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State of Florida
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Public Service Commission
Capital Circle Office Center ● 2540 Shumard
Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
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DATE:
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June 23, 2016
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TO:
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Office of Commission Clerk (Stauffer)
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FROM:
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Office of Telecommunications (Bates,
Fogleman, Salak, Williams)
Office of Auditing and
Performance Analysis (Vinson, Lehmann)
Office of the General
Counsel (Page)
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RE:
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Docket No. 140029-TP – Request for submission
of proposals for relay service, beginning in June 2015, for the deaf, hard of
hearing, deaf/blind, or speech impaired, and other implementation matters in
compliance with the Florida Telecommunications Access System Act of 1991.
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AGENDA:
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07/07/16 – Regular Agenda – Proposed Agency Action for Issue 1 –
Interested Persons May Participate
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COMMISSIONERS ASSIGNED:
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All Commissioners
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PREHEARING OFFICER:
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Administrative
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CRITICAL DATES:
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September 1, 2016 – Effective date of Florida
Telecommunications Relay, Inc. budget. Notification of any change in the
Telecommunications Access System Act surcharge must be made to carriers prior
to September 1, 2016.
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SPECIAL INSTRUCTIONS:
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Anticipate the need for sign
language interpreters and assisted listening devices. Please place near the
beginning of the agenda to reduce interpreter costs.
This recommendation replaces
the recommendation that was deferred from the 5/5/16 Commission Conference.
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Case Background
The Florida
Relay System provides deaf and hard of hearing persons access to basic
telecommunications services by using a specialized Communications Assistant
that relays information between the deaf or hard of hearing person and the
other party to the call. The primary function of the Florida Relay System is
accomplished by the deaf or hard of hearing person using a Telecommunications
Device for the Deaf where the person using the Telecommunications Device for
the Deaf types a message to the Communications Assistant who in turn voices the
message to the other party, or a Captioned Telephone which displays real-time
captions of the conversation.
The
Telecommunications Access System Act of 1991 (TASA) established a statewide telecommunications
relay system which became effective May 24, 1991. TASA is authorized pursuant
to Chapter 427, Florida Statutes (F.S.). Section 427.701(1), F.S., provides that
the Florida Public Service Commission (Commission or FPSC) shall establish, implement,
promote, and oversee the administration of the statewide telecommunications
access system to provide access to telecommunications relay services by persons
who are deaf, hard of hearing or speech impaired, or others who communicate
with them. It is estimated that approximately 2.5 to 3 million of the estimated 20 million persons living
in Florida have been diagnosed as having a hearing loss. This system provides
telecommunications service for deaf or hard of hearing persons functionally
equivalent to the service provided to hearing persons.
TASA provides
funding for the distribution of specialized telecommunications devices and
provision of intrastate relay service through the imposition of a surcharge of
up to $.25 per landline access line per month. Accounts with over 25 access
lines are billed for only 25 lines. Pursuant to Section 427.704(4)(a)1, F.S., a
surcharge is collected only from landline access lines.
Florida
Telecommunications Relay, Inc. (FTRI), a non-profit corporation formed by the
local exchange telephone companies, was selected by the Commission to serve as
the Telecommunications Access System Act Administrator. On July 1, 1991, the
local exchange telecommunications companies began collecting an initial $.05
per access line surcharge pursuant to Order No. 24581. Since July 1, 1991 the
surcharge, which is currently $.12 per month, has changed to reflect FTRI budgetary
needs and potential Federal Communications Commission (FCC) mandates.
Chapter 427,
F.S., requires that the relay system be compliant with regulations adopted by
the FCC to implement Title IV of the Americans with Disabilities Act. The FCC
mandates the minimum requirements for services a state must provide, certifies
each state program, and periodically proposes changes in the stipulated
services.
The current
relay service provider in Florida is Sprint. The FPSC awarded the contract to
Sprint, effective March 1, 2015, for a period of three years. The contract
contains options to extend the contract for four additional one-year periods,
and requires mutual consent by both parties to extend the contract.
Staff sent a
data request to FTRI on a number of issues included in its proposed budget. FTRI’s
responses to staff’s data request are included in the docket file. In order to
perform additional analysis, staff deferred this item from the May 5, 2016
Agenda Conference. This time allowed staff to thoroughly review additional
information for the FTRI proposed budget and to assess the budget results for Fiscal
Year 2015/2016 using the latest actual information which became available on
May 16, 2016. Based on having more actual data for Fiscal Year 2015/2016, staff
has estimated the actual FTRI expenses for Fiscal Year 2015/2016 and they are presented
in Option 2 under Issue 1 of the recommendation. Staff used actual data from June
2015 through March 2016 and estimated the fourth quarter by averaging the first
three quarters of the fiscal year.
