FY 2018 Inflation Adjustment and Category 2 Budget Tools:
Last week — roughly a month earlier than last year — the FCC announced a 1.8% inflation adjustment for FY 2018 E-rate funding. The announcement itself ( DA 18-163) addresses only the total program cap for the next funding year, raising the cap to $4,062,030,726. The same inflation adjustment, however, will also apply to Category 2 budget factors for FY 2018. By our calculations, yet to be confirmed by USAC, the FY 2018 factors are shown in the table below.
Note: The factors shown above are calculated compounding inflation adjustments from FY 2015, then rounded to the nearest penny (as per FCC guidance in FY 2017).
Shortly after the FCC’s announcement, USAC updated EPC to incorporate the additional 1.8% inflation adjustment for FY 2018. As we have discussed in the past, however, the Category 2 budgets shown in EPC do not properly reflect the rounded per-student and per-sq.ft. factors. As a result, EPC will slightly overstate the school and non-urban library budgets, and understate urban library budgets for FY 2018. The error is small, but is potentially significant for applicants applying for funding at their individual entity budget caps. Note also that the EPC budget tool does not reflect any Category 2 funding for FY 2015.
By way of comparison, USAC’s non-EPC Category 2 budget status tool does properly round per-student and per-sq.ft. factors to the nearest penny — albeit not yet reflecting the FY 2018 inflation adjustment — and does include FY 2015 funding. However, note that the non-EPC budget tool uses school student counts and library square-foot measures as approved in FY 2017 applications, whereas the EPC budget tool uses potentially updated entity profile data.
Bottom line: Applicants approaching their maximum FY 2018 Category 2 budgets may use USAC’s budget tools as guides, but may need to more carefully and precisely calculate their own funding caps.
Recipient of Service (“ROS”) Allocation Mismatch Appeals:
Within the last two weeks, USAC has created over 200 self-initiated “appeals” to correct small computational errors — hopefully small — in previously issued Funding Commitment Decision Letters (“FCDLs”). Applicants are being notified of these appeals via emails entitled “ROS Allocation Mismatch.” The applicants are rightfully somewhat puzzled, if not concerned, by the text that reads: “USAC discovered that the Recipient of Service (ROS) allocation does not equal the Funding Request Number (FRN) line amounts on your FCC Form 471. Therefore, USAC has created an appeal record on your behalf to review your application. After our review is complete, you will receive a Revised Funding Commitment Decision Letter. There is no action required by you at this time.”
Because these appeals are currently being handled internally, it is difficult to fully understand the problem being addressed. The problem, apparently not initially caught by EPC, has occurred in cases where (a) applicants were required by PIA to reduce funding due to exceeding a recipients Category Two budget, and/or (b) PIA identified ineligible Category Two products or services. While there may be additional permutations, we have identified two specific scenarios where there is an ROS issue.
The first, illustrated below, is when the eligible costs attributed to the recipients of service did not match the approved eligible costs amount.
The second is when cost-allocation information is missing in its entirety.
In both cases the original Form 471 submission properly allocated the costs to each recipient of service which means that these errors occurred during PIA or the FCDL wave process. Note that these issues also appear to impact the reporting of the Category 2 budget tools. Pending resolution of these appeals, applicants who have had an ROS appeal created on their behalf should be careful applying for Category 2 funds in FY2018.