oversight

Illegal Aliens: Extent of Welfare Benefits Received on Behalf of U.S. Citizen Children

Published by the Government Accountability Office on 1997-11-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to Congressional Committees




November 1997
                 ILLEGAL ALIENS
                 Extent of Welfare
                 Benefits Received on
                 Behalf of U.S. Citizen
                 Children




GAO/HEHS-98-30
      United States
GAO   General Accounting Office
      Washington, D.C. 20548




      B-275806

      November 19, 1997

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

      The Honorable Henry J. Hyde
      Chairman
      The Honorable John Conyers, Jr.
      Ranking Minority Member
      Committee on the Judiciary
      House of Representatives

      In recent years, public concern about illegal immigration has often focused
      on the costs associated with illegal aliens’ use of public benefits and the
      extent to which these benefits serve as an incentive for immigration.1 In
      1996, the Congress took steps to address these concerns through welfare
      and immigration reform legislation. The Personal Responsibility and Work
      Opportunity Reconciliation Act of 1996 (P.L. 104-193) further restricted the
      limited access of illegal aliens to federal public benefits and limited their
      access to state and local public benefits. In addition, the legislation
      established requirements for states and selected federal agencies to report
      information to the Immigration and Naturalization Service (INS) on any
      individual they know is unlawfully in the United States. In the Illegal
      Immigration Reform and Immigrant Responsibility Act of 1996 (P.L.
      104-208), the Congress addressed several enforcement issues, including
      the need for improved border control and better ways of deterring the use
      of fraudulent documents.

      The act also requires us to report on the extent to which means-tested
      public benefits are provided to illegal aliens for the use of eligible
      individuals. This is most likely to occur when an illegal alien parent not
      eligible for aid receives benefits on behalf of his or her U.S. citizen child. A
      child born in the United States to an illegal alien obtains U.S. citizenship at
      birth regardless of the parent’s immigration status and, as any other citizen
      in need, may receive welfare and other benefits. When such a child
      receives assistance, the aid also helps support the child’s family, raising

      1
       An illegal alien is a person who is in the United States in violation of U.S. immigration laws. Such a
      person may have entered illegally—that is, without Immigration and Naturalization Service inspection
      (undocumented) or using fraudulent documentation—or legally under a nonimmigrant visa or other
      temporary condition and subsequently violated the terms of the visa or other terms of entry.



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concerns about the use of public assistance by those illegally in the United
States. This report responds to the mandate for information on the extent
to which this occurs and, as agreed with your offices, discusses (1) to
what extent and in what locations selected federal means-tested benefits
are being provided to illegal aliens for the use of their U.S. citizen children
and (2) the nature and extent of fraud or misrepresentation detected in
connection with these benefits.

Of the many federal means-tested programs, we focused on the four
largest programs—Aid to Families With Dependent Children (AFDC),2 the
Food Stamp program, Supplemental Security Income (SSI), and
Department of Housing and Urban Development (HUD) rental housing
assistance3—likely to provide benefits to U.S. citizen children through an
ineligible parent rather than providing benefits or services directly to a
recipient—as is the case with Medicaid. We conducted fieldwork in
California, New York, and Texas, which our preliminary work showed
were the principal locations where these benefits were being provided. In
addition, we used the most recent AFDC and Food Stamp administrative
data available to develop national estimates of the number of households
with an illegal alien parent receiving benefits for U.S. citizen children.4 We
also identified some cases of illegal aliens receiving SSI benefits for their
U.S. citizen children using data from the Social Security Administration
(SSA). To determine the extent of fraud or misrepresentation detected, we
spoke with officials at the national level for each program and in the three
states and reviewed available studies.5 Appendix I provides more details
on our methodology.


2
 Welfare reform legislation ended the AFDC program for all states as of July 1997 and instead provides
states with funds through Temporary Assistance for Needy Families (TANF) block grants.
3
 HUD housing programs generally do not provide payments directly to recipients but do subsidize the
rent a household pays.
4
 To identify all households that potentially include an illegal alien parent of a U.S. citizen child, our
estimate includes households headed by (1) one illegal alien parent, (2) an illegal alien parent with an
illegal alien spouse, or (3) a parent who is not an illegal alien but who has an illegal alien spouse.
5
 For the purposes of this study, we use the phrase “misrepresentation or fraud” to discuss fraud as
described in three studies of the AFDC caseload conducted in three California counties. These studies
consider fraud to exist when previously unreported information that should have been used to
evaluate eligibility is discovered during the investigation. More specifically, fraud is said to occur when
an individual willfully misrepresents information even though there is no immediate impact on the
benefit amount. Further, a finding of fraud occurs when a recipient’s willful misrepresentation results
in an overpayment of aid or total ineligibility. Last, fraud is found to exist if a household voluntarily
withdraws from aid or aid is terminated due to failure to cooperate with the study and it is believed
reasonable to conclude that fraud existed. We recognize, however, as do the California studies, that
the legal definition of fraud requires an offender to be successfully prosecuted and convicted. Only a
small number of cases are prosecuted, in part because it is a time-consuming and labor-intensive
process.



