III. Income-Based Eligibility Requirements

The Lifeline/Link-Up Order added an income-based criterion for participation in Lifeline/Link-Up in federal default states, if the ETC customer's household income is at or below 135% of the Federal Poverty Guideline. Each ETC must certify, under penalty of perjury, that a customer is qualified for Lifeline/Link-Up based on: 1) Customer self-certification, under penalty of perjury, of his/her qualification, and 2) Income document(s) supporting the income level of the customer.

ETCs in states that do not mandate state Lifeline support must implement certification procedures to document consumer income-based eligibility for Lifeline as a part of the consumer's enrollment process. This OIR was issued to address this issue since California does not currently require documentation of income-based eligibility.

The OIR asked parties to comment on whether the Commission should adopt an income certification program. Several parties (AT&T, Blue Casa, Cox, Fones4All, NECA, ORA, SBC, and TURN) support implementation of an income certification program, although they do not agree on how it should be structured.

LIF declares the program is too costly and suggests that the Commission seek a waiver of the requirement from the FCC. Both LIF and Greenlining prefer to retain the current system of self-certification. LIF suggests that the Commission should seek a waiver from the FCC for a defined period while it is ascertained how the ULTS program will be funded for the long term. LIF's suggestion is not viable. The FCC addresses the use of self-certification as follows:


...states that operate their own Lifeline/Link-Up programs should maintain the flexibility to develop their own certification procedures other than self-certification, including acceptable documentation to certify consumer eligibility under an income-base criterion.8

While LIF/Greenlining's proposal to retain the current system of self-certification is admirable, such a proposal would put over $300 million of federal funding in jeopardy. As demonstrated above, the FCC specifically eliminates self-certification as an acceptable method of certification so Greenlining's proposal to seek a one-year extension to fashion a study to determine the impact of replacing the current self-certification process with an income documentation requirement will not help us to meet the FCC's requirement.

Greenlining suggests that the California Public Utilities Commission (CPUC) devise a creative strategy that will allow for self-certification without jeopardizing the Commission's receipt of federal funding. Greenlining believes that a certification program would disproportionately impact California's most vulnerable consumers, such as undocumented immigrants, limited-English speakers, the poor, and other underserved communities. While Greenlining encourages the Commission to "work diligently to avoid losing eligibility for continued federal funding," it makes no concrete proposal for how to accomplish that. Nor has any other party provided a concrete proposed for alternative ways to retain federal funding.

SBC states the obvious, if the Commission loses the $330 million in federal support, it will have to either increase surcharges paid by consumers or decrease benefits. SBC opines that neither option is palatable considering the funds available through the federal Lifeline/Link-Up programs. We agree. Also, as SBC states, those parties who oppose these changes have failed to offer any acceptable way to compensate for the lost federal revenues.

We therefore adopt income-based eligibility requirements. This will enable us to comply with the FCC's Order and retain state eligibility for federal Lifeline/Link-Up funds.

Blue Casa and Fones4All propose that income certification apply only to the ETCs, since non-ETCs do not receive federal monies. Instead, they receive the full reimbursement from the state's ULTS fund. Therefore, they assert it is not necessary for them to institute any form of income certification.

A number of parties (Cox, ORA, SBC, Surewest, Small LECs, and TURN) express concerns that if we allow non-ETCs to continue to operate under the current rules, it could undermine the Lifeline program and violate the law. While LIF does not take a position on the issue, it finds it troubling for there to be separate universal service rules for different carriers because customers will not understand the distinctions and will be adversely affected in the process. These parties point to the fact that that ULTS-eligible consumer lucky enough to live in an area served by a non-ETC would be able to enroll in the program without proper documentation.

This would disturb the competitively neutral system designed in Decision 96-10-066, which structured the present ULTS program. ETCs would face a higher burden for securing ULTS benefits for their customers. Verizon states that non-ETCs would have a competitive advantage by marketing themselves as a "no hassle" way to obtain ULTS. Cox and Surewest/Small LECs point to Pub. Util. Code § 871.5 which reads as follows:


[T]he commission, in administering the lifeline telephone service program, should implement the program in a way that is equitable, nondiscriminatory, and without competitive consequences for the telecommunications industry in California.