In
2013 the Office of Auditing and Performance Analysis performed a management
audit of FTRI. The audit produced seven findings and corresponding recommended
actions (Attachment C). To assist the current analysis, audit staff updated
portions of its analysis and conducted a limited assessment of improvements
FTRI has implemented in response to the 2013 findings.
Through its
recent analysis, audit staff concluded that FTRI had undertaken largely
responsive and reasonable efforts to implement the suggested improvements from
2013. However, audit staff noted that FTRI’s Fiscal Year 2016/2017 proposed
expenditures interrupts a three-year trend of reducing total expenditures.
Staff contacted
FTRI and its Board and requested that the FTRI budget be refiled using the
actual amounts for expenses from the previous year. The Board voted to keep the
budget as they originally filed it.
Decertification from the National
Deaf-Blind Equipment Distribution Program
FTRI was
certified by the FCC to participate in the National Deaf-Blind Equipment
Distribution Program (NDBEDP) and receive reimbursement from the Federal
TRS Fund in 2012. Under current FCC guidelines, FTRI is reimbursed for some
expenses related to administering the program, including equipment purchased
and distributed, assessment of clients, and training of clients. Administrative
costs are capped at 15 percent of the reimbursement expenses.
As presented in
Attachment B, on March 28, 2016, after it submitted its Fiscal Year 2016/2017
proposed budget, FTRI submitted a letter to the Commission communicating that
it will decertify from the NDBEDP. In the letter, FTRI explains that the FTRI
Board directed that participation in the NDBEDP not adversely impact FTRI’s
TASA function in Florida. FTRI further explains that its continued participation
in the NDBEDP would result in absorbing some of the cost through its state relay
budget. FTRI revenues for Fiscal Year 2015/2016 from the NDBEDP for Q1 and Q2
were $66,149 and expenses were $76,702, resulting in a net loss of $10,553.
FTRI believes
continued participation in the program may lead to increased losses due to the
15 percent administrative cap. Further, FTRI states that reimbursable expenses
are shifting to lower cost equipment offered through the program, yielding a
lower administrative reimbursement using the 15 percent cap.
If FTRI
decertifies with the FCC, it is anticipated that the program and its offered
services will continue with another entity distributing the NDBEDP equipment
for the deaf-blind, low-income Floridians. The FCC will make that determination
after reviewing interested applicants’ proposals.
The full impact
of continuing to participate in the NDBEDP on FTRI’s proposed Fiscal Year 2016/2017
budget would be a projected $61,820 loss as presented by FTRI in its Fiscal
Year 2015/2016 Estimated Revenue & Expenses as presented in Attachment A.
The purpose of
this recommendation is to address the FTRI proposed Fiscal Year 2016/2017 budget
and determine what the relay surcharge should be for the upcoming fiscal year. The
Commission is vested with jurisdiction pursuant to Chapter 427, F.S.
Discussion
of Issues
Issue 1:
Should the Commission approve FTRI’s proposed budget,
excluding the National Deaf-Blind Equipment Distribution Program, for Fiscal Year
2016/2017, and should the Commission maintain the current Telecommunications
Relay Service (TRS) surcharge of $0.12 per month?
Recommendation:
No, staff recommends that the budget expenses should
be reduced by $601,238. Attachment D reflects the line-by-line adjustments that
are being recommended. The surcharge should be reduced to $0.11 beginning
September 1, 2016. If necessary, FTRI should be allowed to use the surplus
account if there is a revenue shortfall in Fiscal Year 2016/2017. (Salak, Fogleman,
Williams, Bates, Vinson, Lehmann, Page)
Staff Analysis:
Traditional
Telecommunications Relay Service
Minutes of use for traditional TRS have been declining. Sprint’s
projections indicate that traditional minutes will continue to decline during
the 2016/2017 Fiscal Year. Traditional relay users are transitioning to Internet
Protocol Relay, Video
Relay Service,
Captioned Telephone Service,
Internet Protocol Captioned Telephone Service, Internet
Protocol Speech-to-Speech (STS) service,
and wireless service. The traditional TRS cost as approved in Sprint’s contract
remains at $1.09 per session minute.
