C-2
DRAFT

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Telecommunications Division					RESOLUTION T-16388
Carrier Branch							May 4, 20000

R E S O L U T I O N

RESOLUTION T-16388.   GREENLINING INSTITUTE, GTE-CALIFORNIA, LATINO ISSUES FORUM, AND THE CONSUMER SERVICES DIVISION SUBMITS PROPOSED SET OF BY-LAWS OF THE GTEC TELECOMMUNICATIONS CONSUMER PROTECTION FUND OVERSIGHT CORPORATION. 
BY LETTER, FILED ON DECEMBER 27, 1999.
_______________________________________________________________

SUMMARY

This Resolution addresses a set of proposed by-laws filed by the Greenlining Institute (Greenlining), GTE - California (GTEC), the Latino Issues Forum (LIF) and the Commission’s Consumer Services Division (CSD) (collectively referred to as “Parties” or “settling parties”) to implement a Telecommunications Consumer Protection Fund (Fund).  The Fund is to be established for the benefit of limited-English and non-English speaking customers in the service areas most affected by the allegedly abusive marketing practices of GTEC.  

The Parties filed by letter a request to the Director of the Telecommunications Division (TD), on December 27, 1999.   The proposed set of by-laws and the accompanying documents (collectively referred to herein as “by-laws”) create a framework to implement the Commission’s policy as set forth in D.98-12-084 approving the All-Party Settlement Agreement.  The filing contains provisions that are consistent with D.98-12-084, and the method that the Parties have taken therein comports with Option Two that the Commission specified in D.98-12-084.  

The proposed by-laws of the Consumer Protection Fund Oversight Corporation contain provisions that are consistent with the Commission’s decisions and do not conflict with any provisions thereof.  Nevertheless, we herein order Parties to this proceeding to revise the by-laws to reflect the additional safeguards that the Parties proposed in their comments to the draft of this resolution.  We approve the by-laws subject to the Parties’ filing the modifications ordered herein and subject to the written approval of the Director of the Commission’s Telecommunications Divison.  We further clarify that we do not view the Consumer Protection Fund Oversight Board as an advisory board to the Commission comparable to other boards such as the Universal Lifeline Telephone Service Marketing Board (ULTSMB) or the Low Income Governing Board (LIGB).  Rather, we consider it to be an autonomous, self-governing body.

In approving these by-laws with the modifications ordered herein, we note that the source of revenues for this Fund is GTEC’s shareholders, not GTEC’s ratepayers.  GTEC’s management agreed to provide this Fund for the benefit of affected customers to resolve a case of alleged marketing abuse. Thus, the source of financial support of the Telecommunications Consumer Protection Fund is neither a ratepayer refund, nor is it a penalty imposed upon GTEC or its shareholders.  

BACKGROUND

On February 19, 1998, the Commission issued an order instituting investigation opening I.98-02-025 to investigate allegations regarding GTEC California (GTEC).  On March 6, 1998, the Greenlining Institute (Greenlining) and the Latino Issues Forum (LIF) filed a Motion to Intervene into I.98-02-025 on behalf of their constituencies of limited-English speaking and non-English speaking people which was granted on May 12, 1998.  On September 9, 1998, the Consumer Services Division (CSD), GTEC, Greenlining, LIF, and the individual respondents to the investigation jointly filed a motion to approve a proposed settlement agreement.  This settlement agreement was approved by the Commission on December 17, 1998, in an Opinion Approving Modified All-Party Settlement Agreement, D.98-12-084 (D.98-12-084). 

The purpose of the fund is to facilitate and further telecommunications consumer protection and education in non-English and limited-English speaking communities in the GTEC California (GTEC) service area, particularly those populations most negatively impacted by the practices addressed in Commission Resolution No. T-15404.  Specifically, the fund should be used for projects intended to remedy the harms created by the types of activity addressed in Res. No. T-15404.

The Commission provided three options in D.98-12-084 for administering the Telecommunications Consumer Protection Fund (Fund): 

(1) 	the parties could submit a proposal identifying to whom the entire fund will be distributed and for what purpose and target groups; 
(2) 	GTEC, or an outside party, could establish and administer the Fund with limited oversight and reporting to the CPUC; or 
(3) 	GTEC could retain the funds, and the CPUC appoint a purely advisory board to review grant proposals and make recommendations to the CPUC.

