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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

E-Rate

Status, Steps,

and Strategies

Lansing, Michigan

October 22, 2002

10/19/02


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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


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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


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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


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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)


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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


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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


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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


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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


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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


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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


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Form 470: Purpose

  • Identifies applicant

  • Generally describes services needed

  • Begins mandatory 28-day waiting period

  • Does not replace state and local competitive bidding rules


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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


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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”


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Form 470: Block 2 Examples


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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


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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


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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


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Problem:Narrow and Early Contract Window

Form 470 Posting

Form 471 Application Window

Oct./Nov. Dec. Jan.

Contract Signing Window

Jan. 16th


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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


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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


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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


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Discount Percentages

% of Students Eligible for

School Lunch Program

Discounts


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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


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Individual School

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


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School District

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


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Library System

Complete Worksheet B, all columns

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


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Consortium

Complete Worksheets A or B, as appropriate

Complete Worksheet C to calculate consortium discount(s).


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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


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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


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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


Form 471 block 5 examples

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


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Local Telephone (tariff)Form/Item Description


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


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Internet - Direct (quarterly)Form/Item Description


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PBX Maintenance (2nd year)Form/Item Description


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LANs (new contract)Form/Item Description


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Form 471: Attachment


Eligibility warning tip

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!


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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!


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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


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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


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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”)


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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


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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


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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


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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


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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:


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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:


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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”


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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


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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


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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


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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


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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


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Critical Deadline Issues


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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


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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?


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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


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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


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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.


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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


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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


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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


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Reference Area


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BEAR/SPIN Search by Name


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BEAR/SPIN Search Result by Name


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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


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Funding Commitments


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Funding Commitments, cont.


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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


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Apply Online Resources


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To Find Specific Form 470


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Multiple Search Options


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Multiple Search Results


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Specific Form 470


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Apply Online Resources


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To Find Specific Form 471

Note: To find Entity Number, first find Form 470


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Specific Form 471 Number and Status


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Apply Online Resources


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To View Specific Form 471


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Block Data for Specific Form 471


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Apply Online Resources


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FRN Extension List by Funding Year


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FRN-Specific Service and Invoice Dates


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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


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Multiple Search Options


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Data Format Options


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PC: Right-Click to Download File


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PC: Left-Click to View File


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Imported into Excel for Ease of Analysis


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Original vs. Committed Amounts


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Analysis: Form 486 Status


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Analysis: Unusually Unsuccessful Vendors


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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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