20160328_4937.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSION RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:GRACE SEAMAN
DATE:MARCH 24,2016
RE:2015 IDAHO TELEPHONE SERVICE ASSISTANCE PROGRAM ANNUAL
REPORT;CASE NO.GNR-T-16-03
BACKGROUND
Each year 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 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 service.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 Idaho
Department of 1-lealth and Welfare administers the program and grants limited federal “lifeline”
contributions to Idaho’s low-income customers.Idaho Code §56-901(1).Idaho telephone
companies provide assistance in the form of a monthly discount of $2.50 to eligible subscribers.
Idaho Code §56-9020).To be eligible for the ITSAP assistance,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 Code §56-903(1).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.47 C.F.R.§54.201(a)(1).
THE 2015 ANNUAL REPORT
In the annual report filed on March 3.2016,the ITSAP Administrator,Alyson Anderson,
reported an increase in wireline access lines of 2%,an increase in wireless lines (6%),and a
DECISION MEMORANDUM -I -MARCH 24,2016
significant decrease in the number of ITSAP recipients by 37%from the previous year.The
ITSAP reimbursements continued to drop in 2015 due to the withdrawal of ETC wireless service
providers and to the annual database reconciliation.The gross surcharge revenue for the year was
reported at $491,398 of which $124,936 (25%)was assessed on wireline sen’ices and $366,462
(75%)was assessed on wireless services.The Administrator explains that ETCs remit net
surcharge revenue,which 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
in 2015 totaled $398,971.
The average number of wireline access lines per month reported to the Administrator was
435,822 compared to 427,065 in 2014,and the average number of wireless access lines per month
was 1,414,763 compared to 1,329,112 in 2014.Overall,there was an increase of approximately
94,400 in the total number of average monthly lines subject to the ITSAP surcharge (1,850,584
lines per month compared to 1,756,177 in 2014).
The average number of reported ITSAP recipients per month in 2015 (6,693)decreased by
37%from 2014 (10,674).Telecommunications companies received 5226.245 in disbursements for
ITSAP credits paid to eligible recipients compared to $365,725 in 2014.Disbursements for
company administrative costs were $33,089,a decrease from 2014 (S51,979).
The Administrator’s fees and expenses were $18,011 for the year.The fund’s cash balance
at the end of the year was reported at S 1,278,348.
2016 BUDGET AND TRENDS
The ITSAP Administrator projects the funding requirements for 2016 will continue to
decrease.The Administrator estimates that the ITSAP recipient reimbursements to the companies
for 2016 will be approximately $148,230,and expenses are projected to be $38,950 for costs
associated with administration of the program—this includes the Administrator’s costs ($11,900)
and the telephone companies’administrative costs ($27,050).
To establish the 2016 budget,the Administrator estimates that the number of access lines
subject to the surcharge will be approximately 1,736,347 per month and the average number of
ITSAP recipients will be approximately 5,121 per month.Based on this data,Ms.Anderson
projects the funding requirement for 2016 will be approximately $208,361.
DECISION MEMORANDUM -2 -MARCH 24,2016
ADMINISTRATOR’S 2016 FUNDING RECOMMENDATIONS
Ms.Anderson slates that there was another significant drop in credit recipients during 2015
while the surcharge revenue increased.The surcharge rate was reduced in 2015 to $0.01 per access
line.The Administrator believes it is impractical to reduce the surcharge rate below S0.01 and,
therefore,recommends the rate be maintained at S0.01 per wireline and wireless access line.The
Administrator states that at this rate,the fund balance will be more than sufficient to reimburse
companies for assistance credits provided,as well as maintain an adequate balance for unexpected
occurrences.The estimated balance for the end-of-year 2016 is projected to be approximately
$1,090,000.
STAFF ANALYSIS AND FUNDING RECOMMENDATION
Staff has reviewed the 2015 annual report,the proposed 2016 budget,and the 2016 funding
recommendation.Staff agrees with the Administrator’s assessment that reducing the rate is
impractical and,therefore,supports the recommendation to maintain the surcharge rate at $0.01 per
access line.In addition,2016 changes by the Department of Health and Welfare in the ITSAP
enrollment process may encourage other wireless Lifeline-only ETCs to receive ITSAP assistance
credit by participating in the program.Staff believes this rate will maintain an adequate fund
balance as well as provide sufficient funding for any unanticipated changes in the program.Thus,
Staff recommends that the Commission approve the Administrator’s rate proposal and the 2016
budget.
COMMISSION DECISION
1.Does the Commission wish to accept the 2015 annual report and adopt the
Administrator’s 2016 budget?
2.Does the Commission wish to adopt the Administrator’s recommendation to maintain
the monthly ITSAP surcharge rate at S0.01 per access line?
Uderncrnos/2015 ITSAP An,,ual Report
2
race Seaman
DECISION MEMORANDUM -3-MARCH 24,2016