**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

In the Matter of )

)

Request for Review of the )

Decision of the )

Universal Service Administrator by )

)

Merced Union High School District ) File Nos. SLD-8404; SLD-9605

Merced, California )

)

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

Universal Service )

)

Changes to the Board of Directors of the ) CC Docket No. 97-21

National Exchange Carrier Association, Inc. )

**order**

**Adopted: August 17, 2000 Released: August 18, 2000**

By the Common Carrier Bureau:

1.  The Common Carrier Bureau has under consideration a Letter of Appeal
    filed by Merced Union School District, Merced, California on April
    6, 1999, seeking review of a decision issued by the Schools and
    Libraries Division (SLD) of the Universal Service Administrative
    Company (USAC or Administrator).[^1] Merced Union seeks review of
    SLD's denial of its application for support for internal connections
    under the schools and libraries universal service support mechanism.
    For the reasons set forth below, we deny the Letter of Appeal and
    affirm SLD's denial of Merced Union's application.

2.  Under the schools and libraries universal service mechanism,
    eligible schools, libraries, and consortia that include eligible
    schools and libraries, may apply for discounts for eligible
    telecommunications services, Internet access, and internal
    connections.[^2] In the *Fifth Reconsideration Order*, the
    Commission established new rules to govern how discounts will be
    allocated when available funding is less than total demand.[^3]
    These rules provide that requests for telecommunications and
    Internet access services shall receive first priority for available
    funds and that requests for internal connections shall receive
    secondary priority. The rules further provide that, when sufficient
    funds are not available to fund all requests for discounts on
    internal connections, the Administrator shall allocate funds for
    discounts beginning with those applicants eligible for a ninety
    percent discount level and, to the extent funds remain, continue to
    allocate funds for discounts to applicants at each descending single
    discount percentage, *e.g.*, eighty‑nine percent, eighty‑eight
    percent, and so on.

3.  In accordance with the Commission\'s rules, the discount available
    to a particular school is determined by indicators of poverty and
    high cost.[^4] The level of poverty for schools and school districts
    is measured by the percentage of student enrollment that is eligible
    for a free or reduced price lunch under the national school lunch
    program or a federally-approved alternative mechanism.[^5] A
    school\'s high cost status is derived from rules that classify it as
    urban or rural.[^6] The rules provide a matrix reflecting both a
    school\'s urban or rural status and the percentage of its students
    eligible for the school lunch program to establish a school\'s
    discount rate, ranging from 20 percent to 90 percent, to be applied
    to eligible services. [^7]

4.  In applying for funding for the first funding year, Merced Union
    indicated that its discount eligibility was 90 percent. In its
    Funding Commitment Decision Letters dated January 26, 1999, SLD
    denied Merced Union's request for funding for internal connection
    services, finding that the "funding cap will not provide for
    internal connections less than 62% discount to be funded."[^8] SLD
    found that Merced Union incorrectly calculated its discount. Rather
    than a 90% discount, Merced Union is only entitled to a 60% discount
    based on the supporting documents it submitted to SLD. Because
    funding for internal connections was only available down to the 62%
    level, SLD denied Merced's funding request for internal connections.
    Merced Union appealed, stating that SLD's database is in error and
    that the 90 percent discount is correct.

5.  On March 19, 1999, SLD affirmed its initial decisions and denied
    Merced Union's appeals. It explained that Merced Union\'s requested
    discount was not supported by appropriate documentation and that SLD
    reduced the discount accordingly. On April 6, 1999, Merced Union
    filed the instant appeal of SLD\'s decision.

6.  We have carefully reviewed Merced Union\'s appeal as well as SLD's
    records relating to this application, and conclude that Merced Union
    has not shown that its request for funding at a 90 percent discount
    was improperly denied. According to Merced Union's Letter of Appeal,
    Merced Union calculated its discount by deriving its number of
    eligible students using the "feeder pattern concept," rather than
    one of the acceptable methods set out in the Commission\'s rules and
    orders for calculating the discount. Schools that do not use an
    actual count of students eligible for the national school lunch
    program may use only the federally-approved alternative mechanisms
    contained in Title I of the Improving America\'s Schools Act, which
    does not include the feeder method.[^9] In fact, the Commission
    specifically rejected commenters\' suggestions that would have
    permitted showings, such as the feeder method, that would merely
    approximate the percentage of low-income students in a particular
    area.[^10] The burden of supporting the requested discount level
    falls on the applicant and Merced Union has failed to meet that
    burden.