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                   In fiscal year 1995, about $1.1 billion in AFDC and Food Stamp benefits
Results in Brief   were provided to households with an illegal alien parent for the use of his
                   or her citizen child. This amount accounted for about 3 percent of AFDC
                   and 2 percent of Food Stamp benefit costs. A vast majority of the
                   households receiving these benefits resided in a few states—85 percent of
                   the AFDC households were in California, New York, Texas, and Arizona; 81
                   percent of Food Stamp households were in California, Texas, and Arizona.
                   California households alone accounted for $720 million of the combined
                   AFDC and Food Stamp benefit costs, with such households representing
                   about 10 percent of the state’s AFDC and Food Stamp caseloads. Although
                   illegal aliens also received SSI and HUD housing assistance for their citizen
                   children, data to develop estimates for these two programs were not
                   available.

                   Comprehensive national statistics on any misrepresentation or fraud
                   perpetrated by illegal aliens receiving benefits on behalf of their citizen
                   children are not available. However, a few California counties’ studies of
                   AFDC households indicate that the rates and types of potential
                   misrepresentation or fraud are similar both for households headed by
                   illegal aliens and for the general welfare population. In these studies, one
                   of the most commonly cited types of misrepresentation or fraud was the
                   underreporting of income. Income is a key factor in determining program
                   eligibility and benefit amounts and, when underreported, can result in
                   overpayment of benefits. The states we visited had procedures in place to
                   verify income; however, officials said that verifying individuals’ income
                   from earnings obtained through the underground economy was very
                   difficult—for both illegal aliens and citizens—in part because these
                   earnings are not documented or reported to state or federal databases
                   used to verify employment and earnings.


                   An estimated 5 million illegal aliens resided in the United States in 1996,
Background         according to INS. Official estimates, however, are not available on the
                   number of children born to illegal aliens in the United States.6 Illegal alien
                   parents may apply on behalf of their children for those federal welfare
                   benefits to which their children are entitled as citizens. A household
                   composed of an illegal alien parent and a citizen child gains access to
                   federal welfare benefits by virtue of the child’s eligibility. The AFDC, Food
                   Stamp, and SSI programs generally do not provide direct payment of

                   6
                    We recently reported that in 1995, undocumented alien mothers received Medicaid benefits for 78,386
                   births in California and 24,549 births in Texas. These births represented 14 and 8 percent, respectively,
                   of all births in these states in that year. See Undocumented Aliens: Medicaid-Funded Births in
                   California and Texas (GAO/HEHS-97-124R, May 30, 1997).



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benefits to minors—children under 18—requiring that their benefits be
paid through an authorized representative payee, typically the custodial
parent. In such cases, the citizenship status of the parent is not a
consideration in deciding who the payee should be. The rationale is that
the parent of an eligible child is in the best position to make decisions on
how benefits should be spent on behalf of his or her child. For housing
assistance, HUD provides funds to a public housing authority or owner of a
housing unit to subsidize the rent for an eligible household. Under HUD
rental programs, a household composed of an illegal alien and a citizen
would be eligible for assistance if the citizen met eligibility criteria and
assistance was available.7

Although illegal alien parents are not eligible for assistance, their income
and assets are taken into account when determining the eligibility of and
benefit amounts for their citizen children. Table 1 shows the average
monthly benefit amounts under the various programs. Recipients often
receive assistance from more than one program. In 1995, about 87 percent
of AFDC households also received Food Stamp benefits and 31 percent
received housing assistance.8 No individual may receive both AFDC and SSI
benefits.




7
 Housing benefits are limited by budgetary constraints to about one-fourth of those who are eligible.
8
 Almost all AFDC recipients—97 percent—also received Medicaid. In fiscal year 1994, the average
annual Medicaid expenditure for a child on AFDC was $1,039. Under welfare reform legislation,
individuals who meet the eligibility requirements that existed as of July 16, 1996, of their states’ now
terminated AFDC programs will remain eligible for Medicaid.



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Table 1: Major Federal Welfare
Programs With Benefit Amounts for                                                                                       National average
One Person or Household                                                                                                 monthly benefit
                                    Program                      Benefit                                                amount
                                    AFDC                         Cash assistance to needy families with                 $290 for households
                                                                 dependent children who meet state                      with one recipient
                                                                 eligibility criteria                                   childa
                                    Food Stamp                   Food assistance for needy individuals who $71 per persona
                                                                 meet federal eligibility criteria
                                    SSI                          Cash assistance to needy blind, disabled,              $453 per disabled
                                                                 or aged individuals who meet federal                   childb
                                                                 eligibility criteria
                                    HUD rental housing           Public housing, tenant-based certificates              $385 per householdc
                                    assistance                   or vouchers, or project-based rental
                                                                 subsidies for private-market housing
                                    a
                                     AFDC and Food Stamp data were obtained from the National Integrated Quality Control System
                                    for fiscal year 1995.
                                    b
                                     The benefit amount was for September 1995, as reported in SSA administrative data, and
                                    includes both federal and state assistance and may include retroactive payments.
                                    c
                                     The HUD average benefit is for tenant-based housing, not public housing, and covers the
                                    30-month period ending June 1997. See A Picture of Subsidized Households in 1997: Description
                                    of a Data File (Washington, D.C.: HUD, Oct. 1997). The amount of assistance for a household
                                    comprising an illegal alien parent with an eligible child would be prorated on the basis of the
                                    number of eligible people in the household. In this case, the household would receive one-half as
                                    much rental assistance as it would if both parent and child were eligible.



