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Dispelling 10 common eRate myths

Here’s what this year’s eRate training sessions focused on.

The $2.3 billion-a-year eRate program, which helps schools and libraries obtain discounted telecommunications services and internet access, is often confusing for applicants. The program’s different forms, filing windows, and application rules can befuddle even the most experienced eRate applicant at times.

Each fall, the Universal Service Administrative Company (USAC)—the agency that administers the program—holds a number of training sessions designed to help applicants wade through the rules and acronyms that accompany the process. Here’s what this year’s training sessions focused on.

eRate basics

Schools and school districts are eligible for eRate funding, as are libraries and library systems. Consortia—groups of eligible entities that band together—also are eligible.

eRate discounts amount to between 20 percent and 90 percent of eligible costs. Discount levels are determined by the percentage of students who qualify for the National School Lunch Program in the school, or, in a library’s case, in the school district in which the library is located. Discounts also are determined by urban or rural status.

eRate funds are allocated according to rules of priority, with first priority given to requests for telecommunications services and internet access. The remaining available funds are allocated to requests for the wiring, routers, switches, servers, and other “internal connections” needed to bring internet access into classrooms, and basic maintenance of these internal connections.

Applicants must develop technology plans as part of the eRate application process. Technology plans have to identify goals and strategies for using technology to improve education or library services, a needs assessment, staff training, and an evaluation plan.

Common eRate myths

This year’s eRate training included a focus on common myths and misconceptions that surround the federal program. Here are a handful of those myths.

Myth No. 1: eRate applicants must draft technology plans each funding year before filing FCC Form 470 for all services requested.

Facts: Technology plans no longer are required for Priority 1 services (telecommunications services and internet access), but they still are required for Priority 2 services (internal connections). Technology plans can be approved for more than one year, so an applicant’s services still might be covered by its approved plan. If Priority 2 services are included in a current technology plan, and that plan covers at least part of the upcoming funding year, a new technology plan draft isn’t necessary before posting an FCC Form 470.

Myth No. 2: Technology plan approvals are always due July 1.

Facts: Not always. Applicants who request Priority 2 services must have an approved plan that covers at least part of the upcoming funding year before the start of service or before filing the FCC Form 486 (reimbursement form)—whichever comes first. If Priority 2 services starting after July 1 are not covered by an existing technology plan, the new technology plan must be approved before the start of service or the filing of the FCC Form 486, whichever comes first.

Myth No. 3: Applicants can provide internet access to all students and staff at home (for educational purposes).

Facts: Off-campus internet access currently is not eligible for eRate funding. The FCC’s “Learning on the Go” is a pilot program that allocated up to $10 million to support interactive off-premise home wireless device connectivity for only those 20 schools and libraries that were chosen to participate.

Myth No. 4: If a school in an applicant’s district or a branch in the applicant’s library system uses a year under the Two-in-Five Rule, it counts for the district/system as a whole. (The Two-in-Five Rule holds that eligible entities can receive eRate discounts for Priority 2 services only in two out of every five funding years.)

Facts: The Two-in-Five Rule applies to the individual entities listed on the Block 4 worksheet cited on the Internal Connections funding request. Entities can use two years within any five-year period, looking back or forward from that year.

Myth No. 5: An applicant who received a funding commitment for Internal Connections will get this year back if the applicant does not invoice for any equipment.

Facts: This myth is partially correct but is missing an important step. USAC considers applicants to have used a year of Two-in-Five Rule eligibility if they have received a funding commitment for Internal Connections. If no funds are disbursed for this request, applicants can get a year back if, and only if, they file an FCC Form 500 to cancel the unused Funding Request Number (FRN).

Myth No. 6: Applicants should wait for the filing window for FCC Form 471, the formal application, to open before filing their FCC Form 470 (the request for services, which launches the bidding process).

Fact: False. Applicants can file the FCC Form 470 for a funding year as soon as it becomes available online. Generally, this occurs about a year before the start of the funding year. For example, FY 2013 begins on July 1, 2013, and the FY 2013 FCC Form 470 became available online in July 2012.

Myth No. 7: Applicants can apply for Priority 1 and Priority 2 services on one FCC Form 471.

Facts: USAC recommends that applicants avoid doing this. If Priority 1 and Priority 2 services are combined on the same FCC Form 471, USAC cannot issue commitments on the Priority 1 services until a funding decision can be made on the Priority 2 services.

However, applicants don’t have to file Priority 1 services from different providers on separate FCC Forms 471—they can put these all on the same form, just listed under separate FRNs. This is the same for Priority 2 services. (An FRN is a number assigned by USAC to each FCC Form 471 Block 5 Discount Funding Request.)

Myth No. 8: All of an applicant’s students or patrons are impoverished, so the applicant can claim a 90-percent discount level, and the applicant is rural based on the appearance of its surroundings.

Facts: Applicants must use National School Lunch Program numbers or an alternate discount mechanism to determine their discount, and they should retain their documentation. They must use the formally approved urban/rural status to determine their status. Then, applicants must use the discount matrix to determine their discount.

Myth No. 9: If an applicant’s state posted an FCC Form 470 and signed contracts with three service providers as a result, the applicant can simply pick any one of the three to complete its FCC Form 471.

Facts: Applicants must conduct a bid evaluation for all three service providers who are able to provide services under those contracts (called a “mini-bid”) and must choose the most cost-effective solution. Applicants do not need to post an FCC Form 470 just to conduct that mini-bid, however.

Myth No. 10: There is only one service provider serving an applicant’s region, so the applicant can just claim sole source and not bother with a competitive-bidding process.

Facts: The 28-day waiting period, competitive bidding, and other applicable rules must always be followed.

Surviving an audit

Just like IRS audits, an eRate audit can elicit groans and apprehension. The random audits are designed to ensure compliance with the program rules, and careful preparation can help audited applicants through the process.

Beneficiary and Contributor Audit Program (BCAP) audits are performed to ensure compliance with FCC and program rules. These rules include eligibility, discount percentage, and adherence to competitive-bidding requirements.

Site visits usually occur at the applicant’s location, and most site visits take from three to five days. An audit takes several weeks and is generally performed by USAC’s Internal Audit Staff.

The Payment Quality Assessment (PQA) is a program that assesses the rate of improper eRate disbursements, focusing in particular on the eligibility of program beneficiaries, the calculation of support performed by USAC, and the beneficiary documentation supporting the funding disbursed. The PQA is an assessment and is not an audit. No on-site visits occur.

Applicants and service providers should keep all documentation that demonstrates compliance with FCC rules. All documents should be retained for five years from the last date of service delivery, and they can be kept in paper or electronic format.

To access the full presentation materials from USAC’s eRate training sessions, click here.

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