20220405_jk1rq.pdf

DECISION MEMORANDUM
TO:COMMISSIONER ANDERSON
COMMISSION CHATBURN
COMMISSIONER HAMMOND
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:JOHAN E.KALALA-KASANDA
DAYN HARDIE
DATE:APRIL 1,2022
RE:2021 IDAHO TELEPHONE SERVICE ASSISTANCE PROGRAM (ITSAP)
ANNUAL REPORT;CASE NO.GNR-T-22-02.
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 not receiving the ITSAP credit.The Commission determines the uniform statewide monthly
surcharge,and the Idaho Department of Health 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 monthlydiscount of $2.50 to
eligible subscribers.Idaho Code §56-902(1).To be eligible for the ITSAP assistance,the
applicant must be the head of a household and meet narrowlytargeted eligibilitycriteria 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).
DECISION MEMORANDUM -1 -APRIL l,2022
The 2021 Annual Report
On February 15,2022,the Commission received the annual ITSAP report.In the report,as
illustrated in Table No 1 below,the program Administrator,Kathleen Toohill,reported a 6 %
decrease in local access lines compared to a decrease of 19 %the previous year 2020.The wireless
access lines decreased by 1%compared to a 30 %decrease in the year 2020.The number of
ITSAP credit recipients in 2021 was 113,880,which was 8 times higher than the 14,157 reported in
the previous year.A 704%increase.The gross surcharge revenue for the year was reported at $0
since the surcharge is suspended.
Table No.1:ITSAP Trend of Reported Monthly Data
Years 2017 2018 2019 2020 2021
Local %%
Access Lines Amount Amount Amount Amount Change Amount Change
Residential 1,805,334 1,525,716 1,302,666 1,198,146 1,003,491
Business 1,623,944 1,414,148 1,288,214 888,994 964,291
Total 3,429,278 2,939,864 2,590,880 2,087,140 -19%1,967,782 -6%
Wireless
Access 9,199,039 3,722,983 3,651,576 2,543,252 -30%2,523,243 -l%
Credit
Recipients 30,661 21,455 17,657 14,157 -20%113,880 704%
The average number of wireline access lines per month reported to the Administrator,for
both residential and business lines,was 163,981 compared to 173,928 in 2020,and the average
number of wireless access lines per month was 210,270 compared to 211,938 in 2020.Overall,
there was a decrease of approximately 11,615 in the total number of average monthlylines subject
to the ITSAP surcharge (374,251 lines per month compared to 385,866 in 2020).These numbers
are under reported due to a lack of wireless providers reporting line counts due to the surcharge
suspension.
The average number of reported ITSAP recipients per month in 2020 (1,180)increased by
almost 8 times in 2021 (9,466)per month or 113,600 per year.Telecommunications companies
received $284,000 in disbursements for ITSAP credits paid to eligible recipients compared to
$35,521.25 in 2020.Disbursements for company administrative costs were $34,998,an increase of
$26,105.38 from 2020.
DECISION MEMORANDUM -2 -APRIL l,2022
Throughout the year,ITSAP reimbursed companies for net monthlydiscounts provided to
eligible subscribers and costs of administering the program,so checks were written in the amount
of $318,998.The Administrator's fees and expenses were $10,289 for the year.The fund's cash
balance at the end of the year was reported at $839,112.87.
2022 Budget and Trends
The ITSAP Administrator projects the funding requirements for 2022 will increase for the
first time in years.There have been several new companies that have been granted access to
participate in ITSAP.The Administrator estimates that the ITSAP reimbursements to the
companies are approximately $205,855.The ITSAP Administrator expenses are projected to be
$18,000.
In order to establish the 2022 budget,the Administrator estimates that the number of access
lines subject to the surcharge will be approximately 370,508 per month and the average number of
ITSAP recipients will amount to approximately 6861 per month or 82,342 per year.Based on this
data,Ms.Toohill projects the funding requirement for 2022 will be approximately $223,000,and
the end-of-year 2022 balance is expected to be $616,113.
Administrator's 2022 FundingRecommendations
Ms.Toohill states that,during 2021,the number of credit recipients was almost 8 times the
previous reported year.Even with the increased participation,the Administrator recommends that
the surcharge rate continue to be suspended for an additional year,but that all companies must
report access lines to her during this period.The Administrator affirms that the fund balance
should prove sufficient for another year of the projected credit recipients,company administrative
costs,a four-year audit,and fund administration with about $223,000 estimated for the 2022
budget.The estimated balance for the end-of-year 2022 is projected to be $616,113.
STAFF ANALYSIS AND FUNDING RECOMMENDATION
Staff has reviewed the 2021 annual report,the proposed 2022 budget,and the funding
recommendation.Staff agrees with the Administrator's assessment and supports the
Administrator's recommendation to continue suspending the surcharge rates for all wireline and
wireless access lines for another year.Staff believes the fund balance will be sufficient to meet the
2022 expenses as well as provide for any unforeseen changes to the number of ITSAP recipients.
DECISIONMEMORANDUM -3 -APRIL l,2022
Thus,Staffrecommends that the Commission approve the Administrator's 2022 budget and
approve the recommendation to suspend the surcharge rates for calendar year 2022.Furthermore,
Staffrecommends the Commission direct all companies to report access line counts to the
administrator while the surcharge is suspended.Staffand the Administrator will continue to
monitor the number of recipients and make changes,if needed,if participation continues to
increase.
