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E-Rate. Status, Steps, and Strategies Lansing, Michigan October 22, 2002. 10/19/02. Workshop Agenda. Overview of E-Rate Program Current year status (FY 2002) Application for next year (FY 2003) Special Issues Technology Plans and CIPA–Deadlines Program Compliance–SLD Databases

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E-Rate

Status, Steps,

and Strategies

Lansing, Michigan

October 22, 2002

10/19/02


Workshop Agenda

  • Overview of E-Rate Program

  • Current year status (FY 2002)

  • Application for next year (FY 2003)

  • Special Issues

    • Technology Plans and CIPA–Deadlines

    • Program Compliance–SLD Databases

  • Q & A

Major Focus


General Concepts

  • Funded by carriers under Telecommunications Act of 1996

  • Not a typical government grant program

    • Funding not based on competitive applications

    • Funds are provided indirectly as discounts on

    • eligible services from the vendors

  • Annual applications required

  • –First year was FY 1998

  • –Current year is FY 2002

  • –Next application year is FY 2003


General Framework

  • 20-90% discounts on three types of services:

    • Telecommunications

    • Internet Access

    • Internal Connections (Networking)

  • Annual applications for funding

    • Annual cap of $2.25 billion

    • Priority 1: Telecom and Internet Access – Full funding

    • Priority 2: Internal Connections – High discount funding only

  • Basic SLD overview

    • http://www.sl.universalservice.org/overview


Eligible Services: Telecom/Internet

  • Basic telephone (local & long distance)

  • Advanced telecom (T-1, ATM, Frame Relay, etc.)

  • WANs (only if provided by telecom carrier)

  • Mobile services(‘instructional use”)

  • PBXs eligible only as Internal Connections

  • Internet access (not content)


Eligible Services: Internal Connections

  • Eligible:

    • Network wiring

    • Routers and hubs

    • Switches

    • Network servers and operating software

    • Wireless LANs

    • PBXs and key systems

  • Ineligible:

    • Personal computers and modems

    • Asbestos removal

    • Electrical wiring

    • Teacher training

    • Application software

    • Internet filters/firewalls

Mixed eligibility issues: http://www.sl.universalservice.org/reference/costallocationguide.asp


E-Rate Opportunities and Issues

  • Important source of technology funding (FY 1998 – FY 2002)

    • $9.4 billion nationwide – $268 million for Michigan

  • Time-consuming, bureaucratic, and confusing program

    • Forms 470, 471, 472, 479, 486, and 500

    • Service eligibility and discount rate issues

    • Long lead time competitive bidding procedures

    • Strict application review process

    • Additional procedures for consortiums


Basic E-Rate Cycle

Pre-Commitment

Form 470-Describes services required

(fall)-Posted on SLD Web site

Form 471-Calculates allowable discount rate

(mid-Jan.)-Requests funding for specific services/vendors

-Requires billing or contract documentation

PIA-Detailed SLD review of applications

(spring/summer)-Often requires additional documentation


Basic E-Rate Cycle

Post-Commitment

Form 486-Confirms use of approved services

(summer)-Certifies tech plan and CIPA compliance

-Appeals and SPIN Changes as required

Funding Alternatives(throughout year)

SPI -Service provider discounts bills

(Form 474)-Schools pay only undiscounted amount

BEAR -Discounts reimbursed after the fact

(Form 472) -Based on actual bills paid


FY 2002: Current Issues

  • Remaining funding waves and “ripples”

  • Form 486 requirements

    • October 29th and later deadlines

    • Technology plans and CIPA compliance

    • Form 479s for consortia

  • Other issues

    • Appeal processing

    • BEARs vs. discounted bills

    • Non-recurring service deadline


New Program Developments

  • New forms (in scanning format and/or online)

  • Expanded online SLD databases

  • New for FY 2003

    • Updated eligibility list

    • Yellow SLD correspondence

  • Possible changes for FY 2004


Form 470: Purpose

  • Identifies applicant

  • Generally describes services needed

  • Begins mandatory 28-day waiting period

  • Does not replace state and local competitive bidding rules


Form 470: Block 1

  • Application #: SLD assigns

  • FY 2003: July 1, 2003 — June 30, 2004

  • Contact Person: For SLD and vendors

    • Can use Item (11) for alternative vendor contact

    • Do NOT let a vendor act as applicant contact


Form 470: Block 2

  • Be broad and inclusive

  • Item (7): Check ALL that could apply

  • Tariff has specific regulatory connotation

  • MTM is an allowable category for:

    • Internet, cellular, paging

  • Items (8) - (10): Check “YES” or “NO”


Form 470: Block 2 Examples


Form 470: Automatic Rejection

  • Wrong version (should be April 2002)

  • Missing applicant and contact information

  • Other missing blocks/pages

  • Missing or invalid certification

  • Wrong program year specified

    Not many Form 470s are rejected, but many

    are filed too late for Form 471 filings


Form 470: Filing Online

  • Assures earliest “Allowable Contract Date”

  • Provides check on field information

  • Use Form 470 Application # to resume data entry at any point before submission

  • Important: Must use electronic signature or mail signed certification page to SLD


Form 470: Filing by Mail

  • 28 day waiting period starts after Form is posted, NOT received.

