SCHOOLCIO: 10 Things Schools Need to Know About the New E-Rate

1/11/2012 By:

You already know that E-rate provides discounts on services and products that enable classrooms and libraries to receive voice, video, and data communications. The amount of the discount depends on the school’s location and level of poverty, but it ranges from 20 percent to 90 percent.

To be eligible to receive discounts, a school or library must meet certain criteria. In general, a school is eligible to receive a discount as long as it doesn’t operate as a for-profit entity or possess more than $50 million in endowments.

Now, while the basic structure of E-rate has remained the same, the FCC Sixth Report and Order brought some major changes to the program. Other FCC orders involving CIPA compliance and service-provider gifts have caused confusion. SchoolCIO spoke with John Harrington, chief executive officer of Funds for Learning (www.fundsforlearning.com), the E-rate compliance firm specializing in guiding applicants and service providers through the ever-changing E-rate regulatory process, to gain insight into the latest iteration.

1. CIPA compliance changes

On August 12, 2011, the FCC issued an order based on the Protecting Children in the 21st Century Act, which updates the Children’s Internet Protection Act (CIPA). The order will become effective on July 1, 2012. The additional requirements it contains focus on educating minors about appropriate online behavior, including interacting with other individuals on social-networking web sites and in chat rooms, as well as awareness of, and response to, cyberbullying.

2. Gift-giving restrictions

Applicants now must follow either their own state and local laws regarding gifting or the FCC rules, whichever are stricter. Applicants and/or other school personnel are prohibited from soliciting and/or receiving gifts or anything of value from a service provider that is participating in or seeking to participate in the E-rate program. Additionally, service providers may not offer or provide gifts to anyone involved in the E-rate process. Modest refreshments not offered as a part of a meal and items with little to no intrinsic value, such as plaques and certificates, are acceptable. An exception to this rule is that gifts and/or meals are permissible if the total value of the gifts and/or meals is less than $20 and the total of gift/meals received do not exceed $50 per employee from any one source per calendar year.

3. Expanding eligibility

The rule mandating that requested services be used solely for educational purposes was overturned permanently. The new rule states that services will be used primarily for educational purposes. The following conditions apply to schools that wish to open their doors after hours for the community’s use:

Schools may not request funding for more services than are necessary to serve the student population.

The public can gain access to services only when school is not in session: after school hours, on weekends and holidays, and during summer vacation. Schools will determine whether community access is allowed. (A box will appear on Form 471 for entities to check to indicate that they took advantage of the rule change.)

Schools may not charge for the use of services that are subject to a universal service discount. Fees may be assessed for additional electricity, security, heating, and equipment not covered by E-rate.

4. Indexing the funding cap to inflation

The FCC will use the gross domestic product chain-type price index (gDP-CPI) to adjust for inflation the amount of funds available annually to E-rate program participants. In practical terms, the cap for FY 2010 would increase to $2.27 billion. The FCC will continue to roll over unused E-rate dollars to future years.

5. Dark fiber: Back again

Starting with funding year 2011, dark fiber may now be purchased from any E-rate service provider (vendors need not be telecommunications carriers), with the caveat that the applicant must light the fiber immediately. while installation and maintenance of dark fiber will be eligible, any special construction that is necessary as a result of the fiber will not be eligible for E-rate discounts.

6. Connectivity to portable devices

The FCC authorized up to $10 million for funding year 2011 to investigate “the merits and challenges of wireless off-premises connectivity services.” Twenty schools were selected to participate, and while the findings of the project may not be released for some time, the subsidizing of the research indicates that E-rate funds may eventually be used for off-site learning.

7. Technology-plan requirements

In an effort to streamline the application process for smaller applicants, the Sixth Report and Order eliminated the requirement that applicants have a technology plan to receive Priority One services (telecommunications and Internet access). A technology plan is still required for Priority Two requests (internal connections and basic maintenance).

8. Disposal of E-rate equipment

Applicants can now “[dispose] of E-rate equipment for payment or other consideration, but no sooner than five years after the equipment is installed.” This rule overturns previous guidance barring applicants from reselling or transferring ownership of E-rate–funded equipment for money or anything of value.

9. Changes to basic maintenance

Unbundled warranties were deemed ineligible because they are purchased as a type of retainer and not as an actual maintenance service. Basic maintenance requests must be for actual work performed.

10. Item 21 deadline

Effective with funding year 2011, Item 21 attachments are now due before the close of their respective filing window. The Item 21 (or description of service) attachments help with the funding process and provide the Universal Service Administrative Company with information needed to make funding decisions quickly. Incomplete or missing Item 21 will delay the decision on an applicant’s funding request. When the funding request is reviewed, the applicant may be contacted so that they may provide the Item 21 information if it has not been filed in time.

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