In D.98-12-084, the CPUC stated its preference for Option One over the other two options.  On January 22, 1999, GTEC, CSD, Greenlining, LIF and the individual respondents ratified the Commission's modifications to the All-Party Settlement in a unanimous filing with the Commission.  

D.98-12-084 directed GTEC, Greenlining and LIF, and the Staff of the Telecommunications Division (Staff) to discuss terms of administration for the Fund at meetings noticed by the Staff.  The Telecommunications Division requested proposals to implement an education trust fund from the Parties to be filed on or before April 15, 1999.  GTEC, Greenlining and LIF filed their Joint Proposal on April 15, 1999.  

In accordance with D.98-12-084, the Staff gave notice of a public workshop.  Staff prepared a Discussion Paper on the Joint Proposal, and distributed it on April 30, 1999 directly to the Parties.  Staff also placed notice of the workshop and availability of the Discussion Paper on the Commission’s Daily Calendar.  Staff also posted the Discussion Paper on the CPUC’s web site.  Staff conducted a workshop on May 5, 1999 wherein Parties met with Staff to discuss the Staff’s recommended changes to the Parties’ Joint Proposal. 

Over the intervening months, from the date of the workshop until the present letter request filing which is the subject of this Resolution, the Parties provided additional draft implementation documents for the Telecommunications Division’s review.  The proposed set of by-laws filed on December 27, 1999 incorporated changes to the draft documents that respond to the issues discussed at the workshop.

SUMMARY OF PARTIES’ FILING

The Telecommunications Division (TD) has reviewed the proposed set of by-laws and recommends that the Commission approve it.  In making its recommendations, the TD is mindful of the guidance that the Commission provided by Resolution T-16712, implementing the Community Partnership Commitment (CPC).  The proposed set of by-laws complies with the principles underlying Resolution T-16172.  

FORMATION OF A CONSUMER PROTECTION TRUST OVERSIGHT BOARD

Responding to Staff’s concern expressed in the May 5, 1999 workshop, the proposed set of by-laws incorporates a plan to establish a governing body, designated as the “Consumer Protection Fund Oversight Corporation” (Oversight Corporation).  The Oversight Corporation will provide independent oversight for a $4.8 million fund (Fund) created by the settling parties in I.98-02-025.  Parties propose that the Oversight Corporation will provide accountability for the program, will be organized as a non-profit California corporation, and will be governed by by-laws.  It will be comprised of 5 voting members to represent the interests of various stakeholders.  The by-laws designate three individuals who will initially serve on the Board of Directors of the Oversight Corporation. There are four vacancies for additional Board members: two of these vacancies are for voting member, one is for a non-voting member representing GTEC, and one is for a non-voting member designated as a CPUC liaison.

SELECTION OF FUND ADMINISTRATOR 

The primary task of the corporation will be to select and monitor one or more non-profit Fund Administrator(s) capable of receiving and distributing the $4.8 million Fund.  The proposed set of by-laws states that the Oversight Corporation should issue an RFP within 45 days of incorporation, in order to find one or more third parties capable of administering this Fund.  The RFP will allow non-profit organizations to present their qualifications for administering the Fund.  Attached to the proposed set of by-laws is a representative RFP.  

Proposals are due within 35 days after issuance of the RFP, and the Oversight Corporation will choose one or more Fund Administrators within 35 days of the deadline for proposals.  Any administrator candidate must show that it is a non-profit corporation capable of distributing these funds, and must present a proposed budget for administration of the Fund.  The candidate must also show: (1) it works with or is conversant with community-based organizations assisting limited-English and/or non-English speaking consumers in GTEC's service areas; (2) it has a history of ethical and responsible practices; (3) it has sufficient resources, in terms of personnel, technology and experience, to manage a Fund of this size; and (4) it has the ability to report quarterly to the Corporation and the Commission on the status of the Fund, and to provide a full annual review, preferably by way of independent audit.  Copies of all submitted proposals for Fund Administrator shall be immediately distributed to all Board members or directors. 

The Commission will be advised of the successful selection of the Fund Administrator by means of an informational letter filing, but appointment of the Fund Administrator(s) will not be made subject to Commission approval.  The Fund Administrator(s) will execute a Memorandum of Agreement with the Oversight Corporation within a reasonable amount of time.  The proposed set of by-laws includes a representative Memorandum of Agreement. 

