FY4 and FY5 Application Status
Last week, the SLD announced that Wave 15 for funding year four ("FY4") would be released on or after March 1. Current indications are that the SLD will actually wait until at least March 15 with the objective of making this the last major funding wave.
The SLD's estimate of E-rate demand for next year ("FY5") was released to the FCC this week (see E-rate Central Bulletin No. 202). Based on 36,000 applications received within the window period ending January 17, 2002, the total demand is estimated at $5.736 billion. This is above the final revised level for FY4, but is comparable to the SLD's estimate at this time last year of $5.787 billion. As occurred last year, the SLD expects a reduction in real demand as the SLD begins to review applications in detail.
Comparing the same preliminary estimates for FY5 and FY4, it is interesting to note that the demand for both Priority One (telecommunications and Internet access) and Priority Two (internal connections) funds are down slightly from last year. The only significant change is that the Priority Two demand from 90% discount applicants is now $2.6 billion, up from the comparable level of $1.7 billion last year. This suggests that internal connection funding will again be limited to the highest discount applicants, maybe just those at 90%.
A copy of the SLD's letter to the FCC, and a summary table of demand estimates, is available on the SLD Web site at Letter to the FCC, and Demand Estime Breakdown, respectively.
A comparable document from FY4 is available in the SLD Web site's archives at FY4 Demand Estimate.
The SLD is already reviewing FY5 applications, but no actual funding commitments are expected until after the FCC has had time to review the SLD's demand estimates and has confirmed the $2.25 billion funding limit for next year.
More than 30,000 applications were submitted online for FY5. In a change from last year, the filing requirements this year did not specify that Item 21 attachments had to be submitted within the application window. However, applications cannot be processed without the attachments, and the SLD is reporting that a surprisingly large number of applications are still without attachments. Online applicants, who have not yet submitted their Item 21 attachments, should do so ASAP to avoid undue funding delays.
More than 5,000 applications were filed by mail in FY5. So far, only about 10% of these applications have gone through the data entry process and have generated Receipt Acknowledgment Letters ("RALs").
Over the past year, the SLD has significantly increased the invoice review level for applicant BEARs (and vendor SPIFs). In many cases, particularly those involving internal connection reimbursements with potentially ineligible components, BEAR reviewers are requesting additional documentation in the form of bills and invoices. Applicants attempting to support payments with purchase orders are being told that these are insufficient, presumably on the premise that POs represent only authorizations to pay for services but do not reflect final charges or actual payments.
Applicants, who do pay directly off POs and cannot produce actual invoices, will have to find other ways to document actual payments. Alternatives may include copies of cancelled checks matching the PO amounts or specially requested vendor receipts.
Last June, the FCC adopted a rule that formally extended the period for using discounts for non-recurring (i.e., installation) services. This "Permanent Extension Order" is available (see FCC Order).
As applied to FY4, this rule means that applicants funded in Waves 1-14 will have until September 30, 2002, to use non-recurring discounts. This gives applicants an additional three summer months, beyond the actual funding year, to complete their projects. The similar deadline for applicants funded after March 1, 2002 (Wave 15 and beyond, including appeals) is September 30, 2003.
There was an interesting FCC appeal decision last week that reiterated and clarified several aspects of the FRN extension rules, specifically dealing with the role of the SLD in reviewing extension waivers beyond the "normal" three-month September 30 deadline (see FCC Appeal Decision).
As a review, the decision notes that: "The Permanent Extension Order provided that an applicant would qualify for an extension of the [normal] September 30 implementation deadline if it could demonstrate that it fell into one of four categories: (1) applicants whose funding commitment decision letters are issued by the Administrator [i.e., the "SLD"] on or after March 1 of the funding year for which discounts are authorized; (2) applicants who receive service provider change authorizations or service substitution authorizations from the Administrator on or after March 1 of the funding year for which discounts are authorized; (3) applicants whose service providers are unable to complete implementation for reasons beyond the service provider's control; or (4) applicants whose service providers are unwilling to complete installation because funding disbursements are delayed while the Administrator investigates their application for program compliance."
The first two categories, dealing with funding awarded or changed after March 1, always support an extension to September 30 of the following year (as discussed above for FY4).
The third and fourth categories deal with special extension waivers requested because of vendor problems. The recent FCC decision stresses that the phrase "beyond the service provider's control" is not meant to include delays resulting from applicant problems. The decision states that "in order to qualify for an extension, irrespective of particular circumstances, eligible [applicants].may not bear any fault for failure to complete application of the non-recurring services."
The FCC decision also stresses that waiver requests should be made to the SLD, not the FCC, stating that ".as a general matter, the Permanent Extension Order contemplated that extension requests would be presented to the Administrator for review in the first instance. Thus, in the future, when reviewing extension requests made directly to the Commission, we expect to transfer such requests to the Administrator for initial review... In the future,.we caution applicants that such requests should be filed with the Administrator."