Universal Service Fund USF

1
Universal Service Fund(USF)

• MIEM Technology Conference
• November 15, 2001

2
USF Life Cycle
3
USF Life Cycle

• Inception (the Act, the Order, and the Fund)
• Infancy (that first year)
• Toddlerhood (years 2 and 3)
• Preschool (CIPA and where we are now)
• Kindergarten (crossing the threshold)
• Elementary School (the future)
• The Bell Rings (footnotes)

4
Inception
5
Inception

• Telecommunications Act of 1996
• Directed the FCC to adopt a Universal Service
  Order
• Designed to ensure that all eligible schools and
  libraries have affordable access to modern
  telecommunications and information services
• 2.25 billion annually is available to provide
  eligible schools and libraries with discounts for
  authorized services (the E-rate)

6
Inception, cont.

• Supported by the Universal Service Fund
• Established by the FCC to provide for affordable
  access to specified telecommunications services
  for all communities, regardless of location or
  economic strata
• The Universal Service Fund (USF) is administered
  by the not-for-profit Universal Service
  Administrative Company (USAC) under the direction
  of the FCC
• The Schools and Libraries Division (SLD) of USAC
  administers the Schools and Libraries Program

7
Infancy
8
Infancy(USF Year 1)

• Program Parameters Defined
• Level of Discounts
• 20 to 90 percent, depending on
• Economic need (percentage of students eligible
  for the National School Lunch Program - NSLP) and
• Location (urban or rural)
• Urban or Ruralis based on definitions adopted
  by the U.S. Department of Health and Human
  Services Office of Rural Health Policy

9
Infancy, cont.(USF Year 1)

• U.S. Office of Management and Budgets
  Metropolitan Statistical Area (MSA) method is
  used to designate schools and libraries as urban
  or rural
• Discount percentages for Michigan schools and
  libraries based on October 2000 NSLP data are
  provided on the MIN web site at
  www.state.mi.us/cio/min

10
Infancy, cont.(USF Year 1)
11
Infancy, cont.(USF Year 1)

• Eligible Services
• Basic local and long distance telephone services
• Internet access services
• Acquisition and installation of equipment to
  provide internal connections

12
Infancy, cont.(USF Year 1)

• SLDs Eligible Services List
• Basic Telephone Service is allowed, but a Burglar
  or Fire Alarm Telephone Line is not allowed
• E-mail Service and Account Fees are allowed, but
  Filtering Service is not allowed
• Hubs are allowed, but Asbestos Removal is not
  allowed

13
Infancy, cont.(USF Year 1)

• Funding Rules of Priority
• Priority 1 Telecommunications services and
  Internet access
• Priority 2 Internal connections
• Eligible Entities
• Schools
• Libraries
• Consortia

14
Infancy, cont.(USF Year 1)

• Eligible Schools
• Public schools
• Non-public schools
• Private Parochial
• Charter schools
• Intermediate units
• Ineligible Schools
• Home school programs
• Higher education
• Private vocational skills schools (proprietary)

• Eligible Libraries
• Public libraries
• Private libraries
• Research libraries (that make services publicly
  available that are not part of higher
  education)
• Ineligible Libraries
• Academic libraries (unless their budget is
  completely independent)

15
Infancy, cont.(USF Year 1)

• Technology Plans
• Required if school or library applies for other
  than basic local and long distance telephone
  services
• Purpose is to ensure that the school or library
  has the ability to use the discounted services
  once they are purchased
• Tech plans should cover a three-year period
• Should specify how schools and libraries plan to
  integrate the use of technology into their
  curricula and programs

16
Infancy, cont.(USF Year 1)

• Helpful information for writing technology plans
  in Michigan
• Schools
  www.techplan.org
• Libraries www.libraryofmichigan.org/services/usft
  ech plan.html

17
Infancy, cont.(USF Year 1)

• Application Forms
• Three key forms
• FCC Form 470 (Description of Services Requested
  and Certification
• FCC Form 471 (Services Ordered and Certification)
• FCC Form 486 (Receipt of Service Confirmation)
• Reimbursement Forms
• Discounts on bills (FCC Form 474), or
• Reimbursements (FCC Form 472 - BEAR Form)