                                    The 1996 welfare reform legislation made sweeping changes to welfare
                                    programs for needy families, but it did not directly affect the eligibility of
                                    illegal aliens’ citizen children. Although TANF block grants, which replaced
                                    AFDC, will allow states more flexibility in structuring their programs,
                                    federal and state officials stated that U.S. citizen children of illegal aliens
                                    will remain eligible for assistance. The provision in the welfare reform law
                                    that requires reporting of illegal aliens to INS, however, may have an impact
                                    in the longer term. Prior to the legislation, AFDC, SSI, and housing assistance
                                    programs generally were not required to report illegal aliens to INS.9 The
                                    new provision requires that states operating TANF programs, the
                                    Commissioner of SSA, and the Secretary of HUD periodically provide
                                    information to INS on any individual they know is unlawfully in the United
                                    States. Federal officials stated that an interagency workgroup is presently
                                    determining what level of evidence will be required to establish that
                                    someone is known to be unlawfully present in the United States, as well as
                                    reporting procedures. No time frame, however, was available for when

                                    9
                                     Food Stamp program regulations regarding reporting requirements have not changed. They require
                                    that illegal aliens be reported to INS. In the states we visited, this reporting focused on illegal aliens
                                    issued a final order of deportation by INS.



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                      agencies and states are to begin reporting known illegal aliens to INS. If the
                      final regulations for this reporting affect illegal aliens acting as payees for
                      their U.S. citizen children, some illegal aliens could be discouraged from
                      seeking benefits for their eligible children. Also, the Congress is
                      considering legislation that would deny citizenship to children born in the
                      United States to a parent who is not a citizen or lawful permanent resident.


                      In fiscal year 1995, an estimated $1.13 billion—$700 million under the AFDC
An Estimated $1.1     program and $430 million in Food Stamp benefits—was provided to
Billion Provided in   households in which either the head of household or his or her spouse was
AFDC and Food         an illegal alien.10 These benefits were provided to illegal alien parents for
                      the well-being of their U.S. citizen children. The payments represent about
Stamp Benefits        3 percent of total AFDC benefit costs and about 2 percent of total Food
                      Stamp benefit costs.11 Approximately 153,000 AFDC households—with
                      300,000 citizen children—and 224,000 Food Stamp households—with
                      428,000 citizen children—had an illegal alien as the head of household or
                      spouse of the head of household. In many cases, these estimates reflect
                      the same households and citizen children, since 94 percent of the AFDC
                      households with an illegal alien parent also received Food Stamp benefits
                      and 65 percent of the Food Stamp households with an illegal alien parent
                      also received AFDC. A summary of estimated benefits provided to these
                      households in fiscal year 1995, by program, is shown in table 2.




                      10
                        We previously reported that for fiscal year 1992 about $479 million annually—or 2 percent of federal,
                      state, and local AFDC benefits—was provided to the citizen children of illegal aliens. See Benefits for
                      Illegal Aliens: Some Program Costs Increasing, But Total Costs Unknown (GAO/T-HRD-93-33, Sept. 29,
                      1993).
                      11
                       AFDC benefit costs were shared between the federal government and the states, with the federal
                      share being about 55 percent nationally. Food Stamp benefit costs are fully federally funded.



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Table 2: Estimated Number of AFDC and Food Stamp Households Headed by Illegal Aliens and Benefits Provided to Citizen
Children, Fiscal Year 1995
                                                  Estimated                            Total estimated
                                                households                        benefits provided to
                           Total households headed by illegal   Percentage of households headed by         Percentage of
Program                nationwide (millions)         aliensa total households illegal aliensa (millions)    total benefits
AFDC                                  4.9                153,000b                       3                         $700                      3
                                                                  b
Food Stamp                           10.9                224,000                        2                         $430                      2
                                         a
                                            See appendix I for the sampling errors associated with these estimates.
                                         b
                                          Since households are likely to participate in both programs, the estimated number of households
                                         should not be totaled.

                                         Source: GAO estimate based on data obtained from the National Integrated Quality Control
                                         System.



                                         About 77 percent of AFDC and 78 percent of Food Stamp households with
                                         an illegal alien parent had one or two citizen children; the remaining
                                         households had three or more citizen children receiving benefits. In
                                         addition, while most of the illegal alien parent households had only citizen
                                         children in the households, a significant portion—23 percent of AFDC and
                                         29 percent of Food Stamp recipients—had both eligible citizen children
                                         and noneligible illegal alien children.


