier task. For example, a Guam official told us that when the Compact was
implemented, the territory could not quantify impact from available data;
since that time, Guam agencies have collected the necessary data on FAS
migrants. Further, the CNMI government has reported that it is now taking
action to better review data in order to provide more specific information
regarding FAS migrants and their use of public services. However, it is
worth noting that over time the Department of the Interior will need to
define the eligible Compact impact population as U. S.- born children of FAS
migrants begin to have children of their own.

Appendix IV: Comments From the Department of State

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Appendix IV: Comments From the Department of State

Note: GAO comments supplementing those in the report text appear at the end
of this appendix.

Appendix IV: Comments From the Department of State

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See comment 1.

Appendix IV: Comments From the Department of State

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See comment 3. See comment 2.

Appendix IV: Comments From the Department of State

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The following are GAO?s comments on the Department of State?s letter dated
August 22, 2001.

1. The report recognizes that machine- readable passports would facilitate
entry of travelers, determinations of admissibility, and links to criminal
databases. It is worth pointing out that criminals have been identified upon
entry into the United States using other means. For example, the U. S.
embassy in the RMI is providing the INS with a list of convicted RMI felons
for determining admissibility at the port of entry.

2. This report examined Hawaii, Guam, and the CNMI because these
destinations received the initial influx of Compact migrants, comprehensive
surveys of these migrants had been conducted in each location, and impact
compensation is authorized for each of the three locations. As acknowledged
by the Department of State in its letter, we intend to undertake a review of
migration to the mainland following publication of this report.

3. We maintain that our comments on p. 8 of the report are accurate: While
FAS migrants are classified as nonimmigrants, their behavior is often like
that of immigrants in that they can stay indefinitely in the United States
with few restrictions. Further, the habitual residence restrictions cited in
the Department of State letter only apply to Guam.

Appendix V: Comments From the Government of the Federated States of
Micronesia

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Appendix V: Comments From the Government of the Federated States of
Micronesia

Note: GAO comments supplementing those in the report text appear at the end
of this appendix.

Now on p. 16. See comment 2. See comment 1.

Appendix V: Comments From the Government of the Federated States of
Micronesia

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See comment 5. See comment 4.

See comment 3. Now on p. 10.

Appendix V: Comments From the Government of the Federated States of
Micronesia

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See comment 11. See comment 10.

See comment 9. See comment 8. See comment 7.

See comment 6.

Appendix V: Comments From the Government of the Federated States of
Micronesia

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See comment 14. Now on p. 22.

See comment 13 See comment 12.

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Micronesia

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The following are GAO?s comments on the letter from the government of the
Federated States of Micronesia dated August 31, 2001.

1. We agree that the Compact?s migration provisions strengthen ties between
the United States and the FSM and the RMI. As we discussed on p. 8 of this
report, at the time of the Compact negotiations, the Compact negotiator
stated that the migration rights were to strengthen ties between the United
States and the Freely Associated States (FAS). The current Compact
negotiator has reiterated this point, referring to the migration rights not
only as an important "safety valve" for the FAS population, but as the
"glue" between the nations. The negotiator further stated that because the
children of FAS migrants born in the United States are U. S. citizens, ties
between the United States and the FAS are further deepened.

2. As we reported on p. 16 of this report, the governments of Guam, Hawaii,
and the CNMI all acknowledge that FAS migrants have had positive impacts
such as contributing to the tax base and filling employment needs. However,
the Compact enabling legislation specifically requires reports only on the
adverse impact of the Compact. As noted on p. 16 of this report, the CNMI's
impact estimate for 1996 quantified $3.6 million in positive benefits from
the taxes paid by FAS migrants, compared with their reported cost of $11
million that year. The Congress authorized compensation in the Compact's
enabling legislation for U. S. island areas that may have experienced
increased demands on their educational and social services by Compact
migrants, but did not include compensation for other impact costs, such as
infrastructure. Consequently, the U. S. island areas are not submitting
claims for total costs in their impact estimates. In addition, available
data on investment and savings reported by FAS migrants in Department of the
Interior surveys show that few migrants invest and save. For example, of
2,053 Compact FSM households surveyed, only 15 reported any interest,
dividend, or net rental income in 1997 in Guam and Hawaii or 1998 in the
CNMI. Reviewing the impact of Compact expenditures on U. S. companies is not
within the scope of this review.