18
Infancy, cont.
How Discounts Work
100
You get 55
(existing) bills
in discounts
you would pay
You apply for discounts
K
The vendors bill
drops by 55
Vendor
Vendor invoices SLD/SLD
gets 55
approves invoice
from SLD!
You now only
owe 45
J
12
12
12
19
How Reimbursements Work
100
You get 55
(existing) bills
in discounts
you would pay
You apply for discounts
K
You pay 100 of
bill
Vendor
SLD approves
sends
paperwork/sends check to
you 55!
vendor
You apply for
reimbursement
J

9/19/00
-
-

13
20
Infancy, cont.(USF Year 1)

• Application Process
• Develop a technology plan
• Submit FCC Form 470
• Provide for a 28-day competitive bidding period
• Select service provider/sign contracts
• Submit FCC Form 471 inside the application window
• Survive the SLDs data entry process
• Receive and review your Form 471 RAL

21
Infancy, cont.(USF Year 1)

• Receive and review your FCDL
• Assure technology plan approval
• Receive services
• File Form 486
• Retain records (for at least 5 years!)
• Appeal (if denied for invalid reason)
• Pay your share
• Prepare for the next funding year

22
Infancy, cont.(USF Year 1)

• Year 1 of the USF program
• January 1, 1998 - June 30, 1999
• 30,120 applications received
• 25,785 applications funded
• 1.66 billion funded in 10 waves (to 70 level)
• Michigan received 58.5 million
• Michigan ranked 7th in nation for funding
• Approximately 36.55 per student (Michigan)

23
Toddlerhood
24
Toddlerhood(USF Years 2 3)

• Year 2 of the USF program
• July 1, 1999 - June 30, 2000
• 32,000 applications received
• 2.435 billion requested
• 2.125 billion funded in 21 waves (to 20)
• Michigan received 80.06 million
• Michigan ranked 8th in nation for funding
• Approximately 50.04 per student (Michigan)

25
Toddlerhood, cont.(USF Years 2 3)

• Year 2 Twist
• Many below the 70 discount level did not even
  apply in Year 2 because applications were
  approved in Year 1 only down to the 70 level
• As a result, all approved applications were
  funded in Year 2, even those received outside the
  filing window (Year 2 Out-of-the-Window
  applications)

26
Toddlerhood, cont.(USF Years 2 3)

• Year 3 of the USF program
• July 1, 2000 - June 30, 2001 (Yellow)
• gt36,000 applications received
• 4.72 billion requested
• 2.12 billion funded in 29 waves (to 82 level)
• Michigan received 53.48 million
• Michigan ranked 10th in nation for funding
• Approximately 33.43 per student (Michigan)

27
Toddlerhood, cont.(USF Years 2 3)

• Year 3 Twist
• 79 percent of applications submitted
  electronically
• Four appeal funding waves so far

28
Toddlerhood, cont.(USF Years 2 3)

• Top 10 states at the end of Funding Year 3
• 1. California 937.8 M
• 2. New York 663.2 M
• 3. Texas 433.8 M
• 4. Illinois 361.6 M
• 5. Georgia 211.1 M
• 6. Florida 194.4 M
• 7. Michigan 192.0 M
• 8. Puerto Rico 191.6 M
• 9. Pennsylvania 186.2 M
• 10. Ohio 163.9 M

Cumulative Totals Years 1 - 3
29
Preschool
30
Preschool(USF Year 4)

• Year 4 of the USF program
• July 1, 2001 - June 30, 2002 (Pink)
• 37,188 applications received
• 5.78 billion requested
• 1.63 billion funded so far in 7 waves (to 90
  level)
• Michigan has received 67.98 million so far
• Michigan ranks 7th in nation for funding

31
Preschool, cont.(USF Year 4)

• Approximately 39.99 per student
• Michigan collaborated with MiCTA to establish a
  statewide contract for Telecommunications
  Services and Internet Access
• Resulted in statewide Form 470 246270000298415
• Good for three years (USF funding years 4, 5 and
  6)
• Listing of eligible USF contracts at www.micta.org

32
Preschool, cont.(USF Year 4)

• Year 4 Twist
• 84 percent of applications submitted
  electronically
• CIPA - Childrens Internet Protection Act
• Applicant now must certify compliance with CIPA
  if seeking E-rate funds for Internet access,
  internal connections, or non-basic telephone
  services
• Compliance with CIPA includes...

