Schools and Libraries Division President Kate Moore advised the FCC March 1 that "USAC may for the first time be unable to fund fully …90% discount requests, and may be unable to reach any of the requests below the 90% internal connections threshold." Moore noted, however, that demand for funding is likely to decline somewhat as the SLD reviews Year 4 applications for compliance with program rules.
The FCC has not yet set the funding cap for the fourth funding year beginning July 1, but in the past two years the cap was set at the maximum currently permissible or $2.25 billion. Moore projected that total demand for Program Year Four funding would be $5.787 million, an increase of $258 million over the SLD's February 6 preliminary estimate.
Demand for Priority One services, telecommunications services and Internet access, is expected to be approximately $1.824 billion, or 81% of the $2.25 billion funding cap. These services are funded first. For internal connections at the 90% level, projected demand is $1.708 billion, twice as much as last year. Together, the two categories could account for $3.532 billion in demand, leaving a potential funding shortfall of as much as $1.282 billion for 90% internal connections requests.
The SLD projections are based on funding requests included in 37,188 applications filed during the Year Four window application period. According to the SLD, factors that will reduce the ultimate demand level include late filed Form 471 attachments and certifications that will disqualify applications for consideration "inside the window," elimination of duplicate requests, and reductions made as a result of program integrity review.