3. We believe our description of the number of FAS migrants and the income
levels of these households is neither damning nor inaccurate. Surveys have
identified thousands-- about 14,000-- of Compact FAS migrants in Guam,
Hawaii, and the CNMI. FAS migrants reported their income in surveys
conducted in Guam, Hawaii, and the CNMI. In total,

Appendix V: Comments From the Government of the Federated States of
Micronesia

Page 55 GAO- 02- 40 Micronesian Migration

about 61 percent of FAS migrants lived in households with income levels
below the poverty level, based on the U. S. poverty definition.

4. We do not suggest that FSM migrants ?choose? to live in poverty, but
report that their employment has been primarily in private sector jobs
requiring few skills and paying low wages.

5. Our report does not contain data on the number of FAS migrants on the U.
S. mainland. As reported on p. 11 of this report, according to OIA surveys,
FAS migrants accounted for about 5 percent of Guam?s total population in
1997 and around 4 percent of the CNMI?s total population in 1998. These
migrants accounted for 0.5 percent of Hawaii?s population in 1997. As noted
on p. 11, we believe that these figures underestimated the number of FAS
migrants in these three U. S. locations.

6. Issues regarding U. S. employer recruitment were not raised by island
government officials or FAS migrants concerning Guam, Hawaii, or the CNMI.
We recognize that FSM officials have raised this issue regarding U. S.
mainland employers who are recruiting FSM citizens for work.

7. The number of FAS citizens who return to the islands after schooling or a
period of employment is not known. The FSM and RMI governments were not able
to provide such data, although one FSM government official estimated that
perhaps one- fourth of migrants return.

8. When reporting on OIA migrant survey information, we identified the FSM,
the RMI, and Palau separately where notable data differences existed. For
example, see table 1 on p. 11 and table 2 on p. 14. With respect to Compact
impact estimates, we relied upon data provided to us by Guam, Hawaii, and
the CNMI. These data often combined all FAS migrants, making it impossible
for us to report on the impact of the three FAS nations separately. Guam,
Hawaii, and the CNMI are eligible to receive Compact impact compensation for
the impact of migrants from all three FAS nations.

9. The issue of FAS citizens who enlisted in the U. S. armed forces will be
addressed in a separate GAO report on Compact defense and security issues.
This report will be issued before the end of 2001.

10. As we reported on p. 13, the pursuit of educational opportunities was
one of the motivations for migration, according to migrants and FAS

Appendix V: Comments From the Government of the Federated States of
Micronesia

Page 56 GAO- 02- 40 Micronesian Migration

government officials. OIA migrant surveys for Guam, Hawaii, and the CNMI did
not ask FAS migrants whether education was a reason for migration, and thus
contain no data on this issue.

11. The report?s recommendation was not drafted with the intent to end
migration. The recommendation has two purposes. In addition to providing an
option that could reduce some of the incentives to migrate, the
recommendation also recognizes that improvements in the health and education
systems in FAS nations could reduce the impact of migration on the receiving
areas.

12. Consideration of alternatives available to the U. S. government to
increase opportunities and improve conditions in FAS nations was beyond the
scope of this report.

13. Our report does not contend that FAS migrants have introduced (i. e.,
provided the first case of) any communicable disease into the United States.
However, Hawaii has repeatedly emphasized public health concerns regarding
FAS migrants. According to a report prepared by Hawaii?s Department of
Health and included in Hawaii?s January 31, 2001 Compact impact report, the
FSM has the highest prevalence of Hansen?s Disease (leprosy) in the world,
at 35 cases per 10,000 people. For 1992 through 1999, 151 cases of this
disease were detected among the Marshall Islanders and Micronesians in
Hawaii. Hawaii also identified cases of tuberculosis, pertussis, and
hepatitis A occurring within the FAS population communities in the state. In
addition, Guam and CNMI health officials also raised public health concerns
regarding FAS migrants.

14. We believe this report is objective and fair. It reports on the
migration experience under the Compact of Free Association relying on the
best available data.

Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

Note: GAO comments supplementing those in the report text appear at the end
of this appendix.

Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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See comment 2. See comment 1.

Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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See comment 3.

Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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See comment 7. See comment 6. See comment 5. See comment 4.

Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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See comment 10. See comment 9.

See comment 8.

Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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The following are GAO?s comments on the letter from the government of the
Republic of the Marshall Islands dated September 4, 2001.

1. This GAO report is one in a series of reviews of U. S. relations with the
FSM and the RMI under the Compact of Free Association. Previously, we have
published an assessment of the use, effectiveness, and accountability of U.
S. Compact economic assistance. In addition to this migration report,
forthcoming reviews cover the use, effectiveness, and accountability of U.
S. domestic programs extended to both nations, as well as defense and
security relations. Taken together, these reports will illustrate the larger
context of the free association relationship between the three countries.

2. The determination of poverty levels is based on the U. S. nationwide
standard as established by the U. S. Bureau of the Census. These levels are
adjusted annually for family size. The measure of poverty is required for
statistical purposes by the U. S. Office of Management and Budget in
Statistical Policy Directive No. 14. We have added a footnote on p. 14,
stating that poverty levels are based on the single U. S. standard discussed
previously.

Regarding education, our report does not state that FAS migrants are

?uneducated.? Instead, we report that migrants have not been highly
educated, based on OIA migrant survey data. According to U. S., Guam, and
CNMI government reports, FAS migrants have lower educational levels than the
overall population in Guam, Hawaii, and the CNMI. For example, 55 percent of
Compact migrants over the age of 25 had high school degrees in Hawaii in
1997, while 84 percent of the total Hawaiian population over the age of 25
had a high school degree.

3. We have added text on p. 23 to state that the RMI government does not
have an official policy regarding migration.

4. We have modified the title of the report in recognition that ?foreign

relations? is a more appropriate way to classify the migration relationship
between the United States and FAS nations. We continue to believe that the
Compact economic and program assistance is most accurately referred to as
?foreign assistance.?

5. We made the suggested change. 6. We made the suggested footnote change.

Appendix VI: Comments From the Government of the Republic of the Marshall
Islands

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7. We made the suggested footnote change. 8. We did not make this change.
The report states that migration is

viewed as a ?safety valve? by government officials; it does not state that
this view constitutes a matter of official government policy.

9. While we did not alter this particular sentence, on p. 14 of the report
we added text to note that, in Hawaii, a higher percentage of Compact RMI
migrants reported that they migrated to Hawaii for medical reasons (10
percent) than reported moving for employment (7 percent). However, we note
that 43 percent of Compact Marshallese surveyed chose ?other? as their
reason for migrating.

10. We have made some of the suggested changes.

Appendix VII: Comments From the Government of Guam

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Appendix VII: Comments From the Government of Guam

Note: GAO comments supplementing those in the report text appear at the end
of this appendix.

Appendix VII: Comments From the Government of Guam

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See comment 1.

Appendix VII: Comments From the Government of Guam

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See comment 3. See comment 2.

Appendix VII: Comments From the Government of Guam

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See comment 4.

Appendix VII: Comments From the Government of Guam

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See comment 6. See comment 5.

Appendix VII: Comments From the Government of Guam

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See comment 2.

Appendix VII: Comments From the Government of Guam

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The following are GAO?s comments on the letter from the government of Guam
dated August 30, 2001.

1. The data we present on p. 17 of the report regarding the impact of FAS
migrants on Guam, Hawaii, and the CNMI include public safety costs. We
acknowledge that FAS migrants create impact on the criminal justice system
in Guam. For example, in Guam, where FAS migrants make up about 5 percent of
the population, 12 percent of the cost of the corrections system was
attributed to FAS migrants in fiscal year 2000. FAS migrants represented 26
percent of all convictions in fiscal year 1999/ 2000 in Guam. We did not
separately discuss this area of impact in our report because it is smaller
than the impact reported on the health and education systems. For example,
for fiscal year 2000 public safety costs estimated by Guam was 6 percent of
the total impact amount, compared with 54 percent for education and 40
percent for health and welfare.

Reviewing the impact immigration to Guam from countries other than FAS
nations was beyond the scope of this report.