  • Form 470 receipt acknowledgment letter will show “Allowable Contract Date”

  • Can check posting on SLD web site


Problem:Narrow and Early Contract Window

Form 470 Posting

Form 471 Application Window

Oct./Nov. Dec. Jan.

Contract Signing Window

Jan. 16th


Contracting Tips

  • Broadly define service requirements in Form 470

  • Work closely with vendors

    • Structure contract

    • Prepare eligibility exhibits

    • Set contract signing date

  • “Contract” can be a contingent agreement

    • Subject to final board and budget approval

    • Allow substitution of equipment models

    • Prices subject to change

  • Consider use of OGS contracts

    • Can serve as “standing bids”

    • Must specify specific vendor in multi-vendor contracts

    • Request best and final prices or use mini-bid


Form 471: Purpose

  • Calculation of discount rate(s)

  • Requests specific discount on each tariffed, monthly, and contract service

  • Separates eligible from ineligible costs

    An important and complex form


Discount Rates

  • All flow from individual school data

  • All other applicants use weighted or simple average depending on type of applicant

  • Based on need

    • Poverty

      • Defined by National School Lunch Program

        http://www.fns.usda.gov/cnd/IEGs&NAPs/IEGs.htm

    • Location

      • Rural vs. Urban


Discount Percentages

% of Students Eligible for

School Lunch Program

Discounts


Alternative Measures

  • Comparable measures (milk/breakfast programs, Medicaid/public housing data)

  • Survey (can extrapolate from 50% response rate)

  • Sibling searches

  • Feeder system not approved

    Note: SLD reviews using state lunch program participation

    data, so document all higher eligibility data

E


Individual School

Complete Worksheet A, Columns (1)-(7) Columns (3)-(7) step through discount calculation


School District

Complete Worksheet A, all columnsColumn (7) gives site-specific discountsItem (10c) gives the shared (weighted average) discount


Library System

Complete Worksheet B, all columns

Column (5) provides site-specific discountsItem (10c) gives the shared discount


Consortium

Complete Worksheets A or B, as appropriate

Complete Worksheet C to calculate consortium discount(s).


Form 471: Form 470 Link

  • Item (12): Form 470 application number

  • Items (17) - (18): Allowable Vendor Selection/Contract Date must be earlier than Contract Award Date

Form 471: Discount Rate Link

  • Item (22): Block 4 Entity or Worksheet number

  • Item (23), Column (J): Discount rate from Worksheet


Form 471: Vendor Link

  • Item (13): SPIN

    • Source: SLD’s BEAR & SPIN Contact Search

  • Item (14): Beware “d.b.a” names

  • Item (16): Billing Account Number


Form 471: Contract Link

  • Item (15): Contract ID, “T”, or “MTM”

  • Items (17) - (18): Contract Award Date must be later than Allowable Vendor Selection/Contract Date

  • Item (19a): No earlier than 07/01/2003

  • Item (19b): Normally 06/30/2004

  • Item (20): Hopefully 06/30/2004 or later

  • Item (21): Attachment #

  • Item (23): Charges, eligibility, and funding request


Local telephone

Cellular

Internet (direct)

PBX maintenance

New LANs

Tariff (monthly)

Month-to-month billing

Annual contract (quarterly)

2nd year of 3 year contract

Contract (non-recurring)

Form 471: Block 5 Examples


Local Telephone (tariff)Form/Item Description


Cellular (month-to-month)Form/Item Description


Internet - Direct (quarterly)Form/Item Description


PBX Maintenance (2nd year)Form/Item Description


LANs (new contract)Form/Item Description


Form 471: Attachment


Eligibility Warning & Tip

  • If SLD determines that more than 30% of requested amount is ineligible, entire FRN may be denied

  • When in doubt — break it out!


Service Warning & Tip

  • If SLD determines that more than 30% of the requested amount is not Priority 1, the entire FRN may be categorized as Priority 2

    • Typical problem: On-premise equipment included in telecommunications or Internet access services

  • When in doubt — break it out!


