The federal E-rate funding program is an essential resource for supporting connectivity in schools and libraries. In 2014, the FCC started a five-year Category 2 budget trial to fund critical network infrastructure. This test run would determine if the approach was an effective way to provide more equitable access to Category 2 services nationwide.
In July 2019 THE Journal covered the pending expiration of the Category 2 budget approach and the release of the Notice of Proposed Rulemaking from the FCC, which requested stakeholder feedback on their proposal to create a permanent Category 2 budget system.
In December 2019, the FCC released a long-awaited Report and Order making the Category 2 system permanent and streamlining the application process.
Here are the ed tech funding updates that E-rate applicants will need to know for funding year 2020 and beyond.
Q: Has anything changed for FY2020?
A: The FCC determined that FY2020 will act as a gap year between the old Category 2 regulations, and new rules outlined in the Report and Order.
Here are some key updates to keep in mind…
Category 2 budgets will be calculated using the same per-site methodology used in FY2015 to FY2019, but FY2020 budgets will receive a one-time 20 percent increase — a unique opportunity for E-rate applicants.
FY2020 Category 2 Budget Multipliers: (1) Schools: $195.63 per student; (2) Libraries with IMLS Locale Codes 11, 12, 21: $6.52 per square foot; (3) Libraries with all other IMLS Locale Codes: $3.00 per square foot; (4) Entities at the Funding Floor: $11,998.43 per site
According to the FCC, the FY2020 E-rate Eligible Services List included “limited changes” for FY2020. The Commission declined to include new services or functionality as eligible for either Category 1 or Category 2 services.
Q: What’s in store for ed tech funding in FY2021?
A: Budget cycles, calculations and floors are all changing come FY2021. It’s critical that E-rate applicants read and understand the new Category 2 rules to make the most of their funds.
Q: How will E-rate applicant budgets be impacted?
A: Beginning in FY2021, all applicant budgets will be reset to the full amount available under the new Category 2 rules. As part of this modification, the FCC will adopt district-wide and library system-wide budget calculations.
Q: What are the new budget cycles?
A: The FCC’s revised ed-tech funding rules adopt fixed five-year budget cycles. The first cycle will run from FY2021 through FY2025. Applicants can submit E-rate applications in any or all Funding Years during this five-year cycle, with a new budget cycle beginning in subsequent five-year periods (e.g. FY2026). There will be no rollover of funds from cycle-to-cycle.
Q: How will budgets be calculated?
A: A popular request from E-rate stakeholders is being fulfilled: starting in FY2021 the program will adopt district-wide and library system-wide Category 2 budgets. This means school districts and library systems will have a single budget cap to administer.
The per-site funding “floor” for smaller sites will increase from $9,200 to $25,000.
Budgets will be calculated at the start of each five-year cycle. The FY2021 budget multiplier factors are $167 per student for schools, and $4.50 per square foot for libraries.
Q: What about the budget ‘floor’ for smaller sites?
A: To ensure sufficient funding to deploy internal connections, the new FCC rules include an increased funding floor for smaller sites. The updated floor will switch to a pre-discount level of $25,000 over the five-year funding cycle beginning in FY2021.
Q: What are some other Category 2 changes coming for FY2021?
A: FCC rules currently include a prohibition on equipment transfers that was meant to prevent applicants from circumventing the then-existent per-site Category 2 budget rules. Now, equipment transfer rules will be relaxed for equipment purchased with E-rate discounts in FY2021 and forward, affording applicants more flexibility to deploy equipment where it is most needed.
In a day and age where internet access is a requirement rather than a luxury, it’s critical that school districts and library systems have adequate resources to remain connected. The recent updates to E-rate’s Category 2 rules mark an exciting time for applicants.
Thank you for your time.
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