New eRate head reveals upcoming changes

When CEO Ira Fishman resigned from the Schools and Libraries Corp. (SLC) Aug. 28, he left Kate Moore, the corporation’s chief operating officer, in charge of administering the eRate. Now, for the first time, Moore reveals the changes planned for the next round of the program.

As chief operating officer, Moore was responsible for overseeing the SLC’s contractors in areas such as systems development (i.e., creation of the web site, data processing, and database administration), program integrity assurance, and support services. She also managed the internal controls audit and helped develop program policies along with Debra Kriete, the SLC’s general counsel.

Before joining the SLC, Moore served as chief financial officer of the United Way of America. She’s also been in the political spotlight before, having served as assistant secretary of transportation during the Bush administration. In that role, she represented the Department of Transportation before Congress, the media, and the public.

In an exclusive interview with eRate Update Sept. 14, Moore discussed the changes you can expect to see implemented during the next application cycle, which is scheduled to begin this fall. She also revealed her vision of the program and described how she expects to handle its intense public and congressional scrutiny.

Timing of procedures

Do you plan to send out funding commitment letters before the application window for the next cycle opens?

The FCC, as you know, has established Oct. 1 as the date when schools and libraries may send in applications. And indeed, we have a goal of getting commitment letters into the hands of applicants before the second cycle begins—that’s our personal goal. We will be talking to the FCC about the prospects of the Oct. 1 timing and whether that should be changed or not. I think it’s fair to say that we all have a goal to allow the applicants to know the response to the first year before they face the deadline for the start of the second year.

The General Accounting Office (GAO) had some recommendations for you to implement before you could issue funding commitment letters. How far along are you in terms of implementing those recommendations?

If you’ll recall, there were three major recommendations. One was conducting a random sampling of applications. We have virtually completed the random samplings, and the results on that will be reported to the GAO in the next couple of weeks. Overall, I would say we generally approve of the results of the surveys and are working with the GAO to identify follow-up steps. So that step is virtually complete.

You’ll recall that they also asked us to have a complete report from our auditors, who are part of the design of our internal controls. That work is continuing the pace also. We met with our auditors on [Sept. 11] to go over some of their latest work.

A key point for completion of their work would be the stabilization of the invoice forms, which represent the last batch of forms in this cycle. We’ve been doing a lot of consulting with service providers as well as applicants to ensure that those forms work a little bit more user-friendly and effectively for our customers. Once those forms stabilize, we’ll have a pretty clear picture of the first cycle, and that will be a key point for the [auditors] to understand where we are so they can complete their report.

The third [recommendation] was to have completed the processes and procedures around the various stages of the program. So, for example, the invoice forms—we wouldn’t want to issue a commitment letter and then not be able to turn around and pay the invoice that would come along ten, fifteen, twenty days later. It makes good management sense to have your invoicing procedures and the forms and all of that in place before you issue the commitment letters.

So again, it’s tied to the finalization of the forms and the finalization of the computer systems to plug in those forms. Obviously, the computer systems are a function of the data collected on those forms. If the data collected were to change, then you have to change the system. It’s another issue that makes the timing hard to predict.

When will the public know demographic information like how much each state has requested in discounts? Is that going to be public knowledge soon?

We’d like the public to know soon, but we do need to make sure that our reporting systems are accurate enough. We feel that we do have a critical mass of information in the computer to be able to report that—but, as you know, the processing of these applications has taken longer than expected. So I would like to think that this kind of information would be available soon, but [we’ll need] a bit longer to work with both our contractor and the FCC to make sure they would be comfortable with (a) the projection, from the contractor’s standpoint, and (b) the release, from the FCC’s standpoint. I know there’s been a lot of interest in that information.

Reasons for rejection

Above and beyond the reasons for rejection listed in the “Minimum Processing Standards” document, can you discuss some of the common reasons that applications will be rejected so that schools and libraries will have a heads-up in anticipating the next round?

In terms of reasons that applications or portions of an application would be rejected, among them would be: One, they had sought discounted support for services deemed ineligible. That would be the issue that’s probably most common.

Go back to the application mentally if you can, where they cite in Items 15 and 16 the service provider name/number, the 470 application upon which this is based, and the service bucket, like “internal connections.” Then in Item 17 they’re providing a lot of the backup details of the services that are actually encompassed in the application.

We have clearly communicated to our applicants that if that single line item has included in it requests for discounts on services that are not eligible, that entire line item would be rejected. If they’re asking for funding on services that are going to an ineligible entity or going for ineligible uses, and if those are not broken out of a line item, that entire line has to be rejected. So that would be one reason.

There may also be partial funding responses in the sense that if the applicant did not have adequate documentation for the discount level they were claiming, we could respond with a different discount level. A discount would still be provided, but it may not be exactly the one that was on the application. So that would be a reason for partial funding.

