Every school or library that applied by the April 6 deadline and successfully passed the program integrity review process will get eRate funds this year–even those applicants seeking discounts on internal connections at the 20 percent discount rate.

The funding breakthrough was announced Oct. 25 at the quarterly meeting of the Schools and Libraries Committee of the Universal Service Administrative Company (USAC) board, which oversees the $2.25 billion program that gives discounts on telecommunications services to schools and libraries.

The announcement was welcome news to the applicant community, which had seen funding for the first year of the oft-maligned program cut by nearly $1 billion after 30,000 applications had been filed. As a result, only those applicants who qualified for discounts of 70 percent or above received funding last year for their internal connections–the wiring, routers, switches, and hubs necessary to bring internet access to classrooms.

This year, the Federal Communications Commission restored eRate funding to its $2.25 billion cap. Despite early projections that year two demand would exceed $2.4 billion, the Schools and Libraries Division (SLD) of USAC now estimates it will have enough money to fund all qualified applications.

“It’s encouraging that the SLD and the FCC have seen fit to fund all applications this year–I’m very encouraged by that,” said Greg Weisiger, program administrator for the Virginia Department of Education. Weisiger said many schools in Virginia were put off by their year one experience and chose not to apply again this year.

The first-year cutbacks were triggered by criticism from a vocal contingent in Congress who called for the overhaul, or even the outright demise, of the eRate.

Much of the criticism focused on how the program is funded, which is through fees collected from telecommunications carriers by the FCC. Republican critics labelled the program the “Gore tax,” after the vice president whose promise to connect all schools to the internet was a driving force behind the eRate.

Though criticism still persists–on Sept. 30, the House Telecommunications Subcommittee held a hearing to discuss a bill that would change the way the eRate is administered–some observers think the news that all eligible second-year applicants will be funded helps strengthen the program’s long-term viability.

“Obviously, we’re ecstatic that all eligible applicants will get funding this year,” said Jon Bernstein, a lobbyist for the National Education Association who has fought for the program’s survival. “We think this will encourage schools and libraries to apply for year three funds.”

Next round of applications begins

Bernstein said the news is only one of several recent developments that help put the eRate on solid footing. Another is the “strong favorable decision” out of the 5th U.S. Circuit Court of Appeals in July, which ruled that the program’s funding mechanism does not constitute an “unconstitutional tax.”

A third is the streamlined application process for year three, which kicked off with the release of simplified forms Oct. 29.

New to the program in its third year is an “evergreen” Form 470, which lists the services that schools and libraries are seeking discounts on and lets service providers respond to their requests. Applicants can now file a Form 470 for new services any time during the year, and they don’t have to file a new Form 470 each year for existing services already covered under a multiyear contract.

The new forms can be submitted by mail or online using virtually any platform and most internet browsers (though Form 471 requires a more recent browser, version 4.01 or better). The forms are available in a spreadsheet application or PDF format on the SLD’s web site.

Applicants who file a Form 470 for new or tariffed services in year three must still wait 28 days before signing a contract and filing a Form 471, and Form 471 must still be filed within the application window. The year three window is scheduled to open in early November and close Jan. 19, 2000.

The SLD believes these changes will make it easier for schools and libraries to apply and will further improve the program. “All of these new features allow us to distribute discounts more quickly and efficiently,” said Kate Moore, SLD president.

But despite these changes, Virginia’s Weisiger believes there is still room for improvement. His chief concern is what will become of unspent funds from the program’s first year. According to some estimates, this amount could total as much as half a billion dollars after all first-year waivers and appeals have been resolved.

“The FCC is constrained by its own rules–it can carry over unspent funds to the next year, but it can’t distribute more than $2.25 billion in any given year,” Weisiger said. “Our fear is that the FCC will use these carryover funds from year one to offset the contributions by telecommunications companies in future years. We want them to be used to meet the unsatisfied demand for discounts.”

For example, there were about 2,000 second-year applications filed after the window closed. “It would be nice if they could get funding, too,” he said.

The Virginia Department of Education has filed a petition with the FCC seeking to resolve this issue. The FCC has not said when it will make a decision.

Meanwhile, schools that plan to apply for year three funds are encouraged to submit a revised Form 470 as soon as possible. Copies of the forms are available on the SLD’s web site, http://www.sl.universalservice.org, or by calling the toll-free fax-on-demand service at (800) 959-0733. For assistance, call the SLD’s toll-free Client Service Bureau at (888) 203-8100.