Wave 5 Funding for FY 2002
Wave 5 of Funding Year 2002 (previously "FY 5") will be released on Monday, June 17. Total funding in this wave is approximately $52 million for 2,390 applications. The cumulative total for FY 2002 is now $505 million for 19,300 applications.
Funding is still being provided only for Priority One (telecommunications and Internet access) services. Applicants with discount rates below 80% are being told that their requests for Priority Two (internal connection) services will be denied due to insufficient funds. It is not yet clear if any internal connection funding will be available at 80-89% discount levels, or even if full funding will be possible at the 90% level.
One subtle aspect of this wave is a change in the release date from Tuesday to Monday. We suspect this may have been done to set the stage for releasing Wave 6 on July 1 (or even the preceding Friday). If Wave 6 is of comparable size, this will permit the SLD to report that it had funded over 70% of the valid FY 2002 applications on or before the start for actual funding year. This will be a major achievement in light of historic program funding delays.
With start of the next funding year, July 1, fast approaching, applicants are reminded that they must have an approved technology plan and be in compliance with CIPA before they begin receiving discounted services for FY 2002. If a technology plan is not approved until September 1, for example, discounts for monthly Internet services would apply only to the last 10 months of the year. The key date is the start of services, not the date that an applicant files a Form 486 certifying plan approval and CIPA compliance.
The exceptions to these deadlines are as follows:
(a) Applicants receiving discounts only on basic telephone services do not require approved technology plans. Advanced telecommunications services, such as Centrex and T-1 access, are not considered "basic" services.
(b) Applicants receiving discounts only on telecommunications services (including advanced services) are not required to comply with CIPA.
(c) Applicants receiving discounts for Internet access and/or internal connection services for FY 2002, but who did not do so for FY 2001, may, for this first year, simply certify that they are "undertaking such actions" as to comply next year.
(d) Under a recent court decision, libraries need not comply with the filtering requirements of CIPA, but still require an Internet safety policy.
A new fact sheet was posted on the SLD Web site this week discussing on-site audits that are being conducted with selected E-rate beneficiaries either by SLD internal audit staff, the FCC's Office of Inspector General, or related contractors. The fact sheet should be required reading by all applicants. It discusses some of the major issues being addressed by the audits and lists the types of documentation that applicants are required to keep for five years (see Audit Fact Sheet ).
The SLD's notice follows, by only a few days, the release by the FCC Inspector General of a report earlier in 2002 (see OIG Report ) discussing concerns regarding program fraud and abuse. One telling statement is that, at the time of report, the FCC was "tracking 22 investigations being performed by the FBI and several local law enforcement agencies... ."
In part to stress the importance of the program rule that requires each applicant to pay their own, undiscounted, share of E-rate services, the SLD has initiated a new certification procedure as a part of its review of selected BEAR reimbursement forms. The criteria for selecting BEARs subject to this procedure is unknown but would logically focus on BEARs submitted for internal connections services and/or by high discount applicants.
As a part of the procedure, applicants are being asked to certify that they understand that payment for the undiscounted portion of the services received is a program requirement and that the service provider may not forgive that amount. The applicants are also being asked for the names and telephone numbers of their service providers so that the SLD can call and confirm that the applicants' portions have been paid. The new procedure is reportedly "temporary," but could easily become standard if applicant non-payment problems are uncovered.
The FCC has adopted a compromise solution to an ongoing dilemma of how to deal with E-rate funds that have been awarded but, for various structural reasons, not utilized. Despite growing applicant demand for funds, the FCC has until now been applying unused funds from earlier years to reduce Universal Service Fund ("USF") collections from the contributing carriers. Applicants have been arguing that unused funds from any given period should be rolled over for use in subsequent years.
The new FCC policy continues the existing carrier offset process for up to three more quarters, through March 2003, but then stipulates that "unused funds will be distributed to the schools and libraries program, increasing the funds available for the program." This is good news for E-rate applicants.
Although the formal FCC Order is not yet available, a press release on the new policy is available. (see Press Release ).