REPORTING REQUIREMENTS	

Under the terms of the proposed set of by-laws, once selected, the Fund Administrator will work autonomously to make grants, and to file quarterly reports.  The Fund Administrator shall file quarterly written progress reports showing its expenditures of that year to date, including administrative costs, grant payments, total grant payments to date, and money remaining in the Fund for distribution. Filings made to the Commission for this program will be informational in nature.  

The Oversight Corporation will monitor the activities of the Fund Administrator without the necessity of Commission intervention.  The existence and functioning of an Oversight Corporation will streamline the Program’s operations.

GRANTMAKING CRITERIA

In D.98-12-084, the Commission stated that the Fund “is intended to educate non-English speaking customers only in the potentially affected service area.”  (D.98-12-084 at 20.)  Therefore, the Fund Administrator(s) shall distribute Fund money in a manner which best promotes the education and interests of limited-English and non-English speaking communities in GTEC service areas.  In particular, the fund should be used for projects intended to remedy past harms by educating the target communities.  

To determine which communities should receive the benefits of Fund money, the by-laws provide that the Corporation shall take steps to insure that the Fund Administrator(s) consider(s) a diversity of limited-English and non-English speaking communities.  In order to meet this requirement, the Fund Administrator(s) must send out annual (or more frequent) Requests For Proposals to non-profit groups which work with limited-English and non-English speaking people in the GTEC service areas.  These non-profit groups must submit written grant proposals setting forth the planned use of the money by that group.  The Fund Administrator(s) will choose from these grant proposals which groups deserve funding for their proposed projects.  

Grants chosen by the Fund Administrator(s) for funding should focus on telecommunications consumer protection and education issues (empowerment).  The Fund Administrator(s) should base its decision regarding grant funding upon this principle and upon the CPUC’s stated purpose for the Fund (cited above).  Groups requesting funds cannot be funded if they do not provide telecommunications consumer protection and education services in limited-English speaking or non-English speaking communities in the GTEC service area.

Under the terms of the proposed by-laws, solely the Fund Administrator(s) shall make the decision regarding which groups will be awarded funding.  Grant proposals submitted by groups shall not be distributed to the settling parties, and the Fund Administrator(s) will act independently in making grant decisions.  After approval, the winning proposals shall be made public.  According to the filed by-laws, the Corporation shall change no funding decisions of the Fund Administrator(s).  The Fund Administrator shall exercise the care and prudence of a reasonable fiduciary.  Any complaints received by the Fund Administrator(s) about any aspect of the Administrator's activities shall be forwarded to the Corporation.  

The Fund Administrator(s) shall distribute all the Fund money from GTEC within three years after receipt of the funds.  All grantee programs shall be completed in the year following receipt, or as soon thereafter as possible.  

COMMISSION’S AND CORPORATION’S OVERSIGHT AUTHORITY

The Commission shall have power to monitor and examine the records of both Corporation and the records of the Fund Administrator(s) relative to this Fund.  Members of the Corporation's Board of Directors shall also have the right, upon reasonable notice, to inspect the books and records of the Fund Administrator(s) relating to this Agreement.  Inquiry into the Fund Administrator's administration of the Fund may be suggested by the settling parties, and/or initiated by the Corporation or Commission.  The Corporation or the Commission, independent of the settling parties would conduct any inquiry.  On request of the settling parties or the Corporation, the Commission may intervene in any way it sees fit to preserve the Fund and further the purposes for which the Fund was created.   

The Commission and/or Corporation will retain authority to disallow any portion of the third party Fund Administrator’s costs, which exceed their annual budget at the end of the year.    

If for any reason a Fund Administrator becomes unable to continue acting as an Administrator, or it is determined by the Corporation with notice to the Commission, or it is determined by the Commission, that good cause exists for the removal of the Administrator from that position and role, the agreement with the Fund Administrator may be terminated.  Good cause includes, but is not limited to: the Fund Administrator’s loss of tax-exempt status; the Fund Administrator's bankruptcy; ethical improprieties committed in administering the Fund; or repeated violation of the Fund requirements as set forth by the Corporation and described herein. 

