ERate

1
E-Rate
Overview, Update, and Key Issues Fall 2005
11/7/05
2
Workshop Agenda

• Brief overview of E-rate program
• Whats new for FY 2006
• E-rate funding in eight steps
• Special topics
• Selective reviews and audits
• Top 10 denial reasons
• E-rate resources

3
General Framework

• 20-90 discounts on four types of services
• Telecommunications
• Internet Access
• Internal Connections (networking equipment)
• Internal Connections (basic maintenance)
• Annual applications for funding
• Annual cap of 2.25 billion plus roll-over
• Priority 1 Telecom and Internet Access Full
  funding
• Priority 2 Internal Connections Allocated
  funding
• Basic SLD overview
• www.sl.universalservice.org/overview

4
Eligible Services

• Telecommunications
• Basic telephone (local, long distance, and
  mobile)
• Advanced telecom (Centrex, T-1, WANs, etc.)
• Internet Access
• Internal Connections equipment
• Network wiring, routers, hubs, switches, etc.
• PBXs and key systems
• Internal Connections basic maintenance

5
E-Rate Opportunities and Issues

• Important source of technology funding (FY 1998
  2005)
• 15 billion nationwide 2 billion for NYS
  
• Time-consuming, bureaucratic, and confusing
  program
• Forms 470, 471, 472, 479, 486, and 500
• Service eligibility and discount rate issues
• Long lead time and competitive bidding
  procedures
• Strict application review process
• Additional procedures for consortiums
• Program may not be for everyone

6
Basic E-Rate Cycle Pre-Commitment

• Form 470 - Describes services required
• (fall) - Posted on SLD Web site
• Form 471 - Calculates allowable discount rate
• (winter) - Requests funding for specific services
• - Requires billing or contract documentation
• PIA - Detailed SLD review of applications
• (spring - fall) - Often requires additional
  documentation

7
Basic E-Rate Cycle Post-Commitment

• Form 486 - Confirms use of approved services
• (when funded) - Certifies tech plan and CIPA
  compliance
• Funding Alternatives (throughout year)
• SPI - Service provider discounts bills
• (Form 474) - Schools pay only undiscounted
  amount
• BEAR - Discounts reimbursed after the fact
• (Form 472) - Based on actual bills paid

8
Critical Deadline Issues
9
Benefits of Filing Online

• Available for Form 470, Form 471, and Form 486
• Provides check on field information
• Direct entry or interview mode
• Important Must use electronic signature or mail
  signed certification page to SLD

10
Whats New for FY 2006

• Form color is yellow
• Tighter enforcement of rules and procedures
• More audits and site visits
• Second year of new 2 in 5 rule
• Online operational changes
• New PIN system
• Block 4 upload option
• Online Item 21 option
• Unknowns
• Anti-deficiency Act (ADA) exemption
• Katrina relief efforts
• New FCC and Congressional initiatives

11
E-Rate in Eight Steps

• Technology plan
• Form 470 and competitive bidding
• Bid assessment and contracts
• Form 471 application
• PIA application review
• Funding commitment and Form 486
• Vendor discounts and BEAR reimbursements
• Record retention

12
Step 1 Technology Plan

• Basic premise E-rate requests should be based
  on a technology plan covering everything but
  basic telephone services
• Need a technology plan covering FY 2006 before
  filing Form 470
• Need an approved technology plan before the start
  of services (normally July 1, 2006)

13
Technology Plan Guidelines

• Five required elements
• Goals and objectives
• Assessment of current technology
• Staff development
• Budget
• Review and evaluation process
• Tip 1 Cover all E-rate services
• Including telecommunications services
• Consider E-rate filing plan addendum
• Tip 2 Cover entire funding year(s)
• Plan can be approved for three years if it covers
  all three years (including budget)

