News of the Week

Funding Status

Wave 15 for FY 2011 will be released on Tuesday, September 27th, for $39.2 million.  Cumulative funding for FY 2011 will be $956 million.  Only Priority 1 applications are being funded at this time, but Priority 2 funding at 90% is expected soon.  Through Wave 15, five of twenty-two EDU2011 applications for the "Learning On The Go" wireless pilot program will have been funded.

Wave 68 for FY 2010 will be released on Wednesday, September 28th.  Cumulative funding for FY 2010 is $2.73 billion.  As of this wave, Priority 2 funding will be provided at all discount levels.

Wave 94 for FY 2009 will be released on Monday, September 26th, for $1.57 million.  Cumulative funding for FY 2009 remains $2.87 billion.

SLD Fall Training Overview

The first of the SLD's fall training workshops will be held this Monday in Washington, DC.  Seven additional workshops will be held regionally from October 6 to November 8.

The SLD's Fall Applicant Training material is now available.  Although E-Rate Central will be reporting on this information in the coming newsletters, the agenda and a number of important topics are outlined below.

Understanding the Basics:  Provides an excellent overview, aimed at beginners, of the basic E-rate process and rules.

Welcome and Overview:  Summarizes the state of E-rate in 2011.

CIPA Update:  Reviews the longstanding CIPA rules and discusses last summer's updated rules implementing the E-rate provisions of the Protecting Children in the 21st Century Act.

Correcting Ministerial and Clerical Errors:  Discusses the types of Form 471 errors that may be corrected during the RAL and PIA processes, prior to the issuance of a funding decision, and what types of corrections are not allowable or are only conditionally allowable.  We were relieved to see that the discussion of allowable errors includes examples cited in the FCC's Ann Arbor decision (see our article on Clerical and Ministerial Errors in last week's newsletter).

Gifts:  Provides additional information on the E-rate gift rules including: (a) the distinction between permissible charitable contributions and prohibited gifts, (b) guidance on conferences and training, and (c) procedures for "curing" gifting violations.  Note that USAC is still awaiting further FCC guidance on these issues.

Discount Calculations:  Provides information on a number of discount calculations including: (a) a new USAC requirement, effective FY 2012, on dating NSLP data; (b) treatment of direct certification notices; and (c) acceptable and unacceptable uses of alternative discount mechanisms, either singly or in combination.

Eligible Services: Reviews the basics of eligible and ineligible products and services, including additional clarification on basic maintenance, dark fiber, and the resale or trade-in of older equipment.

Road to Success:  Covers the competitive bidding rules for both applicants and service providers, including (a) a new reference to internal "ethical regulation policies," (b) multi-tier bid evaluations, and (c) SPIN changes.

Tips for Success:  Includes program tips, filing tips, and available USAC resources.

E-Rate Updates and Reminders

IRS Clarification on Cellular Phones:

Earlier this month, the Internal Revenue Service issued guidance designed to clarify the tax-free treatment of employer-provided cell phones or of employer reimbursements for employee-provided cell phones (IR-2011-93).  The IRS Notice indicates:

1. "…when an employer provides an employee with a cell phone primarily for noncompensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee. The IRS will not require recordkeeping of business use in order to receive this tax-free treatment;" and
2. Alternatively, "…employers that require employees, primarily for noncompensatory business reasons, to use their personal cell phones for business purposes may treat reimbursements of the employees' expenses for reasonable cell phone coverage as nontaxable. This treatment does not apply to reimbursements of unusual or excessive expenses or to reimbursements made as a substitute for a portion of the employee's regular wages."

Importantly, applicants should note that the E-rate treatment of employer-provided or employee-provided cell phones is different.  In particular:

1. The cost of school- or library-provided cell phone service for staff members is eligible if, and only if, the service is used for educational purposes.  If cell phones are used for other purposes, service costs should be allocated accordingly.  The allocation process, if needed, is more easily assured if discounts are received through BEAR reimbursements.
2. If the applicant is reimbursing employees for business cell phone uses — i.e., the applicant is not the billed entity for cellular service — none of the reimbursement costs are E-rate eligible.

Consortium LOA Language:

Now that technology plans are no longer required for Priority 1 services, consortia may wish to update the language of their letters of agency accordingly.  The sample LOA on the SLD Web site still has pre-FY 2011 technology plan language.  We recommend that paragraph (c) of the SLD's sample LOA be revised as follows:

(c) I certify that, if required by Commission rules, our [Insert Type of Entity (e.g. school, school district(s), library(ies))] is/are covered by a technology plan(s) that is written, that covers all 12 months of the funding year, and that has been or will be approved by a state or other authorized body, or an SLD-certified technology plan approver, prior to the commencement of service. The plan(s) is written at the following level(s):
____ an individual technology plan for using the services requested in this application; and/or 
____ higher-level technology plan(s) for using the services requested in this application; or 
____ no technology plan is needed; applying for Priority 1 Telecommunications and Internet Access services only."

Schools and Libraries News Brief dated September 23 – Service Provider Tips

Last week's SLD News Brief for September 23, 2011, provides several suggestions for service provider activities for the next few months leading up to the opening of the Form 471 window for FY 2012.  The tips include the following:

1. File Form 473s for FY 2010 and FY 2011 if not already done.
2. Verify that USAC has current contact and billing information on the Form 498.
3. Finish filing Form 474s (SPIs) for FY 2010 recurring services.
4. Finish acknowledging Form 472s (BEARs) for FY 2010 recurring services.
5. Check the status of FY 2010 non-recurring services (with service delivery deadlines of September 30, 2011).
6. Verify that customers have submitted Form 486s for FY 2011 funding awards.