SCHEDULE FOR GTEC’S DISBURSEMENT OF FUNDS

Under the terms of the All-Party Settlement Agreement Resolving I.98-02-025, and approved in D.98-12-084, GTEC will disburse $1.62 million each year for the first two years to the Fund and $1.61 million the third year. To implement this requirement, the by-laws state that the first payment will be released by GTEC to the Fund Administrator(s) as soon as the Fund Administrator is selected by the Corporation and under contract, in amounts designated by the Corporation.  The second payment will be released on the later of that same date, or June 1, 2000.  The third payment will be released on June 1, 2001.  The Corporation shall exert its best efforts to insure that the Fund Administrator(s) disburses the money in the twelve months after its receipt, in its entirety, to grantees.  Thus, all funds shall be disbursed to grantees by June 1, 2002, and expended by grantees by June 1, 2003, or as soon thereafter as possible.  All funds that remain with the Fund Administrator(s) as of June 1, 2002, or unexpended by any grantee as of December 31, 2003 shall be transferred to another non-profit designated by the Corporation (with notice to the Commission), and all agreements with grantees shall so provide.

The by-laws further state that, within 7 days of being notified by the Corporation that one or more Fund Administrator(s) have been selected, GTEC shall transfer the first payment of $1.62 million to the Fund Administrator(s), plus interest after taxes, minus 1.5% (of $1.62 million) which will be paid directly to the Corporation by GTEC for the Corporation's first-year operating expenses.  The Fund Administrator(s) will acknowledge this transfer by executing a Receipt for Restricted Funds and Memorandum of Agreement.  GTEC will transfer the second payment of $1.62 million to the Fund Administrator(s) on June 1, 2000 (minus 1% for Corporation expenses), and the third payment of $1.61 million on June 1, 2001 (minus 1% for Corporation expenses), pursuant to request by, and notice of, the Board.
GTEC will transfer 1.5% the first year, and 1% in the two succeeding years, of the scheduled payments directly to the Corporation (e.g., approximately $24,000 in year one, $16,000 in year two), to be used by the Corporation for its expenses (annual meetings, management company, per diem, postage, telephone, and other reasonable expenses).  The Corporation shall make a written accounting of such funds at each year-end, and provide such accounting to any interested person on demand (including but not limited to the Commission and settling parties).  All such operating expense funds not expended after the wind-up of the Corporation’s affairs shall be paid to one or more of the previously chosen non-profit grantees selected by the Fund Administrator(s) and approved by the Corporation, with notice to the Commission. 
In the event that the Corporation Board determines that it needs more than 1% of the Fund for its costs in year 2 or 3, it shall apply in writing to the settling parties, with notice to the Commission, stating in full why the 1% payment was insufficient and why further monies are needed.  Any such further payment shall not be made without the concurrence of all settling parties or order of the Commission.  
DISCUSSION
The Commission finds the terms of the Parties’ proposed by-laws to be reasonable with the modifications that the Parties proposed in their comments to the draft of this resolution.  In their original filing, the Parties proposed an organizational structure of an Oversight Corporation and the Fund Administrator(s), with the Fund Administrator acting independently in managing the Fund, and in making grant decisions, subject only to an after-the-fact review by third parties.  We believe that the originally proposed structure confers an excessive degree of responsibility to the Fund Administrator(s) by giving it autonomous authority.  Further weakening the system of controls, and in spite of the hindsight review, “[n]o funding decisions of the Fund Administrator shall be changed by the Corporation.”  Under the proposed structure, hypothetically an entire year of funds could be improperly disbursed (i.e., in the first quarter of operations) before any remedial action would be possible.  The possibility of such a negative result is potentially too damaging to the groups that are intended to benefit from this Trust, to approve the by-laws as filed.  
We therefore order the Parties to revise the proposed structure set out in the by-laws and accompanying documents to reflect the proposed safeguards offered by Parties (discussed below). The Fund Administrator of the GTEC Education Trust Fund is approved to manage the Fund and determine final approval and funding of grants, subject to an expedited appeal process whereby the Board is available to hear complaints regarding allegations that the Fund Administrator has proposed a grant to an unqualified organization or for a purpose inconsistent with the Fund.  We also approve the Parties’ proposed additional, specific procedures in the contract between the Board and the Fund Administrator to control the timing and amount of disbursements to grantees as well as a bonding or insurance requirement for the Fund Administrator. 
The proposed by-laws provide for overhead expenses of the Oversight Corporation in the amount of 1.5% of the annual funding level (approximately $24,000) the first year, and 1% ($16,000) in each of the two succeeding years.   

