**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

In the Matter of )

)

Federal-State Joint Board on ) CC Docket No. 96-45

Universal Service )

**Order**

**Adopted: March 2, 2000 Released: March 7, 2000**

By the Commission:

1.  The Universal Service Administrative Company (USAC) has requested
    waivers of the Commission's rules setting forth quarterly caps on
    the rural health care support mechanism and the schools and
    libraries support mechanism.[^1] In this Order, we grant USAC's
    request and waive the quarterly cap on collections and disbursements
    under the rural health care support mechanism for the first and
    second quarters of 2000. We also waive the quarterly cap on
    disbursements under the schools and libraries support mechanism for
    the second quarter of 2000. These waivers will ensure that lags
    between the collection and disbursement of funds in these support
    mechanisms will not delay the disbursement of support to applicants
    in the first and second quarters of 2000.[^2] We emphasize, however,
    that these waivers do *not* affect the *annual* collection and
    disbursement caps, which shall remain in effect for the rural health
    care support mechanism and the schools and libraries support
    mechanism.

2.  *The Rural Health Care Support Mechanism.* The Commission adopted a
    funding cap of \$12 million for the Year 2 funding cycle for its
    rural health care support mechanism, requiring that no more than \$3
    million be collected or disbursed in each of the first two quarters
    of 2000.[^3] USAC estimates that approximately \$8,250,839 will be
    needed to fund Year 2 applicants under the rural health care support
    mechanism, an amount lower than the Year 2 annual funding cap.[^4]
    USAC projects, however, that \$4,128,000 will need to be disbursed
    during the first quarter of 2000, and that \$4,506,225 will need to
    be disbursed during the second quarter of 2000.[^5] This is due to
    the lag between collection of funds for Year 1 and Year 2 and their
    ultimate disbursement.[^6] Given that total Year 2 funding will be
    at or less than the annual cap and that disbursements have lagged
    behind commitments, we waive section 54.623(a) of the Commission's
    rules to enable USAC to collect funds and make disbursements in
    excess of \$3 million for the rural health care support mechanism in
    each of the first and second quarters of 2000.

3.  *The Schools and Libraries Support Mechanism.* The Commission
    adopted an annual funding cap of \$2.25 billion for its schools and
    libraries universal service support mechanism.[^7] The Commission
    also required that no more than \$562.5 million be collected or
    disbursed in each of the first two quarters of 2000.[^8] For Year 2
    of the schools and libraries support mechanism,[^9] USAC has not
    committed more than the \$2.25 billion annual cap, and the actual
    annual funding disbursed will be less than the cap.[^10] USAC
    estimates, however, that more than \$562.5 million may need to be
    disbursed in the second quarter of 2000 due to the lag between the
    collection of funds and their ultimate disbursement during Year
    2.[^11] Given that total funding will be at or below the annual cap
    and that disbursements have lagged behind commitments for Year 2, we
    waive section 54.507(a) of the Commission's rules to enable USAC to
    make disbursements in excess of \$562.5 million for the schools and
    libraries support mechanism in the second quarter of 2000.

4.  It is therefore ORDERED, pursuant to section 4(i) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 154(i), and
    section 1.3 of the Commission's rules, 47 C.F.R. § 1.3, that the
    Universal Service Administrative Company's request for waiver is
    GRANTED, and that sections 54.623(a) and 54.507(a) of the
    Commission's rules, 47 C.F.R. §§ 54.623(a) and 54.507(a), are WAIVED
    to the extent indicated herein.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

[^1]: *See* Federal Universal Service Programs Fund Size Projections &
    Contribution Base For the Second Quarter 2000 at 22, 26 (filed by
    USAC Feb. 1, 2000) (*USAC Filing for Second Quarter 2000*).

[^2]: We issue these waivers concurrently with the Common Carrier
    Bureau's release of the proposed contribution factor for the second
    quarter of 2000, to ensure that there is no disruption in the flow
    of funding for the rural health care support mechanism and the
    schools and libraries support mechanism. *See* *Proposed Second
    Quarter 2000 Universal Service Contribution Factor*, CC Docket No.
    96-45, Public Notice, DA 00-517 (rel. Mar. 7, 2000).

[^3]: 47 C.F.R. § 54.623(a). The Year 2 funding cycle for the rural
    health care support mechanism began on July 1, 1999, and ends on
    June 30, 2000. 47 C.F.R. § 54.623(b).

[^4]: *See USAC Filing for Second Quarter 2000* at 22.

[^5]: *Id.* at 22-23. These projected disbursements include both Year 1
    and Year 2 rural health care funding commitments. USAC reports that,
    as of December 31, 1999, \$544,490 for Year 1 and \$0 for Year 2 had
    been disbursed. *Id.* at 22.

[^6]: *Id*. at 22.

[^7]: 47 C.F.R. § 54.507(a).

[^8]: 47 C.F.R. § 54.507(a)(1).

[^9]: Year 2 of the schools and libraries support mechanism began on
    July 1, 1999, and ends on June 30, 2000. 47 C.F.R. § 54.507(b).

[^10]: *See USAC Filing for Second Quarter 2000* at 26.

[^11]: *Id.*