E-Rate Central

E-RateStatus, Steps,

and Strategies

Lansing, Michigan

October 22, 2002

10/19/02

E-Rate Central

Workshop Agenda

• Overview of E-Rate Program• Current year status (FY 2002)

• Application for next year (FY 2003)

• Special Issues– Technology Plans and CIPA – Deadlines– Program Compliance – SLD Databases

• Q & A

Major Focus

E-Rate Central

• Funded by carriers under Telecommunications Act of 1996

• Not a typical government grant program – Funding not based on competitive applications

– Funds are provided indirectly as discounts on

eligible services from the vendors

• Annual applications required – First year was FY 1998

– Current year is FY 2002– Next application year is FY 2003

General Concepts

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General Framework

• 20-90% discounts on three types of services:– Telecommunications– Internet Access– Internal Connections (Networking)

• Annual applications for funding– Annual cap of $2.25 billion– Priority 1: Telecom and Internet Access – Full funding– Priority 2: Internal Connections – High discount funding only

• Basic SLD overview– http://www.sl.universalservice.org/overview

E-Rate Central

Eligible Services: Telecom/Internet

• Basic telephone (local & long distance)

• Advanced telecom (T-1, ATM, Frame Relay, etc.)

• WANs (only if provided by telecom carrier)

• Mobile services (‘instructional use”)

• PBXs eligible only as Internal Connections• Internet access (not content)

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Eligible Services: Internal Connections

• Eligible:– Network wiring– Routers and hubs– Switches– Network servers and

operating software– Wireless LANs– PBXs and key systems

• Ineligible:– Personal computers and

modems– Asbestos removal– Electrical wiring– Teacher training– Application software– Internet filters/firewalls

Mixed eligibility issues: http://www.sl.universalservice.org/reference/costallocationguide.asp

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• Important source of technology funding (FY 1998 – FY 2002)

– $9.4 billion nationwide – $268 million for Michigan

• Time-consuming, bureaucratic, and confusing program

– Forms 470, 471, 472, 479, 486, and 500

– Service eligibility and discount rate issues

– Long lead time competitive bidding procedures

– Strict application review process

– Additional procedures for consortiums

E-Rate Opportunities and Issues

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Basic E-Rate CyclePre-Commitment

Form 470 - Describes services required(fall) - Posted on SLD Web site

Form 471 - Calculates allowable discount rate(mid-Jan.) - Requests funding for specific services/vendors

- Requires billing or contract documentation

PIA - Detailed SLD review of applications(spring/summer) - Often requires additional documentation

E-Rate Central

Basic E-Rate CyclePost-Commitment

Form 486 - Confirms use of approved services (summer) - Certifies tech plan and CIPA compliance

- Appeals and SPIN Changes as required

Funding Alternatives (throughout year)

SPI - Service provider discounts bills(Form 474) - Schools pay only undiscounted amount

BEAR - Discounts reimbursed after the fact(Form 472) - Based on actual bills paid

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FY 2002: Current Issues

• Remaining funding waves and “ripples”

• Form 486 requirements– October 29th and later deadlines– Technology plans and CIPA compliance– Form 479s for consortia

• Other issues– Appeal processing– BEARs vs. discounted bills– Non-recurring service deadline

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New Program Developments

• New forms (in scanning format and/or online)

• Expanded online SLD databases

• New for FY 2003– Updated eligibility list– Yellow SLD correspondence

• Possible changes for FY 2004

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Form 470: Purpose

• Identifies applicant

• Generally describes services needed

• Begins mandatory 28-day waiting period

• Does not replace state and local competitive bidding rules

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Form 470: Block 1

• Application #: SLD assigns

• FY 2003: July 1, 2003 — June 30, 2004

• Contact Person: For SLD and vendors

– Can use Item (11) for alternative vendor contact

– Do NOT let a vendor act as applicant contact

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Form 470: Block 2

• Be broad and inclusive

• Item (7): Check ALL that could apply

• Tariff has specific regulatory connotation

• MTM is an allowable category for:

