Universal Service reform: What it means for schools

A recipient of federal technology funding from two or more sources absolutely must know and understand the rules governing each. Federal rules generally prohibit a recipient from using federal funds received from two different federal programs to pay for the same costs.

Several federal technology grant programs, such as BTOP, have objectives that overlap with those of the e-Rate (and, increasingly, the FCC’s other Universal Service Support Mechanisms). BTOP award recipients are required to contribute non-federal matching funds to their grant-funded projects. The NTIA prohibits BTOP award recipients from using federal funds, including federal Universal Service funds, to meet these obligations. So, for example:

  • A school or library may purchase services from a service provider that has received a BTOP infrastructure or comprehensive community infrastructure grant award, because those awards do not cover any portion of the recurring costs of operating the network.
  • If the service provider will construct facilities as part of its delivery of e-Rate funded services, in addition to BTOP-funded infrastructure, both the provider and the school or library customer should maintain detailed records to demonstrate that none of the e-Rate funded infrastructure was paid for with BTOP funds.
  • A school or library that has received a BTOP grant award for a public computer center or sustainable broadband adoption project may not use e-Rate funds to pay any of the non-federal portion of its award costs, particularly the costs of obtaining broadband services, without explicit federal approval.
  • A school or library may only use BTOP award funds to pay for the non-discounted share of the costs of services supported by e-Rate if it included such funding in its approved BTOP budget and receives and pays for the service during the award period.

As part of the process of purchasing services, if federal funds are involved, a school or library should confer with its service provider to discuss explicitly any possible risk of such prohibited duplication of funding. The school or library and the service provider must maintain detailed records demonstrating compliance with the funding requirements of each program in which it participates.

Cynthia Schultz is president of The Schultz Group, a consulting firm that specializes in compliance with federal technology programs, and is Of Counsel for the firm Patton Boggs LLP. For more information or to discuss any federal grant, loan, or e-Rate compliance question, you can contact Ms. Schultz at (202) 361-6550, or contact Richard R. Cameron, Vice President, The Schultz Group, at (202) 457-7665.

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