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                                                           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-105791
Brooklyn, New York                 )
                                   )
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:  January 4, 2000               Released: January 7, 2000

By the Commission:

1.     This Order grants in part and dismisses in part the Letter of Appeal of United
Talmudical Academy, Brooklyn, New York (UTA), that was received by the Commission on
August 12, 1999.  UTA's Letter of Appeal seeks review of a decision of the Schools and
Libraries Division (SLD) of the Universal Service Administrative Company (USAC or
Administrator), dated July 14, 1999.  UTA seeks review solely with respect to SLD's denial of
UTA's request for funding of basic voice telephone service.  We remand UTA's application to
SLD for further determination with respect to UTA's request for funding of basic voice telephone
service.  Furthermore, we dismiss UTA's request for an opportunity to review SLD documents
pertaining to its application.
                           BACKGROUND
2.     Under the schools and libraries universal service support mechanism, eligible schools,
libraries, and consortia that include eligible schools and libraries, may apply for discounts on
eligible telecommunications services, Internet access, and internal connections.   In order to
receive discounts on eligible services, schools must file certain information with the
Administrator.  Specifically, the Commission's rules require that an applicant submit to the
Administrator a completed FCC Form 470, in which the applicant sets forth the school's
technological needs and the services for which it seeks discounts.  Once the school has signed a
contract for eligible services, it must file an FCC Form 471 application to notify the Administrator
of the services that have been ordered, the carrier with whom the school has signed a contract,
and an estimate of the funds needed to cover the discounted portion of the price of the eligible
services.
3.     On the FCC Form 470, among other things, applicants must attest that any support
they receive is conditional upon their "securing access to all of the resources, including
computers, training, software, maintenance, and electrical connections necessary to use the
services purchased effectively."  On the FCC Form 471, among other things, applicants must
certify that they have secured access to "to all of the resources, including computers, training,
software, maintenance, and electrical connections necessary to make effective use of the services
purchased as well as to pay the discounted charges for eligible services."  These certifications are
consistent with the requirements set forth in the Commission's May 8, 1997 Universal Service
Order.  In that order, the Commission stated that applicants for schools and libraries discounts
would be required to certify in their requests for services that "all of the necessary funding in the
current funding year has been budgeted and will have been approved to pay for the 'non-discount'
portion of requested connections and services as well as any necessary hardware, software, and to
undertake the necessary staff training required in time to use the services effectively . . . . "
4.     Administration of the schools and libraries support mechanism is the responsibility of
the Schools and Libraries Division (SLD) of USAC, under the oversight of the Schools and
Libraries Committee of USAC.  Under the rules adopted in the Commission's Eighth
Reconsideration Order, the Schools and Libraries Committee's functions include "development of
applications and associated instructions," "review of bills for services that are submitted by
schools and libraries," and "administration of the application process, including activities to ensure
compliance with Federal Communications Commission rules and regulations."  Thus, under the
Eighth Reconsideration Order, the Commission vested in the Schools and Libraries Committee
and the Schools and Libraries Division the responsibility for administering the application process
for the universal service support mechanism for eligible schools and libraries.  Moreover, under
the Commission's rules, it is the responsibility of SLD, subject to the oversight of the Schools and
Libraries Committee, to process and review each FCC Form 470 and FCC Form 471 filed with
SLD to ensure that the funding applicant is in compliance with applicable rules and regulations of
the Commission.