33
Preschool, cont.(USF Year 4)

• Internet Safety Policy
• Must address procedures the district or library
  will follow to
• protect minors from access to inappropriate
  matter on the Internet and World Wide Web
• ensure the safety and security of minors when
  using electronic mail, chat rooms, and other
  forms of direct electronic communications

34
Preschool, cont.(USF Year 4)

• address the unauthorized access, including
  so-called hacking and other unlawful activities
  by minors online
• address the unauthorized disclosure, use, and
  dissemination of personal identification
  information regarding minors
• restrict minors access to materials harmful to
  minors

35
Preschool, cont. (USF Year 4)

• Technology protection measure (filtering)
• Required for any computers with Internet access
• Must protect against access to visual depictions
  that are
• obscene
• pornography
• harmful to minors

36
Preschool, cont. (USF Year 4)

• Enforcement methods
• Identify how the district or library will enforce
  the Internet safety measures during use of any
  computers with Internet access by minors

37
Preschool, cont.(USF Year 4)

• Monitoring
• For schools only - must include monitoring the
  online activities of minors
• Libraries are NOT required to monitor the online
  activities of minors
• CIPA and N-CIPA do NOT require schools or
  libraries to track Internet use by identifiable
  users

38
Preschool, cont.(USF Year 4)

• New Form 479 added to the process
• Billed Entity must collect a completed and signed
  Form 479 from all consortia members before can
  file the Form 486
• Billed Entity not responsible for accuracy of the
  Forms 479
• Entire consortium will not be penalized due to
  the non-compliance of an individual member(s)

39
Preschool, cont.(USF Year 4)

• The Administrative Authority certifies on the
  Form 479 that recipients under its administrative
  authority
• a) have complied with CIPA or
• b) are undertaking actions to comply with CIPA
  for the next funding year, or
• c) CIPA does not apply because discount services
  being received are for telecom services only.

40
Preschool, cont.(USF Year 4)

• The Billed Entity certifies on the revised Form
  486 that the recipients of service
• a) have complied with the requirements of CIPA
  or
• b) are undertaking actions to comply with CIPA
  for the next funding year or
• c) CIPA does not apply because discount services
  are for telecom services only.

41
Preschool, cont.(USF Year 4)

• ALA and ACLU lawsuits challenge the applicability
  of CIPA to libraries
• the two cases have been consolidated by the court
  and will be heard together
• trial date set for February 14, 2002

42
Preschool, cont.(USF Year 4)

• No lawsuits from schools
• Perhaps because schools have much greater
  flexibility restricting free speech under the
  concept of educational suitability and in
  loco parentis
• Also, schools are considered limited use
  facilities whereas libraries are more of an open
  forum

43
Preschool, cont.(USF Year 4)

• Form 486 filing deadlines
• 10/28/2001 if your services started before then
  or if you received an FCDL before that date
• Within 120 days after receipt of an FCDL or the
  start of services, whichever occurs later (and if
  these events occur after 10/28/2001)
• Refer to the CIPA Compliance Calculator
  developed by Funds For Learning at
  www.fundsforlearning.com

44
Preschool, cont.(USF Year 4)

• Form 486 filing deadlines
• SLD in the midst of a huge processing backlog for
  Year 4 Forms 486
• New Jersey post office delays not helping matters

45
Preschool, cont.(USF Year 4)

• Pink Postcard Dilemma
• The SLD rejected several hundred Year 4 Form 471
  applications erroneously
• Michigan applicants received a total of 134 Pink
  Postcard rejections
• About 60 percent of these were legitimate
  rejections 40 percent sent in error
• SLD has given second chance to only 8 Michigan
  Pink Postcard recipients

