Little public information is available concerning the precise nature and scope of the accounting problem. The primary effect of the accounting change, as we understand it, is to limit existing and new commitments to cash on hand. Although cash balances in the E-rate fund are approximately $3 billion, there remains a comparable level of pending (i.e., unused) commitments. If the existing cash balance is already spoken for, no new commitments can be made under the new accounting rules until: (a) committed, but undisbursed, funds can be reduced (a path that the SLD is pursuing vigorously by encouraging applicants to relinquish unneeded funds by filing Form 500s); (b) new fund contributions are received; and/or (c), different accounting practices are approved.

Given the SLD's current cash squeeze, it is difficult to understand a proposal made by the FCC staff last week (see DA 04-2976 ) that would reduce the collection of additional E-rate funds in the fourth quarter by $150 million, a 27% cut from the basic quarterly contribution requirement of $562.5 million (i.e., 1/4th of the annual $2.25 billion program cap). Under the new accounting rules, such a reduction would aggravate the already difficult situation that led to the current funding suspension.

Interested parties should note that the staff proposal will take effect automatically in two weeks unless changed by the Commission itself. Although the FCC has not asked for formal comments on the proposal, ex parte comments can - and, in our view, should - be submitted. A copy of E-Rate Central's own comments is available at ERC Comments.

In a public notice released last week (see DA 04-2994 ), the FCC stated specifically that the DCIA applies to the E-rate program and that all participants - schools, libraries, consortia, service providers, and consultants - must have a FCC Registration Number. The notice is a bit ambiguous, however, suggesting that the FRN requirement applies to any participant holding a Billed Entity Number or an Entity Number. Since a school district, for example, typically has one Billed Entity Number, but has individual Entity Numbers for each of its schools, this could mean that the FCC intends to treat each facility as a separate E rate participant and to require a single applicant to obtain multiple FRNs. While such an interpretation of "participant" would seem overly complex, given the objectives of FRN identification, stranger things have happened.

The notice provides no indication of whether service providers, with multiple SPINs, will require multiple FRNs. Since FRNs are linked to Employee Identification Numbers ("EINs"), we presume that only SPINs associated with separate corporate entities will require separate FRNs.

While additional guidance is expected to be made available shortly, and E rate forms do not yet require FRNs, those who want to obtain at least one primary FRN now can do so online (see FRN Registration).

Some E-rate applicants may find - perhaps to their surprise - that they already have FRNs associated with their mobile radio or instructional television operations. There are two ways to check for an existing FRN.

(1) The same Web address referenced above can be used to search for (or update) an existing FRN. The only trick in searching for an existing FRN is that the name of the entity must be entered exactly as listed, or an asterisk must be used as a "wildcard" symbol. To search for Anytown School District, for example, we'd suggest searching for "Anytown*."

(2) If a new FRN application is inadvertently submitted under the same EIN associated with an existing FRN, the online system will display a warning message before assigning a second FRN.

(1) At a minimum, the school can count, as eligible, every student from a family reporting its income under the NSLP reduced-price threshold, whether or not those students actually partake of free or reduced-price lunches.

(2) Better still, if the number of survey returns - from both eligible and ineligible families - exceeds 50% of the school's total enrollment, E-rate rules permit the school to extrapolate the eligibility percentage of the survey returns to the entire base. In a school of 500 students, for example, suppose surveys are returned for 300 students indicating that 195 (or 65%) are NSLP-eligible. The same percentage can then be used for the school as a whole. The Block 4 Worksheet in the Form 471, therefore, would show 500 total students and 325 (the same 65%) eligible students. (Warning: Surveys must be carefully documented. SLD reviewers will typically ask for a copy of an actual survey form and a certifying letter from a senior administrator.)

The trick in utilizing surveys is to maximize the number of returns. The higher the percentage of returns - hopefully at least 50% - the more accurate the survey.

New York City announced an interesting "sweepstakes" and outreach program this year to encourage returns. Under the program, families who return their children's forms by October 22nd are automatically entered into a drawing for a variety of donated prizes including a trip to Hawaii.