Discussion
of Issues
Issue 1:
Should the Commission approve Florida Telecommunications
Relay, Inc.'s proposed budget as presented in Attachment A for Fiscal Year
2021/2022, effective August 1, 2021, and should the Commission maintain the
current Telecommunications Relay Service (TRS) surcharge at $0.10 per month?
Recommendation:
Staff recommends the Commission approve FTRI’s proposed
budget expenses of $4,450,727 for Fiscal Year 2021/2022. Staff recommends the
Commission order all local exchange companies to continue billing the $0.10 TRS
surcharge for Fiscal Year 2021/2022. Staff further recommends the Commission
require FTRI to conduct a financial break-even analysis of the Regional
Distribution Center fee structure and present the results to the Commission
with its Fiscal Year 2022/2023 budget filing. (Williams, Fogleman, Murphy)
Staff Analysis:
Traditional
Telecommunications Relay Service
The
traditional TRS cost to FTRI as approved in Sprint Communications Company,
L.P.’s (Sprint) contract is currently $1.35 per session minute. Sprint’s
projections indicate that traditional minutes will decrease by 19 percent
during Fiscal Year 2021/2022 from the current fiscal year. Traditional relay
users are transitioning to the following services:
·
Internet Protocol (IP) Relay
·
Video Relay Service (VRS)
·
IP Captioned Telephone Service
·
Internet Protocol Speech-to-Speech (STS) Service
·
Wireless Service
CapTel
Service
The CapTel
cost to FTRI as approved in the Sprint contract is currently $1.69 per session
minute. 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 decline by 41 percent from the current
fiscal year during Fiscal Year 2021/2022. CapTel users are transitioning to
Internet Protocol Captioned Telephone Service and wireless services.
Florida
Telecommunications Relay, Inc. Budget
Attachment
A reflects FTRI’s Fiscal Year 2021/2022 proposed budget, which was reviewed and
adopted by FTRI’s Board of Directors prior to filing with the Commission. The
FTRI proposed budget projects total operating revenue of $4,396,927 and total
expenses of $4,450,727, representing a $53,800 shortfall. FTRI does not request
transferring funds from the surplus account to offset the shortfall. FTRI requests
that the TRS surcharge be maintained at $0.10 per access line for Fiscal Year
2021/2022.
FTRI’s
proposed budget represents a projected decrease in revenue of $509,911 (10 percent)
from that included in the Fiscal Year 2020/2021 Commission-approved budget.
This projected revenue decrease is attributed to an expected six percent decrease
from the current fiscal year in access lines that are assessed the TRS
surcharge.
FTRI’s
proposed budget also includes a decrease in expenses of $621,322 (12.25 percent)
from the Fiscal Year 2020/2021 Commission-approved budget. The most significant
decline in FTRI’s proposed budget expense ($607,207) relates to an expected
decline in minutes of use.
Sprint’s
estimated Fiscal Year 2021/2022 traditional TRS minutes of use are 890,468, at
a rate of $1.35 per minute, for the TRS related expense of $1,202,132. Sprint’s
estimated CapTel minutes of use are 263,681, at a rate of $1.69 per minute, for
the CapTel related expense of $445,621. The total estimated expense for TRS and
CapTel for Fiscal Year 2021/2022 is $1,647,753. For comparison, the Fiscal Year
2020/2021 Commission-approved budget reflected traditional TRS minutes of
1,105,917 and CapTel minutes of 450,871. The total expense for TRS and CapTel
for Fiscal Year 2020/2021 was $2,254,960.
Analysis
Based upon
current industry trends, FTRI estimates that access lines will decrease at the
rate of approximately six percent from the current fiscal year as more
consumers transition from landline phones. Holding the TRS surcharge constant,
a decrease in access lines results in a decrease in revenues to support FTRI’s
activities.
Staff
developed an estimate of FTRI’s expenses for Fiscal Year 2020/2021. This data
is presented in Attachment B. Staff used actual data from the first three
quarters of the fiscal year, and took an average of those three quarters to
estimate the fourth. Staff’s estimates were then used as one element in
evaluating FTRI’s proposed budget. Attachment B also includes FTRI’s budgeted
information for comparison purposes. Staff also analyzed past
Commission-approved FTRI budgets to identify and evaluate ongoing cost
reduction measures.
