The bulk of Year Five eRate applicants hoping to get money to wire their schools won’t receive funding for internal connections, according to program officials. In fact, because of the extraordinarily high demand for discounts this year, there won’t even be enough money to fund all requests at the 90-percent discount level.

The nation’s schools and libraries have asked for a record $5.736 billion in eRate discounts for Year Five, nearly $550 million more than last year’s total and more than double the $2.25 billion available.

The eRate program, part of the Telecommunications Act of 1996, derives its funding from the universal service charge on telephone bills. The program is intended to help needy and rural schools pay for telephone service, internet access, and internal wiring.

This is the third consecutive year that the demand for eRate funds has surpassed the amount allotted by the Federal Communication Commission (FCC). Last year, applicants requested an unprecedented $5.19 billion total, an amount greater than the first two program years combined.

The Schools and Libraries Division (SLD) of the Universal Service Administrative Co., the group that administers the eRate, received 36,043 applications by Jan. 17, the close of the Form 471 application filing window.

Interestingly, 86 percent of the applications were filed online using the SLD web site.

“Obviously, demand continues to be very strong for the program,” SLD spokesman Mel Blackwell said. But this also means a large number of applicants won’t receive funding for their internal connections.

The eRate funds all requests for telecommunications service and internet access—called Priority One services—first. Then, any leftover funds are allocated for internal connections, starting with the neediest schools and libraries.

The estimated demand for telecommunications service and internet access this year is $1.817 billion, leaving $433 million to pay for internal connections. The demand for internal connections at the neediest level—the 90-percent discount level—is $2.619 billion.

“There’s enough money to fund all the Priority One [requests], but there’s not enough to fund all the internal connections [requests], even at the 90-percent [discount] level,” Blackwell said.

The estimated $5.736 billion figure might decrease as the SLD wades through the applications and eliminates duplicate and ineligible requests.

“You don’t really know [how much the estimate will be reduced] until you get through all the applications throughout the course of the year,” Blackwell said.

Under current program rules, each 90-percent discount school would get only a small portion of the funds it requested for internal connections this year—in this case, about 17 percent, if current demand estimates hold true.

Facing a similar problem last year, though on a smaller scale, the FCC proposed a change to the eRate rules that would have given priority to schools that had not received funding for internal connections the previous year. But the agency scuttled its proposal when several applicants complained that changing the rules in mid-stream would not be fair.

FCC spokesman Mike Belmoris said the agency has no current plans to increase eRate funding or change the program’s rules this year, either.


Schools and Libraries Division

Federal Communication Commission