January 30, 2001 Minutes

Fifteen of the eighteen members (there is one vacancy) were present, representing a quorum:

Anne, Bryant - by telephone

Ouye, Kathleen

Davis, Fr. William

Parrino, Cheryl

Eichler, Edwin

Rivera, Robert

Gold, Heather

Rosenblum, Lisa - by telephone

Gumper, Frank

Sanders, Dr. Jay

Hogerty, Martha

Talbott, Dr. Brian

Jackson, Jimmy

Thoms, Allan

Lubin, Joel

Two members joined the meeting in progress:

Lineberry, Isiah - by telephone

Wheeler, Tom

One member was absent:

Hess, Kevin

Officers of the Corporation present:

Barash, D. Scott - Assistant Secretary

Haga, Robert - Assistant Treasurer

Others present for the meeting:

Name

Company

Blackwell, Mel

USAC

Flannery, Irene

USAC

Howard, Cathy

USAC

Moore, Kate

USAC

Ricker, John

NECA

Sandy, Colin

NECA

a1.

Annual Election of Officers and Committee Chairs and Vice Chairs. Ms. Parrino reviewed the recommendations being made by the Committees. She informed the Board that she received a note of appreciation from Dr. Hank Marockie, whose term as Board member ended on December 31, 2000. Dr. Marockie thanked USAC staff for its work during his tenure and conveyed his best wishes to the Board.

On a motion duly made and seconded, the Board adopted the following resolutions:

RESOLVED, That the USAC Board of Directors accepts the recommendations of the USAC Nominating Committee to elect Mr. Frank Gumper as Chair of the Board of Directors; Mr. Allan Thoms as Vice Chair; Mr. Ed Eichler as Secretary; Ms. Anne Bryant as Treasurer; D. Scott Barash as Assistant Secretary; and Robert Haga as Assistant Treasurer for the term of one year that shall begin at the conclusion of the January 2001 Board meeting and that shall conclude at the close of the January 2002 Board meeting; and

RESOLVED FURTHER, That the USAC Board of Directors accepts the recommendations of the USAC Nominating Committee to elect Ms. Cheryl L. Parrino as CEO of the Universal Service Administrative Company for a term coincident with the term of her employment contract; and

RESOLVED FURTHER, That the USAC Board of Directors accepts the recommendations of the USAC Executive Committee to establish a policy that the Chair and Vice Chair of the USAC Board of Directors will be elected as the Chair and Vice Chair of the USAC Executive Committee; and

RESOLVED FURTHER, That the USAC Board of Directors accepts the recommendations of the USAC Executive Committee to elect the Chair and Vice Chair of the USAC Board of Directors as the Chair and Vice Chair of the USAC Executive Committee for the term of one year that shall begin at the conclusion of the January 2001 Board meeting and that shall conclude at the close of the January 2002 Board meeting; and

RESOLVED FURTHER, That the USAC Board of Directors accepts the recommendations of the USAC High Cost & Low Income Committee to elect Ms. Martha Hogerty as Chair and Mr. Ed Eichler as Vice Chair of the USAC High Cost & Low Income Committee for the term of one year that shall begin at the conclusion of the January 2001 Board meeting and that shall conclude at the close of the January 2002 Board meeting; and

RESOLVED FURTHER, That the USAC Board of Directors accepts the recommendations of the USAC Rural Health Care Committee to elect Dr. Jay Sanders as Chair and Mr. Isiah Lineberry as Vice Chair of the USAC Rural Health Care Committee for the term of one year that shall begin at the conclusion of the January 2001 Board meeting and that shall conclude at the close of the January 2002 Board meeting; and

RESOLVED FURTHER, That the USAC Board of Directors accepts the recommendations of the USAC Schools & Libraries Committee to elect Ms. Kathleen Ouye as Chair and Mr. Kevin Hess as Vice Chair of the USAC Schools & Libraries Committee for the term of one year that shall begin at the conclusion of the January 2001 Board meeting and that shall conclude at the close of the January 2002 Board meeting.

a2.

