Immigration Application Fees: Current Fees Are Not Sufficient to 
Fund U.S. Citizenship and Immigration Services' Operations	 
(05-JAN-04, GAO-04-309R).					 
                                                                 
The Homeland Security Act of 2002 (HSA) established the Bureau of
Citizenship and Immigration Services (CIS) within the Department 
of Homeland Security (DHS). CIS is responsible for several	 
functions transferred from the former Immigration Services	 
Division of the Immigration and Naturalization Service (INS)	 
under the Department of Justice. CIS's functions include	 
adjudicating and processing applications for U.S. citizenship and
naturalization, administering work authorizations and other	 
petitions, and providing services for new residents and citizens.
CIS collects fees from applicants to process the various	 
immigrationrelated applications and petitions. CIS also receives 
appropriated funds to pay for administrative and overhead costs  
such as records management and backlog reduction. HSA requires	 
that we report on whether CIS is likely to derive sufficient	 
funds from fees to carry out its functions in the absence of	 
appropriated funds.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-309R					        
    ACCNO:   A09066						        
  TITLE:     Immigration Application Fees: Current Fees Are Not       
Sufficient to Fund U.S. Citizenship and Immigration Services'	 
Operations							 
     DATE:   01/05/2004 
  SUBJECT:   Fees						 
	     Financial management				 
	     Funds management					 
	     Immigration information systems			 
	     Immigration or emigration				 
	     Strategic planning 				 
	     Federal agency reorganization			 
	     Reporting requirements				 
	     Appropriated funds 				 

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GAO-04-309R

A

United States General Accounting Office Washington, D.C. 20548

January 5, 2004

The Honorable Orrin G. Hatch
Chairman
The Honorable Patrick J. Leahy
Ranking Minority Member
Committee on the Judiciary
United States Senate

The Honorable F. James Sensenbrenner, Jr.
Chairman
The Honorable John Conyers, Jr.
Ranking Minority Member
Committee on the Judiciary
House of Representatives

Subject: Immigration Application Fees: Current Fees Are Not Sufficient to
Fund U.S. Citizenship and Immigration Services' Operations

The Homeland Security Act of 2002 (HSA)1 established the Bureau of
Citizenship and Immigration Services (CIS)2 within the Department of
Homeland Security (DHS). CIS is responsible for several functions
transferred from the former Immigration Services Division of the
Immigration and Naturalization Service (INS) under the Department of
Justice. CIS's functions include adjudicating and processing applications
for U.S. citizenship and naturalization, administering work authorizations
and other petitions, and providing services for new residents and
citizens. CIS collects fees from applicants to process the various
immigrationrelated applications and petitions. CIS also receives
appropriated funds to pay for administrative and overhead costs such as
records management and backlog reduction.3 HSA requires that we report on
whether CIS is likely to derive sufficient funds from fees to carry out
its functions in the absence of appropriated funds.4

1Pub. L. No. 107-296, S: 451, 116 Stat. 2195.

2The bureau is now referred to as the United States Citizenship and
Immigration Services (CIS).

3A backlog exists when the processing time for a newly filed application
exceeds the processing target time, which is 6 months or less for every
application.

4Pub. L. No. 107-296, S: 477(d)(3), 116 Stat. 2210.

This report summarizes the information provided during our November 24,
2003, briefing to your staff on this topic. The enclosed briefing slides
highlight the results of our work and the information provided.
Specifically, we determined application fees collected and projected for
funding CIS operations for fiscal years 2001 through 2003 and compared
those totals with identifiable operating costs for those 3 fiscal years as
a basis for determining whether fees collected would likely be sufficient
to fund CIS's operating costs.

Results in Brief	We determined that fees were not sufficient to fully fund
CIS's operations. In part, this has resulted because (1) the current fee
schedule is based on an outdated fee study that did not include all costs
of CIS's operations and (2) costs have increased since that study was
completed due to an additional processing requirement and other actions.

While it is clear fees are insufficient to fully fund CIS's operations,
there is insufficient cost data to determine the full extent of the
shortfall. A fundamental problem is that CIS does not have a system to
track the status of each application as it moves through the process.5
Accordingly, CIS does not have information on the extent to which work on
applications in process remains to be finished. In addition, CIS does not
know the current cost of each step to process each application. The effect
is that CIS knows neither the cost to process new applications nor the
cost to complete pending applications. Further, because DHS is still
determining how administrative and overhead functions will be carried out
and the related costs allocated, CIS does not know what future
administrative and overhead costs will be.

