Hey, where you going with that money?

The punches just keep coming.  In April, Chairman Pai let USAC have it. Last month, Commissioner O'Rielly said, "I believe that all options should be on the table, including putting USAC’s functions out for contract...."  In response to yesterday's GAO report that found problems with the Lifeline (née Low Income) Program of the USF, Commissioner O'Rielly said: "I have little confidence...in the ability of USAC to stem the tide of problems. More significant reform is needed, including completely rethinking USAC.”  He sure has it in for USAC.

Of course, I only wanted to look at the summary of the GAO report (basically scanning for anything E-Rate-related).  Let's see: blah blah blah blah
"In March 2017, FCC developed a preliminary plan to move the USF to the Treasury."
[record scratch]

Say what now?!  Where is this plan?  To the full GAO report!

Page 23: "According to correspondence received from the FCC Chairman’s Senior Legal Counsel, as of March 2017, FCC has decided to move the funds to the Treasury....  FCC’s Office of the Managing Director prepared a preliminary project plan for moving the USF to the Treasury with the goal of completing the transfer in approximately 1 year."

Oh, crap!  As I said back in 2005, this is step one to killing the E-Rate.  Get it into the Treasury so that it will be easy to "so underfund it that it goes away."

Do you think I'm being paranoid?  OK, maybe, but that doesn't mean I'm wrong.  Back on page 23 of that GAO report:
"...FCC explained that having the funds in the Treasury could allow USF payments to be used to offset other federal debts...."

It seems to me they're saying that the USF could be used to pay down the national debt.  At this moment, the federal debt is $19.96 trillion, which means the $10 billion that USF collects annually is 0.056% of the debt.  The government is paying something like 0.8% interest on t-bills, so we'd need 15 times the total amount of the USF just to pay the interest on the debt.

This is bad.  When was the FCC going to tell us about this?

Is this a silver lining?
Page 24: "...in May 2017, while reviewing a draft of this report, a senior FCC official informed us that FCC experienced some challenges associated with moving the funds to the Treasury, such as coordinating across the various entities involved, which raised some questions as to when and perhaps whether the funds would be moved."

Stay tuned.

Meanwhile, back to the sidelong glance the FCC seems to be giving USAC.  Page 24: "beginning in November 2016, FCC sought to amend the contract between USAC and the bank to enable the bank to act on FCC instructions independent of USAC in the event USAC ceases to be the administrator."

She's baaaaack

I did not expect this: President Trump has renominated Jessica Rosenworcel to the FCC.

First, is it good news for the E-Rate? Yes!  Crucially, she has historically used the big "R" in "E-Rate."  She used to work for Senator Rockefeller, the godfather of the E-Rate, and she has been very supportive in the past.

But don't expect her to be approved instantly.  If she were, it would create a 2-2 tie on the Commission, so I'll bet that the Senate will sit on their hands until President Trump nominates a third Republican commissioner.

I also just have to show the timeline of Ms. Rosenworcel's nomination for a second term on the FCC:
Dec. 2014: Commissioner O'Rielly is confirmed; in return for Democratic agreement, Republicans promise to confirm her quickly when she's nominated for reappointment.
May 2015: President Obama nominates her for a second term.
July 2015: Her first term technically ends, but she's allowed to continue serving until December 2016.
Oct. 2015: The Senate Commerce Committee holds a hearing on her reappointment.
Dec. 2015: The Commerce Committee unanimously approves her reappointment, and passes it to the full Senate for confirmation (which is normally a formality).
Mar. 2016: At a Senate hearing, Chairman Wheeler is vague on whether he'll step down at the end of his term.
Apr. 2016: Democrats moan that Senator McConnell is delaying on the confirmation vote, in spite of the promise they made in 2014 to reconfirm her quickly.
Sept. 2016: Senator Thune suggests that her confirmation might be smoothed if Chairman Wheeler agrees to step down at the end of Obama's term.
Sept. 2016: Chairman Wheeler says he'll give up his post, but not when.
Nov. 2016: Two Democratic senators put a hold on her confimation.  Now that's a twist: Democrats holding up one of their own.
Nov. 2016: Three days later, the Democratic senators lift their hold.
Dec. 2016: Chairman Wheeler offers to step down if the Senate will confirm her.
Dec. 2016: The Senate adjourns without voting on her confirmation.
Jan. 2017: President Obama renominates her.
Mar. 2017: President Trump withdraws her nomination.
June 2017: President Trump nominates her.

Did you notice that of all the people in that timeline, there was only one "she"?  We still have a long way to go.

DDIY (don't do it yourself)

I didn't make it to the SHLB conference last week, but John Harrington from Funds for Learning was kind enough to publish the slide deck from his presentation.  As usual, I skipped to the pictures.  On page 10, we learn that in FY 2017, 16% fewer organizations applied for funding than in FY2014.

Why are applicants leaving the program?  I think there are 2 main reasons:

1. Complexity is increasing.  In 2015, they changed the Form 471, which confused people who only filed one form a year, and in 2016, they introduced EPC, which made applying for funding much more difficult.
2. Funding is decreasing.   For many small applicants, when voice is phased out, the remaining funding opportunity isn't worth the hassle.  And some libraries that don't filter were only getting voice funding, so they can't apply.

Which is worse, the increasing complexity or the decreasing funding?  Maybe we can get an idea from the graph on page 12.  It shows that the number of applicants not using consultants has dropped over 39% from FY 2014 to FY 2017, while the number of applicants using consultants has increased over 8%.  I think the only reason that consultants would be getting more clients while the total pool of applicants shrinks is the complexity of the program.

How can we fix this?  I already answered that.