20250423Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMISSIONER LODGE
COMMISSION HAMMOND
COMMISSIONER HARDIE
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM: JOHAN E. KALALA-KASANDA, COMMISSION STAFF
CHRIS BURDIN,DEPUTY ATTORNEY GENERAL
DATE: APRIL 23, 2025
RE: 2024 IDAHO TELEPHONE SERVICE ASSISTANCE PROGRAM ("ITSAP")
ANNUAL REPORT; CASE NO. GNR-T-25-04.
BACKGROUND
Annually, in February, the Administrator of the Idaho Telecommunications Service
Assistance Program ("ITSAP") files a report detailing the activities and status of the program
during the previous year. The Administrator of the program determines the funding requirements
for the following year and submits a recommended budget with the annual report.
ITSAP provides eligible recipients with a reduction in the cost of a residential basic local
exchange telephone service. Funds for the program are raised through a surcharge on all end-user
business, residential, and wireless service lines not receiving the ITSAP credit. The Commission
determines the uniform statewide monthly surcharge, and the Idaho Department of Health and
Welfare ("IDHW") administers the program and grants limited federal "lifeline" contributions to
Idaho's low-income customers. Idaho Code § 56-901(1). Idaho telephone companies assist in the
form of a monthly discount of $2.50 to eligible subscribers. Idaho Code § 56-902(1). To be
eligible for ITSAP assistance, the applicant must be the head of a household and meet the
eligibility criteria, which are based solely on income or factors established by IDHW. Idaho Code
§ 56-903(1). To receive reimbursement for providing low-income benefits (ITSAP and federal
lifeline assistance), a company must be designated as an Eligible Telecommunications Carrier by a
state commission. 47 C.F.R. § 54.201(a)(1).
In 2012, IDHW introduced legislation amending Idaho Code § 56-902. The legislation
reduced the amount of the monthly ITSAP assistance credit from $3.50 to $2.50. The ITSAP
DECISION MEMORANDUM - 1 - APRIL 23, 2025

surcharge rate of$0.01 per access line remained suspended during 2023, while there was no gross
or net surcharge revenue collected or deposited during the year ending December 31, 2023. The
ITSAP surcharge rate suspension was initially made by Commission Order No. 33732 in Case No.
GNR-T-17-03, on March 29, 2017, with an effective date of May 1, 2017. This suspension was
made subject to subsequent annual budget reviews by the Commission. On May 1, 2024, the
Commission reinstated the surcharge rate of$0.05 per access line by Commission Order No. 36180
in Case No. GNR-T-24-03.
THE 2024 ANNUAL REPORT
On February 19, 2025, the Commission received the annual ITSAP report from the Program
Administrator, Ms. Kathleen Toohill ("Administrator").
In the report, as illustrated in Table No. 1 below, the Administrator reported the total
number of local access lines using the program was 2,468,358 compared to 1,574,726 reported in
2023, which is an increase of 893,632 access lines. The total reported wireless lines in use was
8,973,226 compared to 1,769,513 in 2023, which is an increase of 7,203,713 wireless lines. There
were 89,508 ITSAP credit recipients in 2024, compared to 93,325 reported in 2023, representing a
decrease of 3,817. The Administrator reported 14,213 unspecified access lines in 2024. The net
surcharge revenue for 2024 was reported at $522,684, and the surcharge rate was reinstated on May
1, 2024.
Telecommunications companies received $223,770 in disbursements of ITSAP credits paid
to eligible recipients in 2024, compared to $233,312.50 reported in 2023. Expenditures for
company administrative costs of the program were $33,495.01 in 2024, which is an increase from
the $26,240.65 reported in 2023.
The Administrator reported that during 2024, ITSAP reimbursed companies with a total of
$250,010.65 compared to the $259,053.45 reported for 2023, for net monthly discounts provided to
eligible subscribers and costs of administering the program. The Administrator's fees and expenses
were $9,152.40 in 2024. The December 31, 2024, year-end fund's cash balance was reported at
$633,525.91.
DECISION MEMORANDUM - 2 - APRIL 23, 2025

