COMMENTS

A Notice of Availability of TD staff's draft resolution in this matter was mailed on July 24, 2001 to all telecommunications carriers, advising them of the availability of this draft resolution on the Commission's web site, www.cpuc.ca.gov, in accordance with PU Code Section 311(g). Hard copies of the draft resolution were mailed to the parties of record in R.98-09-005, I.95-01-020/021 on July 24, 2001. Comments received on a timely basis will be addressed by TD staff in this resolution.

FINDINGS

1) The Universal Lifeline Telephone Service (ULTS) program total budget from July 1, 2002 to June 30, 2003 (FY 2002-03) of $284,011,726 is reasonable.

2) The ULTS surcharge rate should be decreased to 1.25% from 1.45% for the FY 2002-2003.

3) The ULTS surcharge rate of 1.25% provides sufficient revenue to fund projected ULTS program expenses through June 30, 2003.

4) The ULTS surcharge rate of 1.25% will provide a sufficient reserve balance as of June 30, 2003.

5) For administrative efficiency, it is reasonable to allow all telecommunications utilities that are subject to the various public program surcharges to file concurrently revised tariff schedules in compliance with the resolutions and decisions revising these surcharges in accordance with the provisions of G.O. 96-A for the FY 2002-2003 on or before June 15, 2002. Such filings shall become effective July 1, 2002.

6) The Universal Lifeline Telephone Service - Trust Administrative Committee (ULTS-TAC) FY 2002-03 budget of $1,847,618 is reasonable.

7) A Call Center will aid the marketing efforts of the Universal Lifeline Telephone Service Marketing Board (ULTS-MB).

8) The ULTS-MB FY 2002-2003 budget proposal of $1.5 million for a Call Center is reasonable.

9) The total FY 2002-03 budget for ULTS-MB for FY 2002-2003 of $7,164,108 is reasonable.

10) In order to conform with the State Budget, the budget process requires changing the filing of proposed program budgets and surcharge levels on a fiscal year basis.

11) The ULTS program should file a proposed fiscal year 2003 - 2004 budget for Commission approval by or before June 1, 2002 (or the next business day if June 1 is not a business day).

THEREFORE, IT IS ORDERED that:

1) The Universal Lifeline Telephone Service (ULTS) program total budget from July 1, 2002 to June 30, 2003 (FY 2001-02) of $284,011,726 is adopted.

2) The ULTS surcharge rate of 1.25% is adopted, effective July 1, 2002, for FY 2002-03.

3) The 1.25% surcharge rate to fund the ULTS Program shall be applied to all surchargeable intrastate billings rendered on or after July 1, 2002. This surcharge rate shall continue until further revised by the Commission.

4) All telecommunications carriers who are required to collect the ULTS surcharge shall file revised tariff schedules by advice letters in accordance with the provisions of General Order 96-A for FY 2002-2003 on or before June 15, 2002. The advice letters shall become effective on July 1, 2002.

5) All telecommunications carriers who are required to collect the surcharges for the various public programs may concurrently file revised tariff schedules in compliance with the resolutions or decisions revising these surcharges by advice letters in accordance with the provisions of General Order 96-A for FY 2002-03 on or before June 15, 2002. The advice letters shall become effective July 1, 2002.

6) The Universal Lifeline Telephone Service - Trust Administrative Committee (ULTS-TAC) FY 2002-3 of $1,847,618 is adopted.

7) The Universal Lifeline Telephone Service Marketing Board (ULTS-MB) FY 2002-03 budget proposal of $1.5 million for a Call Center is adopted.

8) The total FY 2002-03 budget for ULTS-MB of $7,164,108 is adopted.

9) The ULTS program shall file a proposed fiscal year 2003 - 2004 budget for Commission approval by or before June 1, 2002 (or the next business day if June 1 is not a business day).

10) The Executive Director shall serve hard copies of the conformed resolution to all parties of record in R.98-09-005 and I.95-01-020/021.

This Resolution is effective today.

I hereby certify that this Resolution was adopted by the Public Utilities Commission at its regular meeting on August 23, 2001. The following Commissioners approved it:

