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December 18, 2003 Minutes
Board of Directors Meeting
A meeting of the Board of Directors of the Universal Service
Administrative Company (USAC) was held at the USAC office in Washington, DC,
on
Thursday, December 18, 2003. Mr. Gumper, Chair of the Board, called the meeting
to order at 11:02 a.m. Eastern
Time. Ms. Howard, Executive Assistant
to the CEO, called the roll.
| Thirteen of the nineteen members were present,
representing a quorum (there is one
vacancy): |
| Bryant, Anne - by telephone |
Hughes, Alison - by telephone |
| Campbell, Anne - by telephone |
Jackson, Jimmy - Secretary - by telephone |
| Cornell, Diane - by telephone |
Jortner, Wayne - Treasurer - by telephone |
| Davis, Fr. Bill - by telephone |
Parrino, Cheryl |
| Eichler, Ed - by telephone |
Sanders, Dr. Jay - by telephone |
| Gumper, Frank - Chair - by telephone |
Talbott, Dr. Brian - by telephone |
| Hess, Kevin - by telephone |
|
| Five members were absent: |
| Buller, Karen |
Rivera, Robert |
| Coltharp, James |
Sanford, Jo Anne |
| Lubin, Joel - Vice Chair |
|
|
Other Officers of the Corporation present:
|
| Barash, D. Scott - Vice President and
General Counsel |
| Carmichael, Mark - Assistant Treasurer;
VP, Finance and Financial Operations |
| Flannery, Irene - VP, High Cost and
Low Income Division |
| Haga, Robert - Assistant Secretary;
VP, Strategic Planning and USAC Operations |
| McDonald, George - VP, Schools and Libraries
Division |
| Scott, Wayne - VP, Internal Audit Division |
|
Others Present for the Meeting:
|
|
Name
|
Company
|
|
Askin, Jonathan
|
Association for Local Telecommunications Services
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|
Baker, David
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Earthlink, Inc.
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Duff, Bridget
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Cox Communications, Inc.
|
|
Howard, Cathy
|
USAC
|
|
Miller, Linda
|
USAC
|
Action Items
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a1.
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Election of Directors to the USAC Board of Directors. Mr.
Eichler, Chair of the USAC Nominating Committee, reported that the
Nominating Committee met on December 16, 2003, and at that meeting
determined to recommend that the Board accept the FCC Chairman's appointments
and elect six Board members to fill the Board member terms that expire
the end of this year, one new Board member to fill a current vacancy
on the Board, and one new Board member to fill a vacancy that will
be created due to a resignation of a Board member as of December 31,
2003. Ms. Parrino explained that after the voting today, she
would send out an e-mail message to Board members seeking nominations
for the Board of Directors officers' positions. The Board then thanked
Fr. Davis for his service on the Board, as his term expires December
31, 2003.
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 Nominating Committee, and with the nominations made
by the FCC Chairman and USAC's
corporate By‑laws, the USAC Board of Directors elects Mr. David Baker,
Dr. Douglas Christensen, Mr. Kevin Hess, Mr. Joel Lubin, Dr. Jay Sanders,
and Ms. Jo Anne Sanfordto the USAC Board of Directors for three-year terms
beginning on January 1, 2004;
and,
RESOLVED
FURTHER, That the USAC Board of Directors accepts the recommendation of the
USAC Nominating Committee, and with the nomination made by the FCC Chairman and
USAC's corporate By-laws, and due to impending resignation of Board member Mr.
James Coltharp, the USAC Board of Directors elects Ms. Bridget Duff to
the USAC Board of Directors, whose term shall begin on January 1, 2004, and expire
on December 31, 2004: and
RESOLVED FURTHER, That the USAC Board of Directors accepts
the recommendation of the USAC Nominating Committee, and with the nomination
made by the FCC Chairman
and USAC's corporate By-laws, and due to the resignation of Board member Mr.