Form 471: Automatic Rejection

  • Wrong version (should be Oct. 2000)

  • Missing applicant and contact information

  • Other missing blocks/pages

    • At least one Block 4 worksheet

    • At least one valid Block 5 funding request

  • Invalid certification

  • Filed after the window closes (January 16, 2003)

Form 471s can be rejected completely,

or funding can be reduced or denied on individual FRNs


Form 471: Filing Online

  • Promotes early SLD processing

  • Provides check on field information

  • Use Form 471 Application # to resume data entry at any point before submission

  • Important: Must use electronic signature or mail signed certification page to SLD within the application window

  • Attachments must be mailed to SLD


Form 471 Review Process

  • Data entry of mailed applications

    • Problem resolution review

    • Receipt Acknowledgment Letter (“RAL”)

  • Program Integrity Assurance (“PIA”)

    • Requests for supporting documentation

    • Seven day response cycles

    • Separate 471 for Priority 1 may speed approval

    • Item 25 and Selective Reviews

  • Funding Commitment Decision Letter (“FCDL”)


SLD and FCC Appeals

  • Must be received within 60 days of decision

  • Appeal cycle is lengthy

  • Post-decision procedures, if successful

    • SLD decisions have two-steps: Decision + FCDL

    • FCC decisions often referred back to SLD for resolution

      When in doubt, appeal


Post-Commitment Form 486

  • Confirmation of service usage and start date

    • The SLD won’t process any E-rate invoices on any FRN without a valid Form 486

  • Certification of technology plan and CIPA

  • Filing deadlines are critical

    • October 29th or 120 days from FCDL or service start


Form 486: Other Issues

  • Penalty for missing FY 2002 filing deadline:

    Discounts paid only from 120 days prior to

    final filing date

  • Before consortium can file Form 486:

    Must collect Form 479s from all members

    or reduce funding accordingly


Post-Commitment Changes

  • Can change services/equipment/terms

    • Requires Service Substitution letter (http://www.sl.universalservice.org/reference/ServiceSub.asp)

    • Tip: Keep contract specifications flexible

  • Can change service provider (SPIN)

    • Requires SPIN Change Request letter (http://www.sl.universalservice.org/reference/SpinChange.asp)

  • Use Form 500 to cancel or reduce funding


Funding: Vendor Discounts

Service Provider:

  • Discounts applicant bills and files Form 473 (“SPI”) with SLD

  • May ask applicant for applicable account and eligible usage data

  • Must pay non-discounted amount

  • Should carefully review discount calculations

Applicant:


Funding: Discount Reimbursements

Applicant:

  • Pays bills in full and summarizes eligible payments

  • Files Form 472 (“BEAR”) with SLD

  • Must carefully track BEAR payments

  • Must acknowledge BEAR before submission

  • Is paid by SLD, then must pay applicant

Service Provider:


BEAR Payment Issues

  • After processing, SLD sends BEAR Notification Letter to vendor and applicant

    • Approval is on individual FRN basis

    • Denials or rejections may require resubmission or appeal

    • Checks sent to vendors approximately 20 days later

  • Vendors should pay applicants within 10 days of receipt

    • No standard vendor practices on applicant payments

  • Bankruptcy of vendor may require “Good Samaritan”


Technology Plan

  • Five SLD technology plan criteria

    • Goals and Objectives

    • Needs Assessment

    • Professional Development

    • Budget

    • Evaluation

  • No Tech plan required for “basic” phone service

  • Tech plans approved for no more than 3 years


Children’s Internet Protection Act (“CIPA”)

  • Requires “technology protection measures”

    • Applies to all Internet-connected computers

    • Libraries currently exempt

  • Requires Internet Safety Policies

    • Need for public hearing

    • May be more than a student Acceptable Use Policy

  • Applies only to Internet and Internal Connection discounts


Must Block or Filter Internet Access to Visual Depictions that are:

  • Obscene

  • Child pornography

  • Harmful to minors

    Key points: - Based on existing and precise legal definitions

    - Only courts – not filter suppliers – can determine

  • Otherwise deemed “inappropriate for minors”

    Key point: - As determined locally


N-CIPA Establishes Separate Policy Requirements for Minors re.

  • Monitoring of online activity

  • E-mail

  • Chat rooms

  • Other electronic communications (e.g. IM)

  • Hacking and other unlawful activities

  • Unauthorized disclosure of personal information

    Key Point: Existing Acceptable Use Policy

    may not suffice


CIPA E-Rate Issues

  • Timing:

    • First year (FY 2001):“Undertaking action”

    • Second year (FY 2002): Compliance

    • Form 486 certification and timing is critical

  • Special requirements for consortiums(Form 479s)

  • FCC administration relies heavily on certification

  • E-Rate Central’s CIPA primer and checklist

    • http://e-ratecentral.com/help/cipa_policy_primer.pdf

    • http://e-ratecentral.com/help/cipa_checklist.pdf


Critical Deadline Issues


Critical Deadline Issues, cont.