– Internet, cellular, paging

• Items (8) - (10): Check “YES” or “NO”

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Service or Function Quantity and/ or Capacity

Telecommunications – Item (8) Local and long distance voice services 50 existing or new phone lines

Cellular/ PCS services 20 existing or new users

Paging services 25 existing or new users

High-speed access (ISDN, DSL, T-1, etc.) 5 buildings

Videoconferencing links 5 buildings

Internet Access – Item (9) Dedicated access services 5 buildings

Dial-up services 25 user accounts Internal Connections – Item (10)

New LAN network 2 buildings, 50 classrooms Upgraded LAN network 1 building, 30 classrooms LAN network maintenance 4 buildings, 100 classrooms New or upgraded telephone systems 2 buildings, 200 lines Telephone system maintenance 5 buildings, 250 lines Internet routers 5 buildings

Form 470: Block 2 Examples

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Form 470: Automatic Rejection

• Wrong version (should be April 2002)

• Missing applicant and contact information

• Other missing blocks/pages

• Missing or invalid certification

• Wrong program year specified

Not many Form 470s are rejected, but many

are filed too late for Form 471 filings

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Form 470: Filing Online

• Assures earliest “Allowable Contract Date”

• Provides check on field information

• Use Form 470 Application # to resume data entry at any point before submission

• Important: Must use electronic signature or mail signed certification page to SLD

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Form 470: Filing by Mail

• 28 day waiting period starts after Form is posted, NOT received.

• Form 470 receipt acknowledgment letter will show “Allowable Contract Date”

• Can check posting on SLD web site

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Problem: Narrow and Early Contract Window

Form 470 Posting

Form 471 Application Window

Oct./Nov. Dec. Jan.

Contract Signing Window

Jan. 16th

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Contracting Tips• Broadly define service requirements in Form 470• Work closely with vendors

– Structure contract– Prepare eligibility exhibits– Set contract signing date

• “Contract” can be a contingent agreement– Subject to final board and budget approval– Allow substitution of equipment models– Prices subject to change

• Consider use of OGS contracts– Can serve as “standing bids”– Must specify specific vendor in multi-vendor contracts– Request best and final prices or use mini-bid

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Form 471: Purpose

• Calculation of discount rate(s)

• Requests specific discount on each tariffed, monthly, and contract service

• Separates eligible from ineligible costs

An important and complex form

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Discount Rates

• All flow from individual school data • All other applicants use weighted or simple average

depending on type of applicant• Based on need

– Poverty• Defined by National School Lunch Program http://www.fns.usda.gov/cnd/IEGs&NAPs/IEGs.htm

– Location• Rural vs. Urban

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Discount Percentages

Urban Rural

<1% 20% 25%

1-19% 40% 50%

20-34% 50% 60%

35-49% 60% 70%

50-74% 80% 80%

75-100% 90% 90%

% of Students Eligible for School Lunch Program Discounts

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Alternative Measures

• Comparable measures (milk/breakfast programs, Medicaid/public housing data)

• Survey (can extrapolate from 50% response rate)

• Sibling searches

• Feeder system not approved

Note: SLD reviews using state lunch program participation

data, so document all higher eligibility data

E

E-Rate Central

Individual School

1 3 4 5Name of School Urban or

Rural

U or R

Total

# of

Students

# of Students

Eligible for NSLP

Oak Elementary U 100 55

6% Students

Eligible for

NSLP

Col. 5/Col. 4

55%

7Discount

% from

Discount

Matrix

80%

Complete Worksheet A, Columns (1)-(7) Columns (3)-(7) step through discount calculation

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School District

1 3 4 5 8Name of School Urban or

Rural

U or R

Total

# of

Students

# of Students

Eligible for NSLP

Weighted Product

for Calculating Shared Discount

(Col. 4 x Col. 7)

Oak Elementary R 100 50 80.00Spruce Jr. High R 212 98 148.40Elm High School R 566 273 396.20