CapTel
Service
CapTel service uses a specialized telephone that provides
captioning of the incoming call for a deaf or hard of hearing person. Sprint’s
projections show that CapTel minutes of use will also decrease during the 2016/2017
Fiscal Year. The CapTel cost as approved in the Sprint contract remains at $1.63
per session minute.
Florida
Telecommunications Relay Inc. Budget
Attachment A reflects FTRI’s 2016/2017 Fiscal Year proposed
budget, which was reviewed and adopted by FTRI’s Board of Directors prior to
filing with the Commission. The proposed budget includes a decrease in expenses
of approximately $774,299 from the Fiscal Year 2015/2016 Commission approved
budget. The FTRI 2016/2017 proposed budget projects total operating revenues to
be $8,269,418 and total expenses to be $7,977,633. FTRI believes the
Telecommunications Relay surcharge should remain at $0.12 per access line for
the 2016/2017 Fiscal Year.
Sprint’s estimated Fiscal Year 2016/2017 traditional
Telecommunications Relay surcharge minutes of use are 1,013,262 at a rate of $1.09
per minute for a total of $1,104,456. Sprint’s estimated CapTel minutes of use
for Fiscal Year 2016/2017 are 1,280,726 at a rate of $1.63 per minute for a
total of $2,087,583.
The biggest decrease in expense in the budget arises from
relay provider services, resulting in $779,460 in savings when compared to the Fiscal
Year 2015/2016 Commission approved budget. The largest increase in the budget
is associated with FTRI Outreach. FTRI’s Outreach expense increased by $153,674
over the Fiscal Year 2015/2016 Commission approved budget and FTRI’s 2015/2016
estimated expenditures for Outreach.
Not including Category I, the relay provider expense or
NEBEDP, FTRI’s proposed budget includes a net increase in expenses for
categories II-V of $1,386 compared to the approved budget for Fiscal Year
2015/2016; $383,346 compared to FTRI’s estimated actual for Fiscal Year
2015/2016; and $305,387 compared to staff’s estimate of actual expense for
Fiscal Year 2015/2016.
A comparison of FTRI’s Fiscal Year 2015/2016 Commission approved
budget and FTRI’s Fiscal Year 2016/2017 proposed budget as filed is shown in
Table 1 below.
Table 1
FTRI Fiscal Year 2016/2017 Budget
Comparison
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Commission
Approved
2015-2016
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FTRI
Proposed
2016-2017
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Operating Revenue:
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Surcharges
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$8,249,890
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$7,762,706
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Interest Income
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33,941
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34,188
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NDBEDP
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468,749
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472,524
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Total Operating Revenue
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$8,752,580
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$8,269,418
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Operating Expenses:
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Relay Provider Services
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$3,971,499
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$3,192,039
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Equipment and Repairs
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1,690,386
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1,621,478
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Equipment Distribution And Training
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1,054,737
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950,403
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Outreach
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574,626
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728,300
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General & Administrative
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991,935
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1,012,889
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NDBEDP
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468,749
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472,524
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Total Expenses
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$8,751,932
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$7,977,633
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Annual Surplus
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648
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291,785
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Total Surplus
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$15,723,243
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$16,274,881
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Source: FTRI’s Fiscal Year 2016/2017
proposed budget.
Analysis
Staff believes there are several approaches that could be
used to determine the appropriate FTRI budget for Fiscal Year 2016/2017. Staff
will provide three options for the Commission’s consideration as presented in
Attachment D. As previously mentioned, Relay and CapTel expenses from Sprint
(Category I) are projected to decline as a result of reduced minutes. All other
expense categories in FTRI’s Fiscal Year 2016/2017 proposed budget are
projected to increase over the actual expenses for Fiscal Year 2015/2016 as
presented by FTRI.
Staff believes that Category I, the Sprint relay charges,
should not be adjusted for any of the three options. The minutes of use have
been projected by Sprint. It has multi-state experience with such projections
and its historic projections have proven to be reasonable. In addition, staff
believes that FTRI’s projection methodology of the revenues for Fiscal Year
2016/2017 is reasonable and should also be used for the three options.
