Rating the E-rate

Students and teachers in this rural Wisconsin town have come to rely on the Internet in a dozen different ways—from researching papers and taking virtual field trips to communicating by e-mail and pulling lesson plans off the Web.
But district officials say they wouldn’t have been able to deliver this global network to their classrooms for at least another two years were it not for the E-rate. The federal subsidy has lowered the cost of acquiring modern communications services for thousands of schools and libraries nationwide in the first three years of the program’s existence.

“It’s had a great impact within our school system, not only in terms of the telecommunications end, but in paying for wiring our classrooms,” says Fredrick E. Postuma, Westfield’s technology coordinator and chief technology planner.

Since 1998, the 1,400-student district has used its $175,815 in E-rate support to help pay for the cables, communications hubs, and switches that now ferry data between school buildings. The subsidy has also saved Westfield thousands of dollars on Internet and telephone charges—a big help in a district whose five schools are scattered across 250 square miles and three area codes.

But this year, the third year of the program, Westfield’s E-rate award plummeted to $27,388— $105,000 less than the district was expecting. “That meant all of our internal [classroom] connections were not funded, which is one of our large areas of need,” Postuma says.

It’s a turn of events that Postuma finds exasperating, because it throws into disarray the careful plans he has made for technology in the district. And he knows that many of the 45 hours he and a financial assistant spent preparing Westfield’s applications were wasted.

In many ways, the Westfield school district’s experience offers a microcosm of a program that has provided enormous benefits to the nation’s schools, along with almost equally enormous frustrations.

As of last month, the education-rate program has awarded $5.1 billion worth of discounts on telecommunications services and equipment to schools and libraries.

The program has touched every state and given school officials the means to connect 1 million classrooms to the Internet nationwide. And it’s a big reason why practically every school in the United States, and nearly two-thirds of the classrooms, now have Internet access; in most cases, the connections are through dedicated lines rather than much slower dial-up modems.

“I think it’s been a smashing success,” says Keith R. Krueger, the executive director of the Consortium for School Networking in Washington. “Whereas there were many cynics and critics two years ago, those answers have largely been addressed. It is getting to schools; there has not been fraud or abuse. It’s making a difference in the number of wired classrooms.”

“The main theme I hear from educators and librarians is that this program has made possible the use of technology that otherwise would have been years away in classrooms,” says Kate L. Moore, the president of the Schools and Libraries Division of the Washington-based Universal Service Administrative Co., or USAC, the nonprofit agency that manages the program for the Federal Communications Commission. “It is allowing these organizations to leapfrog into the realm of advanced technology and learning.”

But if the E- rate is now speeding many schools toward new technologies for learning, it’s been a difficult journey for the nerve-racked passengers: the school officials who have had to learn the program’s intricate rules, react to a seemingly inexplicable series of changes on the fly, and then wait, and wait some more, for crucial decisions to be made.

Even ardent supporters bemoan the persistent problems in the program.

“I would certainly like it to be less cumbersome in its process,” says Helen Soulé, the director of technology for the Mississippi Department of Education. “And this year, it has not been able to cover as much of [schools’] internal connections—I hate that, because I think that is important.”

“My sense is there’s a bunch of stuff going wrong this year,” says Jeff Ogden, an official at Merit Network Inc. in Ann Arbor, Mich., and a moderator of an online forum that enables local school administrators to compare notes on navigating the E-rate’s arcane process. Merit is a nonprofit corporation, governed by Michigan’s publicly supported universities, that promotes computer networking.

“The first year, everything was slow, and applications were not approved till really late,” Ogden says. “The second year was a bright spot because the [Schools and Libraries Division] managed to fund all the valid requests. The third year will be very rocky.”

The E-rate was created by the Telecommunications Act of 1996, which mandated that the FCC make up-to-date communications services affordable for all schools and libraries.

“Congress was very smart; they indeed were worried about the fact that every school had constraints on its resources that would make it difficult to fully participate in the digital age,” says Ira A. Fishman, formerly the chief executive of the agency that became known as the SLD.

One of the FCC’s goals in designing the program was to help bridge what has since come to be known as the “digital divide” between schools serving predominantly poor students and those who are more affluent. To that end, the commissioners decided to award the greatest discounts to the applicants serving the poorest communities and those in rural areas.

The commission further aided poorer districts by splitting the services eligible for discounts into three categories: telecommunications, Internet access, and internal connections. All valid applications for services in the first two categories are fulfilled first, no matter the poverty status of the applicants. The remaining money is awarded to eligible applications for internal connections, with the applicants that serve the poorest students being served first.