5.     On April 13, 1998, UTA filed with SLD an FCC Form 471, requesting funding of
various telecommunications and advanced services for Year 1 of the schools and libraries support
mechanism in the amount of approximately $3.4 million.  By correspondence dated January 13,
1999, SLD requested additional information from UTA regarding its application.  In particular,
SLD inquired about UTA's plans for making use of a high bandwidth network, UTA's plans for
staff training, apparent disparities between the number of personal computers that UTA had
acquired and planned to acquire and the capacity of UTA's planned network, and UTA's requests
for discounts on wireless service from multiple providers.  SLD's information request also
sought descriptions or diagrams of the placement and use of several network components listed in
Item 17 of UTA's application.  In response, UTA explained that it sought to give
teleconferencing capacity to each of its 542 classrooms, that most of its teachers would not
require more than 6-10 hours of formal training, and that it had signed long-term service contracts
with multiple wireless service providers at different times.  UTA's response also gave an account
of the placement and number of components listed in Item 17 of its funding application.  In its
Funding Commitment Letter, dated February 26, 1999, SLD denied UTA's request in its entirety. 
In support of its decision, SLD stated that, after careful review of the information UTA
submitted, SLD had determined that UTA had not secured access to all of the resources,
including computers, training, software, maintenance, and electrical connections, necessary to
make effective use of the services for which UTA sought discounts.
6.     On March 29, 1999, UTA filed with SLD a Letter of Appeal requesting review of
SLD's denial of funding with respect to certain items in its original FCC Form 471.  UTA's
Letter of Appeal to SLD indicated that, after reviewing its original FCC Form 471, UTA was
modifying its technology plan for the 1999-2000 funding year.  Furthermore, for the 1998-1999
funding year, UTA sought review only of SLD's denial of its requests for funding of:  (1) UTA's
existing telecommunications services; (2) a PBX system; and (3) two computer networks,
reducing the amount of UTA's request to $238,451.  In its Decision on Appeal, SLD again
denied UTA's remaining funding requests.  In support of its decision, SLD stated that its review
for necessary resources had not been not applied to individual funding request numbers (FRNs),
but rather to the entire funding application UTA submitted in its FCC Form 471.  After SLD
issued its Decision on Appeal, UTA requested additional information from SLD regarding its
denial of UTA's requests for discounts.  By letter dated August 9, 1999, SLD responded to
UTA's information request.  Specifically, SLD's response stated that its review indicated UTA's
application suffered from deficiencies in the areas of hardware, professional development,
software and maintenance, with the numbers submitted by UTA deviating by as much as 20
percent from SLD's projections of the resources necessary to make effective use of the services
for which UTA had requested discounts.
                     UTA'S LETTER OF APPEAL

7.     On August 12, 1999, UTA filed with the Commission a Letter of Appeal seeking
review of SLD's Decision on Appeal.  In this Letter of Appeal that is currently before us, UTA
limits its appeal solely to review of SLD's denial of funding of basic voice telephone service. 
UTA also requests that, prior to making a final determination on its appeal, the Commission give
UTA an opportunity to review all of SLD's records pertaining to UTA's application.
8.     In its Letter of Appeal to the Commission, UTA raises several objections to SLD's
Funding Commitment Letter and Decision on Appeal.  In particular, UTA objects to the denial of
UTA's application based on SLD's finding that UTA lacks the necessary resources to make
effective use of the services requested.  UTA deems this finding by SLD "perfunctory . . . [and]
without explanation."  UTA also objects to SLD's denial of UTA's entire funding request based
on a determination that a portion of UTA's application failed to meet the requirement of
necessary resources to make effective use of the services requested.  In support of its denial of
the entire funding request, SLD's Decision on Appeal states, "The necessary resources standard is
one that is applied against the entire application, not to individual Funding Request Numbers
(FRNs).  This policy is based on the concept that the application as a whole must pass scrutiny,
without regard to whether resources can be allocated differently to cover a portion of the
expenses."  UTA objects to this methodology as "patently unfair," regarding it as illogical that a
funding request under one Funding Request Number (FRN) could be denied because of problems
in another FRN on the same FCC Form 471, when the former FRN would have received funding
if it had been placed on a separate FCC Form 471.  UTA also contends that SLD's denial of
entire applications based on irregularities within individual FRNs is not based on any Commission
rule or regulation.