District Totals for calculating

Weighted Average Discount 878 624.60

71%10c Weighted Average Discount % for Shared Services (Col. 8 total divided by Col. 4 total. Round to nearest %)

50%46%

6% Students

Eligible for

NSLP

48% 70%

7Discount

% from

Discount

80%70%

Complete Worksheet A, all columnsColumn (7) gives site-specific discounts

Item (10c) gives the shared (weighted average) discount

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Library System

1 3Name of Library System

(if all on one site) or Individual Library Outlets

(if multiple sites)

Urban or

Rural

U or R

Treetop Branch Library RGreenleaf Branch Library UAcorn Branch Library U

System Totals for calculating Shared Discount

Name of School District

in which site in Column 1 is located Weighted Average Discount

for the School District in Column 4

(round to nearest %)

Treetop School DistrictShady Grove School District

67%10c Shared Discount % (Col. 5 total divided by # of sites in Col. 1. Round to nearest %)

200%

71%46%

Nutburg School District 83%

4 5

Complete Worksheet B, all columnsColumn (5) provides site-specific discounts

Item (10c) gives the shared discount

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Consortium

1

ELIGIBLE MEMBER ENTITIES Name of each individual school, school district and/or

library/library system in consortium

Treetop School District

Woodsville Library System

Forest Academy

Totals for calculating Shared Discount

10c Shared Discount % (Col. 4 total divided by # of sites in Col. 1. Round to nearest %)

66%

198%

67%

60%

71%

ENTITY DISCOUNT Individual School: Discount from Worksheet A

School District: Weighted average discount calculated in Worksheet ALibrary System: Shared discount from Worksheet B

4

Complete Worksheets A or B, as appropriate Complete Worksheet C to calculate consortium discount(s).

E-Rate Central

Form 471: Form 470 Link

• Item (12): Form 470 application number

• Items (17) - (18): Allowable Vendor Selection/Contract

Date must be earlier than Contract Award Date

• Item (22): Block 4 Entity or Worksheet number

• Item (23), Column (J): Discount rate from Worksheet

Form 471: Discount Rate Link

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Form 471: Vendor Link

• Item (13): SPIN– Source: SLD’s BEAR & SPIN Contact Search

• Item (14): Beware “d.b.a” names

• Item (16): Billing Account Number

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Form 471: Contract Link

• Item (15): Contract ID, “T”, or “MTM”

• Items (17) - (18): Contract Award Date must be later than Allowable Vendor Selection/Contract Date

• Item (19a): No earlier than 07/01/2003

• Item (19b): Normally 06/30/2004

• Item (20): Hopefully 06/30/2004 or later

• Item (21): Attachment #

• Item (23): Charges, eligibility, and funding request

E-Rate Central

Form 471: Block 5 Examples

• Local telephone• Cellular• Internet (direct)• PBX maintenance• New LANs

– Tariff (monthly)– Month-to-month billing– Annual contract (quarterly)– 2nd year of 3 year contract– Contract (non-recurring)

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Local Telephone (tariff)Form/Item Description

Form 470 Service request posted annually

From 471 One FRN

Category Telecommunications

Contract Number "T"

Billing Account Number Main telephone number

Form 470 Application Number From current Form 470

Allowable Contract Date From current Form 470

Contract Award Date blank

Service Start and End Dates 07/01/2003 and 06/30/2004

Contract Expiration Date blank

Attachment Summary pages of recent bill

Ineligible Portion Voice mail, pay phones

Recurring Charges Est. average monthly charges

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Cellular (month-to-month)Form/Item Description

Form 470 Service request posted annually

From 471 One FRN

Category Telecommunications

Contract Number “MTM"

Billing Account Number Account number

Form 470 Application Number From current Form 470

Allowable Contract Date From current Form 470

Contract Award Date blank

Service Start and End Dates 07/01/2003 and 06/30/2004

Contract Expiration Date blank

Attachment Recent bill, user list

Ineligible PortionBus drivers, maintenance personnel, equipment

Recurring Charges Est. average monthly charges

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Internet - Direct (quarterly)Form/Item Description

Form 470 Service request posted annually

From 471 One FRN

Category Internet Access (and internal connections?)