As the FCC intended, the largest share of the E-rate aid has gone to the schools serving the poorest students.

“If the objective of these people [at the FCC and USAC] is to drive penetration of access to advanced services to everyone, then I think it’s been achieved,” says Richard Taylor, a co-director of the Institute for Information Policy at Pennsylvania State University. “My own political disposition is that, generally speaking, it’s positive.”

Yet on one crucial front, the data show no progress: Classrooms that serve the highest proportion of poor students are still much less likely to have Internet access than classrooms serving students whose families are better off financially. FCC officials say that finding is troubling, because poor students are meant to benefit the most from the E-rate.

Linda G. Roberts, the U.S. Department of Education’s director of technology, says a big reason for the disparity is that many high-poverty districts are saddled with buildings that are so old and ill-maintained that they can’t take advantage of the E-rate discounts.

“Older buildings don’t have basic infrastructure—and we’re talking about electrical outlets,” Roberts says. “Or there’s the difficulty of pulling cable in schools with asbestos problems and a lot of concrete.”

But overall, officials in dozens of districts interviewed by Education Week say the E- rate has allowed them to deploy widely a range of telecommunications services.

“It has somewhat changed the culture of rural poor schools, to be more about possibilities rather than to be about regulations or the lack of money,” Soulé says. “Being able to afford a T-1 line is no longer the issue—now the issue is how will you use it for your classroom,” she says, referring to the high-speed data pipe.

She points to the rural South Delta school system, near the southern reaches of the Mississippi River, as an example.

“The E- rate has really been a blessing for our district,” where all 16,000 students qualify for federally subsidized lunches, says Katherine Tankson, the associate superintendent of curriculum.

In the past, it was nearly impossible to lure technology vendors to visit the district, she says, but that has changed: “Since we’ve had the E-rate, no problem. Money talks.”

The E-rate has also benefited schools in some ways that are easily overlooked, education observers say.

Nearly every district in the country now has a technology plan, partly because of the requirement that E-rate applicants get such plans approved by their states. (A plan is not required for applications limited to basic telephone service.) Some states had already required district technology plans as a condition for state technology grants, but the E-rate has reinforced what experts say is a good practice.

To be valid under the E-rate, a plan must lay out the applicant’s goals and a strategy for using the desired technology that takes into account staff training, an inventory of related equipment, a budget, and a procedure for evaluating progress and making any needed changes.

Moore of the SLD says planning has often brought together individual schools, districts, libraries, and state agencies. “It has been an unintended benefit for people to come together to advance the common good,” she says.

But school leaders’ public praise for the E-rate often glosses over the frustrations many officials have experienced. Participation in the program has been difficult for just about everyone involved in it, and some school administrators say they haven’t gotten the benefits they expected. (“A Bureaucratic Hassle, But Worth It,” Sept. 20, 2000.)

Educators who have applied for E-rate support grouse about the paperwork it entails, including the voluminous documentation that the SLD often demands during its review process.

“If there’s any frustration on part of people in the field, it’s the complicated application process,” says Krueger of the Consortium for School Networking.

School officials also complain about delays by the SLD, which they say has been swift to acknowledge districts’ correspondence and answer questions but slow to make decisions.

“My complaint has mainly been the time delay between when you apply for these funds and when you know you get them,” says Christopher Napper, the technology coordinator for the Pittsville, Wis., schools. “Last year, our initial letter [from the Schools and Libraries Division] said we were denied funding. Later, a letter came awarding us support, but we’d already spent the money on other things.”

Moore acknowledges many of the applicants’ complaints about the SLD, but she says delays are often due to applicants’ errors in filling out forms. In other cases, she says, the “resounding silence” applicants experience is attributable to the reviewers’ practice of evaluating proposals, which often involve several applications, in their entirety rather than piecemeal.

Other delays, Moore says, result from unresolved policy questions, such as whether certain types of equipment or services are eligible for discounts.

The rigorous review is necessary, she adds, to ensure the integrity of the program. The process was tightened in 1998 after a review by the General Accounting Office, the congressional watchdog agency. Another GAO report on the program is due this week.

Moore says the process should be smoother this year, thanks to expanded electronic filing and a new client- service bureau. “We have made progress and are committed to continuous improvement,” she says.

Even more frustrating to applicants than the delays are the FCC’s rules of priority, under which internal connections aren’t financed until requests for telecommunications and Internet access are satisfied.

