The Changing E-Rate Equation

In the 12 years since E-Rate began offering subsidies on telecommunications and Internet services to schools and libraries, a lot has changed – with the discount program itself and within the technology-driven world of education it has facilitated. And yet the value proposition remains unchanged. For schools willing to do the work of applying, the payoff is evident.

The goal of the Telecommunications Act of 1996, which created E-Rate (formally known as the Schools and Libraries Program of the Universal Service Fund), was to ensure that schools and libraries – particularly those in low-income and rural areas – had affordable access to telecommunications and Internet services. In this regard, the program is a success.

Offering discount rates of 20 to 90 percent on eligible services and equipment, E-Rate has helped subsidize technologies that have become fixtures in many schools' day-to-day operations and classroom activities.

Relying on E-Rate

"Today, [Internet access] is a necessity," says John Harrington, CEO of Funds for Learning, an E-Rate funding compliance services firm. Because of E-Rate, "schools now have sophisticated Internet pipes and wide area networks. Curriculum and lesson plans rely on and utilize Internet access."

Certainly, technology's critical role in the modern school day has been apparent for quite some time. But in the current era of historic budget shortfalls, finding the funding to support its implementation has taken on a new urgency.

Like many districts, the 3,400-student Bloom Township High School District 206 in Chicago Heights, Ill., relies on E-Rate to help support its IT budget, which has shrunk 15 percent in the past two years. "The need for more bandwidth and accessibility makes E-Rate essential," says District Director of Technology Andrew Schmitt. "Budgets are shrinking, but the networks keep getting bigger. Without E-Rate, budgeting would be difficult."

Thanks to the district's 85 to 90 percent E-Rate discount, Bloom Township's IT staff completed a number of upgrades this past summer, including the installation of a new Cisco Systems IP phone system, a wireless network deployment and a virtualization initiative.

DeLilah Collins, E-Rate coordinator for the Colorado Department of Education (CDE), says she sees a growing reliance on E-Rate among the schools she's assisted. "In Colorado, 97 percent of the schools are applying for E-Rate funding," she explains. "There's an urgency for the money right now … to help reduce budget shortfalls."

California's Tulare City School District has been reaping the rewards of E-Rate since 1998. With an overall discount rate of 83 percent, the 9,600-student district has had the means to complete telecommunications, cell phone and e-mail projects.

"We couldn't do many of our bedrock IT projects ... and our education programs wouldn't be as far along as they are" without E-Rate, says Daryl Shelton, director of information services and the district's longtime E-Rate coordinator. "We're extremely thankful for it."

The Downside of Success

Many schools rely on E-Rate to support essential services. But has the program become a victim of its own success? The funding cycle for 2010–2011 no doubt will be colored by schools grappling with severely reduced budgets, making E-Rate funding that much more attractive.

According to Mel Blackwell, vice president of the School and Libraries Division of Universal Service Administrative Co. (USAC), which manages the E-Rate program, USAC typically receives about 40,000 applications each year, totaling approximately $4 billion in requested funding. In the past, E-Rate has been funded to provide only $2.25 billion in subsidies annually, thereby limiting what schools could expect from the program.

"Applicants are telling me that with lower tax revenues and the general economic situation, it's likely that the E-Rate program will prove [even] more valuable to schools in the coming year," Blackwell says. In anticipation of that expected uptick in applicants for the current funding cycle, which began July 1 and ends June 30, 2011, USAC has increased its personnel and processing resources.

Still, the disparity between the amount of funding requested each year and the amount actually available has long been troublesome. With only so much money to go around, calls for program reforms are common.

Change Is Coming

To its credit, USAC has been flexible over the years, soliciting feedback from applicants and stakeholders about ways to improve E-Rate.

In fact, on Sept. 23, the Federal Communications Commission, which is responsible for setting the program's policies, announced plans to upgrade and modernize E-Rate via the following improvements:

• 21st Century E-Rate Program: E-Rate's funding cap will now be indexed to inflation, allowing schools to maintain effective purchasing power and addressing a longstanding problem with the amount of funding available through the program. This initiative offers other benefits as well.
• Super-Fast Fiber: Participants will now have the option of connecting to the Internet via unused fiber-optic lines already in place as part of local, regional and state networks. This new option may provide a substantially less expensive connectivity route for many schools than was previously available through E-Rate.
• School Spots: E-Rate now supports the option of allowing schools to provide Internet access to local communities after students go home.
• Learning On-the-Go: Recognizing that mobile devices are changing the way that students learn, the FCC is launching a pilot program that will support off-campus connectivity for smartphones.

Reaching Out for Resources

While the program itself may be in flux, E-Rate remains one of the few reliable funding sources that hasn't dried up with the economy. The application process can be daunting, but resources exist to help schools navigate it. According to USAC's Blackwell, the organization "offers training around the country, free of charge."

Tulare City's Shelton has received training through the Tulare County Office of Education. "I also search USAC's website for up-to-date information," he says.

Applicants seeking help also can hire a consulting firm or turn to state resources. CDE's Collins says her agency offers technical assistance, training in completing applications and even help with audits. CDE also offers web conferences to train applicants in the E-Rate process.

The time commitment required to complete the application process varies by school, of course, but all schools must be prepared to do some legwork throughout much of the year.

"Prior to the Form 470 date [the first step in the E-Rate application process], we're putting in a few hours a week, monitoring payments and invoices," says John Wisnewski, technology coordinator for Bloom Township. "But [from] December through February, we're putting in time every day. E-Rate offers great rewards, but you have to really work for it."