The proposed by-laws also state:

The Corporation shall exert its best efforts to insure that the Fund Administrator(s) disburses the money in the twelve months after its receipt, in its entirety, to grantees.  Thus, all funds shall be disbursed to grantees by June 1, 2002, and expended by grantees by June 1, 2003, or as soon thereafter as possible.  All funds that remain with the Fund Administrator(s) as of June 1, 2002, or unexpended by any grantee as of December 31, 2003 shall be transferred to another non-profit designated by the Corporation (with notice to the Commission), and all agreements with grantees shall so provide. (By-laws, p. 3, Emphasis added)

Elsewhere in the proposed by-laws, the date specified by which grantees are to expend their funds is inconsistently stated as December 31, 2003.  We herein order that the provision for unspent funds be deleted.  The by-laws shall state that disbursement of funds to grant recipients shall be completed by June 1, 2002, and grantees’ expenditure of funds shall be completed by June 1, 2003.  The by-laws shall also be modified to specify that, unless the Commission directs otherwise, the Board is to take all necessary steps to achieve dissolution by December 31, 2003 or as soon thereafter as regulatory authorities permit.

311 MAILING OF DRAFT RESOLUTION 
 
The draft resolution of the Telecommunications Division in this matter was mailed to the parties in accordance with PU Code Section 311 (g). 

COMMENTS ON PROPOSED RESOLUTION

On February 14, 2000 Parties filed Joint Comments of GTE California Incorporated (U-1002-C), the Greenlining Institute and Latino Issues Forum on Draft Resolution T-16388 (Joint Comments).   On February 23, Greenlining late-filed Reply Comments.  

The Joint Comments first address the draft resolution’s concern over the by-law which provides that the Board shall change no funding decision of the Fund Administrator.  In the draft resolution, the Commission expressed its concern that, the Fund Administrator could hypothetically improperly disburse an entire year of funds before any remedial action would be possible.  The Parties agree that the broad wording of this by-law should be modified.   However, the Parties believe that placing all decision-making authority in the hands of the Board would not guarantee a solution and could greatly slow down the effort to put grant monies from the Fund into the communities it is intended to benefit.  

In their Joint Comments, the Parties provided the reason that they had decided to give responsibility for grant-making decisions and fund management to one or more professional Fund Administrators.  Parties state that the reason they conferred this responsibility on the Fund Administrator was to provide for the most efficient, independent, and robust grant-making process possible, and particularly to avoid the delays and apparent conflicts of interest which they believe, have troubled similar funds.  

The Parties therefore propose some alternative measures, which they believe, will directly reduce the chance of undetected funding improprieties.  The Parties recommend an expedited appeal process whereby the Board is available to hear complaints regarding allegations that the Fund Administrator has proposed a grant to an unqualified organization or for a purpose inconsistent with the Fund.  The Parties also propose additional, specific procedures in the contract between the Board and the Fund Administrator to control the timing and amount of disbursements to grantees as well as a bonding or insurance requirement for the Fund Administrator.

The Parties claim that making the Board responsible for all grant decisions and the day-to-day management of the Fund is likely to reduce the pool of qualified community leaders willing to serve.  Moreover, giving such authority to five Board members from disparate backgrounds in the community, and without specific professional experience in grant-making or fund administration, may precipitate the sort of delays which the Parties believe other community funds have experienced.  In contrast, most fund administrators are themselves tax-exempt, non-profit corporations, with their own boards of directors, their own errors and omissions insurance, and their own funding guidelines (which would in case of conflict be superceded by the specific criteria of the Fund here at issue). 
	
Finally, the Joint Comments note that the draft Resolution is incorrect when it refers to the Oversight Corporation as tax-exempt.  As planned by The Parties, the Oversight Corporation would be a California non-profit corporation but would not be required to have tax-exempt status. The Resolution is modified to correct this error.  The Parties state that if the Board were to manage the Fund, as the draft resolution suggests, then the Oversight Corporation would have to secure tax-exempt status, which the Parties claim, is a time-consuming and expensive process the Parties sought to avoid.  Using the Fund Administrator for this purpose, in contrast, takes advantage of the fact that one of the qualifications of the Fund Administrator is that it already be a tax-exempt organization, and to order that the Oversight Corporation be established as a tax-exempt entity.