14
Step 2 Form 470 and Competitive Bidding

• Basic premise E-rate program based on fair and
  open competitive bidding
• Form 470
• Alerts vendors to applicant needs
• Must be posted on SLD Web site for 28 days
• Warnings
• Does not supplant state and local procurement
  rules
• Must be based on technology plan
• Must be carefully aligned with RFPs (if used)
• Keep vendors out of the planning, RFP, and Form
  470 process

15
Form 470 Contact Information

• Primary contact (Item 6) should be knowledgeable
  representative
• Answer questions re. needs and bidding process
• Receive and log vendor queries and bids
• Alternative contact (Item 12) is optional
• Other contact or procurement information can be
  entered as text in Item 13a

16
Form 470 RFP Procedures

• RFP, if used, must be referenced
• Service(s) covered by RFP must also be listed in
  Items 8-11
• RFP response period must be aligned with Form
  470s 28-day posting requirement.
• Warning Be careful about mandatory bidder
  meetings and walk-throughs

17
Form 470 Block 2 Examples
18
Form 470 Entities

• Item 16 Eligible entities
• Geographically identified by area code and prefix
• Item 17 Billed entities
• BEN and name
• Often only the applicant is listed
• Item 18 Ineligible entities (if any)
• Name, area code, and prefix

19
Form 470 Check-offs

• Warning Basic telephone check-off is dangerous
• BEAR/SPI check-off
• Multi-year contract and extensions check-off
• Other services needed (can check all)
• Certifications are serious

20
Form 470 Timing

• Must be posted for at least 28 days before
• Vendors are selected
• Contracts are signed
• Form 471 is signed and submitted
• File online to post immediately
• Posting establishes two key data elements for
  Form 471
• Form 470 number
• Allowable Contract Date (ACD)
• Warning Do not forget to certify by close of
  window

21
Competitive Bidding Tips

• Cannot ignore any reasonable bids or requests for
  additional information
• Existing service provider rates may be treated as
  bids
• Document and keep everything
• Requests for information, and responses
• Winning and losing bids
• Use memo to file to document one or no bids

22
Step 3 Bid Assessment And Contracts

• If no competitive bids, must be prepared to
  support service as cost effective
• If multiple competitive bids, must be prepared to
  support selection of cost effective bid
• Price of eligible service must be most important
  factor
• Use bid assessment matrix

23
Bid Assessment Matrix
www.e-ratecentral.com/applicationTips/bidAssessmen
t/FRN_Bid.xls
24
Contract Requirements

• Contracts required for all but certain telecom
  and Internet tariff and MTM services
• Must be real contract
• As defined by state law
• Signed by both parties
• Dated by both parties
• Can be contingent, but applicant signer must be
  authorized
• Quotes (or POs) are not sufficient without a
  contractual covering letter
• www.e-ratecentral.com/us/nys/resources/NYS_Vendor
  _Contract_Letter.asp

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OGS State Master Contracts

• Selected contracts have been competitively bid
  and can be used under NYS Form 470
• Warning Be careful re. contract and expiration
  dates
• Most contracts are not competitively bid
• Warning Must follow OGS procedures (e.g.,
  mini-bid)
• Important Web links
• NYS Form 470s
• www.ogs.state.ny.us/purchase/snt/wiredindex/defau
  lt.asp
• OGS E-rate contract list
• www.ogs.state.ny.us/purchase/snt/wiredindex/nywir
  ed.asp

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Step 4 Form 471 Application

• Purpose
• Calculation of discount rate(s)
• Requests specific discount on each tariffed,
  monthly, and contract service
• Separates eligible from ineligible costs
• An important and complex form

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Block 4 Discount Rates

• Based on need
• Poverty
• Defined by National School Lunch Program
• www.fns.usda.gov/cnd/governance/notices/iegs/IEG0
  5-06.pdf
• Location
• Rural vs. Urban
• All flow from individual school data
• School districts use weighted average of school
  discounts
• Libraries use aggregate school district data
• New upload option