2. The issues of economic development and employment opportunities in the
FSM and the RMI have been addressed in a prior GAO report. In this review,
we reported that the considerable funds provided to the FSM and the RMI
under the Compact had resulted in little economic development. See Foreign
Assistance: U. S. Funds to Two Micronesian Nations Had Little Impact on
Economic Development

(GAO/ NSIAD- 00- 216, Sept. 22, 2000). We have not assessed the extent to
which long- term stability in FAS nations can be created in the future
through economic development and employment opportunities.

3. We maintain that the report?s recommendation provides an option that
could reduce some of the incentives to migrate. For example, targeted
investments for dialysis treatments would allow some FAS citizens to remain
at home instead of moving to U. S. locations. Further, the recommendation
also recognizes that improvements in the health and education systems in FAS
nations could reduce the impact of migration on the receiving areas. For
example, improved immunization in FAS nations could reduce the public health
concerns currently voiced by Guam, Hawaii, and the CNMI with regard to FAS
migrants.

4. OIA migrant survey data have shown that employment has been a key reason
for FAS migration to Guam, Hawaii, and the CNMI since the

Appendix VII: Comments From the Government of Guam

Page 78 GAO- 02- 40 Micronesian Migration

Compacts were implemented. However, we noted on p. 15 of our report that ??
Guam government officials told us that as Guam?s unemployment rate has
reached about 15 percent in recent years, the demand for FAS workers may
have decreased.? This development does not necessarily mean, however, that
Guam is now viewed in FAS nations as a location without employment
opportunities. For example, an elected Guam official pointed out to us that
as difficult as the employment situation may be in Guam, conditions are
worse in the FSM state of Chuuk (the poorest state in the FSM and the
birthplace of the largest group of FAS migrants in Guam).

5. As Guam rightly states in its comments, our report does not address how
the two options available in the Compact and its enabling legislation should
be used to address the impact caused by the migration from FAS. As our
report points out, however, the Compact?s enabling legislation does not
require compensation for impact costs. Rather, it says that the Congress
will act ?sympathetically and expeditiously? to redress adverse
consequences. As such, it is at the Congress? discretion to compensate for
Compact impacts. Similarly, since the INS recently instituted regulations on
habitual residents in the territories, we felt it was premature to recommend
further regulations until the results of the new regulations can be
assessed.

6. We added language on p. 25 of this report noting that the Guam government
believes that restricting the use of compensation funding to capital
improvement projects does not target the money where it could be best used.

Appendix VIII: Comments From the Government of Hawaii

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Appendix VIII: Comments From the Government of Hawaii

Note: GAO comments supplementing those in the report text appear at the end
of this appendix.

See comment 1.

Appendix VIII: Comments From the Government of Hawaii

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See comment 5. See comment 4.

See comment 4. See comment 3.

See comment 2.

Appendix VIII: Comments From the Government of Hawaii

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See comment 8. See comment 7. See comment 6.

Appendix VIII: Comments From the Government of Hawaii

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See comment 9.

Appendix VIII: Comments From the Government of Hawaii

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Appendix VIII: Comments From the Government of Hawaii

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Appendix VIII: Comments From the Government of Hawaii

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Appendix VIII: Comments From the Government of Hawaii

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Appendix VIII: Comments From the Government of Hawaii

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Appendix VIII: Comments From the Government of Hawaii

Page 97 GAO- 02- 40 Micronesian Migration

Appendix VIII: Comments From the Government of Hawaii

Page 98 GAO- 02- 40 Micronesian Migration

The following are GAO?s comments on the letter from the government of the
State of Hawaii dated August 31, 2001.

1. We recognize in our report that FAS migrant eligibility for Medicaid is
an important issue for the state of Hawaii. As Hawaii noted in its letter,
the Congress recently reinstated FAS citizen eligibility for federal housing
programs; a similar reinstatement of eligibility for federal Medicaid
benefits would require a congressional policy decision.

2. We have not undertaken an analysis to determine whether there might be
sufficient potential Compact health sector funds to pay FAS debts to U. S.
health care facilities or what the impact of such payments would be on the
FAS health care systems.

3. We have discussed the possibility of requiring health screenings with
Department of State officials. They informed us that such screenings are not
feasible, as the Department does not have sufficient resources to administer
such a system in FAS countries. Further, INS officials noted that requiring
such screenings would be unfair treatment against FAS migrants, as
nonimmigrants are not required to undergo health screenings. While we
recognize that requiring health screenings would address a key concern for
all three U. S. locations, we believe that the likelihood of the U. S.
government implementing such a recommendation is low.

