Schools receive first notice of $148 million in eRate funds: As letters go out, applications pour in for 1999 program

Capping more than seven months of anticipation and frustration since the first eRate application window closed on April 15, the Schools and Libraries Corp. (SLC) issued its first two waves of funding commitment letters to about 6,300 schools and libraries–roughly 20 percent of applicants. The letters, which were sent Nov. 23 and Dec. 7, allocated more than $148 million in eRate funds.

“This is a big moment for all of us…,” said Kate Moore, SLC’s acting chief executive officer. “We’re seeing the real beginnings of the program now–it’s real, it’s happening, there’s a great need out there, and we’re moving to meet it.”

Vice President Al Gore, Education Secretary Richard Riley, and Federal Communications Commission Chairman William Kennard celebrated the first wave of letters in a ceremony at a Washington, D.C., public library. Sen. John Rockefeller, D-W.Va., who co-wrote along with Sen. Olympia Snowe, R-Maine, the provision of the 1996 Telecommunications Act that created the eRate, also was in attendance.

“Today, we are taking steps that will forever change the lives of millions of children and change the way teachers teach and children learn,” Gore said, indicating that he felt “excitement blended with relief” that the program was finally on its way to issuing funds.

Since its inception last year, the eRate has been blasted by critics on several fronts. Though schools invested a great deal of time and money in applying last spring, not a single school had yet to receive a discount. Supporters hope the flow of commitment letters will silence the program’s critics.

Mark Root, manager of technology services for the Council of Great City Schools, told STFB the letters have restored faith in the program among the nation’s largest school districts. “While there was a period where there was a lot of discouragement, I think [the SLC is] back on track,” Root said.

As recently as a few months ago, “there was a lot of concern about the viability of the program,” Moore said. “Now, we have emerged…This program will be under continuous scrutiny. But I think the worst is hopefully behind us.”

The first two waves of letters, which came after a thorough audit of the SLC’s internal controls by independent auditors and the General Accounting Office, were issued to “priority one” applicants–those who requested discounts on telecommunications services or internet access only, as well as those who requested funding for internal connections and who qualify for a 90 percent discount.

In these waves, according to the SLC, one of every $4 in discounts go to the schools and libraries that need it most: those in which at least three-fourths of the student population is eligible for participation in the National School Lunch Program.

In addition, one-third of the dollars will go to applicants from rural areas; schools and libraries from all 50 states were represented. About 3 percent of the letters were flat-out rejections–in most cases, because applicants included extensive requests for ineligible services.

California schools are the big winners so far. The state’s schools and libraries netted more than $24 million in the first waves of letters. New York was next, with $10.6 million; then Michigan with $9.1 million, and Illinois with $8 million.

Decision letters included a Form 486 and a Billed Entity Applicant Reimbursement (BEAR) Form. Form 486 must be completed and returned to the SLC to begin the discount process. For applicants who have already paid for any discounted services in full, the BEAR Form will initiate the reimbursement process.

Launch of second program year

As funding letters for the first year of the eRate were being sent, applications for the program’s second year were pouring in. The application window for the 1999-2000 eRate opened Dec. 1.

All K-12 schools, public or private, qualify for the program–which provides discounts of 20 to 90 percent on telecommunications services, internet access, and internal connections–if they are nonprofit and do not have an endowment exceeding $50 million.

Services eligible for eRate discounts include the installation, maintenance, and operating costs of all commercially available telecommunications systems, internet access (including communications links to internet service providers and eMail), and internal connections (including routers, hubs, and network file servers).

Services and products that aren’t covered include staff development, voice mail, fax machines, modems, electrical upgrades, building infrastructure, and computers or software. However, computers used solely as switches or file servers, and the software necessary to operate them, are eligible for discounts.

Applying for the eRate is a three-step process. First, you must submit a Form 470, which describes the eligible services you intend to purchase. Your Form 470 is then posted to the SLC’s web site for 28 days so vendors can bid for your services.

Once you’ve signed a contract (or once the 28-day posting period is over, for services already under contract), you must file a Form 471, which details the services you’re applying for discounts on. New this year: You can file Form 471 online. The online form includes pop-up help screens to walk you through the application process.

Finally, after you get your funding commitment letter, you must file a Form 486 to confirm that contracted services have begun. This lets the SLC know to begin issuing funds to your vendors, who in turn pass along discounts to you in the form of a check or credit.

The length of the filing window for the 1999-2000 program year is 100 days. For your application to be considered with the others as if they arrived on the same day, you need to file a Form 471 on or before March 11, 1999–which means you should file your Forms 470 on or before Feb. 11, 1999, to allow for the 28-day posting period.

In theory, up to $2.25 billion in funding is available each year. But pressure from some members of Congress and from telecommunications companies–which subsidize the eRate through fees collected by the FCC–caused the agency to cut funding to $1.3 billion (with a six-month extension providing an additional $600 million) during the first program year.

In the same action, the FCC changed the funding priority in mid-program. Requests for discounts on telecommunications services and internet access now are approved first, and any money left in the fund is distributed to schools and libraries for their internal wiring projects according to need–so a school or district qualifying for an 80 percent discount receives priority over a 70 percent school, and so on.

If you’re applying for funding during the 1999-2000 program year, you’ll want to consider the FCC’s new rules of priority as you prepare your application. Unfortunately, the FCC is not expected to set next year’s funding level until May 1 (well after you’ve applied), making it difficult to plan your eRate strategy.

John Bailey, director of the Office of Educational Technology for the Pennsylvania Department of Education, recommends that you approach the eRate as “a supplemental source of funding” which, if approved, you can reinvest to expand your technology initiatives.

Where to look for help

Forms and their instructions can be obtained from the SLC’s web site or via the agency’s fax on demand service at (800) 959-0733. The agency’s client service bureau can be reached any of the following ways:

Phone: (888) 203-8100

Fax: (888) 276-8736


In addition, eSchool News publishes a monthly newsletter called eRate Update, filled with the latest news, policy changes, expert advice, and creative strategies for securing your full share of eRate discounts. Call (888) 394-2551 or visit eSchool News Online to request a free trial issue.

eSchool News Staff

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