The Joint Comments recognize that the draft resolution’s concern about controls over funding improprieties and the speed with which they are detected and corrected is valid.  The Parties outline the changes they recommend to achieve the control objectives stated in the draft resolution.

The Parties recommend that the form contract for the Fund Administrator included in the December 27, 1999 filing be modified to provide for a protest period.  During the period within 10 days of the public notice of the award of the grant, any interested party would be able to file an appeal with the Board arguing that a grant had been made to an unqualified organization or for a purpose inconsistent with the Fund.  To avoid prolonged delay, the appeal would have to be filed in writing with the Board, and the Board would dispose of the appeal within 30 days of its filing.  The Fund Administrator would not disburse grant funds until either the 10 day filing period expires with no appeal filed or after the Board disposes of the appeal. 

Regarding the problem of a non-performing grantee, the Parties believe that the first and best line of defense should be the professional Fund Administrator.  While the proposed form of contract for the Fund Administrator already contains several safeguards in this respect, the concerns in the draft resolution have caused the Parties to conclude that additional or more detailed procedures should be specified which the Fund Administrator must follow and which the Board can monitor.  These procedures include the following:

•	All grants in excess of $20,000 must be disbursed in no less than three increments.  
•	For grants in excess of $20,000, no funding increment (after the first increment) shall be released until the grantee provides the Fund Administrator with a brief summary of grant status along with any work product to date (reports, brochures, list of presentations, etc.)
•	The Fund Administrator shall include in every grant agreement a right to audit the grantee’s books and records and the obligation of the grantee to refund to the Fund any monies, which the audit determines, were improperly spent.
•	The Fund Administrator shall report to the Board all complaints which it receives regarding the performance of any grantee and shall advise the Board of its investigation and resolution of all such complaints.
•	The Fund Administrator must post a bond or provide evidence of insurance sufficient to cover the loss of all Fund monies entrusted to it.

Parties argue that excepting small grants from some of these requirements would be practical because compliance could require more personnel and expense than the grant itself could justify.  The risk of loss of funds is minimal and the Parties do not want to discourage small grant applicants.  The Joint Comments do not define what is meant by “small grant.”  

The Parties note that the changes discussed in these comments will require a higher degree of Board activity.  Accordingly, we recommend the final resolution increase the Board’s budget to $48,000 for the first year’s funding and $32,000 in the second and third years.  However, Parties do not believe that the Fund Administrator’s budget ceiling should be changed because its management activities will not be reduced if these comments are adopted in the final resolution.

We are persuaded by Parties’ arguments on this point.  The proposed additional safeguards are adequate to ensure that improprieties will be detected and remedied in a timely manner.

The Joint Comments also respond to the draft resolution’s requirement for the disbursement of all funds no later than June 1, 2003.  The Parties state that the by-laws as submitted allow the Fund Administrator to distribute any remaining monies to previously selected grantees by December 31, 2003.  The reason for this provision was that there would be no way either the Fund Administrator or the Board could insure all money would be disbursed to grantees by a certain date.  Grantees may return unused funds or be ordered to do so.  In addition, either the Fund Administrator or the Board or both may have unused funds from their budgets.  For these reasons, the Parties believed the simplest method of disposing of what is likely to be a rather modest amount of unused funds in order to permit the wind-up and dissolution of the Board was to distribute any remaining sums to previously selected grantees.  The Parties suggest this provision be reinstated in the final resolution.  

We disagree with the Parties’ statement that “that there would be no way either the Fund Administrator or the Board could insure all money would be disbursed to grantees by a certain date.”  The Board would be able to ensure that grants had been made by this date certain if it is made a requirement of the by-laws.  

The draft resolution specifies that the Oversight Corporation be dissolved by a date certain, i.e., December 31, 2003.  The Parties note that, as a non-profit California corporation, the Oversight Corporation may be dissolved only with the approval of the Attorney General.  For this reason, the Parties recommend that the final resolution require that, unless the Commission directs otherwise, the Board is to take all necessary steps to achieve dissolution by December 31, 2003 or as soon thereafter as regulatory authorities permit. This proposed modification is reasonable and is adopted. 