                         USAC'S LETTER
9.     On December 20, 1999, USAC filed with the Commission a letter commenting on
particular issues raised in UTA's Letter of Appeal and summarizing the method by which SLD
reviews applications for necessary resources in order "to ensure that the record before the
Commission is developed fully ."  In support of its authority to review funding requests for
necessary resources, generally, and of its method of performing such review, in particular, USAC
cites to the Communications Act of 1934, as amended, particular Commission orders and rules
implementing the schools and libraries support mechanism for eligible schools and libraries, as
well as the necessary resources certification contained in the Commission-approved FCC Form
471.  At the outset, USAC notes that section 254(h)(1)(B) of the Act limits discounts to
services provided in response to bona fide requests made for services to be used for educational
purposes.  According to USAC, the necessary resources certification requirement, as adopted by
the Commission and applied by USAC, is critical to achieving compliance with section
254(h)(1)(B) by helping to ensure that requests for discounted services are, in fact, bona fide
requests and that applicants can make use of those services for their intended educational
purpose.  USAC also points to the Commission's mandate that SLD take steps to curb waste,
fraud, and abuse of funds in the schools and libraries support mechanism.  USAC asserts that
reviewing applicants' necessary resources certifications constitutes SLD's primary means of
guarding against waste, fraud, and abuse of funds under the schools and libraries support
mechanism. 
10.    USAC defends the method by which SLD performs its necessary resources review
(i.e., reviewing the adequacy of support resources against the totality of an applicant's funding
requests and rejecting all funding requests in a given year where SLD finds inaccuracies or
deficiencies with respect to an applicant's necessary resources certification) as the only practical
way to give effect to the language of the Commission's rules and orders governing necessary
resources certifications.  According to USAC, performing the necessary resources review on an
FRN-by-FRN basis, in essence, would require SLD to "stand in the shoes" of the applicant. 
SLD would be put in this untenable position, USAC argues, by having to determine for the
applicant the particular funding requests for which the applicant has the necessary resources and
determine, thereby, how to allocate an applicant's available resources among particular funding
requests.  According to USAC, this would undermine the Commission's stated goal of allowing
applicants to determine the types of services they need and would "significantly expand" the work
and associated costs of administering the program.  
11.    Noting that the Schools and Libraries Committee of the USAC Board of Directors had
considered the question of whether support for basic telephone service should be provided where
an applicant had failed SLD's necessary resources review, USAC states that the Committee
concluded that all funding requests associated with that applicant should be denied.  Should the
Commission reverse this decision, USAC urges that the Commission provide an exception from
SLD's current necessary resources review procedure only with respect to basic telephone service
that is provided on a stand-alone (unbundled) basis and where the request appears under a
separate FRN, rather than as part of a grouping with other services under the same FRN. 
USAC notes that providing such an exception for applicant requests for basic telephone service
would not require SLD to substitute its judgment for that of the applicant or involve the same
level of entanglement in an applicant's technology plan as discussed above, insofar as applicants
requesting only discounted telephone service are not required under the current FCC Form 471 to
submit a technology plan.                                                                                                 
12.    Finally, USAC takes issue with UTA's characterization of SLD's necessary resources
review methodology as "patently unfair" to the extent that UTA's characterization is premised,
according to USAC, on UTA's misapprehension that a funding request under one FRN may be
denied because of necessary resources deficiencies in another FRN on the same FCC Form 471,
but the former FRN could have received funding if it had been placed on a separate FCC Form
471.  In response to UTA's assertion, USAC states that it is not SLD's practice to perform its
necessary resources review on an application-by-application basis (i.e., only with respect to those
FRNs listed together on the same FCC Form 471).  Rather, USAC states that it is SLD's
practice to consider concurrently all of an applicant's funding requests for a given funding year,
including those listed on different FCC Form 471s.  Under this concurrent review, SLD denies
all funding requests, including funding requests submitted on separate FCC Form 471s, if any of
an applicant's funding requests fails to pass SLD's review for necessary resources.