Data Not Available to                    SSA does not have any comprehensive data on the number of U.S. citizen
Accurately Estimate SSI                  children of illegal aliens receiving SSI benefits. Based on the limited data
Benefits or HUD Rental                   available, we estimated that as of December 1996, at least 3,450 disabled
                                         U.S. citizen children of illegal aliens received benefits at an annualized
Housing Assistance                       federal benefit cost of about $17.6 million. SSA officials explained that
                                         readily available data cannot be used to accurately estimate the total
                                         number of cases in which an illegal alien parent received benefits on
                                         behalf of citizen children because the citizenship status of payees is not
                                         uniformly identified in SSA’s automated systems.

                                         Similarly, HUD does not have any data that would allow for an estimate of
                                         the number of households in which illegal aliens are receiving rental
                                         housing assistance for the benefit of U.S. citizen children. Before
                                         June 1995, citizenship status was not considered when determining the
                                         eligibility of individuals for HUD’s various rental assistance programs and
                                         such information was not collected or maintained on participants.
                                         However, recently implemented regulations and provisions included in the
                                         immigration reform legislation prohibit HUD from providing rental



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                            assistance to persons other than U.S. citizens and certain qualified
                            noncitizens.12 HUD has begun redesigning its automated databases and data
                            collection instruments to capture information on participants’ citizenship
                            and alien status. However, this process is ongoing and the agency is not
                            yet able to report the level of assistance being provided to households
                            composed of both illegal aliens and eligible U.S. citizen children.


Majority of Cases Located   Most illegal aliens receiving AFDC or Food Stamp benefits on behalf of U.S.
in a Few States             citizen children are located in only a few states. Over 85 percent of the
                            households with children of an illegal alien parent receiving AFDC are
                            located in California, Texas, New York, and Arizona.13 (See fig. 1.) The
                            distribution of Food Stamp households with an illegal alien parent is only
                            slightly different, with 54 percent of the cases in California, 23 percent in
                            Texas, and 4 percent in Arizona.14 In addition, the majority of SSI cases of
                            illegal alien payees for citizen children that records allowed us to identify
                            were located in California and Texas.




                            12
                              Under the law, a public housing authority has the option, but is not required, to verify the citizenship
                            information provided by program participants.
                            13
                             INS has estimated that most illegal aliens reside in a few states, including California, Texas, New
                            York, Florida, and Illinois. For some of these states, although they have a large number of illegal
                            immigrants, the sample data on which we based our estimates did not contain enough households with
                            an illegal alien parent for us to develop an estimate.
                            14
                              We were unable to estimate the number of households or benefits being provided under the Food
                            Stamp program in New York because we did not have a large enough number of these households in
                            the sample.



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Figure 1: AFDC Households With an
Illegal Alien Parent Receiving Benefits
on Behalf of U.S. Citizen Children, by                                                        3.1%
                                                                                              Arizona (4,700)
State, Fiscal Year 1995
                                                                                              9.5%
                                                                                              Texas (14,500)


                                                           •        14.8% •                   Other Locations (22,600)

                                                       •

                                                                              •               11.4%
                                                                                              New York (17,500)




                                                      61.2%
                                                         •




                                                                                              California (93,700)



                                          Note: See appendix I for sampling errors.

                                          Source: GAO estimate based on data obtained from the National Integrated Quality Control
                                          System.




                                          In California, households composed of an illegal alien parent and citizen
                                          children represented about 10 percent of the state’s AFDC and Food Stamp
                                          caseloads in 1995 and accounted for $720 million in AFDC and Food Stamp
                                          benefits combined. Other studies from the California counties of Los
                                          Angeles and Orange estimated that these households have constituted up
                                          to 20 percent of each county’s AFDC caseload in recent years. In the other
                                          states for which we developed estimates, illegal alien payee cases ranged
                                          from 4 to 7 percent of each state’s AFDC and Food Stamp caseloads. (See
                                          app. I for more details on the estimated number of households and
                                          benefits provided by state and the associated sampling errors.)




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                           Although procedures are in place to prevent and detect fraud,
Detected                   comprehensive national statistics on fraud perpetrated by illegal aliens
Misrepresentation or       serving as payees on behalf of their citizen children are not available.
Fraud Similar for          However, studies of AFDC households in a few California counties with
                           large populations of illegal aliens serving as payees indicate that there is
Households Headed          little difference in the rate and type of misrepresentation or fraud detected
by Illegal Aliens and      for them and other households receiving benefits.
Other Households
Various Methods Used to    To prevent and detect misrepresentation or fraud, federal, state, and local
Prevent and Detect Fraud   agencies use various approaches in processing applications for benefits,
                           ensuring the continued eligibility of recipients, and maintaining payment
                           accuracy for the AFDC, Food Stamp, and SSI programs.15 While each of these
                           programs has different goals, all require individuals or families to meet
                           certain eligibility criteria. To establish program eligibility, proof of
                           citizenship and a social security number typically must be presented for all
                           applicants, including U.S. citizen children of illegal aliens.16 In addition,
                           since these are means-tested programs, the income and resources of an
                           applicant’s household cannot exceed specific limits set by each program.
                           Benefits, based on total household income, are then computed for the
                           eligible family members.

