The Universal Service Fund was established under 1993 Wisconsin
Act 496 to ensure that all state residents receive essential telecom-
munications services and have access to advanced telecommunica-
tions capabilities.
The Fund supports telecommunications services and access programs
that are provided by several state agencies,including the
Public Service Commission (PSC),the Technology for Educational
Achievement (TEACH)Board,the University of Wisconsin System,
and the Department of Public Instruction.It is funded through
assessments paid by telecommunications providers,which totaled
$22.3 million in fiscal year (FY)2001-02.
At the request of the PSC,we completed a financial audit of the
Universal Service Fund.Our audit report contains our unqualified
opinion on the Fund ’s financial statements and related notes for the
fiscal years ending June 30,2002 and 2001.
Educational Telecommunications Access Program
The largest program supported
by the Universal Service Fund is
the Educational Telecommunica-
tions Access Program,which
subsidizes new and existing data
lines and video links to public and
private K-12 schools,colleges,
public libraries,and others.The
program has been operated by the
TEACH Board.
In FY 2001-02,Educational Tele-
communications Access Program
expenditures were $11.7 million,
which was 61.9 percent of the
Universal Service Fund’s total
expenditures and transfers.
PSC-Operated Programs
Eight other programs supported
by the Universal Service Fund
help people with disabilities
acquire special telecommunica-
tions equipment,lessen the
financial effect of rate increases
on users,and serve low-income
individuals.These programs are
operated by the PSC.
Until recently,the PSC-operated
programs spent significantly less
than their budgets.However,
with the addition,expansion,and
promotion of these programs,
expenditures for their operation
and administration have increased.
During FY 2001-02, expenditures for PSC-operated programs included:
$1.6 million for the Telecommunications Equipment Purchase
Program,which provides financial assistance to help
persons with disabilities in acquiring special telecommunications equipment;
$1.5 million for the Lifeline and
Link-up America programs,
which provide support for
low-income individuals to
establish and receive basic
telephone services;
$275,000 for the Medical
Telecommunications Equipment Program,which awards
grants on a competitive basis to
nonprofit medical clinics or
public health agencies for the
purchase of medical telecommunications equipment;
$235,000 for the Access Program or Project by Nonprofit
Groups program,which provides grants to nonprofit
groups for programs or projects
that facilitate affordable access
to telecommunications and
information services;
$130,000 for the Public Interest
Pay Telephone Program,which
ensures that pay telephones
remain or are installed at
locations where there is a
public need;
$101,000 for the Rate Ceiling
Credit Program,which lessens
the financial effects of rapid
rate increases on users;
$850 for the Two-Line Voice
Carryover Program,which
provides a second telephone
line for hearing-impaired
customers for teletype service;
and
$200,000 for administrative expenses.
Under limits established in 2001
Wisconsin Act 16,the 2001-03
Biennial Budget Act,the assess-
ments that fund these programs
have been reduced to $5.0 million
in FY 2003-04 and $6.0 million in
FY 2004-05 and each year thereafter.
Lapses to the General Fund
In response to projected budget
deficits for the 2001-03 biennium,
several bills were enacted that
required state agencies to lapse
funds to the General Fund.A
total of $340,000 was lapsed from
the Universal Service Fund in
FY 2001-02,and $3,639,000 was
lapsed in FY 2002-03.
First,the 2001-03 Biennial Budget
Act required the Department
of Administration (DOA)to
recommend lapses from various
agencies to the General Fund total-
ing $18.8 million each year in both
FY 2001-02 and FY 2002-03. DOA ’s
recommendations included lapses
of $200,000 from the Universal
Service Fund in both years.
Second, 2001 Wisconsin Act 109
required the Fund to lapse another
$340,000 to the General Fund:
$140,000 in FY 2001-02, and
$200,000 in FY 2002-03.
Finally,subsequent budget adjustment legislation, 2003 Wisconsin
Act 1, required the Universal Service Fund to lapse another
$3,239,000 during FY 2002-03.
Following these lapses,the Universal Service Fund had a balance of
approximately $4.8 million as of June 30,2003.
New Budget Provisions
Under 2003 Wisconsin Act 33,the
2003-05 Biennial Budget Act,the
TEACH Board is eliminated and
administration of the Educational
Telecommunications Access
Program is moved to DOA.
Other Universal Service Fund –
related provisions in the 2003-05
Biennial Budget Act include:
shifting $4.2 million of public
school library aid payments
from general purpose revenue
(GPR)funding to the Universal
Service Fund for the 2003-05
biennium and allowing the PSC
to assess telecommunications
providers for the library aid
payments;and
specifying that public museums
are eligible for the Educational
Telecommunications Access
Program.