Interim Report Concerning Intermediate Units

Prepared by the Subcommittee on Schools and Libraries

Pennsylvania Universal Telephone Service Task Force

Adopted July 11, 1997

Introduction and Background

In order for a school or library to qualify for the federal universal telephone service discount program (commonly referred to as the Education-Rate or "E-Rate" Program), Section 254(h)(5) states that the school must fit within the definition of an elementary or secondary school as defined in the Elementary and Secondary Act of 1965, 20 U.S.C. §8801. Using the statutory reference as the basis, the FCC's rules prescribe the following definitions:

(1) Elementary School. An "elementary school" is a non-profit institutional day or residential school that provides elementary education, as determined under state law.

. . .

(8) Secondary School. A "secondary school" is a non-profit institutional day or residential school that provides secondary education, as determined under state law. A secondary school does not offer education beyond grade 12.

47 CFR §54.500(a)(1) and (8). The FCC's Universal Service Report and Order further clarifies that the term "school" includes individual schools, school districts, and consortia of schools and/or school districts." Universal Service Report and Order, FCC CC Docket No. 96-45 (May 8, 1997), & 425 n.1087.

The issue has arisen whether Intermediate Units may qualify for "E-Rate" discounts. The FCC's Order makes clear that it is a state determination to define which elementary schools and secondary schools qualify for the program. The Pennsylvania School Code does not contain a statutory definition of "school." The Pennsylvania Department of Education has stated that "for the purposes of the FCC regulations, the Department believes that Intermediate Units are eligible to participate in the program."

The Universal Telephone Service Task Force has requested the Subcommittee on Schools and Libraries to undertake an analysis of The Telecommunications Act of 1996 and the FCC's Universal Service Report and Order, and to develop this Interim Report on the issue of whether an IU is eligible for the E-Rate Program.

It is imperative that this issue be clarified promptly before the E-Rate application process begins. It is anticipated that applicants will be required to self-certify that they are an eligible entity, under penalty for making false statements.

What is an Intermediate Unit?

An Intermediate Unit ("IU") is a regionally based provider of educational services. Each school district is assigned to an IU and entitled to receive the services adopted by the intermediate unit board of directors. IUs are part of the public school system. 24 PS §9-951. There are 29 IUs within the Commonwealth, of which two are coterminous with single school districts (Philadelphia and Pittsburgh). The specific services that may be rendered by an IU include, but are not limited to: (1) curriculum development and instructional improvement services; (2) educational planning services; (3) instructional materials services; (4) continuing professional education services; (5) pupil personnel services; (6) State and Federal agency liaison services; and (7) management services. 24 PS §9-964. Two additional key statutory responsibilities of IUs are the provision of educational services to exceptional children and the provision of vocational-technical services:

Except as otherwise provided by law, all powers and duties of county boards of school directors in regard to classes and schools for exceptional children, educational broadcasting, audio-visual libraries, instructional materials centers, area technical schools and area vocational-technical schools are hereby transferred to and conferred upon intermediate units boards of directors. An intermediate unit may contract with school districts to provide services on behalf of the intermediate unit.

24 PS §9-964(7). All authority with respect to special pupil services was transferred from the county boards of school directors to the IUs pursuant to 24 PS §9-958. All authority with respect to vocational-technical education was transferred from the county boards of school directors to the IUs pursuant to 24 PS §9-959.

IUs are authorized by statute "[t]o receive Federal, State, school district and other moneys and expend the same to conduct programs of services." 24 PS §9-964(9). Also relevant is the authority for IUs to "consolidate and let combined bids for bulk purchases." 24 PS §9-964(14).

What is the role of an IU relating to technology?

Each IU has a Network Field Coordinator who provides computer networking support for school districts within that IU. Since their inception in 1971, Pennsylvania's 29 IUs have provided technology services to school districts. As technology has advanced, the IUs have provided, coordinated and facilitated the provision of data and Internet services, as well as the design and installation of local area and wide area networking through consortia efforts. Of the 27 IUs not including Pittsburgh or Philadelphia, 25 provide some or all of the telecommunications and additional services which fall within the E-Rate discount program. Services are provided in three general areas:

1. Data Services: student scheduling, grading, child accounting, attendance, payroll, etc.

2. Internet Services: both dial-up and dedicated connections using an aggregation model.

3. Local/Wide Area Networking: design, installation and maintenance.

Many school districts are already part of cooperative technology consortia through their respective IUs. These regional networks have been in place for years and have already achieved significant savings for school districts.

Intermediate Units are eligible entities under the E-Rate Program.

Each of the following points independently establishes the eligibility of IUs to receive the E-rate discounts.