Table No. 1: ITSAP Program Trend of Annual Reported Data
Years Year 1: Year 2: Year 3: Year 4: Year 5:
2020 2021 2022 2023 2024
Local Access Lines Amount Amount Amount Amount Amount
Residential 1,198,146 1,003,491 976,314 902,553 1,888,914
Business 888,994 964,291 769,421 672,173 579,444
Total 2,087,140 1,967,782 1,745,735 1,574,726 2,468,358
Wireless Access 2,543,252 2,523,243 2,797,830 1,769,513 8,973,226
Unspecified Access
Lines 10,899 14,213
Total Lines 4,630,392 4,491,025 4,543,565 3,355,138 111455,797
Credit Recipients 14,157 113,880 80,604 93,325 89,508
2025 BUDGET AND TRENDS
The ITSAP Administrator is projecting that the funding requirements for 2025 will be met.
The Administrator stated that during 2024, the fund balance increased by $298,714.01 due to the
surcharge being reinstated on May 1, 2024, at the rate of $0.05 per line. Prior to May 2024,
wireless lines were reported as zero for several companies until the surcharge was reinstated. If the
number of customers, recipients, and fund administration were to remain the same for 2025 as
2024, then the fund balance will continue to increase. There are several new telecommunication
companies that have been granted access to participate in the ITSAP program since 2020. The
Administrator estimates the ITSAP disbursements will be approximately $223,770, with projected
expenses of$42,695.011. The estimated expenses are composed of$9,200 for the Administrator's
salary and estimated bank charges; $10,000 for four years of auditor fees; and $33,495.01 for
program administration costs.
For the 2025 budget, the Administrator estimates the average number of access lines subject
to the surcharge will be approximately 11,455,7997 per year and the average number of ITSAP
recipients will amount to approximately 89,508 per year. Based on this data, the ITSAP
Administrator projects that the funding requirement for 2025 will be approximately $266,465.01,
and the end-of-year 2025 balance is expected to be $934,450.21.
' This amount and its breakdowns are shown in the ITSAP 2024 AR Worksheet—attached to the 2024 ITSAP Annual
Report.
DECISION MEMORANDUM - 3 - APRIL 23, 2025

ADMINISTRATOR'S 2023 FUNDING RECOMMENDATIONS
The Administrator recommends that the surcharge rate be decreased from $0.05 to $0.03.
The Administrator contends that when evaluating the annual income versus the outgoing expenses,
a charge of $0.03 per line could be a more stabilizing rate. This rate would bring the annual
income closer to expected annual expenses, which have ranged between $235,000-$320,000 over
the last four years.
STAFF ANALYSIS AND FUNDING RECOMMENDATION
Staff has reviewed the 2024 annual report, the proposed 2025 budget, and the funding
recommendation. Staff agrees with the Administrator's assessment that a further reduction of the
surcharge rate is practical and supports the Administrator's recommendation to reduce the
surcharge rates for all wireline and wireless access lines.
Staff agrees with the Administrator's evaluation of the annual income versus the outgoing
expenses and the recommendation to decrease the surcharge rate from the newly reinstated $0.05 to
$0.03 per access line. Table 2 below shows the historical cost of the fund over the last four years
when the surcharge rate was suspended. The average annual expenses over the last four years have
ranged between $235,000-$320,000. Staff believes the fund balance will be sufficient to meet the
2025 expenses as well as provide for any unforeseen changes to the number of ITSAP recipients.
Thus, Staff recommends that the Commission approve the Administrator's 2025 budget and
approve the recommendation to reduce the surcharge rates for the calendar year 2025.
Table 2. Historical Data
Years 2021 2022 2023 2024
Customers/credit recipients 113,880 80,604 93,325 89,508.00
Assistance Credits 284,700 201,510 233,313 223,770
Company Administration 34,998 24,809 26,241 33,495.01
Fund Administration 10.829 9,143 9152.4 9,135.60
Total costs 319,709 235,462 268,706 266,401
DECISION MEMORANDUM - 4 - APRIL 23, 2025

COMMISSION DECISION
1. Does the Commission wish to accept the 2024 ITSAP annual report and adopt the
Administrator's 2025 budget?
2. Does the Commission wish to adopt the Administrator's recommendation to set the
ITSAP program surcharge rate at $0.03 per access line, effective May 1, 2025, until the next annual
budget review?
3. Does the Commission wish to direct all companies to report access line counts to the
Administrator?
4. Anything else?
{I
oh E. Kalal Kasanda
Commission Staff
I:\Uti1ity\UDMEM0S\GNR-T-25-04 Decision Memo.doc
DECISION MEMORANDUM - 5 - APRIL 23, 2025