Sample Funding Commitment Decision Letter

Some applicants have experienced difficulty identifying their Funding Commitment Decision Letter. Click here to view sample sections of a letter.

1998 Funding Commitment "Waves" Schedule Firmed Up

Wave 4 of the Funding Commitment Decisions Letters is scheduled to be issued no later than December 31. It will be followed by additional waves after the in January. (For more information about the waves themselves, see "20 Questions [and Answers] About the Waves," available at the SLC Web Site, www.sl.universalservice.org, or via fax-on-demand, 800/959-0733, document #208.)

We will announce the launch of each wave through a notice on our Web Site and via newsflash, and will post on the Web Site the list of recipients by state once each wave has been released. Applicants who will be away from their offices during the holidays may want to make arrangements to check the Web Site and their mail during this time period. (Note: The five-business-day turnaround for Form 486 does not count school or library vacation days as business days.)

Tips for Completing Your Form 472 BEAR

Recipients of funding commitment decision letters who are concerned about the December 31, 1998 due date for the BEAR Form may elect to submit one form with a due date of January 31, 1998.  This tip and others are featured in "Tips for Completing Your Form 472 BEAR."

Guidance on Timing of BEAR Reimbursement Payments to Service Providers

FCC Form 472, the Billed Entity Applicant Reimbursement Form (commonly referred to as the BEAR Form), prescribes that the service provider must remit the approved reimbursement amount to the Billed Entity Applicant no later than 10 days following the receipt of the reimbursement check from the fund administrator. This proposal describes how the SLC and USAC will implement the timing of the BEAR reimbursement process.

Clarification on Discounts for Pre-Paid Services

Some applicants have questioned how to complete their Forms 472 to seek reimbursement of prepaid services. Click Here for guidance on discounts for prepaid services.

Tips for Completing Your Form 486

For those applicants that may receive the Funding Commitment Decisions Letters during a holiday break, please be reassured that you will NOT be penalized for waiting to file Form 486 until after your holiday breaks. The Instructions to Form 486, on page 4, prescribe that you must complete and file Form 486 within five (5) business days of certain events. Please note that school and library holidays are not counted when computing the five business day deadline.

This tip and others are featured in "Tips for Completing Your Form 486."

Tips for Completing Your Form 470

Click here to read "Tips for Completing Your Form 470."

SLC Extends 1999-2000 Application Window to 100 Days

To accommodate 1998 E-rate applicants awaiting their Funding Commitment Decisions Letters, as well as those new applicants who may need a little more time for planning, the SLC has extended the window for E-rate applications for 1999-2000 to 100 days. The window, which opened on December 1, 1998, will now close on March 11, 1999, at 11:59 p.m. ET.

All complete applications received by SLC within the window will be considered as if they had arrived on the same day. Outside the window, applications are considered on a first-come, first-served basis.

To be considered as having applied "in the window," an applicant must first file Form 470, wait 28 days while its Form 470 is posted for bidding (for new services) or held (for pre-existing contracts), and then file Form 471 so it is received by SLC before the window closes.

SLC Announces 1998 Internal Connections Funding "Threshold"

Applicants have expressed a strong desire for clarity on how far 1998 E-rate funds are likely to reach when it comes to in-the-window internal connections requests below the 90% discount level. The SLC now has enough information about the total volume of E-rate discount requests to be certain that it will be unable to make funding commitments on discount requests for internal connections with approved discount percentages of less than 50%.

IMPORTANT NOTE: This does NOT mean any guarantee of funding for internal connections requests at approved discount percentages of 50%-89%. (Approved internal connections requests at the 90% discount level are already a priority for funding.) See below for more details on SLC's handling of internal connections requests at 50-89% discount levels.

In future waves of funding commitment letters (see Funding Commitment "Waves" Schedule information, below), the SLC will report the unavailability of funding for Funding Request Numbers (FRNs) for internal connections at discount percentages of less than 50%. In addition, SLC will continue to process commitments for internal connections at approved discounts of 90%.

Regarding internal connections requests at approved discount levels of 50%-89%: At this time, there is still too much uncertainty to estimate reliably in advance how far available funds will reach for internal connections requests with approved discounts from 89% down to 50%. As these uncertainties are resolved, we will inform the applicant and service provider communities of any adjustment of the funding threshold for internal connections.

1998 Funding Commitment "Waves" Schedule Firmed Up

Wave 3 of the Funding Commitment Decisions Letters is expected to be issued no later than December 21. It will be followed by three or more additional waves after the Christmas holiday into January. (For more information about the waves themselves, see "20 Questions [and Answers] About the Waves," available at the SLC Web Site, www.sl.universalservice.org, or via fax-on-demand, 800/959-0733, document #208.)

We will announce the launch of each wave through a notice on our Web Site and via newsflash, and will post on the Web Site the list of recipients by state once each wave has been released. Applicants who will be away from their offices during the holidays may want to make arrangements to check the Web Site and their mail during this time period. (Note: The five-business-day turnaround for Form 486 does not count school or library vacation days as business days.)

National E-rate Satellite Videoconference December 17, 1998

The Schools and Libraries Corporation has scheduled a two-hour national satellite videoconference for Thursday, December 17, to provide updates on the post-funding commitment process, plus highlights and tips for applying for E-rate in Year 2.  Initiated by the State of Nebraska Department of Education, the videoconference will run from 10:30 a.m. to 12:30 p.m. ET. Viewers can fax in questions during the videoconference, and are also invited to tape, reuse, and rebroadcast the program for training purposes. SLC will make videotapes available on a free-loan basis after the broadcast.

The satellite coordinates for the videoconference are as follows: C-Band, Galaxy 6/Transponder 17. Downlink frequency: 4040 MHz.  Audio frequency: 6.2/6.8 MHz.

The videoconference will feature the latest news on the waves of funding commitments, updates on filing Form 486 and the Billed Entity Applicant Reimbursement Form, and instructions on making post-commitment changes/corrections. The second hour will focus on updates and suggestions regarding the application process for 1999-2000. Those interested in viewing the videoconference are encouraged to check with their state, district, and public library system offices for downlink sites.

E-Rate Application Window Opens and Forms Available

On December 1, 1998, the Schools and Libraries Corporation begins accepting E-rate applications for the 1999-2000 funding year. Schools, libraries, and consortia are invited to begin submitting their requests for services by filing a Form 470 application, Description of Services Requested and Certification Form, for discounts on services that will run from July 1, 1999 through June 30, 2000.

The application window, during which all completed applications received will be considered as if they had arrived on the same day, will remain open for at least 80 days, closing on February 19, 1999 at the earliest. The final window closing date will be announced soon as SLC takes fully into account the impact of the notification schedule for the first funding cycle. To qualify as having filed an application "in the window," applicants must successfully file Form 470, wait 28 days, then assure that SLC receives a completed Form 471 before the window closes.

The new operating hours of the SLC web site are from 7:00AM to 1:00AM ET. The two-hour reduction is necessary to accommodate simultaneous data processing of new Forms 470 along with Forms 486, 472, and service provider invoices for the 1998 funding year.

With this opening, clients will be able to:

1)  File Form 470 online. (Form 471 is expected to be available for online filing in January 191999).

2) Download and print out PDF versions of Forms 470 and 471, with revised instructions and updated addresses. (Printed versions of the forms will also be mailed soon to school districts, main libraries, and non-public schools across the nation.) Please note that while the instructions for Form 470 and 471 have been revised for clarification purposes, the forms themselves remain unchanged except for the return address, which is now: Schools and Libraries Corporation, P. O. Box 7026, Lawrence, Kansas 66044-7026.

3) Examine newly filed Forms 470, available in the Service Provider Area.

The SLC Client Service help line, (888) 203-8100 is available toll-free from 8 a.m. to 8 p.m. ET, Monday through Friday. In addition, guidance documents are available via our toll-free fax-on-demand service, (800) 959-0733.

Please note that we are still in the process of updating this site for application guidance for the new year.  New information is available in the Reference Area, Form 470 Guidance; much of the Form 471 Guidance has been removed so that only relevant, current information is available.  In the days ahead, this site will be updated more completely.  Thank you for your patience.

Discounts on Prepaid Services Clarified

QUESTION: In October 1997, I pre-paid for a year of Internet access under my multi-year contract with my Internet Service Provider. During the 75-day window, I filed a Form 470 listing this as a pre-existing contract and then filed a Form 471 requesting discounts as of January 1, 1998. I received my funding commitment decision letter from SLC approving my requested discount for this service, but when I began preparing my Billed Entity Applicant Reimbursement Form (Form 472), I noticed that the instructions say I can be reimbursed only for services delivered AND paid for in 1998. I haven’t lost out on E-rate benefits for the 1998 portion of my pre-paid Internet service, have I?

ANSWER: No, you are still entitled to your discount, and can claim it as a reimbursement via Form 472.

FCC rules prescribe that services must be delivered during the funding year to be eligible for discounts. The May 8, 1997 Universal Service Order further prescribes that schools and libraries may prepay for services over a multiple year period, using their own funds, and may request that the service provider seek universal service support for the pro rata annual share of the pre-payment. Universal Service Order (FCC 97-157) (issued May 8, 1997), para. 544. However, the instructions to FCC Form 472, Billed Entity Applicant Reimbursement Form, in Column (12) state "Please note that this date [the customer billed date] must be no earlier than January 1, 1998, because only services received and paid for in the current program year are eligible for discounts."