28
Discount Percentages
of Students Eligible for School Lunch Program
Discounts
29
NYSED Web Site for School NSLP Enrollment Data

• Link portal.nysed.gov/pls/cn_port/mel3_pkg.elig_
  enroll_query
• Features
• Search feature for individual school or group
• Data available on month-by-month basis
• Pro forma enrollment numbers for Provision II
  schools
• Note Must use with Internet Explorer, not
  Netscape

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Participation vs. Eligibility Alternative
Measures

• Comparable measures (milk/breakfast programs,
  Medicaid/public housing data)
• Sibling searches
• Survey (can extrapolate from 50 response rate)
• Feeder system not approved
• Note SLD reviews using state lunch program
  participation
• data, so document all higher eligibility data

33
Non-Instructional Facilities (NIFs)

• All sites must be listed on Block 4
• With individual entity numbers
• Often require ownership and use certifications
• Plain NIFs use aggregate discount rates
• NIFs with classrooms are problematic
• Must use own matrix discount
• Based on student snapshot

34
Block 5 FRNs

• One Block 5 per
• Service type
• Vendor
• Contract
• Site or sites
• Each Block 5 contains
• Form 470 link
• Vendor SPIN link
• Multi-year contract information
• Funding amount (eligible and ineligible, monthly
  or one-time)
• Discount rate (and Block 4 link)

35
Item 21 Attachments

• Required to describe and document actual services
  requested on Block 5
• Types of documentation
• Copy of contract
• Vendor quote or bill
• Applicant-provided description
• Eligible Products database may provide Item 21
  attachment

36
SLD Telecommunications Example
37
Item 25 Resources

• Must have supporting resources
• Computer hardware and software
• Training
• Maintenance
• Electrical capacity
• Requires budgeted amount for these resources
• Special killer check box for vendor funding

38
Form 471 Timing

• Must be submitted on-line or postmarked by
  1159 pm EST on day of deadline
• Certification and submission must be after
  Form 470 ACD and contract dates
• Item 21 attachments need not be submitted by
  deadline, but early submission is recommended
• Watch for and review RAL carefully

39
Step 5 PIA Application Review

• All applications go through multiple review
  stages
• Problem Resolution in Kansas (mailed forms)
• Selective Review (selected applicants)
• Initial Review
• Final Review
• Quality Assurance
• Can follow progress on-line
• Most require additional information from
  applicants
• Supporting documentation
• Special certifications
• FCC RNs and LOAs
• Seven-day response cycles

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Step 6 FCDL and Form 486

• Funding decisions issued in waves
• Hopefully beginning by at least May
• Smaller, less complicated Priority 1 applications
  usually processed first
• Typical progress by July 1
• lt 1/2 applicants
• lt 1/3 dollars
• Many large applications undecided by Nov./Dec.
• Funding delays appear to be growing
• Tighter PIA procedures, invoicing reviews,
  COMADs, etc.
• Katrina relief priorities may further slow FY
  2006

41
FCDL and Form 486, cont.

• FCDL provides funding decisions for each FRN
• Funded
• Not Funded
• As Yet Unfunded
• Carefully review all decisions
• Particularly if not FRN approved as submitted
• Adverse decisions can be appealed to SLD or FCC
• Funded FRNs must be enabled with Form 486
• Certifies that service is being used
• Certifies technology plan approval
• Certifies CIPA compliance

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Step 7 Discounts Reimbursements

• Two options for funds utilization
• Bills discounted by vendor (SPI process)
• Discounts reimbursed to applicant (BEAR
  process)
• Choice is at applicants option (theoretically)
• Discounts available
• Only on eligible services actually used
• Up to funding commitment maximum
• Related issues
• SPIN changes and splits
• Service substitutions
• Invoice and service extensions

43
Vendor Discounts

• Best option to minimize cash payments for
  services
• Points to remember
• Vendors may require separate accounting forms
• Discounts should be audited for accuracy
• Cellular bills often discounted a month in
  arrears
• May have to request discount credits if funding
  is approved after July 1
• Use pre-discount amounts to support next years
  application

