E-RATE FOR BEGINNERS Universal Service Administrative Company Schools and Libraries Division September 24, 2003

Universal Service Administrative Company Slide 2  School and Libraries Support Mechanism –Provides discounts to eligible schools and libraries for Telecommunications Services, Internet Access, and Internal Connections –Applicants can be schools, libraries, or consortia, but only eligible recipients of services can receive discounts –Applicants must apply for discounts each year –Disbursements are capped at $2.25 billion annually  School and Libraries Support Mechanism –Provides discounts to eligible schools and libraries for Telecommunications Services, Internet Access, and Internal Connections –Applicants can be schools, libraries, or consortia, but only eligible recipients of services can receive discounts –Applicants must apply for discounts each year –Disbursements are capped at $2.25 billion annually Overview 2

Universal Service Administrative Company Slide 3 History  Schools and Libraries Support Mechanism started providing discounts as of January 1, 1998 –Telecommunications Act of 1996 Congress directed the FCC to “establish competitively neutral rules... to enhance, to the extent technically feasible and economically reasonable, access to advance telecommunications and information services for all public and non-profit elementary and secondary school classrooms... and libraries.” First Report and Order (FCC ) 3

Universal Service Administrative Company Slide 4 Introduction 4  Commitments to Date by Applicant Type (Inception to September 10, 2003)

Universal Service Administrative Company Slide 5 Introduction 5  Commitments to Date by Service Type (Inception to September 10, 2003)

Universal Service Administrative Company Slide 6 Introduction 6  Commitments to Date by Discount Band (Inception to September 10, 2003)

Universal Service Administrative Company Slide 7 Introduction  Vendor Assistance –NECA in New Jersey Application review — Program Integrity Assurance (PIA) Invoice review (PIA) Appeal process Program correspondence, including change and extension requests –Pearson Government Solutions in Kansas Client Service Bureau (call center) Forms processing 7

Universal Service Administrative Company Slide 8 Eligibility  Eligible Entities –Schools Must meet the statutory definition of elementary or secondary school found in the No Child Left Behind Act of 2001 Must be a non-profit institutional day or residential school, including a public charter school, that provides elementary or secondary education, as determined under state law Must not be operating as a for-profit business Must not have an endowment exceeding $50 million 8

Universal Service Administrative Company Slide 9 Eligibility  Eligible Entities –Schools (cont.) Pre-kindergarten, Adult Education, Juvenile Justice –Must meet state definition of elementary or secondary education –Students and/or facilities may be eligible –SLD requests updated information from state departments of education every two years 9

Universal Service Administrative Company Slide 10 Eligibility  Eligible Entities –Libraries Must meet the statutory definition of library or library consortium found in the Library Services and Technology Act (LSTA) of 1996 Must be eligible for assistance from a state library administrative agency under LSTA Budget must be completely separate from any schools Must not be operating as a for-profit business 10

Universal Service Administrative Company Slide 11 Eligibility  Eligible Services –Priority 1 Telecommunications Services –local and long distance –wireline and wireless –voice, data, video Internet Access –Priority 2 Internal Connections (switches, hubs, routers, wiring) –Priority 1 funded first, then Priority 2 funded beginning with neediest applicants (90%, 89%, 88%, etc.) 11

Universal Service Administrative Company Slide 12 Eligibility  Eligible Services –Eligible Services List Lists services by category (Telecommuncations Services, Internet Access, Internal Connections, and Miscellaneous) –Services which are conditionally eligible –Ineligible services Available on SLD web site 12

Universal Service Administrative Company Slide 13 Service Providers  Service Providers –Must file Form 498 Request a Service Provider Identification Number (SPIN) Provide/update contact information –Providers of Telecommunications Services Must provide telecommunications services on a common carriage basis to be an eligible telecommunications provider –In general, must provide services and bill customers before being reimbursed for discount on services 13

Universal Service Administrative Company Slide 14 Calculating Discounts  Discount Calculation –National School Lunch Program (NSLP) Individual schools — start with the percentage of students eligible for NSLP for their school School districts — start with the NSLP percentages of individual schools in the district, calculate weighted average of all schools Libraries — start with the percentage of students eligible for NSLP for the school district in which the library is located Consortia — calculate simple average of discounts of members –Urban or rural status of county in which school or library is located (from web site) 14

Universal Service Administrative Company Slide 15 Calculating Discounts Points to Remember:  All discount calculations will involve  percentage of students eligible for NSLP in a school or school district  determination of Urban/Rural status  discount from Discount Matrix  Applicant with members or subunits must calculate an average of those members  School district – individual schools  Library system – library outlets/branches  Consortium – eligible member entities 15

Universal Service Administrative Company Slide 16 Calculating Discounts 16 Discount Matrix