WESLEY M. FRANKLIN Executive Director

Appendix A-1

	Universal Lifeline Telephone Service Trust - Administrative Committee
	Proposed And Adopted Budget for FY 2002-03
		Adopted	Proposed	Adopted
	Description	FY 2001-02	FY 2002-03	FY 2002-03
Personnel	Executive Director	$ 58,288	$ 53,681	$ 53,681
	Office Administrator	n/a	$ 50,850	$ 50,850
	Internal Auditor	$ 45,876	$ 45,762	$ 45,762
	Administrative Asst (was Recept/Secty)	$ 32,007	$ 35,000	$ 35,000
	Executive Assistant	$ 50,669	$ 0	$ 0
	Administrative Asst.	$ 40,541	$ 29,523	$ 29,523
	Project Manager - ULTSMB
	Administrative Asst. - ULTSMB
Personnel	Personnel (3.75 FTE)	$ 227,381	$ 214,816	$ 214,816
Taxes	FICA (Medicare/OASDI)	$ 17,397	$ 16,434	$ 16,434
	ETT	$ -	$ 72	$ 72
	SUI	$ 1,767	$ 1,440	$ 1,440
	WCI	$ 2,321	$ 2,686	$ 2,686
Benefits	Medical	$ 26,550	$ 30,254	$ 30,254
	Dental	$ 10,250	$ 7,644	$ 7,644
	Accidental Death	$ 752	$ 1,235	$ 1,235
	Long Term Disability	$ 977	$ 3,397	$ 3,397
	Pension	$ 26,148	$ 24,704	$ 24,704
Operating Exp.	Office Supplies	$ 3,777	$ 5,000	$ 5,000
	Publications/Subscriptions	$ 1,295	$ 1,386	$ 1,386
	Postage	$ 3,239	$ 3,475	$ 3,475
	Telephone	$ 4,856	$ 5,100	$ 5,100
	New Equip/Software/Service	$ 8,000	$ 8,700	$ 8,700
	Rent/Lease	$ 30,209	$ 36,000	$ 36,000
	Commercial Liability Ins.	$ 540	$ 575	$ 575
	Staff Training/Development	$ 2,698	$ 3,000	$ 3,000
	Employee Travel	$ 810	$ 1,200	$ 1,200
	Board Travel	$ 200	$ 200	$ 200
	Board Per Diem	$ 4,800	$ 4,800	$ 4,800
Advisory Svcs.	Legal Expenses	$ 3,150	$ 5,000	$ 5,000
	Investment Advisory	$ 30,000	$ 0	$ 0
	Professional Consultants	$ 15,000	$ 5,000	$ 5,000
	Audit/Accounting
	--Accountant/Bookkeeper	$ 6,194	$ 4,000	$ 4,000
	--Annual Financial Audit	$ 6,000	$ 8,000	$ 8,000
	--Compliance Audit	$ -	$ 500,000	$ 500,000
	--Carrier Audit	$ 500,000	$ 600,000	$ 600,000
	Board Insurance
	--D & O Insurance	$ 26,715	$ 28,500	$ 28,500
	--E & O Insurance	$ -	$ -	$ 0
Trust Svcs.	Trust Fees	$ 107,888	$ 0	$ 0
	SB 669 Estimated Pro-Rata Charges	$ 328,006	$ 325,000	$ 325,000
	Total Administrative Expense	$ 1,396,917	$ 1,847,618	$ 1,847,618

Appendix A-2

	Universal Lifeline Telephone Service - Marketing Board
	Proposed and Adopted Budget for FY 2002-03
		Adopted	Proposed	Adopted
	Description	FY 2001-02	FY 2002-03	FY 2002-03
Personnel	Executive Director	$ 24,981	$ 17,893	$ 17,893
	Office Administrator	n/a	$ 5,650	$ 5,650
	Internal Auditor	$ -	$ 2,408	$ 2,408
	Administrative Asst (was Recept/Secty)	$ -	$ -	$ -
	Executive Assistant	$ -	$ -	$ -
	Administrative Asst.	$ -	$ 12,652	$ 12,652
	Project Manager - ULTSMB	$ 53,344	$ 55,475	$ 55,475
	Administrative Asst. - ULTSMB	$ 40,543	$ 42,175	$ 42,175
Personnel	Personnel (3.25 FTE)	$ 118,868	$ 136,253	$ 136,253
Taxes	FICA (Medicare/OASDI)	$ 9,096	$ 10,423	$ 10,423
	ETT	$ -	$ 28	$ 28
	SUI	$ 822	$ 560	$ 560
	WCI	$ 1,196	$ 1,703	$ 1,703
Benefits	Medical	$ 13,950	$ 10,934	$ 10,934
	Dental	$ 4,250	$ 2,505	$ 2,505
	Accidental Death	$ 368	$ 723	$ 723
	Long Term Disability	$ 457	$ 2,862	$ 2,862
	Pension	$ 13,670	$ 15,669	$ 15,669
Operating Exp.	Office Supplies	$ 8,631	$ 11,167	$ 11,167
	Publications/Subscriptions	$ 5,394	$ 5,610	$ 5,610
	Postage	$ 6,473	$ 7,832	$ 7,832
	Telephone	$ 5,000	$ 5,700	$ 5,700
	New Equip/Software/Service	$ 5,500	$ 7,600	$ 7,600
	Rent/Lease	$ 12,947	$ 16,000	$ 16,000
	Commercial Liability Ins.	$ 221	$ 230	$ 230
	Staff Training/Development	$ 1,619	$ 2,400	$ 2,400
	Employee Travel	$ 7,500	$ 7,500	$ 7,500
	Board Travel	$ 23,500	$ 23,500	$ 23,500
	Board Per Diem	$ 32,400	$ 32,400	$ 32,400
Advisory Svcs.	Legal Expenses	$ 50,000	$ 50,000	$ 50,000
	Investment Advisory	$ -	$ -	$ -
	Professional Consultants	$ 30,000	$ 12,500	$ 12,500
	Audit/Accounting
	--Accountant/Bookkeeper	$ 5,000	$ 4,000	$ 4,000
	--Annual Financial Audit	$ 11,025	$ 8,000	$ 8,000
	--Compliance Audit	$ -	$ -	$ -
	--Carrier Audit	$ -	$ -	$ -
	Board Insurance
	--D & O Insurance	$ 12,000	$ 6,400	$ 6,400
	--E & O Insurance	$ 24,000	$ 31,609	$ 31,609
Trust Svcs.	Trust Fees
	Total Administrative Expense	$ 403,887	$ 414,108	$ 414,108
Marketing Exp.	Marketing Program	$ 5,000,000	$ 5,000,000	$ 5,000,000
	Call Center		$ 1,500,000	$ 1,500,000
	Market Research	$ 750,000	$ -	$ -
	Assessment	$ 200,000	$ 250,000	$ 250,000
	Total Marketing Expense	$ 5,950,000	$ 6,750,000	$ 6,750,000
	Total Budget:	$ 6,353,887	$ 7,164,108	$ 7,164,108