Option
1: Adjustments to the Budget on a Line-by-Line Basis
The number of access lines assessed the relay surcharge is
declining and has been for a number of years. The costs of Florida’s relay
program are being spread among a fewer number of consumers as the number of landlines
decline. In addition, the equipment that can be distributed by FTRI’s equipment
distribution program is limited by the relay statute. Based upon the premise that
wireline access lines are declining and the number of FTRI eligible clients is
declining as customers convert from landline to other technologies, Option 1 is
designed to adjust each of the expense categories to insure that the expenses
reflect the necessary costs to serve the program. With this goal in mind, staff
recommends the following adjustments to the FTRI budget.
In the 2013 management audit
report, audit staff calculated FTRI’s “core” operating expenditures per new
client added. Core operating expenditures was defined as expenses for
equipment, equipment distribution, repairs, training, outreach and general
administration. The following chart displays updated results.
Table 2
Florida Telecommunications Relay, Inc.
Core* Operating Expenditures per New Client
Fiscal Year 2010-2017
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FY ‘10-‘11
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FY ‘11-‘12
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FY ‘12-‘13
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FY ‘13-‘14
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FY '14-'15
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Projected
FY '15-'16
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Budget
FY '16-'17
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Total Core* Expenditures
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$5,891,703
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$5,066,067
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$4,634,021
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$4,166,422
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$4,071,914
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$4,007,686
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$4,313,070
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Total New Clients
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24,399
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19,287
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15,078
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13,671
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13,408
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13,408**
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13,408**
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Ratio Expenditures/
New Client
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$241
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$263
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$307
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$305
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$304
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$299
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$322
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*Core expenditures include
Equipment/Repairs/Distribution/Training, Outreach, and General/Administrative
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**Assumed for illustration
purposes by audit Staff to equal 2014-2015 total
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Staff and FTRI recognize that
FTRI provides service to more clients than just the new ones; however, this
chart provides focus on the dollar impact of FTRI’s outreach efforts. Within
its Fiscal Year 2016-2017 budget, FTRI proposes increased core operating
expenses, which combined a continued decline in new clients, would result in a
significant increase costs per new client.
Category I-Relay
Service
As previously discussed, staff recommends that no
adjustments should be made to this category.
Category II-Equipment
& Repairs
Category II reflects the purchases of the equipment to be
distributed to clients and the repairs that FTRI must do to keep the equipment
in working order. Staff has reviewed the workpapers to determine the amounts of
equipment purchases for the year. Most of the line items are based upon the
historic twelve-month period to determine the level that will be needed for the
upcoming year. Staff is recommending several adjustments in this category:
·
VCP Hearing Impaired
equipment should be reduced from $1,434,745 to $1,291,270, a reduction of $143,475.
Staff believes the recommended reduction in Category IV-Outreach will decrease
demand. VCP Hearing Impaired equipment is currently the equipment most widely distributed.
The $143,475 adjustment represents ten percent of the FTRI proposed amount
budgeted for this line item.
·
TeliTalk Speech Aid equipment
should be reduced from $15,000 to $10,000. The actual amount for Fiscal Year
2015/2016 appears to be below the estimated amount for Fiscal Year 2015/2016.
FTRI indicates it missed one of the state events that generates interest in the
TeliTalk Speech Aid equipment, so staff suggests a $5,000 disallowance in the
budget rather than further decreasing the amount.
·
VRS-Signaling equipment
should be reduced from $15,246 to $10,000. The actuals for Fiscal Year 2015/2016
appears to be lower than projected. However, a price increase is expected.
Staff is recommending a $5,246 adjustment to account for the lower demand in
the last year, but accounting for the price increase.
·
Equipment Accessories/Supplies should be reduced
from $1,886 to $900 since there was lower expense in Fiscal Year 2015/2016 than
expected. Staff recommends a $986 reduction in the allowed budget request.
Category III-Equipment
Distribution & Training
Category III reflects the cost of the distribution of
equipment throughout the state and the training of consumers in the use of the
equipment. FTRI contracts with Regional Distribution Centers (RDCs), many of which
are non-profit agencies, to perform these functions throughout Florida.
Currently there are 23 RDCs.
Based upon staff’s estimates of the actual costs of the
RDCs for Fiscal Year 2015/2016, staff believes the requested amount is already
below actual costs for Fiscal Year 2015/2016. However, staff proposes decreasing
the amount since staff believes demand for equipment will decline if staff’s
recommendation in Category IV-Outreach is adopted. Consistent with the adjustment
for equipment, the amount in the budget is adjusted by ten percent for a total
of $90,108. Staff also believes an
adjustment to Training Expense for RDCs is appropriate by decreasing the
proposed budget amount by $800. Much of the training is conducted through webinars
which should reduce the costs.