Staff notes
that Fiscal Year 2020/2021 was out of the norm due to the COVID-19 pandemic.
FTRI experienced significant reductions in equipment distributed, consumer inquiries,
and related expense, which it contributes to the pandemic. As a result, FTRI’s
support for its proposed Fiscal Year 2021/2022 budget request is based largely
on pre-pandemic levels instead of Fiscal Year 2020/2021 estimates.
Taking
into consideration the challenges related to the pandemic, staff supports
FTRI’s approach to focus on pre-pandemic budget levels. As stated earlier,
staff developed expense estimates for Fiscal Year 2020/2021. However, we
acknowledge that the estimates are based on historical data impacted by
COVID-19.
Staff
supports FTRI’s approach to place greater focus on pre-pandemic data and the
Fiscal Year 2020/2021 Commission-approved budget. Below is staff’s review of
selected items from FTRI’s proposed budget expense by category.
Category
I – Relay Services
Category I
captures expenses for traditional TRS and CapTel service currently provided by
Sprint. The proposed budget recognizes a $607,207 expense reduction from the
Fiscal Year 2020/2021 Commission-approved budget, primarily due to declining minutes
and service cost associated with TRS and CapTel service.
The relay
service expenses are based on the minutes of use as projected by Sprint and
relay service contract rates. Sprint’s historical projections have proven to be
reasonable and it has multi-state experience with such projections. Staff
believes that the estimates for Fiscal Year 2021/2022 are reasonable and should
be used for budgetary purposes. However, staff notes that the current relay
service contract, along with the current contract rates, expires on February
28, 2022. The Commission has issued a request for proposals to provide relay
services beginning March 1, 2022, and will be considering a new relay service
contract that may have rates that are different from the current contract.
Category
II – Equipment & Repairs
Category
II expenses reflect the purchase of equipment to be distributed to clients and
the repairs that FTRI must make to keep the equipment in working order. FTRI
used contract pricing for equipment multiplied by the number of units it plans
to order over the course of the year. These contracts for equipment between
FTRI and equipment vendors are separate from the contract for relay service
approved by the Commission. FTRI’s proposed budget represents no change in
expense from the Fiscal Year 2020/2021 Commission-approved budget.
FTRI’s
Fiscal Year 2020/2021 Commission-approved budget for equipment and repairs was
$773,235. FTRI’s estimated 2020/2021 expenses are $452,158. Staff’s estimated
expense is $437,740, representing a difference of $14,418.
In its
budget filing, FTRI explained that due to the impact of recommended COVID-19 guidelines
by the Centers for Disease Control and Prevention (CDC), it experienced a
significant change in the number of clients served and equipment distributed
during Fiscal Year 2020/2021. As a result, FTRI explained that it budgeted for
equipment and repairs for Fiscal Year 2021/2022 at the Fiscal Year 2020/2021 budget
level, rather than the actual pandemic-affected level. FTRI further explained
that it believes the distribution of vaccine and new CDC guidelines may be
sufficient for services to return to previous levels.
Staff recommends
approval of FTRI’s budgeted amount for equipment and repairs. Further, staff encourages
FTRI to increase efforts and develop more creative ways to inform consumers
about the program to increase equipment distributed.
Category
III – Equipment Distribution & Training
Category
III reflects the cost of distributing equipment throughout the state and the
training of consumers in the use of that equipment. FTRI’s proposed budget
reflects a slight decrease in expense from the Fiscal Year 2020/2021
Commission-approved budget.
Regional Distribution Centers
Expenses
related to Regional Distribution Centers (RDCs) are the largest component of
Category III expenses. FTRI’s proposed budget for RDCs is $531,618, which is $4,029
lower than the Fiscal Year 2020/2021 Commission-approved budget. Staff notes
that FTRI’s proposed budget exceeds FTRI’s Fiscal Year 2020/2021 estimated
expenditures by $369,806.
Consistent
with its explanation for Category II Equipment & Repairs, FTRI explains that
the impact of COVID-19 and related CDC guidelines resulted in expenses
significantly lower than the Fiscal Year 2020/2021 Commission-approved budget.
