Thursday, August 4, 2011

An Audit of the Universal Service Fund

Six Republicans, including the co-chairs of the Joint Committee on Finance, and four Democrats serve on the 2011-12 Joint Legislative Audit Committee.   Although it's not on the agenda, the members of the Wisconsin Library Association Library Development & Legislation Committee will discuss the potential impact of this report at an August 5th meeting.  I'll be interested to see if any of the Audit Committee members prepare a news release about the USF report.


Selected text, most of which shines a light on the shift of funding public library system aids from GPR (general purpose revenue) to USF (Universal Service Fund):

Letter to co-chairs Interim State Auditor Joe Chrisman.  Two programs—the Educational Telecommunications Access Program and Aid to Public Library Systems—represented nearly 80.0 percent of the USF’s FY 2009-10 program expenditures.

Page 3.  During the two-year period we audited, it funded programs that were managed by four state agencies: the Department of Administration (DOA), the Department of Public Instruction (DPI), University of Wisconsin (UW) System, and the Public Service Commission (PSC), which also establishes policies and procedures for the USF and is responsible for levying the assessments paid by telecommunications providers to fund USF programs.

Page 4. The USF has replaced GPR as the funding source for Aid to Public Library Systems.  The State of Wisconsin provided general purpose revenue (GPR) as aid to public libraries until 2003 Wisconsin Act 33 required the USF to fund a portion of that aid beginning in FY 2003-04. By FY 2008-09, the USF had become the sole funding source for the Aid to Public Library Systems program, which is managed by DPI. As shown in Figure 1, $16.2 million in Aid to Public Library Systems expenditures represented 38.7 percent of all USF program expenditures in FY 2009-10.

Page 6.  Provider assessment revenues increased 73.0 percent from FY 2008-09 to FY 2009-10.  Program expenditures did not increase significantly during the two-year period we reviewed. However, provider assessment revenues increased 73.0 percent, primarily because 2009 Wisconsin Act 28 also made the USF the sole source of funding for Aid to Public Library Systems and required the PSC to include that program’s FY 2008-09 and FY 2009-10 costs in telecommunications provider assessments for FY 2009-10. (It should be noted that program expenditures for Aid to Public Library Systems declined from $16.8 million in FY 2008-09 to $16.2 million in FY 2009-10.)

Page 7.  We estimate that the USF has paid DOA at least $4.3 million in excess fees that were subsequently lapsed to the General Fund.  (These 2007-09 and 2009-11 overpayments are, at minimum, a significant eyebrow-raiser, and the only area in the report where the auditors make a recommendation.)

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