Although Wave 10 is good news for a number of applicants, it is important to note that the underlying accounting issue that led to the four month funding freeze has yet to be solved. Without a change in procedures or law, future funding will depend upon the accumulation of new and/or unobligated cash. This will stretch out the release of new FY 2004 commitments well into 2005 with new funding waves being released roughly once a month.

New Internal Connections funding, which the SLD had begun funding at the 90% level prior to the freeze, is still frozen. No additional Priority 2 awards are expected until the SLD has cash reserves exceeding the level of pending Priority 1 commitments.

Prospects for a near-term solution to the accounting problem hinge on Senate action over the next week or two to approve a measure excluding E-rate funding from the Anti-Deficiency Act, at least until the end of 2005. The House has already passed HR-5419 which contains such an exclusion. There is an equivalent provision in a proposed Senate bill, S-2994, but action on it has been stalled as a result of unrelated initiatives and concern dealing with boxing industry reform and spectrum relocation.

In the absence of a legislative solution, consideration is being given to pre-commitment notification letters. Under this approach, applicants would be notified when their applications had been reviewed and would be given a preliminary indication of the level of "approved" funding, but would be told that final commitments would depend on additional cash availability. This would provide applicants and vendors with information that may be useful for planning purposes, but clearly does not solve the underlying problem.

In the past, the typical approach taken by PIA in dealing with multi-function routers, for example, was to require applicants to sign certifications that such routers would not be used to provide remote access (or, more generally, any ineligible function). The prohibition against remote access usage was meant to avoid having E-rate funded equipment being used to provide general public or other non-educational services. An outright prohibition, however, has the effect of disallowing valid, or at least ancillary, use of such equipment to support remote maintenance and other necessary applications.

Recently we have seen PIA inquiries that go one or two steps beyond strict certifications on the use or non-use of equipment for ineligible functions. The following is an example of a more detailed certification of eligibility than we had seen before.

In an allocation situation, the PIA inquiry proceeds as follows:

(1) Since these situations are usually confined to Internal Connections, low discount applications and/or those with only one or two related pieces of equipment should consider excluding such equipment from their funding requests altogether.

(2) High discount applicants and/or those with a large equipment inventory should address the allocation issues upfront in the Item 21 attachments associated with their funding request. Whenever possible, allocation should depend upon vendor provided information that can be easily documented.