July 20, 1998 Minutes

Board of Directors Meeting

A meeting of the Board of Directors of the Universal Service Administrative Company (USAC) was held at the Washington Marriott, 1221 22nd Street, NW, Washington, D.C. on the above date. The meeting was called to order at 1:30 P.M. EST by Donald Lynch, Vice Chair. Edward English, Secretary and Treasurer called the roll.

1. Mr. Lynch welcomed the Board and presented the Minutes of the April 20, May 28, June 26 and June 30, 1998 Board of Directors meetings. On a motion duly made and seconded, the Minutes were unanimously approved with minor typographic changes.
   

2. Ms. Parrino gave a status report on the plan of reorganization for USAC, SLC and RHC submitted to the FCC. On July 15, the FCC had released a Public Notice requesting comments by August 5 and reply comments by August 12. Ms. Parrino established tentative conference calls of the USAC Long Range Planning Committee on August 7 and 11 to assess the initial round of comments and determine whether USAC would file any reply. She also asked the Board if it would like to form an Executive Committee to handle policy questions put before the full Board. The Board requested that Ms. Parrino present a plan for the role of an Executive Committee of the Board at the next regularly scheduled meeting.
   

3. Mr. Gumper gave a status report of the meetings held by the High Cost and Low-income Committee since the last regularly scheduled Board meeting. Details are included in the Committee Minutes displayed on the High Cost/Low Income section of the USAC webpage on the Internet. He pointed out that the fund collections were ahead of fund demand and that funding levels had been reduced in the Third and Fourth Quarters to compensate. He also indicated that adoption of a forward-looking cost model for non-rural carriers had been postponed until June 30, 1999. However, there are significant implementation issues depending on the role USAC will play in the role out of the new program. Ms. Parrino was asked to work with the FCC to discuss implementation timing issues and determine what role USAC would be filling in the implementation of the new model.
   

4. Ms. Ouye presented a status report on the latest issues facing the SLC. She reported that Mr. Fishman had appeared before the Senate Commerce Committee to address the audit which had been performed by the GAO. The GAO audit had requested modifications in the way SLC was determining discount size, reviewing applications for commitment letters and screening applications for eligible services. SLC had agreed to all of the adjustments requested by the GAO.
   

5. Dr. Sanders had nothing to report for RHC due to the fact that the RHC Board was meeting on July 21. The Board discussed the feasibility of moving the USAC Board meeting to Tuesday and allowing SLC, RHC and the Committees to meet on the preceding Monday. Ms. Parrino was asked to coordinate the new schedule for the October meeting with SLC and RHC and the Committees.
   

6. Mr. Levy presented a status report on regulatory matters since the last regularly scheduled meeting. He focused on a brief prepared by NECA on the inapplicability of the Government Corporation Control Act to the operations of USAC and NECA. He then reviewed the highlights of the Fifth Order on Reconsideration and its effects on the universal service programs.
   

7. Mr. Lynch presented a status report on the meeting of the Budget and Finance Committee. He indicated that there was nothing unusual in the results of operation for the January - June period. The projected expense budget had been reallocated to support additional systems work, but was still within the original budget submitted to the FCC. On a motion duly made and seconded, the Board unanimously approved the following resolution:
   

RESOLVED, that the USAC Board accepts the recommendation made by the Budget and Finance Committee to adopt a 4th Quarter budget for USAC of $1,231,000.

8. Mr. Lynch then explained that the FCC was not as proactive as USAC desired on enforcing collections of overdue balances. Ms. Parrino was asked to seek further support from the Commission.
   

9. Mr. Ricker explained the policy issues reviewed with the Budget and Finance Committee in the morning session.
   

1. The first issue concerned non-netting contributors that owed monies to the funds and were also due money from the funds. The Committee agreed with the staff recommendation that these entities be forced to net contributions with payments until their accounts were in good standing for three months. The Budget and Finance Committee decided to recommend that the full Board request that the FCC approve this treatment.
   

2. The second issue addressed the determination of De minimus status. The Committee concluded that a six month test using a $5,000 threshold was the most reasonable approach to provide funding certainty and that there should be no retroactive treatment during a calendar year for any entity whose status changed during the year. The Budget and Finance Committee decided to recommend that the full Board request that the FCC approve this treatment.
   

10. On motions duly made and seconded, the Board unanimously agreed to seek clarification of the rules from the FCC following the recommendations of the Budget & Finance Committee.
    

11. Mr. Ricker presented a summary of the current status of telecommunications service provider revenues and an operations report concerning the funding levels for the universal service programs. On a motion duly made and seconded, the Board unanimously adopted the following resolution:
    

RESOLVED, that the USAC Board of Directors, having reviewed a summary of current status of telecommunications service provider revenues for calendar year 1997 at its meeting on July 20, 1998, hereby directs the staff to proceed with the required July 31, 1998 filing on behalf of USAC. Staff may make adjustments if additional data becomes available or errors are discovered and to reflect changes required as a result of FCC orders.

12. Ms. Parrino reviewed the USAC Systems Development Report. She explained that revised estimates resulted from modifications made necessary by program changes, additional requirements and functional enhancements to the processes. Ms. Parrino reviewed the feasibility of employing videoconferencing of future Board meetings and indicated further investigation into the technology and prospective vendors was necessary before making a recommendation to the Board.
    
    On a motion duly made and seconded, the Board unanimously decided to go into Executive Session to discuss the disposition of the contract between USAC and NECA. When the Board reconvened in public session, on a motion duly made and seconded, the Board unanimously approved the following resolution:

    RESOLVED, that the USAC CEO is authorized to enter into negotiations to extend the contract with NECA for a period of 90 days. The CEO is also requested to meet with the officers of SLC and RHC and report back to the Board on a further plan of operation.
    

There being no further business to attend to, on a motion duly made and seconded the meeting was adjourned at 3:00 P.M.

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Edward R. English
Secretary

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