USCIS Budget Implosion Owes to Far More than the Pandemic
Editor's note: This article was updated on June 19, 2020 to clarify Table 1 totals for the select application categories examined here and all applications received. Also, refugees are not charged for status adjustment.
The global COVID-19 pandemic has brought immigration case processing to a near standstill. Citing the pandemic, U.S. Citizenship and Immigration Services (USCIS) is urging Congress to provide $1.2 billion to address its severe budget shortfall. Without this emergency infusion, the agency has warned that it may have to furlough as many as 15,000 of its 18,700 employees by July 20.
Unlike nearly all other federal agencies, USCIS does not derive most of its budget from congressional appropriations but rather from the fees that applicants for green cards, citizenship, and other immigration services pay. With the suspension in March of in-person USCIS services and the worldwide travel shutdown due to the coronavirus, the volume of immigration petitions—and thus fees—coming into the agency fell dramatically. Even with plans to largely reopen services in June, USCIS predicts application levels will drop about 61 percent this fiscal year.
However, a deeper look at USCIS operations shows it was facing serious budget problems long before the pandemic—ones that are the logical results of actions undertaken by the Trump administration.
Managing Fee-Funded Operations
Last November, USCIS proposed fee increases, including an 83 percent hike for naturalization, that it argued should go into effect during fiscal year (FY) 2020, in order to help it avoid a $1.26 billion budget shortfall.
USCIS is required to regularly assess whether fees cover processing costs. Over the years, each fee adjustment has been preceded by at least one year of the agency’s costs exceeding collections. For example, before its FY 2017 fee hike, receipts accounted for 91 percent and 96 percent of eligible expenses in FYs 2015 and 2016, respectively.
This mismatch and the need to regularly revise fees make it difficult for the agency to quickly adjust operations, especially staffing, to meet sudden surges or drops in petition rates, which can be driven by the economy, debates over immigration legislation, business cycles, policy changes, and more. USCIS has managed these fluctuations by moving resources between types of adjudications—which can result in significant backlogs—and by “forward funding,” i.e. taking on costs that will be repaid by future revenue.
USCIS has further successfully weathered ups and downs because it maintained significant cash reserves or carryover, keeping the portion of its budget covered by congressional appropriations at 5 percent or less since 2007. The $1.2 billion emergency relief the agency is seeking from Congress amounts to 25 percent of its current FY 2020 budget.
In 2014, USCIS leaders decided the agency needed at least $600 million to provide stability amid fluctuating receipts. More recently, however, it lowered the $600 million goal to $350 million, calculating the minimum carryover threshold by averaging the greatest cash flow deficits over the last three years. Nonetheless, the carryover went from $790 million at the end of FY 2017 to negative territory in FY 2019, the first time it has been in the red since at least 2007. This deficit is on path to balloon to $1.5 billion in FY 2020, as Figure 1 shows.
Figure 1. End-of-Year Immigration Examinations Fee Account Carryover Balances, FY 2008-20
Notes: U.S. Citizenship and Immigration Services (USCIS) manages its budget primarily through what is known as the Immigration Examinations Fee Account (IEFA). This figure does not include additional premium processing fees, paid by those seeking expedited processing. Premium processing fee carryovers are designated for special projects. In the supporting documentation for its most recent fee adjustment, USCIS did not report the carryover balances for premium processing; at the end of FY 2012, it totaled $450 million. FYs 2011, 2019, and 2020 displayed here are projected carryover balances.
Sources: For FY 2008-11, USCIS, “FY 2010/2011 Immigration and Examinations Fee Account Review,” accessed June 6, 2020, available online; FY 2012-15, USCIS, “FY 2016/2017 Immigration Examinations Fee Account Fee Review Supporting Documentation with Addendum,” accessed June 6, 2020, available online; FY 2016-20, USCIS, “USCIS Fee Rule – Supporting Documentation (Immigration Examinations Fee Account),” accessed June 6, 2020, available online.
USCIS failed to fully account for the source of the deficiency when it came to light last November. Now, it is attributing the shortfall to the effects of COVID-19 and has announced that more than half its workforce will need to be furloughed to achieve quick spending cuts. Such an action would threaten the stability of its operations and its ability to provide critical services.
Falling Immigration Petitions
The agency’s falling petition rates over the last two years and increased spending on vetting and enforcement offer a deeper explanation for its revenue and budget problems. They reflect the administration’s immigration priorities, which have taken a heavy toll on USCIS’ financial sustainability.
