July 29, 2013

By Bill Jaynes
The Kaselehlie Press

July 22, 2013 Pohnpei, FSM -From 2004 through 2010 American Samoa, the Commonwealth of the Mariana Islands (CNMI), Guam, and Hawaii, the "affected jurisdictions" of the Compacts of Free Association with the Federated States of Micronesia, Palau, and the Republic of the Marshall Islands (RMI) reported that they had spent more than a $1 billion as a result of compact migration. They reported that the funds were spent in order to provide education, health, and social services benefits to compact migrants.

However, David Gootnick of the U.S. Government Accountability Office (GAO) told the U.S. Congress in a statement for the record delivered on July 11 that the reported figures are unreliable.

"Assessed against best practices for cost estimation, these cost estimates contain a number of limitations with regard to accuracy, adequate documentation, and comprehensiveness, affecting the reported costs' credibility and preventing a precise calculation of total compact impact on the affected jurisdictions," he told Congress.

Gootnick also told Congress that the 1994 reporting guidelines issued by the U.S. Department of the Interior (DOI) that oversees compact relations to the affected jurisdictions did not adequately address "certain concepts key to reliable estimates of impact costs."

Further, agencies in the affected jurisdictions didn't seem to know about the guidelines and they didn't strictly adhere to them when they did know about them.

Gootnick told Congress that in November of 2011 GAO recommended that Interior should disseminate guidelines to the affected jurisdictions and that they should call for those jurisdictions to apply the guidelines when developing compact impact reports. DOI agreed with the recommendations. In March of 2012, DOI convened a meeting of the Presidents of the Freely Associated States (FAS) along with governors and senior officials from affected jurisdictions to collaboratively develop strategies to address policy issues concerning the compacts. DOI told the participants that it would work directly with affected jurisdictions regarding the feasibility of developing uniform reporting guidelines. As of June 2013, DOI had not prepared any new guidance.

The 2011 GAO report found that roughly 56,000 compact migrants were living in U.S. areas in 2005 to 2009. About 58 percent of them lived in areas that the U.S. Congress defined in the amended compacts' enabling legislation as "affected jurisdictions"- American Samoa, Hawaii, Guam, and CNMI. Because of the economic effects of the Compact the affected jurisdictions collected $210 million in federal Compact Impact grants from 2005 through 2009.

"Some jurisdictions did not accurately define compact migrants, account for federal funding that supplemented local expenditures or include revenue received from compact migrants," Gootnick reported. Because standardized guidelines issued by the U.S. Department of the Interior in 1994 were not followed by the affected jurisdictions there is no way to tell if the actual financial impact of compact migrants bears any relationship to the actual situation.

As one example of problems with accuracy, Gootnick pointed out that using ethnicity or language as a way of determining who is and who is not a compact migrant could lead to overstating costs, since neither measure would exclude individuals who came to the jurisdiction prior to the compact. If citizenship was used to determine costs, those costs could be understated because it would exclude U.S. born children of compact migrants.

He also said that "affected jurisdictions" receive federal funding for programs that compact migrants use but that not all compact impact reports accounted for that stream of funding thus overstating the cost for providing services.

He said that multiple local government agencies receive fees as a result of providing services to compact migrants but that those agencies did not consider the fees in their compact impact reports. "Compact migrants also participate in local economies through their participation in the labor force, payment of taxes, consumption of local goods and services and receipt of remittances," his report said. "Any exclusion of revenue may cause an overstatement of the total impact reported."

Costs could have been under reported because many local government agencies did not include capital costs in their impact reporting. Capital costs include such expenditures as providing additional classrooms to accommodate an increase in students or constructing additional health care facilities. "In cases where compact migration has resulted in the expansion of facilities, agencies understated compact migrant impact by omitting these costs," Gootnick's report says.

Because "a number of local agencies" used an average per-person service cost for the jurisdiction rather than specific costs associated with providing services to compact migrants, there is no way to determine if compact impact of those services was understated or overstated.

Gootnick's statement said that a number of local government agencies did not disclose their methodology for developing impact costs, including any assumptions, definitions, and other key elements. Lastly, Gootnick said that not all local government agencies in the affected jurisdictions included compact impact costs for each year in which the jurisdictions reported. "Without comprehensive data in each year, the compact impact reports could understate total costs," he said.

He also said that compact impact reporting has not been consistent across affected jurisdictions. For example, Guam and the CNMI included the costs of providing police services, while Hawaii did not.

"We continue to believe that providing more rigorous guidelines to the affected jurisdictions and promoting their use for compact impact reports would increase the likelihood that Interior can provide reliable information on compact impacts to Congress," Gootnick concluded.