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This Week in Washington

This was a busy week in Washington as it relates to the E-rate program.  It is often times difficult for either school administrators or the service provider community to monitor E-rate program developments and Funds For Learning is a one-stop resource that provides regular program updates as they occur.

President Obama Nominates Clyburn for FCC Commissioner Position: President Obama nominated Mignon L. Clyburn to fill a vacant Federal Communications Commission (FCC) Commissioner position this week.  She has been a member of the Public Service Commission of South Carolina since 1998 and has long been active in the telecommunications industry. Several months ago Obama nominated Julius Genachowski to lead the Commission, but he has yet to be confirmed by the Senate.  There is still a vacant Republican position that will need to be filled soon as there are many important issues that the FCC needs to address.   The Commission has released several proposed rulemakings concerning Universal Service and E-rate reform and at this point, it is our estimation it will be unlikely that the Commission will make any substantive changes to the E-rate program this year.  However, we would expect the Commission to continue to release appeal decisions and as we have recently seen, the FCC over the last few years has made significant progress in helping applicants not get denied due to clerical mistakes or errors not relating to fraud or abuse.  There is no reason to expect that the new Commission will change that direction.  USAC has reported that $1 billion is available from previous years that could be rolled over into FY 2009 to increase the overall funding pot and we would hope the FCC will notify USAC in the coming weeks that much of that can be used in order for more schools to get access to the internal connections dollars.

GAO E-rate Report: This week, the Government Accounting Office (GAO) released a long anticipated report in which they were critical of the FCC for not having any meaningful goals or program performance measures.  The FCC countered that the program is currently meetings the initial goals by “providing access to modern telecommunications and information services and making those services affordable”.  The FCC, did acknowledge, that it is prudent to assess goals and performance measures and in recent proposed rulemakings have asked stakeholders to comment on their views.  It is unclear if Congress will make any statutory changes to the program based on this report; however, as stated above, the FCC has asked stakeholders to comment on various aspects of Universal Service and E-rate reform over the last few years and most likely the earliest any major change will happen is next year.

Congress: In the FY 2009 Omnibus Appropriations Bill that was recently passed and signed by President Obama, Congress gave the FCC Office of Inspector General the authority to transfer an additional $25.4 million from the Universal Service fund to conduct additional audits and oversight activities.  The FY 2009 Omnibus Appropriations Bill also calls on both the FCC OIG and the GAO to assume “greater managerial control over these important programs.”  This week Acting Chairman Copps testified on the House Appropriations Committee outlining the FCC’s 2010 budget request that should be released in the next couple of weeks.  We will review the details when they become available to determine if the FCC OIG will request additional Universal Service Fund dollars to be used for even further oversight activities.  This is above the approximately $80 million that USAC will spend this year on their audit program.

Each year for the last several years, Congress has tried to permanently exempt Universal Service from the “Anti-Deficiency Act “(ADA), but the Bush Administration opposed those efforts.  The ADA would require USAC to start treating approved commitments as obligations, rather than when an invoice was presented for payment. Under the accounting rules, USAC must actually have the money in hand before it can issue a commitment. In October 2004, when the FCC initially decided that USAC should adopt the ADA the funding commitments came to a halt for several months. Congress has extended the ADA exemption each year since 2004.   This week, Congressman Markey (D-MA) introduced a bill to permanently expect Universal Service from the ADA and Funds for Learning, along with other education and industry stakeholders are continuing to work together on this important issue.  While the Obama Administration has not publicly stated whether or not they support this exemption, we are again, hopeful, that the ADA exemption will finally be put to rest.

USAC Schools and Libraries Board Meeting:  The USAC Schools and Libraries Committee held its quarterly Board Meeting this week and Board members expressed their concern with the escalation of the cost of the audit program.  While Funds For Learning recognizes the need to maintain oversight of the E-rate program, as we have reported in a previous blog post, the whole E-rate process is itself one, big audit.  USAC was pleased that the SLD issued its first FY 2009 funding wave this week and the SLD is continuing to issue funding commitments at a faster pace than they had a few years ago.

We will continue to monitor Congress, FCC, USAC and other federal agencies with jurisdiction over E-rate related matters and as important information is released we will continue to identify what and how it may impact the E-rate program.

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