For the 3-year period from fiscal year 2001 through 2003, CIS's reported
operating costs exceeded available fees by almost $460 million, thus
creating the need for appropriated funds. CIS projects that this situation
will remain in fiscal year 2004. Since the beginning of fiscal year 2001,
the number of pending applications increased by more than 2.3 million
(about 59 percent) to about 6.2 million at the end of fiscal year 2003.
This increase occurred despite additional appropriations beginning in
fiscal year 2002 of $80 million annually to address the backlog. In
addition, CIS has not performed an analysis of the steps needed to reduce
processing times to

5According to CIS officials, the deployment of a new system that will
track the status of each application is expected in 2006.

the 6-month average goal established in the President's backlog
initiative. These times increased significantly in fiscal year 2003 to
levels well above the 6-month target established in CIS's March 2002
Backlog Elimination Plan.

Absent actions to increase fees, reduce processing costs and times, or
both, as well as to improve the timeliness and completeness of fee
schedule updates, CIS will continue to need appropriated funds to avoid
even greater increases in the backlog of pending applications. The full
costs of CIS's operations cannot be determined until analyses of the costs
to process incoming and pending applications and administrative and
overhead costs are completed.

                      Recommendations for Executive Action

In order to achieve the goals of the President's backlog initiative, we
recommend that the Secretary of Homeland Security direct the Director of
CIS to perform an analysis of current processing functions to determine
steps needed to reduce the processing time to an average of 6 months or
less.

In order to determine the cost to process new and pending applications, we
recommend that the Secretary of Homeland Security direct the Director of
CIS to

o 	perform a comprehensive fee study to determine the costs to process new
immigration applications and

o  determine the costs to eliminate the backlog of pending applications.

In order for CIS to know the full cost of its operations, we recommend
that the Secretary of Homeland Security direct the Deputy Secretary to
identify which support services and functions, such as shared services,
modernizing and supporting shared databases, shared infrastructure, and
other forms of support, and the cost of those functions should be
transferred or allocated to CIS.

Regarding the timing of fee schedule updates, we recommend that the
Secretary of Homeland Security direct the Director of CIS to identify
options to improve the timeliness for implementing fee updates to help
ensure that all costs are captured.

                       Agency Comments and Our Evaluation

We obtained oral comments on a draft of our briefing slides from DHS and
CIS officials. They generally agreed with our conclusions and
recommendations. However, they stated that our recommendations did not
address the fact that fee schedules do not go into effect promptly, thus
delaying implementation of fee levels that would help ensure that the full
costs of adjudications are covered. The timing of fee schedule updates is
a key issue, and we have added a recommendation to address this issue. DHS
and CIS officials also provided technical comments, which we incorporated
as appropriate.

                             Scope and Methodology

We analyzed actual and estimated/projected application fees and
appropriations that fund CIS operations and the related costs for fiscal
years 2001 through 2003. To determine if fees collected were sufficient to
fund CIS's operations, we (1) interviewed CIS staff and officials and
external auditors, (2) reviewed biennial fee review reports, (3) reviewed
audit reports, (4) reviewed financial records and budget-related
documents, (5) analyzed various other documents provided by CIS containing
information on numbers of applications and application fees, and (6)
analyzed data on fee collections and appropriated funds and compared these
to our analysis of the related costs.

We assessed the reliability and completeness of the CIS-provided data for
fiscal years 2001 and 2002 by reconciling the funds received and costs
incurred to the audited financial statements. For fiscal year 2003 data,
the audit was not yet complete. We did not otherwise verify the data. We
did not assess the effectiveness of CIS's application processing functions
or verify the accuracy of application totals.

We requested comments on a draft of the enclosed briefing slides from DHS
and CIS officials. We received oral comments from DHS and CIS that were
incorporated into the briefing slides and this report as appropriate. We
conducted our work from March through November 2003 in accordance with
generally accepted government auditing standards.

