WHEREAS, the Universal Service Administrative Company (USAC) is the administrator of the universal service programs authorized in the Telecommunications Act of 1996; and

WHEREAS, the Federal Communications Commission (FCC) has recently determined that the Anti-Deficiency Act, 31 U.S.C.S. §1341, is applicable to the funds administered by USAC; and

WHEREAS, the Anti-Deficiency Act prohibits officers or employees of the U.S. Government from authorizing the expenditure of funds that exceed the amount available in an appropriation, and prohibits the creation of a financial obligation before such appropriation is made; and

WHEREAS, the FCC has recently determined that the commitment letters issued by USAC’s School and Library Division and Rural Health Care Division, constitute immediate financial accounting obligations despite the fact that, in order to receive payments, beneficiaries of the School and Library and Rural Health Care programs must satisfy additional program requirements after the issuance of commitment letters; and

WHEREAS, USAC is now required to have unobligated funds available to back commitment letters instead of its prior sound practice of having funds available to cover invoices submitted by service providers; and

WHEREAS, a significant percentage of the dollars represented in School and Library and Rural Health Care commitment letters are never paid by USAC because of later failures by beneficiaries to qualify for full funding under program rules; and

WHEREAS, the FCC’s new accounting directives will have the effect of increasing USAC’s continuing cash reserves that are already well over $3 billion; and

WHEREAS, until the FCC’s recent accounting directives to USAC, the substantial lag between USAC’s receipt of USF contributions and ultimate payments to School and Library program beneficiaries has allowed the FCC to make the USF contribution factor more affordable for consumers, by USAC’s use of sound cash management practices; and

WHEREAS, as a result of the FCC’s new accounting directives requiring more funds to be available in order to avoid a violation of the Anti-Deficiency Act, USAC has been required to adopt a moratorium on all School and Library commitment letters since August 3, 2004 and expected to continue through November, 2004; and

WHEREAS, the FCC has recently determined that USAC’s previously approved mutual fund investments now constitute an existing “obligation” within the meaning of the Anti-Deficiency Act, thereby requiring USAC to divest all of its highest paying investments; and

WHEREAS, USAC’s new investment limitations will result in substantially reduced returns on over $3 billion in cash reserves, thereby requiring higher quarterly USF contribution factors; and

WHEREAS, the reasoning underlying the FCC’s new accounting directives could be made applicable to the High-Cost Support mechanisms administered by USAC; and

WHEREAS, it is doubtful that Congress intended to include the USF within the meaning of the term “appropriation”, as used in the Anti-Deficiency Act:

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Utility Consumer Advocates (NASUCA), urges Congress to enact legislation to exempt from the provisions of the Anti-Deficiency Act, all funds administered by USAC.

BE IT FURTHER RESOLVED, that the Telecommunications Committee of NASUCA, with the approval of the Executive Committee of NASUCA, is authorized to take all steps consistent with this Resolution in order to secure its implementation.


Approved by NASUCA:

Place:  Nashville, Tennessee

Date:            November 14, 2004