1. 1 E-rate as a Teenager The E-rate Program

2. 2 E-rate program overview E-rate statistics – then and now Major program changes Educational service agencies Current issues Looking toward the future Topics to be covered Summary

3. 3 E-rate as a Teenager Overview

4. 4 Federal Communications Commission (FCC), an independent U.S. government agency, established and oversees the E-rate program Universal Service Administrative Company (USAC), a not- for-profit, administers the E-rate program along with three other programs Schools and Libraries Program (SL) is the part of USAC with responsibility for E-rate E-rate Organization E-rate Overview

5. 5 Congress directed the FCC to establish the E-rate program in 1996 The FCC sets rules and policies through orders USAC and the Schools and Libraries Program develop procedures for specific actions, such as how to process applications E-rate Rules E-rate Overview

6. 6 Commitments for E-rate are made by the funding year (FY), which runs from July 1 through the following June 30 USAC refers to the funding year as the year in which most services will begin, e.g., FY2012 is July 1, 2012 to June 30, 2013 E-rate Timeline E-rate Overview

7. 7 The FCC has set the E-rate fund at $2.25 billion for each funding year. However, beginning in FY 2010, the cap is now adjusted for inflation each year Once each year, FCC can roll over unused funds from previous funding years into the current funding year E-rate Budget E-rate Overview

8. 8 Who is eligible for E-rate funding? – Schools and school districts Non-traditional entities (conditionally by state) such as juvenile justice, Head Start, adult education – Libraries and library systems – Consortia – groups of eligible entities that band together to aggregate demand and negotiate lower prices E-rate Eligibility E-rate Overview

9. 9 How large are the discounts on eligible products and services? – Discounts are 20-90 percent of eligible costs – Discount level for a school or library depends on: Percentage of students who are eligible for National School Lunch Program (NSLP) in – (for a school) the school – (for a library) the school district in which the library is located Urban or rural location of the school or library E-rate Discounts E-rate Overview

10. 10 E-rate as a Teenager Statistics

11. 11 E-rate Statistics - Applications E-rate Statistics Then (FY2000)Now (FY2012) Total Number of Applications36,43746,838 Online Applications (%)78.4 %98.0 % Paper Applications (%)21.6 %2.0 %

12. 12 E-rate Statistics – Priority One (Telecom and Internet) E-rate Statistics Then (FY2000)Now (FY2012) P1 Requests (%)36.7 %46.7 % P1 Requests ($)$1.44 billion$ 2.44 billion

13. 13 E-rate Statistics - Appeals E-rate Statistics Then (FY2001)Now (FY2011) Number of Appeals3,1931,504 Average Time to Process Appeals 265 days63 days

14. 14 E-rate Statistics - Invoices E-rate Statistics Then (2000)Now (2011) Number of Invoice Line Items253,670521,656 Average Time to Process Invoices 14 days5 days

15. 15 E-rate as a Teenager Major Program Changes

16. 16 Denials/reductions for ministerial and clerical errors OLD: Applicants could not correct data entered on program forms; USAC decisions were based on the existing math errors, accidental omissions, etc. NEW: Applicants can correct many errors and/or provide missing information before the date USAC issues a funding decision – Bishop Perry Order (FCC 06 -54) released in 2006 – Applicants can submit corrections manually and/or notify their PIA reviewers Major Program Changes

17. 17 Penalties for late filing/certifications of forms OLD: Applicants were denied funding if the FCC Form 471 was certified after window close; services were reduced if the FCC Form 486 was filed after the deadline NEW: USAC reminds applicants by letter – allowing 20 days for response – if in-window FCC Forms 471 are not certified and/or if FCC Forms 486 appear to be late – Bishop Perry Order (FCC 06 -54) released in 2006 – Alaska Gateway Order (DA 06-1871) released in 2006 Major Program Changes

18. 18 Contracts OLD: Applicants and service providers must sign and date contracts before the FCC Form 471 was submitted NEW: Applicants (only) must sign and date contracts before the FCC Form 471 is certified – Service providers can sign earlier – If the applicant’s state does not require an applicant to sign and/or date a contract, the applicant can provide that information during PIA review Major Program Changes

19. 19 Audits OLD: Audits were time-consuming and invasive NEW: A simpler, two-pronged audit approach satisfies the requirements of the Improper Payments Elimination and Recovery Act (IPERA) – PQA process targets specific, recent payments and requests specific, limited documentation to be submitted by email or fax (no on-site visits) – BCAP conducts audits but with clearer document requests and less time spent at the beneficiary site Major Program Changes