COMMISSION DECISION
Does the Commission wish to:
l.Accept the 2021 annual report and adopt the Administrator's 2022 budget;
2.Adopt the Administrator's recommendation to continue suspending the ITSAP
assessments for anotheryear;and
3.Direct all companies to report access line counts to the administrator while the
surcharge is suspended?
Johan E.Kalala-Kasanda
Udmemos/GNR·T-22-02 ITSAP Decision Memo
DECISIONMEMORANDUM -4 -APRIL 1,2022
ADMINISTRATOR'S REPORT
IDAHO TELECOMMUNICATIONS SERVICE
ASSISTANCE PROGRAM
YEAR ENDED -DECEMBER 31,2021
SURCHARGE REVENUES
The Idaho Telecommunications Service Assistance Program (ITSAP)surcharge is
assessed on all residential,business,and wireless end users not receiving the ITSAP
credit.Most companies actually remit net surcharge revenue,which is gross surcharge
revenue less any assistance credits provided to eligiblecustomers and the company's
administrative costs.The ITSAP surcharge rate remained suspendedduring 2021,and
no gross or net surcharge revenue was collected or deposited during the year ended
December 31,2021.
DISBURSEMENTS
ASSISTANCE CREDITS/COMPANYADMINISTRATIVE EXPENSES
Telecommunicationscompanies reported $284,000 in credits provided to eligible
subscribers,and reported $34,998 in costs for administration of the program for the year
ended December 31,2021.That comes to approximately9466 credit recipients per
month/113,600 per year.Throughoutthe year,ITSAP reimbursed companies for net
monthlydiscounts provided to eligiblesubscribers and costs of administering the
program,so checks were written in the amount of $318,998.
ADMINISTRATIVE FEES AND EXPENSES
Administrative fees and expenses paid during the year ended December 31,2021 were
$10,289.00.These expenses include fees and expenses paid to the current and past
Administrators,Alyson Anderson and Kathleen Toohill,in addition to bank fees of
$111.75 for the year.Those bank fees were negotiateddown to $0 in spring 2021.
INVESTMENTS AND FUNDS
CASH
As of December 31,2020,the Idaho Telecommunications Service Assistance Program
had a cash balance of $1,109,035.45 and then one year later closed with checks
clearing at $839,112.87.The followingis a table showingthe quarterly cash balances
for the year of 2021:
CASH BALANCE CASH BALANCE CASH BALANCE CASH BALANCE CASH BALANCE
12/31/20 3/31/21 6/30/21 9/30/21 12/31/21
$1,109,035.45 $1,096,319.78 $963,744.76 $947,067.24 $839,112.87
INTEREST
No interest was earned on funds during the year ended December 31,2021.
ADMINISTRATOR'S RECOMMENDATION
Currently,the surcharge rate is suspended,or $0.00 per access line and the assistance
credit amount is $2.50 per customer per month.Some companies report on a monthly
basis while some other companies report on a quarterly basis.During 2021,the number
of credit recipients was almost 8 times the previous reported year due to the company
providing free governmentbenefit phone service.
In 2012,the Idaho Departmentof Health and Welfare introduced legislationamending
Idaho Code §56-902.This legislationreduced the amount of the monthlyITSAP
assistance credit from $3.50 to $2.50.The impact of this legislationcombined with the
2012 fund balance indicated a need to reduce the surcharge rate,however there was a
cautious approach to reducing the surcharge rate for the followingreasons:1)The
unknown impact of wireless ETCs that had not begun marketing the ITSAP and Lifeline
discounts in Idaho;2)The long-term impact of the ITSAP database reconciliation;and
3)The possibility that some companies not currently requesting reimbursement of
program administrative costs may do so in the future.For the most part,these events
did not occur,making it unlikely that the current fund balance will be reduced.The
current fund balance indicates continued suspension of the ITSAP surcharge is
necessary.
During 2021,the fund balance declined $269,922.58.One company received the
majority of paymentsdue to all of their customers qualifying as credit recipients;this
company provides free governmentbenefit phone service plus the related company
fund administration costs.By the 4th Quarter,those paymentsstarted to level off.The
surcharge can continue to remain suspended for the next year,but I continue to
recommend that companies report access lines.Averagelines per month reported by
telecommunications companies were residentÍal at 83,62;business at 80,357;and
wireless 210,270;so predicted lines potentiallycould decrease by about 10%to
residential at 75,262;business at 72,321 and wireless of 189,243.The fund balance
remaining should prove sufficient for another year of the projected credit recipients,
company administrative costs,a 4-year audit,and fund administration with about
$223,000 estimated for the 2022 budget.December 2022 could realize an estimated
ending balance of $616,113.00 with approximately6,861 credit recipients estimated per
month and the related fund administration costs.
Credit Assistance Program Check Fund
recipients credit Admin Totals Admin.
Q1 2021 $28,017.00 $61,621.00 $8,320.00 $69,941.00 $3,317.00
Q2 2021 $46,650.00 $116,715.00 $13,132.00 $129,847.00 $2,262.00
Q3 2021 $4,807.00 $12,016.00 $2,236.00 $14,253.00 $2,424.00
Q4 2021 $37,744.00 $94,348.00 $11,310.00 $105,668.00 $2,286.00
2021 Total $117,218.00 $284,700.00 $34,998.00 $319,709.00 $10,289.00