This means that, in some cases, the decision about whether a school should receive an E-rate award turns on how the school wants to use a particular piece of equipment, rather than whether the equipment itself is eligible for discounts. A network server, for example, might be eligible if the school intends it for telecommunications, but ineligible if its purpose is internal connections, depending on the school’s poverty level.

For many schools, making such distinctions is difficult and, in practice, arbitrary.

“It required an awful lot of background information before you could even fill out the application form, to know when something was an internal connection and something was telecom or Internet access,” says Patricia M. Tillotson, who is in charge of applying for E-rate funding for the 16,000-student Red Clay district in Wilmington, Del.

“The fact there are these three categories and two different priority levels—that’s forcing people at SLD and at schools to make a lot of decisions, nitpicking lines, making artificial distinctions,” Ogden of the Merit Network says.

As Wisconsin’s Westfield schools discovered, the FCC’s priorities also make it hard to count on getting E-rate discounts from year to year.

The first year of the program, only those applicants that ranked above the 70th percentile according to the FCC’s formula for determining need received discounts for internal connections. Westfield met that requirement, because its percentage of students who qualify for federally subsidized lunches put its level of need precisely at the 70th percentile.

The second year, surprisingly, the FCC gave internal-connections discounts to every applicant that asked for them. Some observers speculate that many needy districts lost out because they didn’t bother applying, given the cutoff percentile for the first year.

In the third year, the pendulum swung the other way. Requests for internal-connections discounts skyrocketed. But so did the cutoff percentile, which USAC set at 81 percent. To their dismay, districts like Westfield found themselves out of luck.

Even when schools receive the E-rate awards they applied for, they can’t always use them. There are many ways the arrangements can fall through: A vendor may go out of business, for example, or a school may fail to follow the proper billing procedures.

In the first year of the program, the only year for which final data are available, $340 million in discounts—about 20 percent of the total amount awarded to applicants—was never used, and never will be. Although the E-rate rules allow the FCC to roll over up to half of the undisbursed money from one year to the next—potentially increasing the fund’s annual ceiling of $2.25 billion—the commission has chosen not to do so, for reasons it has kept to itself.

The difficulty of navigating the process has had a big impact on which schools have applied for the E-rate and how well they have been able to take advantage of it.

Some districts, especially smaller ones, haven’t pursued any E-rate discounts, largely because of the paperwork burden.

“We looked into it,” says Ronald J. Kanzulak, the superintendent of the Community Consolidated Grade School in Elwood, Ill. “It seemed to be way more complicated for a small school district than necessary.”

The one-school district, serving 310 students in grades K-8, is run by just three administrators: the superintendent, a principal, and a bookkeeper. Their problem wasn’t just completing the application form, Kanzulak says. “When we called [the SLD], we talked to two or three different people, and the answers you get from one may be similar to another, but not the same,” he says.

The Elwood school isn’t exactly hurting for want of E-rate support. “We found there are probably just as many good ways to do this in the state of Illinois,” Kanzulak says.

The district has turned to a state technology grant and the federal Education Department’s Technology Leadership Challenge Fund Grantboth of which were much simpler to apply for than the E-rate, Kanzulak saysto install a network linking the library and two computers in each classroom to the Internet.

Some states have gone to great lengths to help their schools apply for E-rate discounts; a few have even organized statewide consortia for purchasing Internet and telephone services.

Other schools have chosen to hire one of the many E-rate consultants who have set up shop since the program began, either on an independent basis or through vendors that provide telecommunications services.

The latter arrangement led to problems for a group of Oklahoma school districts that saw their Year 2 E-rate awards go up in smoke last spring, when the FCC rejected applications that had been completed with the consulting services provided by a vendor, MasterMind Internet Services Inc.

Ben L. West, the assistant superintendent of the schools in Pawhuska, Okla., says his district had previously used MasterMind for Internet service. When the Tulsa-based company offered to fill out the E-rate applications and help him find vendors to bid on the work, he jumped at the offer.

“I wear about 10 different hats,” West says. “I had no idea what a [network] hub was for, what a router was for, and didn’t have the technical knowledge to write specifications, and they did.”

West insists that the company played no part in choosing the winning bids, but the 1,100-student district awarded MasterMind its Internet-services contract.

The FCC ruled that MasterMind’s “proximity” to the bidding process had tainted Pawhuska’s application, because its role might have deterred other vendors from bidding. Pawhuska’s Year 2 funding awards for hubs, routers, switches, and inside wiring were withdrawn, along with those of more than 100 similar applications by Oklahoma districts with which MasterMind had been involved—another example of the many ways that E-rate discounts can go unused.