David Conn, the USAC Board of Directors elects Mr. Jonathan
Askin to the USAC Board of Directors, whose term shall begin immediately
and expire on December 31, 2005.
|
At this point, Board member Mr. Askin became a voting member of the Board.
|
a2.
|
Appointment of Directors to Committees
of the Board. Mr. Eichler, as Chair of the USAC Nominating Committee,
introduced this item. He reported that the Nominating Committee
met on December 16, 2003, and at that meeting determined to recommend
the following appointments as listed in the resolutions. He noted
that there was competition for the service provider representative
on the Schools & Libraries and that the Nominating Committee
vote was a split 2-1 decision with regard to that Committee position. Mr.
Gumper reminded the Board that even if they are not members of a
Committee, they are welcome to participate in any meeting of a Committee
of the Board as an observer, where they can still give input even
though they cannot vote on the resolutions.
A Board member then questioned why the resolution did not include the appointment
of Mr. Hess and Ms. Sanford to the Audit Committee, as their terms are being
renewed. The Board determined to revise the resolution to correct this oversight.
On a motion duly made and seconded, the Board adopted the following resolution, as
amended (in italics and strikeout):
RESOLVED, That the USAC Board of Directors accepts the
recommendations of the USAC Nominating Committee and hereby appoints to the
High Cost & Low Income Committee, Mr. Jonathan Askin as the representative
for competitive local exchange carriers (CLECs), Mr. Kevin Hess as the representative
for incumbent local exchange carriers (ILECs) that represent rural telephone
companies as that term is defined in 47 U.S.C. 153(37), Mr. Joel Lubin as the
representative for interexchange carriers (IXCs) with more than $3 billion
in annual operating revenues, and Ms. Jo Anne Sanford as the representative
for state regulators; to the Rural Health Care Committee, Ms. Bridget Duff
as the representative for service providers, Dr. Jay Sanders as the representative
for rural health care providers that are eligible to receive discounts, and
Ms. Jo Anne Sanford as the representative for state regulators; and to
the Schools & Libraries Committee, Dr. Douglas Christensen as the representative
for schools that are eligible to receive discounts and Mr. David Baker as the
representative for service providers; and to the Audit Committee, Mr. Kevin
Hess as one of the at-large representatives and Ms. Jo Anne Sanford
as the High Cost & Low Income Committee representative.
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|
a3.
|
Approval of Revised USAC Funds Guidelines
for Investments. Mr. Carmichael introduced this item. A
Board member asked about the proposed revisions that would allow
the Investment Committee to contract with firms to provide investment
management, advisory, and custody services to USAC without seeking
Executive Committee or Board approval as long as the annual fees
from the firm are less than $600,000, and questioned whether there
was a limit to the number of such contracts that could be engaged
in by the Investment Committee. Mr. Carmichael explained that
there are no limits to the number of contracts but that all contracts
for such services made by the Investment Committee must be reported
to the USAC Executive Committee and/or Board of Directors so that
there will always be Board oversight on such contracts.
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 Investment Committee to modify the USAC Funds Guidelines
for Investments in the form set forth as Attachment A and directs
the USAC Treasurer and Assistant Treasurer to adhere to the revised Guidelines in
managing the Universal Service Fund.
|
a4. |
Approval of Proposed Course of Action Regarding
the Proposals Received in Response to the Request for Proposals for
Investment Portfolio Management and Advisory Services - Confidential & Proprietary - Executive
Session Recommended. In accordance with the approved criteria
and procedure for conducting USAC Board and Committee business in Executive
Session, Mr. Barash recommended that discussion of this
item be conducted in Executive Session because discussion
of this matter, which relates to USAC's procurement strategy and
contract negotiations, and public disclosure of such matters would
compromise USAC's negotiation strategy to the detriment of the corporation
and the Universal Service Fund.
On a motion duly made and seconded, the Board adopted the following resolution:
RESOLVED, That the USAC Board of Directors determines
that the discussion of the proposed selection of a firm and award of a contract
based on the proposals received in response to the Request for Proposals for
Investment Portfolio Management and Advisory Services (RFP) shall be conducted
in Executive Session.
See Executive Session for a report of the discussion and action
taken on this item. |
a5. |
Termination of Retirement Benefit Plan
for USAC CEO Cheryl L. Parrino - Confidential & Proprietary - Executive
Session Recommended. In accordance with the approved criteria
and procedure for conducting USAC Board and Committee business in Executive
Session, Mr. Barash recommended that discussion of this
item be conducted in Executive Session because discussion
of this matter relates to an internal personnel matter regarding
a USAC employee.