Universal Service Administrative Company Slide 17 Calculating Discounts INDIVIDUAL SCHOOL EXAMPLE 1.Determine the total number of students in the school 2.Determine the number of students eligible for NSLP 3.Divide the number of students eligible for NSLP by the total number of students to get the percentage of students eligible for NSLP 4.Determine if the school is Urban or Rural 5.Look up the discount from the Discount Matrix

Universal Service Administrative Company Slide 18 Calculating Discounts INDIVIDUAL SCHOOL EXAMPLE (cont.) Polk Elementary School  Rural location  64 total students  31 students eligible for NSLP  Calculation  31 / 64 = % eligible for NSLP  Rural location  Discount Matrix: 70% discount

Universal Service Administrative Company Slide 19 Calculating Discounts SCHOOL DISTRICT EXAMPLE  School districts calculate a weighted average of the discounts for their individual schools to get their shared discount percentage, as follows: 1.Calculate the matrix discount for each individual school 2.Calculate the weighted product (the matrix discount multiplied by the total number of students) for each individual school 3.Determine the total number of students in the School District and the total of the weighted products 4.Divide the total of the weighted products by the total number of students to get the shared discount percentage

Universal Service Administrative Company Slide 20 Calculating Discounts SCHOOL DISTRICT EXAMPLE (cont.)

Universal Service Administrative Company Slide 21 Calculating Discounts SCHOOL DISTRICT EXAMPLE (cont.) Madison Elementary School  Urban location  127 total students  49 students eligible for NSLP  Calculation  49 / 127 = % eligible for NSLP  Discount Matrix: 60% discount  127 x 60% = 76.2 = weighted product for Madison Elementary School

Universal Service Administrative Company Slide 22 Calculating Discounts SCHOOL DISTRICT EXAMPLE (cont.) Madison Elementary School  127 total students, 76.2 weighted product Adams Middle School  195 total students, 97.5 weighted product Washington High School  142 total students, 71.0 weighted product  Calculation  = 464 = total students in school district  = = total of weighted products  / 464 = 53% = shared discount percentage for school district

Universal Service Administrative Company Slide 23 Calculating Discounts LIBRARY OUTLET/BRANCH EXAMPLE 1.Determine the total number of students in the school district in which the library is located 2.Determine the number of students eligible for NSLP in that school district 3.Divide the number of students eligible for NSLP by the total number of students to get the percentage of students eligible for NSLP in that school district 4.Determine if the library is Urban or Rural 5.Look up the discount from the Discount Matrix

Universal Service Administrative Company Slide 24 Calculating Discounts LIBRARY OUTLET/BRANCH EXAMPLE (cont.)

Universal Service Administrative Company Slide 25 Calculating Discounts LIBRARY OUTLET/BRANCH EXAMPLE (cont.) Polk Public Library  Rural location  Located in Lincoln School District Polk Elementary School has 64 total students, 31 students eligible for NSLP Lincoln Jr/Sr High School has 92 total students, 62 students eligible for NSLP  Calculation  = 156 total students  = 93 students eligible for NSLP  93 / 156 = % eligible for NSLP  Discount Matrix: 80% discount

Universal Service Administrative Company Slide 26 Calculating Discounts LIBRARY SYSTEM EXAMPLE  Library systems calculate a simple average of the discounts for their individual outlets/branches, as follows: 1.Calculate the matrix discount for each individual library outlet/branch 2.Calculate the total of the matrix discounts for all the library outlets/branches 3.Divide the total of the matrix discounts by the total number of library outlets/branches to determine the library system’s discount

Universal Service Administrative Company Slide 27 Calculating Discounts LIBRARY SYSTEM EXAMPLE (cont.)

Universal Service Administrative Company Slide 28 Calculating Discounts LIBRARY SYSTEM EXAMPLE (cont.) Washington Main Library and Jefferson Branch Library  Both in Washington School District  = 464 total students  = 163 students eligible for NSLP  163 / 464 = % eligible for NSLP  Urban location  Discount Matrix: 60% Monroe Branch Library  In Lincoln School District  Discount Matrix: 80% (calculated previously)

Universal Service Administrative Company Slide 29 Calculating Discounts LIBRARY SYSTEM EXAMPLE (cont.) Washington Main Library  Discount Matrix: 60% Jefferson Branch Library  Discount Matrix: 60% Monroe Branch Library  Discount Matrix: 80% (calculated previously)  Calculation  = 200 = total of matrix discounts  200 / 3 = 67 = simple average of three outlet/branch discounts gives the shared discount percentage

Universal Service Administrative Company Slide 30 Calculating Discounts CONSORTIUM EXAMPLE  Consortia calculate a simple average of the discounts for their individual member entities, as follows: 1.Determine the matrix discount for each eligible member of the consortium, depending on its entity type 2.Calculate the total of the matrix discounts for all the eligible members of the consortium 3.Divide the total of the matrix discounts by the total number of eligible members to determine the consortium’s shared discount

Universal Service Administrative Company Slide 31 Calculating Discounts CONSORTIUM EXAMPLE (cont.)

