**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

In the Matter of )

)

Request for Review of the )

Decision of the )

Universal Service Administrator by )

)

United Talmudical Academy ) File No. SLD-148011

Brooklyn, New York )

)

Schools and Libraries Universal Service ) CC Docket No. 02-6

Support Mechanism )

**order**

**Adopted: October 30, 2008 Released: October 30, 2008**

By the Acting Chief, Telecommunications Access Policy Division, Wireline
Competition Bureau:

# introduction

1.  In this Order, we grant an appeal filed by United Talmudical Academy
    (UTA) of a decision of the Universal Service Administrative Company
    (USAC) seeking to recover funding disbursed to UTA in Funding Year
    1999 under the schools and libraries universal service support
    mechanism (also known as the E-rate program) on the grounds that UTA
    did not pay the non-discounted portion of the E-rate services it
    purchased.[^1] Based on the record before us, it appears that this
    matter can be resolved through USAC's review of additional
    documentation UTA provided to the Commission in its appeal, which it
    had not previously provided to USAC. Therefore, we remand the
    underlying application associated with this appeal to USAC for
    further action consistent with this Order. In doing so, we direct
    USAC to review this matter within 60 calendar days from the release
    date of this Order in light of this additional information provided
    to the Commission on appeal. To ensure that the underlying matter is
    resolved expeditiously, if USAC finds that UTA has documentation
    demonstrating its timely payment of the non-discounted portion of
    the purchase price of the services at issue, then USAC shall
    immediately suspend its recovery actions against UTA with respect to
    this application.

# BACKGROUND

2.  Under the E-rate program, 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] To ensure that applicants are able to use
    the discounted services effectively, and thereby minimize waste,
    Commission rules require that applicants who receive E-rate
    discounts pay the full non-discounted portion of the services or
    products purchased with E-rate discounts.[^3] In the *Universal
    Service First Report and Order*, the Commission determined that
    requiring schools and libraries to pay a share of the costs
    encourages them to avoid unnecessary and wasteful expenditures
    because they will be unlikely to commit their own funds for
    purchases that they cannot use effectively.[^4]

3.  In Funding Year 1999, USAC granted UTA a 90 percent E-rate discount
    on \$1,238,562 in purchases from Communications Data & Security,
    Inc. as part of UTA's FCC Form 471 for Application No. 148011 for
    Funding Year 1999.[^5] In 2004, an audit report conducted by the
    Commission's Office of Inspector General, however, found that UTA
    had not timely paid its 10 percent share of the price of the E-rate
    services purchased as part of the 118 funding requests that
    constitute UTA's FCC Form 471 for Application No. 148011.[^6] In
    response to this audit report, USAC sought to recover \$943,300 in
    disbursements made to UTA for 67 of these funding requests through
    its commitment adjustment procedures.[^7] UTA appealed USAC's
    recovery efforts, claiming that it had paid its entire share for all
    its funding requests by the time of the audit, consistent with
    E-rate program rules.[^8] In its review of the documentation that
    UTA provided as part of its appeal, USAC, however, found
    insufficient evidence of timely payment for three of the funding
    requests contained in the application, for which UTA owed
    approximately \$7,300.[^9] Therefore, USAC denied UTA's appeal that
    it had paid its non-discounted share of the purchase price for the
    services listed in the application.[^10] UTA then appealed to the
    Commission and provided additional documentation, which it had not
    previously provided to USAC, to support its claim that it paid all
    of the funding requests at issue in the application on a timely
    basis.[^11]

# DISCUSSION 

4.  We grant UTA's appeal. Based on the foregoing, it appears that this
    matter can be resolved through USAC's review of all the
    documentation that UTA has submitted to USAC and to the Commission
    concerning the funding requests at issue as part of UTA's FCC Form
    471 for Application No. 148011 for Funding Year 1999. We find that
    directing USAC to consider UTA's additional documentation in
    reviewing UTA's application for funding will not reduce or eliminate
    any review procedures or program requirements that applicants must
    comply with to receive funding, or otherwise result in waste, fraud
    or abuse, or a failure to adhere to core program requirements.
    Therefore, we direct USAC to review this matter within 60 calendar
    days of the release date of this Order in light of the additional
    information provided to the Commission in UTA's appeal. If USAC
    finds that UTA has documented its timely payment of its share of the
    purchase price of all of the funding requests at issue consistent
    with E-rate program rules, then USAC shall immediately suspend its
    recovery actions against UTA with respect to this application. Our
    direction provided herein is limited to the issue of determining
    whether UTA paid its non-discounted share of the purchase price for
    UTA's FCC Form 471 for Application No. 148011 for Funding Year 1999.
    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 and expeditiously. In remanding this
    application to USAC, we make no finding as to the ultimate
    eligibility of the services or the petitioner's application.[^12] We
    remind USAC of its obligation to independently determine whether the
    disbursement of universal service funds would be consistent with
    program requirements, Commission rules and orders, or applicable
    statutes and to decline to disburse funds where this standard is not
    met.