The Form 472 Instructions must be interpreted in a manner consistent with the FCC rules and orders. Accordingly, please be advised that if a service was delivered during the current program year, but was paid for prior to the current program year as a prepayment of a multiple year period, the cost of the services delivered during the current program year are eligible for discounts and for reimbursement under the Form 472.

Please note that the SLC will not authorize payment for services that were delivered and received prior to January 1, 1998 but were paid for after January 1, 1998. As stated in the SLC’s Clients Commonly Asked Questions, Set III, dated March 2, 1998, Question 1: "SLC will not authorize the disbursement of discounts on facilities or services originally acquired or purchased prior to January 1, 1998. For example, if an eligible school or library originally purchased internal connections prior to January 1, 1998, and later refinanced the purchase sometime after January 1, 1998, the date of service delivery will be the original purchase or acquisition date, which in this example, is prior to January 1, 1998. Consequently, discounts on the internal connections originally purchased prior to January 1, 1998 will not be funded by the Schools and Libraries Universal Service Program."

Please consult the following table to determine whether services are eligible for discounts during the current program year. Remember that, in all instances, the services must be delivered on or after the actual service start date reported in your Form 486, Column (E) of Block 2 and the services must have been approved for discounts via the SLC’s issuance of a funding commitment decision letter.

Timing of Wave Two Letters

SLC plans to mail the second wave of funding commitment decision letters later this week. This wave will generate over 3,300 letters, and will provide for some commitments for internal connections at the 90% discount level, consistent with Wave One. Later this week additional information will be posted about the balance of the schedule for mailing notifications.

Urgent Form 486 Filing Guidance

With the first wave of funding commitment decision letters now arriving in applicants' mailboxes and the second wave fast approaching, the Schools and Libraries Corporation offers two very important clarifications for filing Form 486, the next step in the E-rate process.  Click here to read these clarifications, which are found in the Reference Area in the "486 Guidance" section.

Notice Of Meeting of the Board of Directors of SLC

NOTICE IS HEREBY GIVEN that a meeting of the Board of Directors of Schools and Libraries Corporation shall take place at the Ronald Reagan International Trade Center, 1301 Pennsylvania Avenue, NW, Washington, D.C., on December 15, 1998 beginning at the hour of 9:30 a.m. local time. At the meeting, the Board of Directors will consider and vote upon the Agreement and Plan of Merger by and among Universal Service Administrative Company, Rural Health Care Corporation and Schools and Libraries Corporation.

SLC Issues the First Wave of Funding Commitment Decision Letters

The Schools and Libraries Corporation announced today that the first wave of funding commitment decisions letters is now on its way to E-rate applicants across the country. Approximately 3,000 letters have been sent, committing a total of $73 million for this first wave. The wave includes applicants from every state and the District of Columbia. Letters notifying these applicants’ service providers of their funding commitments will follow shortly.

As expected, those applicants included in the first wave represent a mix of requests for discounts on telecommunications services and Internet access at a variety of discount levels, plus some internal connections requests at the 90% discounts level. One in four dollars in the first wave is going to schools and libraries at the highest discount level, while one-third of the commitments are to rural applicants.

Each wave of funding commitment decisions letters is formed based on Federal Communications Commission rules of priority plus completion of all SLC processing and decisions on specific Form 471 applications. The FCC rules designate as "priority one" all approved telecommunications services and Internet access requests received within the 75-day window, followed by in-the-window requests for internal connections at the 90% discount level. Funds have been set aside to meet these priorities for every application received within the 75-day window, and will remain earmarked through the final wave. (For more information about the funding commitment process, see "20 Questions (and Answers) About the ‘Waves,’" on the SLC Web Site at www.sl.universalservice.org or via fax-on-demand, 800-979-0833, document #208.)

Applicants who receive funding commitment letters in the first wave are urged to submit, within five business days, Form 486 for services that are already in place. This five-business-day turnaround is strongly recommended, since no invoices to SLC for E-rate discounts can be paid until the relevant Form 486 has been approved. Form 486 is enclosed with the funding commitment decisions letter, as is Form 472, the Billed Entity Applicant Reimbursement form. Letter recipients in the first wave seeking reimbursement for services previously received may file as soon as possible for services received through September 30, 1998, and must file a BEAR form by December 31, 1998. For more information about Forms 486 and 472, see the Web Site and fax-on-demand service. Procedures for making necessary corrections/changes to information included in the funding commitment decisions letter will also be available very soon via Web and fax.

The second wave of funding commitment decisions letters is expected to be released in December, followed by additional waves before the end of the calendar year. The final waves will be issued in January.

SLC E-rate Discounts Fact Sheet

Demand for the E-Rate

In the first funding year’s 75-day application window, the SLC received over 30,000 E-rate applications from schools and libraries requesting more than $2.03 billion in discounts for services being received in 1998. Applications were filed from schools and libraries, large and small, rural and urban, rich and poor. The SLC is finalizing its review of these requests for discounts and anticipates that total requests will be approximately $2.3 billion.

Service Type/Discount Level

The requests for discounts are for all three kinds of eligible services – telecommunications services, Internet access and internal connections. Public and private schools, and public libraries from every region of the country, reflecting a geographically and economically diverse applicant base, have applied to participate in the E-rate. Their level of discount is determined by the number of students who qualify for the National School Lunch Program.

Overview of E-rate Requests

The SLC received 30,000-plus applications for discounts in the 75-day application window. These requests for discounts on services received in 1998, when adjusted for the 18 month funding period established by the FCC in June, result in an estimated demand of $2.6 billion. Nearly one fourth of the discount dollars requested is sought by the neediest schools and libraries, and over half the discount dollars are sought for those qualifying for the top two discount bands: 90%, and 80-89% discount rates. The average discount request is for $69,200. And, 70% of applications seek less than $25,000 in discounts.

CHART I

First Wave

The first wave of E-rate commitment letters consists of over 3,000 funding commitment decision letters, committing over $73 million in discounts. Applicants in every state and the District of Columbia will receive an E-rate letter in this first wave. Over 25% of the funds committed in the first wave are for services for the neediest schools and libraries: those with at least 75% of students eligible to participate in the school lunch program.

The first wave of letters includes commitments to applicants at every economic level seeking discounts on priority one services: telecommunications and Internet access. "Priority one" services account for 80% of the funds committed in this wave of letters. Additionally, applications seeking discounts on internal connections at the 90% discount level are included in this first wave.

CHART II

Applicant Type

The profile of funding commitments in the first wave generally parallels the requests nationwide, with the exception of funding for libraries whose applications account for 3% of total dollars requested, but just 1% of funds committed in the first wave. SLC review of library applications for program compliance started slowly due to the special issues associated with discount calculations for libraries, many of which cross school district lines. These reviews are accelerating and the balance is expected to shift, beginning in waves two or three.

CHART III

Rural/Urban

Applicants in rural areas are well represented with one third of the dollars going to schools and libraries in rural communities.

CHART IV

Vice President Al Gore Announces E-rate Commitments

On Monday, November 23, Vice President Al Gore & Education Secretary Richard Riley will announce the first discounted telecommunications services provided to schools & libraries nationwide as a result of the E-rate. With the start of E-rate discounts & the next installment of the Department of Education's Technology Literacy Challenge Fund to states, schools & libraries across the country will be able to connect young people from all walks of life -- urban, suburban, & rural areas -- to the power of the Information Age. This announcement will be webcast live on Monday at 10:30 a.m. (ET) through the Department of Education's Web Site: http://www.ed.gov/

Questions and Answers about SLC Funding Commitment Decisions

SLC Cleared for Issuance of Commitment Letters

This week, the Schools and Libraries Corporation (SLC) passed two major milestones on its path to issuing funding commitment decision letters to E-rate applicants.

First, on November 4, the SLC received – on the subject of its internal control design for achieving the SLC’s stated program and internal controls objectives -- an unqualified opinion from its independent auditor, PricewaterhouseCoopers.

Second, the SLC wrote to the FCC Chairman William Kennard affirming that it had implemented the recommendations issued from the General Accounting Office (GAO) in July 1998. These recommendations -- steps to take before issuing a single commitment letter – included:

1. To conduct detailed reviews of a random sample of E-rate applications to assess the overall effectiveness of program integrity, and undertake corrective actions if necessary;
2. To finalize procedures, automated systems and internal controls for the post-commitment process, including funds disbursement;
3. To obtain a report from independent auditors that finds the SLC has developed appropriate internal controls to mitigate against waste, fraud and abuse.

In response, FCC Chairman Kennard wrote to the GAO stating that he was "satisfied that the GAO recommendations have been substantially met by SLC."

With completion of these milestones, SLC will launch the process of issuing funding commitment decision letters. The SLC anticipates beginning to mail funding commitment letters the middle of this month and that the notification process will continue over several weeks. The SLC will provide a timetable for the waves of funding commitment letters after the first wave has been issued.

In light of this timetable, the SLC is still evaluating the timeframe of the application window for the next funding year. The 80-day window is scheduled to open on December 1, 1998 and close on February 19, 1999.