4. Financial compensation is not required under the Compact or its enabling
legislation, but can be made at the discretion of the Congress.

5. While we agree that Hawaii has developed its own methodology for
calculating impact, we note that Hawaii officials have told us that the
state?s Department of Education includes pre- 1986 migrants in its Compact
impact estimates.

6. On p. 1 of our report, we have better highlighted the fact that Hawaii is
a state with a different status than Guam and the CNMI. We then explain in a
footnote that we chose the term ?U. S. island areas? to refer collectively
to a U. S. state, a U. S. territory, and a U. S. commonwealth. We view this
term as a neutral, concise reference to the three locations. Further, we
list ?Guam, Hawaii, and the CNMI? in descending order based upon the number
of FAS Compact migrants each location has received.

Appendix VIII: Comments From the Government of Hawaii

Page 99 GAO- 02- 40 Micronesian Migration

7. We have retained the footnote as is. We do not believe that Interior?s
recalculation of Compact impact estimates for 1 year out of 15 merits
inclusion in the body of the report. Further, we are not convinced that
OIA?s approach to adjusting the data was valid.

8. We have modified the text to note that Hawaii has estimated $86 million
in Compact impact costs, but has received no compensation to date.

9. We agree, and have recommended in a previous report that future Compact
economic assistance include specific measures (including grant requirements)
that will ensure the effectiveness of, and accountability over, future
spending. See Foreign Assistance: U. S. Funds to Two Micronesian Nations Had
Little Impact on Economic Development (GAO/ NSIAD- 00- 216, Sept. 22, 2000).

Appendix IX: Comments From the Government of the Commonwealth of the
Northern Mariana Islands

Page 100 GAO- 02- 40 Micronesian Migration

Appendix IX: Comments From the Government of the Commonwealth of the
Northern Mariana Islands

Note: GAO comments supplementing those in the report text appear at the end
of this appendix.

Now on p. 15, footnote 21. Now on p. 29.

Appendix IX: Comments From the Government of the Commonwealth of the
Northern Mariana Islands

Page 101 GAO- 02- 40 Micronesian Migration

Now on p. 19, footnotes 29 and 30.

See comment 3. See comment 2.

See comment 1.

Appendix IX: Comments From the Government of the Commonwealth of the
Northern Mariana Islands

Page 102 GAO- 02- 40 Micronesian Migration

See comment 4.

Page 103 GAO- 02- 40 Micronesian Migration

The following are GAO?s comments on the letter from the government of the
Commonwealth of the Northern Mariana Islands dated August 29, 2001.

1. We added text in footnote 21 on p. 15, stating: ?Further, CNMI government
officials have reported that it is far more cost effective to hire a FAS
citizen, given the immigration filing expenses and other costs associated
with hiring other foreign workers.?

2. The report does not suggest that FAS migrant health costs are unimportant
in the CNMI. In fact, on p. 18, we noted that health costs were the greatest
impact for the CNMI in 2000.

3. We added language on p. 25 of the report, noting that the CNMI government
believes that restricting the use of compensation funding to capital
improvement projects does not target the money where it could be best used.

4. The issues of economic development and employment opportunities in the
FSM and the RMI have been addressed in a prior GAO report. In this review,
we reported that the considerable funds provided to the FSM and the RMI
under the Compact had resulted in little economic development. See Foreign
Assistance: U. S. Funds to Two Micronesian Nations Had Little Impact on
Economic Development

(GAO/ NSIAD- 00- 216, Sept. 22, 2000). We have not assessed the extent to
which long- term stability in FAS nations can be created in the future
through economic development and employment opportunities.

Page 104 GAO- 02- 40 Micronesian Migration

Emil Friberg (202) 512- 8990 Leslie Holen (415) 904- 2277

In addition to those named above, Tama Weinberg, Ron Schwenn, Mary Moutsos,
and Rona H. Mendelsohn made key contributions to this report. Appendix X:
GAO Contacts and Staff

Acknowledgments GAO Contacts Acknowledgments

(320001)

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