California LifeLine Program Overview and Update Low Income Oversight Board July 10, 2012

2 Background The Universal Lifeline Telephone Service (ULTS) began with the 1984 Moore Act (Assembly Bill 1348)  Goal: to promote universal service  Carriers required to offer basic residential service at ½ of the lowest rate in California  Decision quantified rules for the program  Carriers responsible for administering the program  Customers self-certified income eligibility  Carriers submitted claims for reimbursement In 2004 the FCC (04-87) required third party verification  Income eligibility in the program must be verified.  Customers can alternatively qualify based on participation in approved public assistance programs

3 Background - continued The Commission established a centralized customer enrollment process D required a third party vendor to perform the California LifeLine Administrator’s duties. The California LifeLine Administrator’s primary duties:  Reviews application and renewal forms  Determines eligibility and notifies applicants  Audits 3% of program participants  Notifies program participants and carriers of the status of eligibility and enrollment. Current contractor: Xerox State and Local Solutions, Inc. (6/1/12)

4 Background - continued Commission required pre-qualification for California LifeLine effective July 1, 2009, D  Pre-Qualification required applicants to pay regular rates for Basic Service until approved for LifeLine.  Subscribers receive a bill credit or check (if requested) for the difference between the regular rates and California LifeLine discounted rates (retroactive to the date of the initial request for California LifeLine).  Customers are no longer subject to back billing of regular charges if disqualified for California LifeLine.

5 Recent Changes: Specific Support Amount D (Resolution T-17321) established a new subsidy mechanism for the California LifeLine, effective December 1, 2011 Set a Specific Support Amount (SSA) of $11.50 per month per LifeLine subscriber.  Carriers reimbursed based on monthly weighted average subscriber count.  SSA subsidy updated annually based on 55% of highest Carrier of Last Resort (COLR)* Basic Service rate. Administrative Cost reimbursement capped at $0.50, if supported, otherwise $0.03 per weighted average subscriber.  Administrative Cost cap reviewed annually, increases capped at CPI-U rate of inflation.  Bad debt reimbursement ended December $6.84 maximum LifeLine Rate until 12/31/12. $5.00 LifeLine Rate floor until 12/31/12. * Uniform Regulatory Framework Carriers

6 Recent Changes: FCC In February 2012, the FCC made fundamental changes to the Lifeline program New Customer eligibility requirements strengthened:  Proof of eligibility required for all applicants  Last four digits of SS# and Date of Birth required Yearly self-certification of eligibility under penalty of perjury Federal 4-Tier subsidy replaced with flat rate subsidy: $9.25 Connection (Linkup) subsidy eliminated except for Enhanced Lifeline Toll Limitation Service support reduced Definition of “household” revised to allow multiple “households” at same address Other administrative changes

7 Application Process California LifeLine Application Process: Customer requests LifeLine service with carrier Applicant pays regular rates until approved (pre-qualification) The LifeLine Administrator checks customer data for duplicate LifeLine discounts and mails application form (pink envelope) Applicant fills out form (paper or online at and submits proof of eligibilitywww.californialifeline.com  Proof of participation in a means-tested program  Proof of income eligibility The Administrator reviews the form and support; determines eligibility; notifies the customer and carrier If approved, the LifeLine benefits are back-dated to customer’s request date If denied, customer continues to pay regular rates.  Customer may appeal the denial to the CPUC

8 California LifeLine Rates December 1, 2011 to December 31, 2012  LifeLine Rates may not exceed $6.84 nor be less than $5.00  LifeLine Rates will vary by carrier  LifeLine Rate is equal to the retail rate less federal subsidy less SSA, subject to cap and floor Beginning January 1, 2013  LifeLine Rates may not exceed ½ of the carrier’s basic rate, with no price floor  LifeLine Rates will vary by carrier  LifeLine Rate is equal to the retail rate less federal subsidy less SSA.  Subsidy will be calculated assuming no less than $5.00 LifeLine Rate.

