February 27, 1998 Minutes

Board of Directors Meeting

A meeting of the Board of Directors of the Universal Service Administrative Company (USAC) was held via conference call on the above date. The meeting was called to order at 10:00 A.M. EST by Lisa Rosenblum, Chair. Edward English, Secretary and Treasurer called the roll.

1. Ms. Rosenblum welcomed the Board and stated that the purpose of the meeting was to discuss the content of FCC Commissioner Harold Furchtgott-Roth's February 26, 1998 correspondence to the Board and form a consensus on the Board's response. The Commissioner's letter had expressed concern on the steps the Board was taking to fund contribution shortfalls without formal FCC authority. Ms. Rosenblum told the Board that she had personally spoken to the Commissioner about his concerns and added that it was not his intent to delay today's distribution to recipients of the high cost fund.
   

2. The Board discussed the content of the Commissioner's letter and questioned the accuracy of some of the facts and interpretations included therein. Ms. Rosenblum retraced the steps that had been taken up to today's meeting which led to the decision to use an interfund transfer to cover the shortfall in the high cost fund. She explained that USAC was working under tight time constraints. When it became apparent that non-payment by certain fund contributors would result in a shortfall, USAC obtained informal direction from the Common Carrier Bureau that the use of an interfund transfer on an interim basis was appropriate. Members of the Budget and Finance Committee were immediately informed of the situation and had concluded that use of an interfund transfer was an acceptable approach. USAC also obtained guidance from outside counsel that an interfund transfer was not prohibited by the orders or rules. The full Board was notified of the approach on Tuesday, February 24, 1998 and no objections were made.
   

3. The Board deliberated further and on a motion duly made and seconded unanimously adopted the following resolution:
   

   RESOLVED that a letter be sent to FCC Commissioner Harold Furchtgott-Roth explaining USAC's rationale for using an interfund transfer to meet its February 27, 1998 obligation to recipients of the high cost fund and another letter be sent to the FCC General Counsel requesting clarification on USAC's authority to manage cash flows using an interfund transfer.

4. The Board concluded that no additional motion was required to effect the interfund transfer. Mr. English informed the Board that a formal request had been made to the FCC on February 25, 1998 requesting authority to borrow funds commercially to meet universal service obligations. The Board also discussed the need to formulate a process to enforce collection from non-payers.

There being no further business to attend to on a motion duly made and seconded the meeting was adjourned at 10:32 A.M. EST.

____________________________________
Edward R. English
Secretary

February 27, 1998
Date