On Thursday, August 6, the FCC voted to open a wide-ranging review of how the Universal Service Administrative Company (USAC) runs the Universal Service Fund, the federal program that includes E-rate. If you count on E-rate to connect your schools or your library, here is the most important thing to know: nothing changes today. This is a request for public comment, not a new rule.
This isn’t an E-rate-only proceeding. It covers all four programs USAC administers (High Cost, E-rate, Lifeline, and Rural Health Care), but several of the proposals would touch E-rate applicants directly.
What Happened
The FCC’s Notice of Proposed Rulemaking, or NPRM, is a formal request for public feedback before any rule changes. It was released August 7. The public comment period opens once the notice is published in the Federal Register, the official government publication that sets the deadlines. Asking questions is not the same as making rules, and nothing is decided yet.
What the FCC Is Asking
The notice is broad. Here are the areas most likely to matter to schools and libraries:
Audits and Recoveries
Several questions focus on how USAC audits schools and libraries after funding has been disbursed, and how it recovers money when it finds a problem. The FCC asks whether to:
- Spell out in the rules that USAC can audit schools and libraries directly. The current rule text only names “contributors and carriers,” which may leave a gap in the wording.
- Let USAC estimate what you owe back by sampling a portion of your spending and extrapolating across the full amount under review, instead of recovering only the specific errors it finds. The FCC asks whether that approach fits E-rate, where every competitive bid looks different.
- Move to a “pay-and-dispute” model, where you would repay questioned funds while your appeal is still pending, rather than the appeal pausing repayment automatically. (Contributions work this way today.)
- Exempt smaller recipients from random audits altogether.
- Require more training for USAC auditors, and allow AI tools to help speed up document review during audits.
USAC’s Board and How Schools and Libraries Are Represented
Some questions could change how schools and libraries have a seat at the table. The FCC asks whether to:
- Shrink USAC’s Board of Directors from 20 members to 13.
- Replace the current program-specific committees, including the Schools and Libraries Committee, with committees focused only on audits and governance.
- Keep guaranteeing Board seats for specific stakeholder groups like schools and libraries, or shift toward general administrative expertise instead.
Deadlines and Delays (“Shot Clocks”)
Another set of questions asks whether firm deadlines, sometimes called “shot clocks,” could speed up slow USAC processes. The FCC asks whether to:
- Have USAC publicly report its turnaround times and other responsiveness metrics, beyond what is already on USAC’s Open Data platform.
- Have USAC track upcoming filing deadlines and notify you of your filing status before a deadline arrives. (You would still bear full responsibility for meeting every deadline, notice or not.)
- Apply a shot clock to specific processes like application review, similar to the 180-day timeline the FCC already uses for reviewing license transfer applications.
- Limit any shot clock to “workable” applications, setting aside those that need more information from you or further guidance from the FCC.
- Decide what should happen if USAC misses a shot clock, and when the clock could pause, for example while USAC waits on information from an applicant.
Other Questions in the Notice
A few more questions round out the notice. The FCC asks whether to:
- Require USAC to publish its written decisions on stakeholder appeals and cite the rules and precedent behind them.
- Run a periodic, high-level performance review of how USAC administers the Fund.
- Set caps or guidelines on parts of USAC’s budget, such as information technology, outreach, contractors, or staff salaries.
- Move certain administration functions in-house at the FCC, or reconsider whether USAC should stay the permanent administrator of the Fund at all.
- Expand USAC’s use of AI more broadly, including in application review and appeals.
What Happens Next
Nothing changes today. This is a request for public comments on proposed changes, not a new rule. The comment and reply-comment deadlines will be set once the notice is published in the Federal Register (typically 30 and 60 days after publication).
We’ll follow up with specific comment deadlines once they are published, and with more detail on the provisions most relevant to E-rate applicants.
Not sure who to turn to when questions like this come up? That’s what a Funds For Learning Guide is for. Schedule a consultation with a Guide.
About the Author: Verlyne Jolley is a Director at Funds For Learning with more than 20 years of experience helping schools and libraries navigate the E-rate program. Her work focuses on regulatory compliance, program administration, and helping applicants understand and adapt to evolving FCC and USAC requirements.