As the SLC moves forward, it will continue to update applicants and vendors.

Timeframe Refined for Release of Funding Commitments

The SLC is moving to complete several last required steps before issuing funding commitments. Recognizing the intense interest in the commitment schedule, the Schools and Libraries Corporation now estimates that it will begin issuing funding commitment decisions letters in mid-November.

The SLC is in the final stages of implementing additional program safeguards as required by the Federal Communications Commission (FCC) based on recommendations received in July from the General Accounting Office (GAO).

When the FCC and GAO are satisfied that all requirements are met, and as soon as the SLC gets a green light to begin issuing Funding Commitment Decision Letters, the letters will go out in several waves. All such letters will be in response to applications received during the 75-day window. The timing of SLC’s response to an application will be a function of:

• FCC funding priorities;
• the date when the application was successfully entered into our database; and
• completion of all SLC decisions for a given application, so that a complete response is provided in a single letter.

The SLC plans to provide additional details about the process for funding commitment notification before beginning to send letters. In addition, the SLC staff and board are currently evaluating the timeframe of the application window for the next funding year. The window is scheduled to open on December 1, 1998, and to remain open for 80 days. SLC’s goal is to provide applicants time to integrate 1998 funding commitment decisions into their planning for 1999-2000.

As the SLC moves toward issuance of the funding commitment letters, its outreach to applicants and vendors about key post-commitment steps continues apace. Please see this Web Site, www.sl.universalservice.org, for the latest schedules of upcoming outreach events.

Special E-rate Training Program for Vendors

The Schools and Libraries Corporation is launching an E-rate Training Program for Vendors, which focuses on specific aspects of the E-rate program from funding commitments through implementation of discounts. These sessions are designed to provide the timely information vendors will need to deliver E-rate discounts to approved applicants. 

Final E-rate Forms Approved and Posted on this Web Site

The SLC is pleased to announce that the new forms that E-rate applicants and their service providers will need to implement Universal Service discounts upon funding commitment have now been approved by the Federal Communications Commission (FCC) and the Office of Management and Budget (OMB). 

Please note that these forms (with the exception of the Service Provider Annual Certification) CANNOT be filled out and sent in by applicants and service providers until SLC has made funding commitments for the 1998 program year. NO FUNDING COMMITMENTS HAVE YET BEEN MADE. Please wait until you have received notification of your funding commitment before you attempt to use these forms.

The final forms are:

• FCC Form 486, Receipt of Service Confirmation Form: After applicants are notified of their funding commitments, they will use this form to let SLC know that the services for which they have approved for discounts have actually begun to flow. Applicants will receive a copy of Form 486 (pre-printed with their billed entity applicant name and number) with their funding commitment
  letter. The blank form is posted in PDF format at <www.sl.universalservice.org> in the Reference Area under Form 486 Guidance.
• FCC Form 472, Billed Entity Applicant Reimbursement Form (BEAR): Applicants will use this form to request reimbursement from SLC via their service providers for approved discounts on services for which they have already paid. Applicants will receive a copy of the BEAR form with their funding commitment letter. The blank form is posted in PDF format at <www.sl.universalservice.org> in the Reference Area under Reimbursement and Invoicing.
• FCC Form 473, Service Provider Annual Certification Form (SPAC): Service providers complete and file this form one time per program year to certify that the invoices they submit for discounts benefiting their E-rate-approved customers will comply with all FCC program rules. Service providers are encouraged to complete and submit their Annual Certification as soon as possible. The blank form is posted in PDF format at <www.sl.universalservice.org> in the Service Provider Area. It will also be sent to service providers with their notification of their customer's approved E-rate funding commitments.
• FCC Form 474, Service Provider Invoice Form (SPIF): Service providers will use this form to invoice the SLC for reimbursement of discounts they have implemented in their E-rate approved customers' bills. Service providers will use this form to invoice the SLC on the same regular billing cycle (monthly, quarterly, one-time, and so on) that they use to invoice their customers for the non-discounted portion of the cost of services. Blank invoice forms will be sent to service providers with their notification of their customer's approved E-rate funding commitments. The SPIF is also now posted in PDF format at <www.sl.universalservice.org> in the Service Provider Area. Service providers should note that they will also have the option of invoicing the SLC electronically;see the Service Provider Area for registration details.

Applicants and service providers are invited to preview these forms in preparation for funding commitments, but are reminded that only the Service Provider Annual Certification can be completed and filed before SLC makes any funding commitments. Please watch the SLC Web Site for details, coming soon, about the scheduled release of funding commitment letters.

80-Day Window Set for Second Program Year

The Schools and Libraries Corporation (SLC) announces that the application cycle for the 1999-2000 E-rate funding period will begin with an 80-day window during which all completed applications received by the SLC will be considered as if they had arrived simultaneously. The application window for this second funding year will open on December 1, 1998, and will close on February 19, 1999, at 11:59 p.m. EST.

Applying for E-rate funding (officially known as Universal Service for Schools and Libraries) is a two-step process. Eligible schools, libraries, and consortia of those entities first file Form 470, the posting of which to the SLC Web Site triggers a 28-day competitive bidding period for new services (or a 28-day waiting period for existing contracts). After the 28th day, applicants may select a service provider and sign a contract for new services, then file Form 471 requesting discounts on services ordered.

To qualify as "in the window," applicants must fully complete and file both Forms 470 and 471 between December 1, 1998 and February 19, 1999. The latest possible date that a Form 470 can be posted to provide for the subsequent 28-day period and the possibility of successfully filing a Form 471 within the window is January 21, 1999. Posting for new services as late as January 21, 1999, however, requires that two events occur on, and only on, February 19, 1999 in order to complete a filing within the window: 1) contracts for new services are signed; and 2) the Form 471 Application is completed, submitted and received by the SLC on February 19, 1999.

The 1999-2000 funding period will begin July 1, 1999, and run through June 30, 2000. Applicants filing within the 80-day window will be applying for discounts on services that begin July 1, 1999.

The 80-day window for 1999-2000 was established by the SLC Board of Directors to allow schools and libraries sufficient time to plan for their telecommunications technology needs for the coming fiscal year. The 80-day window also provides five additional days compared to the 1998-1999 application window of 75 days. Forms received after the 80th day will be treated on a first-come, first-served basis, in accordance with the FCC’s rules.

Application materials will be mailed to public school districts, library systems, and non-public schools prior to December 1, 1998. Materials will also be available on this Web Site (www.sl.universalservice.org) and via the toll-free help line, 888-203-8100. Guidance documents will also be available via toll-free fax-on-demand, 800-959-0733.

Application Window to Open 12/1/98, for Second Year of E-rate Funding

The Federal Communications Commission (FCC) has established December 1, 1998 as the new opening date to file applications for the 1999 / 2000 E-Rate funding period.

This action, which changes the opening date from October 1, 1998 to December 1, 1998, has several benefits. It allows schools and libraries to obtain E-Rate funding commitments for the first funding period, and assess their future technology needs in light of those first commitments, before filing applications for the second funding period. The additional time provided by the December 1, 1998 opening date will also give new applicants the opportunity to apply the benefits of lessons learned by the SLC in the first year of the program. The SLC plans to make available such guidance soon after funding commitment decisions letters for the first funding period have been released.

This decision was adopted by the FCC on September 28, 1998 in the Seventh Order on Reconsideration (CC Docket No. 96-45). As a result of this decision, schools and libraries may begin to file applications on December 1, 1998, for the 1999 / 2000 E-Rate funding period, which runs from July 1, 1999 to June 30, 2000.

The FCC also directed the SLC to determine the length of the filing window by October 30, 1998. The SLC Board is now considering the question of the window’s duration. Recognizing the importance of the window to the planning of competitive procurement schedules, the SLC will announce the length of the window as soon as possible.

SLC Board Meeting - October 19, 1998

A meeting of the Schools and Libraries Corporation Board of Directors will begin at 8:30 AM ET on October 19, 1998. At 10:30 AM (or whenever business on the open agenda is completed), the Board will move into a closed session to discuss confidential matters relating to personnel and administration.

The meeting will be held at the following location:

International Trade Center &
Ronald Reagan Building
Meridian Rooms D & E
1300 Pennsylvania Avenue, N.W. Washington, D.C.

Acting CEO Kate L. Moore's Letter to E-rate Participants

September 23, 1998

Dear School, Library and Telecommunication Industry Leaders,

With summer vacation behind us, many of you are asking about the status of the E-rate fund. What are the latest program developments?

Significant Progress
After three weeks as Acting Chief Executive Officer of the Schools and Libraries Corporation, my simple answer to you is this: the summer has been productive, and we are entering the home stretch. A dedicated SLC team is moving the program forward, and stands ready to assist you. We continue to benefit from the wisdom, direction, and support of the SLC Board of Directors. Furthermore, having served as SLC’s Chief Operating Officer since last November, I assure you of my commitment to rapid, but careful, completion of critical next steps.

With your cooperation and the intense work of our Client Service Bureau, over 29,000 of the 30,000-plus applications that were received during the 75-day application window have completed our data entry process. The remaining applications are in the final stages of preparation for data entry.

