Now’s the Time to Take Advantage of New E-Rate Funding for 2015

If you're wondering how the recent changes to E-rate program will affect your school communications, you are not alone. This past year brought major changes to E-rate, the FCC program that many schools rely upon for telecommunications and internet funding.

The FCC committee that oversees E-rate held several votes this year that culminated in some of the biggest changes to the program since its inception in 1998. These changes affect how much funding each school can receive, as well as what kinds of technology can be funded with E-rate.

We wanted to take this space to give you an E-rate update, and encourage you to begin planning now for how your school will adjust to these changes. They will affect not only just about every school, but our business as well. This overview includes a summary compiled by Micah Rigdon, communications coordinator for Funds For Learning, a consultancy with its ear to ground when it comes to all things E-rate.

Changes to eligible E-rate technologies

Back in July, a five-person FCC panel voted 3-2 (along party lines) to make fundamental changes to the types of projects that E-rate can fund. Under the old rules, E-rate funds could be used for a wide variety of technological services, including broadband access, website hosting, e-mail, and even voicemail services. That’s no longer the case. Led by FCC Chairman Tom Wheeler, the commission voted to shift E-rate’s priorities. The program’s top priority is now to fund greater access to high-speed broadband internet. The second objective is to increase access to internal Wi-FI networks.

Members of the commission say more funding is needed in those areas because broadband and Wi-Fi access can greatly enhance learning in all types of classrooms. That gives teachers the ability to incorporate phones, tablets, and other mobile devices  into their learning plans.

Don't run the risk of allowing the funding changes to compromise your website and leave you with no way to pay for it.

Democratic commissioner Mignon Clyburn said that she believed that broadband access could be “the great equalizer of our times.” Mr. Wheeler said that he believes access to internal Wi-Fi networks is important because modern teaching methods require students to have internet access at their desks.

Of course, the shift in focus to high-speed broadband and Wi-Fi comes at the expense of other technological services. Starting in funding year 2015, E-rate funding will not be available for use on things like web hosting, email, and voicemail. Also, funding for traditional voice and phone technologies will be reduced by 20 percent in each of the next two years.

The committee said that it acknowledges that voice technologies still play a major role in most schools. However, it also said that many schools are using VoIP, or Voice over Internet Protocol. Since VoIP works over broadband, it is still essentially being funded through the shift to broadband technology.

Increase in E-rate funding

The second major change came in December. The committee voted 3-2 to increase the annual E-rate funding cap by $1.5 billion. The cap had stayed stagnant since the program’s launch in 1998.

Committee members said that demand for E-rate funding has historically exceeded availability and that the new cap will allow more schools to embrace high-speed and Wi-Fi access. The changes go into effect for the 2015 budget year and will remain constant until 2019.

The increased cap also gives a boost to urban schools, which will get a higher cap than non-urban schools. The budget cap for urban schools is now $5.00 per square foot of school library, up from the previous level of $2.30.

E-rate changes and school websites

While the news about e-rate no longer supporting website hosting may on the surface sound detrimental to SchoolNow and the many CMS providers serving schools, we’re confident funding for websites will remain a priority for schools. In fact, the focus on high-speed connectivity bodes well for our industry and the schools who are embracing the emerging technologies and trends such as mobile access and social media integration.

The increased budget is obviously good news for schools who wish to improve their access to high-speed, wireless internet. However, the eligibility changes may require many schools to re-evaluate their current technology budgets. Also, consider the way discount rates are calculated has changed.

You'd do well to recalculate your discount rates and E-rate eligibility to see how much funding you'll have in 2015. Once you’ve done that, you can then see how your needs and goals fit into the new E-rate criteria.

1. Focus on accessibility needs. Are there spots in your school that don’t get reliable access? Are there specific times during the day where the internet seems to run slow? Talk to your teachers, too. Do they have any curriculum that they would like to transition into online learning?

Doing a deep dive into exactly how your school uses its broadband will help you make more informed decisions about exactly which types of technology you need to fund.

2. Evaluate the services that will no longer be eligible. Are you using E-rate funding to pay for web hosting? If so, now is a good time to review if you're getting all you can from your current vendor, or maybe consider a new vendor.

Web design and hosting services have changed greatly in recent years, so you may even be able to find a new partner who offers a more robust package at less overall cost. Investigate your contract options and get an thorough understanding of your requirements when shopping for who your next website host will be.

3. Consider alternative funding methods. One creative way to cover your website hosting costs includes shifting your procurement mindset by considering alternative and innovative payment methods. Ask your website vendor if they've any creative ways to offset the loss of E-rate dollars.

Another solution is offered by org.results.com, an e-procurement company that transforms how school districts can stretch their operating budgets. With Org-Results, schools can offset these looming e-rate changes – and other costs – by creating an actual revenue stream from all purchases. Very simply, Org-Results does it by rewarding schools with ‘rebates’ for centralizing their procurement process. Imagine transforming your school website into a profit center: it can be done.

Don't be blindsided by funding changes that can adversely affect your school communications. The increased role of school websites and web-based communications for schools have elevated the importance of having a sound web strategy in place. At a time when you ought to be looking long and hard at elevating the role of your website in the total communications mix, don't run the risk of allowing the funding changes to compromise your website and leave you with no way to pay for it.

You are best served by reviewing your technology needs and goals sooner than later. Then you can develop a strategy to most effectively take advantage of the new e-rate funding opportunities. – JC

For more insight on how schools can leverage the new E-rate, we contacted Micah Rigdon of Funds for Learning. Funds for learning is an e-rate funding consultancy that helps schools navigate the e-rate bureaucracy and develop a strategic plan that helps schools stretch their budgets. Here’s Micah’s take on what the new e-rate rules may mean for you…

3 steps to follow for the next E-rate funding year:

1. Calculate your discount rate

Historically, the E-rate discount rate has been a relatively stable facet of the E-rate program, with most applicants seeing little fluctuation in their discount percentage from year-to-year.