Category IV-Outreach
FTRI has requested $728,300, an increase of $153,674 over
last year’s budget for Outreach. FTRI’s Outreach expense includes RDC Outreach
at community events; printed materials such as brochures, postcards, banners,
and flyers; a marketing campaign including newspaper advertising, magazines,
social media, and other marketing tools; partnerships with service provider
associations; and attendance at statewide conferences. The marketing campaign
and the RDC Outreach are the two most expensive programs in the overall Outreach
plan. FTRI has made commitments for this budget year to spend the total amount
of the Outreach budget for Fiscal Year 2015/2016. Staff recommends that the proposed
FTRI Outreach budget be adjusted from $728,300 to $500,000 with FTRI
determining where the Outreach dollars should be spent. Reducing the Outreach
is consistent with the basic premises of Option 1. The recommended amount is $74,626
less than the amount budgeted and spent in Fiscal Year 2015/2016. Staff
recommends that Outreach should be reduced by $228,300.
Category V-General
& Administrative
Category V reflects the expenses associated with FTRI’s
office and furnishings, employees, contracted services (auditors, attorney,
computer consultants), computers and other operating expenses. It should be
noted that FTRI has reduced its full-time employees from 15 to 10 since Fiscal
Year 2010/2011.
Staff is recommending that the following adjustments be made
to Category V’s proposed budget:
·
Advertising should be reduced by $1,313. FTRI
states that they increased the amount for advertising vacancies based on the
assumptions of two vacancies and possibly needing to advertise for each vacant
position twice. During Fiscal Year 2015/2016, FTRI had two vacancies and has
not needed to advertise twice.
·
Legal expense should be reduced from $72,000 to
$36,000. FTRI has had the same law firm on retainer for many years. The
attorney attends the board meetings and writes the minutes, reviews Request For
Proposals, reviews contracts, and advises on legal issues as they arise. It
would appear that paying the attorney an hourly rate may be more cost effective
than paying a retainer. Staff recommends that the attorney fees be cut in half,
an adjustment of $36,000.
·
Consultation-Computer expense should be reduced
from $15,980 to $8,100. For Fiscal Year 2015/2016, staff and FTRI’s actual
expenses were about $8,100. FTRI’s proposed budget for this account includes
Network Administration for the FTRI server in the Tallahassee office and
additional desktop computer support for four hours a week for $50 per hour. Staff
recommends the budget should be based on last year’s budget amount for an
adjustment of $7,880.
·
Insurance-Health/Life Disability expense should
be reduced from $165,735 to $147,949. When determining the amount to propose
for this insurance in the budget, FTRI made the decision to exclude a reduction
for Health Care Credit stating there is uncertainty in the credit amount and
whether it will exist during the entire budget period due to legislation. Staff
recommends the full credit of $17,786 from Fiscal Year 2015/2016 be used to
adjust the FTRI budget amount.
·
Insurance-Health/Life Disability expense should
be reduced by another $16,299.83. This amount is related to the short-term
disability and long-term disability that FTRI provides as a benefit. While this
insurance may be beneficial to the employee, it goes well beyond what an
organization must offer its employees. The landline customers should not be
required to pay for this type of insurance.
·
Retirement should be reduced by $14,232. Currently,
11.1 percent of salaries is put into a retirement account for the
employees. The employees are not
required to pay for any of their retirement.
This adjustment would reflect that only 8.1 percent of the salaries
would be paid by FTRI with the rest being paid by the employee. Many companies require matching of retirement
contributions. In addition to paying the
11.1 percent, FTRI would still need to pay the 2.34 surcharge to the pension
benefit company.
·
Employee Compensation should be reduced by
$12,653. Included in FTRI’s proposed budget is a three percent compensation
increase for all employees. Based on historic information, raises are not given
across the board annually. However, most employees have received a salary
increase within the past three years. Given the audit finding that the employee
related expenses per FTE are high, no increase should be allowed for this
budget cycle.
