20070323Decision memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:MARCH 23, 2007
RE:2006 ANNUAL REPORT AND RECOMMENDATION FOR THE IDAHO
TELEPHONE SERVICE ASSISTANCE PROGRAM.
On March 3 , 2007, the Idaho Telephone Service Assistance Program (IT SAP)
Administrator, Alyson Anderson, filed the annual report for the fiscal year ending
December 31 , 2006. In general, 2006 was a more stable year for ITSAP. The growth in
number of recipients and the increase in the number of wireless lines were less significant.
Ms. Anderson reported gross revenues from surcharges of$1,198 653 of which $553 699 (46%)
was assessed on wire line local exchange services and $644 954 (54%) was assessed on wireless
services. Additional revenue for 2006 included u.S. Treasury notes redeemed for the amount of
$740 000 and accrued interest of$39 591. Reversing the sharp upward trend of the past, the
number of ITSAP recipients and the corresponding disbursements remained somewhat stable or
decreased slightly. Disbursement credits for eligible subscribers decreased by .8% to $1 323 371
and disbursements to telephone companies for administrative costs decreased by 1 % to $117 648.
During 2006, an average of 32 025 recipients per month received ITSAP support, a slight increase
of .13% from 2005. The ITSAP Administrator s fees and expenses were $8 939 for the year. The
fund's cash balance at the end of the year was reported at $344 043. u.S. Treasury notes for the
amount of $400 000 were purchased in 2006 with a maturity date of March 31 , 2007.
The average number of local access lines per month reported to the Administrator for 2006
increased by 4% to approximately 686 800 from 662 200. The reported number of wireless access
lines increased by almost 10% to approximately 855,400 from 775 000. The total number oflines
per month increased overall by nearly 105 000 (7%) to approximately 1 542 200 from 1 437 200.
DECISION MEMORANDUM MARCH 23 , 2007
REVISED 2005 REPORT
While reviewing the financial information for 2006, the Administrator discovered a data
entry error that occurred in December 2005. Corrections were made and she filed a revised report
for 2005 with the following changes:
Revised Items
Wireline Surcharges
Wireless Surcharges
Total Surcharge
$792 564
$785 054
577 618
2005
$797 052
$812 516
609 568
2005 Revised
ITSAP Credit Disbursements to Te1cos $1 334 639
Reimbursement of Telco Administrative Costs $119 258
334 650
$118 177
End of Year Cash Balance $218 918 $251 937
2007 BUDGET AND TRENDS
Ms. Anderson estimated the 2007 funds from access lines would remain stable, with
contribution from wireless lines increasing slightly and local access lines remaining static. Using
the December 2006 data, she reported the number of ITSAP recipients is expected to decrease by
approximately 5% to a monthly average of 30 237; the telephone company administrative costs are
estimated to be $124 887, an increase of approximately 6%; and, the ITSAP Administrator fees and
expenses are estimated to be $10 000, an increase of almost 12%. The expected increase in
telephone company administrative costs is due to more companies reporting costs that did not do so
in the past. Ms. Anderson s fees will increase due to a triennial audit that will occur during the
year. The projected funding requirement for 2007 is estimated to be $1,404 827.
ADMINISTRATOR'S RECOMMENDATIONS
Ms. Anderson believes adequate ITSAP funding will be supported by the current surcharge
rate of$.06 per line along with the 2006 end of year cash reserve and the U.S. Treasury investment
that will mature this year. She, therefore, recommends no changes to the ITSAP monthly rate for
2007. At this rate, the fund balance for the end of year is projected to be $461 545; an amount Ms.
Anderson believes will provide a reasonable four-month reserve balance.
DECISION MEMORANDUM MARCH 23 , 2007
STAFF RECOMMENDATION
Staff agrees with Ms. Anderson s assessment that the 2007 monthly ITSAP surcharge rate
should remain at the current $0.06 per line. In addition, the four-month reserve provides adequate
funding to adjust to potential demands on the program as a result of pending, as well as, possible
future Applications for ETC designation by wireless companies.
COMMISSION DECISION
Does the Commission wish to maintain the monthly Idaho Telephone Service Assistance
Program surcharge rate of$0.06 per line?
Jhav
Grace Seaman
i:udmemos/ITSAP 2006
DECISION MEMORANDUM MARCH 23 , 2007