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  1. E-Rate Status, Steps, and Strategies Lansing, Michigan October 22, 2002 10/19/02

  2. 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

  3. 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

  4. 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

  5. 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)

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. Form 470: Purpose • Identifies applicant • Generally describes services needed • Begins mandatory 28-day waiting period • Does not replace state and local competitive bidding rules

  13. 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

  14. 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”

  15. Form 470: Block 2 Examples

  16. 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

  17. 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

  18. 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

  19. Problem:Narrow and Early Contract Window Form 470 Posting Form 471 Application Window Oct./Nov. Dec. Jan. Contract Signing Window Jan. 16th

  20. 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

  21. 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

  22. 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

  23. Discount Percentages % of Students Eligible for School Lunch Program Discounts

  24. 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

  25. Individual School Complete Worksheet A, Columns (1)-(7) Columns (3)-(7) step through discount calculation

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

  27. Library System Complete Worksheet B, all columns Column (5) provides site-specific discountsItem (10c) gives the shared discount

  28. Consortium Complete Worksheets A or B, as appropriate Complete Worksheet C to calculate consortium discount(s).

  29. 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

  30. 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

  31. 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

  32. 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

  33. Local Telephone (tariff)Form/Item Description

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

  35. Internet - Direct (quarterly)Form/Item Description

  36. PBX Maintenance (2nd year)Form/Item Description

  37. LANs (new contract)Form/Item Description

  38. Form 471: Attachment

  39. 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!

  40. 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!

  41. 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

  42. 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

  43. 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”)

  44. 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

  45. 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

  46. 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

  47. 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

  48. 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:

  49. 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:

  50. 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”