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FCC Reverses SLD on Unsubstantiated Eligible Charges

The Federal Communications Commission's Telecommunications Access Policy Division has sided with a school district—and state E-rate coordinators–in an appeal that involved the Schools and Libraries Division's application of the so-called "30 percent rule" to an eligible funding request that was not fully substantiated.

In this case, Iroquois West School District 10 in Gilman, IL, submitted a funding request for the 2003 funding year, requesting $341 a month in discounts on its phone bill. During application review, the SLD said that the district had submitted back-up documentation that only supported requests of $232.90 a month. The school district responded that it had made an error in averaging its phone bills.

In May, 2003, the SLD rejected the funding request, saying that more than 30 percent of the funding request was for unsubstantiated phone charges, and thus the whole funding request should be rejected. Iroquois argued that the SLD should have simply reduced the funding request to reflect the correct amount, but that because the services were eligible for support, it was wrong to apply the 30 percent rule and reject its whole funding request.

Upon appeal, the FCC staff agreed with the school district. The staff wrote: "We understand SLD's rationale for applying the 30 percent policy to unsubstantiated amounts for eligible services—to create incentives for applicants to request only those amounts that they can justify as reasonable estimates of the costs of eligible services. The 30 percent policy, however, applies to requests for ineligible services, not for unsubstantiated amounts of eligible services. Such an application goes beyond the scope of the 30 percent policy as drafted." The FCC said that the SLD would be correct in reducing the request to the amount that could be substantiated, and instructed the SLD to approve the reduced amount "unless SLD identifies other grounds for denial."

The case had been watched by the state E-rate coordinators, who had identified a number of applicants whose funding requests had been rejected on this basis. The group said it had persuaded the SLD not to act on similar appeals that were pending at the SLD until the FCC had rendered its decision on the overall policy issue.

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