20170324Decision Memo.pdf

RE:
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DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSION RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM: GRACE SEAMAN
DATE: MARCH 23,2A17
2016IDAHO TELEPHONE SERVICE ASSISTANCE PROGRAM ANNUAL
REPORT; CASE NO. GNR-T-17-03.
BACKGROT.IND
Each year the Administrator of the ldaho Telecommunications Service Assistance Program
$TSAP) files a report detailing the activities and status of the program during the previous year and
submits a recommended budget for the next year. ITSAP provides eligible recipients with a
reduction in the cost of residential basic local exchange telephone seryice. Funds for the program
are raised through a surcharge on all end-user business, residential, and wireless access service
lines. The Commission determines the uniform statewide monthly surcharge and the ldaho
Department of Health and Welfare administers the program and grants limited federal"lifeline"
contributions to Idaho's low-income customers. Idaho Code $ 56-901(l). Idaho telephone
companies provide assistance in the form of a monthly discount of $2.50 to eligible subscribers.
Idaho Cade $ 56-902(l). To be eligible for the ITSAP assislance, the applicant must be the head of
a household and meet narrowly targeted eligibility criteria based solely on income or factors
established by the Department of Health and Welfare. Idaho Cade $ 56-903(l). To be eligible to
receive reimbursement for providing low-income benefits (ITSAP and the federal Lifeline
assistance), a company must be designated as an eligible telecommunications carrier (ETC) by a
state commission.4T C.F.R. $ 54.201(aXl).
THE 2016 AIYNUAL REPORT
In the annual report filed on March 8,2017, the ITSAP Administrator, Alyson Anderson,
reported a decrease in wireline access lines (177o), a decrease in wireless lines (2%), and a
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significant decrease in the number of ITSAP recipients (42%) from the previous year. The gross
surcharge revenue for the year was reported at$,235,421* $42,812 (187r) was assessed on
wireline services and $195,610 (82%) was assessed on wireless services. The Administrator
explains that ETCs remit net surcharge revenue, rvhich is gross surcharge revenue less any
assistance credits provided to eligible recipients and the ETC's administrative costs. Thus, net
surcharge revenue collected and deposited into the fund in 2016 totaled $201,503.
The average number of wireline access lines per month reported to the Administrator was
363,888 compared to 435,822 in 2015, and the average number of wireless access lines per month
was 1,384,720 compared to 1,414,763 in 2015. Overall, there was a decrease of approximately
101,976 in the total number of average monthly lines subject to tlre ITSAP surcharge (1,748,608
lines per month compared to 1,850,584 in 2015).
The average number of reported ITSAP recipients per month in 2016 (3,880) decreased by
42Yofram 2015 (6,693). Telecommunications companies received $126,830 in disbursements for
ITSAP credits paid to eligible recipiens compared to5226,245 in 2015. Disbursements for
company administrative costs were $23,235, a decrease from 2015 ($33,089).
The Administrator's fees and expenses were $8,827 for the year. The fund's cash balance
at the end of the year was reported at $1,354,852.
2OI7 BUDGET AND TRENDS
The ITSAP Administrator projects the funding requirements for 2017 will continue to
decrease. The Administrator estimates that the ITSAP reimbursements to the companies at
approximately $101,156. The ITSAP Administrator expenses are projected to be $20,925;
including a triennial audit and legal fees.
To establish the 2017 budget, the Administrator estimates that the number of access lines
subject to the surcharge rvill be approximately 1,725,778 per month and the average number of
ITSAP recipients will decrease to approximately 2,681 per month. Based on this data, Ms.
Anderson projects the funding requirement for 2017 will be approximately $122,081, and the end-
of-year balance is expected to be about $1,232,771
ADMINISTRATOR'S 2OI7 FUNDING RECOMMENDATIONS
Ms. Anderson states that there was another significant drop in credit recipients during 2016
and, and at the same time, the fund balance increased. The surcharge rate was reduced in 2015 to
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$0.01 per access line. Nonetheless, the decline in credit recipients has caused the fund to continue
to grow each year. This suggests another surcharge decrease is necessary. The Administrator,
however, states it is impractical to reduce the surcharge rate below $0.01 and instead, recommends
the rate be eliminated for calendar year 2017 for all wireline and wireless access lines. The
Administrator affirms that the fund balance will be more than sufficient to reimburse companies for
assistance credis provided, as well as maintain an adcquate balance for unexpected occurrences.
The estimated balance for the end-of-year 2017 is projected to be $1,090,000.
STAFF ANALYSIS AFID T'UNDING RECOMMENDATION
Staffhas reviewed the 2016 annual report, the proposed 2017 budget, and the funding
recommendation. Staffagrees with the Administrator's assessment that further reduction of the
surcharge rate is impractical and supports the Administrator's recommendation to suspend the
surcharge rates for all wireline and wireless access lines. Staffbelieves the fund balance will be
sufficient to meet the 2017 expenses as well as provide for any unforeseen changes to the number
of ITSAP recipients. Thus, Staffrecommends that the Commission approve the AdminisEator's
2017 budget and approve the recommendation to suspend thc surcharge rates for calendar year
20t7.
COMMISSTON DECISION
l. Does the Comrnission wish to accept the 2016 annual report and adopt the
Administrator's 201 7 budget?
2. Does thc Commission wish to adopt the Administrator's recommendation to suspend
the ITSAP assessments for calendar year 2017?
t/(n 6 (-o -:L Ctt+ AIL
Grace Seaman
Urlmcmos2016 ITSAP Annual Rcport dec mcmo
DECISION MEMORA}IDUM 3 MARCH 23,2017