June 26, 1998 Minutes

Board of Directors Meeting

A meeting of the Board of Directors of the Universal Service Administrative Company (USAC) was held at the International Trade Center & Ronald Reagan Building, 1300 Pennsylvania Avenue , Washington, D.C. on the above date. The meeting was called to order at 1:05 P.M. EDST by Lisa Rosenblum. Edward English, USAC Secretary and Treasurer called the roll.

1. Ms. Rosenblum welcomed the members of the Board. Ms. Cheryl Parrino, CEO of USAC, Mr. Ira Fishman, CEO of SLC and Mr. Lee Bailey, President of RHCC, were asked to join the meeting. The announced purpose of the meeting was to finalize the content of the Report and Plan of Reorganization (the Report) to be submitted to the FCC. Ms . Rosenblum summarized the issues discussed in the morning meeting of the joint Boards of USAC, SLC and RHCC. Refer to Attachment B: Minutes of the Joint Meeting.
   

2. The floor was then turned over to Mr. Bailey, who summarized the results of the Executive session of the Board of the Rural Health Care Corporation which had taken place between 12:25 and 1:00 P.M. The RHCC Board agreed to the following:
   

1. RHCC agreed to go along with the committee structure and merger if all the conditions below are met.
   

2. RHCC agreed to the CEO ability to hire and fire the Division head only.
   

3. RHCC agreed to the USAC Board 2/3 override for Budget items only. This would exclude programmatic items or policy issues.
   

4. The above was conditional on the USAC Board being expanded by 3 rural health care representatives.
   

3. Ms. Rosenblum then turned the floor over to Ms. Ouye , Chair of the SLC Corporation. Although the SLC Board had not formally voted, she reported out the latest views of the SLC Board.
   

1. SLC agreed to go along with the committee structure and merger;
   

2. SLC agreed to the CEO's ability to hire and fire all staff;
   

3. SLC agreed to the USAC Board 2/3 override for all items on an exception basis;
   

4. SLC requested another service provider representative from the existing Board be added to the schools and libraries committee and Mr. Abramson volunteered.
   

4. There followed a discussion of the operational mechanics of a 2/3 USAC Board override. and the desirability of creating an Executive Committee of the USAC Board empowered to fast track decisions for the CEO. The sense of the Board was that an Executive Committee would streamline decision making for the organization.
   

5. Ms. Rosenblum asked Lee Bailey if RHCC was willing to concede to the majority points of view. Lee said he was not empowered to amend the decisions of the RHCC Board. In general, the desires of the RHCC Board were not included in the current proposals. He was particularly concerned with the failure to increase the rural health care representation on the combined Board. He felt strongly that special expertise was needed and that merely assigning USAC Board members to the rural health care committee was not sufficient.
   

6. Ms. Ouye polled the members of the schools board in attendance and on a motion duly made and seconded the SLC Board adopted the following resolution:
   

   RESOLVED that, the Board of Directors of the Schools and Libraries Corporation votes to adopt the proposed Report and Plan of Reorganization as modified by discussion and that the SLC CEO is authorized to utilize editorial privilege to arrive at a final draft.

7. Dr. Jay Sanders joined the meeting and RHCC met again in Executive session to see if the members desired to amend their position. The USAC meeting was recessed from 2:15 P.M. until 2:35 P.M.
   

8. When the full board reconvened, Mr. Bailey reported that the RHCC Board decided not to amend its positions and will draft a separate response to the Report and Plan of Reorganization.
   

9. Ms. Parrino indicated that the report as modified would be filed on Wednesday. The USAC Long Range Planning Committee would work with the three corporations to meet this objective. A discussion ensued as to the proposed composition of the committees. The consensus was that the schools and libraries committee should consist of seven members: 4 schools and libraries reps, 2 service providers and the USAC CEO. The high cost/low income committee should consist of eight members: 1 low income, 1 ILEC, 1 IXC, 2 public. 1 wireless, 1 clec and the USAC CEO. The rural health care committee should consist of five members: 1 service provider, 1 public, 1 rural health, 1 at large, and the USAC CEO.
   

10. On a motion duly made and seconded the USAC Board adopted the following resolution:
    

    RESOLVED that, the Board of Directors of the Universal Service Administrative Company votes to adopt the proposed Report and Plan of Reorganization as modified by discussion and that the USAC CEO is authorized to utilize editorial privilege to arrive at a final draft.

11. Under other business Mr. Wheeler expressed a desire to have face-to-face Board meetings rather than via conference. Ms. Parrino was asked to report out recommendations at the July meeting on potential video conferencing capabilities.
    

There being no further business to attend to, Ms. Rosenblum adjourned the meeting at 3:00 PM.

____________________________________
Edward R. English
Secretary

June 26, 1998
Date