  • Consequences of missed deadlines

    • Denial or loss of funding

    • Partial year funding

  • Deadline extension requests

    • Service delivery (or FRN) extensions

      http://www.sl.universalservice.org/reference/ServiceDeliveryDeadlines.asp

    • Invoice deadline extension requests

      http://www.sl.universalservice.org/reference/InvoicingDeadlines.asp

    • PIA response exceptions


Program Compliance Issues

  • Greater focus on “waste, fraud, and abuse”

    • PIA scrutiny, including Item 25 and selective reviews

    • Audits by SLD, FCC, and contractors

    • Vendor investigations by SLD, FCC, DOJ, etc.

  • Consequences for applicants and vendors

    • Denied or reduced funding

    • Delayed funding decisions

    • Retroactive commitments (“COMAD”)

    • Criminal indictments?


Suggested Recordkeeping

  • Support of Form 471 calculations

    • Discount percentages

    • Requested dollar amounts

  • Bid documents (including losing bids)

  • Contracts

  • Delivery, testing, and inventory documents

  • Bills and proof of payment


Questionable Applicant/Vendor Practices

  • Vendor involvement in the selection process

    • Vendor can not be the contact on the Form 470

    • FCC expects fair and open bidding process

  • Applicants not paying non-discounted portion

    • Vendor cannot forgive or offset with “free” services

    • Vendor-arranged “grants” are suspect

  • Non-competitive pricing or excessive services

    • Service cost must be primary factor in selection

    • Increasing requests for bid documentation

Primary Targets: Small 90% schools


SLD’s Worst Case Scenario

  • Numerous applicants cite the “XYZ Foundation” as the source of the funds for their share.

  • Applicants have no contact information for the foundation.

  • This foundation has made commitments only to applicants that have chosen this one service provider.

  • All applicants are 90% Schools.

  • Service provider leases applicants a server (by SP’s own admission worth $20,000) for $20,000per year…

  • Then charges $96,000per year as maintenance on that server.


SLD Online Database Resources

  • Service Provider names, SPINs, and contacts

  • Form 470s and Form 471s

  • Funding status information

  • FRN Extension Table

  • New: Detailed FRN “Data Requests”

    • Funding

    • Form 486 filing

    • Authorized disbursements


Portal to the SLD Databases

  • Service provider information

  • Detailed FRN funding data

  • Local, state, and national funding data

  • Detailed Form 470 and Form 471 data

  • Form 471 application status

  • FRN extension status


Portal to the SLD Databases

  • Service provider information

  • Detailed FRN funding data

  • Local, state, and national funding data

  • Detailed Form 470 and Form 471 data

  • Form 471 application status

  • FRN extension status


Reference Area


BEAR/SPIN Search by Name


BEAR/SPIN Search Result by Name


Portal to the SLD Databases

  • Service provider information

  • Detailed FRN funding data

  • Local, state, and national funding data

  • Detailed Form 470 and Form 471 data

  • Form 471 application status

  • FRN extension status


Funding Commitments


Funding Commitments, cont.


Portal to the SLD Databases

  • Service provider information

  • Detailed FRN funding data

  • Local, state, and national funding data

  • Detailed Form 470 and Form 471 data

  • Form 471 application status

  • FRN extension status


Apply Online Resources


To Find Specific Form 470


Multiple Search Options


Multiple Search Results


Specific Form 470


Apply Online Resources


To Find Specific Form 471

Note: To find Entity Number, first find Form 470


Specific Form 471 Number and Status


Apply Online Resources


To View Specific Form 471


Block Data for Specific Form 471


Apply Online Resources


FRN Extension List by Funding Year


FRN-Specific Service and Invoice Dates


Portal to the SLD Databases

  • Service provider information

  • Detailed FRN funding data

  • Local, state, and national funding data

  • Detailed Form 470 and Form 471 data

  • Form 471 application status

  • FRN extension status


Multiple Search Options


Data Format Options


PC: Right-Click to Download File


PC: Left-Click to View File


Imported into Excel for Ease of Analysis


Original vs. Committed Amounts


Analysis: Form 486 Status


Analysis: Unusually Unsuccessful Vendors


SLD Help

  • Web: www.sl.universalservice.org

  • Help lines: 888-203-8100 (General)

    888-276-8736 (Fax questions)

    question@ universalservice.org

E-Rate Central Help

  • Web: www.e-ratecentral.com


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