In its Reply Comments, Greenlining further expresses its hope that the Commission will leave open the possibility of using the fund structure for other settlement or cy pres monies, especially if they are telecommunications related.  The Commission, given its plenary power to intervene in the Oversight Corporation's affairs, could order the Corporation to amend its by-laws to extend its own life, apply new funds to purposes other than those currently specified in the by-laws, and (if necessary) remove the GTE representative from participation in the Fund's activities after the GTE-specific aspect of the Fund has been completed.  We believe we have addressed the possibility that the Commission may find a further purpose for continuing the Fund beyond the year 2003, by adopting the Parties’ proposed language, “unless the Commission directs otherwise…”

The Parties note an inconsistency between Finding No. 8 and Finding No. 9 of the draft resolution.  The former stated that there is one non-voting seat on the Board reserved for the Commission but the latter states that no Commission representative will be appointed to the Board.  The resolution is modified to state that there will be a non-voting liaison position from the CPUC, but that no Commissioner shall have a “seat”, or membership on the Board of Directors.

The Parties also note that Ordering Paragraph No. 8 mandates new language to be added to the by-laws requiring funded projects to focus on “informing and educating” limited and non-English-speaking communities regarding protection from telecommunications marketing abuses.  Parties recommend that all references in the final resolution and Fund documents track the language of the Settlement Agreement as approved by the Commission in D. 98-12-084 which states that it is the purpose of the Fund “to facilitate and further consumer protection and education of limited English and non-English-speaking communities potentially affected by GTEC’s alleged 1989-92 marketing abuses.” This proposed change is reasonable and is adopted in the final resolution.  

The Parties agree with Ordering Paragraph No. 7, which requires the Board to make a yearly written accounting, and with Ordering Paragraph No. 5, which orders the Board to identify in its quarterly reports the measurable benefits, if any, that have been realized by grantees. 

CONCLUSION
The proposed set of by-laws filed by the Parties, as modified by this Resolution, complies with the D.98-12-084 and with the All-Party Settlement Agreement in I.98-02-025.  As modified by this Resolution, the method followed in the by-laws comports with Option Two that the Commission specified in D.98-12-084.   The Telecommunications Division recommends that it be approved as modified.  

FINDINGS

1.	By a letter to the Director of the Telecommunications Division, dated December 27, 1999, Greenlining Institute submitted a set of proposed by-laws (Greenlining), on behalf of itself, GTE California (GTEC), the Latino Issues Forum (LIF) and the Commission’s Consumer Services Division (CSD) (collectively referred to as “Parties” or “settling parties”) to implement a Telecommunications Consumer Protection Fund (Fund). 

2.	The proposed set of by-laws and the accompanying documents create a framework to implement the Commission’s policy as set forth in D.98-12-084 approving the All-Party Settlement Agreement.  

3.	In D.98-12-084, the Commission stated that the Fund “is intended to educate non-English speaking customers only in the potentially affected service area.”  (D.98-12-084 at 20.)  Therefore, the purpose of the Fund is to facilitate and further telecommunications consumer protection and education in non-English and limited-English speaking communities in the GTEC California (GTEC) service area, particularly those populations most negatively impacted by the practices addressed in Commission Resolution No. T-15404.

4.	D.98-12-084 directed GTEC, Greenlining and LIF, and the Staff of the Telecommunications Division (Staff) to discuss terms of administration for the Fund at meetings noticed by the Staff.  Proposals to implement an education trust fund were requested from the parties to be filed on or before April 15, 1999.  GTEC, Greenlining and LIF filed a Joint Proposal on April 15, 1999.  

5.	In accordance with D.98-12-084, the Staff gave notice of a public meeting, prepared and distributed a Discussion Paper on the Joint Proposal directly to the parties.  Staff conducted a workshop on May 5, 1999 wherein Parties met with Staff to discuss the Staff’s recommended changes to the Parties’ Joint Proposal. 

6.	The proposed set of by-laws filed on December 27, 1999 incorporate changes to the draft documents that address the issues discussed at the workshop.

7.	The proposed set of by-laws incorporates a plan to establish a governing body, designated as the “Telecommunications Consumer Protection Fund Oversight Corporation” (Oversight Corporation) to provide independent oversight for a $4.8 million fund (Fund) created by the settling parties in I.98-02-025.  