44
BEAR Reimbursements

• Best option to maximize budget flexibility
• Points to remember
• BEAR must be acknowledged by vendor before
  submission
• Reimbursements flow back through vendor and must
  be carefully tracked

45
Step 8 Required Recordkeeping

• Technology plan and approval letter
• Application documentation
• NSLP data
• Budget for Item 25 resources
• Backup for Item 21 attachments
• PIA submissions
• All forms and attachments
• Bids and evaluations (incl. losing bids or no
  bids)
• Contracts
• Delivery, testing, and asset inventory records
• Invoices and proof of payment

46
Program Compliance Issues

• Greater focus on waste, fraud, and abuse
• PIA scrutiny, including selective reviews
• Audits by SLD, FCC, and contractors
• Vendor investigations by SLD, FCC, DOJ, etc.
• Consequences for applicants and vendors
• Denied or reduced funding
• Delayed funding decisions
• Retroactive commitment reductions (COMAD)
• Criminal indictments

47
Selective Reviews

• Special PIA review team
• Typically initiated with 14 page fax of questions
  and instructions. Sample available at
• www.sl.universalservice.org/data/pdf/M
  egaFax.pdf
• Target criteria Large requests or suspected
  problems
• Areas of concern
• Technology plans
• Budget to cover all needed resources (see Form
  471 Item 25)
• Competitive procurement (bids and evaluations)
• Consultants
• Contracts

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On-Site Beneficiary Audits

• In-depth, on-site audits
• USAC staff or FCCs OIG staff
• Professional outside auditors (e.g. KPMG)
• Approximately 100 full on-site audits this year
• 1000 site visits should be treated as
  quasi-audits
• Target criteria Random (with weighted
  probabilities) or suspected problems
• Areas of concern
• Technology plans Supporting resources
• Discount rate Invoices
• Competitive procurement Equipment
  verification

49
Top Ten Denial Reasons

• Ineligible products and services
• 30 Rule countered by When in doubt, break it
  out
• Contracts not signed or not in place
• Make sure that you have a signed and dated
  contract in place when needed
• Unauthorized consortium members
• Make sure that you have Letters of Agency that
  meet the requirements posted on the website

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Top Ten Denial Reasons, cont.

• Insufficient documentation
• Respond to PIAs requests for documentation and
  ensure that you meet the FCCs document retention
  requirements
• Insufficient support resources
• Secure access to, and document, sufficient
  resources to make effective use of the funds
  money to pay your share, hardware, software,
  electrical capacity and maintenance

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Top Ten Denial Reasons, cont.

• Form 470 not filed
• Dont extend contracts without posting a Form 470
  unless those extensions were already mentioned on
  the establishing Form 470
• Competitive bidding violations
• Conduct a free and open competitive bidding
  process. The Applicant cannot turn over their
  responsibility for this to a service provider.
  Document your compliance!

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Top Ten Denial Reasons, cont.

• 28-Day Rule violations
• Keep your dates in order Allowable Contract
  Date ? Contract Award Date ? Application Signed ?
  Application Received Date
• Invalid telecom provider
• Use the SPIN search tool on the website as a
  guide to determine if a provider is eligible to
  provide Telecommunications services.
• Form 470 not certified or certified late
• Certify online and by window close!

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SLD Help

• Web www.sl.universalservice.org
• Help lines 888-203-8100 (General)
• 888-276-8736 (Fax questions)
• Online Submit a Question facility
• www.slforms.universalservice.org/EMailRespon
  se/EMail_Intro.aspx
• Hint Get a Case and keep records

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NYS Help

• Web www.e-ratecentral.com/us/nys
• New funding history database available
• Weekly news (via e-mail)
• Help lines -- Fax [phone] --
  E-mail question_at_ e-ratecentral.com
• OGS www.ogs.state.ny.us/purchase

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