FTRI also states that it anticipates equipment distribution to resume to
pre-COVID-19 levels.
In support
of its Fiscal Year 2020/2021 proposed budget, FTRI previously indicated that it
intended to “expand the quantity of Regional Distribution Centers (RDCs) while
working with the existing RDCs to evaluate and implement a business model that
enables them to provide FTRI services at break-even.” Staff did not recommend
approval of FTRI’s proposed Fiscal Year 2020/2021 RDC expense of $664,128.
However, in consideration of FTRI’s intent to increase the number of RDCs, and
recognizing the importance of adequately funding equipment distribution
channels, staff recommended, and the Commission approved continued funding at
FTRI’s estimated 2019/2020 expense level of $535,647.
FTRI previously
indicated, as part of last year’s budget request, that the fee per service
structure was not financially performing at a break-even point for the RDCs.
FTRI contracts with the non-profit RDCs to perform equipment distribution and
training throughout Florida. The amount of funds for FTRI’s contracts with RDCs
varies based on the number of clients they assist. More funds are provided for
connecting a new client, while fewer funds are provided to assist existing
clients in the system.
The
Commission determined that FTRI did not present sufficient cost detail
regarding the compensation to RDCs and their associated costs. The Commission
concluded that additional information was needed to confirm the appropriate
reimbursement rate FTRI pays RDCs. The Commission requested FTRI to provide a
financial break-even analysis related to the RDC’s fee structure and present the
results to the Commission with its Fiscal Year 2021/2022 proposed budget filing.
The analysis was not included with the proposed budget filing.
In
response to a staff data request regarding the break-even analysis, FTRI stated
that only three of the twenty-three RDCs responded. FTRI explained that it does
not believe the information received is sufficient to provide a meaningful
analysis. FTRI further responded that the impact of the pandemic has made it
difficult to determine RDCs break-even. FTRI requested a postponement of the
analysis until a more normal business environment returns.
Staff
understands that the Fiscal Year 2020/2021 break-even analysis was adversely
impacted by the pandemic. Considering the continued decline in equipment
distributed and client inquiries, staff believes it is critical that FTRI renew
its effort to evaluate the RDC model. Therefore, FTRI should be ordered to
submit the RDC break-even analysis with its Fiscal Year 2022/2023 budget
filing. Further, it would be beneficial for FTRI to provide a status update to
staff and the TASA Advisory Committee at the October 2021 TASA Advisory
Committee meeting. Staff believes FTRI’s proposed budget for Category III
expense is reasonable.
Category
IV – Outreach
Outreach
efforts are designed to promote FTRI’s equipment distribution services and to
raise awareness about Florida relay service. FTRI’s proposed Fiscal Year
2021/2022 outreach budget remains unchanged from the Commission-approved
outreach budget for Fiscal Year 2020/2021.
FTRI
employs various forms of communication in its outreach strategy. FTRI plans to
continue advertising in newspapers using free-standing insert ads (flyers) in
markets where such ads continue to be effective. However, FTRI acknowledges
that it has witnessed rapid changes in the newspaper industry. In response,
FTRI will utilize other print tools such as direct mail post cards and coupon
book advertisements. FTRI also plans to continue expanding its digital
marketing campaign, including increased use of banner ads on websites, as well
as targeted email and social media campaigns.
The
Commission has previously encouraged FTRI to research and consider more
technologically advanced and cost-effective forms of outreach in addition to
traditional newspapers. Most recently, during the Commission’s February 16,
2021 Internal Affairs meeting, the Commission discussed FTRI exploring
improvements to its website. Specifically, the Commission encouraged FTRI to consider
the addition of an online chat function to help with customer inquiries, as
well as the creation of an online consumer portal similar to what is utilized
by the Florida Department of Children and Families. Through such a portal consumers
could enter personal qualifying information and be automatically advised of
available equipment and directed to the appropriate RDC for service.
Staff
recommends that FTRI, in consultation with the TASA Advisory Committee, explore
the development of such online mechanisms to facilitate a potentially effective
means of obtaining needed services by qualifying customers. Consistent with the
RDC break-even analysis, it would be beneficial for FTRI to provide a status
update to staff and the TASA Advisory Committee at the October 2021 TASA
Advisory Committee meeting. Staff believes FTRI’s proposed budget for Category
IV expense is reasonable.