·
Temporary Employment is used mainly when an
employee resigns. During the hiring period, a temporary employee is hired to do
tasks that cannot wait for the permanent position to be filled. Temporary
employees are also sometimes used to help in times of extreme workload. Staff
suggests the proposed budget amount should be reduced by $9,400. The employment
compensation includes the full salary for ten people. If the Salary is included
in the employment compensation account and the temporary employment account,
staff believes there is double counting. Staff recommends an adjustment of
$9,400 be made to this account leaving $1,000 if there are times of high
workload.
·
Taxes-Payroll should be reduced by $959 as a
result of staff’s recommendation to eliminate the three percent increase in
Employment Compensation.
·
Travel and Business Expense is used for travel
to non-outreach trips, conferences and training. The budget includes two trips
that were not included in last year’s budget. In addition, it is not
anticipated that Fiscal Year 2015/2016 Travel and Business Expense will be any
greater than $11,430 and will more than likely be lower. Staff recommends
reducing this budget by $8,700, from $18,700 to $10,000.
·
Employee Training should be adjusted by $2,100.
One of the items in the budget is a meeting that falls outside of the time
frame for Fiscal Year 2016/2017. The Employee Training expense account is
proposed by FTRI to be $5,300. After the adjustment, the budget for this
account would be $3,200.
The total
difference between staff’s Option 1 budget and FTRI’s proposed budget is $601,238.
Under Option 1, the TRS surcharge may be reduced to $0.11 from the current $0.12.
There is an allowance for a margin of error of $427,710 before the surplus fund
would need to be used. If the Commission chooses to reduce the surcharge to $0.11,
staff recommends that FTRI be able to use the money from the surplus account to
cover any shortfalls in revenue for Fiscal Year 2016/2017.
Option
2 Adjustments to the Budget to Reach Last Year’s Actual Expenses
Under Option 2, FTRI’s budget for Fiscal Year 2016/2017
would be predicated on the actual expense level for Fiscal Year 2015/2016. For
Fiscal Year 2015/2016, FTRI estimated the actual expenses by including six
months of actual data and six months of estimated data based on a combination
of actual data and projections of any changes.
On May 16, 2016, FTRI filed its quarterly report with
actual data for the third quarter of Fiscal Year 2015/2016. Staff used that
information to update the “actual” amounts for Fiscal Year 2015/2016 with nine
months (three quarters) of actual data and three months (one quarter) of
estimated data. Staff estimated the fourth quarter by averaging the first three
quarters of actual data and using it as a proxy for the fourth quarter.
Staff made three category exceptions in its calculations
of its actual results. First, Category I-Relay Services includes the amount
recommended for Fiscal Year 2016/2017 in all options. The second adjustment is
to Category IV-Outreach. The outreach money has been committed so the amount
budgeted for this item for Fiscal Year 2015/2016 will substantially be used by
year end. The last proposed adjustment is to Category V-Advertising. Staff
recognizes that FTRI currently has one vacancy; however actual advertising
expenses for Fiscal Year 2014/2015 were significantly below average during this
time period. Staff believes that a better estimate for advertising expenses
would be an average based on actual expenses for the prior three years.
Since staff’s results for Fiscal Year 2015/2016 are based
on more actual data, staff believes staff’s estimates for Fiscal Year 2015/2016
should be used for purposes of this option and should be considered the actual
results for Fiscal Year 2015/2016.
The total expenses would be $7,199,722. This represents a
reduction from FTRI’s proposed budget of $305,387. FTRI will be given the
flexibility to determine where the reductions would occur in Categories II-V.
The Category I-Relay Services should remain as projected.
Under Option 2, the surcharge should remain at $0.12. However,
the Commission could reduce the surcharge to $0.11 with the understanding that
the difference would be taken from the surplus account. Under the revenue
forecast, at least $48,519 would be removed from the surplus account.
Option
3 The Budget as Proposed by FTRI
In Option 3, FTRI’s proposed budget operating revenue of
$7,796,894 and proposed budget expenses of $7,505,109, excluding the National
Deaf-Blind Equipment Distribution Program, for Fiscal Year 2016/2017, would be
approved, and the current TRS surcharge of $0.12 per month would be maintained.
FTRI would be allowed to increase its outreach expenses as a pilot to targeted
newspaper insert program with data to be filed with its annual budget request
indicating the program’s effectiveness. FTRI’s budget is
building upon past experience using the targeted newspaper
insert ad strategy, RDC outreach partnerships, and a comprehensive marketing
plan to expand its outreach efforts. FTRI’s goal is to promote, educate, and
increase awareness about FTRI, the Equipment Distribution Program (EDP), and
Florida Relay, with the ultimate goal of recruiting new clients.
