Funding Status
FY 2011:
The SLD announced its initial demand estimate for FY 2011 last Thursday. This is an important step preceding the release of the first funding wave which we expect in early May. These numbers are preliminary because they may not include a few applications still being data entered, duplicative applications soon to be canceled, RAL changes, and future funding reductions and/or denials. Comparisons with similar numbers from preceding years, however, are indicative of demand trends and potential funding levels.
As shown in the table below, the total preliminary demand for FY 2011 rose over 10% from the preceding year, reversing two years of total demand reductions. Priority 1 demand continued its upward trend, rising over 6%. Priority 2 rose almost 14%.
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Total Demand
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% Change
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FY 2011
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$ 4,309,942,527.18
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10.1%
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FY 2010
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$ 3,915,889,486.98
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-1.8%
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FY 2009
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$ 3,986,033,329.00
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-7.5%
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FY 2008
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$ 4,307,572,380.00
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16.8%
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The critical comparison for high discount applicants seeking Priority 2 funding is the combined level of demand for Priority 1, in total, and Priority 2, at the 90% level. This, together with an estimate of roll-over funding, provides the best indication of the likely Priority 2 funding threshold for the next year. These numbers are shown in the table below.
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P1 + 90% P2
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% Change
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Roll-over
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Threshold
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FY 2011
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$3,181 M
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4.6%
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?
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?
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FY 2010
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$3,042 M
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6.7%
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$900 M
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80-81%
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FY 2009
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$2,852 M
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-5.6%
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$900 M
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77%
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FY 2008
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$3,022 M
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20.7%
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$600 M
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87%
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The "P1 + 90% P2" demand for FY 2011 is up almost $140 million (4.6%) from FY 2010. Almost all of this increase is due to Priority 1 requests. The major unknown at this point is the level of roll-over funding that the FCC will make available for FY 2011. Based on the first three of the four quarters the FCC will use to make that decision, there is $400 million in unused and available funds. Without a significant change in reserve policies, it’s unlikely that the roll-over for FY 2011 will be above $600 million. At that level, the Priority 2 funding threshold will not be much lower than 90%.
FY 2010 and FY 2009:
Wave 47 for FY 2010 will be released on Tuesday, April 19th, for $16.3 million. This will raise cumulative funding for FY 2010 to $2.44 billion. Priority 2 funding is still being awarded at 81% and above, and denied at 79% and below. The status of Priority 2 funding at 80% is pending an FCC decision.
Wave 84 for FY 2009 will be released Wednesday, April 20th, for $1.9 million. Total funding for the year stands at $2.79 billion.
Incomplete FY 2011 Applications
Although the application window for FY 2011 closed March 24th, applicants who did not certify their Form 470s, or did not submit some or all of their Item 21 attachments, still have work to do.
Within the next week or two, the SLD will send reminder letters to those applicants needing to submit certifications and/or Item 21 attachments. Those applicants will have 20 days from the date of the letters to file the missing information. Please note the following:
- Applications not completed within this extended deadline period will be considered out-of-window. The only recourse at that point will be an FCC appeal. As noted below in the discussion of the recent Al-Noor School decision (DA 11-605), the FCC continues to show limited flexibility on waiving the Form 471 filing deadline. We suspect, however, that they will have little sympathy for those also missing reminder deadlines.
- Applicants needing to submit certifications or attachments are encouraged to do so now and not to wait for the reminder letters.
Applicants not fully meeting the March 24th Form 471 deadline will find only limited information available over the next month or so on the status of their applications.
Online applications missing certifications show up on the SLD’s Application Status Tool simply as "Complete." This status indicator does not immediately change to "Certified – In Window" when the missing certifications are filed. Many will be updated in bulk a couple of weeks after the 20-day certification reminder deadline.
The SLD’s application status system does not currently have a special indicator reflecting missing Item 21 attachments. Indeed, the presence or absence of Item 21 attachments will be determined on an FRN-by-FRN basis —determinations that may ultimately be made during the PIA review process. At the moment, it is not clear how the SLD will determine which applicants will receive Item 21 attachment reminder letters. The most automated, but misleading procedure, would be to send reminder letters to all applicants who had not done online attachments for all FRNs on their applications. We expect that more information on this process will become available once the reminder letters are mailed.