Appendix A-3

Universal Lifeline Telephone Service Trust - ULTS-AC and ULTSMB Combined
Proposed Budgets for FY 2002-2003
		Adopted ULTSAC	Adopted ULTSMB	Adopted Cumulative
	Description	FY 2002-2003	FY 2002-2003	FY 2002-2003
Personnel	Executive Director	$ 53,681	$ 17,893	$ 71,574
	Office Administrator	$ 50,850	$ 5,650	$ 56,500
	Internal Auditor	$ 45,762	$ 2,408	$ 48,170
	Admin. Asst (Recept/Secretary)	$ 35,000	$ -	$ 35,000
	Executive Assistant	$ -	$ -	$ -
	Administrative Asst.	$ 29,523	$ 12,652	$ 42,175
	Project Manager - ULTSMB		$ 55,475	$ 55,475
	Administrative Asst. - ULTSMB		$ 42,175	$ 42,175
Personnel	Personnel (7.0 FTE)	$ 214,816	$ 136,253	$ 351,069
Taxes	FICA (Medicare/OASDI)	$ 16,434	$ 10,423	$ 26,857
	ETT	$ 72	$ 28	$ 100
	SUI	$ 1,440	$ 560	$ 2,000
	WCI	$ 2,686	$ 1,703	$ 4,389
Benefits	Medical	$ 30,254	$ 10,934	$ 41,188
	Dental	$ 7,644	$ 2,505	$ 10,149
	Accidental Death	$ 1,235	$ 723	$ 1,958
	Long Term Disability	$ 3,397	$ 2,862	$ 6,259
	Pension	$ 24,704	$ 15,669	$ 40,373
Operating Exp.	Office Supplies	$ 5,000	$ 11,167	$ 16,167
	Publications/Subscriptions	$ 1,386	$ 5,610	$ 6,996
	Postage	$ 3,475	$ 7,832	$ 11,307
	Telephone	$ 5,100	$ 5,700	$ 10,800
	New Equip/Software/Service	$ 8,700	$ 7,600	$ 16,300
	Rent/Lease	$ 36,000	$ 16,000	$ 52,000
	Commercial Liability Ins.	$ 575	$ 230	$ 805
	Staff Training/Development	$ 3,000	$ 2,400	$ 5,400
	Employee Travel	$ 1,200	$ 7,500	$ 8,700
	Board Travel	$ 200	$ 23,500	$ 23,700
	Board Per Diem	$ 4,800	$ 32,400	$ 37,200
Advisory Svcs.	Legal Expenses	$ 5,000	$ 50,000	$ 55,000
	Investment Advisory	$ -	$ -	$ -
	Professional Consultants	$ 5,000	$ 12,500	$ 17,500
	Audit/Accounting
	--Accountant/Bookkeeper	$ 4,000	$ 4,000	$ 8,000
	--Annual Financial Audit	$ 8,000	$ 8,000	$ 16,000
	--Compliance Audit	$ 500,000	$ -	$ 500,000
	--Carrier Audit	$ 600,000	$ -	$ 600,000
	Board Insurance
	--D & O Insurance	$ 28,500	$ 6,400	$ 34,900
	--E & O Insurance	$ -	$ 31,609	$ 31,609
Trust Svcs.	Trust Fees	$ -		$ -
	SB 669 Costs	$ 325,000		$ 325,000
	Total Administrative Expense	$ 1,847,618	$ 414,108	$ 2,261,726
Marketing Exp.	Marketing Program	$ -	$ 5,000,000	$ 5,000,000
	Call Center	$ -	$ 1,500,000	$ 1,500,000
	Market Research	$ -	$ -	$ -
	Assessment	$ -	$ 250,000	$ 250,000
	Total Marketing Expense	$ -	$ 6,750,000	$ 6,750,000
	ULTS Carrier Claims			$ 275,000,000
	Total Budget:	$ 1,847,618	$ 7,164,108	$ 284,011,726