That stability changes with updates to the program from the FCC’s E-rate Modernization Order, which was adopted this past summer. Single school site applicants will still calculate their discount rates in much the same way – by comparing their total enrollment and the number of students which would qualify for free or reduced meals under the National School Lunch Program (NSLP).

School district applicants previously calculated site-specific discount rates, as well as a different weighted-average rate for the entire district. Now district E-rate applicants will calculate their discount rate only at the district level, by dividing the total number of NSLP qualifying students by the district enrollment. This district-wide discount rate will apply to every eligible site within the district.

Because of this change, many districts will experience discount rate changes as they move to the discount band that fits their numbers. In our analysis of funding year 2014 (FY 2014) enrollment data, just under half of district applicants could see a decrease or increase in their discount rate. Obviously, libraries that set their discount rates based on a school district will experience the same changes as well. Even a slight change of just a couple of percentage points could have a big impact on school and library budgets that have little margin.

It’s in the best interest of every applicant to recalculate their discount rate and find out what discounts to expect under the new program rules. Even if an applicant is fortunate enough to experience a higher discount this year, knowing ahead of time will allow schools and libraries to make informed decisions when negotiating contracts and determining which technology will meet their needs.

It’s in the best interest of every applicant to recalculate their discount rate and find out what discounts to expect under the new program rules.

Every E-rate applicant will experience a reduction in their discount rate for voice services – whether those services are delivered via traditional analog lines or on digital circuits.

Beginning with FY 2015, the discount for voice services will be reduced by 20 percentage points – and then reduced again in each subsequent funding year by an additional 20 percentage points until all voice-service discounts are completely phased-out for E-rate applicants.

2. Review needs and current contracts

Successful E-rate applicants will begin their work by creating a clear picture of what their current and future technology needs are, what is covered by existing and renewable eligible contracts, and how these factor into the FY 2015 Eligible Services List.

Looking at existing contracts to determine whether they can still be used in the coming funding year can save time and stress later on in the application filing window. Receiving and evaluating new bids could be an unnecessary drain on time and resources if current agreements meet your needs, but realizing too late that a new contract is required can be worse – especially if it means that you’ve missed the filing window entirely.

Before deciding what to procure, check your current contracts to see if their time frames line up with what you will need for FY 2015, and make sure that existing contracts were the result of a competitive bidding process that meets both E-rate requirements and any additional state or local rules. Then consider whether the scope of the available contracts will continue to meet the technology needs that you have identified for your sites.

If board approval is required for new contracts, check the dates for upcoming board meetings to ensure that new contracts can go before the board in time to be used for a FY 2015 application. Planning ahead for the filing window – and the timelines that will suit your needs – is an invaluable step in preparing a comprehensive and successful application.

Most applicants will be affected by the changes in the eligible services list – some of the E-rate discounts that you are currently receiving will not be eligible in FY 2015. Knowing the impact that this will have on your budget for next year can help create a framework for what you can do to meet your technology goals in the future.

3. Start building your ‘Category Two’ strategy

Due to the incredible demand on the E-rate program, and the limits on the fund amount, many applicants could not receive significant support for network equipment and maintenance in recent funding years. The FCC has addressed this issue by increasing the overall E-rate fund, setting Category Two (previously Priority Two) spending budgets for applicants, and focusing the E-rate program on broadband connectivity and capacity.

The FY 2015 E-rate funding cap was originally set to max out at approximately $2.4 billion, adjusted for inflation from the original funding cap of $2.25 billion since FY 2010. With a historic vote on December 11th an additional $1.5 billion per year for E-rate discounts for a total of at least $3.9 billion for FY 2015.

This funding adjustment should address the increased demand for E-rate eligible services, and provide much-needed support for network electronics purchases, management and maintenance with Category Two funding. Applicants who haven’t seen discounts for Priority Two in years will now be able to receive funding support for Category Two requests.

Applicants will now also have a five-year budget cap on the amount of E-rate funding that can be received at each school or library site. For schools, the pre-discount amount is set at $150 per student; for libraries the amount is set at $2.30 per square foot for most sites, and at $5.00 per square foot for large urban libraries. Non-instructional school facilities and non-public library sites will not be allocated Category Two funding. Making an estimate of your Category Two budget is the first step in deciding your strategy for Category Two applications.

The FY 2015 Eligible Services List has eliminated support for most servers, phone system equipment and video conferencing equipment, but caching servers and managed internal broadband services have been added to the list. (Managed internal broadband service can include network equipment leases, monitoring, management and maintenance by a third-party vendor.)

When considering Category Two, the first place that applicants can look are the critical needs for your sites. What eligible network infrastructure or services will you get, regardless of E-rate discounts? If you could use your whole Category Two budget for these items, then you may already have a game plan to start with. Otherwise, it’s time to assess the technology needs that your school sites will have for the future, and see where E-rate discounts can help you meet those needs.

Along with the new Category Two opportunities come new responsibilities for applicants. Be prepared to track the individual Category Two budgets for each of your school or library sites, create plans for when installations can occur to comply with program rules, and track the assets that are purchased.

The New E-rate

The modernized E-rate program offers new opportunities for applicants, as well as budgetary considerations and new rules to follow. Effective applications will come from the schools and libraries that are proactive in learning about the new program, and applying the updated rules to the plans that they have for meeting the technology needs of students and library patrons.