E-Rate Updates and Reminders
Extended Deadline for Corrections:
The FCC issued an Order (FCC 11-60) last week to extend the deadline for making certain corrections to existing Form 471 applications during the PIA review process.
Technically, corrections for "clerical and ministerial" errors have previously been permitted only during the 20-day RAL period early in the SLD’s application review cycle. The new order permits corrections any time during the review process up until the funding commitment is issued. The following two points should be noted:
- Only "truly ministerial and clerical errors" can be corrected. "Such errors include only the kinds of errors that a typist might make when entering data from one list to another, such as mistyping a number, using the wrong name or phone number, failing to enter an item from the source list onto the application, or making an arithmetic error."
- By giving USAC the authority to accept these corrections, the FCC hopes to avoid unnecessary appeals to the FCC that would otherwise be required — and typically granted. Because USAC may be somewhat strict in defining correctable errors, however, the FCC notes that "Applicants that believe USAC has incorrectly rejected a clerical or ministerial correction may appeal that decision to the Commission."
New FCC Appeal Decisions:
The FCC released five decisions last week addressing a total of 52 waiver requests for FY 2002 through FY 2010. The new decisions, largely affirming past precedents, are summarized briefly below.
| DA 11-599 |
Upheld a USAC decision to deny a service delivery deadline to an applicant seeking funding for a telephone system expansion and for ongoing technical support. Since the application requested funding for both the equipment and the maintenance as monthly recurring services, no extension beyond the actual funding year was permitted. The following two points should be noted:
- Had the applicant split the requested funding into two parts, one for the recurring system support and one for the non-recurring system upgrade, a request to extend the service delivery deadline for the latter would most likely have been approved.
- This is the reverse of a situation in which lump sum, annual maintenance expenses are filed for as one-time charges. As such, the USAC system treats them as non-recurring charges and will want to change the category of service from Basic Maintenance of Internal Connections to pure Internal Connections. This is particularly problematic if it leads to 2-in-5 Rule violations or if Form 470s were not filed for Internal Connections. The proper way to treat one-time maintenance charges is to divide them by twelve and request monthly, recurring service funding.
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DA 11-605
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Waived Form 471 application deadlines for two of eleven applicants. In line with past precedent, the two successful appellants had missed the deadline by 14 days or less (one having a technical problem filing online); the unsuccessful appellants had missed the deadline by many more days.
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DA 11-606
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Approved the appeals of six applicants whose Telecommunications requests had been denied because their service providers had not properly registered as eligible carriers. In all cases, the FCC found that the carriers, in fact, were eligible even though their paperwork was not up-to-date or not yet filed at the time the applications were processed.
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DA 11-607
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Approved two appeals of funding that had been denied based on services to locations that USAC had deemed ineligible. One case appears to have been a simple misunderstanding. The other involved circuits from schools to two community colleges. Although the colleges are clearly ineligible locations, the FCC found the circuits themselves were eligible "…because the connections were used solely for transmitting course material from the colleges to eligible high schools." In other words, the circuits were not being used to provide services to the colleges.
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DA 11-672
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Granted thirteen appeals, and denied nineteen others, for competitive bidding rule violations. Consistent with past precedent, most of the approved appeals involved minor timing issues, or clerical errors in Form 470 citations, related to the 28-day waiting period. The denied appeals dealt with other violations such as requesting services not covered by Form 470s or other Form 470 problems.
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Submitting RAL Corrections:
Receipt Acknowledgment Letters ("RALs") note that certain corrections can be made to filed Form 471s by e-mail, fax, or mail, but simply refer applicants to the SLD Web site for instructions. These instructions can be found on the page labeled Step 7: Form 471 Receipt Acknowledgment Letter.
When submitting RAL corrections, it is important to document a successful submission. If submitting online, via the Submit a Question facility, you will receive a confirming e-mail and case number. If submitting by fax, print out the fax transmission record (and be prepared to fax it several times to get through). If submitting by mail, we recommend using an express mail service and retaining the tracking record.
The SLD’s News Brief for April 15, 2011, reviews the three basic levels of PIA application review including:
- Initial Reviews
- Final Reviews
- Quality Assurance ("QA")
Selective Reviews, Cost-Effective Reviews and other special purpose reviews may be discussed in a future News Brief.