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What Do the E-Rate Changes Mean For You?

Skyward IT Services
Skyward IT Services - Network Infrastructure and Security Specialists

Every school district would love to be cutting edge, but how do you keep up when the money stops flowing? As purse strings are tightened to the breaking point, technology continues to evolve at breakneck speeds. The E-rate Program was designed to help schools and libraries bridge the accessibility gap and afford equal opportunities for those who would otherwise be left behind.

In 2014, we witnessed two major changes to E-rate. First, a Modernization Order was issued by the FCC in July to prioritize and free up money for improved Wi-Fi accessibility, with an emphasis on rural schools and impoverished communities. The Commission followed up by approving a second Modernization Order that included a significant funding increase – from $2.4 billion to $3.9 billion – only five months later.

As a result of these changes, school district technology departments will have access to more money than ever before in FY2015 and should be able to take tremendous strides toward closing the Wi-Fi gap, updating network infrastructure, and managing internal connections, all with the end goal of enabling students to access the tools and resources that will help them succeed in this digital age.


E-Rate Eligibility, Simplified

Through the years, there has been some confusion among vendors and applicants as to what products and services are eligible under each category of E-rate funding. Beginning with FY2015, the Eligible Services List (ESL) has been simplified and updated to account for the many changes that are now in effect. For detailed, up-to-date descriptions of eligible services, we recommend visiting the Universal Service Administrative Company (USAC) ESL webpage, located here

There are some notable new exclusions from the program, including web hosting, voicemail, and email services. These were deemed to be outdated and no longer aligned with the objectives of E-rate, which is now focused almost exclusively on broadband connectivity.

The following graphic provides a basic overview of services and categories as of 2015 and should be used as an informational guide only:


The Impact of Funding

Internet connectivity speeds and Wi-Fi accessibility are major areas of concern for school districts throughout the United States. As schools continue to pursue 1:1 initiatives, the resulting increase in demand for bandwidth has taxed the load bearing capability of networks, resulting in frustration and inefficiencies. With the phase out of less critical services and injection of new funds, the E-rate Program should allow more districts to move forward with a whole new generation of innovations and initiatives.

In recent years, technology departments have had to adapt their networks in piecemeal fashion, adding hardware to their existing infrastructure in a constant attempt to free up bandwidth. Many districts have had to resign themselves to less-than-optimal network performance as a result of insufficient funding. Those districts will now have a great chance of qualifying for funding under the new guidelines and finally taking steps to catch up to their more fortunate counterparts.

The magnitude of discounts available through the E-rate Program is based on free and reduced meal (FARM) percentages in combination with urban/rural designation. The system is set up this way in order to ensure equitable distribution of available funds to those locations that need it most. The message from the FCC has been that smaller, rural districts stand to benefit most from the Modernization Order; these districts should be encouraged to fill out the required application forms (Form 470/471), even if they have been denied funding in the past.


Additional Considerations  

Although the competitive bidding requirements have been loosened through the Modernization Orders, most products and services will still need to be procured through the RFP process, with a demonstrated adherence to price as the number one factor in awarding a contract. Fortunately, districts are given some leeway to take other factors under consideration in order to determine which proposal offers the actual lowest total cost of ownership.

Some things to be cognizant of when comparing proposals include manufacturer warranties (E-rate funding applies to component warranties up to three years when they are included in the cost), vendor support and training, and hidden costs related to implementation. In order to give districts some flexibility, E-rate applicants are not required to use the same vendor for both products and implementation services – if it is more cost-effective to procure hardware from one vendor and contract locally for training and support, E-rate funding will support such an arrangement.


Still More Work to be Done

All stakeholders in the E-rate Program can agree that the recent Modernization Order was long overdue, but concerns remain as to whether or not the Order actually addressed the fundamental issues that have hampered the program over the years. The Order passed 3-2 along party lines, and both dissenting commissioners expressed trepidation over missed opportunities that will need to be revisited in the future.

One of the primary concerns we have heard from school districts is that the application process is too complex. Those who have the money often outsource the entire process to consultants, while districts with tighter budgets are forced to navigate the fine print themselves, with little to no training or support. In our experience, we have found that the application forms (Form 470 and Form 471) appear more difficult than they actually are, but there is no denying the intimidation factor.  Commissioner Ajit Pai, in his dissenting statements to both Modernization Orders, called for a “one-page application” process that would undoubtedly negate a large portion of the uneasiness that technology directors face today when considering whether to pursue potential funding.

Then, there is the added problem of the millions of dollars in E-rate funding that are lost to waste and fraud on a yearly basis. The question of enforcement is one that still has no clear answer, and recent court decisions have called into question the legal viability of existing oversight and controls. On numerous occasions throughout the program’s history, large swaths of funding have been granted without any legitimate demonstrated need, but USAC has rarely been successful in attempts to recover these funds when discrepancies are uncovered after the fact.

Large, urban school districts in the top tier of funding eligibility receive breaks of up to 90% on eligible projects, which dramatically reduces the incentive for careful, responsible spending and opens the door for vendors to disregard the “lowest available price” requirement and charge exorbitant pre-discount rates. These same districts have traditionally taken home the lion’s share of funding, making it even more difficult for rural schools to qualify. If the goal of the E-rate program is to allocate dollars to districts and libraries with the most need, enforcement and oversight has to be a top priority going forward.


Keep Your Options Open

As previously stated, there has never been a better time to pursue E-rate funding, especially now that the deadline for applications has been extended. Time will tell whether the goals of 2014’s Modernization Orders can be met under the current guidelines, but it seems we are headed in the right direction. Is your network prepared to handle the weight of a continually increasing number of devices in the years to come? If not, the E-rate Program may offer the solution you need to ensure future readiness.



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