Funding for 'E-Rate' Discounts May Come Up Short, FCC Says

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Schools shouldn't count on getting all the money they asked for this year from the federal "E-rate" program, a Federal Communications Commission official said last week.

"You have to expect that when demand exceeds the available money, not everybody gets everything they want," said Ruth Milkman, the deputy chief for the FCC's common carrier bureau, which regulates rates for local phone companies.

The FCC said this month that it expects to collect $1.67 billion from phone companies this year to pay for education-rate discounts on telecommunications services and equipment for schools and libraries.

That amount is $350 million less than the projected demand and $580 million less than the $2.25 billion yearly cap for the program set by the FCC.

Ms. Milkman said that the FCC still plans to collect an average of $2.25 billion each year for E-rate discounts, but that collecting that much for the first year is unrealistic.

"The FCC always said the $2.25 billion was an ongoing cap. Our target figure [for this year] was actually closer to $1.75 billion," Ms. Milkman said.

The FCC lowered that figure to $1.67 billion based on how much money it projects that phone companies can provide for the program without having to increase long-distance rates, she said.

FCC Chairman William Kennard insisted that the agency "ramp up schools and libraries as fast and efficiently as possible but ... in a way that doesn't cause rates to increase,'" Ms. Milkman said.

A Promise Is a Promise

Education groups, which are lobbying hard to protect the E-rate program, say the FCC should come up with the $2.25 billion they feel was promised.

"The $2.25 billion cap is the figure schools have been relying on," said Leslie Harris, a lobbyist for the Consortium for School Networking and the Eugene, Ore.-based International Society for Technology in Education. "People have made their plans, signed contracts. I'm worried that if that [$1.67 billion] figure is adopted, a lot of schools will not receive their funding."

An aide to Sen. Olympia J. Snowe, R-Maine, a key congressional supporter of the E-rate program, said the senator would accept a figure less than $2.25 billion, as long as demand is met.

The $1.67 billion figure "is not a done deal," said the aide, who asked not to be identified by name. "We need to see at the end exactly how much demand there is. Then if there's still a gap, that would be of concern to us."

The FCC is now seeking public comment on whether it should collect more than $1.67 billion, Ms. Milkman said. But when asked whether schools could expect the amount to grow, she said, "It's unlikely."

If demand for the discounts outstripped funding, poorer schools would receive top priority, FCC Chairman Kennard said recently in a statement.

The FCC announced the $1.67 billion figure in a May 8 report that deals mostly with how the agency plans to restructure the administration of the E-rate program.

The restructuring, effective next January, responds to a Feb. 10 General Accounting Office report that concluded that the FCC did not comply with the law when it created the Schools and Libraries Corp., which administers the E-rate program.

The FCC said it will consolidate the SLC and the Rural Health Care Corp.--which administers a universal-service program for rural health-care organizations--under one agency.

Vol. 17, Issue 36, Page 28

Published in Print: May 20, 1998, as Funding for 'E-Rate' Discounts May Come Up Short, FCC Says
Web Resources
  • The Schools and Libraries Corp. Web site contains a variety of information about the 'E-rate' program.
  • Read a May 8, 1998, statement from FCC Chairman William E. Kennard about the commission's efforts to revamp the 'E-rate' program.
  • In a Jan. 27, 1997, speech to the National School Boards Association, former FCC Chairman Reed Hundt described the philosophy of what eventually became the 'E-rate' program. He noted that the program, in theory, would allow the poorest schools to compete with the richest for telecommunciations services, asking rhetorically "Where's the catch?' and answering "Well, there really isn't one."
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