                           The amount of household income and other resources are verified at the
                           time of application and, for successful applicants, periodically thereafter
                           to ensure continued eligibility and payment accuracy. Applicants must
                           provide proof of income and resources such as pay stubs, vehicle
                           registration forms, and rental agreements. For the AFDC, Food Stamp, and
                           SSI programs, officials access the Income and Eligibility Verification
                           System or use computer matching with other databases to corroborate
                           information provided by applicants.17




                           15
                             HUD’s rental housing assistance programs require all applicants to self-certify their status as either
                           citizens or eligible noncitizens to establish eligibility for assistance. However, current regulations do
                           not require verification of an applicant’s citizenship status for all of HUD’s rental housing assistance
                           programs.
                           16
                             Under the Food Stamp program, for an individual reporting to be a U.S. citizen, proof of citizenship is
                           required to the extent that it is questionable. The determination of questionable citizenship is left to
                           the discretion of the state agency.
                           17
                             Federal law has supported using computerized systems to validate social security numbers and
                           identify household information, such as earnings, assets, and receipt of other forms of aid by
                           applicants and recipients. Such matches are required in TANF and were required under the Food
                           Stamp program until made optional in the 1996 welfare reform legislation.



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                             In addition to the verification procedures used during the application
                             process and periodic reviews, some states take further steps to aid in
                             detecting and preventing misrepresentation or fraud. For instance, all AFDC
                             applicants in New York City are required to participate in office interviews
                             and home visits by investigative staff to validate application information.
                             As a result of these investigations, approximately 35 percent of new
                             applicants never received benefits, according to city officials. In California
                             and Texas, cases are referred to investigators for additional reviews,
                             including home visits, if fraud is suspected. Although the officials we
                             spoke with generally agreed that intensive screening is effective, it is also
                             resource intensive and costly.

                             Under the AFDC and Food Stamp programs, all states have been required by
                             federal regulations to conduct quality control reviews of a sample number
                             of cases to ensure that benefit amounts are correct. These reviews include
                             verification of eligibility and income data; if fraud is suspected, a referral
                             for investigation is made. Although the quality control program is not a
                             requirement under TANF, states may continue the program at their option.

                             In addition to the application and review procedures, some federal
                             agencies, states, and localities train staff to identify fraudulent documents
                             and provide updates on the latest counterfeit documents. For example, SSA
                             staff use black light equipment to determine whether documents
                             submitted in support of SSI benefit claims are authentic. Staff are also
                             trained to use interview techniques to better identify misrepresentation by
                             applicants.


Incidence and Types of       National studies on the nature and extent of misrepresentation or fraud by
Misrepresentation or         illegal aliens obtaining benefits for their citizen children are not available.
Fraud Detected Similar for   However, three California counties—Fresno, Los Angeles, and
                             Orange—have experienced rapid growth in their AFDC child-only cases
Illegal Alien Payees and     (those without an adult recipient)18 and, in recent years, began conducting
the General AFDC             studies to investigate fraud among child-only and other cases. Although
Population                   these studies used a much broader definition of fraud and a different
                             methodology than generally used in AFDC and Food Stamp quality control
                             reviews, they provide some evidence that the types and frequency of
                             misrepresentation or fraud in cases where illegal aliens receive AFDC
                             benefits for their U.S. citizen children are similar to that of the general


                             18
                              A child-only case is an AFDC case in which the parent or caretaker is excluded from receiving
                             benefits due to (1) receipt of SSI benefits; (2) undocumented alien immigration status; (3) failure to
                             cooperate with program requirements, such as work or child support enforcement; or (4) lack of need.



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AFDC  population.19 Based on a random sample of 450 AFDC cases, a 1997
Orange County study identified potential misrepresentation or fraud in
38 percent of the illegal alien payee cases and over 46 percent of all other
cases.20 These findings of potential fraud were associated with overpaid
benefit amounts totaling 9 percent of combined AFDC and Food Stamp
benefits paid in a typical month to the 450 cases. Two additional studies
based on random samples and conducted in Los Angeles County and
Fresno County identified potential misrepresentation or fraud in 42 to
45 percent of the AFDC cases involving illegal alien payees.21 In these two
studies, about one-half of the cases in which misrepresentation or fraud
was identified resulted in an overpayment of benefits. In the other cases,
the incorrectly reported information did not have an impact on benefit
amount.

The most commonly cited types of misrepresentation or fraud identified in
all three of the California studies were misreported or unreported income
and misrepresented household composition, such as unreported members
living in a household.22 The types found in cases involving illegal alien
payees did not differ from those of the general AFDC population. Officials in
New York and Texas also identified misreporting of income and household
composition as the most common types of misreporting among AFDC
child-only cases and the general AFDC population.

