The Schools and Libraries Committee of the Universal Service Administrative Company's Board of Directors July 21 approved a proposal to increase the budget for the SLD by $1 million in the fourth quarter of 2003 and $4.8 million next year to improve its application review processes.
The additional funds will enable the National Exchange Carrier Association, the subcontractor responsible for application processing, to convert temporary employees in the Program Integrity Assurance department to permanent status, consolidate multiple steps of the Form 471 review process and add enough staff so that 90 percent of funding commitment decision letters for the 2004 funding year could be issued by June 30, 2004.
At the quarterly meeting of the SLD governing committee, it was reported that by July 1, 2003, the PIA staff had finished its review of 80 percent of applications for the 2003 funding year. However, the SLD has not yet distributed letters for all of those. As of July 9, the SLD had distributed 25,605 letters representing $707.8 million in approved commitments.
John Perry, who directs NECA's operations on behalf of the SLD, said that in the past, NECA has hired and trained 115 temporary employees each application year. Over time, he said, 'non-performers" are dismissed and others leave for permanent jobs. 'This is not the best way to deal with applicants who are becoming more and more sophisticated," Perry told the committee. Perry indicated that because of the recent downturn in the job market, NECA has been able to hire persons with more education. One-third of its current temporary employees, he said, hold a master's degree.
George McDonald, USAC vice president for the schools and libraries program, said that the permanent employees would be deployed to support such as areas as 'complex reviews" and 'selective reviews." Temporary employees, he said, would still be used to review simple applications seeking relatively small amounts of money.
McDonald said the Federal Communications Commission had advised the SLD that it would support it in requests for additional funds to improve application review and other operations. Along with E-rate discounts and other universal service programs, the SLD's budget is supported by the Universal Service Fund, which earns interest on funds that are not disbursed in a timely manner. McDonald noted that when the General Accounting Office reviewed SLD operations in 1999, it reported that the SLD spent a relatively small amount on administrative operations, relative to the amount of money it distributed.
Perry reported that NECA was ready to issue another 188 funding commitment decision letters for 2002, and that the number still under investigation had been reduced to 163. He said that of those dating from before the 2002 funding, NECA hoped to wrap all of them up within a month.
Perry reported that for 2003, NECA had already completed its review of 222 of 261 consortia applications. However, funding letters had been issued for only 125 of these applications because they 'usually involve other kinds of reviews."
Perry also reported that only 125 current appeals to the SLD are older than 90 days. A newer issue is appeals of Commitment Adjustments (COMADs)—cases in which the SLD was forced to reduce a funding commitment it previously made when rule violations were uncovered. A number of applicants have appealed COMAD rulings arising out of funding commitments that had been made in the early years of the program.
Perry noted that service substitution requests are becoming more complicated, requiring a change in 2.4 funding requests per substitution request. He also noted that the invoicing approval process had become more complicated, with more manual review required. The invoicing staff, he said, had found that a 'significant number of service substitutions take place in the invoicing process," and that the invoicing staff was required to do those kinds of reviews.
Frank Gumper of Verizon, who chairs the USAC board, commented, 'That means the applicant went ahead and changed what they ordered and didn't inform us?" McDonald replied that the SLD guidance states that 'if you don't come in and ask us to approve your change, you're at risk of getting denied at the invoicing stage."
Perry said that the invoicing department also needed more permanent employees with background in PIA reviews because that department was now required to do more complicated reviews.