Universal Service Administrative Company Slide 32 Calculating Discounts CONSORTIUM EXAMPLE (cont.) Polk Elementary School  70% matrix discount Washington School District  53% matrix discount Polk Public Library  80% matrix discount Washington Library System  67% matrix discount  Calculation  = 270 = total of matrix discounts  270 / 4 = 68% = simple average of four consortium members and shared discount percentage

Universal Service Administrative Company Slide 33 Application Process Technology Plan – What is my plan? Form 470 – What services do I want? Form 471 – What services did I order? Form 486 – When did services start? Form 472 or Form 474 – How do I receive reimbursements or discounts?  Online filing/certification available for most forms 33

Universal Service Administrative Company Slide 34 Application Process 34 Applicant Actions SLD Actions

Universal Service Administrative Company Slide 35 Technology Planning Technology Plans Not required for local/long distance phone service Must be in place before Form 470 filing Must be approved by an SLD-certified approver before Form 486 filing or start of services, whichever is earlier Must cover five areas: Goals / Strategies for using technology Professional development Needs assessment Sufficient budget Evaluation process 35

Universal Service Administrative Company Slide 36 Technology Planning Points to Remember:  Tech Plan must establish the connections between the technology and specific curriculum reforms or library service improvements  Tech Plan should provide evidence of securing the resources needed to make effective use of the discounted services  Tech Plan should include an evaluation process to monitor progress toward established goals  Tech Plan Approver listed on Form 486 must be SLD certified 36

Universal Service Administrative Company Slide 37 Form 470 Opens a competitive bidding process Applicant responsible for ensuring an open, fair process and selecting the most cost-effective provider of the desired services Must wait 28 days after POSTING of Form 470 to select service provider, sign contract/agreement, and sign and submit Form 471 Service providers who will participate in the bidding process cannot complete Form 470 Can be filed once for multi-year contracts, but 470 and RFP must indicate intent to sign multi-year contract Make RFP available or list specific service/function and quantity/capacity 37

Universal Service Administrative Company Slide 38 Form 470 Competitive Bidding Request for Proposal (RFP) Not required, but a good idea Describes your project scope, location, other requirements in detail Competition Goal is to have as many bidders as possible Promotes better service and lower prices Fair and open process All bidders treated the same, no advance knowledge of RFP information No secrets in the process, all bidders know what is required of them 38

Universal Service Administrative Company Slide 39 Form 470 Points to Remember:  Competitive bidding process must be open and fair  List services sought in correct category of service (Form 471 must match)  Retain worksheets, bid evaluation criteria, winning AND LOSING bids  Form 470 must be certified by close of Form 471 application filing window  Filing online speeds processing and reduces errors 39

Universal Service Administrative Company Slide 40 Form 470 Form 470 Receipt Notification Letter (RNL) Cover page of important reminders and deadlines Notifies applicant that Form 470 has been posted to the SLD web site System will generate RNL for Forms 470 filed online after form is submitted but before it is certified Form MUST be certified before close of Form 471 application filing window Contains Allowable Vendor Selection / Contract Award Date 40

Universal Service Administrative Company Slide 41 Form 471 Provides specific information on services, service providers selected, and contracts and/or agreements Provides discount calculation information Must be filed for each funding year Applicant certifies compliance with rules, which include securing access to resources to make effective use of discounts Must be postmarked on or before the last day of the Form 471 application filing window 41

Universal Service Administrative Company Slide 42 Form 471 Points to Remember:  WAIT AT LEAST 28 DAYS from the posting of the Form 470 before  selecting a service provider  executing a contract or agreement  signing and submitting Form 471  File separate Forms 471 for Priority 1 and Priority 2 services  Remove ineligible costs and document or estimate eligible costs carefully (30% Rule)  Filing online speeds processing and reduces errors 42

Universal Service Administrative Company Slide 43 Form 471 Obligation to Pay Non-discount Share Applicants are required to pay their share of the cost (the “non-discount” portion or share) — cannot be donated, forgiven or ignored Service providers cannot waive or credit the applicant’s share Offers to reduce price must be incorporated into the “total pre-discount amount” Service provider must bill the applicant for non-discount share of services 43