Appendix A-4

ULTS Surcharge Rate

The following are the historical ULTS surcharge rates since the inception of the program:

Beginning	Decision or Resolution	Rate
July 1, 1988	T-12093	4.0%
July 1, 1989	T-13071	2.5%
July 1, 1990	T-14081	3.4%
July 1, 1991	T-14081	3.0%
July 1, 1992	T-14960	4.0%
March 1, 1993	T-15221	5.0%
July 1, 1993	T-15322	6.0%
July 1, 1994	T-15558	6.0%
January 1, 1995	Decision 94-09-065	3.0%
January 1, 1996	T-15799	3.2%
January 1, 1997	T-15984	3.2%
January 1, 1998	T-16176	2.4%
January 1, 1999	T-16245	0.0%
January 1, 2000	T-16366	0.5%
January 1, 2001	T-16412	0.8%
June 1, 2001	T-16435	1.45%

Appendix A-5

ULTS Customers

The number of ULTS customers has grown steadily since 1987 and is estimated to reach 3.7??? million by December 31, 2001.

The following table illustrates the growth in ULTS customers:

	ULTS Customers
June 30, 1987	1,095,293
June 30, 1988	1,254,647
June 30, 1989	1,387,100
June 30, 1990	1,552,800
June 30, 1991	1,761,200
June 30, 1992	1,951,100
June 30, 1993	2,321,500
June 30, 1994	2,580,000
June 30, 1995	2,700,000
December 31, 1995	3,100,000
December 31, 1996	3,050,000
December 31, 1997	3,109,000
December 31, 1998	3,215,000
December 31, 1999	3,350,260
December 31, 2000	3,604,880 (projected)
December 31, 2001	3,704,448 (estimated)

APPENDIX B
ULTS Surcharge Analysis
		(A)	(B)
		Monthly	Year
1	Balance as of June 30, 2001		$ 107,210,650
2	Billing Base for FY 2001-02	$ 19,414,000,000
3	Revenue at 1.45% surcharge	23,458,583			Line 2 * 0.0145/12
4	Est. Claims (5/31/00 - 12/21/00)	22,821,492			Adopted Per Res. T-16435
5	Est. Admin. Exp. (5/31/00-12/31/00)	645,900			Adopted Per Res. T-16435
6	Total Disbursements (5/31/00 - 12/31/00)	23,467,392			Line 4 + Line 5
6a	Investment Income	305,841			Adopted Per Res. T-16435
7	Cash Flow (7/1/01-6/30/02)	297,032	3,564,388		Line 3 - Line 6 + Line 6a
					(Year = Col. A * 12 months)
8	Estimated Balance as of 12/31/00		110,775,038		Line 1 + line 7
9	Billing Base for FY 2002-03	19,487,690,000
10	Estimated Revenue at 1.25% Surcharge	0.01250
11		20,299,677			(Line 9 * Line 11)/12
12	Est. Claims (7/1/02 - 6/30/03)	22,916,667			Est. annual claims = $275,000,000
13	Est. ULTS-MB and ULTS-TAC	750,977			$9,011,726 for ULTS-TAC & ULTS-MB
14	Total Disbursements (7/1/01 - 6/30/02)	23,667,644			Line 20 + Line 21
14a	Investment Income	-			Assumed no investment income
15	Cash Flow (7/1/02 - 6/30/03)	(3,367,967)	(40,415,601)		Line 11 - Line 14 + Line 14a
					(Year = Col. A* 12 months)
16	Estimated Balance as of 6/30/03		$70,359,437		Line 8 + Line 15

STATE OF CALIFORNIA Gray Davis, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

July 24, 2001

To: All California Public Utilities Commission Certificated Telecommunications Carriers

The following draft Resolutions will be on the agenda of the Commission's August 23, 2001 meeting:

A) Draft Resolution T-16550 proposes the approval of the following:

· The California High Cost Fund-A program budget for July 1, 2002 to June 30, 2003 in the amount of $ 43. 250 million.

· The increase in the surcharge rate to 0.210% effective July 1, 2002 from the current surcharge rate of 0.20%.