We are sending copies of this report to congressional committees and
subcommittees responsible for issues related to immigration services and
the Department of Homeland Security, the Secretary of Homeland Security,
the Deputy Secretary of the Department of Homeland Security, and the
Director of CIS. This report is also available at no charge on GAO's home

page at http://www.gao.gov. If you have any questions about this report,
please contact me at (202) 512-9508 or Steven Haughton, Assistant
Director, at (202) 512-5999. You may also reach us by e-mail at
[email protected] or [email protected]. Additional contributors to this
assignment were Diane N. Morris and Estelle M. Tsay.

Linda M. Calbom
Director
Financial Management and Assurance

Enclosure

Enclosure

IMMIGRATION APPLICATION FEES

Current Fees Are Not Sufficient to Fund U.S. Citizenship and Immigration
Services' Operations

Briefing to Staff of the Senate and House Committees on the Judiciary

November 24, 2003

                                       1

o  Introduction and Objectives

o  Results in Brief

o  Background

o  Sufficiency of Fees

o  Conclusions

o  Recommendations

o  Agency Comments and Our Evaluation

o  Scope and Methodology

                                       2

o 	The Homeland Security Act of 2002 (HSA)1 established the Bureau of
Citizenship and Immigration Services (BCIS) within the Department of
Homeland Security (DHS) to carry out several functions transferred to BCIS
from the former Immigration Services Division of the Immigration and
Naturalization Service (INS) under the Department of Justice (DOJ). The
transfer became effective March 1, 2003.

o  BCIS is now referred to as the United States Citizenship and

Immigration Services (CIS).

(Note: Throughout these slides, we use "CIS" to refer to both the new U.S.
CIS and the former Immigration Services Division of INS.)

1Pub. L. No. 107-296, S: 451, 116 Stat. 2195. 3

o 	CIS's functions include adjudicating and processing applications for
U.S. citizenship and naturalization, administering work authorizations and
other petitions, and providing services for new residents and citizens.

o 	CIS collects fees from applicants to process the various
immigration-related applications and petitions.

o 	CIS also receives appropriated funds that are used for administrative
and overhead costs (including records management) and backlog reduction.2

2A backlog exists when the processing time for a newly filed application
exceeds the processing target 4 time, which is 6 months or less for every
application.

o 	HSA requires that we report on whether CIS is likely to derive
sufficient funds from fees to carry out its functions in the absence of
appropriated funds.3

o 	Consequently, the objective of our review was to determine whether fees
collected are sufficient to fund CIS's operating costs.

o  To do this, we

o 	determined amounts of application fees projected and collected for
funding CIS operations for fiscal years 2001 through 2003, and

o 	identified CIS's operating costs for fiscal years 2001 through 2003.

             3Pub. L. No. 107-296, S: 477(d)(3), 116 Stat. 2210. 5

o 	Although all costs of CIS's operations were not identifiable, on the
basis of our review of the current fees, we determined that fees were not
sufficient to fully fund CIS's operations. In part, this has resulted
because

o 	the current fee schedule is based on an outdated fee study that did not
include all costs of CIS's operations and

o 	costs have increased due to an additional processing requirement and
other actions that are not covered bythe current fees.

                                       6

o  Costs are not identifiable in part because

o 	CIS cannot accurately track the status of each application as it moves
through the process,4 and

o 	remaining steps needed to complete the processing of pending
applications and the related costs are not known.

o 	As shown in table 1, for the 3-year period from fiscal year 2001 to
2003, CIS's operating costs exceeded available fees, thus creating the
need for appropriated funds. CIS projects that this situation will remain
in fiscal year 2004.

4According to CIS officials, a new system that will track application
status is expected to be 7 deployed in 2006.

     Table 1: Funds and Reported Costs for Fiscal Years 2001-2003  
                  (Dollars in thousands)                   3-year totals
    Carryforward fees a available - beginning FY 2001              107,673$  
                      Fees collected                               3,432,871 
            Fees available for CIS operations                      3,540,544 
                     Processing costs                  3,557,702$  
            Administrative and overhead costs              440,900 
                  Total operating costs                            3,998,602 
                Costs not covered by fees                          (458,058) 
                S&E appropriation -backlog             160,000$    
           S&E appropriation -admin & overhead             440,900 
                 Total S&E appropriation                             600,900 
         Carryforward fees available -end FY 2003                  142,842$  

Source: GAO analysis of CIS data.

aCarryforward fees represent fees collected but not used in the current
year. These unused fees are carried forward to the next year to continue
processing incomplete applications.

