Introduction
The E-Rate Central News for the Week is prepared by E-Rate Central. E-Rate Central specializes in providing consulting, compliance, and forms processing services to E-rate applicants. To learn more about our services, please contact us by phone (516) 801-7804 or by e-mail. Additional E-rate information is located on the E-Rate Central Web site.
Wave 12 Funding for FY 2003
| FY 2003 funding commitments have now surpassed $1 billion. Wave 12 for FY 2003 is scheduled for release on Monday, September 22. Funding in this wave is $103 million on over 300 applications. This brings total FY 2003 funding to $1.074 billion.
The funding threshold for Internal Connections remains at 85%. No Internal Connections funding will be available below 70%. The availability of funding for applicants in the 70-84% range is still uncertain, although funding requests in this range are currently being reviewed by the SLD.
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| The SLD announced that the Form 471 application filing window for FY 2004 will open at noon on Wednesday, November 5, 2003, and close at 11:59 PM EST on Wednesday, February 4, 2004.
Last year’s Form 471 filing deadline had initially been set as January 16th, but was then extended to February 6th as a result of a minor SLD online systems problem early in the filing period. The SLD found that it could still meet its July 1st application review targets and found that many applicants enthusiastically endorsed an early February, rather than a mid-January, deadline. As a result, the SLD stayed with an early February window closing date this year.
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| Under new FCC rules, unused E-rate funds from earlier years will be added onto the annual $2.25 billion program limit. This roll-over of unused funds will take effect beginning in FY 2004. In a report released to the FCC on August 1, USAC (the SLD’s parent) conservatively estimated that an additional $420 million would be available for next year’s program.
Unused funds can arise for a number of reasons including: (a) actual usage that falls short of original estimates; (b) canceled or scaled-down projects; (c) price reductions on technology products; and (d) conservative SLD reserve estimates for appeals and uncommitted requests. Often the quantification of unused funds cannot be accurately calculated until well after the end of a funding year. Based on the history of disbursements for the first three funding years, the SLD estimates that actual funds utilization is running at rates less than 86% of funds committed.
In the past, when unused funds were finally identified, the excess amounts were used to reduce the level of contributions that telecommunications carriers were required to put into the E-rate portion of the Universal Service Fund. In other words, with E-rate running at a $2.25 billion annual rate, some lesser amount would often be collected from the carriers. Under the new rules, the carriers will contribute the full $2.25 billion each year, and unused funds will be added to program resources. The total available funding for FY 2004, therefore, will be at least $2.67 billion.
The following table summarizes the amount of unused funds that reduced carrier contributions in earlier years and that are estimated to be available to increase program funding in FY 2004. (Note: we would expect that unused funds from FY 2002 will ultimately become available for roll-over into subsequent funding years.)
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Funding
Year |
Carrier
Contribution
Reductions |
FY 2004
E-rate
Roll-Over |
Total
Unused |
| 1998 |
$ 477M |
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$ 477M |
| 1999 |
469M |
$ 60M |
529M |
| 2000 |
383M |
160M |
543M |
| 2001 |
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200M |
200M |
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$ 1,329M |
$ 420M |
$ 1,749M |
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| One significant impact of this additional amount is likely to be the availability of Internal Connections funding to a lower threshold of E-rate discounts. Internal Connection funding in the years 2000-2002 was never provided at discounts lower than 81%. As a result, many applicants with discounts in the 20-60% range have simply not bothered requesting Internal Connection funding in recent years. With the roll-over of unused funds in FY 2004, we would encourage more mid-level discount applicants to include Internal Connections services in their Form 470 and Form 471 applications. |