Meanwhile, work continues apace on the review of applications by the SLC Program Integrity Assurance (PIA) unit, with inquiries to applicants occurring on an as-needed basis. These inquiries will continue as applications move through our PIA pipeline. We appreciate your patience during this key phase of the process. These inquiries mean we are approaching decisions on your applications.

Looking ahead, to help you prepare for the arrival of funding commitment decisions letters, we have already scheduled over 40 training workshops in 40 states to explain the final steps of the funding process.

Funding Commitment Process
Many of you are asking, "When will the SLC launch the funding commitment process?"

My answer to you is firm, if not highly specific: "early fall," and "when we’ve got it right."  By "getting it right," I mean meeting a major milestone: implementing, consistent with the Federal Communications Commission (FCC) Chairman’s direction, the recommendations which the General Accounting Office (GAO) made to the FCC and the SLC. The steps to be completed before launching the funding commitment process are:

• Conduct detailed reviews of a random sample of applications to test our review process.
  
• Finalize our post-commitment procedures and systems, so that invoices for approved discounts may be handled expeditiously.
  
• Obtain a report from our independent auditor affirming the soundness of our internal controls.

The random sample has been completed, and a written report is in process. Systems development is well advanced for the last processing phase: receiving Forms 486 and handling invoices. Finally, we are working side by side with our auditors, PricewaterhouseCoopers, so they can complete their report on our controls, consistent with the direction given to the SLC by the Chairman of the Federal Communications Commission.

Rolling Out Funding Commitment Decisions

The SLC will be issuing funding commitment decisions letters in waves. For applications received and accepted during the 75-day window, the FCC’s 5^th Order places first priority on funding telecommunications services and Internet access for all approved applications. The second identified priority is to fund the neediest applicants for internal connections. Our goal is to provide applicants with one unified letter per Form 471 application, providing funding decisions on all of the services requested in that application. As a result, the first wave of letters will be comprised predominantly of commitment decisions on applications seeking discounts only for telecommunications services and/or Internet access, as well as requests from the neediest applicants for internal connections support. Mixed applications at lower discount levels will receive funding commitment decisions letters later in the process.

More Answers in the Days Ahead

Now that we are entering the final phase of the first program year, events will move quickly, and additional information will be posted frequently on our Web Site. Over the next several weeks you can expect us to post additional information about:

• The kind of data to be included in the Funding Commitment Decisions Letters for applicants and service providers;
  
• Requirements for filling in the FCC Form 486: Receipt of Service Confirmation Form;
  
• Notification Letters to Service Providers re: acceptance of Forms 486;
  
• Reimbursement and invoicing procedures.

Service to Clients

Our mission is to deliver universal service support in a manner that provides for the most effective use of technology in our schools and libraries. As we administer the program, we will uphold the operating principles described to you in November 1997. As noted then, we will:

• Conduct open and regular communications with all of those interested in the universal service program;
  
• Take the extra steps to ensure that all schools and libraries, regardless of financial resources or geographic location, have the opportunity to participate in the program; and
  
• Provide for the integrity of the program through careful planning and sound controls to protect this investment in schools and libraries for the long term.

These principles will remain central in this start-up program, as we administer this dynamic initiative where rules and policies have changed mid-course to address new circumstances. We will ask for your advice and keep you informed as well as we are able. We ask for the gift of your wisdom, patience, and optimism, and we offer in return an eagerness to listen, learn, and improve.

A Personal Note
As the Acting CEO of the SLC, I want to personally assure you that I am dedicated to this mission. Career experience in three different sectors – private, government and not-for-profit – has proven useful here at the SLC. My government work previously as Assistant Secretary for Budget and Programs at the U.S. Department of Transportation, for example, has facilitated communications with government colleagues and officials, especially those involved in oversight. Additionally, three years as Chief Financial Officer of United Way of America, during its financial recovery phase, taught me lessons about technology implementation and the significance of effective internal controls. These lessons are being applied here.

Finally, my own liberal arts background – a degree in American history and a wonderful two-year stint in publishing art and history books for children -- engenders a profound appreciation for the central role of the E-rate program in the Information Technology revolution. I look forward to our shared journey in transforming the classrooms and libraries of today into global gateways to learning for all Americans.

With a sense of history, urgency, and integrity, we will together move this program forward. Together we can. Thank you for your counsel and support.

Sincerely,

Kate L. Moore
Acting CEO
Schools and Libraries Corporation

SLC Workshop Schedule

To prepare schools and libraries for the release of their funding commitment decision letters and the subsequent steps they must take to begin the flow of E-rate discounts, the Schools and Libraries Corporation is working with state education agencies and state library associations to hold a variety of training workshops.   Click here for a schedule of confirmed and tentative state workshops available by date as well as by state.

These workshops, which will be led by members of SLC's outreach team, will focus on the specifics of the funding commitment decisions letters, Form 486, the applicant reimbursement process, and service provider invoicing of discounts. In some cases, states have scheduled "train the trainer" sessions for a targeted group of local E-rate experts; in other cases, the sessions are open to a broad audience in person and via teleconference.  The design of each workshop is up to the state hosting it.  For more information about each state's workshop, please call or email the contact person listed for each state.

The SLC is also working with the Virginia Department of Education to host a national satellite videoconference on Monday, September 28, 1998, from 1:30 - 3:30 p.m. EST.  The teleconference will air in analog format on C-Band satellite Galaxy 7, channel 8 (3860 Mhz).  Galaxy 7 is located at 91 degrees west. A test signal will air at 1:15 p.m. EST.  Many schools, libraries, and state networks are planning to downlink this program, and all are invited to tape, rebroadcast, and redistribute the program at no charge.  Contact your state library, state department of education, or state network to locate downlink sites near you.

As part of this active outreach schedule, SLC has distributed some draft documents and forms to trainers for use during the workshops. Please be aware that Form 486, the Billed Entity Applicant Reimbursement (BEAR) Form, and the Service Provider Invoice are all DRAFT forms still to be reviewed and approved by the Federal Communications Commission and the Office of Management and Budget. None of these forms are ready for applicant use, and since no applicants have yet received their funding commitment decisions letters, filing any of forms is not yet necessary or permitted.   Furthermore, applicants who attempt to use these draft forms after funding commitments will have them returned, because only official, final forms will be accepted at that time.  Final forms WILL BE AVAILABLE when funding commitments are made.

Service Provider Weekly Conference Call

The SLC invites service providers and vendors to join a regularly scheduled conference call to learn about and discuss billing issues, invoicing procedures, and other important aspects of the E-Rate program. Participants may ask questions of SLC staff and share solutions with each other. The call occurs each Wednesday from 1:00 p.m. to 3:00 p.m. Eastern Time. The number to call is 800-991-9019, passcode 708855#.

The minutes of past calls and the list of issues discussed will also be posted on the SLC Web Site when available.

Notice to New Participants:  New Participants may join the Wednesday Conference Call at 12 (noon) ET for a "pre-meeting," which will revisit issues discussed on previous calls.   Agendas and supporting documents (when necessary) will be E-mailed to participants prior to the pre-meeting. 

Suggestions for the agenda of the pre-meeting may be E-mailed to universalservice.org by close of business each Monday. 

Reminder:  Both of these Wednesday calls address issues specific to service providers and vendors.

FYI: Modified SPINs for Some Vendors

Over the past several months, some vendors have made necessary changes to their Service Provider Identification Numbers (SPIN). The SLC has made every effort to automatically correct such SPINs on all Form 471 applications we are reviewing, with the result that our future communications with you may list different SPINs from those you originally included in your Form 471.

If you encounter this situation, please consult the List of Modified SPINs  to determine if your service provider has changed its SPIN since you filed your Form 471. You should then confirm the new number with the service provider. (The List of Modified Spins contains names and contact information for those service providers that have recently changed their SPINs.)

Please use the corrected SPIN for all future business involving that particular service provider. If the SPIN we list is incorrect, please notify USAC immediately by calling 1-888-641-8722.

Some Applicants to be Notified of Pre-Data Entry "Line-Item" Rejections

Over the next few weeks, the Schools and Libraries Corporation will be notifying about 400 Universal Service Fund applicants that a particular line item of their Form 471 applications has been rejected, prior to data entry, for violation of program rules. These applicants will be informed via a special letter labeled Form S that a specific line from their Form 471 Item 15 or 16, known as a Funding Request, cannot be accepted for data entry, but that the remainder of their application is continuing through processing. To assure prompt and proper delivery, the Form S letters are being sent via priority mail for second-day delivery, with return receipt requested.

There are several reasons why a specific Funding Request must be rejected before data entry. In some cases, the service requested is not being provided during the current program year—for example, a one-time order that was delivered and paid for in 1997.

In other cases, applicants did not comply with the rules governing posting of Form 470. As program application materials make clear, all services not covered by a formal, written contract signed before January 30, 1998, were required to be filed as New Services on Form 470 and posted on the SLC Web Site for 28 days before a contract or service agreement could be executed AND before the applicant could file a Form 471 for that service. Applicants who failed to post such services (including tariff services, which are not covered by written contracts) for competitive bidding, or who signed a contract or submitted Form 471 before the end of the 28 days, will be notified that these specific Funding Requests have been rejected.

