§  54.507   Cap.

   (a) Amount of the annual cap. The annual funding cap on federal
   universal service support for schools and libraries shall be $2.25
   billion per funding year. All funding authority for a given funding
   year that is unused in that funding year shall be carried forward into
   subsequent funding years for use in accordance with demand. All funds
   collected that are unused shall be applied to stabilize universal
   service contributions in accordance with the public interest and
   consistent with § 54.709(b) for no more than three quarters, beginning
   with third quarter 2002. Beginning no later than second quarter 2003,
   all funds collected that are unused shall be carried forward into
   subsequent funding years for use in the schools and libraries support
   mechanism in accordance with the public interest and notwithstanding
   the annual cap.

   (1) Amount of unused funds. The Administrator shall report to the
   Commission, on a quarterly basis, funding that is unused from prior
   years of the schools and libraries support mechanism.

   (2) Application of unused funds. On an annual basis, in the second
   quarter of each calendar year, all funds that are collected and that
   are unused from prior years shall be available for use in the next full
   funding year of the schools and libraries mechanism in accordance with
   the public interest and notwithstanding the annual cap, as described in
   paragraph (a) of this section.

   (b) A funding year for purposes of the schools and libraries cap shall
   be the period July 1 through June 30.

   (c) Requests . Funds shall be available to fund discounts for eligible
   schools and libraries and consortia of such eligible entities on a
   first-come-first-served basis, with requests accepted beginning on the
   first of July prior to each funding year. The Administrator shall
   maintain on the Administrator's website a running tally of the funds
   already committed for the existing funding year. The Administrator
   shall implement an initial filing period that treats all schools and
   libraries filing within that period as if their applications were
   simultaneously received. The initial filing period shall begin on the
   date that the Administrator begins to receive applications for support,
   and shall conclude on a date to be determined by the Administrator. The
   Administrator may implement such additional filing periods as it deems
   necessary.

   (d) Annual filing requirement. Schools and libraries, and consortia of
   such eligible entities shall file new funding requests for each funding
   year no sooner than the July 1 prior to the start of that funding year.
   Schools, libraries, and eligible consortia must use recurring services
   for which discounts have been committed by the Administrator within the
   funding year for which the discounts were sought. The deadline for
   implementation of non-recurring services will be September 30 following
   the close of the funding year. An applicant may request and receive
   from the Administrator an extension of the implementation deadline for
   non-recurring services if it satisfies one of the following criteria:

   (1) The applicant's funding commitment decision letter is issued by the
   Administrator on or after March 1 of the funding year for which
   discounts are authorized;

   (2) The applicant receives a service provider change authorization or
   service substitution authorization from the Administrator on or after
   March 1 of the funding year for which discounts are authorized;

   (3) The applicant's service provider is unable to complete
   implementation for reasons beyond the service provider's control; or

   (4) The applicant's service provider is unwilling to complete
   installation because funding disbursements are delayed while the
   Administrator investigates their application for program compliance.

   (e) Long term contracts . If schools and libraries enter into long term
   contracts for eligible services, the Administrator shall only commit
   funds to cover the pro rata portion of such a long term contract
   scheduled to be delivered during the funding year for which universal
   service support is sought.

   (f) Date services must be supplied . The Administrator shall not
   approve funding for services received by a school or library before
   January 1, 1998.

   (g) Rules of priority. Administrator shall act in accordance with
   paragraph (g)(1) of this section with respect to applicants that file a
   Form 471, as described in § 54.504(c) of this part, when a filing period
   described in paragraph (c) of this section is in effect. Administrator
   shall act in accordance with paragraph (g)(2) of this section with
   respect to applicants that file a Form 471, as described in § 54.504(c)
   of this part, at all times other than within a filing period described
   in paragraph (c) of this section.

   (1) When the filing period described in paragraph (c) of this section
   closes, Administrator shall calculate the total demand for support
   submitted by applicants during the filing period. If total demand
   exceeds the total support available for that funding year,
   Administrator shall take the following steps:

   (i) Schools and Libraries Corporation shall first calculate the demand
   for telecommunications services, voice mail, and Internet access for
   all discount categories, as determined by the schools and libraries
   discount matrix in § 54.505(c). These services shall receive first
   priority for the available funding.

