**FEDERAL COMMUNICATIONS COMMISSION**

**Washington, D.C. 20554**

Adopted: March 11, 2008

Released: March 11, 2008

Mel Blackwell

Vice President, Schools and Libraries Division

Universal Service Administrative Company

2000 L Street, N.W.

Suite 200\
Washington, D.C. 20036

Dear Mel:

We have before us an appeal filed by Berrien County Intermediate School
District (Berrien), Berrien Springs, Michigan, seeking review of a
decision by USAC reducing its funding commitment in Funding Year 2007
for Funding Request Number (FRN) 1571125 under the E-rate program.[^1]
Based on the record before us, as set forth below, it appears that this
matter can be resolved through further discussions between USAC staff
and the applicant, Berrien. Therefore, we direct USAC to review this
matter in light of the additional information provided by Berrien in its
appeal to the Commission.

In Funding Year 2007, Berrien applied for \$121,445.00 in pre-discount
E-rate funding for Internet access from Merit Network, Inc.[^2] Berrien
qualified for E-rate funding at the 62 percent level.[^3] After the 62
percent discount was applied, Berrien would receive \$75,295.90 in
E-rate funds.[^4] On May 1, 2007, Berrien received a Program Integrity
Assurance (PIA) request indicating that its request for funding included
\$97.16 monthly in support for ineligible pre-kindergarten students.[^5]
Therefore, USAC asked Berrien to either confirm that they agreed with
this cost allocation, or provide an alternative cost allocation that did
not include ineligible pre-kindergarten students.[^6]

On May 7, 2007, Berrien responded to USAC's request for funding
reallocation with a letter and spreadsheet that removed 24
pre-kindergarten students from the overall student count of 28,756
students.[^7] Berrien said that it was requesting \$75,295.90 minus
\$60.24 that would have gone to the pre-kindergarten students, resulting
in a funding commitment amount of \$75,235.66.[^8] Berrien, however, did
not clarify whether this amount was pre- or post-discount.[^9] Thus, on
July 26, 2007, USAC sent out a Funding Commitment Decision Letter (FCDL)
notifying Berrien that it was approved to receive \$75,235.66 in
pre-discount funding, or \$46,646.11 after application of the 62 percent
discount.[^10]

On September 20, 2007, Berrien appealed to the Commission, noting that
its response to USAC was misconstrued and that the \$75,235.66 amount it
requested for FRN 1571125 was a post-discount amount, rather than a
pre-discount amount as indicated by USAC.[^11] Berrien states that the
pre-discount amount for which it intended to apply was the original
\$121,445.00 minus \$97.16 for the pre-kindergarten students, resulting
in a pre-discount amount of \$121,347.84. Application of the 62 percent
discount to this adjusted amount results in a post-discount amount of
\$75,235.66.[^12] Berrien acknowledges that its response to USAC should
have been clearer and that the misunderstanding concerning the funding
amount was unintentional.[^13]

As indicated above, based on the foregoing, it appears that this matter
can be resolved through further discussions between USAC staff and the
applicant to determine the appropriate post-discount funding commitment
amount for FRN 1571125 as part of Berrien's Funding Year 2007
application. It appears that the misunderstanding concerning the funding
commitment request was unintentional; that it was, in fact, a mistake,
is obvious from the record. Additionally, correcting the
misunderstanding regarding the requested amount would not, in and of
itself, result in waste, fraud or abuse, or a failure to adhere to core
program requirements. Therefore, we direct USAC to review this matter in
light of the additional information provided to the Commission in
Berrien's appeal. If USAC determines that the \$75,235.66 figure
accurately represents the post-discount amount for FRN 1571125, then
USAC shall issue a revised FCDL to Berrien within 30 days from the date
of this letter. We dismiss without prejudice Berrien's appeal.

It is important to note that the guidance provided herein is limited to
the issue of the requested funding amount for FRN 1571125 only.  If
there are other issues with this application that would result in a
commitment adjustment or request for further information, we direct USAC
to act accordingly.

> Sincerely,
>
> Dana R. Shaffer
>
> Chief
>
> Wireline Competition Bureau

cc: Scott Barash, Acting CEO, USAC

[^1]: Letter from Ronald M. Basso, counsel for Berrien County
    Intermediate School District, to Federal Communications Commission
    (filed Sept. 21, 2007) (Berrien Request for Review).

[^2]: *See* Berrien Request for Review, Attachment 2 (FCC Form 471,
    Berrien County Intermediate School District, SLD-569038 (filed Feb.
    6, 2007) (regarding FRN 1571125)).

[^3]: *See id.* at Block 5 (Discount Funding Request(s)).

[^4]: *Id.*

[^5]: *See* Berrien Request for Review, Attachment 3 (Letter from Marie
    C. Thomas, Universal Service Administrative Company, Schools and
    Libraries Division, to Dennis Lundgren, Berrien Intermediate School
    District (dated May 1, 2007)).

[^6]: *Id.*

[^7]: *See* Berrien Request for Review, Attachment 4 (Letter to Marie C.
    Thomas, Universal Service Administrative Company, Schools and
    Libraries Division, from Dennis Lundgren, Berrien Intermediate
    School District (dated May 7, 2007)).

[^8]: *Id.*

[^9]: *See id*.; Berrien Request for Review at 3.

[^10]: *See* Berrien Request for Review, Attachment 1 (Letter from
    Universal Service Administrative Company, Schools and Libraries
    Division, to Dennis Lundgren, Berrien Intermediate School District
    (dated July 26, 2007)).

[^11]: *See* Berrien Request for Review at 3.

[^12]: *Id.*

[^13]: *Id.*