20. 20 SPIN Changes OLD: Applicants could change service providers easily, so a new service provider could effectively bypass the competitive bidding process by offering a lower rate NEW: Applicants must show that they have cause to change (breach of contract, unable to perform) and must select the “runner-up” in their evaluation if they received more than one bid – Sixth Report and Order (FCC 10-175), released in 2010 Major Program Changes

21. 21 Disposal of Obsolete Equipment OLD: Disposal not specifically permitted – Equipment purchased with E-rate funds cannot be sold, resold or transferred for money or any other thing of value NEW: Disposal permitted starting five years after date of installation (Sixth Report and Order, FCC 10-175) – Effective January 3, 2011 – Can be for payment or other consideration Major Program Changes

22. 22 Transfers of Equipment OLD: Transfers not specifically permitted – Equipment purchased with E-rate funds cannot be sold, resold or transferred for money or any other thing of value NEW: Transfers to other eligible entities permitted three years or more after date of purchase – Transfers are permitted before three years if the facility is temporarily or permanently closing – Third Report and Order (FCC 03-323), released in 2003 Major Program Changes

23. 23 E-rate as a Teenager ESAs

24. 24 Applicant Consultant to component school districts providing assistance with E-rate applications and administration Technology plan reviewer and approver Service provider – Potential conflicts In some states, component districts may select services provided by ESAs on a non-competitive basis Some states provide subsidies that allow ESAs to provide discounted rates to public schools Possible Roles of ESAs Educational Service Agencies

25. 25 Can provide consulting for the development of technology plans, service and equipment requirements, and assist in the application and administration of the receipt of discounts Can approve technology plans If the ESA’s role in the development of the technology plan is significant, the ESA must be able to demonstrate that the ESA’s review and approval process is independent of the development role ESAs Not Acting as Service Providers Educational Service Agencies

26. 26 If the ESA both applies for and provides services (i.e., acts as both an applicant and a service provider): – The ESA must be able to clearly show both organizational and functional separation between ESA staff providing services (the service provider function) and ESA staff providing technology plan support and application and administrative assistance (the applicant function) – Documentation can include organizational flow charts, budgetary codes, and supervisory administration ESAs Acting as Service Providers Educational Service Agencies

27. 27 Even if state procurement rules permit selection of an ESA’s services on a non-competitive basis, E-rate program rules must be followed: – Posting on USAC’s website of the FCC Form 470 – Fair and open consideration of all resulting proposals – Selecting the most cost-effective bid with price of the eligible products and services as the primary factor ESAs and Competitive Bidding Educational Service Agencies

28. 28 Discounts cannot be paid twice on the same service – E.g., if the ESA acts as ISP and its component districts seek discounts on that Internet access, the ESA cannot also seek discounts as a consortium leader for those services from the underlying provider(s) ESAs and Discounts Educational Service Agencies

29. 29 E-rate as a Teenager Current Issues

30. 30 Pilot program to test the merits and challenges of supporting off-premise wireless connectivity Twenty projects selected – March 2001 – Interim reports due February 2012 – Final reports due October 2012 Project benefits Project costs Effectiveness of protective measures Lessons learned Learning on the Go (LOGO) Pilot Program Current Issues

31. 31 Priority 1 (P1 – Telecom and Internet) requests use most of the money P1 requests continue to grow Funding for P2 (Internal Connections and Basic Maintenance) Looking to the Future

32. 32 Hot trend CIPA questions Duplicative services questions Unresolved issues BYOD (Bring Your Own Devices) Current Issues

33. 33 Hot trend CIPA questions Pressure on E-rate funds Unresolved issues School- or Library-provided Devices to Take Home Current Issues

34. 34 Buy service – free device? Cell phones eligible now Other devices not now eligible Free Equipments/Handsets Current Issues

35. 35 E-rate as a Teenager Looking to the Future

36. 36 Administrative automation – No paper Electronic letters and other communications – Easier application process Create online versions of all forms Develop simpler process for requesting PINs Copy My App – Faster decisions and fewer mistakes Future Looking to the Future

37. 37 Phone: (888) 203-8100 Fax: (888) 276-8736 Website: www.usac.org/slwww.usac.org/sl With questions, please contact us! Contacts

38. 38 Questions?