Each spring, Funds For Learning receives questions from many E-rate stakeholders about where we expect the Priority Two discount threshold will be for the upcoming funding year. This year is no different. If we knew where it would end up, we would definitely share that information with you. Trying to estimate where the P2 discount threshold will solidify is like reading tea leaves…each person can see a different outcome based on the same set of data.
This year’s questions have come with a heightened sense of urgency since, on the surface, it appears that there’s not enough money to fund all of the reported requests at the 90% level. (You’ll remember USAC’s recent letter to the FCC in which they reported the estimated demand for FY 2009.) We’re pretty confident that the P2 threshold will descend into the upper 80% levels, at least.
First, the FCC can roll over unused commitments from previous funding years. Funds For Learning recently reported that USAC projects they have $1 billion that could be rolled over for FY 2009. For 2007 and 2008, the FCC rolled over $650 million and $600 million, respectively. The final decision as to the amount of money that will be rolled over ultimately rests with the FCC. We would expect some roll over announcement to come from them in the upcoming months.
Next, using history as a guide, USAC will probably deny or reduce about $100 million to $125 million worth of P1 requests as they review applications. And, history tells us that not all of the 90% P2 requests will be funded, either (around $135 million in 90% requests are denied each year). These factors increase the probability that more applicants at lower discount rates will receive funding in the Priority Two categories.
Based on these many factors, it would seem likely that USAC should be able to fund FY 2009 priority two applications below the 90% discount band.
If you’re interested in some specific pieces of data that led us to this conclusion:
Historical Priority One Denials by Year (to date):
- 2008: $98 million
- 2007: $143 million
- 2006: $138 million
Historical 90% Priority Two Denials by Year (to date):
- 2008: $150 million
- 2007: $137 million
- 2006: $167 million