A LETTER FROM ACTING CEO, KATE L. MOORE

E-RATE NEWSFLASH

SCHOOLS AND LIBRARIES CORPORATION

September 23, 1998

A LETTER FROM ACTING CEO, KATE L. MOORE

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 5th 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.

As soon as we know the date for the beginning of these waves of letters, and the expected frequency of their distribution, we will place the information on the SLC Web Site.

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