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Schools and Libraries Still Await Word on 80 Percent of Requested E-rate Dollars

As the midpoint of the 2004 E-rate funding year approaches, schools and libraries are still awaiting word on the status of more than $3.3 billion worth of E-rate funding requests for that year. A Funds For Learning review of the SLD's publicly available data as of December 2, 2004 indicates that the total of unresolved funding includes $832 million worth of discounts on telecommunications services and $201 million worth of discounts on the Internet access, costs that many applicants may have had to absorb themselves in order to sustain these services since July 1.

In addition, applicants are still awaiting word on nearly $2.3 billion worth of requests for internal connections for 2004. Applicants are also awaiting word on just under $300 million worth of funding requests for the 2003 funding year, which ended June 30, 2004.

The impact of the hold-up in approving funding requests for 2004 varies from state to state. States in which more than 83 percent of funding requests have still not been resolved are Alaska, Arizona, California, Connecticut, Kentucky, Massachusetts, New Mexico, North Dakota, South Carolina, South Dakota, Tennessee, Texas, Utah, as well as the District of Columbia, Puerto Rico and the territories of American Samoa, Northern Marianas Islands and the Virgin Islands. Nationwide, a decision is still pending on 79.6 percent of funding commitments for 2004.

E-rate applicants are now in the process of preparing applications for the 2005 funding year, a process made more complicated by the fact that so many applicants do not know the status of their requests for the 2004 funding year.

As of early December, the SLD had approved $741 million in commitments for the 2004 funding year, compared with the $1.5 billion that it had approved by early December 2003. By this time last year, the SLD had been able to advise applicants that it would be able to approve all eligible internal connections requests from applicants at the 85 percent discount rate or higher. The SLD was eventually able to lower that threshold to 70 percent

In August, the Schools and Libraries Division suspended making new funding commitments as the Universal Service Administrative Company was required to comply with the federal government's accounting standards and the Anti-Deficiency Act. Under that law, agencies cannot make new funding obligations until the funds have been collected. This required the SLD to hold up making new commitments until USAC had collected enough money in the Universal Service Fund to cover them.

Congress is considering a measure that would exempt USAC from the Anti-Deficiency Act for a period of time so that funding commitments could proceed while the accounting standards issue is resolved. If the measure does not pass when Congress returns for a final lame-duck session the week of December 6, it may take several months before the matter can be resolved.

Funds For Learning's state-by-state analysis can be reviewed at /docs/2004/12/ada.xls

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