On a motion duly made and seconded, the Board adopted the following resolution:
RESOLVED, That the USAC Board of Directors determines
that the discussion of a personnel matter regarding a USAC employee shall be
conducted in Executive Session.
See Executive Session for a report of the discussion and action
taken on this item. |
Information Items
i1.
|
Information on the FCC Budget for Federal Fiscal Year
2004. Ms. Parrino informed the Board that the FCC requested $3
million be budgeted in fiscal year 2004 for audits of the Universal
Service Fund beneficiaries to be conducted by the FCC Inspector General,
but that both the House and the Senate denied the budget request. The
Senate Report stated that because the funds are managed outside of
the Treasury, it would not be appropriate for the cost of the audits
to come from appropriated funds. Mr. Gumper requested that Ms. Parrino
forward the exact language of the denial to Ms. Jane Mago at the FCC,
Office of Strategic Planning and Policy Analysis. |
| i2. |
Information on Schools and Libraries Support
Mechanism Issues.
- Ms. Parrino informed
the Board that on December 17, 2003, the FCC acted on additional steps
to improve the Schools and Libraries Support Mechanism. One of those
improvements gives USAC permission to rollover unused Schools and Libraries
Support Mechanism funds from previous years into Funding Year 2003. Ms.
Parrino said that the Schools & Libraries Committee would take
up this issue at a meeting in January 2004.
- Ms. Parrino reported on
a press report regarding the School and Libraries Support Mechanism
beneficiary audits in which a House of Representatives staff member
indicated that the House would likely conduct hearings in 2004 as
to the matter of possible waste, fraud, and abuse in the program.
|
At 11:38 a.m., on a motion duly made and seconded, the Board voted to move
into Executive Sessionfor purposes of discussing the confidential
and proprietary items as noted above.
Executive Session
a4.
|
Approval of Proposed Course of Action Regarding the
Proposals Received in Response to the Request for Proposals for Investment
Portfolio Management and Advisory Services - Confidential & Proprietary - Executive
Session Recommended. Mr. Carmichael introduced this item. He
answered questions and explained how the Investment Committee came
to 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
USAC Investment Committee's recommendation to select and retain Evergreen Investments
for investment portfolio management, advisory, and custody services, and authorizes
USAC management to enter into an Investment Management Agreement with Evergreen
Investments. |
Mr. Gumper requested that everyone except Board members and Ms. Howard leave
the meeting at this point.
a5.
|
Termination of Retirement Benefit Plan for USAC CEO
Cheryl L. Parrino - Confidential & Proprietary - Executive Session
Recommended. Mr. Gumper explained the process for terminating
the retirement benefit plan for the USAC CEO, Cheryl L. Parrino, who
is resigning effective January 30, 2004. He informed the Board of
the status of the search for a new CEO and indicated that the search
has generated a number of strong candidates thus far, but that the
search is still open.
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 Chairman of the Board to inform Bank One Trust Company,
NA, the Trustee of the Trust Agreement for the Retirement Benefit Plan for USAC
CEO Cheryl L. Parrino, that Cheryl L. Parrino is fully vested and eligible for
payment of all funds held in the Trust as of 11:59 pm on January 30, 2004, and
to provide specific instructions to the Trustee for the payment of the funds
to Ms. Parrino, including any tax withholding information; and
FURTHER RESOLVED, That the USAC Board of Directors accepts
the recommendation of the USAC Chairman of the Board to terminate the Trust Agreement
for the Retirement Benefit Plan for USAC CEO Cheryl L. Parrino effective January
31, 2004. |
The Board adjourned from Executive Session and reconvened
in open session at 12:02 p.m. to report the discussions and actions
of the Committee during Executive Session.
There being no further business, Mr. Gumper adjourned the meeting at 12:04
p.m.
____________________________________
Robert W. Haga
Assistant Secretary
___________________________________
Date
Content Last Modified: February 4, 2004
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