5.  We stress that the Commission is committed to guarding against
    waste, fraud, and abuse, and ensuring that funds disbursed through
    the E-rate program are used for appropriate purposes.[^13] Although
    we grant the request for review addressed here, this action does not
    affect the authority of the Commission or USAC to conduct audits or
    investigations to determine compliance with the E-rate program rules
    and requirements. Because audits or investigations may provide
    information showing that a beneficiary or service provider failed to
    comply with the statute or the Commission's rules, such proceedings
    can reveal instances in which universal service funds were
    improperly disbursed or in a manner inconsistent with the statute or
    the Commission's rules. To the extent the Commission finds that
    funds were not used properly, the Commission will require USAC to
    recover such funds through its normal processes. We emphasize that
    the Commission retains the discretion to evaluate the uses of monies
    disbursed through the E-rate program and to determine on a
    case-by-case basis that waste, fraud, or abuse of program funds
    occurred and that recovery is warranted. The Commission remains
    committed to ensuring the integrity of the program and will continue
    to aggressively pursue instances of waste, fraud, or abuse under the
    Commission's procedures and in cooperation with law enforcement
    agencies.

# ordering clauses

6.  ACCORDINGLY, IT IS ORDERED, pursuant to authority contained in
    sections 1-4 and 254 of the Communications Act, as amended, 47
    U.S.C. §§ 151-154 and 254, and pursuant to authority delegated under
    sections 0.91, 0.291, and 54.722(a) of the Commission's rules, 47
    C.F.R. §§ 0.91, 0.291, and 54.722(a), that United Talmudical
    Academy's Request for Review IS GRANTED and its application REMANDED
    to USAC for further consideration in accordance with the terms of
    this Order.

7.  IT IS FURTHER ORDERED, pursuant to authority contained in sections
    1-4 and 254 of the Communications Act, as amended, 47 U.S.C. §§
    151-154 and 254, and pursuant to authority delegated under sections
    0.91, 0.291, and 54.722(a) of the Commission's rules, 47 C.F.R. §§
    0.91, 0.291, and 54.722(a), that the Universal Service
    Administrative Company SHALL COMPLETE its review of the above
    captioned application no later than 60 calendar days from release of
    this Order and, if warranted, suspend its recovery of the disbursed
    E-rate universal service funding in accordance with the terms
    expressed herein.

8.  IT IS FURTHER ORDERED that, pursuant to authority delegated under
    sections 0.91, 0.291 and 1.102 of the Commission's rules, 47 C.F.R.
    §§ 0.91, 0.291, and 1.102, this Order SHALL BE EFFECTIVE upon
    release.

FEDERAL COMMUNICATIONS COMMISSION

Jennifer K. McKee

Acting Chief

Telecommunications Access Policy Division

Wireline Competition Bureau

[^1]: Letter from Shiya Dresdner, United Talmudical Academy, to Office
    of the Secretary, Federal Communications Commission, CC Docket No.
    02-6 (filed Aug. 13, 2007) (Request for Review); *see also* Letter
    from Arthur Jacknis, Communication Data and Security, Inc., to
    Office of the Secretary, Federal Communications Commission, CC
    Docket Nos. 96-45, 02-6 (filed Jan. 8, 2007). Section 54.719(c) of
    the Commission's rules provides that any person aggrieved by an
    action taken by a division of USAC may seek review from the
    Commission. 47 C.F.R. § 54.719(c).

[^2]: 47 C.F.R. §§ 54.501-503.

[^3]: 47 C.F.R. § 54.523.

[^4]: *Federal-State Joint Board on Universal Service,* CC Docket No.
    96-45, Report and Order, 12 FCC Rcd 8776, 9036, para. 493 (1997)
    (*subsequent history omitted*) (*Universal Service First Report and
    Order*).

[^5]: *See* Letter from USAC, Schools and Libraries Division, to Mozes
    Greenfeld, United Talmudical Academy (dated Nov. 16, 1999).

[^6]: *See* Memo from Office of Inspector General, Federal
    Communications Commission, to Chairman, Federal Communications
    Commission (dated Jun. 7, 2004).

[^7]: *See* Request for Review at 3.

[^8]: *Id.* at 2-8.

[^9]: *See* Letter from USAC, Schools and Libraries Division, to Moses
    Greenfeld, United Talmudical Academy at 2 (dated July 5, 2007).

[^10]: *See* *id.*

[^11]: *See* Request for Review at Exhibits F-K.

[^12]: Additionally, nothing in this order is intended: (1) to authorize
    or require payment of any claim that previously may have been
    released by a service provider or applicant, including in a civil
    settlement or plea agreement with the United States; or (2) to
    authorize or require payment to any person or entity that has been
    debarred from participation in the E-rate program.

[^13]: *See Request for Review of the Decision of the Universal Service
    Administrator by Bishop Perry Middle School, Schools and Libraries
    Universal Service Support Mechanism,* File Nos. SLD-487170, *et
    al.*, CC Docket No. 02-6, Order, 21 FCC Rcd 5316 (2006).