Contract Number “MTM”

Billing Account Number Account number

Form 470 Application Number From current Form 470

Allowable Contract Date From current Form 470

Contract Award Date blank

Service Start and End Dates 07/01/2003 and 06/30/2004

Contract Expiration Date blank

Attachment Contract or recent bill

Ineligible Portion Content (router may be internal connections)

Recurring Charges Quarterly charges/3

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PBX Maintenance (2nd year)Form/Item Description

Form 470 Posted last year

From 471 One or more FRNs

Category Internal Connections

Contract Number Identifier

Billing Account Number If applicable

Form 470 Application Number From current Form 470

Allowable Contract Date From current Form 470

Contract Award Date After Allowable Contract Date

Service Start Date 07/01/2003

Contract Expiration Date On or after 06/30/2004

Attachment Contract or recent bill

Ineligible Portion Telephone set maintenance, MACs, etc.

Recurring Charges Monthly (or one-time) charges

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LANs (new contract)Form/Item Description

Form 470 Service request posted annually

From 471 One or more FRNs

Category Internal Connections

Contract Number Identifier

Billing Account Number If applicable

Form 470 Application Number From current Form 470

Allowable Contract Date From current Form 470

Contract Award Date After Allowable Contract Date

Service Start and End Dates On or after 07/01/2003

Contract Expiration Date On or after 09/30/2004

Attachment Contract and eligibility breakout

Ineligible Portion Workstations, training, etc.

Non-recurring Charges One-time charges

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Form 471: Attachment

Attachment

State contract selected after Allowable Contract Date

1

Tariff or month-to-month. No contract needed.Contract signed after Allowable Contract Date

Documentation included with Attachment:Contract (applicable pages)Sample bill summary

Service Description:

Service Provider:

Contract Status:

Entity NumberContact Person

Applicant's Form IdentifierPhone Number

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Eligibility Warning & Tip

• If SLD determines that more than 30% of requested amount is ineligible, entire FRN may be denied

• When in doubt — break it out!

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Service Warning & Tip

• If SLD determines that more than 30% of the requested amount is not Priority 1, the entire FRN may be categorized as Priority 2– Typical problem: On-premise equipment included in

telecommunications or Internet access services

• When in doubt — break it out!

E-Rate Central

Form 471: Automatic Rejection• Wrong version (should be Oct. 2000)

• Missing applicant and contact information

• Other missing blocks/pages– At least one Block 4 worksheet

– At least one valid Block 5 funding request

• Invalid certification

• Filed after the window closes (January 16, 2003)

Form 471s can be rejected completely,or funding can be reduced or denied on individual FRNs

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Form 471: Filing Online

• Promotes early SLD processing

• Provides check on field information

• Use Form 471 Application # to resume data entry at any point before submission

• Important: Must use electronic signature or mail signed certification page to SLD within the application window

• Attachments must be mailed to SLD

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Form 471 Review Process

• Data entry of mailed applications– Problem resolution review– Receipt Acknowledgment Letter (“RAL”)

• Program Integrity Assurance (“PIA”)– Requests for supporting documentation– Seven day response cycles– Separate 471 for Priority 1 may speed approval– Item 25 and Selective Reviews

• Funding Commitment Decision Letter (“FCDL”)

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SLD and FCC Appeals

• Must be received within 60 days of decision

• Appeal cycle is lengthy

• Post-decision procedures, if successful– SLD decisions have two-steps: Decision + FCDL– FCC decisions often referred back to SLD for resolution

When in doubt, appeal

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Post-Commitment Form 486

• Confirmation of service usage and start date– The SLD won’t process any E-rate invoices on any

FRN without a valid Form 486

• Certification of technology plan and CIPA

• Filing deadlines are critical– October 29th or 120 days from FCDL or service start

