Year three of eRate will fall well short of demand

The Federal Communications Commission (FCC) has set funding for year three of the eRate at $2.25 billion, the maximum allowed under the program’s rules. But with demand for discounts at an all-time high, most schools are likely to receive only a fraction of the total funding they’ve requested.

The Schools and Libraries Division (SLD) of the Universal Service Administrative Co. (USAC)—the federal agency that administers the eRate—estimates that only schools qualifying for discounts of 81 percent or higher will receive help with their internal connections this year—the wiring, routers, switches, and servers needed to deliver internet access to classrooms.

More than 36,000 schools and libraries applied for year-three eRate funding, which gives discounts of up to 90 percent on telecommunication services. SLD estimates the total requested by these applicants is $4.72 billion, an amount greater than the program’s first two years combined.

“More schools than ever are connecting to the internet and increasingly the [telecommunications] services have upped the cost of connectivity. That’s one reason why requests are so high,” said Linda Roberts, White House adviser on education technology.

“I think people have found that their districts and towns have applied and met success, so now they know that this program can work for them,” said Mel Blackwell, SLD representative. “It’s such a good program for schools. And the eRate, unlike other programs, is ubiquitous and in every state.”

But not everyone sees the greater demand for eRate dollars as an indication of the program’s success.

“Schools will continue to have an ongoing need for funding to maintain these broadband connections year after year,” said Greg Weisiger, associate director of teleproduction services for the Virginia Department of Education. In other words, Weisiger said, the more schools receive funding, the more they come to rely on the eRate every year.

Weisiger also questioned how money left over from the program’s first year has been used. “The collections [from telecommunications companies, which fund the eRate] for year one were $1.9 billion, and schools and libraries received $1.6 billion,” he said.

About $448 million has been earmarked to reduce contributions from telecommunications carriers this year, Weisiger said. Much of this money is leftover funding and should not go back to the companies that donated it in the first place, he said, given that demand for the eRate exceeds the available funding this year.

“There is a conflict in FCC regulations that allows this type of thing to happen,” Weisiger said. “First, they say no more than $2.25 billion may be committed in any given year. But then they say that any extra will carry over. It’s contradictory.”

According to SLD, all eligible schools that successfully filed applications before the year three filing window closed Jan. 19 will get discounts on so-called “Priority One” services, namely telecommunications services and internet access.

But the agency estimates that only applicants qualifying for discounts of 81 percent or higher will get funding for “Priority Two” services, which are internal connections. Schools qualify for discounts on a sliding scale based on the percentage of their students who qualify for the federal lunch program. To qualify for this year’s 81 percent cut-off, applicants must have at least half their students eligible for free or reduced-price lunches.

Explained Blackwell, “The way it works is this: Everyone sends in applications, and all those who fall within the 70-day [filing] window receive their Priority One funding, period.”

The next in line to receive eRate discounts are those who apply for Priority Two funding within the allotted application time.

But only schools with the greatest number of poor students will qualify for those dollars this year. “Basically, we started with our Priority One requests and just kept subtracting from the total funding for the year. Then, we started subtracting for each Priority Two request. And we ran out of money at 81 percent,” Blackwell said.

In the program’s first year, funding for internal connections stretched to the 70-percent discount level. Last year, the agency was able to fund all applicants’ requests.

Most observers seem to agree that telecommunications services and internet access should take precedence over internal connections. “The good thing is that once the internal wiring is installed, it’s done,” Roberts said. “It’s not a continuing cost.”

But some observers privately wonder whether another year of failed expectations on the part of applicants might be damaging to the program’s credibility. Schools and districts must invest several hours in the arduous process of applying, only to find out after the fact whether there will be enough money to fund their requests.

“I don’t think these restrictions will in any way put a damper on next year’s applications,” said Blackwell, who argued that the potential for schools not to receive the discounts they apply for is a facet of the program that cannot be helped.

“We have a public trust here and deal with a lot of money, and we have a responsibility to make sure that everyone who applies is eligible for what they apply for,” he said. “But almost 30,000 applicants received funding in year two, so something must be working.”

Federal Communications Commission

Schools and Libraries Division of USAC

Virginia Department of Education

eSchool News Staff

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