The Form S rejections are being issued now because these specific Funding Requests cannot be entered into the data system. Every effort has been made to verify the applicants’ Form 471 information so that Funding Requests won’t be rejected due to clerical error on the part of either the applicant or the SLC.

Form S will also explain that other Funding Requests in the applicant’s Form 471 will be duly data processed, followed by Program Integrity Assurance review for full compliance with program rules prior to funding commitment.

Applicants who receive Form S and wish to appeal their specific Funding Request rejection are instructed how to do so in their letter.

For questions about the Form S letter or the rejection of specific Funding Requests, please call 888-203-8100.

Live National VideoConference on September 28, 1998

The SLC invites E-rate applicants and service providers to tune in to a live satellite teleconference on September 28, 1998 from 1:30 - 3:30 Eastern time, hosted by the Virginia Department of Education.

At the teleconference, SLC staff experts will walk through the remaining steps of the 1998 E-rate program year, from the issuance of funding commitments this fall to the implementation of discounts by service providers through June 1999. SLC will begin with a preview of the Funding Commitment Decisions Letter that approved applicants will receive, followed by step-by-step instructions on filling out FCC Form 486 (Receipt of Service Confirmation Form), which triggers payment of discounts. We’ll also provide detailed instructions for applicants who will seek reimbursement for funds they’ve already spent on services for which they are approved for discounts. The teleconference will pinpoint who is required to submit which forms, when, and under what circumstances. A brief overview of the application schedule for the next program year will also be covered.

The teleconference will air in analog format on C-Band satellite Galaxy 7, channel 8 (3860 Mhz). Galaxy 7 is located at 91 degrees west. A test signal will air at 1:15 p.m. eastern time.

For more information, prior to the broadcast day of September 28, contact Greg Weisiger of the Virginia Department of Education, (804) 692-0335. The SLC thanks Greg for once again making it possible for us to get important program information out via a very timely national teleconference.

Service Providers Urged to be Proactive in Planning E-rate Implementation

Sprint "Form 471 Worksheet" Is Example of Service Provider Action

Sprint Corporation recently informed its local (not long distance) telecommunications services customers of a special form it will require schools and libraries to complete in order to process their E-rate discounts. The form, which Sprint is calling a Form 471 Worksheet, is adapted from the SLC’s Optional Prediscount Cost Calculation Grid, and includes additional data Sprint has advised customers that it needs for its own billing procedures. Sprint has informed its customers that completion of this form is essential for both 1998 and 1999 discounts, and has promised assistance to any applicant who needs help completing the form.

The Sprint worksheet does not replace FCC Form 471 or any other required form. (Please keep in mind that the SLC’s Prediscount Cost Calculation Grid is OPTIONAL.) For Sprint customers, Sprint’s modified worksheet IS a substitute for the Optional Prediscount Cost Calculation Grid. When the application window opens for the next funding year, the SLC will accept the Sprint Form 471 Worksheet as a supplement to Sprint customers’ FCC Form 471 applications and as an attachment for Form 471, Block 5, Item 17 covering Sprint services.

In addition, the SLC’s own procedures (forthcoming soon) for applicant reimbursements in the 1998 program year will recommend, but not require, that applicants complete an Optional Prediscount Cost Calculation Grid to submit to their service providers. Sprint has noted that its customers should use Sprint’s Form 471 Worksheet for this purpose.

The SLC supports efforts by service providers to proactively plan for implementation of the E-rate, and we certainly encourage applicants to begin consulting with their service providers now so that their discounts will be implemented efficiently once the SLC issues funding commitments. In addition, we urge service providers to inform the SLC of any supplemental E-rate procedures and documents they develop, so that SLC can capably answer applicant questions that may arise. Finally, we ask service providers to be certain that their customer service and marketing staffs are prepared to help applicants complete any additional paperwork service providers may deem necessary for processing of discounts.

Status Report on Latest Program Developments

As summer winds down, the Schools and Libraries Corporation is working diligently toward completing the last stages of the E-rate application and funding process for this challenging first program year. What follows is a brief report on our progress to date as well as a "heads up" on next steps for applicants and service providers. For all who managed to squeeze in some well-deserved vacation time, welcome back—and for those whose summer included interaction with our staff on the application review and program planning fronts, many thanks for your cooperation and support.

Data Entry Virtually Complete
Data entry for the more than 30,000 Forms 471 we received within the window is nearing completion. Close to 90% of the applications have been entered into our data system—many after fairly extensive problem resolution with applicants. The remaining applications are in the final stages of problem resolution. If you have been contacted for additional information by our customer service staff in Iowa or Kansas, and have not yet responded, please do so immediately.

Program Integrity Process on Schedule
Following data entry, applications are subject to checks by our Program Integrity Assurance (PIA) team to be certain that FCC rules are being followed. These reviews are proceeding in a timely fashion, with approximately half of the reviews complete. While all applications are reviewed, not every application requires contact by our PIA staff. Our thanks to those applicants who have responded quickly and effectively to PIA requests.

Funding Commitment Letters
We are still aiming to issue funding commitment letters early this fall. Although developments over the past several months—particularly changes in the FCC rules of priority and the extensive review of our program controls—have slowed the process somewhat, we are determined to commit E-rate funds to eligible applicants for eligible services as quickly as possible.

Form 486
As you know, your next step after receiving your funding commitment is to submit a Form 486, which lets SLC know you have begun receiving services and that we can authorize payment to your vendors for those services. For existing services, you will need to submit your Form 486 within five days of funding commitment; for new services, the 486 is due within five days of start of services. You'll also use Form 486 to inform us that you are due a reimbursement for discounts on approved services for which you have already paid in full (see Reimbursements, below). The Form 486 is now being reviewed by the FCC. A final draft version of the form will be available for your information on the web site within the next several weeks.

Technology Plans
The Form 486 will ask you to certify that you have an approved technology plan and to name your technology plan approver. If you do not yet have an approved plan, you should make every effort to secure approval from your state education agency, your state library, or another third-party approver, such as a private school association, certified by the SLC. For more information about technology plan approval, please call the SLC Client Service Bureau at 888-203-8100.

Reimbursements
Like many applicants, you may be approved for discounts on services you are already receiving or have received and for which you have paid in full. The Universal Service Fund will work through your service providers to reimburse you for these discounts. To receive reimbursement, you will file a special Applicant Invoice to SLC; we will review and approve it for payment via your service provider in the form of a check or a credit. A draft of the Applicant Invoice will be available on the www.sl.universalservice.org Web Site within the next several weeks.

Vendor Invoicing
Once you have submitted your Form 486, vendors can begin invoicing SLC for your discounts. Vendors may submit invoices on paper or electronically. A draft of the Service Provider Invoice will also be available on the www.sl.universalservice.org Web Site within the next several weeks.

Program Year Two
We are still aiming to open the application window for the second program year this October. We are currently putting into place improvements suggested by applicants and service providers like you, to whom we are very grateful for thoughtful guidance and feedback.

SLC Staffing
As he announced last week, founding CEO Ira Fishman will step down as of August 28 for personal and family reasons. Chief Operating Officer Kate Moore will take over as acting CEO. The rest of the SLC staff will remain on hand to bring this first program year to a successful conclusion and ramp up for year two.

URGENT! Help us find you this summer

As we move ahead with processing Form 471 applications, the Schools and Libraries Corp. (SLC) will need to contact applicants over the coming weeks regarding their applications. If you will be away from your normal modes of contact during some or all of the summer, PLEASE use the new Summer Contact Information data base to let SLC know how to find you. (Applicants without Web access can call 888-203-8100 to report their summer contact information.)

Letter to Applicants from Ira Fishman

Dear School, Library, and Telecommunications Leader:

On August 28, I will leave my position as CEO of the Schools and Libraries Corporation. Over the past five years, I have committed myself to helping create and launch the E-rate as well as a number of other public policy initiatives. Unfortunately, I no longer can fulfill both this commitment and my commitments to my wife and children. For too long, I have asked them to take a back seat.

It has been tremendously rewarding both professionally and personally to work with you. Together, we have persevered through thick and thin in this great venture to bring technology to all of our nation’s schools and libraries. You have been patient and willing to offer support, suggestions, constructive criticism, and assistance.

E-rate is one of the most challenging start-up operations one can imagine. Without your help, we would never have made it. I wish I could have done my job better so that you would have seen smoother, faster operations. But we have learned together, and I appreciate your teaching me.

As I leave, I can confidently tell you that virtually all of the pieces for this year and next year are in place. We still face challenges in finishing the processing of applications and in finalizing our computer systems. But together we have met every challenge to date, and we will meet these as well.

More importantly, I can tell you that the E-rate is being left in superior hands. Kate Moore, our Chief Operating Officer, will become Acting CEO. Over the past nine months, Kate has tackled all of the difficult operations issues and knows the E-rate inside-out. As the former Chief Financial Officer of the United Way of America, who arrived in the aftermath of its financial difficulties, she has the skills and vision to successfully carry out the E-rate mission. And, of course, Debra Kriete, Mickey Revenaugh, Tom Carroll, and their teams will continue to provide an unsurpassed level of support, service, and commitment. I know that all of you who have dealt with them share the firm conclusion that the SLC staff is an extraordinary group of people.