To the extent that it’s an ineligible entity that applies, or if they have included an ineligible entity in their consortium application and that ineligible entity were seeking discounts in part of the application, then that would jeopardize their funding as well. So these are some of the issues.

In terms of the areas that might give schools or libraries a lot of confusion about what is an eligible and what is not an eligible service, can you dicuss some of the things that you’ve seen that keep recurring among applications?

I hear this question, and it’s a good question—but this is a question that we would like to discuss after the commitment letters have gone out, as part of our “after the fact” service product. But I think at this point, given that we’re in the middle of the process, I won’t go down that path.

Changes in the next round

Based on the feedback that you’ve gotten from schools and libraries who have applied, what changes will you be making to improve the process for the next round?

Good question. There’s lots of changes, and let me mention them to you.

Let’s start with the actual forms, the Form 470 and Form 471. We will not be changing the actual forms—first of all, of course, we worked hard to get FCC and OMB clearance, and number two, we’ve built a computer system based on the data fields that we have. But what we can change, and what we are proposing to the FCC to be changed, are the instructions that support those forms. We believe that we can do a clearer job this time of explaining how to fill in the forms, based on the experience that we’ve had this year. So that’s point one.

Point two, we plan to put the Form 471 application process online this year, as opposed to requiring it purely on paper. Our hope is that will facilitate the application process for many, many applicants. It may be that there are many out there who—with the breadth of their applications—choose to put it on paper again. But we want to offer that option for the Form 471. Of course, [we’ll offer] a lot of support and verbal instructions and so forth to facilitate the online approach to the Form 471. That’s point two.

Point three, we are defining our outreach efforts for the second program year to incorporate many of the lessons learned. We have the luxury and the ability this year, for the second program year, to package and integrate a lot of the information that we made available to the clients in the first year, but made available to them on a sequential basis as we learned and heard more from the FCC. So we have the benfit now of providing for our clients a kind of integrated set of materials.

We also have the benefit of some the tools that we put in place later in the year to reach those clients who have less access to the internet. For example, in the course of the first year, we established a “fax on demand” facility, allowing applicants to call in and get by fax some of the public documents and news advisors, et cetera, that we were issuing electronically. So we can build on that capacity.

Finally, we will be instituting certain internal operating changes to enhance the process from an internal operating standpoint. Ultimately, we hope to have a bar coding process for the applications so that we have an easier way to track and identity them.

Also, the new forms that you’ll see for the Form 486, as well as the invoice form, will feature an opportunity for the applicant to create his or her own number on that form. Should there be conversations between our client service bureau and the applicant, and the applicant has filed five or six Forms 486 and they want to know, “Which one are you talking about?” we can say, “You marked this one that I’m looking at as Form 486, Number 7.” That will allow us to engage in a more productive conversation with the client if there are issues that come up.

These are again the kind of things that we are planning to incorporate for the second year from lessons learned.

There has been some criticism directed at the client service bureau from applicants who were unhappy with the quality of help they received. In many cases, the responses from the help desk turned out to be wrong. What will you be doing to ensure more reliable, more accurate help the next time around?

Let me address that one. The client service bureau had in-person training from Debra Kriete, our general counsel. We have a very aggressive communications and training program for our client service bureau. Inevitably, there are going to be occasional disconnects in terms of the information that is received and the information that is transmitted. We worked very hard to identify those when we heard about them, trace them down to the source, and correct that.

I think in year two, we have the benefit of the establishment of the program and the availability of all the resources and tools, both for the applicants and the client service bureau, for clearer communication. We believe that to the extent it was an issue in year one, it should be a much smaller issue in year two, by virtue of both the materials—the sort of training reinforcement we’ve provided—as well as the experience we’ve all had.

The packet of outreach materials that you’re putting together—will it be made available before the start of the application window for the second round?


Will it include copies of the Form 470 and Form 471, filled out the way they should appear when submitted?

I hear that question a lot. The basic package will consist of the actual forms and the instructions for these forms—with the FCC’s support, presumably revised instructions. So that’s one component. The second component would be an updated program description.

Then in terms of the mailings that we would do and the stuff that we would put up on the web site for the second program year—those components would be included as well.

We do plan to provide sample forms, filled in on a sample basis, as a tool to help our applicants. We think this is going to be particularly helpful for those who have not applied this year, because we really want to make sure we reach out to those who, in effect, did not assimilate enough information to gear up to apply, or for whom the actually implementation came as a surprise, or whatever.

We’re very eager to broaden the base of participants and we think tools like that can help us with that.

Outreach efforts

Speaking of outreach efforts to target schools and libraries that didn’t apply the first year, how do you plan to do this?

Let me address that in a couple of ways. We will have the data for those who applied and ultimately, of course, for those who were successful applicants. And we will be in a position to use that data to say who or what is missing.

We have in the past and will continue to work closely with the Council of Chief State School Officers for outreach on the school side because I think they can give us a kind of hands-on, on-the-scene assessment like, “here’s a whole thematic block of schools or school districts that kind of failed to leap in,” and we’d like to work with the council to help bring those schools into the fold.

