Year 7 (2004) Internal Connections Funding Threshold Finalized at 81%
Message Posted May 3, 2005
The SLD announced on Friday that the funding threshold for Internal Connections, which was set at 81% in early January, would not be reduced any further for Funding Year 7. All outstanding Priority 2 requests at 80% and below, including those previously listed “As Yet Unfunded,” will now be denied.
The decision to not fund lower than 81% Year 7 Internal Connections came as a shock to everyone in the E-rate community. Rather than announcing an early percentage limit at which Internal Connections would definitely not be funded, the SLD continued to review Priority 2 requests at all levels. The 81% level, set in the first funding wave after the enactment of the program’
s temporary exemption from the Anti-deficiency Act (“ADA”), was widely seen
as just the first step in lowering the Year 7 threshold.
E-rate Central just uncovered the deeper issue in an unpublicized letter,
dated March 11th, in which USAC notified the FCC that it had erred in
recommending a reduction in the funding threshold to 81%. At this level,
USAC projected that funding commitments would exceed the Year 7 cap of $2.4
billion (including $150 million of roll-over funds) by $159 million. Apparently, the proper threshold should have been only 85%.
The USAC letter proposed three alternative approaches to dealing with this problem: (a) permit USAC to over-commit funds for Year 7 (which the FCC has the authority to do based on projections that not all committed funds will be actually used); (b) roll-over additional unused funds from prior years into Year 7; or (c) immediately cut back Priority 2 funding to 85%, and cancel commitments already made at 81-84% (a decision which would have had potentially disastrous consequences for some applicants).
Although we have not seen a formal decision by the FCC, we assume that Friday’s 81% announcement confirms that option (c) was not selected. Internal Connections funding down to the 81% level should be safe for Year 7.
A copy of the March 11th letter is available on the FCC Web site at
http://gullfoss2.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6517495234.
Julie Tritt Schell
jtschell@comcast.net
(717) 730.7133 (voice)
(717) 730.9060 (fax)
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