I will miss the E-rate, SLC, and you a great deal—more than I can ever come close to expressing. I hope that we will stay in touch. It has been an honor to serve you.

Sincerely,
Ira Fishman

Testimony of Ira Fishman - Senate Commerce Committee

Summary Statement of Ira Fishman CEO of the Schools and Libraries Corporation Before the Senate Committee on Commerce, Science and Transportation

July 16, 1998

Mr. Chairman and Members of the Committee, I am pleased to be here today to report to you on the status of the Schools and Libraries Corporation’s administration of the universal service fund for schools and libraries with a particular focus upon the issues that are the subject of the General Accounting Office’s investigation.

At the Chairman’s request, the U.S. General Accounting Office (GAO) has been conducting an investigation of the operations of the Schools and Libraries Corporation (SLC), particularly our procedures to protect against waste, fraud, and abuse. We at the SLC have viewed the GAO’s investigation as a way to improve our operations. We have cooperated completely and been fully forthcoming with the GAO auditors

The GAO has made four specific recommendations about our operations. We concur in those recommendations and will implement them.

Our mission is straightforward: to administer the universal service fund for schools and libraries efficiently and effectively so that every school and library has the opportunity to participate. We are fully accountable to the FCC for how we implement its rules and administer the universal service fund. In addition to FCC oversight, under the FCC rules, we are also subject to an annual, independent financial audit. And we see ourselves as equally accountable to the Congress and this Committee.

This first year of implementation has been very challenging – likely the most challenging, extensive, and intensive we will ever face – as we have built the SLC Web Site, established a client service bureau and a program integrity assurance program, developed operating policies and procedures, and implemented an extensive outreach program.

The Schools and Libraries Corporation itself has only 15 employees. The bulk of the SLC’s day-to-day operations are conducted by contractors – primarily by the National Exchange Carrier Association (NECA).

We share the Committee’s commitment to ensuring that the resources available for the universal service fund for schools and libraries go, to the maximum extent possible, to eligible entities for eligible services and that schools and libraries receive the discounts to which they are entitled but no more. At least 35 percent of our current budget projection is for program integrity assurance. Indeed, our commitment to program integrity is evidenced from the outset of our operations not only by our investment in our operations but in our communications to schools and libraries. The first letter we wrote in November 1997 to potential participants made it clear that guarding against waste, fraud and abuse is one of our primary responsibilities. It is a warning that has been repeated consistently since then.

The FCC designed the schools and libraries universal service program with a number of features specifically intended to guard against waste, fraud and abuse. The program combines market-driven incentives with direct regulatory sanctions. First, the FCC required posting on the SLC Web Site of new service requests to encourage competitive bidding and the lowest prices. Second, the schools and libraries must pay from their own budgets the non-discounted portion of the services for which they are seeking discounts.

Supplementing these market-based protections are a number of direct regulatory requirements. First, the FCC required certification, under penalty of civil and criminal enforcement, that the applicant is complying with program rules. In addition, the FCC required that schools and libraries receiving discounts have a sufficient budget to maintain and effectively use the new services and equipment.

The SLC program integrity measures represent another set of overlapping protections against waste, fraud, and abuse. Our computer system will flag applications that raise potential issues of program compliance. Different flags are used to target the risks that we are guarding against.

In addition to reviewing applications flagged by the system as potentially raising program compliance issues, we will conduct reviews of a risk-based sample of applications even though they are not flagged as raising such issues. These reviews will include assessments of the adequacy of the applicant’s resources to support the services for which it is requesting discounts, to assure the validity of the applicant’s certification on this issue.

We have not relied solely upon our own abilities in this area. As the FCC required, we have underway an independent assessment of controls by Pricewaterhouse Coopers.

And program integrity is, of course, the primary focus of GAO’s investigation of the SLC. As they finalized their testimony for this hearing, GAO developed specific recommendations for changes in our program integrity assurance procedures. We have agreed to implement those recommendations.

As of April 15, 1998, the end of the 75-day window during which all applications are to be treated as if simultaneously received, we had received more than 30,000 FCC Forms 471 requesting discounts. We have received applications from schools and libraries in all 50 states. Particularly heartening is that participation has come from urban and rural, big and small, rich and poor, public and private.

Universal service for schools and libraries is off to a strong start. SLC will continue to work diligently to ensure that the fund is administered properly and efficiently. In particular, we will aggressively implement the procedures we have in place to ensure that discounts go only to eligible entities for eligible services at the appropriate discount percentage and that other program rules reflected in the certifications an applicant must make on the application forms are observed.

SLC Board Meeting - July 20, 1998

A meeting of the Board of Directors of the SLC will begin immediately following the 1:30 P.M. USAC Board meeting on Monday, July 20, 1998.   The SLC meeting is expected to begin at 4:00 P.M. EST.  If necessary, it will resume at 8:30 A.M., Tuesday, July 21, 1998. 

The meeting will be held at the following location:

Washington Marriott
1221 22nd Street, NW
Washington, DC 20037
Phone: 202 872-1500
Fax:     202 872-9899

Information about the Recent E-rate Changes

June 24, 1998

Dear School, Library, and Telecommunications Industry Leaders:

I am certain you have closely followed the recent press reports about the Federal Communications Commission (FCC) decisions regarding the size, timing, and structure of the Universal Service Fund for Schools and Libraries -- commonly known as the E-rate – and have attempted to assess what impact these decisions might have on your applications. We understand the frustration many of you have experienced due to the uncertainties surrounding the E-rate. On behalf of the Schools and Libraries Corporation (SLC), I am writing to you today to summarize the changes contained in the FCC’s formal Order released on June 22, and to discuss what happens next.

Although the funding for the 1998 program year as set in the FCC’s new Order will disappoint some applicants, other revisions may make the E-rate more manageable for you in the months ahead. The FCC has worked hard to put the E-rate on stable footing operationally and financially, and the SLC has made constructive suggestions during this process based in large part on feedback we have received from you.

Funding Levels Set for 1998

Although an annual funding cap of $2.25 billion remains in place, the FCC acted last winter to limit collections from the telecommunications industry to $625 million for the first six months of 1998, with funding level for the remainder of the year to be determined. In their recent Order, the FCC set collections and disbursements for the program at $325 million per quarter for the next four quarters. Together with the $625 collected in the first six months of 1998, this equals $1.925 billion over the 18 month period from January 1, 1998 to June 30, 1999.

The 18-Month Year

As a result of suggestions from the SLC, the FCC extended the 1998 program year through June 30, 1999. This shift in the program schedule allows all of us sufficient time to implement properly the first program year, and synchronizes the E-rate funding cycle with the most common fiscal year among schools and libraries. Approved discounts for ongoing telecommunications and Internet access costs will be extended for six months. While the amount for approved internal connections discounts will not be augmented, discount recipients will have until June 30, 1999 to use these discounts. The second funding year will begin July 1, 1999, and will run through June 30, 2000.

This 18-month transition for 1998 has several benefits. In addition to maximizing our ability to fund applicants to the fullest extent possible within the collection levels described above, it will give schools and libraries the time they need to properly roll out their 1998 technology projects while carefully developing their applications for 1999. In addition, the funding schedule should make budgeting and planning much more workable for E-rate applicants. The 18-month transition will allow E-rate applicants several additional months of planning time before the second cycle begins.

Rules of Priority Revised

The FCC’s order has established a new method of assuring that the poorest schools and libraries get the greatest E-rate benefits while honoring the needs of all other applicants as well. For applications received within the 75-day window, available funding will be allocated first to fulfill all approved requests for telecommunications services and Internet access. Remaining funds will then be allocated for internal connections, beginning with the schools and libraries in the highest need categories (those that qualify for the greatest discounts) and continuing as long as funds remain.

Effect on Other Program Rules

To permit the six-month extension of ongoing telecommunications and Internet access discounts, the FCC has revised program rules to allow the voluntary extension of contracts to June 30, 1999, for contracts that would otherwise have expired between December 31, 1998 and June 30, 1999. The rules governing retroactivity will remain in place.

Application Cycle for 1999

The FCC’s Order states that the second year application cycle should begin no later than October 1, 1998, rather than July 1, 1998. This will give schools and libraries more time to plan for their second year requests. Application materials will be distributed well before the application cycle begins. While we expect that the FCC Forms will remain unchanged, the accompanying explanatory materials are being improved based on first-year experience and your comments and suggestions. A "window" period, during which all correctly completed applications received will be treated as if they had arrived simultaneously, will be established and its length will be determined soon. Funding commitments for the second program year will be made in the spring, and discounts will take effect July 1, 1999.

Funding Commitments for 1998

The SLC is making substantial progress on processing the 30,000 applications received from schools and libraries during the 75-day window. As you probably know, the application review process got off to a slower start than planned as accommodations were made to process the unexpectedly large number of applications requiring time-intensive problem resolution. The SLC made a conscious choice to provide as much hands-on customer assistance as possible to assure that schools and libraries had the greatest opportunity to properly complete the applications. And, the SLC needed to improve some of our initial problem resolution procedures once the process was underway. In addition, the FCC’s new Order will require some revisions to our computer systems and to application processing procedures.