8

o 	During the same period, the number of pending applications increased by
more than 2.3 million (about 59 percent) since the beginning of fiscal
year 2001 to a total of about 6.2 million at the end of fiscal year 2003
despite additional annual appropriations beginning in fiscal year 2002 of
$80 million to address the backlog.

o 	In addition, CIS has not performed an analysis of the steps needed to
reduce processing times down to the 6-month average goal established in
the President's backlog initiative. These times have increased
significantly in fiscal year 2003.

                                       9

o 	Because DHS is still in the process of determining how administrative
and overhead functions will be carried out and the related costs
allocated, CIS does not know what future administrative and overhead costs
will be.

o 	We are making recommendations for CIS to determine (1) the steps needed
and related costs to process current and pending applications, (2) the
administrative and overhead functions and related costs that need to be
funded, and (3) a plan to improve timeliness of fee schedule updates.

o 	DHS officials generally agreed with our conclusions and
recommendations, but stated that our recommendations did not address the
fact that because fee schedules are not updated promptly, full costs are
not captured. We added a recommendation to address this issue.

                                       10

o 	In October 1988, Congress authorized INS to collect fees to recover the
cost of providing immigration adjudication and naturalization services and
authorized and established in the Treasury the Immigration Examinations
Fee Account (IEFA).5

o 	CIS collects such fees from applicants for over 50 different
application types and deposits the fees into the IEFA. The fees range from
$15 to $580.

o 	Unused fees are carried forward to the next year and are available to
continue processing incomplete applications.

5Pub. L. No. 100-459, S: 209(a), 102 Stat. 2203. 11

o 	CIS also collected and deposited fees into the H-1B Non-Immigrant
Petitioner Fee Account (H-1B account).

o 	The H-1B account was established in October 19986 to fund a number of
activities administered by the Department of Labor, National Science
Foundation, and DOJ.

o 	Employers were also required to pay a fee of $500 for each H-1B worker
sponsored,7 and the fee was applied to filings made before October 1,
2001.

6Pub. L. No. 105-277, Div. C, Tit. IV, S: 414(b), 112 Stat. 2681-652.

7Pub. L. No. 105-277, Div. C, Tit. IV, S: 414(a), 112 Stat. 2681-651. CIS
received 1.5 percent of the $500 which was in addition to the base filing
fee of $130 that was deposited to the IEFA.

                                       12

o 	In October 2000, the additional fee was increased to $1,000 and
extended for filings made before October 1, 2003.8

o 	Therefore, the additional fee was no longer collected. Any unused
additional H-1B fees will also be carried forward and used to process
backlogged applications.

o 	In 1990,9 INS was authorized to set fees at a level to fund the cost of
asylum processing and other services provided to immigrants at no charge.
As a result, INS added a surcharge to the immigration application fees to
recover these additional costs.

8Pub. L. No. 106-311, S: 1, 114 Stat. 1247. CIS received 4 percent of the
$1,000 fee. 13 9Pub. L. No. 101-515, S: 210(d), 104 Stat. 2121.

o 	In November 2002, HSA repealed the authority to include the cost of
asylum processing and other services provided to immigrants at no charge,
referred to as the surcharge.10

o 	As a result, in January 2003, the fees were adjusted by discontinuing
the surcharge for asylum and refugee services.

o 	In February 2003,11 CIS was reauthorized to collect such fees and the
surcharge was reinstated.

o 	According to a CIS official, prior to the establishment of DHS, INS
received an appropriation in each fiscal year that it used for
administrative and overhead costs.

10Pub. L. No. 107-296, S: 457, 116 Stat. 2201. 14 11Pub. L. No. 108-7, S:
107, Div. L. S: 107, 117 Stat. 532.

o 	A portion of the fiscal year 2003 appropriation was allocated by INS to
its former Immigration Services Division (now CIS). For fiscal year 2004,
CIS received a separate appropriation.

o 	INS/CIS used $80 million in appropriated funds annually in fiscal years
2002 and 2003 for the President's backlog initiative, a 5-year effort with
a goal to achieve a 6-month average processing time per application. CIS
will continue to use $80 million of its appropriations through fiscal year
2006 for the President's backlog initiative.

o 	The President's backlog initiative calls for using $500 million over 5
years. Each $100 million installment is comprised of $80 million in
appropriated funds and $20 million in fee collections.