Universal Service Administrative Company Slide 44 Form 471 Form 471 Receipt Acknowledgment Letter (RAL) Cover page of important reminders and deadlines Provides confirmation of certain information entered from Form 471 Data entry errors may be corrected by submitting a copy of the RAL with the specific errors lined out and the correct information supplied — three-week deadline Funding request reductions may also be submitted before funding commitment 44

Universal Service Administrative Company Slide 45 Application Review Review of Applications Review by PIA, which may include:  Competitive bidding process  Contracts and agreements  Discount calculation  Sufficient budget  Establishing Form 470  Technology Plan 45

Universal Service Administrative Company Slide 46 Funding Commitments Points to Remember:  Provide information requested by reviewers (PIA) promptly  If desirable, work with your state coordinator to comply with information requests  Ask for more time if you need it  Retain documentation  Review Request for Selective Review Information fax to understand what information might be requested 46

Universal Service Administrative Company Slide 47 Funding Commitments Funding Commitment Decision Letter Cover page of important reminders and deadlines FCDL reports status of individual funding requests:  Funded  Not Funded  As Yet Unfunded (Internal Connections)  Canceled May receive more than one FCDL 47

Universal Service Administrative Company Slide 48 Funding Commitments Points to Remember:  Check all entries on the FCDL carefully to make sure there are no data entry errors  Review the FCDL and the SLD web site for information on requesting SPIN changes and service substitutions, if necessary  Use the information on the FCDL to prepare the Form

Universal Service Administrative Company Slide 49 Funding Commitments  Commitments vs. Disbursements –$2.25 billion cap is on disbursements –SLD can commit more than $2.25 billion in a given Funding Year, because commitments have historically exceeded disbursements 49

Universal Service Administrative Company Slide 50 Form 486 Notification that services have started and the SLD can pay invoices Certifies that Tech Plan (if required) has been approved Certifies status under Children’s Internet Protection Act (CIPA) Lead members of consortia may be required to collect CIPA certifications from consortium members on a separate form (Form 479) 50

Universal Service Administrative Company Slide 51 Form 486 Points to Remember:  Tech Plan must be approved by an SLD- certified Tech Plan Approver (list available on SLD web site)  CIPA certification(s) must be consistent with those filed in previous years  Filing online speeds processing and reduces errors 51

Universal Service Administrative Company Slide 52 Form 486 Form 486 Deadline Form 486 must be postmarked no later than 120 days after the Service Start Date featured on the Form 486 OR 120 days after the date of the Funding Commitment Decision Letter whichever is later If Form 486 is postmarked later than the above deadline, the date 120 days before the Form 486 postmark date will become the start date for discounted services and funding may be reduced 52

Universal Service Administrative Company Slide 53 Form 486 Form 486 Notification Letter Cover page of important reminders and deadlines Provides confirmation that a Form 486 has been successfully data entered Copies sent to both applicant and service provider 53

Universal Service Administrative Company Slide 54 Invoices Invoices — Form 472 or Form 474 BEAR (Billed Entity Applicant Reimbursement) Form 472 filed by the applicant and certified by the service provider after the applicant receives services and pays for the services in full OR SPI (Service Provider Invoice) Form 474 filed by service provider after providing services and billing applicant for its non-discount share 54

Universal Service Administrative Company Slide 55 Invoices Points to Remember:  Invoices cannot be used to request SPIN changes or service substitutions  Invoices are reviewed for program compliance – respond promptly to requests for information  Service providers have 20 days after RECEIPT of a check from SLD to reimburse the applicant 55

Universal Service Administrative Company Slide 56 Invoices Invoice Deadline Invoices must be postmarked no later than 120 days after the last date to receive service OR 120 days after the date of the Form 486 Notification Letter whichever is later If Form 486 is postmarked later than the above deadline, payment will be denied Extensions of invoice deadlines may be requested under certain conditions 56

Universal Service Administrative Company Slide 57 Invoices BEAR Notification Letter Cover page of important reminders and deadlines Provides confirmation that a Form 472 (BEAR) has been successfully data entered Copies sent to both applicant and service provider Indicates what amounts are being paid and reason for reductions/denials 57

Universal Service Administrative Company Slide 58 Document Retention In general, documents must be retained for five years Examples of documents that must be retained: Worksheets Bid evaluation sheets Winning and losing bids Contracts and agreements Invoices sent to SLD Service provider bills sent to customer 58

Universal Service Administrative Company Slide 59 Appeals Decisions of the SLD can be appealed to the SLD or to the FCC Generally, appeal first to the SLD Can appeal to the FCC if SLD does not grant the appeal Can be filed electronically or on paper Must be postmarked within 60 days of the SLD decision See Appeals Procedure in Reference Area for specific guidance Requests for waivers of rules must be filed with the FCC 59

Universal Service Administrative Company Slide 60 Questions 60