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Form 486: Other Issues

• Penalty for missing FY 2002 filing deadline:

Discounts paid only from 120 days prior to final filing date

• Before consortium can file Form 486:

Must collect Form 479s from all members or reduce funding accordingly

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Post-Commitment Changes

• Can change services/equipment/terms– Requires Service Substitution letter

(http://www.sl.universalservice.org/reference/ServiceSub.asp)

– Tip: Keep contract specifications flexible

• Can change service provider (SPIN)– Requires SPIN Change Request letter

(http://www.sl.universalservice.org/reference/SpinChange.asp)

• Use Form 500 to cancel or reduce funding

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Funding: Vendor Discounts

• Discounts applicant bills and files Form 473 (“SPI”) with SLD

• May ask applicant for applicable account and eligible usage data

• Must pay non-discounted amount• Should carefully review discount calculations

Service Provider:

Applicant:

E-Rate Central

Funding: Discount Reimbursements

• Pays bills in full and summarizes eligible payments• Files Form 472 (“BEAR”) with SLD• Must carefully track BEAR payments

• Must acknowledge BEAR before submission• Is paid by SLD, then must pay applicant

Applicant:

Service Provider:

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BEAR Payment Issues

• After processing, SLD sends BEAR Notification Letter to vendor and applicant– Approval is on individual FRN basis

– Denials or rejections may require resubmission or appeal

– Checks sent to vendors approximately 20 days later

• Vendors should pay applicants within 10 days of receipt– No standard vendor practices on applicant payments

• Bankruptcy of vendor may require “Good Samaritan”

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Technology Plan

• Five SLD technology plan criteria Goals and Objectives Needs Assessment Professional Development Budget Evaluation

• No Tech plan required for “basic” phone service• Tech plans approved for no more than 3 years

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Children’s Internet Protection Act (“CIPA”)

• Requires “technology protection measures”– Applies to all Internet-connected computers– Libraries currently exempt

• Requires Internet Safety Policies – Need for public hearing– May be more than a student Acceptable Use Policy

• Applies only to Internet and Internal Connection discounts

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Must Block or Filter Internet Access to Visual Depictions that are:

• Obscene• Child pornography

• Harmful to minors Key points: - Based on existing and precise legal definitions

- Only courts – not filter suppliers – can determine

• Otherwise deemed “inappropriate for minors” Key point: - As determined locally

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N-CIPA Establishes Separate Policy Requirements for Minors re.

• Monitoring of online activity• E-mail• Chat rooms• Other electronic communications (e.g. IM)

• Hacking and other unlawful activities• Unauthorized disclosure of personal information

Key Point: Existing Acceptable Use Policy may not suffice

E-Rate Central

CIPA E-Rate Issues

• Timing:– First year (FY 2001): “Undertaking action”– Second year (FY 2002): Compliance

– Form 486 certification and timing is critical

• Special requirements for consortiums (Form 479s)

• FCC administration relies heavily on certification

• E-Rate Central’s CIPA primer and checklist– http://e-ratecentral.com/help/cipa_policy_primer.pdf– http://e-ratecentral.com/help/cipa_checklist.pdf

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Critical Deadline Issues

Form 470 (Allowable Contract Date) 28 days after SLD posting

Form 471 Filing window closes 1/16/2003

PIA or invoice review inquiries 7 day response cycle

Tech plan and CIPA compliance Service start date (usually July 1)

Form 486 120 days after service start or FCDL (often October 28)

Service delivery June 30 or September 30 (unless extended)

Invoices (BEARs or SPIs) 120 days after last day of service or 486 notification (often October 28)

Appeals (SLD or FCC) 60 days after decision

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Critical Deadline Issues, cont.