Approval of the Minutes. On a motion duly made and seconded, the Board approved the minutes, as distributed, of the USAC Board of Directors' meetings of Tuesday, October 24, 2000, and Wednesday, December 20, 2000.

a3.

Reports from the Committee Chairs. Each of the Committee Chairs briefly reported on the activity from the January quarterly Committee meetings: Ms. Ouye - Schools & Libraries Committee; Ms. Gold - High Cost & Low Income Committee; Dr. Sanders - Rural Health Care Committee; and Mr. Gumper - Executive Committee. Ms. Ouye and Dr. Sanders brought action items from their respective Committee before the Board.

Ms. Ouye informed the Board that Mr. Rivera had resigned from the Schools & Libraries Committee; therefore, a new at-large representative needs to be appointed to the Committee. The Committee recommends Mr. Jackson.

On a motion duly made and seconded, the Board adopted the following resolution:

RESOLVED, That the USAC Board of Directors accepts the recommendation of the USAC Schools & Libraries Committee to appoint Mr. Jimmy Jackson to the Schools & Libraries Committee as one of the at-large representatives.

Dr. Sanders informed the Board that Mr. Hess resigned from the Rural Health Care Committee; therefore, a new service provider representative needs to be appointed to the Committee. The Committee recommends Mr. Rivera.

On a motion duly made and seconded, the Board adopted the following resolution:

RESOLVED, That the USAC Board of Directors accepts the recommendation of the USAC Rural Health Care Committee to appoint Mr. Robert Rivera to the Rural Health Care Committee as the service provider representative.

a4.

Adoption of Resolutions Honoring Departing Board Members. On a motion duly made and seconded, the Board adopted the following resolutions:

RESOLVED, That the USAC Board of Directors hereby expresses its profound appreciation for the service Mr. David Abramson has provided to the Universal Service Administrative Company, and wishes him the best in his future endeavors.

RESOLVED, That the USAC Board of Directors hereby expresses its profound appreciation for the service Dr. Henry Marockie has provided to the Universal Service Administrative Company and the Schools and Libraries Corporation, and wishes him the best in his future endeavors.

a5.

Review of the Executive Committee Structure. Mr. Gumper recalled that when the Board revised the Executive Committee structure at its January 2000 meeting, the Board requested that Committee members monitor the meetings throughout the year for any problems resulting from the size of the Committee and to recommend changes in membership to the Board if the Committee believed changes are warranted. Mr. Gumper stated the sense of the Committee and staff is that the current size of the Executive Committee has not caused any problems.

On a motion duly made and seconded, the Board adopted the following resolution:

RESOLVED, That the USAC Board of Directors accepts the recommendation of the USAC Executive Committee to maintain the current structure of the Executive Committee.

a6.

Approval of April 2002 - January 2003 Board of Directors Quarterly Meeting Schedule. On a motion duly made and seconded, the Board adopted the following resolution:

RESOLVED, That the USAC Board of Directors adopts the following Board of Directors and Committee quarterly meetings schedule for April 2002 - January 2003:

a7.

Delegation of Authority to the Executive Committee for Review and Final Approval of the USAC Annual Report to the FCC and Congress. Mr. Blackwell distributed a draft copy of the 2000 USAC Annual Report. As required by FCC regulations, staff has consulted with the FCC regarding the contents of the annual report. The report is due to the FCC and Congress by March 31, 2001.

On a motion duly made and seconded, the Board adopted the following resolution:

RESOLVED, That the USAC Board of Directors delegates the final review and approval of the USAC 2000 Annual Report to the Executive Committee and directs staff to provide each Board member with a copy of the final 2000 Annual Report.

a8.

Approval of USAC Enforcement Compliance Plan. Mr. Barash reminded the Board that a presentation was given on this issue at each of the programmatic Committee meetings on January 29, 2001. Mr. Gumper noted that all of the Committees approved the recommendation before the Board.