More than 1 million fewer petitions were received in FY 2018 than the year before, driving a $152 million drop in fee receipts—from $3.48 billion in FY 2017 to $3.33 billion the following year. Petitions increased slightly in FY 2019, but those with the highest fees continued downward. As a result, receipts fell again, this time by $13 million, bringing revenues to $3.32 billion.
There is a direct relationship between the decreases in categories of petitions and the administration’s policies and priorities. For example, one group of applications that declined significantly was petitions for renewal of Temporary Protected Status (a form of temporary humanitarian protection). The administration terminated this protection for nationals of six countries—totaling more than 300,000 people. While federal court injunctions are temporarily keeping the protections in place, affected recipients no longer file renewal petitions, bringing a sizeable hit to USCIS revenues.
Table 1. Select Applications Received by USCIS, FY 2017-19
Sources: USCIS, “All USCIS Application and Petition Form Types,” multiple years, accessed June 6, 2020, available online; USCIS, “Form I-130 Petition for Alien Relative,” multiple years, accessed June 6, 2020, available online.
The declines shown in Table 1 suggest that administration positions such as advocating for significant reductions in family-based immigration and policies such as issuing a regulation tightening sponsorship requirements that will disproportionately exclude family-based applicants may be having a chilling effect even before they are implemented. Petitions for family-based immigration fell 29 percent for immediate relatives of U.S. citizens between FY 2017-19. Those for other relatives (including immediate relatives of legal permanent residents) declined by 43 percent. These are significant shifts from patterns dating back to 2012 when these data were first reported.
At the same time, petitions for employment-based immigration, a category the administration has typically favored, increased by 2 percent. This slight shift might be explained by economic fluctuations. But the reasons for such sharp differences in petition rates between family and employment-based applications are uncharacteristic and unexplained.
The agency’s plummeting application rates are not likely to abate. The president has called on government agencies to consider imposing restrictions on temporary foreign workers. Such a ban would further deepen USCIS’s budget shortfall, as most temporary workers must file petitions with the agency before entering the country and then must continue to file petitions and pay fees to remain.
Alongside declines in petitions, USCIS has increased spending on detecting immigration-benefit fraud and on vetting applications. Anti-fraud costs more than doubled from FY 2016 to FY 2020, rising from $177 million to $379 million. Vetting nearly tripled during that period, from $53 million to $149 million.
In addition, enhanced vetting appears to be decreasing productivity. USCIS adjudicated 63 percent of its pending and incoming caseload in FY 2016. The adjudication rate dropped to 56 percent in FY 2019. Over that same period, despite falling application rates, the backlog of pending petitions grew by 1.4 million, to 5.7 million.
As a result, processing times for most types of petitions have increased, with some more than doubling. The wait time for T visas for victims of human trafficking, for example, increased from eight months in FY 2016 to 17 months in FY 2020.
Opportunity and Responsibility for Congress
The administration’s emergency request for $1.2 billion in appropriations and a 10 percent surcharge on application fees provides Congress with a unique opportunity. As a fee-funded agency, USCIS has been largely exempt from customary congressional oversight.
At a minimum, Congress should require adequate carryover balances to ensure the basic stability of USCIS operations. Accepting the proposition that COVID-19 explains the agency’s budget crisis overlooks far deeper fiscal and management deficiencies that predate the pandemic.
The steep increases in spending to detect fraud and increase vetting also raise questions. It is essential to protect and uphold the integrity of immigration processes. But it should not come at the expense of processing for fee-paying applicants who are eligible for immigration benefits. USCIS has not offered evidence indicating there are undetected levels of fraud in benefit adjudications, So Congress should examine the bases for these expenditures, given their costs in dollars, delays, and reduced productivity.
More broadly, the budget crisis points to policy decisions and fiscal choices that have set USCIS up for failure—now and over the longer term. The inevitable outcome, already underway, is significantly reduced levels of legal immigration. Such changes are squarely the prerogative of Congress, not the executive branch. Yet this shift is happening because the administration—with Congress acquiescing—is systematically circumventing lawmakers in the implementation of its immigration agenda.
When Congress created the Department of Homeland Security in 2003, it established USCIS as a self-standing agency to strengthen the benefit-granting functions of the immigration system and sever them from its enforcement missions. Congress now has a rare opportunity and responsibility to provide clear mandates that guide USCIS in properly fulfilling its congressionally mandated mission.