Cruz Hits USAC on 28% 2018-2023 Spending Increase; Gomez Eyes Hill USF Fix
Senate Commerce Committee ranking member Ted Cruz, R-Texas, latched on to a new Government Accountability Office report about the Universal Service Administrative Company’s handling of the Universal Service Fund to criticize the program’s spending and repeat his call for Congress to make USF subject to the federal appropriations process (see 2403060090). Democratic FCC Commissioner Anna Gomez, meanwhile, told us earlier this month that Congress must prioritize a legislative fix for the USF contribution mechanism after the 5th U.S. Circuit Court of Appeals' recent ruling that the current funding factor is unconstitutional (see 2407240043).
USAC’s “operating expenditures related to USF programs increased by 27.5 percent from 2018 through 2023,” GAO said in its report, released Thursday night. The “share of USF outlays going to USAC’s operating expenditures increased from 2.2 percent to 3 percent” during the same period. “Thus, USAC expended a larger share of USF outlays on its annual operations compared to two non-USF programs” -- the now-lapsed affordable connectivity program and emergency connectivity fund -- “that were subject to a 2-percent statutory cap.”
“USAC attributed the increase to replacing obsolete legacy systems and strengthening program integrity,” including efforts to “better combat waste, fraud, and abuse” within the Lifeline program at the FCC’s direction. USAC “incurred additional operating expenditures” to implement new Lifeline oversight requirements, including “increasing the number of staff working on the Lifeline program from 33 to 76; and with FCC approval, procuring an outside vendor to review Lifeline applications,” GAO said: “According to USAC, Lifeline programmatic outlays decreased during this period as well, as these program improvements removed or prevented ineligible participants from enrolling.”
Cruz said Friday that “these findings underscore my concerns about USF’s history of waste, fraud, and abuse, and the serious transparency and performance failures of” USAC. “The GAO report comes at a pivotal time in the debate over USF reform, especially with ongoing legal challenges, including the 5th Circuit Court’s recent ruling that the USF’s structure is an unconstitutional delegation of Congress’ taxing power,” Cruz said: “It’s time to reform the USF by subjecting it to the appropriations process, eliminating duplicative programs, and preserving only initiatives that deliver measurable benefits to American consumers.”
GAO noted positive developments in FCC oversight of USAC, but Cruz’s office suggested the findings prove that governance remains weak. GAO said, “In the last 6 years, USAC collaborated internally and with FCC to develop annual goals,” including those related to revamping USF processes, “and used them to establish performance targets." USAC also “developed plans with FCC input to help track its progress and modified these plans quarterly to respond to FCC feedback.”
GAO “found that USAC’s processes for managing its operating budget and expenditures align with selected FCC requirements.” Cruz’s office countered that the USAC board “has the final say in budget approvals -- with no modifications allowed without a two-thirds majority vote of a quorum of the board. Notably, the FCC does not have a seat on the USAC board, further limiting its influence over USAC’s decisions.”
Program Revamp Hopes
Gomez told us she’s “hopeful” U.S. Solicitor General Elizabeth Prelogar will seek a U.S. Supreme Court review of Consumers’ Research’s legal challenge to the USF contribution factor “now that we have a split” between the 5th Circuit’s ruling and earlier decisions in the 6th and 11th circuits that upheld the funding mechanism’s constitutionality (see 2312140058). That will give Congress "more urgency to act,” Gomez said: “There needs to be legislation without a doubt.” She wants lawmakers to ensure consumer costs don’t increase for those services, regardless of the contribution source.
Senate Communications Subcommittee Chairman Ben Ray Lujan, D-N.M., who co-leads a congressional USF revamp working group, is aiming for a fix making ACP and USF "sustainable for the long-term,” but “that’s going to take time to work through,” Gomez said. “But they’ve done some really great work that I hope continues and that the momentum continues.” Working group members are considering whether, and how much, the 5th Circuit’s ruling will affect their rollout of an overhauled framework (see 2407300053).
Gomez says it has been difficult for Congress to reach a deal to give ACP stopgap funding in FY 2024 (see 2408090041) because “the pay-for is always the challenge.” ACP backers are eyeing whether Senate leaders should prioritize an amended version of the Proper Leadership to Align Networks for Broadband Act (S-2238), which includes $7 billion in stopgap funding, instead of pursuing the Spectrum and National Security Act (S-4207), which also includes that money (see 2408220041).
The push Senate Commerce Committee Chair Maria Cantwell, D-Wash., is making for a compromise on S-4207 (see 2408150039) is “a very complex undertaking because of the desire to highlight individual bands that maybe other members of the Senate aren't very enthused about,” Gomez said. “I keep hoping they'll be able to put something out.” A legislative deal will also be crucial for fully funding the Secure and Trusted Communications Networks Reimbursement Program, “which is very necessary right now,” she said.