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Even though the E-rate program operates on a fiscal year basis, it is traditional at this time of year to reflect back on 2002 and to look forward to 2003. For both years, we believe the two key watchwords are “accountability” and, unfortunately as a result, “complexity.”
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| 1. |
By July 1, 2002, the SLD had issued Funding Commitment Decision Letters on over 70% of the FY 2002 E-rate applications. This was good news primarily for a large number of the smaller applicants. The bad news was these decisions represented only about 30% of the dollars to be committed and that a significant amount remains to be funded. |
| 2. |
The SLD established standardized deadlines for invoices and SPIN changes. Applicants must now contend with critical deadlines for submitting annual applications (Form 470s and Form 471s), confirming receipt of funded services (Form 486s), and requesting discount reimbursements (BEARs). |
| 3. |
The FCC initiated a major Notice of Proposed Rule Making (“NPRM”) requesting comments on a series of proposed E-rate program changes. |
| 4. |
A major focus was placed on program “waste, fraud, and abuse” issues. SLD review procedures were tightened, the on-site audit program was expanded, and certain cases were turned over to the FCC, FBI, and the Justice Department. The first criminal indictment of an E-rate service provider was made in December. The SLD also publicly announced the denial of one major application for improper competitive bidding procedures. |
| 5. |
FY 2002 marked the first year of the requirement for full compliance with the Children’s Internet Protections Act (“CIPA”). Libraries were granted some respite when a federal court voided the CIPA filtering requirement as applied to libraries. |
| 6. |
Extensive database capability was added to SLD Web site to provide public access to detailed FRN data, Form 471 status and display, entity numbers, and technology plan approvers. |
| 7. |
Online entry was enabled for submitting Form 486s electronically. To make manual filings more efficient, the SLD introduced a new series of OCR-readable forms (beginning with the Form 471 and the Form 486). |
| 8. |
Changes in the SLD’s Eligible Services List and supporting reference material placed increased emphasis on the issues of cost allocation and on-premise Priority 1 equipment. |
| 9. |
A new methodology was introduced for calculating library discount rates. |
| 10. |
The SLD began accepting appeals, SPIN changes, and invoice deadline extension requests by fax and e-mail. |
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| 1. |
Notwithstanding more complicated review procedures and the three-week extension to the application window, we expect continued SLD success in funding a high percentage of FY 2003 applications by July 1, 2003. |
| 2. |
The FCC will release one or more orders on E-rate program changes based on last year’s NPRM. One small order, made last year, but taking affect this year, will allow the rollover of unused E-rate funds from one program year into another. This should permit a 10-20% increase in fund size. |
| 3. |
The Supreme Court is scheduled to begin hearing oral arguments on last year’s court decision on CIPA filtering for libraries. A Supreme Court decision on this issue is expected within the year. |
| 4. |
Expanded enforcement measures will be evident in the escalating war against “waste, fraud, and abuse.” This is likely to include numerous application denials, additional vendor indictments, new Form 470 and procurement guidelines, and increased audit activity. |
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Tighter SLD review of procurement practices and funding requests, together with tighter Form 486 and invoice filing deadlines, will encourage more applicants to seek independent third-party assistance in the E-rate process. |
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The SLD has added an option for submitting Form 471s online utilizing a new “Interview Interface.” The interview format is designed to step smaller applicants through the application process. Conceptually, the new format is comparable to some of the popular tax filing programs for individuals (although at its current stage of development, the Form 471 interview interface is not as sophisticated).
The new interface can be used by individual schools or libraries and by school districts and library systems (with less than 25 sites, with no separate administrative buildings, and with no new buildings under construction). It cannot be used by consortia.
To try the new application platform, go to the “Apply Online” section of the SLD Web site and click on the Form 471 “Interview” button. Our guess, having experimented a bit with the new format, is that some applicants will like it while others will prefer the original format. (Please note that the interview platform is new and may be subject to some early bugs.) There is, however, little downside to trying the system. If an applicant gets part way through the interview (and has been assigned a Form 471 application number), the filing can be halted and resumed under the original system by using the Form 471 “Continue Incomplete” option.
A Form 471 Interview Filing Guide is available on the SLD Web site.
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While most applicants are focusing on the upcoming February 6th deadline, the last day of the Form 471 application window for FY 2003, there are actually several other early year deadlines that apply to various FY 1999 (out-of-the-window), FY 2001, and FY 2002 filings.
One obvious deadline to focus on is the Form 470 posting date. Since most applicants must file Form 470s, and have them posted on the SLD Web site for 28 days, before signing new contracts and submitting their Form 471s, the absolutely last day to post a Form 470 is January 9, 2003. It is already too late to mail a Form 470 to the SLD with expectations that it will be posted before this date, so all new Form 470s should filed online.
Another important date is January 28, 2003. This is the basic deadline for filing invoices (BEAR reimbursements or supplier invoices) for non-recurring services that had to be utilized by September 30, 2002, including installations funded in FY 2001 or in the out-of-the-window period for FY 1999. Invoices postmarked after these deadlines will not be processed and funding will be lost. Remember that BEAR forms must be acknowledged by suppliers before they can be submitted.
The other upcoming deadlines are for FY 2002 Form 486s which must be filed within 120 days of the start of service (normally July 1, 2002) or the date of the Funding Commitment Decision Letter (“FCDL”), whichever is later. The deadlines for applicants funded in Waves 1-10 have already passed. Applicants funded in subsequent waves, have later Form 486 deadlines. Here are the next few:
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FCDL Date |
Deadline |
| Wave 11 |
09/09/02 |
01/07/03 |
| Wave 12 |
09/23/02 |
01/21/03 |
| Wave 13 |
10/08/02 |
02/05/03 |
| Wave 14 |
10/21/02 |
02/18/03 |
| Wave 15 |
11/04/02 |
03/04/03 |
The penalty for missing a Form 486 deadline is a reduction in funding. If, for example, an applicant funded in Wave 6 did not file the associated Form 486 until December 29th, the SLD will adjust the start date to 120 days prior to the postmark date (i.e., to August 31, 2002) and reduce the funding accordingly (i.e., to 10/12ths of the originally approved amount).
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