                                       15

o 	In response to the President's initiative, CIS established a Backlog
Elimination Plan that was issued in March 2002. The plan is currently
being revised.

o 	The Chief Financial Officers Act of 1990 requires that DOJ perform
biennial fee reviews. As a result, INS conducted reviews of its
examination fees to determine the full cost of providing immigration
adjudication and naturalization services.

o 	INS's last biennial fee review was completed in fiscal year 1999.
Because of the lengthy process to publish a notice of proposed fee
increases, receive and review comments, and publish a final rule, the fees
did not go into effect until February 2002, as shown in figure 1.

                                       16

o 	CIS attempted to increase application fees in fiscal year 2003 to cover
certain additional costs related to expanded security checks.

o 	The request was submitted to DOJ management in November 2002. According
to a CIS official, the request was not acted upon because of the upcoming
transition of CIS from DOJ to DHS and was returned to CIS in March 2003.

o 	CIS officials told us they recently revised this fee increase proposal,
which was approved by DHS and submitted to the Office of Management and
Budget (OMB) in October 2003.

                                       17

o Figure 1 shows the timing of the events that have affected fees. Figure
1: Fee History Timeline

12Except for the fee for the Application for Naturalization, which became
effective in January 1999.

                                       18

o 	Although all costs of CIS's operations were not identifiable, on the
basis of our review of the current fees, we determined that fees were not
sufficient to fully fund CIS's operations. In part, this has resulted
because

o 	the current fee schedule is based on an outdated fee study that did not
include all costs of CIS's operations and

o 	costs have increased due to an additional processing requirement and
other actions that are not covered bythe current fees.

o 	Costs are not identifiable in part because of CIS's inability to
accurately track applications and the remaining steps needed to complete
processing the backlog of pending applications. The related costs are not
known.

                                       19

o 	These issues are discussed in more detail later in these slides.

o 	Although reported processing costs exceeded available fees for the
3-year period ending in fiscal year 2003, CIS had sufficient funds to
cover these costs because it

o 	received $80 million each year in appropriated funds to assist with the
backlog (see table 2) and

o  reduced planned spending in fiscal year 2003.

                                       20

o 	For the 3-year period, CIS received more than $4 billion to complete
the processing of 20.1 million applications, but the number of pending
applications still increased by 2.3 million. However, the remaining costs
necessary to complete the backlog of pending applications is not known and
therefore has not been included in the reported costs.

o 	In addition, as shown in table 2, CIS was provided $441 million in
appropriated funds during fiscal years 2001 through 2003 that it used to
cover administrative and overhead costs.

                                       21

o 	Carryforward fees to process pending applications increased by only $35
million (33 percent) to a total of almost $143 million at the same time
the number of pending applications increased by more than 2.3 million (59
percent) to a total of 6.2 million.

o 	CIS does not know the remaining costs to complete the processing of
pending applications because

o 	it does not know the current full cost to process a new application
received or to complete the processing of a pending application, and

                                       23

o 	it does not have a real-time system to accurately trackindividual
applications as they move through each stageof the process.13

o 	CIS officials told us they (1) plan to start a new fee study next year
and (2) are working on a system to track where an individual application
stands in the approval process.

o 	CIS officials told us that in August 2003, DHS approved CIS's proposal
for a system to track application status, which is expected to be deployed
in 2006.

13INS's financial statement auditors reported this issue as a material
weakness in its Reports on Internal Control for fiscal years 2000 through
2002.

                                       24

Fees Are Outdated

o 	The current fee schedule became effective in February 2002 and is based
on the fee review completed in fiscal year 1997.

o 	The February 2002 fee increase adjusted the existing fees by

o 	increasing the fees for inflation (based on OMB inflationary factors)
and

o 	adding a $5 charge to each application fee for information technology
and quality assurance costs.

                                       25

o 	However, at a minimum, the fee increase did not include the following
items, which were identified in the fee review completed in fiscal year
1999. CIS estimated the cost of these items to be about $101 million.

o  New Integrated Card Production System

o  New National Customer Service Center

o  National Records Center

o  Hiring of term/temporary employees

o  Hiring of additional adjudication officers

o  Expansion of Service Center operations

                                       26

o 	According to CIS officials, the above items were not included in the
approved fee increase that became effective in fiscal year 2002 because it
was determined that the resulting fee increases would have been excessive.
For example, the Application for Naturalization fee would have increased
by more than 50 percent from $225 to $345.

o 	As a result, the February 2002 fee increase did not fully cover
processing costs at that time.