9 Wireless – federal Lifeline The Commission approved wireless carriers to offer federal Lifeline Cricket, Nexus, Telscape, and Virgin Mobile (pending on launch) April ,405 wireless federal Lifeline participants

10 California LifeLine Subscribership Declined Since 2006 *Note: does not included federal Lifeline participants. Likely reasons for decline:  Implementation of 3 rd party enrollment process  Subscribers not renewing their eligibility  Move from wireline to wireless/VoIP/alternate providers  Lack of interest in program  Privacy concerns, fear of dealing with government July 20063,134,139 April 2012*1,547,978

11 California LifeLine Budget – 2012/2013: $355 million Carrier Claims - $330 million LifeLine Administrator - $ 14 million Outreach Contract - $ 6 million Staff Costs - $ 1 million Other Costs - $ 4 million Total $355 million

12 Current Eligibility Requirements – Method 1 Program-Based:  Medicaid/Medi-Cal  Low Income Home Energy Assistance Program (LIHEAP)  Supplemental Security Income (SSI)  Federal Public Housing Assistance or Section 8  CalFresh, Food Stamps or Supplemental Nutrition Assistance Program (SNAP)  Healthy Families Category A  National School Lunch Program (NSLP)  Tribal TANF  Bureau of Indian Affairs General Assistance  Women, Infants and Children Program (WIC)  Head Start Income Eligible (Tribal Only)  Temporary Assistance for Needy Families (TANF) California and Stanislaus County Work Opportunity and Responsibility to Kids (CalWORKS) / (StanWORKS), Welfare-to-Work (WTW), and Greater Avenues for Independence (GAIN)  Federal Distribution Program on Indian Reservations (FDPIR)

13 Current Eligibility Requirements – Method 2 Income-Based: Household Size LifeLine Annual Income Limits (06/01/12) 1-2 members $24,700 3 members $28,800 4 members $34,800 Each additional member add $6,000 Other Eligibility Information  One discount per household; 2 nd discount only for TTY  Applicant not claimed as a dependent on tax return  Discount for primary residence

14 Advertising and Outreach (2011) Advertising Creative Development Mediums TV Radio Outdoor Print Online Outreach EducationsPresentationsEvents

15 Developed new ad campaign, “Hello, Savings!” Statewide media buy Collateral: banners, posters, displays, brochures (19 languages), and presentations Supermarket street marketing Media interviews Business and media partnerships Testimonial videos (5 languages) Pro-bono newsletters and online links School outreach Advertising and Outreach (Spring and Summer 2011)

16 Current Outreach Efforts’ Objectives Perform at least 160,000 consumer educations Conduct at least 1,000 presentations Secure attendance to at least 90 community events Enlist a minimum of 1,000 new network organizations to distribute collateral materials on a voluntary basis Recruit between 50 to 70 community-based and/or faith- based organizations to conduct the consumer educations Arrange for articles and/or online links with a minimum of 30 entities Target areas in which participation rates are below 75%

17 Call Center - Public Primary roles: screen for eligibility, conduct optional survey, collect data, transfer consumers to carrier of choice, and provide general program information Operates on weekdays from 7 a.m. to 7 p.m. Serves multiple languages: Chinese, Cambodian, Laotian, Tagalog, Vietnamese, Hmong, Korean, Japanese, Spanish, and English (Language Line translation services are available for other languages.)

18 The Reasons Provided by Consumers for Contacting the California LifeLine Call Center, the Results of their Call, and the Source Informing Them of California LifeLine Call Reasons 36% Eligibility Screening 17% Information 17% Application/Renewal 12% Federal Lifeline 8% Non-CA LifeLine Call Call Results 36% Transferred to Carrier 20% Referred to App/Renewal Phone Line 18% Information Only Call by Source 34% Friends/Family 17% LIHEAP/LIEE 6% Flyer/Brochure (September 2011 to Feb 2012)

19 Contact Information Benjamin Schein – LifeLine Implementation (415) Michaela Pangilinan – LifeLine Outreach (415) RHA, Inc. (Outreach Contractor) – Vanessa Anderson (559) Consumer Affairs Branch (800) Xerox State and Local Solutions, Inc. (LifeLine Public Call Center) (866) – English(866) – Korean (866) – Spanish(866) – Vietnamese (866) – Lao/Hmong(866) – Chinese (866) – Khmer(866) – Japanese (866) – Tagalog