• PY4 Form 470 deadline
• PY2-PY3 status updates
• E-rate benefits statement update
• Ineligible services and incorrect service categories
• LPFM filing window for NYS

PY4 Form 470 Deadline

The last possible day on which to file a Form 470 for PY4 is December 21. Forms posted on this day would carry an Allowable Vendor Selection/Contract Date of January 18, the last day of the Form 471 filing window. At this stage, all new Form 470s should be filed online in order to initiate the 28-day posting period immediately.

Forms mailed to the SLD are not considered posted until they are data entered by the SLD. It is now too late to mail in new Form 470s. Applicants, who mailed Form 470s within the last few weeks, should check to see if their Forms have actually been posted on the SLD Web site; if not, we strongly recommend that their 470s be resubmitted online.

PY2-PY3 Status Updates

PY2: The SLD indicated this week that the first batch of Funding Commitment Decisions Letters ("FCDLs") for pending out-of-the-window PY2 applications, which we had hoped to see in December, will not be mailed until January.

PY3: Although the Administrator’s decision letters on PY3 funding appeals are now being released, the flow is but a trickle. We understand that only 10 letters were included in the first batch. The SLD is reportedly making a concerted effort this year to more fully explain its appeal decisions; Quality Assurance issues are slowing the process.

E-rate Benefits Statement Update

Last week, we reported on the new benefits statements that the SLD was mailing to applicants for whom BEAR or supplier invoices had been processed over the last five months. We have since received examples of actual statements and have several additional comments.

1. The formal name of the statement is the E-rate Quarterly Disbursements Authorization Report. Although the first Report is for five months, the SLD intends to move to a true quarterly schedule in January.

2. The disbursement authorization information reflects the date on which a BEAR or supplier invoice was approved by the SLD. In the case of a BEAR reimbursement, the date shown should correspond with the BEAR approval letter sent to the supplier (with a copy to the applicant). An actual BEAR payment check should be mailed to the supplier within 20 days of disbursement authorization. Once a supplier receives a BEAR check, it should pay or credit the applicant within 10 days.

3. For each FRN on which there was activity, the Report shows the full amount committed (as originally awarded) and the total amount of disbursements authorized to date. This provides an indication to an applicant if additional funding is available. If such funding is available, and will not be used, we recommend filing a Form 500 to reduce the commitment to the level of actual need. This can free up E-rate funds for other applicants.

4. Applicants finding apparent discrepancies in the Reports are instructed to write, not call, the SLD.

Ineligible Services and Incorrect Service Categories

The SLD posted two announcements on its Web site this week dealing with the two most common application problems that lead to denied or unfunded FRNs. One is a clarification of an existing policy, the other is a new policy.

The clarification deals with the situation in which the costs for ineligible services are incorrectly included in a funding request (Form 471 Block 5, Column K). If the SLD finds that a percentage of the requested amount is ineligible, its policy has been to take the following action: (a) if the ineligible percentage is less than 30%, the SLD will reduce the funding request by that percentage; or (b), if the percentage is 30% or more, the entire FRN will be denied.

The recent SLD announcement on ineligibility errors indicates that the 30% denial threshold will again be used on PY4 applications (there had been some discussion of lowering the tolerance level). The clarification is that "ineligible services" is broadly defined to include not only specific ineligible products and services as expressed in the SLD’s Eligibility List, but also the inclusion of any services for ineligible entities or of services to be delivered outside the funding year.

Applicants, who are unsure of the eligibility of any particular service element, are encouraged to submit a separate FRN (i.e., Block 5 request) for that portion of the service. That way, only that portion of the requested service discount could be denied. The clear rule is: "When in doubt, break it out!"

The new policy deals with a problem known to E-rate aficionados as "bucket pollution." In past years, if an applicant’s request for a Priority One service (i.e., in either the Telecommunications or Internet Access category, or "bucket") included any product or service that was viewed as Internal Connections, the SLD reclassified the entire FRN as a Priority Two request. A typical example was an Internet access service containing a small additional charge for a router.

Given the discount rate cutoff on funding of Internal Connections for PY1 and PY3, reclassified requests were not funded for many applicants. The policy of reclassifying FRNs to Priority Two, no matter how small a percentage of Internal Connections was erroneously included, seemed out of line with the 30% threshold policy for ineligible items.

For PY4, the two policies will be aligned using the 30% measure. The bucket pollution policy, however, is a bit more complicated because the exact Priority Two discount rate cutoff is not known for most of the application review process. Specifically, the policy will work as follows:

1. If the percentage of Priority Two items in a Priority One request is 30% or more, the entire FRN will be reclassified as Internal Connections.

But now, pay attention:

2. If the percentage is less than 30%, but the applicant is at a discount rate that qualifies for Priority Two funding, then the entire FRN will be reclassified as Internal Connections (and funded).

3. If the percentage is less than 30%, but the applicant is at a discount rate for which Priority Two funding is being denied, then the FRN will be reduced by that percentage (with the remainder funded as Priority One).

4. If the percentage is less than 30%, but the applicant’s discount rate is at a level for which Priority Two funding status has not been finally determined, then the applicant will be given a choice of either reducing the request to eliminate any Internal Connection component (assuring funding on the remainder) or reclassifying the entire FRN as Priority Two (taking a chance that it may be fully funded.

The best approach for an applicant, of course, is to take care to avoid bucket pollution altogether. If an applicant is unsure as to whether a particular service component is Priority One or Two, the earlier advice applies: "When in doubt, break it out!"

The new service category policyis worth reviewing in the SLD’s own words. .

LPFM Filing Window for NYS

On Friday, the FCC announced that the Low Power FM radio ("LPFM") filing window for the group of states and territories including New York will be January 16-22, 2001. We have already notified to the FCC that this filing deadline may be a problem for schools and libraries already dealing with the E-rate application window closing on January 18.

Seasons Greetings
from all of us at
E-Rate Central