   (ii) Schools and Libraries Corporation shall then calculate the amount
   of available funding remaining after providing support for all
   telecommunications services, voice mail, and Internet access for all
   discount categories. Schools and Libraries Corporation shall allocate
   the remaining funds to the requests for support for internal
   connections, beginning with the most economically disadvantaged schools
   and libraries, as determined by the schools and libraries discount
   matrix in § 54.505(c) of this part. Schools and libraries eligible for a
   90 percent discount shall receive first priority for the remaining
   funds, and those funds will be applied to their requests for internal
   connections.

   (iii) To the extent that funds remain after the allocation described in
   § 54.507(g)(1) (i) and (ii), Schools and Libraries Corporation shall
   next allocate funds toward the requests for internal connections
   submitted by schools and libraries eligible for an 80 percent discount,
   then for a 70 percent discount, and shall continue committing funds for
   internal connections in the same manner to the applicants at each
   descending discount level until there are no funds remaining.

   Note to paragraph(g)(l)(iii): To the extent that there are single
   discount percentage levels associated with “shared services” under
   § 54.505(b)(4), the Administrator shall allocate funds for internal
   connections beginning at the ninety percent discount level, then for
   the eighty-nine percent discount, then for the eighty-eight percent
   discount, and shall continue committing funds for internal connections
   in the same manner to the applicants at each descending discount level
   until there are no funds remaining.

   (iv) If the remaining funds are not sufficient to support all of the
   funding requests within a particular discount level, Schools and
   Libraries Corporation shall divide the total amount of remaining
   support available by the amount of support requested within the
   particular discount level to produce a pro-rata factor. Schools and
   Libraries Corporation shall reduce the support level for each applicant
   within the particular discount level, by multiplying each applicant's
   requested amount of support by the pro-rata factor.

   (v) Schools and Libraries Corporation shall commit funds to all
   applicants consistent with the calculations described herein.

   (2) Rules of priority . When expenditures in any funding year reach the
   level where only $250 million remains before the cap will be reached,
   funds shall be distributed in accordance to the following rules of
   priority:

   (i) The Administrator or the Administrator's subcontractor shall post a
   message on the Administrator's website, notify the Commission, and take
   reasonable steps to notify the educational and library communities that
   commitments for the remaining $250 million of support will only be made
   to the most economically disadvantaged schools and libraries (those in
   the two most disadvantaged categories) for the next 30 days or the
   remainder of the funding year, whichever is shorter.

   (ii) The most economically disadvantaged schools and libraries (those
   in the two most disadvantaged categories) that have not received
   discounts from the universal service support mechanism in the previous
   or current funding years shall have exclusive rights to secure
   commitments for universal service support under this subpart for a
   30-day period or the remainder of the funding year, whichever is
   shorter. If such schools and libraries have received universal service
   support only for basic telephone service in the previous or current
   funding years, they shall remain eligible for the highest priority once
   spending commitments leave only $250 million remaining before the
   funding cap is reached.

   (iii) Other economically disadvantaged schools and libraries (those in
   the two most disadvantaged categories) that have received discounts
   from the universal service support mechanism in the previous or current
   funding years shall have the next highest priority, if additional funds
   are available at the end of the 30-day period or the funding year,
   whichever is shorter.

   (iv) After all requests submitted by schools and libraries described in
   paragraphs (g)(2) and (g)(3) of this section during the 30-day period
   have been met, the Administrator shall allocate the remaining available
   funds to all other eligible schools and libraries in the order in which
   their requests have been received by the Administrator, until the $250
   million is exhausted or the funding year ends.

   [ 62 FR 32948 , June 17, 1997]

   Editorial Note:   ForFederal Registercitations affecting § 54.507, see
   the List of CFR Sections Affected, which appears in the Finding Aids
   section of the printed volume and on GPO Access.