According to one of the California studies, 81 percent of the misreported
income cases involved cash obtained by applicants from sources that
made verification virtually impossible because there are no records of the
financial transactions.23 This study uses the term “underground economy”

19
 The studies’ definition of fraud and objectives, scope, and methodology differed from those used in
AFDC and Food Stamp quality control reviews. The county studies defined misrepresentation or fraud
as any case in which investigators discovered unreported information that should have been reported
and used to evaluate eligibility, even if no overpayment of benefits resulted. Their methods also
differed. For example, investigators in the Orange County study made unannounced home visits and
considered the entire assistance period. AFDC and Food Stamp quality control reviewers generally
announced their visits to households and examined data for the one month’s sample.
20
 County of Orange Fraud Incidence Study: A Joint Effort of the California Department of Social
Services and Orange County Social Services Agency and District Attorney (Orange County, Calif.: Apr.
1997). Food Stamp program fraud was also included in this study. The 450 cases were selected
between August 1994 and October 1995.
21
  Fresno County Child-Only Study: A Joint Effort Between the County of Fresno Department of Social
Services, the Office of the District Attorney, and the California Department of Social Services (Fresno
County, Calif.: Jan. 1995) and Department of Public Social Services, Welfare Fraud and Prevention
Investigations Section, Child-Only Study: Final Report (Los Angeles County, Department of Public
Social Services, Calif.: Jan. 1996).
22
  Misrepresenting household composition includes situations in which not all members of the
household are reported, an absent parent is actually living in the home, or a child is not living in the
reported residence.
23
  County of Orange Fraud Incidence Study, Apr. 1997.
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                     to refer to a source of income from which individuals are paid in cash and
                     their earnings are not reported to the Internal Revenue Service or the
                     state. In addition, officials in California, Texas, and New York cited the
                     difficulties of verifying income that individuals—both illegal aliens and
                     citizens—derived from the underground economy. Moreover, because
                     illegal aliens may not legally obtain social security numbers—which serve
                     as the basis for reporting through the Income and Eligibility Verification
                     System—verification of income for this population is difficult. California
                     officials also noted that it is more difficult to obtain evidence of fraud
                     without a social security number.


                     We received comments from the Department of Health and Human
Agency Comments      Services (HHS) and the Department of Agriculture (USDA). Their comments
and Our Evaluation   are included in appendixes II and III, respectively, and technical
                     comments were incorporated as appropriate. HHS stated that our report
                     identifies the difficult and complicated policy issue of providing food and
                     cash assistance to families containing both citizens and illegal immigrants.
                     Yet it also stated that we had not sufficiently emphasized that citizen
                     children of illegal alien parents are legally eligible for benefits on the same
                     basis as any other citizen in need. We believe our report clearly states that
                     these citizen children are eligible for assistance and, while we
                     acknowledge the difficult policy issues involved, this report focuses on
                     describing the extent to which such children receive assistance.

                     USDA  commented that the report provides valuable information and
                     emphasized that illegal aliens receive no benefits for themselves and that
                     their income and resources are considered in determining the eligibility of
                     any citizen children. In addition, USDA was concerned that the
                     misrepresentation and fraud rates identified by the California counties’
                     studies may inadvertently be misinterpreted. It noted that the studies’
                     definition of misrepresentation and fraud is much broader than that used
                     in Food Stamp quality control studies, which generally focus on the
                     percentage of benefit dollars overpaid as a result of intentional
                     misrepresentation. To address this concern, we have more clearly
                     emphasized the amount of benefit overpayments identified in the studies.
                     We also recognize that the studies use a much broader definition of
                     misrepresentation and fraud than used in quality control reviews and
                     clarified this in the report.

                     We also provided a copy of the report to SSA, which did not have
                     comments. In addition, we considered and incorporated, where



                     Page 13                                   GAO/HEHS-98-30 Illegal Aliens and Welfare
B-275806




appropriate, technical comments from the State of California and Orange
County, California. HUD, Los Angeles County, New York, and Texas did not
have technical comments.

As required by the Illegal Immigration Reform and Immigrant
Responsibility Act of 1996, we are sending copies of this report to the
Inspector General of the Department of Justice. We are also sending
copies to the Secretaries of USDA, HHS, and HUD and the Commissioners of
SSA and INS. We will also make copies available to others upon request.


Please contact me at (202) 512-7215 if you have any questions concerning
this report or need additional information. Major contributors to this
report are listed in appendix IV.

Sincerely yours,




Mark V. Nadel
Associate Director,
  Income Security Issues




Page 14                                GAO/HEHS-98-30 Illegal Aliens and Welfare
Page 15   GAO/HEHS-98-30 Illegal Aliens and Welfare
Contents



Letter                                                                                                1


Appendix I                                                                                           18

Methodology
Appendix II                                                                                          21

Comments From the
Department of Health
and Human Services
Appendix III                                                                                         24

Comments From the
Department of
Agriculture
Appendix IV                                                                                          27

GAO Contacts and
Acknowledgments
Related GAO Reports                                                                                  28


Tables                 Table 1: Major Federal Welfare Programs With Benefit Amounts                   5
                         for One Person or Household
                       Table 2: Estimated Number of AFDC and Food Stamp                               7
                         Households Headed by Illegal Aliens and Benefits Provided to
                         Citizen Children, Fiscal Year 1995
                       Table I.1: Estimated AFDC and Food Stamp Households Headed                    19
                         by an Illegal Alien and Benefits Received, Fiscal Year 1995
                       Table I.2: Estimated SSI Cases With an Illegal Alien Payee and                20
                         Benefits Received, December 1996

