IV. Funding

Q: How much money will be available each year for the schools and libraries discount program?

A: The Commission concluded that there should be an annual cap of $2.25 billion on universal service expenditures for eligible schools and libraries.

Q: What is the funding year for the schools and libraries program?

A: The funding year will be the calendar year.=

Q: What is the source of the money used to pay for universal service discounts?

A: All telecommunications carriers that provide interstate telecommunications services are required to contribute to universal service support mechanisms. Telecommunications carriers required to contribute will receive bills from the universal service administrator; their assessments for the schools and libraries discount program will be based on their interstate and intrastate end-user telecommunications revenues.

Q: How will the universal service administrator know how much money to collect for the schools and libraries program?

A: Because the schools and libraries program is new and demand cannot be predicted with certainty, the Commission concluded that collection should be based on demand as that demand becomes known.

Q: How will collection and spending for schools and libraries work in the first year of the program?

A: The Commission concluded that collection and spending for the period through June 1998 should be limited, in light of both the need to implement the necessary administrative processes and the need to make the fund sufficiently flexible to respond to demand. That is, the Commission directed the universal service administrator to collect $100 million per month during the first quarter of 1998 and up to $700 million in the second quarter. The Commission also stated that the universal service administrator could collect up to $1.25 billion in the last half of 1998.

Q: How will collection and spending for schools and libraries work in subsequent years of the program?

A: Collection and spending for the universal service discountprogram will continue to depend upon demand for amounts under the $2.25 billion annual cap. The Commission directed the universal service administrator to report on a quarterly basis to the Commission on two aspects of universal service: (1) the total amount of payments made to service providers providing eligible services to schools and libraries at a discount; and (2) the administrator's determination of funding requirements necessary to meet projected demand for the next quarter. Both of these reporting requirements will help the administrator and the Commission gauge the level of demand for schools and libraries universal service funding.

Q: What happens if demand in a particular year falls below the annual cap of $2.25 billion?

A: The Commission stated that, if less than $2.25 billion is spent in calendar year 1998, no more than half of the unused portion can be spent in calendar year 1999. If the amount allocated in calendar years 1998 and 1999 is not spent, no more than half of the unused portion for those two years can be spent in calendar year 2000.

Q: What happens if demand in a particular year exceeds the annual cap of $2.25 billion?

A: If during any given year only $250 million remains available for funding discounts, a priority system will go into effect under which the most disadvantaged schools and libraries that have not yet requested universal service funding will have first priority for remaining funds. If the $250 million trigger is reached, the universal service administrator will ensure that a message is posted on the administrator's website, notify the Commission, and take reasonable steps to notify the educational and library communities that commitments for allocating the remaining $250 million will be made only to the most disadvantaged schools and libraries for the next 30 days (or the remainder of the funding year, whichever is shorter). That is, during the 30-day period, applications from schools and libraries will continue to be accepted and processed, but the administrator will only commit funds to support discount requests from schools and libraries that are in the two most-disadvantaged categories of the discount matrix and that did not receive universal service discounts in the previous or current funding years. To avoid discouraging schools and libraries from applying for discounts on basic telephone service, however, schools and libraries that are in the two most-disadvantaged categories will not forfeit their priority status if they have previously applied only for discounted basic telephone service.

Q: What happens if funds still remain after the initial 30-day period has elapsed?

A: If uncommitted funds still remain after the initial 30-day period, pending requests from schools and libraries in the two most disadvantaged categories that have previously received universal service discounts will be honored. If funds still remain, the administrator will allocate the remaining available funds to schools and libraries in the order that their requests were received until the $250 million is exhausted or the funding year ends.

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