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Published in Print: January 12, 2005, as 10 Basic Rules for E-Rate Applications

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10 Basic Rules for E-Rate Applications

Securing a Fair Share of $2 Billion in Federal Funds

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Those that have turned their backs on access to the federal E-rate program’s fund of over $2 billion are some of the school systems in greatest need of funding from the program.

If you could reduce the amount your school pays for telephone service and Internet access by up to 90 percent, would you do so? If the poorest schools in the country could wire their buildings for Internet networks for only 10 percent of the actual cost, should they? The answers to these questions would seem obvious. But surprisingly, many schools across the country are saying no. And among those that have turned their backs on access to the federal E-rate program’s fund of over $2 billion are some of the school systems in greatest need of funding from the program.

It’s not that these schools haven’t heard about the E-rate, which enables K-12 schools and public libraries to reduce their costs for telephone and Internet services. It’s that they are concerned about widely publicized problems with the program. But school districts should not let these issues prevent them from getting their share of the E-rate money, which is set aside by the federal government from the universal-service-fee payments we all make on our phone bills.

The education-rate program was established by Congress in 1996 to provide educational institutions with funding for telecommunications services. The program is structured to allow schools and libraries to apply for discounts on the cost of these services—and in certain cases, also for the equipment needed for internal connections. These discounts can range from 20 percent to 90 percent of the school’s or library’s cost for the services.

It is true that the Federal Communications Commission, which has a role in administering the program, has substantially tightened up its scrutiny of schools applying for and receiving funding. In the face of documented efforts to defraud the system, the agency has instituted procedures to bar the culpable groups and individuals from receiving any more funding. There has been a major investigation of fraudulent practices in Puerto Rico, for example, resulting in the island’s loss of E-rate funding. Likewise, the Atlanta school district has had to respond to allegations that it mismanaged $60 million in E-rate funding. ("Atlanta Responds to E-Rate Scrutiny," Oct. 6, 2004.) And in a recent action, the FCC established new reporting and record-keeping requirements to reduce the likelihood of misuse of funds.

But most schools have no reason to worry about these extreme measures. They should not be discouraged by isolated cases of wrongdoing from making use of the E-rate to substantially reduce their costs of telecommunications-related services. All that schools have to do to protect themselves from charges of impropriety is to make sure that their applications for funds are consistent with their state-approved technology plans; that service providers don’t create the technology plans or participate in the creation of requests for proposals; and that the schools use the funds provided for the purposes listed in the requests. The cases of fraud and mismanagement have all been fairly egregious. For example, in one case, discounts were obtained for services in schools that did not have the basic wiring necessary to use computers.

At its core, the process for applying for funds under the program is really not difficult. For one thing, it is extremely easy for schools to receive discounts for basic telephone service, including the use of cellular phones. For that type of application, there isn’t even a requirement that the school draw up a technology plan. More advanced telecommunication services, including connections to the Internet, do require a technology plan, either approved by the state or by the Schools and Libraries Division (known as SLD) of the Universal Service Administrative Co., which administers the program. Most schools already have these plans. Essentially, all that is necessary for a qualified school to obtain the discounts for eligible services, in addition to having a technology plan, is the timely filing of a form 470 (Request for Services) and a form 471, which actually requests the discount.

Schools that follow these 10 basic rules should have no trouble receiving discounts under the E-rate program:

    1. For all services other than basic telecommunications service, maintain an approved technology plan.

    2. Know what services are eligible for discounts. The new list of eligible services was just published by the FCC and can be found at that agency’s Web site, www.fcc.gov.

    3. Know the deadlines.

    4. Stay current on the FCC rules and procedures.

    5. Use the current version of the forms required. Every year, schools lose funding because they use a form not approved for that year. This year, virtually every form has changes.

    6. Use the FCC rules and orders as the standard for compliance. The Schools and Libraries Division’s Web site is a secondary source that is not always consistent with the FCC rules and can be more restrictive. The FCC has often reversed the SLD on appeal. Be very wary of relying on the SLD hotline. It is staffed by temporary employees, and the FCC has repeatedly held that a school has the obligation to know the current rules. Even if a school claims that it relied on erroneous advice from the SLD, the FCC will deny funding for noncompliance.

    7. If the school system does not have a person who can keep up with the program’s requirements on a full-time basis, it should get help from a knowledgeable, independent third party who is able to do so.

    8. Be very wary of consultants who promise huge discounts for a percentage of the money received. The incentives for these consultants are not generally consistent with the program. Never use a consultant to prepare the technology plan or to prepare a service request if that consultant is linked to a service provider that will be bidding on the right to deliver the telecommunications service.

    9. Use great care when responding to inquiries from the SLD and the SLD’s audit division. Schools have needlessly lost funding because they thought the inquiries were benign. The job of the SLD is to make certain that discounts are not granted when the discounts are not warranted. Their inquiries are designed to ferret out requests that do not qualify. It is also very important, whenever an inquiry is received, to get the inquiry in writing. If there is ever a question about whether the school fully responded to a SLD request, only a written record will protect the school.

    10. If you are denied funding, do not hesitate to appeal the denial to the Federal Communications Commission. Every year, the FCC grants a significant number of appeals. Unfortunately, each year there are also some schools that were wrongly denied funding and did not file a timely appeal at the FCC.

Many schools are becoming more and more dependent on high-quality telecommunications services to meet the educational needs of their students. Congress determined in 1996 that it was imperative that the country not leave schools off the information superhighway. It decided that providing Internet access to schools and public libraries was a national priority, and it set up a fund of more than $2 billion per year to lower the cost of these essential services. No school entitled to discounts under this program should be left out because of inaction, misinformation, or concern about the egregious abuse of the fund by a few bad actors.

Vol. 24, Issue 18, Page 30

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