On a motion duly made and seconded, the Board adopted the following resolution:

RESOLVED, That the USAC Board of Directors accepts the recommendations of the USAC programmatic Committees to adopt the proposed USAC Enforcement Compliance Plan.

a9.

Update and Action on USAC's Financial Reporting Issue. Mr. Haga reported that USAC is still working with its independent auditor, Arthur Andersen, to obtain a final bill for the services provided to date on the audit of the Universal Service Fund's September 30, 2000, financial statements. To date the audit indicates that USAC's management of the Fund complies with applicable laws and regulations. He further explained that at the last quarterly Board meeting, the Board directed staff to review whether it would be prudent for USAC to change its fiscal year to conform to the FCC's fiscal year, which ends on September 30. Mr. Haga directed the Board's attention to the analysis of pros and cons of changing USAC's fiscal year. It is staff's recommendation that USAC retain its current fiscal year.

On a motion duly made and seconded, the Board adopted the following resolution:

RESOLVED, That the USAC Board of Directors accepts the recommendation of the USAC Executive Committee to maintain the current fiscal year period for USAC.

a10.

Request for FCC Approval to Hold USAC Board of Directors Meetings Outside of Washington, DC. Mr. Gumper recalled that in December 1999 USAC sought the FCC's approval to hold certain Board of Directors' meetings outside of Washington, D.C. Mr. Barash reported that USAC has not received a formal response from the Commission, and raised with the Board the question whether it would be prudent for USAC to withdraw its request at this time. The Board discussed the issue and concluded that the issue should be tabled at this time.

On a motion duly made and seconded, the Board laid the following resolution on the table: Resolved, that the USAC Board of Directors directs USAC staff to withdraw USAC's request to the FCC to hold one Board of Directors meeting per year at a location other than Washington, DC.

No further action was taken on the issue.

a11.

Approval of Annual 2001 and 2^nd Quarter 2001 USAC Common and Consolidated Budget. Ms. Bryant gave an overview of the status of the budget. Ms. Parrino drew the Committee's attention to Attachments A and B, charts that set forth how the budget is being allocated.

On a motion duly made and seconded, the Board adopted the following resolutions:

RESOLVED, That the USAC Board of Directors accepts the recommendation of the USAC Executive Committee to approve an annual 2001 USAC common budget of $3,519,300; and

RESOLVED FURTHER, That the USAC Board of Directors accepts the recommendation of the USAC Executive Committee to approve a 2^nd Quarter 2001 USAC common budget of $904,900; and

RESOLVED FURTHER, That the USAC Board of Directors accepts the recommendation of the USAC Executive Committee to approve an annual 2001 USAC consolidated budget of $39,911,400; and

RESOLVED FURTHER, That the USAC Board of Directors accepts the recommendation of the USAC Executive Committee to approve a 2^nd Quarter 2001 USAC consolidated budget of $10,496,900.

a12.

Approval of 2^nd Quarter 2001 Revenue Projections and Resolution on the February 2001 FCC Filing. Mr. Haga distributed a revised Attachment B. He noted that the projected revenue base for the 2^nd Quarter 2001 shows a slight increase from last quarter.

On a motion duly made and seconded, the Board adopted the following amended resolution:

RESOLVED, That the USAC Board of Directors, having reviewed a summary of the current status of telecommunications service provider revenues for January through June 2000, accepts the recommendation of the Executive Committee to authorize staff to proceed with the required February 6, 2001, filing to the FCC on behalf of USAC. Staff may make adjustments within the approved variance threshold of $2.5 billion.

a13.

Miscellaneous.

• Mr. Gumper reported that the Executive Committee adopted a resolution to revise the USAC CEO's compensation for 2001 consistent with the Federal Executive Level I salary ca

Sixteen of the eighteen members were present (there is one vacancy), representing a quorum.

Anne, Bryant - by telephone

Lubin, Joel

Davis, Fr. William

Ouye, Kathleen

Eichler, Edwin

Parrino, Cheryl

Gold, Heather

Rosenblum, Lisa - by telephone

Gumper, Frank

Sanders, Dr. Jay

Hogerty, Martha

Talbott, Dr. Brian

Jackson, Jimmy

Thoms, Allan

Lineberry, Isiah - by telephone

Wheeler, Tom

One member joined the meeting in progress:

Rivera, Robert

i1.