FTRI has experimented with newspaper inserts from 2012 to
present. FTRI plans to advertise the relay program all year, primarily using
insert advertisements in newspapers. In support of its advertising strategy,
and as discussed earlier, FTRI presents the following points:
·
Scarborough, a Nielsen service, released a
report in March 2015 that 71.7 percent of US populations 65+ still read the
Daily or Sunday newspaper.
·
Scarborough also reported that 71.9 percent of
the total Top 7 Florida markets read a Daily or Sunday paper (Tampa-St.
Pete-Sarasota, Miami-Ft. Lauderdale, Orlando-Daytona Beach-Melbourne, West Palm
Beach-Ft Pierce, Jacksonville).
·
In an article published in January 2015 by Pew
Research Center, 84 percent of people 65+ still have landlines.
The newspaper inserts are targeted to zip codes with a
high population of residents over 65 years old. Statistics indicate that one in
three people over 65 have a hearing loss. FTRI has conducted various Outreach
projects in the past including newspaper, community events, and joint efforts
with the Regional Distribution Centers. However, the strategy of using
newspaper insert advertisements on a statewide basis is a new and more intense
effort.
The idea of using insert advertisements that can be pulled
out of newspapers may prove to have a positive impact on the relay program. Under
this option, the targeted newspaper insert program could be approved on a pilot
basis during the Fiscal Year 2016/2017 budget year. FTRI could present its
results and findings in its proposed Fiscal Year 2017/2018 budget to the
Commission to determine its effectiveness. During the April 13, 2016 TASA
meeting, a member of the TASA Committee shared that his organization has seen
an increase in the distribution of equipment as result of FTRI’s outreach
efforts. If this program is successful, the expenses for equipment, maintenance,
and repair should increase over estimated expenses as reflected in FTRI’s
proposed budget.
FTRI believes potential benefits of FTRI’s newspaper ad
strategy is confirmed by comparing the Scarborough and Pew Research Center data
showing that a large percentage of the population 65 and older read the daily
newspaper and still have landline phones, to the FTRI data on clients served. Ninety-one
percent of FTRI’s new clients during the Fiscal Year 2014/2015 budget year were
age 60 or older. More clients in the 80 to 89 age group received equipment than
those of any other age group.
In addition, FTRI’s outreach strategy for Fiscal Year 2016/2017
would continue to focus on RDC Agreements, digital ad networks, email blasts,
and social media such as Facebook, Twitter, and Google Ad Words. Further, FTRI
plans to continue to build partnerships with similar organizations that serve
similar target populations.
The Commission’s audit staff conducted a performance
analysis audit of FTRI in 2013 and issued several recommendations related to
FTRI’s operations, including the establishment of evaluative measures to assess
RDC performance. In response to the audit recommendation to establish RDC
performance measures, FTRI implemented a $50 expense cap per new client for RDC
outreach events. FTRI believes its efforts appear to have produced positive
results in reducing outreach event expenses and more successfully reaching
clients as recommended by the 2013 performance audit.
If FTRI’s primary goal of increasing outreach efforts is
to expand participation in the Florida relay program, FTRI equipment
distribution, equipment repair, and RDC training and equipment distribution
should also increase.
Under Option 3, the surcharge should remain at $0.12. The
Commission could still reduce the surcharge to $0.11 with the understanding
that the difference would be taken from the surplus account. Under this option,
at least $355,107 would be removed from the surplus account.
Conclusion
Staff
has reviewed FTRI’s Fiscal Year 2016/2017 Fiscal Year budget request and has
provided three options for the Commission to consider. Staff recommends Option
1 which makes specific adjustments to FTRI’s Fiscal Year 2016/2017 as reflected
in Attachment D. Staff further recommends that the TRS surcharge be reduced to $0.11
per month per access line up to 25 access lines for the Fiscal Year 2016/2017,
effective September 1, 2016. Staff also recommends that FTRI be granted the
flexibility to move budgeted funds within the same category, if needed, for
expense categories II through V, with one exception. Specifically, this flexibility
would not extend to employee related expenses in Category V. The Commission
should order all telecommunications companies to begin billing the $0.11
surcharge for the Fiscal Year 2016/2017, effective September 1, 2016. If there
are any revenue shortfalls, the surplus account should be used to cover the
shortfall for Fiscal Year 2016/2017.