All of this adds up to a longer than hoped for lead time on funding commitments for 1998. Clearly, we will not be able to commit funds before many applicants’ fiscal years end on June 30, 1998, and probably will not be able to do so in a manner that enables you to undertake installations during this summer. Although the 18-month schedule should alleviate some time pressure for implementation of E-rate projects, we recognize the importance of giving you a timetable for funding commitments as soon as a reliable date is available, and then starting the actual funding as quickly as possible. You have our commitment to do both. Also, once again, please remember that the FCC Order reconfirms that funding commitments will be retroactive in accordance with our existing guidelines on this issue.

FCC Form 486

This "start payment" Form, which applicants will file AFTER they have been notified of funding commitments and AFTER contracted services have begun to flow, is in the process of being finalized in light of the FCC Order. This fairly simple 3-page (no, I am not kidding) form will be made available directly to applicants at the same time they are being notified of funding commitments.

Special Thanks

Start-ups are always challenging, and, as you know, so has been the launch of the E-rate. Rarely has such a multi-faceted, sizable operation been rolled out in so short a time, only to be buffeted by so many uncertainties beyond our collective control. Each step along the way, we have asked for your guidance in improving the way we do business, and you have been very generous and properly candid with your feedback. We think you will be pleased to see your suggestions reflected in our improved program materials and application processes for the second program year. As further details become available on these issues and others, the SLC will disseminate them widely.

In the meantime, please accept our apology for not being able to provide more regular information updates to you over the past several weeks. While open communication and excellent client service are among the SLC’s highest priorities, we could not responsibly share information about recent developments until the FCC had acted definitively. Now, although Congress may yet act to further revise the E-rate, we wanted to take this opportunity to bring you up to date and to thank you for your continued patience and assistance.

Sincerely,

Ira Fishman
CEO, Schools and Libraries Corporation

FCC Revises 1998 E-rate Funding and Timing

Following several weeks of intense debate in Congress and at the Federal Communications Commission, the FCC last Friday released its decision concerning 1998 funding for the E-rate and a new schedule for deploying those funds. The following questions and answers provide basic information about the FCC’s decision. More detailed explanations of each aspect—including how funds will be allocated and how the new schedule will work—will be released by the Schools and Libraries Corporation over the coming days. In addition, applicants should be aware that additional Congressional action on the E-rate remains a possibility.

1. What was the FCC’s recent decision about the E-rate?

On Friday, June 12, the Federal Communications Commission voted to set funding for the 1998 E-rate program at $1.925 billion over an 18-month period ending June 30, 1999.

2. Wasn’t funding for the E-rate supposed to be $2.25 billion a year?

$2.25 billion was the annual cap for the program, the most that could be collected from the telecommunications industry and provided as discounts to schools and libraries. The FCC has stated that it wants to meet the needs of schools and libraries without causing consumer phone bills to rise. It believes that this revised funding level will accomplish this for 1998.

3. Is $1.925 billion enough to fund all of the applications the SLC has received?

We will not know until all applications are processed and reviewed, but our initial estimates show the total requests for applications received within the 75-day window for 1998 at $2.02 billion. Our goals for allocating funds are now to assure that all approved school and library applicants see benefits of the E-rate; to make certain that greatest benefits go to those in greatest need; and to maximize available funding in most equitable and manageable way.

4. So how will the SLC now allocate these funds?

The FCC decision also re-ordered our allocation process. Approved requests for telecommunications services and Internet access will be funded first. Remaining funds will then be allocated to approved requests for internal connections beginning with those from neediest applicants (for example, those with 90% discounts, then 80%, and so on).

5. Does this mean that if I’m not one of those 80-90% applicants, my internal connections probably won’t get funded this year?

Until all applications are completely reviewed, we won’t know precisely how far the funds will stretch, but we are not optimistic about being able to meet many applicants’ internal connections needs. Therefore, we encourage all applicants to begin considering alternate or additional sources of funding for internal connections.

6. How does the 18-month year work?

Originally, the 1998 program year was to have ended December 31, 1998. The FCC has now directed the SLC to extend approved 1998 telecommunications and Internet access discounts through June 30, 1999, and to allow those with approved internal connections discounts to take until June 30, 1999 to expend these funds. Applications for the 1999 program year will begin being accepted in late fall 1998, with funding commitments in place before the new program year begins on July 1, 1999. More details about the 18-month transition, including the process for extending contracts through June 30, will be available soon.

7. What are the reasons for adopting this 18-month cycle?

The FCC and SLC want the E-rate program year to more closely reflect applicants’ fiscal years, which typically begin July 1. In addition, because of all the uncertainties of this initial application cycle, we wanted to give applicants sufficient time to implement 1998 projects and develop their applications for 1999. This 18-month cycle makes 1998 a transitional year; funding will be annual beginning in 1999.

8. Will this decision change the rules regarding retroactivity? Will discounts for qualified pre-existing contracts still be retroactive to January 1, 1998, or the service start date, whichever is later?

The rules regarding retroactive discounts will not change under this new plan.

9. When will we know what our funding commitment will be for 1998?

The SLC is moving ahead with processing of all applications. As you know, problem resolution and program integrity review can be time-consuming. In addition, the FCC decision requires SLC to make significant adjustments in our processing and computer systems. We hope to provide an exact schedule for funding commitments in the near future. Meanwhile, we urge applicants to continue monitoring your phone, fax, and e-mail for contacts from our review staff. (If you will not be reachable during some portion of the summer, we will collect alternate contact information for you via the Summer Contact data base available on the SLC Web site within the week.)

10. When will applications begin being accepted for 1999?

The SLC expects to begin accepting applications for 1999 late this fall—NOT July 1, 1998, as originally planned. Application guidance materials are being revised and updated now and will be made available over the next several months. Application packages will be distributed to school districts, library systems, and non-public schools two to four weeks in advance of the application launch date.

SLC Board Meeting - Friday, June 26, 1998

A joint meeting of the Boards of USAC, SLC and RHCC is scheduled to begin at 10:00 A.M. EST on Friday, June 26, 1998, at the International Trade Center & Ronald Reagan Building, 1300 Pennsylvania Avenue, N.W, Room Meridian D&E, Washington, D.C. The purpose of the meeting is to discuss the Report due to the FCC on the Reorganization of USAC, SLC and RHCC.

Immediately following the joint USAC/SLC/RHCC Board Meeting, there will be a special meeting of the SLC at 11:30 EST to consider the Report on the reorganization of SLC, RHCC and USAC. The meeting will be held at the International Trade Center & Ronald Reagan Building, Room Meridian D&E, Washington, D.C.

Status of Washington Policy Decisions on the E-rate

As some of you may be aware from press accounts over the past few days, the size and shape of the Schools and Libraries Universal Service Fund, better known as the E-rate, is currently the subject of serious debate within the FCC and on Capitol Hill. At issue are the level and source of funding, how the program should be administered, and whether the fund should be suspended or continued for 1998. Decisions are expected over the next three to five days that will affect current applications for 1998 discounts as well as the schedule for 1999 applications.

As decisions are made, the SLC will inform applicants through all available means what impact the decisions may have on them and what specific steps they should take in the weeks ahead. We wish that we could provide more definitive information at this time, but the FCC has not yet completed its decisions.

Until we can offer definitive answers on the size and shape of the program going forward, the SLC wants the E-rate community to know that processing of 1998 applications is moving ahead. Our Problem Resolution and Program Integrity Assurance Teams are continuing to contact applicants for the additional information needed to move applications to the funding commitment stage.

Please watch the SLC Web Site and your e-mail for program news as it becomes available, and also be certain to monitor your phone, fax, and mail for contacts from our application reviewers.

SPIN Contact Search

The Reference Area now features a SPIN Contact Search function. This database includes contact information for the correct person in each participating vendor’s organization who can provide Universal Service Fund applicants with that vendor’s SPIN, as required for Form 471 and the forthcoming Form 486. The database does not contain actual SPINs, because only the service providers themselves can provide SPINs to applicants at this time.

E-Rate Progress Report: Moving Toward Funding Commitments

As you know, the Schools and Libraries Corporation received more than 30,000 Universal Service Fund applications within the 75-day window that ended April 15. Before funding commitments can be made on any of these applications, we must data enter and review all of them. We are moving as quickly as possible to accomplish this task and have committed additional resources to do so. But as you will see from the progress report that follows, we also need YOUR help in one crucial way: It is imperative that you regularly check your voice mail, faxes, and mail over the next six to eight weeks. If your school or library will be going into summer vacation, please make necessary arrangements for this coverage. If there is any problem or question regarding your application, we will not be able to complete the process unless we are able to reach you.

Here's a step-by-step progress report on the application review process.

Problem Resolution
All applications received during the 75-day window have now been logged into our tracking system and have been reviewed by the document analysis staff for obvious errors and incomplete information. Thousands of Problem Resolution faxes have gone out, and thousands more will be going out over the next week; applicants have 7 calendar days to respond with the requested information. In addition, our Problem Resolution Team will be contacting some applicants by telephone to correct their applications on the spot. If you have not yet been contacted by the Problem Resolution Team, you should be very sure to monitor your fax machine and voice mail over the next several weeks.