Figure                 Figure 1: AFDC Households With an Illegal Alien Parent                         9
                         Receiving Benefits on Behalf of U.S. Citizen Children, by State,
                         Fiscal Year 1995




                       Page 16                                 GAO/HEHS-98-30 Illegal Aliens and Welfare
Contents




Abbreviations

AFDC       Aid to Families With Dependent Children
HHS        Department of Health and Human Services
HUD        Department of Housing and Urban Development
INS        Immigration and Naturalization Service
SSA        Social Security Administration
SSI        Supplemental Security Income
TANF       Temporary Assistance for Needy Families
USDA       Department of Agriculture


Page 17                             GAO/HEHS-98-30 Illegal Aliens and Welfare
Appendix I

Methodology


              To estimate the locations, number of households involved, and amount of
              AFDC and Food Stamp benefits provided to illegal aliens for the use of their
              U.S. citizen children, we used administrative databases composed of
              statistically valid samples of households nationwide receiving benefits
              under each of these programs. The source data were AFDC and Food Stamp
              households selected for quality control reviews from October 1994
              through September 1995—the 1995 federal fiscal year. HHS’ Administration
              for Children and Families for AFDC and USDA’s Food and Consumer Service
              for Food Stamps use sample data that are maintained in the National
              Integrated Quality Control System to estimate state error rates related to
              eligibility and payment amount and for studies of populations receiving
              benefits.

              As part of the quality control reviews done for both the AFDC and Food
              Stamp programs, the citizenship or immigration status of household
              members, such as a parent of a U.S. citizen child receiving benefits, is
              obtained by program officials. To develop our estimates of households in
              which an illegal alien received benefits on behalf of citizen children under
              these programs, we selected only sample households identified as having
              (1) a person acting as the head of household whose citizenship status was
              listed as illegal alien due to expired visa or illegal entry into the country or
              (2) a head of household whose spouse had a citizenship status listed as
              illegal alien due to expired visa or illegal entry into the country.24 For some
              individuals, the data did not precisely capture their exact immigration
              status. For example, citizenship status was listed as “not a U.S. citizen, but
              exact alien/immigrant status unknown” or “unknown.” As a result, there
              may be additional households with an illegal alien parent that we were
              unable to identify and are not included in our estimate. Heads of
              households or their spouses whose citizenship status was listed as being
              accorded refugee status, granted a stay of deportation by the INS, or
              permanently residing in the U.S. under color of law were not included in
              our estimate.

              For each of the selected households headed by or whose spouse was an
              illegal alien, we obtained from the sample case file information on the
              dollar amount of benefits received by the recipient household for the
              sample month, projected the yearly dollar amount of such benefits
              received by the household, and confirmed that the benefits were received

              24
                In 89 and 84 percent of the AFDC and Food Stamp cases, respectively, the head of household was
              specifically identified as an illegal (undocumented) alien. In the remaining 11 and 16 percent of the
              cases, the spouse of the head of household was the illegal alien. The head of household in these
              instances was often identified as an immigrant accorded permanent resident status, a lawful
              permanent resident under provisions of the Immigration Reform and Control Act, or a U.S. citizen.



              Page 18                                                GAO/HEHS-98-30 Illegal Aliens and Welfare
                                      Appendix I
                                      Methodology




                                      on behalf of U.S. citizen children in the household.25 We applied sample
                                      weights to develop our estimate for the nation or a specific state. For
                                      those states that had a large enough number of households headed by
                                      illegal aliens in the sample, we were able to develop an estimate for that
                                      state. For AFDC, we were able to estimate the number of such households
                                      and benefits received in Arizona, California, New York, and Texas. Under
                                      the Food Stamp program, these states were Arizona, California, and Texas.
                                      Although other states, such as Florida and Illinois, also have large illegal
                                      alien populations, not enough households with an illegal alien parent or
                                      spouse were identified in these states’ samples to allow us to develop
                                      estimates. This also occurred for New York in the case of the Food Stamp
                                      program.

                                      Because our estimates are based on samples, they are subject to sampling
                                      error. Table I.1 shows each of our estimates and indicates the extent of
                                      each estimate’s sampling error by showing the 95-percent confidence
                                      interval around that estimate. There is a 95-percent chance that the actual
                                      total falls within that interval.

Table I.1: Estimated AFDC and Food
Stamp Households Headed by an                                 Households headed by illegal
Illegal Alien and Benefits Received                                      alien                          Benefits received (thousands)
(With Confidence Intervals), Fiscal                                      AFDC         Food Stamp                   AFDC         Food Stamp
Year 1995
                                      Arizona                            4,700                9,200             $12,340              $16,000
                                                                     (+/-1,000)           (+/-2,300)          (+/-$2,700)          (+/-$4,700)
                                      California                        93,700             120,700             $512,000             $208,000
                                                                    (+/-15,500)          (+/-23,000)         (+/-$93,100)         (+/-$44,600)
                                      New York                         17,500                     NAa            $82,000                    NAa
                                                                     (+/-5,000)                              (+/-$24,700)
                                      Texas                            14,500                52,600             $16,000             $122,500
                                                                     (+/-3,500)          (+/-12,200)          (+/-$4,100)         (+/-$36,200)
                                      National                        153,000              224,000             $700,000             $430,000
                                                                    (+/-17,000)          (+/-27,000)       (+/-$100,000)          (+/-$60,000)
                                      a
                                       New York did not have a large enough number of Food Stamp households headed by an illegal
                                      alien to provide an estimate.