46
Kindergarten
47
Kindergarten(USF Year 5)

• Year 5 of the USF program
• July 1, 2002 - June 30, 2003 (Blue)
• Form 471 application window is Noon, Monday,
  November 5, 2001 through 1159PM Thursday,
  January 17, 2002
• CIPA compliance must be in place by July 1, 2002
  if you certified that you were attempting to
  comply with CIPA in Year 4

48
Kindergarten, cont.(USF Year 5)

• Michigan collaborated with MiCTA once again to
  establish a statewide master contract for
  Internal Connections
• Will result in a statewide Form 470
• Contracts will be good for three years (USF
  funding years 5, 6 and 7)
• Contracts will be posted to MiCTA web site as
  soon as they become finalized

49
Kindergarten, cont.(USF Year 5)

• Form modifications
• Form 500
• Being updated due to CIPA requirements
• Cannot be used to change the Service Start Date
  to a date earlier than what is on the Form 486
  Notification Letter

50
Kindergarten, cont.(USF Year 5)

• New Notification Letters
• Form 486 Notification Letter
• Currently under development at the SLD to confirm
  receipt of your Form 486
• Form 500 Notification Letter
• Currently under development at the SLD to confirm
  receipt of your Form 500

51
Kindergarten, cont.(USF Year 5)

• A few things made easier
• SPIN changes, thanks to the Copan ruling
• Change is allowed under state local procurement
  laws
• Change is allowed under terms of contract
• Original Service Provider (SP) has been notified
  of the intent to make change

52
Kindergarten, cont.(USF Year 5)

• A few things made easier
• Product and Service Substitutions
• 1-to-1 changes no longer required
• Does not have to be initiated by the SP
• Same functionality now more broadly interpreted

53
Kindergarten, cont.(USF Year 5)

• A few things made easier
• E-certification
• SLD to have operational for Year 5 Form 471
  window opening
• Will require applicant to apply for User ID and
  PIN
• PINs assigned only to those individuals who have
  hand-signed Forms 471 and 486 that have been data
  entered at SLD
• User ID and PIN will reside with the person,
  not an entity

54
Kindergarten, cont.(USF Year 5)

• A few things made easier
• Forms to have E-cert capability
• 470 - Services Requested
• 471 - Services Ordered
• 486 - Services Confirmed
• 500 - Service Change
• 472 (BEAR) - Applicant Invoice
• Refer to SLDs E-certification Update
  presentation on MIN and Merit web sites

55
Kindergarten, cont.(USF Year 5)

• A few things made easier
• FCC Deadline Extensions
• Deadline for delivery and installation of
  non-recurring services is the Sept. 30 that
  follows the June 30 close of the relevant funding
  year
• Non-recurring services may be delivered through
  Sept. 30 of the following calendar year if
  certain decisions (e.g., FCDL SP change
  approved ) are issued after March 1

56
Kindergarten, cont.(USF Year 5)

• A few things made easier
• Item 21 Attachments
• May be sent to the SLD after the January 17, 2002
  Year 5 Form 471 postmark deadline, so long as
  they are received by the SLD within a reasonable
  timeframe, and so long as the applicant filed
  electronically and certified by January 17, 2002
• Keep in mind - the SLD cannot process your Form
  471 application until it receives your Item 21
  Attachment

57
Kindergarten, cont.(USF Year 5)

• Kindergarten Math
• Discounts received on items of 500,000 or more
  must be amortized over three (3) years
• If on-premise equipment costs gt67 of funding
  amount requested to acquire services, then SLD
  will likely reject the application because it
  looks like a purchase was made up front
• 500,000 one-time 60,000 recurring 560,000
• 500,000/560,000 89 which is gt 67

58
Elementary School
59
Elementary School(USF Year 6 and Beyond)

• Notice for Proposed Rule Making (NPRM) for Year 6
• Was supposed to have been released by the FCC
  back in August 2001
• No sign of it yet
• Laundry list of changes has been compiled by
  state E-rate coordinators around the nation

60
Elementary School, cont.(USF Year 6 and Beyond)

• A few proposed responses to the NPRM
• Have the SLD fill in the blank when the
  information is obvious and is located in another
  section of the application form
• Change the appeal filing deadline to a postmark
  date (as opposed to a received date), and
  extend it to 90 days after the RAL or FCDL date
  instead of only 30 days
• Simplify the application process...

