Final Tally Released on 1st Round of 'E-Rate' Discounts

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Schools and libraries will receive $1.66 billion in discounts on the cost of telecommunications services, Internet access, and classroom wiring in the first round of "E-rate" awards.

The final awards were announced here last week for the 18-month period that ends June 30 by the schools and libraries division of the Universal Service Administrative Co., which is administering the federal program.

The discounts range from 20 percent to 90 percent, with the larger discounts going to applicants that serve the most economically disadvantaged populations.

Already, USAC has sent $54 million in reimbursements and payments to companies providing services and hardware; payments will continue at least through September, SLD officials said.

More than 30,000 initial applications have been filed so far for the second year of funding, which covers 12 months beginning July 1. The application window closes April 6.

Final tallies suggest that, as E-rate proponents had hoped, the first year's recipients represents both urban and rural communities across the country, with the most help going to the communities that have the most need. Eighty-two percent of public schools applied for E-rate funds this year, according to the SLD, which was known as the Schools and Libraries Corp. before its Jan. 1 consolidation into the USAC.

Seventy-nine percent of the $1.66 billion will go to schools and libraries eligible for discounts of 70 percent or higher. To qualify for a break of that magnitude, at least 50 percent of the student population must be eligible for the federal free- or reduced-price lunch program.

Two-thirds of the $1.3 billion in discounts for schools in the 70 percent bracket and higher--the money is actually paid to the companies providing the services and hardware--are to install cables and other communications hardware. Discounts in future years are expected to shift toward paying for communications services.

The remaining money--$341 million, or 21 percent of the total--will help schools and libraries serving better-off communities pay for telecommunications and Internet services. Those applicants will not get discounts this year for internal wiring.

The "education rate" program, which the Federal Communications Commission oversees, was authorized by Congress in the Telecommunications Act of 1996. Fees charged to the nation's telecommunications companies pay for the discounts; schools and libraries must pay the remainder of the cost of the eligible services and hardware.

"It has a very broad reach in terms of economic and geographic spread," Kate L. Moore, the president of the SLD, said of the first year of E-rate distribution. "It's allowing schools and libraries to leapfrog into realms of interactivity that otherwise would take years to attain."

Schools and libraries in all 50 states and the District of Columbia, as well as Puerto Rico and American Samoa, received discounts, with the largest amounts tending to go to states with the most students. California received $206 million, Texas received $129 million, and New York received $165 million.

The total fell short of the more than $2.4 billion that the 30,120 applicants had requested. The FCC had collected $1.93 billion from phone companies; a contingency fund of about $265 million has been set aside pending FCC decisions on several issues affecting applications.

Building Infrastructure

President Clinton, in a statement coinciding with the SLD's March 1 funding announcement, said the E-rate had put within reach his goal of connecting every classroom to the Internet by 2000.

"Because of our efforts, children in the most isolated inner city or rural town will have access to the same universe of knowledge as a child in the most affluent suburb," he said.

A preliminary analysis of applications in the 70 percent-or-higher discount brackets suggests that the E-rate will help districts connect some 640,000 classrooms to the Internet, said George McDonald, the SLD's operations director.

In a survey released last week, the Department of Education's National Center for Education Statistics announced that 51 percent of the nation's 2.4 million public school classrooms had Internet connections as of last fall. In 1997, that figure was 27 percent, up from only 3 percent of classrooms in 1994.

National education leaders who supported the E-rate program through a troubled start-up phase and long months of political controversy in Washington hailed its prospects for improving education.

"It's the breakthrough that we have needed at the state and local level in learning technologies," said Gordon M. Ambach, the executive director of the Council of Chief State School Officers.

Linda G. Roberts, the Education Department's director of educational technology, last week called the discounts a first step. "We have a huge job to do for professional support for teachers," she said.

The Clinton administration has proposed spending $800 million next year on a range of school technology initiatives.

Round Two

The next E-rate round, which begins in July, has a number of uncertainties, starting with the size of the fund, which the FCC has capped at $2.25 billion annually.

Ms. Moore said the SLD would report its projections of demand to the FCC. In the first year, despite a level of demand that the SLD estimated at $2.02 billion, the commission provided only $1.93 billion. Schools and libraries ended up asking for $2.4 billion.

The outlook for the E-rate program this year has legal and political question marks.

A court challenge to the Telecommunications Act is pending in the U.S. Court of Appeals for the 5th Circuit, based in New Orleans, and could curb the E-rate program.

In Congress, several bills from the last session have been reintroduced that would impose restrictions on the program, most notably an "E-rate termination" bill introduced by several House members.

Vol. 18, Issue 26, Page 20

Published in Print: March 10, 1999, as Final Tally Released on 1st Round of 'E-Rate' Discounts
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