An accounting change that resulted in loss of money in the Univer...

legislative action to solve the problem. “The entire portfolio of federal programs supported by the… USF, including its premiere high-cost program, is facing a politically perilous situation as a result of a recent accounting modification mandated by the… FCC,” NTCA CEO Michael Brunner wrote. Subjecting the high-cost and related low-income programs to the Anti-Deficiency Act (ADA) would “either skyrocket the contribution factor to 25% or more, or… rural telephone companies could be bankrupted should support payments be withheld in order to avoid such an escalation,” the letter said. The letter was sent to House and Senate leadership as well as the chmn. and ranking minority member of Commerce and Appropriations committees in both houses. NTCA followed up with a letter Fri. to FCC Chmn. Powell, urging the agency’s support for Hill efforts. NTCA told Powell it was in discussions with members of Congress about a solution “but your leadership is critical.” NTCA said in a news release that it has been working “with a broad coalition of private as well as public interests as this situation unfolds in an effort to prevent any harm to the high-cost program.” Required changes in the accounting practices of the Universal Service Administrative Co. (USAC) have resulted in a loss of money and disrupted USAC’s procedures for funding schools, libraries and possibly rural telephone companies. Recipients of universal service funding are particularly concerned about an ADA requirement that USAC can’t make “commitments” to provide funding unless the funds are in hand, which appears to conflict with the way some USF funds are provided. Recipients say the changes could result in higher contribution costs by carriers, which would be passed onto consumers, or serious disruptions to universal service programs. Spearheaded by outside members of USAC’s board, organizations such as NTCA are seeking legislation to exempt USAC from the ADA. Brunner’s letter said Sens. Snowe (R-Me.) and Rockefeller (D-W.Va.) “are engaged in discussions with the FCC chairman and others to develop a legislative solution to this dilemma.” Meanwhile, the USAC has issued its projected “demand” figures for first quarter 2005, which the FCC will use to determine a contribution percentage “factor” in Dec. Based on the USAC filing, a number of parties are estimating the factor could raise to around 12.74% from the current 8.9% due to the accounting changes. Legg Mason said in a report Fri. that it thinks “Congress will be very interested in a permanent legislative fix, possibly during this month’s lame-duck session.” The goal is a rider to the appropriations bill, but it’s possible Congress will settle for a continuing resolution and not pass the appropriations bill this year, the analysts said.