                                       27

New Requirements and Other Actions Increased Costs

o 	CIS officials told us costs were affected as a result of new
departmental requirements to address problems arising from the September
11, 2001 terrorist attacks. The main requirement expanded Interagency
Border Inspection System (IBIS) security checks, which are now mandatory
for all new and pending applications.

o 	CIS officials told us costs were also affected as a result of other
actions including:

o 	repeal of surcharge for asylum and refugee services ($25 million in
fiscal year 2003),

                                       28

o 	settlement of class action lawsuit relating to theLegalization Program
of 1986 ($5.3 million in fiscal year 2003 ),

o 	settlement of class action lawsuit relating to a union grievance
concerning payment of overtime toadjudication officers ($2.2 million in
fiscal year 2003 ),

o 	A-76 outsourcing study to determine which government services to
contract out ($5 million budgeted for fiscalyear 2004, $1 million for
fiscal year 2005), and

o 	establishment of a new Office of Citizenship ($4.5 million budgeted for
fiscal year 2004).

o 	CIS had estimated that the cost of 555 additional staff to perform the
expanded IBIS checks for fiscal years 2003 and 2004 would total about $69
million.

                                       29

o 	CIS unsuccessfully attempted to increase application fees by $10 to
cover the costs of these IBIS checks. CIS submitted a proposal to increase
fees to DOJ management in November 2002. According to CIS officials, the
request was not acted upon before the upcoming transition of CIS from DOJ
to DHS. DOJ returned the request to CIS in March 2003.

o 	According to CIS officials, CIS revised this proposal to better capture
efficiencies in the IBIS check process, actual costs incurred to date, and
projected future costs. The revised proposal was approved by DHS and
submitted to OMB in October 2003.

                                       30

Pending Applications Continue to Grow

o 	The number of pending applications at year end increased about 59
percent from about 3.9 million in fiscal year 2000 to about 6.2 million in
fiscal year 2003.

o 	During the same 3-year period, application processing times increased
significantly (see table 3). As a result, the number of applications
completed decreased from more than 7 million for both fiscal years 2001
and 2002 to 6.2 million for fiscal year 2003.

                                       31

o 	The increases in pending applications occurred despite the backlog
initiative efforts and the additional appropriated funds provided to carry
out the efforts. As shown in table 2, about $143 million in carryforward
fees remained to process applications as of September 30, 2003.

o 	The goal of the backlog initiative is to reduce processing time to an
average of 6 months or less per application and eliminate the backlog.

                                       32

o 	In its March 2002 Backlog Elimination Plan, CIS estimated that it would
need to hire over 1,500 additional staff to meet the backlog reduction
milestones and achieve the processing time goals by the end of fiscal year
2003. According to CIS officials, the success of this plan was contingent
upon, among other things, implementation of a new fee schedule that would
fully recoup their processing costs, which did not occur.

o 	In addition, CIS's plan did not include the staff needed to perform the
expanded IBIS security checks.

                                       33

o 	Further, CIS has not established the time it should take to perform
each step to complete the processing of applications, nor has it
identified the remaining steps needed to complete processing the pending
applications and the related costs.

o 	Table 3 shows the average reported processing times for application
types with the most volume and compares with the average goals set out in
CIS's March 2002 plan. The plan included goals to be achieved by the end
of fiscal years 2002 and 2003.

                                       34

               Table 3: Average Reported Processing Time (Months)

                                               Projected (as of
               Application    FY 2002  FY 2003 10/30/03)
                  number      Expected goals     FY   FY     FY     
                              in backlog plan   2001  2002   2003   
                  I-485             10       6     14     13     33 
                  I-130             10       6     31     25     51 
                  I-140              4       3      7      5     10 
                  I-129              2       1      2      2      3 
                  I-539              5       1      9      4      7 
                   I-90              3       1      4      9     19 
                  I-131              2       1      3      3      7 
                  I-765              2       1      2      3      3 
                  I-751              9       6     17      9     45 
                  I-821              7       6     63     20     10 
                  N-400              8       6      9     10     14 
                  N-600              9       6     10      6      8 
                  N-643              9       6      5     10      5 

Source: CIS.