8.	The Oversight Corporation will provide accountability for the program, shall be organized as a California non-profit corporation with tax-exempt status, will be responsible for approval of grants, and will be governed by by-laws.  It will be comprised of 5 voting members to represent the interests of various stakeholders, 1 non-voting member representing GTEC, and 1 non-voting member designated as the CPUC liaison. 

9.	A Commission staff member will be designated to act as a liaison to the Board.

10.	The Commission shall have power to monitor and examine the records of both the Corporation and the records of the Fund Administrator(s) relative to this Fund.  Members of the Corporation's Board of Directors shall also have the right, upon reasonable notice, to inspect the books and records of the Fund Administrator(s) relating to the GTEC Consumer Protection Trust Fund.

11.	The Commission and/or Corporation will retain authority to disallow any portion of the third party Fund Administrator’s costs, which exceed their annual budget at the end of the year.    

12.	The Commission may intervene in any way it sees fit to preserve the Fund and further the purposes for which the Fund was created.   

13.	The source of financial support of the Telecommunications Consumer Protection Fund is neither a ratepayer refund, nor is it a penalty imposed upon GTEC or its shareholders. 

14.	The Commission finds the terms of the Parties’ proposed by-laws to be reasonable as modified by the changes ordered herein.  

15.	The originally proposed structure would confer an excessive degree of responsibility to the Fund Administrator(s) by giving it autonomous authority for fund management and approval of grants. 

16.	Because of its limited responsibilities, the Parties’ filing did not foresee the need for frequent meetings of the Board of the Oversight Corporation.  If the modified by-laws are approved, the Board would have to take a more active approach than under the approval process anticipated by the proposed by-laws. 

17.	The filing, as modified by this resolution, contains provisions that are consistent with D.98-12-084 and the method that the Parties have taken therein comports with Option Two that the Commission specified in D.98-12-084.  

18.	The proposed set of by-laws, as modified by this resolution, complies with the principles underlying Resolution T-16172 implementing the Community Partnership Commitment.

ORDERING PARAGRAPHS

1.	The Parties shall revise the proposed by-laws and accompanying documents to reflect changes discussed in this Resolution.  
2.	Parties to this proceeding shall revise the by-laws to reflect the additional safeguards that the Parties proposed in their comments for the approval of grants.

3.	The Oversight Corporation shall be organized as a California non-profit corporation with tax-exempt status.  

4.	The Parties are authorized to modify the by-laws to reflect a higher level of overhead expenses for the Oversight Corporation.  Parties’ by-laws shall be revised to reflect these changes.  
5.	The Commission shall be advised of the successful selection of the Fund Administrator by means of an informational letter filing, which will be a public document filed with the Commission and served on the Parties. 

6.	Within sixty days following each calendar quarter, the Oversight Corporation shall file with the Commission and shall serve on the Parties, quarterly written progress reports showing its expenditures of that year to date, including administrative costs, grant payments, total grant payments to date, and money remaining in the Fund for distribution.  The Oversight Corporation shall identify in its quarterly reports to the Commission, the measurable benefits, if any, that have been realized from the approved projects.  Filings made to the Commission for this program shall be addressed to the Director of Telecommunications, will be informational in nature and will be documents available to the public.

7.	The Oversight Corporation shall monitor the activities of the Fund Administrator without the necessity of Commission intervention.

8.	The Oversight Corporation shall make a written accounting of such funds at each year-end, and shall provide such accounting to any interested person on demand (including but not limited to the Commission and settling parties).
9.	The proposed by-laws shall be modified to state that all funds are to be disbursed to grantees by June 1, 2002, that grantees’ expenditure be completed by June 1, 2003.  Unless the Commission directs otherwise, the Board is to take all necessary steps to achieve dissolution of the Oversight Corporation by December 31, 2003 or as soon thereafter as regulatory authorities permit.

10.	Approval of the by-laws of the Oversight Corporation is subject to Parties’ filing the revisions herein ordered, and subject to approval by letter of the Director of Telecommunications.  
11.	This proceeding is closed.

This Resolution is effective today.

I hereby certify that this Resolution was adopted by the Public Utilities Commission at its regular meeting on May 4, 2000.   The following Commissioners approved it:

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WESLEY M.   FRANKLIN
    Executive Director