                          UTA'S LETTER
13.    In a letter dated December 27, 1999, UTA restates certain arguments raised in its
March 29, 1999 Letter of Appeal with SLD and its August 10, 1999 Letter of Appeal with the
Commission.   In addition, UTA comments on the December 20, 1999 USAC letter.  In
particular, UTA suggests that the policy adopted by the Schools and Libraries Committee of the
USAC Board, pursuant to which SLD denies the entirety of an applicant's funding requests where
a necessary resources certification is inaccurate and/or inadequate, is not mandated by the
Commission's rules, and harms the chances for funding of schools like UTA "whose annual
budget is met through fundraising efforts and philanthropic donations."  UTA also contends that
USAC's stated justification for its necessary resources review policy does not apply to the instant
Letter of Appeal, inasmuch as UTA seeks review only of the denial of its request for discounted
basic telephone service.   SLD should grant this request, UTA argues, given that doing so will
not require SLD to "step into the shoes" of UTA, and because UTA has demonstrated adequate
resources to support this service.         
                           DISCUSSION
14.    The necessary resources certification requires applicants to examine their technology
needs and available technological and budgetary resources before making funding requests, in
order to ensure that applicants will be able to make effective use of any discounted services they
receive.  We conclude that the review of these certifications by SLD to determine whether
applicants have the necessary resources to make effective use of the services that they request is
an integral part of SLD's responsibility for reviewing funding applications to ensure compliance
with statutory requirements and Commission rules.  We find that SLD's review of applicants'
necessary resources certifications also is an important means by which SLD implements the
Commission's directive to SLD to take steps to curb waste, fraud, and abuse in the schools and
libraries universal service support mechanism. 
15.    With one exception, we find that the method by which SLD performs its necessary
resources review, at the applicant level and applied against all of an applicant's funding requests
within a funding year, constitutes a reasonable application of the Commission's rules under the
schools and libraries support mechanism.  Our rules do not require SLD to perform its review of
necessary resources certifications at the individual funding request level.  The Commission's rules
require applicants to certify that "all of the necessary funding in the current funding year has been
budgeted and approved to pay for the 'non-discount' portion of requested connections and
services as well as any necessary hardware or software, and to undertake the necessary staff
training required to use the services effectively . . . ."  This certification does not distinguish
individual FRNs, but instead applies to "all of the necessary funding in the current funding year"
and to all of an applicant's "requested connections and services."  Upon Commission adoption of
this rule, an applicant reasonably should have expected that its necessary resources certification
would apply to all of the applicant's requested connections and services within a funding year and
that false or inaccurate certification by the applicant could jeopardize all of the applicant's funding
requests for that year.  Furthermore, in light of the thousands of applications that SLD must
review and process each year, we find that it is administratively appropriate to require an
applicant to be responsible for the accuracy and adequacy of the certifications it makes in support
of its request for discounted services.
16.    USAC correctly points out the potential problems inherent in performing a review for
necessary resources at the individual FRN level.  In order to perform such a review, SLD would
be required to determine the extent to which particular FRNs submitted in the same funding year
are or are not related to one another.  In effect, SLD would be required to determine which set of
discounted services an applicant would have requested had it been cognizant of the necessary
resources problems in the funding requests it actually made.  We find that SLD should not be
placed in a position of making such choices on behalf of applicants.  To do so would be contrary
to the policies and objectives underlying the schools and libraries support mechanism, under
which the Commission has determined that individual schools and libraries, not SLD, are best
positioned to determine their support needs in light of their particular technological capabilities
and educational needs.