Report of Legislative and Media Activity. Mr. Blackwell reported that USAC received the usual level of inquiries from the media during the last quarter. He encouraged Board members to refer media inquiries to him. Mr. Blackwell also noted the extensive congressional activity related to the universal service support mechanisms. He reminded the Board that he previously sent them an email containing a brief analysis of the Children's Internet Protection Act that was recently signed into law. Mr. Blackwell also briefly discussed President Bush's education plan that had just been released, noting that the details of the plan have not yet been released. The Board discussed the proposed plan.

i2.

Assistant Treasurer's Report. Mr. Haga reported that although the Universal Service Fund balance has increased from this time last year, USAC must continue to collect funds because current commitments exceed funds on hand. The amount of interest earned in 2000 was $126.3 million. The amount of interest will probably decrease as each Committee trues up collections versus disbursements. In response to a question, Mr. Haga explained that the rules do not directly address the treatment of interest; however, the FCC has approved USAC's actions to include interest in the funding base, thereby reducing the collection rate.

i3.

Regulatory Report. For information only. No discussion held.

i4.

Report on Accounts Receivable and Collection Efforts. For information only. No discussion held.

i5.

Bankruptcy Report. For information only. No discussion held.

i6.

Status of USAC Clarification Requests at the FCC. For information only. No discussion held.

i7.

USAC Timeline and Key Dates. For information only. No discussion held.

i8.

Billing, Collection, Disbursement, and Financial Services Request for Proposals. For information only. No discussion held.

i9.

Benchmarking Study. Mr. Haga reported that a USAC intern prepared a report and assisted in developing a process for benchmarking USAC's performance against certain industry standards. USAC will continue to apply these methods to its operations as it actively strives to meet the Nation's universal service goals in an efficient and effective manner.

i10.

Status of the Proposed Revenue Base Change for Calculation of Universal Service Contributions. Mr. Haga reported that USAC has submitted comments as well as reply comments to the FCC on this issue. The matter is still with the FCC. Mr. Barash noted that USAC has issued a Request for Proposals for the billing, collection, and distribution of the Fund and any changes to how the revenue base is calculated could change the services required of the vendor selected.

i11.

Report on Pending Litigation. For information only. No discussion held.

i12.

Miscellaneous. None.

i13.

Rural Health Care Program Status Report. For information only. No discussion held.

i14.

Summary of the Medicare Reimbursement Policy for Telemedicine. For information only. No discussion held.

i15.

Review of Annual 2001 and 2^nd Quarter 2001 Rural Health Care Programmatic Budget. For information only. No discussion held.

i16.

Review of 2^nd Quarter 2001 Rural Health Care Projections and Resolution on the February 2001 FCC Filing. For information only. No discussion held.

i17.

Schools and Libraries Program Status Report. For information only. No discussion held.

i18.

Report on the Beneficiary Audit. For information only. No discussion held.

i19.

Update on Subcontractor Claim for 1999 Work. For information only. No discussion held.

i20.

Review of Annual 2001 and 2^nd Quarter 2001 Schools and Libraries Programmatic Budget. For information only. No discussion held.

i21.

Review of 2^nd Quarter 2001 Schools and Libraries Projections and Resolution on the February 2001 FCC Filing. For information only. No discussion held.

i22.

High Cost and Low Income Programs Status Report. For information only. No discussion held.

i23.

Report on the Implementation of New Initiatives for the High Cost and Low Income Programs. For information only. No discussion held.

i24.

Review of Annual 2001 and 2^nd Quarter 2001 High Cost and Low Income Programmatic Budget. For information only. No discussion held.

i25.

Review of 2^nd Quarter 2001 High Cost and Low Income Projections and Resolution on the February 2001 FCC Filing. For information only. No discussion held.