                                       35

o 	As shown in table 3, average application processing times have
significantly increased in fiscal year 2003, and are significantly higher
than the goals set out in the March 2002 plan.

o 	CIS told us it is revising its March 2002 Backlog Elimination Plan to
include resources needed to eliminate the backlog and achieve an average
processing time of 6 months per application. HSA requires this revised
plan to be completed by November 26, 2003.

                                       36

Future Administrative and Overhead Costs Are Uncertain

o 	Because DHS is still in the process of determining how the
administrative and overhead functions will be carried out and the related
costs allocated, CIS does not know what its future administrative and
overhead costs will be.

o 	CIS officials told us that since CIS was established as a separate
bureau in March 2003, DHS has been in the process of determining which
support services and functions, such as shared services, modernizing and
supporting shared databases, shared infrastructure, and other forms of
support, should be transferred or allocated to CIS.

                                       37

o 	Until this process is completed, CIS cannot determine the costs of the
administrative and overhead functions that will need to be funded.

                                       38

o 	Absent actions to increase fees and/or reduce processing costs and
times, as well as to improve the timeliness and completeness of fee
schedule updates, CIS will continue to need appropriated funds to avoid
even greater increases in the backlog of pending applications.

o 	However, the full costs of CIS's operations that need to be funded
cannot be determined until analyses of the costs to process incoming and
pending applications and administrative and overhead costs are completed.

                                       39

o 	In order to achieve the goals of the President's backlog initiative, we
recommend that the Secretary of Homeland Security direct the Director of
CIS to perform an analysis of current processing functions to determine
steps needed to reduce the processing time to an average of 6 months or
less.

o 	In order to determine the cost to process new and pending applications,
we recommend that the Secretary of Homeland Security direct the Director
of CIS to

o 	perform a comprehensive fee study to determine the costs to process new
immigration applications and

o 	determine the costs to eliminate the backlog of pending applications.

                                       40

o 	In order for CIS to know the full cost of its operations, we recommend
that the Secretary of Homeland Security direct the Deputy Secretary to
identify which support services and functions, such as shared services,
modernizing and supporting shared databases, shared infrastructure, and
other forms of support, and the cost of those functions should be
transferred or allocated to CIS.

o 	Regarding the timing of fee schedule updates, we recommend that the
Secretary of Homeland Security direct the Director of CIS to identify
options to improve the timeliness for implementing fee updates to help
ensure that all costs are captured.

                                       41

o 	DHS and CIS officials provided oral comments on a draft of this report.
They generally agreed with our conclusions and recommendations.

o 	However, they stated that our recommendations do not address the fact
that fee schedules are not updated promptly to capture the full costs of
adjudications.

o 	The timing of fee schedule updates is a key issue, and we have added a
recommendation to address this issue.

o 	DHS and CIS officials also provided technical comments, which we
incorporated as appropriate.

                                       42

Scope

o 	We analyzed actual and estimated/projected application fees and
appropriations that fund CIS operations and the related costs for fiscal
years 2001 through 2003.

Methodology

o 	To determine if fees collected are sufficient to fund CIS's operations,
we

o  interviewed CIS staff and officials and external auditors,

o  reviewed biennial fee review reports,

o  reviewed audit reports,

o  reviewed financial records, including trial balances,

                                       43

o 	reviewed CIS budget-related documents, including the Reports on Budget
Execution (SF-133),

o 	analyzed various other documents provided by CIS containing information
on numbers of applications and application fees, and

o 	analyzed data on fee collections and appropriated funds, and compared
these to our analysis of the related costs.

o 	We assessed the reliability and completeness of the CISprovided
financial data for fiscal years 2001 and 2002 by reconciling the funds
received and costs incurred to the audited financial statements for which
clean opinions were issued for fiscal years 2001 and 2002.

                                       44

o 	For fiscal year 2003 data, the audit was not yet complete. We did not
otherwise verify the data.

o 	We reviewed the methodology, but did not verify CIS's estimate of the
costs of expanded IBIS security checks.

o 	We did not assess the effectiveness of CIS's application processing
functions nor verify the accuracy of application totals.

                                       45

o 	We requested comments on a draft of these briefing slides from DHS and
CIS officials. We received oral comments from DHS and CIS that were
incorporated into these briefing slides as appropriate.

o 	We conducted our work from March through November 2003 in accordance
with generally accepted government auditing standards.

                                       46

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