We find that allowing non-ETC CLECs to comply with a lower standard for eligibility while ETCs are required to comply with a higher standard would be inequitable and discriminatory. This special treatment of non-ETCs also violates PU Code requirements. Therefore, we conclude that the income certification program we are adopting here will apply to both ETCs and non-ETCs. However, we recognize that some non-ETCs have been rigorous in their outreach to underserved communities, and we urge them to continue to do so. Fones4All describes its innovative outreach work in which the company works cooperatively with Community Based Organizations (CBOs) and state and local agencies that provide services to eligible populations and asserts that the company has been extremely effective in identifying and enrolling eligible customers. Nothing in this order precludes Fones4All from continuing its outreach efforts and hopefully it will continue to reach out to under-served communities.

In its Opening Comments, TURN asked the assigned Administrative Law Judge (ALJ) to provide information on what the impact would be to the California ULTS surcharge if the Commission does not comply with the FCC's order. The assigned ALJ provided information obtained from TD in an e-mail to the parties on January 26, 2005. That e-mail indicates that the ULTS surcharge would have to be increased from 1.55%to 3.35% to make up for the shortfall if the $330 million in federal funds is eliminated.

As SBC states in its Reply Comments, "Restricting ULTS funding sources to California surcharges is fiscally irresponsible and is likely to cause substantial harm to this program."9 We agree, and it is our goal to ensure that California continues to receive funding under the federal programs.

We hereby adopt the income certification process delineated in the OIR. Adoption of income certification will ensure that the Commission continues to receive the $330 million in federal Lifeline/Link-Up funds.

Under the federal rules, acceptable documentation of income eligibility includes:

· Prior year's state, federal, or tribal tax return,

· Current income statement from an employer or paycheck stub,

· Statement of benefits from Social Security, Veterans Administration,

· Statement of benefits from retirement/pension, Unemployment/Workmen's Compensation,

· Federal or tribal notice letter of participation in Bureau of Indian Affairs General Assistance,

· A divorce decree,

· Child support document, or

· Other official document.

Cox, NECA, SBC, TURN and Verizon provide comments on the specific documents customers should be required to provide. TURN believes all of the forms of documentation listed in the FCC's Lifeline Order should be included. TURN states that the Commission should also consider other forms of income verification, including letters from employers and letters from legal aid and community assistance organizations, while possibly requiring those who provide such letters to affirm that the content is true to the best of their knowledge. SBC also supports the documentation listed above, and suggests that additional categories of documents may increase the cost of administering the ULTS program.

Cox supports the first four types of documents from the above list, but also adds student financial aid applications. Cox states that divorce decrees and child support documents should not be used as they are not necessarily updated annually and may not reflect total income.

NECA and Verizon indicate that tax returns are preferable, as they reflect income from most sources. Also, tax returns are certified under the potential for audit and threat of severe sanctions if false. NECA finds pay stubs to be problematic unless they represent at least an entire year's salary. NECA asserts that applicants should also be instructed to document any non-taxable income. By signature, they should be required to attest, under penalty of perjury that the documents they submit accurately reflect all household income.

We will adopt the list developed by the FCC. However, we support the FCC's conclusion that if a consumer chooses to proffer any document other than a previous year's tribal, federal, or state income tax return as evidence of income, such as current pay stubs, the consumer must present three consecutive months worth of the same type of statements within the calendar year.10 Also, if someone provides a divorce decree or child support document, that person must certify that he or she receives no other source of income. Since we are adopting program-based eligibility (see following section), it may not be necessary to have an exhaustive list of documents that participants can use to certify their income. As SBC says, it adds to the cost if the TPA must be familiar with a wide variety of income documents.

We are concerned that TURN's proposal to accept letters from employers or local organizations familiar with the family's financial situation would result in those organizations serving as de facto certifying agents. The TPA itself would not have an opportunity to review the documentation and would simply have to accept the word of the entity writing the letter. This would conflict with § 54.410(b)(i). ETCs must certify that the consumer has presented documentation of his/her household income.

8 Lifeline Order ¶ 29. 9 SBC Reply Comments at 2. 10 Lifeline Order ¶ 30.

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