17.    Finally, contrary to UTA's suggestion, we are satisfied by USAC's explanation that an
applicant cannot circumvent SLD's necessary resources review procedure simply by filing several
applications with a portion of its funding requests listed on each one.  As represented by USAC,
SLD's practice is to perform a review of all of an applicant's funding requests that are submitted
within a given funding year concurrently.  As a consequence, segregating individual funding
requests into separate FCC Form 471s would not cause particular funding requests to be
approved where SLD had found that the applicant had made an inaccurate or inadequate
necessary resources certification in connection with the applicant's submission of another FCC
Form 471. Thus, with one exception, we find that SLD's current practice of reviewing necessary
resources certifications constitutes a reasonable application of our rules and that SLD's necessary
resources review serves as an effective and reasonable implementation of our mandate that SLD
take steps to curb waste, fraud, and abuse.
18.    Notwithstanding our determination to uphold SLD's general practice of denying
funding for all requests where SLD determines that an applicant's certification is inaccurate or
inadequate, we find that a funding request for basic voice telephone service reasonably may be
considered in isolation from an applicant's other funding requests.  Specifically, the components
and resources needed to make effective use of basic telephone service (e.g., telephones) are
readily ascertainable and do not require a detailed or intimate knowledge of an applicant's overall
technology plan to determine whether the request is based on the reasonable needs and resources
of the applicant.  In fact, unlike applicants requesting discounts on all other eligible services,
applicants requesting discounts solely for voice telephone service are not required to submit a
technology plan in connection with such a request.  Thus, we find that separate consideration of
an applicant's request for discounted voice telephone service is warranted where the service is
requested on a stand-alone basis and is not bundled with other services within a single FRN.
19.    Thus, we find that the considerations weighing in favor of SLD's method of review do
not apply where individual FRNs seek discounts solely for basic voice telephone service. 
Accordingly, we find here that, unlike other types of funding requests, FRNs that seek discounts
solely for basic voice telephone service should not be rejected by SLD solely because another
funding request or set of funding requests submitted by the applicant within the same funding year
fails under SLD's review for necessary resources.  Therefore, we remand UTA's application to
SLD for further determination on the merits of any FRNs seeking discounts solely for basic voice
telephone service.  If SLD finds that UTA submitted individual FRNs seeking discounts solely for
basic voice telephone service, that such requests individually pass SLD's review for necessary
resources, and that such requests are otherwise in compliance with our rules and orders governing
the schools and libraries support mechanism, we direct SLD to fund those requests.
20.    To effectuate the decision above, it may be necessary to waive section 54.507(b)(2) of
the Commission's rules.  This rule section provides that schools and libraries may receive
discounts on nonrecurring services only through September 30, 1999.  If in the future UTA
requires relief from this deadline in order to implement nonrecurring services pursuant to this
Order, UTA will be able to obtain such relief under our order of December 28, 1999.  Under
that order, certain applicants granted Year One funding requests late in the funding year, or after
the funding year ended, pursuant to a favorable decision on a request for review may receive an
additional 180 days from the issuance of their new funding commitment letter to implement
nonrecurring services.
21.    In its Letter of Appeal to the Commission, UTA also requests that it be given an
opportunity to review "all the records of the SLD as they specifically pertain to the UTA's
application . . . ."  In light of UTA's currently limited funding request and the Commission's
remand of UTA's application to SLD for further determination on the merits of UTA's requests
for discounts on its basic voice telephone service, UTA's request for review of SLD's records is
moot.  We, therefore, dismiss UTA's request for an opportunity to review SLD records pertaining
to UTA's funding application.
                        ORDERING CLAUSE

22.    Accordingly, IT IS ORDERED, pursuant to sections 1-4, and 254 of the
Communications Act of 1934, as amended, 47 U.S.C.  151-154 and 254, and sections 54.719
and 54.722 of the Commission's rules, 47 C.F.R.  54.719 and 54.722, that the request for
review filed on August 12, 1999, by the United Talmudical Academy of Brooklyn, New York, IS
GRANTED IN PART and DISMISSED IN PART and United Talmudical Academy's application
IS REMANDED to the SLD for further consideration in light of this decision.

                              FEDERAL COMMUNICATIONS COMMISSION
                              
                              
                              
                              Magalie Roman Salas
                              Secretary