Zeroing in on the library side, we will (a) have the data, and then (b) use our networks and all the wonderful support that we’ve been provided through the [American Library Association] and other groups to reach out to the libraries that were missing.

Certainly, of course, we will also target and work with the private school groups, be it parochial schools or other private schools—again, using the data we have, along with their understanding of where we’ve missed and why we’ve missed, through their outreach activities.

So it’ll be a blend of using the data we have, as well as the networks that exist to help make this program a reality, to get a broader base of applicants in the door for year two.

We’re also scheduling outreach efforts in every one of the 50 states to explain the Form 486 and invoicing process to those that have applied, and we’re hopeful that the kind of presence and outreach for this component of the program will have a ripple effect in terms of encouraging knowledge about the first stage of the second program year.

How will you be reaching out to the service provider community to ensure that they’re knowledgeable about the program as well?

We’re encouraging the groups that we’re going to be meeting with this fall on the next phase of the program year one to work with their service providers and encourage them to participate in these outreach sessions as well, because obviously service providers and applicants are going to be working together on these invoice forms.

We’re also talking about producing a program description or manual for service providers on this program, so that they have a window into the program themselves next year. We think we can use this tool as a basis for reaching a broader base of service providers, particularly in the internal connections area where there are more local-based enterprises.

We can then do sort of a push-pull strategy by getting that information out to service providers, making some of them more aware and in tune to the program, and then their relationships with their own communities can help schools and libraries come into the program that had not been in previously.

Looking toward the future

There is some concern from schools and libraries about what will happen when the SLC merges with the Universal Service Administrative Co. (USAC) as proposed by Jan. 1. Can you talk about that, and where the process is in terms of being approved?

That’s a good question for the FCC. I would like to think that there would be action certainly before the end of the year, and that the reorganization would go into place effective in January. But I don’t know whether the FCC is still on that timetable or not.

Meanwhile, to address some of the issues that Congress has raised in terms of efficiencies and so forth, we are taking steps now that can be undertaken regardless of whether there is an official and formal reorganization.

We are collaborating with USAC and the Rural Health Care Corporation on shared space, for example. We are in a one-year sublease situation so that we can co-locate and achieve the modest efficiencies that come along with co-location—be it space, conference room, xeroxing, etc. So to the extent that we can achieve some efficiencies, we’re planning on doing that in any event.

In terms of the programmatic impact of coming together, the sense I have from Cheryl Parrino, the USAC CEO, is that she is very supportive of the individual program identities, and that she’s very sensitive to the fact that this new organization as it will exist, assuming the FCC goes this path, will have different sets of stakeholders and that each of those needs its proper attention. So she has been very clear to us that she does want this kind of customer-oriented, client-based service to continue, including all the outreach.

I should just mention that she and I had a visit with Sen. McCain [on Sept. 10], who asked us to come in because he wanted to meet with the new leadership of the eRate program. In the process of that meeting, when it came to SLC issues, she kindly turned to me as one who’s involved in the day-to-day. And I think that’s her kind of management philosophy, and I think the education and library community and our service providers should take heart in that she’s committed to that kind of client-based service program.

Administrative costs for the program rose again in the fourth quarter, to $4.9 million, sparking renewed criticism among those who say it’s too costly. How do you address that criticism?<

Here’s how I address that: We are in the start-up phase of a virtual $2 billion enterprise. You are going to experience a heavy investment in one-time costs, start-up costs, number one; and two, you’re going to experience a lot of unpredictability.

When you look at our budget, nearly one-fourth is cost associated with a start-up operation—that is to say, computer systems development as well as some of the up-front training and materials for the client service bureau and program integrity assurance team. But the budget is still in the neighborhood of one percent of program cost—slightly above when you consider the reduction on the program side that was reflected in the FCC’s [June 12 decision to cut funding].

Obviously, I think it’s a good investment in the program for objective and efficient operation in the future, and I think that with the staff that we have, with the outsourcing that we have, with the ability to hire temporary staff to address peak loads and then pull back—I think when you look at a single entity doing that, you can achieve long-term efficiencies and long-term success.

How do you plan to handle the public and congressional scrutiny of the eRate?

In a nutshell, by managing the program effectively and with high standards. So, for example, in our work with the GAO—we were happy to get their suggestions. We want this program to work right. And if somebody has an idea for improving it, we will listen. Certainly that was Ira Fishman’s posture, and certainly it’s my posture, to reward the community and listen to the customer.

At the same time, it can be a source of creative tension, maintaining the standards of program compliance that we need to have to make sure there are no material problems with the program’s integrity. But we plan to maintain our accessibility as well, and with respect to Congress, we are at their disposal if they have any questions or concerns. My belief is that the open flow of communications is the best way to address any concerns or queries that the public, or the Congress, or the GAO, or ther FCC might have.

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