Certifications: The major change, affecting all these new versions, is to strengthen the certification language. The changes are being made in response to increasing program concerns regarding waste, fraud, and abuse. We encourage you to read these new certifications carefully because of the potential loss of funding and criminal penalties involved. They also provide a good overview of program rules.

One specific certification to note, because it requires actual budget data, is Item 25 of the Form 471. In addition to summarizing the discount and non-discount amounts associated with the application, the certification must include a budget figure for all supporting resources (computers, staff development, electrical, etc.). Consortium applicants, in particular, may need some time to calculate, or at least estimate, these numbers.

Numbers: The FY 2005 Form 471 will require NCES Codes for all schools and FSCS Codes for all libraries. Most of these codes already exist, but may have to be collected for application purposes. FCC Registration Numbers, which will be required of all applicants as of November 1 (see last week's news), will not be included in the FY 2005 applications, but will undoubtedly be required in the FY 2006 versions.

Non-instructional facilities, together with their Entity Numbers, must now be listed in the Form 471 Block 4 discount rate worksheet. The listing requirement for these types of facilities was put in place last year, but the FY 2004 application permitted the temporary use of dummy Entity Numbers. This year, uniquely assigned numbers must be used.

BEAR vs. SPI: The new Form 470 includes check off boxes to indicate if the applicant prefers to receive discounted bills or to receive discount reimbursements. This election, which can be made for each category of service, is not binding on the applicant. It is merely designed to indicate billing preferences to vendors.

Ms. Smith: The biggest loss to E-rate traditionalists, ranking right up there with the elimination of "blue ink" signatures a few years ago, is the retirement of the fictitious Ms. Smith in Kansas. Express package deliveries of forms to the SLD should no longer be marked to her attention. Instead, the new instructions call for using the form number in the attention line.

Site Visits: The SLD has announced that it plans to make 1,000 visits to applicant sites over the next year, beginning as early as next month. Although the visits will not be conducted by auditors per se (and although one stated purpose is to enhance "outreach" to the applicant community), the primary stated purpose of these visits is to provide "Robust after the fact physical site review to help curb waste, fraud, and abuse." It is expected that each visit will include the detailed tracking of at least one specific invoice. While the typical visit is expected to last no more than one day, we expect applicants will have to spend a significant amount of time preparing for the visits.

LOAs: An applicant using a consultant to help with its E-rate work must now have a Letter of Agency ("LOA") "...in place BEFORE starting to work..." A consortium must have signed and dated LOAs from their members on file "...no later than the signature date on the Form 471." A sample consortium LOA will be made available on the SLD Web site. LOAs cannot be open-ended; there is a three year maximum duration.

Contracts: Valid contracts for E-rate purposes must now be signed and dated by both parties before the Form 471 application is signed. Previously, only the applicant's signature was required. The SLD warns that a quote is not a contract. If a Purchase Order ("PO") is used, the applicant must be prepared to document that such an instrument "...constitutes a contract pursuant to state law."

Tech Plans and Budgets: The SLD notes that a technology plan approved for EETT (No Child Left Behind) is acceptable for E-rate purposes if it includes "... a supplemental analysis that the applicant will be able to secure the necessary financial revenues." This implies that a simple expense budget is insufficient; the budget must show how all those expenses will be covered. This requirement is partially addressed by the Form 471 Item 25 certification discussed above. Form 470 and Form 471 certifications also clarify the requirement that a technology plan covering the next funding year must exist - albeit not necessarily yet approved - before these forms are filed.

Asset Management: Form 470 and Form 471 certifications continue to remind applicants that records must be retained for five years to facilitate audits. The E-rate recordkeeping requirements were significantly expanded by the FCC this summer to clarify the requirement to retain all documentation related to the pre-bidding process, the bidding process itself, contracts, the application process, the purchase and delivery of services, invoicing, inventories, and forms and rule compliance. Because of another new rule that prohibits (with limited exceptions) the transfer of equipment purchased with E-rate funds within three years of installation, the asset and inventory records retention requirements are particularly important. These new recordkeeping requirements took effect September 10, 2004.

Under FCC rules, which the FCC can waive, the ESL must be formally released at least sixty days before the Form 471 application window can open. Since the FCC didn't waive the sixty day waiting period when they released the list, we currently expect the window to open on, or soon after, December 13th. This is significantly later than usual (traditionally the window opens in early November). With the window opening over a month later than usual, we further expect the SLD to extend the window closing by at least couple of weeks.