CPUC Issues California Teleconnect Fund Ruling

CPUC Issues California Teleconnect Fund Ruling

Nearly all nonprofit private schools will remain eligible for participation in the California Teleconnect Fund.

Following a series of delays extending over a three-month period, the California Public Utilities Commission (CPUC) has approved new administrative rules governing the California Teleconnect Fund (CTF).  The CTF enables schools (including nonprofit private schools), libraries, community colleges, health care providers, community-based organizations and other entities to receive discounts on certain telecommunications services, even if they already receive discounts through the federal “E-Rate” program. In 2015-16, the CTF will provide $148 million in discounts.PlugIn

The CPUC’s action ends a multi-year administrative rule making process that re-examined CTF goals, and considered structural reforms.  CAPSO became involved in the process last summer, after CPUC staff proposed adoption of a policy that would have radically revised private school eligibility requirements, which previously consisted of the following:

  • must be nonprofit
  • must be located in California
  • must provide instruction in any of grades K-12
  • must have an active CDS code
  • must have annual endowments of less than $50 million

Those criteria would have been recast by staff’s Proposed Rule 3.2a, which read as follows:

“Since endowments are not always the most appropriate indicator of a school’s need, staff proposes to eliminate the endowment cap for all schools, both public and private nonprofit.  For nonprofit private schools, the endowment cap would be replaced with a Free Reduced Meal Program (FRMP) participation rate of at least 40%.  All public schools would be categorically eligible, regardless of endowment or FRMP participation.”

As its rationale, staff asserted that, “By instituting the FRMP participation level for private nonprofit schools, the program will target the subsidy to the entities in most financial need, in line with the proposed goals.”  In response, CAPSO argued that the proposed rule was blatantly discriminatory on its face, and that in practice it would contradict its chief purpose.  Private schools with a higher incidence of students participating in the FRMP would be categorically excluded in favor of public schools with a lower incidence of such pupils.  Well resourced public schools located in affluent communities would continue to benefit while struggling private schools would be denied.  Finally, it was argued that private schools wishing to participate would become subject to an unfunded administrative mandate – one that would also impose new oversight obligations upon the CPUC.

CAPSO’s view prevailed.  In its decision, the CPUC held that:

“We are not persuaded that a change from the $50 million endowment cap to the new FRMP participation rate criteria is needed at this time. The $50 million endowment cap for private, non-profit schools is utilized by the Federal E-rate eligibility criteria. The E-rate application process is by itself complex and lengthy. It does not appear that a great deal would be gained by adding another layer of complexity for this category of Federal E-rate eligible participants. Therefore, we do not adopt CD Staff’s proposal to use the FRMP participation rate as an eligibility criteria for this category of potential CTF participants, but instead support mirroring the E-rate eligibility criteria for private non-profits.”

The ruling also rejected a staff proposal calling for the imposition of a one-year moratorium on new applicants.  Following changes to the structure of “E-Rate” discounts, the CPUC ruling will reduce or phase out discounts for voice services and data plans.  Unlike the new “E-Rate” provisions, however, the CTF will continue to fund discounts for allowable voice services utilized by schools (but not other program participants), to a total of 25 percent of costs net of “E-Rate” discounts.  Other eligible services will continue to qualify for discounts of 50% of costs net of “E-Rate” discounts, with a new proviso limiting the percentage received by schools to no more than the rate of their “E-Rate” discount.

Schools need not participate in the federal “E-Rate” program in order to qualify for CTF discounts.  Administrators will be happy to know that making application for CTF participation is much simpler than the E-Rate application process.  A CTF application form and accompanying instructions can be accessed, here.  At present, nearly 1,300 private schools participate.

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