Where, Oh Where Do Those Dollars Go?

by Julie Drake
Jewel Technology Services
Have you ever wondered what you actually pay for when you write that check for your monthly telephone bill? Each phone company is required to pay into the Universal Service Fund. Some providers charge a flat fee and others a percentage of monthly charges. The Universal Service Administration Company (USAC), overseen by the Federal Communications Commission, administers this fund. There are four primary funding sources they administer—high cost, rural healthcare, low income and the schools and libraries division (SLD). For the purpose of this article I will focus on the SLD, otherwise known as E-rate. If you work for, serve on a board or are generally concerned about the funding sources for schools, libraries and Head Start programs, read further.

E-rate is a common term in the K-12 education world, but few others know what it means or how it is used. E-rate is a federal funding source through the SLD of the USAC, available to schools, libraries and Head Start facilities. Eligible schools are those which provide primary or secondary education, including private, charter and publicly funded schools. Some non-traditional educational facilities, such as pre-K (Head Start) and adult education facilities, may be eligible, depending on the state’s definitions of primary and secondary facilities. In Illinois, our laws allow for the eligibility of these non-traditional facilities.

Non-traditional educational entities are able to apply for discounts on monthly telecommunications and Internet services, and costs to install and maintain internal connections. Eligibility falls under two categories:

  1. Priority One—eligible telecommunications and Internet services
  2. Priority Two—internal connections and basic maintenance.

Priority One funding is available to all discount levels. Money left over after these requests have been fulfilled is designated for Priority Two funding. It is important to note that only those with the highest discount level typically receive Priority Two funding. Discounts between 20 and 90 percent are determined based on poverty level reported under the National School Lunch Plan program.

Eligible libraries must meet the criteria of the 1996 Library Services and Technology Act and be eligible for assistance from a state library administration. For-profit libraries are not eligible for funding, nor are libraries which function within a school district’s budget, unless that library has a separate budget from the school’s.

E-rate filing is done in stages, and each stage must be completed on schedule to ensure the facility receives its awarded funding. The government is not proactive in giving out this money; it must be properly solicited in a timely manner. Missed deadlines have accounted for millions of dollars of unreceived funds over the past four years ($24.5 million in 2005 alone). One reason for missed deadlines is that few organizations have someone able to spend all of their time on E-rate filing. This complicated service is mixed in with the day-to-day tasks of keeping the network running or the business functioning. Another complication is that, like tax rules, E-rate rules change from year to year, requiring close scrutiny to ensure deadlines are understood and filing requirements are not overlooked.

Before filing for discount funding, a technology plan must be in place, including a description of what connections are required (servers, wires, etc.) and how these connections, combined with hardware and education software, will assist classroom learning and the teaching goals of the district. All of the preparation and filing is done within the 12 months preceding the funding year. These requirements include filing for the competitive bid process, RFP release, calculation of discount levels based upon the free/reduced lunch program and disbursement requests. Each facility is responsible for calculating its discount eligibility. Libraries calculate their discounts based on free/reduced lunches for the school district they reside in.

Before funding can be dispersed by USAC, the facility must confirm start dates of services, approval of the technology plan and the Internet safety plan’s compliance with the Children’s Internet Protection Act (CIPA). If any step along the way is not done to the exact specifications of USAC, funding may be denied.

Just as any taxpayer should be ready for an audit from the IRS, a facility which participates in USAC funding may be approached for an audit of its program. These audits are designed to review competitive bid processes, ensure that non-discount portions of invoices are paid on time and prove that only eligible products and services were installed. In the past, USAC audits have found that, although facilities conducted a competitive bid process, it was not documented, facility shares were not paid properly and service providers billed clients multiple times for the same services.

Schools, libraries and Head Start programs should take advantage of a special funding offer by USAC. Because there is a surplus of uncollected funds in the E-rate program for schools and libraries, more schools will be eligible for the Priority 2 funding in the upcoming funding year. They will be awarding that money on all eligibility levels, not just the 90 percent level.

In conclusion, if you are part of a school, library or Head Start program, contact an E-rate consultant to assist you with your filing for the upcoming funding year. In any event, you can safely say that you learned something new today about where your money goes when you pay your monthly phone bill. IBI

Add new comment

This question is used to prevent automated spam submissions.