7.  In addition, according to Merced Union, SLD informed Dr. Jackie
    Lamb, Assistant Superintendent of Educational Technology and
    Information Management for the California Department of Education,
    that there were three acceptable methods for calculating
    eligibility, one of which was the feeder school concept. We find
    that such statements are insufficient to exempt Merced Union from
    having to comply with our policies regarding the permissible methods
    of calculating its discount. We note that rules and policies are
    enforced, even where a party has received erroneous advice from a
    government employee, and the Commission is not estopped from
    enforcing its rules in a manner that is inconsistent with the advice
    provided by the employee, particularly when the relief requested
    would be contrary to an applicable statute or rule.[^11] In light of
    the thousands of applications that SLD reviews and processes each
    funding year, it is administratively necessary to place on the
    applicant the responsibility of understanding all relevant program
    rules and procedures. Merced Union's unfamiliarity or
    misunderstanding of Commission policies provides no basis for
    deviating from the Commission's policy of placing on the applicant
    the responsibility for understanding program rules and
    procedures.[^12]

8.  ACCORDINGLY, IT IS ORDERED, pursuant to authority delegated under
    sections 0.91, 0.201, and 54.722(a) of the Commission's rules, 47
    C.F.R. §§ 0.91, 0.291, and 54.722(a), that the appeal filed by
    Merced Union High School District, Merced, California on April 6,
    1999 IS DENIED.

    FEDERAL COMMUNICATIONS COMMISSION

    Carol E. Mattey

    Chief, Common Carrier Bureau

[^1]: Letter from Terry Silva, Merced Union High School, to Federal
    Communications Commission, filed April 6, 1999 (Letter of Appeal).

[^2]: 47 U.S.C. 254(h)(1)(B); 47 C.F.R. §§54.502, 54.503.

[^3]: *See* *Federal‑State Joint Board on Universal Service*, Fifth
    Reconsideration Order, 13 FCC Rcd 14915, 14934 at para. 31 (1998)
    (*Fifth Reconsideration Order*).

[^4]: 47 C.F.R. §505(b)

[^5]: 47 C.F.R. §505(b)(1).

[^6]: 47 C.F.R. §54.505(b)(3)(i), (ii).

[^7]: 47 C.F.R. §54.505(c).

[^8]: Letters from the Schools and Libraries Division, Universal Service
    Administrative Company to Terry Silva, Merced Union High School
    District, dated January 26, 1999 at 3 (Funding Commitment Decision
    Letters).

[^9]: *Federal-State Joint Board on Universal Service*, Report and
    Order, 12 FCC Rcd 8776, 9044-46, 9524-25 (1997), as corrected by
    *Federal-State Joint Board on Universal Service*, Errata, CC Docket
    No. 96-45, FCC 97-157 (rel. June 4, 1997), affirmed in part,
    reversed in part and remanded in part sub nom. *Texas Office of
    Public Utility Counsel v. FCC*, 183 F.3d 393 (5th Cir. 1999),
    *motion for stay granted in part* (Sept. 28, 1999), *petitions for
    rehearing and rehearing en banc denied* (Sept. 28, 1999) (affirming
    *Universal Service Order* in part and reversing and remanding on
    unrelated grounds), *cert. denied in Celpage, Inc. v*. *FCC*, 120
    S.Ct. 2212 (May 30, 2000), *cert. granted in GTE Service Corp. v.
    FCC*, 120 S.Ct. 2214 (June 5, 2000), *cert. denied in AT&T Corp. v.
    Cincinnati Bell Tel. Co.*, 120 S.Ct. 2237 (June 5, 2000); 47 C.F.R.
    §54.505(b)(1).

[^10]: *Id.* at 9525, where one commenter noted that expanding
    permissible proxies could "unnecessarily entangle the FCC in endless
    review and approval processes of many less appropriate schemes."
    Merced Union cites to other Department of Education regulations as
    permitting the use of the feeder method, thus allowing the school to
    project the number of low-income students in a middle or high school
    based on the average poverty rate of the elementary school
    attendance areas that feed into that school. As indicated above, the
    Commission considered such proxy methodologies proposed by
    commenters and rejected them.

[^11]: *In re Mary Ann Salvatoriello*, Memorandum Opinion and Order, 6
    FCC Rcd 4705, 4707-08, para. 22 (1991) (citing *Office of Personnel
    Management v. Richmond*, 497 U.S. 1046 (1990) (Erroneous advice from
    a government employee has never been found to create estoppel
    against the Federal Government, particularly when the relief
    requested would be contrary to an applicable statute or rule.). A
    person relying on informal advice given by staff does so at his own
    risk. *Id.*, citing *Texas Media Group, Inc*., 5 FCC Rcd 2851, 2852,
    para. 8 (1990); *aff\'d sub nom. Malkan FM Associates v. FCC*, No.
    90-1281, slip op. at 12 (D.C.Cir. June 14, 1991).

[^12]: *See e.g. Arizona Call-A-Teen Center*, CC Dockets No. 96-45 and
    97-21, Order, DA 00-1058, para. 6 (rel. May 15, 2000).