61
Application Process Flowchart
62
Elementary School, cont.(USF Year 6 and Beyond)

• Block Grants
• Still in favor by many
• No sign of any legislative action yet
• No decline yet in the number of schools and
  libraries applying for E-rate funds, even with an
  horrific application process
• Would likely mean less money overall, but a
  simpler means by which to apply for and receive
  that lesser amount

63
The Bell Rings
64
The Bell Rings(USF Footnotes)

• Top Denial Reasons
• Form 470 not posted for service type requested
• Form 470 not filed for new services requested
• Failure to meet 28-day Form 470 posting
  requirement (competitive bidding)
• Signed certification form not received by SLD
• No technology plan in place (when required)
• Discount below the funding threshold

65
The Bell Rings, cont.(USF Footnotes)

• Number of applications has steadily increased
  over the life of the USF program

66
The Bell Rings, cont.(USF Footnotes)

• Total discount dollars funded to applicants
  reached program cap in Years 2 and 3

67
The Bell Rings, cont.(USF Footnotes)

• Stumbling blocks to avoid
• Use most recent version of the forms and
  instructions
• Read the instructions carefully!
• Always check the SLDs Eligible Services List
  (ESL)
• Watch dates and deadlines - dont leave
  everything until the last minute

68
The Bell Rings, cont.(USF Footnotes)

• Stumbling blocks to avoid
• Dont combine multiple applications - mail
  applications or their attachments separately
  (remember the Year 4 Pink Postcards!)
• Make sure you have a current, approved technology
  plan (plans must be re-approved every three
  years)

69
The Bell Rings, cont.(USF Footnotes)

• Stumbling blocks to avoid
• Avoid red words or phrases
• Wide Area Network
• WAN
• Modem
• Own
• Monitor
• Internet2

70
The Bell Rings, cont.(USF Footnotes)

• Stumbling blocks to avoid
• Keep complete records of everything (for 5
  years!)
• Keep a log or journal of both written and verbal
  correspondence with the SLD or FCC
• Phone calls
• Application form submissions
• Inquiries and responses (via e-mail and fax)

71
The Bell Rings, cont.(USF Footnotes)

• Stumbling blocks to avoid
• Review RALs and FCDLs carefully to make sure they
  are accurate
• Report corrections immediately to the SLD (and
  document)
• Use only approved methods to increase your
  discount percentage
• Feeder schools, projections based on Title I
  programs, or non-random surveys are NOT allowed

72
The Bell Rings, cont.(USF Footnotes)

• High connection rates attributed to the E-rate
  program
• New York Times, October 28, 2001 - latest
  statistical report compiled by Quality Education
  Data indicates that
• 97 of Americas public schools are now connected
  to the Internet
• 84 of public school classrooms are online
• Average ratio of students-per-computer is 5-to-1

73
The Bell Rings, cont.(USF Footnotes)

• Michigan schools and libraries have benefited
  from the E-rate program to the tune of 260
  million over the past 4 years
• Not an easy way to earn a buck, but there are
  definitely to try and go after

74
The Bell Rings, cont.(USF Footnotes)

• Resources to go to for assistance
• www.sl.universalservice.org
• www.state.mi.us/cio/min
• www.merit.edu
• www.micta.org
• http//www.dpi.state.wi.us/dlcl/pld/cipafaq.html
• Ask your E-rate Training Coordinator

75
Schools Out!(Questions?)

• Laurie Taylor
• Michigan Information Network
• 517.241.1642
• taylorL4_at_state.mi.us