Category
V – General & Administrative
Category V
reflects the expenses associated with FTRI’s operations, such as office and
furnishings, employee compensation, contracted services (auditors, attorney and
computer consultants), computers, and other operating expenses. FTRI is
proposing $931,141, which represents a $10,086 decrease in Category V expense
for Fiscal Year 2021/2022. Staff believes FTRI’s Category V expenses are
reasonable.
Conclusion
Staff recommends the Commission approve FTRI’s proposed
budget expenses of $4,450,727 for Fiscal Year 2021/2022. Staff recommends the
Commission order all local exchange companies to continue billing the $0.10 TRS
surcharge for Fiscal Year 2021/2022. Staff further recommends the Commission
require FTRI to conduct a financial break-even analysis of the Regional
Distribution Center fee structure and present the results to the Commission
with its Fiscal Year 2022/2023 budget filing.
Issue 2:
Should this docket be closed?
Recommendation:
If no person whose substantial interests are
affected by the proposed agency action files a protest within 21 days of the
issuance of the order, this docket should be closed upon the issuance of a
consummating order. (Murphy)
Staff Analysis:
At the conclusion of the protest period, if no
protest is filed this docket should be closed upon the issuance of a
consummating order.
Florida
Telecommunications Relay, Inc.
Fiscal Year 2021/2022 Budget @ .10 cents surcharge
|
|
Estimated to Budget
|
Budget to Budget
|
|
|
2020/2021
|
2020/2021
|
2021/2022
|
VARIANCE
|
VARIANCE
|
|
|
APPROVED
|
ESTIMATED
|
|
2020/2021
|
2020/2021
|
|
|
BUDGET
|
REV & EXPEND
|
BUDGET
|
2021/2022
|
2021/2022
|
|
OPERATING REVENUE
1 Surcharges
|
4,792,249
|
4,653,281
|
4,374,084
|
(279,197)
|
(418,165)
|
|
2 Interest Income
|
114,589
|
20,604
|
22,843
|
2,239
|
(91,746)
|
|
TOTAL OPERATING REV
|
4,906,838
|
4,673,885
|
4,396,927
|
(276,958)
|
(509,911)
|
|
OTHER REVENUE/FUNDS
3 Surplus Account
|
17,222,460
|
17,800,593
|
18,286,093
|
485,500
|
1,063,633
|
|
TOTAL REVENUE
|
22,129,298
|
22,474,478
|
22,683,020
|
208,542
|
553,722
|
|
OPERATING EXPENSES
|
|
|
|
|
|
CATEGORY I - RELAY SERVICES
4 DPR Provider 2,254,960 2,254,960 1,647,753 (607,207) (607,207)
SUBTOTAL-CATEGORY I 2,254,960 2,254,960 1,647,753 (607,207) (607,207)
CATEGORY II - EQUIPMENT & REPAIRS
|
5 TTY/TDD
|
0
|
0
|
0
|
0
|
0
|
|
6 CapTel Phone Equipment
|
0
|
0
|
0
|
0
|
0
|
|
7 VCP
Hearing Impaired
|
577,203
|
278,296
|
577,203
|
298,907
|
0
|
|
8 VCP
Speech Impaired
|
0
|
0
|
0
|
0
|
0
|
|
9 TeliTalk Speech
Aid
|
32,760
|
32,250
|
32,760
|
510
|
0
|
|
10 In-Line Amplifier
|
34,950
|
103,170
|
34,950
|
(68,220)
|
0
|
|
11 ARS
Signaling Equip
|
2,592
|
0
|
2,592
|
2,592
|
0
|
|
12 VRS
Signaling Equip
|
16,400
|
8,200
|
16,400
|
8,200
|
0
|
|
13 Accessories & Supplies
|
518
|
50
|
518
|
468
|
0
|
|
14 Telecomm Equip Repair
|
108,812
|
30,192
|
108,812
|
78,620
|
0
|
|
SUBTOTAL-CATEGORY II
|
773,235
|
452,158
|
773,235
|
321,077
|
0
|
CATEGORY III - EQUIPMENT DISTRIBUTION & TRAINING
|
15 Freight-Telecomm Equip
|
30,862
|
20,595
|
30,862
|
10,267
|
0
|
|
16 Regional Distr Centers
|
535,647
|
161,812
|
531,618
|
369,806
|
(4,029)
|
|
17 Training Expense
|
468
|
468
|
468
|
0
|
0
|
|
SUBTOTAL-CATEGORY III
|
566,977
|
182,875
|
562,948
|
380,073
|
(4,029)
|
Florida
Telecommunications Relay, Inc.