• Consequences of missed deadlines– Denial or loss of funding– Partial year funding

• Deadline extension requests– Service delivery (or FRN) extensions http://www.sl.universalservice.org/reference/ServiceDeliveryDeadlines.asp

– Invoice deadline extension requests http://www.sl.universalservice.org/reference/InvoicingDeadlines.asp

– PIA response exceptions

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Program Compliance Issues

• Greater focus on “waste, fraud, and abuse”– PIA scrutiny, including Item 25 and selective reviews– Audits by SLD, FCC, and contractors– Vendor investigations by SLD, FCC, DOJ, etc.

• Consequences for applicants and vendors– Denied or reduced funding– Delayed funding decisions– Retroactive commitments (“COMAD”)

– Criminal indictments?

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Suggested Recordkeeping

• Support of Form 471 calculations– Discount percentages– Requested dollar amounts

• Bid documents (including losing bids)

• Contracts

• Delivery, testing, and inventory documents

• Bills and proof of payment

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Questionable Applicant/Vendor Practices

• Vendor involvement in the selection process– Vendor can not be the contact on the Form 470– FCC expects fair and open bidding process

• Applicants not paying non-discounted portion– Vendor cannot forgive or offset with “free” services– Vendor-arranged “grants” are suspect

• Non-competitive pricing or excessive services– Service cost must be primary factor in selection– Increasing requests for bid documentation

Primary Targets: Small 90% schools

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• Numerous applicants cite the “XYZ Foundation” as the source of the funds for their share.

• Applicants have no contact information for the foundation.

• This foundation has made commitments only to applicants that have chosen this one service provider.

• All applicants are 90% Schools.

• Service provider leases applicants a server (by SP’s own admission worth $20,000) for $20,000 per year…

• Then charges $96,000 per year as maintenance on that server.

SLD’s Worst Case Scenario

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SLD Online Database Resources

• Service Provider names, SPINs, and contacts

• Form 470s and Form 471s

• Funding status information

• FRN Extension Table

• New: Detailed FRN “Data Requests”– Funding– Form 486 filing– Authorized disbursements

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Portal to the SLD Databases

• Service provider information

• Detailed FRN funding data

• Local, state, and national funding data

• Detailed Form 470 and Form 471 data

• Form 471 application status

• FRN extension status

E-Rate Central

Portal to the SLD Databases

• Service provider information

• Detailed FRN funding data

• Local, state, and national funding data

• Detailed Form 470 and Form 471 data

• Form 471 application status

• FRN extension status

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Reference Area

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BEAR/SPIN Search by Name

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BEAR/SPIN Search Result by Name

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Portal to the SLD Databases

• Service provider information

• Detailed FRN funding data

• Local, state, and national funding data

• Detailed Form 470 and Form 471 data

• Form 471 application status

• FRN extension status

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Funding Commitments

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Funding Commitments, cont.

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Portal to the SLD Databases

• Service provider information

• Detailed FRN funding data

• Local, state, and national funding data

• Detailed Form 470 and Form 471 data

• Form 471 application status

• FRN extension status

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Apply Online Resources

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To Find Specific Form 470

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Multiple Search Options

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Multiple Search Results

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Specific Form 470

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Apply Online Resources

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To Find Specific Form 471

Note: To find Entity Number, first find Form 470

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Specific Form 471 Number and Status

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Apply Online Resources

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To View Specific Form 471

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Block Data for Specific Form 471

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Apply Online Resources

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FRN Extension List by Funding Year

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FRN-Specific Service and Invoice Dates

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Portal to the SLD Databases

• Service provider information

• Detailed FRN funding data

• Local, state, and national funding data

• Detailed Form 470 and Form 471 data

• Form 471 application status

• FRN extension status

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Multiple Search Options

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Data Format Options

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PC: Right-Click to Download File

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PC: Left-Click to View File

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Imported into Excel for Ease of Analysis

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Original vs. Committed Amounts

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Analysis: Form 486 Status

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Analysis: Unusually Unsuccessful Vendors

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SLD Help• Web: www.sl.universalservice.org

• Help lines: 888-203-8100 (General)888-276-8736 (Fax questions)question@ universalservice.org

• Web: www.e-ratecentral.com

E-Rate Central Help