USAC also rejected about 300 applications for Year 3 in which other vendors were listed as contacts for submitting bids.

“I see their reasoning,” West says about the decision. “However, I don’t think MasterMind or the Pawhuska schools did anything wrong.”

He says the mistake reinforces his perception that so far the E-rate program is too unpredictable to allow for prudent financial planning. “It’s a crapshoot,” he says.

But for districts that combine a high-poverty student population with technological savvy and administrative muscle, the E-rate can be a huge boon.(“Leveraging the E-rate’s Power ,” Sept. 18, 2000.)

Florida’s Miami-Dade County schools, the fourth- largest district in the nation, received a whopping $24.5 million in E-rate discounts during the first two years of the program.

“Our original [technology] plan would have us complete the wiring of 309 locations in 2005; because of E-rate we were done April 1 of this year,” says Dan Tosado, the district’s associate superintendent for information technology.

In one facet of the project—replacing telephone switches in 202 elementary schools with new, high-bandwidth models—the 350,000-student district actually netted a profit.

The winning bid came in at $11,000 per switch, Tosado explains. After the E-rate discount, the actual cost to the district was a little over $1,000. Meanwhile, the district persuaded the company to broker the sale of the old switches, and a purchaser was found in South America.

“Thanks to the power of the E-rate, the application of our [procurement] rules, and the beauty of competition, we were able to change every elementary school—and we made $1,000 a switch,” Tosado says.

Such successes, however, strike a nerve with officials of schools of modest economic means that still lack the resources to improve their telecommunications infrastructure, yet may have a poverty rate just below what it takes to qualify for support for internal connections.

Fredrick Postuma of Westfield says he is concerned that large, poor districts will soak up so much of the E-rate money that there won’t be much left for other deserving schools. Those districts’ needs may continue to grow for a long time, especially as new eligible technologies appear and support costs rise, he says.

“At some point, we should consider giving [such schools] a prorated share of their requests, so internal-connections money can reach deeper into the discount matrix,” Postuma suggests.

Officials at the FCC say privately that they are watching for signs that high-poverty districts are taking too much from the annual fund. They suggest the demand for internal wiring may drop as every classroom becomes wired. But they acknowledge another possibility: High-poverty schools will soon try to upgrade their connections to broadband capacity, to improve the speeds with which information can be downloaded—an expensive transition.

Says Roberts of the Education Department: “I would expect that the FCC will revisit the rules of priority and the operation of the program, as the nation’s schools’ infrastructure evolves, and as the program evolves and schools’ experience with the E-rate and the application process matures.”

Of course, awarding E-rate discounts to schools is no guarantee that the services and equipment they help pay for will translate into better instruction for students.

Many observers note that when the E-rate awards do arrive, and ambitious telecommunications projects are suddenly a reality, school districts face a flood of new challenges.

“What we’ve got now is the cliché that we’ve built the baseball field, but how do we use it? What are the teams that are going to play in it?” says Frank B. Withrow, the former director of education for the National Aeronautics and Space Administration’s Classroom of the Future Project, housed at Wheeling University in West Virginia.

Withrow, now a private consultant on using technology to improve literacy, points out that educational success depends on having good academic content that is tailored to the needs of teachers and learners. “But there is still a shortage of really great curricula,” he says.

Another problem is also well-known: Teachers need professional development in integrating technology effectively into the curriculum—which is far more challenging than simply learning to use a search engine or an online application.

Finally, schools may lack the means or knowledge to keep their expanding communications infrastructures working reliably. As networks become more central to education, breakdowns become more disruptive.

“You hear people talking about availability [of online content] 24 hours a day, seven days a week, and 365 days a year,” Withrow says. “I don’t think we know what that really means in terms of supporting these networks.”

Sheryl R. Abshire, the technology director for the 33,000-student Calcasieu Parish, La., schools, agrees. “One of the things that perhaps a lot of people didn’t think about was after the technology is there, it’s going to require substantial resources for people to support it.”

In the final analysis, Abshire says, whether the E-rate program can be judged a success depends on how districts answer this question: “Have we effectively harnessed the power of this technology [to create] new learning opportunities for students?”

In her district, she adds, the answer is yes. Students can’t wait to get on the computer, and teachers are redesigning their lesson plans to take advantage of the vast resources on the Internet.

“While it’s been a challenge to try to ramp up professional development and provide technical support, when you see the kinds of products and projects kids are creating now, you feel good,” Abshire says. “It wouldn’t have happened without the E-rate.”