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How to prepare for eRate funding year 2014

Here are several strategies to help you get the most out of the new eRate funding year

At this point, the name of the game is agility, Harrington says.

With eRate reform on the horizon, the stallion of change is still galloping from a considerable distance. That being said, for funding year 2014 you should prepare for things to stay the same—while also preparing for them to change.

Same program, different funding year … for now

With the release of the 2014 Eligible Services List on Oct. 22, the same goods and services as the previous funding year generally continue to qualify for funding. Minor modifications include updated eligibility criteria for lit and dark fiber services, as well as eMail services. One notable change, though, is the new language outlining web hosting eligibility. Now, communications features that are eligible for eRate support as part of a web hosting package are not permitted for funding as stand-alone services. Additionally, applicants are not allowed to request eRate funding for web hosting services from multiple providers. Rather, schools and libraries are limited to seeking support for a single provider for web hosting.

Funding forecast for 2014

The rollover catchall is a pattern that is not unfamiliar to eRate applicants. Earlier this year, the Federal Communications Commission announced that $450 million from prior funding years would be used to help cover all eligible Priority One funding requests in funding year 2013. Before the rollover, funding requests for 2013 exceeded the FCC’s funding cap by approximately $350 million and would not have been funded regardless of eligibility.

The goal of increasing the $2.3 billion-a-year budget cap probably will not be realized by funding year 2014. While the lion’s share of eRate stakeholders are pushing for a budget increase to $5 billion or more, it is more realistic to expect a modest increase in funding from rollover funds generated from previous funding years and inflation adjustment. The forecast for funding year 2014 likely will continue to follow the pattern of the most recent funding years, with Priority One goods and services taking—well—priority, leaving all other requests for support lacking funds.

Navigating Priority Two funding—or lack thereof

Funding year 2014 will not see a change to the current “priority” system. While Priority One services will still be eligible for eRate assistance, the present system leaves little to no financial support for internal connections. The Schools and Libraries Division of the Universal Service Administrative Co., the agency that administers the eRate, has recommended the denial of 2013 Priority Two applications at the 89-percent discount threshold or below.

Without a change to the priority system, this model will remain for funding years to come. So, what should you do about this?

Presently, schools and libraries that qualify for a 90-percent discount are in the most advantageous position for receiving support for Priority Two goods and services, but even these applicants are susceptible to receiving pennies on the dollar for their requests.

In order to receive discounts, consider shifting more costs to hosted/managed services that qualify as Priority One eligible, as opposed to seeking support for Priority Two goods and services that are likely to be denied.

Contrarily, with the slight probability that Priority Two funding is available, it might prove worthwhile to submit an application for traditional internal connections projects that will carry on with or without eRate backing. The key is to apply this method to expenses that already are budgeted and accounted for in full, so as to avoid allowing your financial health to hinge upon assistance that might never come.

Big changes could be here soon

The FCC has adopted the task of modernizing the eRate program to support the ever-increasing prevalence of technology within America’s libraries and classrooms. With the release of the FCC’s latest Notice of Proposed Rule Making (NPRM) over the summer, stakeholders across the country have joined the eRate conversation that is designed to get schools and libraries access to 21st-century connectivity, streamline the application process, and fully ensure the cost-effectiveness of the program’s funds.

Driving this discussion is President Obama’s ConnectED initiative to connect 99 percent of the country’s students to the internet through high-speed broadband and wireless service by 2018. Currently, fewer than 20 percent of educators consider their school’s internet connections adequate for their teaching needs, according to a White House press release. “In a country where we expect free Wi-Fi with our coffee, why shouldn’t we have it in our schools?” Obama said in a recent speech.

With the spotlight placed squarely on eRate reform, the most sweeping changes since the program’s inception in 1997 are possibly on the cusp of realization.

With an almost no-holds-barred atmosphere, proposed changes run the gamut from increased funding to adopting a new priority system. Changes to the Eligible Services List, additional reporting requirements, new discount rates, and other modifications could be established as early as funding year 2014, but are more likely to arrive for the 2015 eRate funding year (see “eRate changes under review”).

At this point, the name of the game is agility. Consider including escape clauses and other “future-proofing” clauses in multiyear service agreements. These types of precautionary measures will protect you from getting trapped in a contract for a service that no longer qualifies for funding—or one that is no longer affordable because of decreased or non-existent eRate support.

Many of the public comments the FCC received suggest lowering discount rates for all applicants, as well as removing items from the Eligible Services List, such as plain old telephone service. Prepare for a possible future that includes losing support for certain services or receiving lowered discount rates, by leveraging as much as you can now. Push as many of your expenses as possible, including one-time fees and purchases, into funding year 2014. It could very well be your last chance.

John Harrington is the chief executive officer for eRate consulting firm Funds for Learning LLC:

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