Fiscal Year 2021/2022 Budget @ .10 cents surcharge
Estimated to Budget Budget
to Budget
|
2020/2021
|
2020/2021
|
2021/2022
|
VARIANCE
|
VARIANCE
|
|
APPROVED
|
ESTIMATED
|
|
2020/2021
|
2020/2021
|
|
BUDGET
|
REV & EXPEND
|
BUDGET
|
2021/2022
|
2021/2022
|
CATEGORY IV - OUTREACH
18 Outreach Expense 535,650 433,143 535,650 102,507 0
SUBTOTAL-CATEGORY IV 535,650 433,143 535,650 102,507 0
CATEGORY V - GENERAL
& ADMINISTRATIVE
|
19 Advertising
|
0
|
0
|
0
|
0
|
0
|
|
20 Accounting/Auditing
|
20,823
|
21,146
|
21,624
|
478
|
801
|
|
21 Legal
|
28,776
|
11,022
|
12,281
|
1,259
|
(16,495)
|
|
22 Computer Consultation
|
5,020
|
6,431
|
5,460
|
(971)
|
440
|
|
23 Dues & Subscriptions
|
2,482
|
1,230
|
1,380
|
150
|
(1,102)
|
|
24 Office Equipment Purchase
|
7,131
|
7,730
|
7,711
|
(19)
|
580
|
|
25 Office Equipment Lease
|
1,751
|
1,778
|
1,778
|
0
|
27
|
|
26 Insurance-Hlth/Life/Dsblty
|
181,893
|
149,461
|
172,997
|
23,536
|
(8,896)
|
|
27 Insurance-Other
|
9,741
|
10,253
|
9,741
|
(512)
|
0
|
|
28 Office Expense
|
12,248
|
10,466
|
10,477
|
11
|
(1,771)
|
|
29 Postage
|
4,139
|
3,025
|
3,025
|
0
|
(1,114)
|
|
30 Printing
|
1,323
|
704
|
1,177
|
473
|
(146)
|
|
31 Rent
|
91,715
|
91,304
|
91,304
|
0
|
(411)
|
|
32 Utilities
|
5,408
|
4,971
|
4,945
|
(26)
|
(463)
|
|
33 Retirement
|
77,030
|
67,828
|
78,849
|
11,021
|
1,819
|
|
34 Employee Compensation
|
431,510
|
422,417
|
443,590
|
21,173
|
12,080
|
|
35 Taxes - Payroll
|
31,979
|
30,840
|
30,977
|
137
|
(1,002)
|
|
36 Taxes - Unemplmt Comp
|
56
|
2,957
|
2,957
|
0
|
2,901
|
|
37 Taxes - Licenses
|
61
|
61
|
61
|
0
|
0
|
|
38 Telephone
|
17,030
|
16,997
|
19,940
|
2,943
|
2,910
|
|
39 Travel & Business
|
8,111
|
1,000
|
8,111
|
7,111
|
0
|
|
40 Equipment Maint.
|
855
|
598
|
611
|
13
|
(244)
|
|
41 Employee Training/Dev
|
2,145
|
3,030
|
2,145
|
(885)
|
0
|
|
SUBTOTAL-CATEGORY V
|
941,227
|
865,249
|
931,141
|
65,892
|
(10,086)
|
|
|
TOTAL EXPENSES
|
5,072,049
|
4,188,385
|
4,450,727
|
262,342
|
(621,322)
|
|
|
REVENUE LESS EXPENSES
|
17,057,249
|
18,286,093
|
18,232,293
|
(53,800)
|
1,175,044
|
|