                                      Source: GAO estimate based on data obtained from the National Integrated Quality Control
                                      System.



                                      We discussed and obtained concurrence from personnel of the
                                      Administration for Children and Families for AFDC and the contractor for


                                      25
                                        The head of household was identified as the parent of a citizen child; data on the parental status of
                                      the spouse were not available.



                                      Page 19                                                 GAO/HEHS-98-30 Illegal Aliens and Welfare
                                         Appendix I
                                         Methodology




                                         the Food and Consumer Service for Food Stamps regarding our estimating
                                         procedures.

                                         Because of variances in how SSI cases composed of disabled children with
                                         illegal alien payees are identified in SSA’s automated systems, we could not
                                         develop an accurate estimate of the number of these cases. However, we
                                         statistically sampled available recipient caseload data to estimate a
                                         minimum number of disabled child cases in which one or both parents
                                         were illegal aliens as of December 1996. Our sample included a sufficient
                                         number of cases from California and Texas to allow us to provide
                                         estimates for those states. Based on the benefits being provided to the
                                         children in our sample, we also estimated the dollar amount of benefits
                                         paid to the children in December 1996.

                                         Because our figures are based on samples, they are subject to sampling
                                         error. Table I.2 shows each of our estimates and indicates the extent of
                                         each estimate’s sampling error by showing the 95-percent confidence
                                         interval around that estimate. There is a 95-percent chance that the actual
                                         total falls within that interval.

Table I.2: Estimated SSI Cases With an
Illegal Alien Payee and Benefits                                                   Cases with an illegal
Received (With Confidence Intervals),                                                      alien payee                Benefits received
December 1996                            California                                                   2,178                   $947,759
                                                                                                     (+/-63)                (+/-$54,536)
                                         Texas                                                         755                    $314,482
                                                                                                     (+/-57)                (+/-$35,207)
                                         National                                                    3,450                   $1,466,601a
                                                                                                   (+/-101)                 (+/-$74,392)
                                         a
                                         Estimated to be an annualized federal benefit cost of about $17.6 million.

                                         Source: GAO estimate based on administrative data obtained from SSA.



                                         Since AFDC and Food Stamp quality control data are reviewed by the
                                         Administration for Children and Families, the Food and Consumer Service,
                                         and the states, and SSI data are reviewed by SSA, we did not independently
                                         examine the computer controls or verify the accuracy of these data.
                                         Except for this limitation, we conducted our review in accordance with
                                         generally accepted government auditing standards between December
                                         1996 and July 1997.




                                         Page 20                                              GAO/HEHS-98-30 Illegal Aliens and Welfare
Appendix II

Comments From the Department of Health
and Human Services




              Page 21       GAO/HEHS-98-30 Illegal Aliens and Welfare
Appendix II
Comments From the Department of Health
and Human Services




Page 22                                  GAO/HEHS-98-30 Illegal Aliens and Welfare
Appendix II
Comments From the Department of Health
and Human Services




Page 23                                  GAO/HEHS-98-30 Illegal Aliens and Welfare
Appendix III

Comments From the Department of
Agriculture




               Page 24     GAO/HEHS-98-30 Illegal Aliens and Welfare
Appendix III
Comments From the Department of
Agriculture




Page 25                           GAO/HEHS-98-30 Illegal Aliens and Welfare
Appendix III
Comments From the Department of
Agriculture




Page 26                           GAO/HEHS-98-30 Illegal Aliens and Welfare
Appendix IV

GAO Contacts and Acknowledgments


                  Gale C. Harris, Assistant Director, (202) 512-7235
Contacts          Mario L. Artesiano, Evaluator-in-Charge, (404) 679-1903


                  In addition to those named above, the following individuals also made
Acknowledgments   important contributions to this report: Carlos J. Evora; Andrea H.
                  Ewertsen; Deborah A. Moberly; and John G. Smale, Jr.




                  Page 27                                GAO/HEHS-98-30 Illegal Aliens and Welfare
Related GAO Reports


              Undocumented Aliens: Medicaid-Funded Births in California and Texas
              (GAO/HEHS-97-124R, May 30, 1997).

              Illegal Aliens: National Net Cost Estimates Vary Widely (GAO/HEHS-95-133,
              July 25, 1995).

              Illegal Aliens: Perspectives on the Issues Associated With Illegal Aliens
              (GAO/T-OGC-94, June 24, 1994).

              Illegal Aliens: Assessing Estimates of Financial Burden on California
              (GAO/HEHS-95-22, Nov. 28, 1994).

              Benefits for Illegal Aliens: Some Program Costs Increasing, But Total
              Costs Unknown (GAO/T-HRD-93-33, Sept. 29, 1993).




(106906)      Page 28                                  GAO/HEHS-98-30 Illegal Aliens and Welfare
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