1. IUs are the lead organization comprising consortia of educational institutions. According to the Report of the Joint Conferees accompanying the passage of The Telecommunications Act of 1996:

The conferees intend that consortiums of educational institutions providing distance learning to elementary and secondary schools be considered an educational provider for purposes of [section 254(h)].

2. While the Pennsylvania School Code does not expressly define "school," the Code states that IUs are part of the public school system. 25 PS §9-951. Moreover, several provisions in the Pennsylvania School Code define the term "school entity" as encompassing intermediate unites. See, e.g, 24 PS §13-1301-A(pertaining to Safe Schools); 24 PS §11-1113(d)(1)(pertaining to Transferred Programs and Classes); and 24 PS §25-2597(c)(pertaining to Distance Learning Grants).

In other circumstances, the inclusion of IUs within the public school system was sufficient to include them within the ambit of legislatively authorized activities available to schools.

The State Public School Building Authority was expressly authorized pursuant to an Official Opinion of the Attorney General to finance office space and warehouse facilities for IUs as part of the public school system of Pennsylvania. The specific authorizing statute which was the subject of the Attorney General's Opinion prescribed that the State Public School Building Authority was authorized to Afinance projects by making loans to any eligible school district...@ (emphasis added). The statute did not expressly identify IUs as eligible recipients of financing, but the Attorney General's Opinion stated:

It is my opinion and you are hereby advised that the Authority is authorized under Section 4 of its enabling act to finance office space and warehouse facilities for intermediate units as part of the public school system of Pennsylvania.

Attorney General Official Opinion No. 86-1. The IUs therefore were able to stand in the shoes of the school districts for purposes of receiving financing from the State Public School Building Authority. This approach comports with the Pennsylvania Department of Education's opinion that IUs are eligible to participate in the E-Rate program.

3. As noted above, IUs inherited the responsibilities of county boards of school directors with respect to special education for exceptional children. The prior authorization to county boards was respect to special education for exceptional students. The prior authorization to county boards was as follows:

The county board of school directors in respect to second, third, and fourth class school districts...shall have the power and its duty shall be ... to provide, maintain, administer, supervised, and operate schools and classes for handicapped children. ...

24 PS §9-925(2), repealed by the Act of January 14, 1970 (P.L. (1969) 468 '21)(emphasis added). "With respect to second, third, and fourth class school districts" excludes only Philadelphia and Pittsburgh, both of which qualify for universal service discounts as school districts. Further, with regard to IUs themselves, the current School Code provides almost identical authority, except for the Amodernization@ of some of the language:

The intermediate unit shall have the power, and it shall be its duty, to provide, maintain, administer, supervise, and operate such additional classes or schools as are necessary...for the proper education and training of all exceptional children who are not enrolled in classes or schools maintained and operated by school districts or who are not otherwise provided for.

24 PS §13-1372(4)(emphasis added).

The Attorney General was asked by the Superintendent of Public Instruction (the predecessor of the Secretary of Education) for a legal opinion as to whether 24 PS §9-925 permitted second class school districts to operate classes and schools for handicapped children or if that section of the statute reserved all power to operate such schools and classes to county school boards. In essence, this reverses the question posed here, but the Attorney General's opinion is instructive here:

The words "whether or not conducted by the county board" as provided in '925, supra., negate exclusive jurisdiction in the county board of school directors and evidence legislative intent that a local school district can, in its own right, conduct educational schools and classes for handicapped children as well as can the county board of school directors. ...

Attorney General Official Opinion No. 57-21. Neither the county (read IU) nor the district is granted exclusive authority to operate schools and classes for handicapped children, but each is granted the independent authority to do so. The Attorney General concluded:

We are of the opinion, and you are accordingly advised, that...(3) where the school district of the second class does not maintain classes and schools for handicapped children, then the county board of school directors, . . shall have the power and its duty shall be to maintain such schools and classes in that district, and (4) the foregoing opinion and the same principles, as set forth in . . (3), supra, are applicable to school districts of the third and fourth class.

Attorney General Official Opinion, No. 57-21(emphasis added).

4. The compelling public policy reasons further substantiate that IUs are eligible entities. IUs are key agents that are assisting school districts in making great strides toward incorporating technology into the K-12 classrooms. Such efforts would be thwarted if IUs were not deemed eligible entities.

5. IUs are expressly authorized to receive federal monies to be expended for the provision of services within their program functions. Each IU has established a network field coordinator to provide computer networking support to the school districts. Clearly the provision of technology services as contemplated under the E-Rate Program falls within the scope of the IU's responsibilities.

Task Force Recommendation:

The Pennsylvania Universal Telephone Service Task Force recommends that the PUC issue an Order approving this Interim Report and approving that Intermediate Units are eligible entities for purposes of the federal E-Rate Program.