An Audit Report on the Public Utility Commission of Texas's Administration of the Texas Universal Service Fund
December 2004
Report Number 05-015
Overall Conclusion
The Public Utility Commission of Texas (Commission), through its contractor that administers the fund, correctly distributed the majority of the funds from the Texas Universal Service Fund (TUSF). However, because the Commission did not monitor the contractor or include all necessary contract provisions, the Commission cannot ensure that the contractor consistently administers the TUSF in accordance with laws and regulations. Our audit identified the following:
- Neither the Commission nor the TUSF administrator has an effective process in place to identify telecommunications companies that may not be paying their mandatory TUSF assessments. We could not determine whether approximately 334 companies paid their mandatory assessments to the TUSF; the potential lost revenue is approximately $2.27 million for the three quarters of fiscal year 2003 that we tested. One hundred and seven of the companies accounted for the majority of the potential lost revenue. The TUSF administrator reported that TUSF revenue for fiscal year 2003 was estimated at $549 million. Additionally, one company from our sample (out of a total of 1,700 companies paying assessments to the TUSF) indicated to us that it may have charged customers the TUSF fee but did not remit the assessment to the TUSF.
- While the Commission's administration of the Lifeline Discount Program substantially
complies with laws and regulations, the following areas need improvement:
- The eligibility of approximately 191,000 of 400,000 Lifeline Discount
Program customers was never determined. The Commission did not perform
any procedures to verify that the eligibility requirements were being
verified by the telecommunications companies when providing the discount
to customers. Telecommunications companies are reimbursed for this program
from the TUSF.
- For the TUSF's Lifeline Discount Program, the TUSF administrator reimbursed 40 percent of the telecommunications companies $145,763 more from the TUSF than is allowed by the Texas Administrative Code (out of total Lifeline Discount Program reimbursements of $17 million). Additionally, some eligible applicants may be incorrectly excluded from receiving the discount available through this program.
- The eligibility of approximately 191,000 of 400,000 Lifeline Discount
Program customers was never determined. The Commission did not perform
any procedures to verify that the eligibility requirements were being
verified by the telecommunications companies when providing the discount
to customers. Telecommunications companies are reimbursed for this program
from the TUSF.
During audit fieldwork, the Commission verified the eligibility of all customers who were self-enrolled in the Lifeline Discount Program. It also hired a contractor to oversee the self-enrollment process rather than relying on the telecommunications companies.
Contact the SAO about this report.
Download the Acrobat version of this report. (.pdf) (Generate HTML Equivalent)*
*HTML equivalents for PDF documents are generated utilizing Adobe's PDF Conversion by Simple Form.