Technology Infrastructure

Federal Ed Tech Funding Under Evaluation for 2020

The nearly $4 billion FCC program enters its fifth year since funding for networking infrastructure became available to schools and libraries. This article examines recent action taken by the FCC that could change how these institutions can access funds beginning in 2020.

Since the first E-rate funding year in 1998, $50.7 billion has been committed to schools and libraries to secure advanced telecommunications services. E-rate is a federally funded program administered by the FCC and a recipient of broad bipartisan support. The K–12 community relies on the program’s stable and predictable funding stream to get schools and public libraries connected to high-speed broadband connections. Over the last 20 years, the FCC has reformed the program to shift the focus to funding broadband and has tried to streamline the application process.

In 2014, the FCC eliminated voice services and reprioritized funds for broadband connections. The Modernization Order created a budget system for Category 2 products, which enabled all applicants to have critical resources for networking infrastructure. The Funding Year 2019 Form 471 Filing window closed on March 27 and we are well into the fifth year of the E-rate Modernization Order of 2014.

In July, the FCC released a proposal to make the Category 2 budgets proposed in the Modernization Order permanent, a relief for the schools and libraries that count on this essential funding.

As we enter the second half of 2019, let’s take a closer look at actions taken by the FCC in 2019 that indicate some potential changes moving forward:

Access to funds for network equipment and hardware

The 2014 E-rate Modernization Order changed how schools apply for the networking equipment and hardware for internal connections. The program moved from the 2-in-5 rule, where applicants could only seek support on network equipment and maintenance for two of every five years, to each school site having a specific budget for these products. If the Modernization Order were to expire in 2020, the program rules would revert to the 2-in-5 rule.

Special construction projects for fiber networking

On January 29, 2019, the FCC released a Notice of Proposed Rulemaking that sought stakeholder feedback on permanently eliminating the E-rate amortization rules that required schools and libraries to amortize non-recurring charges upfront that cost $500,000 or more for a three-year period. This rule includes charges for special construction projects that build infrastructure necessary for schools and libraries to access a reliable internet connection. The FCC suspended these rules in Funding Year 2015 and are now evaluating how to proceed in Funding Year 2020 and beyond. More recently, the FCC released a Public Notice on May 30, 2019 seeking comment whether to prohibit the use of E-rate funds to build fiber networks in areas where fiber networks already exist and what, if any, safeguards should the FCC implement to curb this perceived practice.

Has funding to support broadband connectivity been effective?

On February 11, 2019, the FCC released the Category 2 staff report highlighting the benefits of how districts and libraries are making positive use of Internal Connections.  The report found that the FCC’s goal in creating these budgets “have largely been met,” and the commission recommends retaining the Category 2 budget approach. On May 20, 2019, the FCC began to circulate internally a Notice of Proposed Rulemaking tied to the E-rate program. Once at least three FCC Commissioners agree on the proposed new rules, the item will be voted on and made public for stakeholder feedback. Many stakeholders believe the May 20 FCC E-rate report will create permanent Category 2 rules going forward. It is important that school district technology directors are aware of the likelihood that new rules surrounding Category 2 budgets may impact how they procure their networking products in Funding Year 2020.

Will the FCC set a budget cap on funding?

On May 31, 2019, the FCC released another Notice of Proposed Rulemaking with direct implications for the E-rate program going forward. The FCC is considering providing additional fiscal constraints on the Universal Service Fund by setting a budget cap or possibly combining the E-rate and Rural Healthcare program into a joint funding cap. The FCC is also asking Universal Service stakeholders to provide feedback on these suggestions.

USAC will soon release the Funding Year 2020 Form 470 and schools will again be able to start the E-rate competitive bidding process for E-rate eligible items. With all these unsettled regulatory issues, it will be important for school technology officials to pay close attention to any rule changes during the summer months to successfully apply for funds in 2020.

About the Author

Peter Kaplan is Executive of Client Solutions at Funds For Learning.