Obligation to Pay
Applicants are required to pay the non-discount portion of the cost of the goods and services to their service provider(s). Service providers are required to bill applicants for this non-discount portion.
The Federal Communications Commission (FCC) in the First Report and Order (FCC 97-157, released May 8, 1997) stated that requiring applicants to pay their share would ensure efficiency and accountability in the program:
- “Requiring schools and libraries to pay a share of the cost should encourage them to avoid unnecessary and wasteful expenditures because they will be unlikely to commit their own funds for purchases they cannot use effectively. A percentage discount also encourages schools and libraries to seek the best pre-discount price and to make informed, knowledgeable choices among their options, thereby building in effective fiscal constraints on the account fund.”
The FCC in the Fifth Report and Order (FCC 04-190, released August 13, 2004) stated that all funds disbursed should be recovered for any funding requests in which the beneficiary failed to pay its non-discount share. The FCC concluded that a reasonable timeframe is 90 days after delivery of service:
- "Allowing schools and libraries to delay for an extended time their payment for services would subvert the intent of its rule that the beneficiary must pay, at a minimum, ten percent of the cost of supported services. Accordingly, the FCC clarified prospectively that a failure to pay more than 90 days after completion of service (which is roughly equivalent to three monthly billing cycles) presumptively violates its rule that the beneficiary must pay its share.”
FCC Form 470
– On the FCC Form 470, applicants certify as follows:
- "I acknowledge that support under this support mechanism is conditional upon the school(s) and/or library(ies) I represent securing access, separately or through this program, to all of the resources, including computers, training, software, internal connections, maintenance, and electrical capacity necessary to use the services purchased effectively. I recognize that some of the aforementioned resources are not eligible for support. I certify that I have considered what financial resources should be available to cover these costs."
FCC Form 471 – On the FCC Form 471, applicants certify as follows:
- "I certify that the entity I represent or the entities listed on this application have secured access, separately or through this program, to all of the resources, including computers, training, software, internal connections, maintenance, and electrical capacity, necessary to use the services purchased effectively. I recognize that some of the aforementioned resources are not eligible for support. I certify that the entities I represent or the entities listed on this application have secured access to all of the resources to pay the discounted charges for eligible services from funds to which access has been secured in the current funding year. I certify that the Billed Entity will pay the non-discount portion of the cost of the goods and services to the service provider(s)."
Secured access means that you can show that these funds are, or will be, part of your annual budget; or, if you are obtaining the funds from an outside source, that these funds have been promised to you. If you obtain these funds from an outside source, the funds must not come directly or indirectly from your service providers.
Some service providers and consultants offer to waive the non-discount portion, or to provide the applicant with a credit or with goods and services equivalent to the non-discount portion. It is a violation of program rules for service providers to waive or credit the applicant's share in any manner. Any special offers to reduce the price must be incorporated into the FCC Form 471 total pre-discount amount.
FCC Form 473 – On the FCC Form 473, Service Provider Annual Certification (SPAC) Form, service providers certify that they have billed the applicant for the applicant's non-discount portion:
- "I certify that the Service Provider Invoice Forms (FCC Form 474) that are submitted by this Service Provider contain requests for universal service support for services which have been billed to the Service Provider's customers on behalf of schools, libraries, and consortia of those entities, as deemed eligible for universal service support by the fund administrator."
Some service providers offer to help applicants locate grants to pay for their non-discount portion. Program rules do not restrict applicants from accepting grants from bona fide organizations, nor do they restrict service providers from attempting to help applicants obtain grants from such organizations, so long as the grants or organizations are independent of the service provider.