Dispelling 10 common eRate myths


However, applicants don’t have to file Priority 1 services from different providers on separate FCC Forms 471—they can put these all on the same form, just listed under separate FRNs. This is the same for Priority 2 services. (An FRN is a number assigned by USAC to each FCC Form 471 Block 5 Discount Funding Request.)

Myth No. 8: All of an applicant’s students or patrons are impoverished, so the applicant can claim a 90-percent discount level, and the applicant is rural based on the appearance of its surroundings.

Facts: Applicants must use National School Lunch Program numbers or an alternate discount mechanism to determine their discount, and they should retain their documentation. They must use the formally approved urban/rural status to determine their status. Then, applicants must use the discount matrix to determine their discount.

Myth No. 9: If an applicant’s state posted an FCC Form 470 and signed contracts with three service providers as a result, the applicant can simply pick any one of the three to complete its FCC Form 471.

Facts: Applicants must conduct a bid evaluation for all three service providers who are able to provide services under those contracts (called a “mini-bid”) and must choose the most cost-effective solution. Applicants do not need to post an FCC Form 470 just to conduct that mini-bid, however.

Myth No. 10: There is only one service provider serving an applicant’s region, so the applicant can just claim sole source and not bother with a competitive-bidding process.

Facts: The 28-day waiting period, competitive bidding, and other applicable rules must always be followed.

Surviving an audit

Just like IRS audits, an eRate audit can elicit groans and apprehension. The random audits are designed to ensure compliance with the program rules, and careful preparation can help audited applicants through the process.

Beneficiary and Contributor Audit Program (BCAP) audits are performed to ensure compliance with FCC and program rules. These rules include eligibility, discount percentage, and adherence to competitive-bidding requirements.

Site visits usually occur at the applicant’s location, and most site visits take from three to five days. An audit takes several weeks and is generally performed by USAC’s Internal Audit Staff.

The Payment Quality Assessment (PQA) is a program that assesses the rate of improper eRate disbursements, focusing in particular on the eligibility of program beneficiaries, the calculation of support performed by USAC, and the beneficiary documentation supporting the funding disbursed. The PQA is an assessment and is not an audit. No on-site visits occur.

Applicants and service providers should keep all documentation that demonstrates compliance with FCC rules. All documents should be retained for five years from the last date of service delivery, and they can be kept in paper or electronic format.

To access the full presentation materials from USAC’s eRate training sessions, click here.

Laura Ascione

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