Program Integrity Assurance
Applications which have been data entered are subject to Program Integrity Assurance (PIA) review to ensure compliance with FCC rules. If your application is reviewed, you may receive a phone call from the PIA team requesting additional information or documentation within 7 calendar days. Again, you should make arrangements to regularly monitor your voice mail in the weeks ahead so you don’t miss a call from PIA. (The PIA Team will also be conducting post-funding audits throughout the year.)

Funding Commitment Letters
Once all applications have been processed through the PIA stage, funding commitment letters will be sent to all applicants identifying approval or disapproval of discounts for services on a line-item basis. The funding commitment letters will reflect final funding levels set by the FCC for the Universal Service Program for 1998 (see below).

Funding Levels for 1998
The FCC has proposed a funding level of $1.67 billion for 1998. After taking public comments through the end of this week, the FCC will announce its final decision on 1998 funding. In conjunction with the FCC's announcement, the SLC will release its procedures for allocating funds if final demand exceeds available funding. Please note that final demand will not be known until all applications have been completely processed.

Form 486 and Invoicing
Once you have received your funding commitment letter, you will need to submit your Form 486 (which will be released shortly) to the SLC within 5 days for services that are already being rendered. This will allow your service providers to invoice SLC and receive timely payment for the discounted portion of your costs. Once again, please make any necessary arrangements for completing the Form 486 even during the summer break.

SLC deeply appreciates your help and cooperation during these next critical phases of the 1998 application process, and will continue to do all we can to keep you updated on the process.

Join the SLC at the National Educational Computing Conference

SLC at NECC (June 20-23 in San Diego, California)

SPECIAL PRECONFERENCE WORKSHOP

When: Sunday Afternoon, June 21, 1:30-4:30
Sponsored by:  SLC and the International Society for Technology in Education
Presented  by:  Mickey Revenaugh of the SLC (with additional presenters from ISTE and the school
                         and library community)

E-Rate Made Easy: Help from the Schools and Libraries Corporation

Come for a plain-language overview of the Universal Service Program, including a step-by-step guide to the application process, a discussion of lessons learned from the first application cycle, and tips for managing your application for 1999. Participants will have a chance to work in small groups with others who have similar questions and concerns, and get direct answers from the SLC.

Pre-registration for this special workshop is required. For information and registration instructions, go to <http://www.neccsite.org/advprog/conferen2.htm>.

For more information about NECC, go to http://necc98.csusm.edu.

Check the NECC program for other E-rate related events.

Problem Resolution Quick Fixes

We’ve pinpointed the most common trouble spots on Form 471—those items most likely to be identified for correction on your Problem Resolution fax—and developed a one-page graphic guide to fixing each problem. These Quick Fixes are in PDF format for you to print out and use in correcting your application. They are also available via our toll-free fax-on-demand service (800-959-0733--key in document #19). Please feel free to copy these Quick Fixes and share them with your colleagues.

Vendor Program Overview

The Vendor Program Overview, located in "Service Provider Information" in the Provider Area, provides vendors and service providers with general information on the process and important components of the Schools and Libraries Universal Service Program, popularly known as E-Rate.

Estimated Demand for E-Rate Discounts

Based on a statistical sampling of Universal Service Fund applications filed to date, the Schools and Libraries Corporation reported to the Federal Communications Commission today that the estimated demand for E-rate discounts for 1998 will be $2 billion. This estimate is part of the SLC's quarterly filing with the FCC.

The Universal Service Program is funded up to $2.25 billion annually by contributions from the telecommunications industry. The actual size of the fund for 1998 is expected to be established soon by the FCC.

No actual funding commitments have been made to any Universal Service Fund applicants. The demand estimate figure is based purely on a statistical sampling of applications. The SLC is still in the process of reviewing the more than 30,000 applications it has received, and will not be making funding commitments for some time. Applicants who are approved for discounts will be notified directly, as will their service providers. At that time, the SLC will calculate the exact total of funding commitments and post this figure to this Web Site.

Form 471 Problem Resolution: Helpful Documents, Item-by-Item

Where can you turn for help if you've been notified of a problem with your Form 471 by the SLC Problem Resolution Team? How can you avoid common mistakes if you're completing Form 471 for the first time? Start with this index of helpful SLC documents, organized item-by-item to guide you through typical Form 471 problem areas.

Fact Sheet On Program Integrity Assurance: What Will We Be Looking For?

This Fact Sheet on Program Integrity Assurance, located in the Reference Area, is intended to help applicants identify and gather information that might be requested by the Schools and Libraries Corporation (SLC) to support their Forms 471. It is not meant to present an exhaustive list. It will be important for applicants to respond promptly if contacted by the SLC for additional information about their applications. Applicants who do not respond within seven calendar days of receiving a request for additional information will be subject to rejection of the application.

E-Rate Update

With the close of the 75-day window for this first round of Universal Service Fund applications, schools and libraries who have filed their Form 471 applications are eager to know what happens next. Click here to view the E-Rate Update, which outlines each step of the Form 471 application review process to help schools and libraries better understand the SLC processing procedures for Form 471.

Problem Resolution Turn-Around Timeline Extended to 7 Days

The Schools and Libraries Corporation has begun its review of Form 471 applications and has refined and expanded its Client Service Bureau "Problem Resolution Team" procedures for working with schools and libraries to address incomplete applications. The following is a brief update on these procedures and their timeframe. Please watch for further details on application processing over the next week.

Important Note
Our immediate goal is to get the enormous volume of Form 471 applications being received into processing as quickly as possible. Please do not slow this process down by calling our Client Service Bureau to verify that your application has been received or to determine its current status. If there is a problem with your application that prevents us from entering it into our system, you will be notified. (Please see also our "Form 471 Deadline Do's and Don'ts," April 13, 1998, for more information.)

Notification by Fax
As previously indicated, the CSB Problem Resolution Team will notify applicants via fax with an explanation of the SLC requirements and a request for the additional information needed to complete applications. In the event that a fax number is not listed on applications, a member of the CSB Problem Resolution Team will call applicants to obtain a fax number for documenting the SLC queries. Failing to connect with applicants, the CSB Problem Resolution Team will call again, and may ultimately mail notifications to the contact person. The Problem Resolution notification will include a fax-back form and a toll-free fax-back number for applicants to use in responding to queries.

Response Time Extended
Applicants will now have 7 calendar days, rather than 4 business days, to respond to the questions posed by the CSB Problem Resolution Team in order to maintain their place in the 75-day window. The clock starts ticking on the first day after the SLC has generated its request and applicants must respond by close of business (8 PM ET) on the 7th day to maintain their position in the 75-day window. The due date for your response will be clearly specified in the fax notice you receive. The SLC urges applicants to monitor their faxes, mailboxes, voice-mail, and E-mail so that any problems concerning their applications are addressed quickly.

If applicants take more than 7 calendar days to respond, or if their responses are incomplete, their applications will not be summarily rejected, but they will have lost their position in the 75-day window. Applicants will establish a place in line on whatever date they provide complete answers to the questions posed by the CSB Problem Resolution Team.

Automatic Rejections
The SLC will continue automatically rejecting applications that fail to meet the most basic Minimum Processing Standards. Some examples that will cause an application to be automatically rejected are: if the Form submitted was not the OMB approved or a visually equivalent version; or if the application was not at least two-thirds legible; or if the application was sent via fax or E-mail; or if Block 6 (the certification page) was not completed and signed. Applicants will be notified of automatic rejection via express mail delivery; their entire application will be returned with a notice of explanation.

Form 471 Deadlines Do's and Don'ts

DO keep a copy of your submitted Form 471 along with any proof you have of delivery by deadline (for example, a Federal Express receipt and verification of delivery, or a U.S. Postal Service certification receipt). Proving delivery by the deadline is your responsibility, not SLC's.

DO rest assured that your application was received by the SLC if your overnight delivery service shows it is signed for in Cedar Rapids, Iowa, as opposed to Iowa City. We have established a back-up receipt facility in Cedar Rapids. Your communications should remain addressed to Iowa City.

DON'T call our toll-free customer service line to verify that your application has been received or to check its status. Our Client Service Bureau is devoted to the processing of applications and will NOT be able to discuss the status of individual applications. If there is a problem with your application that prevents us from entering it into our system, you will be notified. (See "Update on E-Rate Application Processing Procedures," April 13, 1998.)

DON'T forget to check the http://www.sl.universalservice.org Web Site regularly for updated information about the overall application review process.

SLC Discount Calculator Removed

Please be advised that the Schools and Libraries Corporation (SLC) has removed the Discount Calculator placed on its Web Site on Saturday, April 11, due to inquiries we have received regarding the purpose of the calculator. We are looking into these matters and will keep you posted on the outcome of our review. We do not anticipate re-posting the Discount Calculator in the foreseeable future. Please continue to rely on your own calculations of the discount level for the entities included in your Form 471 application. Make sure to retain your workpapers. Please submit the worksheet required in Item 14 of Form 471 when you send in your application.

FCC Form 498 For Service Providers

FCC Form 498 is the Service Provider Information Form. It is used to collect important billing and other information from service providers and vendors who participate in the Schools and Libraries Program of the Universal Service Fund (USF) and who have obtained their Service Provider Information Number (SPIN).