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Happy New (Funding) Year 2011!

Another funding year has come to an end, but not without leaving a lasting impression on funding years to come. FY10 may be behind us, but changes that took place (specifically the release of the FCC Sixth Report and Order) have already had an effect on FY11.

What a Difference a Year Makes

To start, let’s take a look back at where we were this time last year –

At first glance, it would appear that FY2011 is far behind where we were this time last year, and in a sense that would be accurate. However, this time last year, FY10 had already issued six funding waves (one of which was the highest funding wave in the history of the program), compared to only two waves thus far for FY11. The difference in funding waves is due largely to the late start, and subsequent late close, of the FY11 filing window while the new Forms 470 and 471 were approved. It is important to note that in relation to the first two funding waves, FY11 is only around $35 million less than the first two waves of FY10.

FCC Sixth Report and Order: The Gift (Restrictions) That Keeps On Giving

When the FCC issued the National Broadband Plan Order on September 23, 2010, it was obvious that the implications on the current E-rate program would extend into FY11 and beyond. The Orders presented several changes to the E-rate program including new rules, updated applications and indexing the annual funding cap to inflation.

Some of the changes to the E-rate program were met with concern and requests for clarification from the E-rate community- none more than the change that codified the regulations regarding gifts from service providers to align with the gift rules applicable to federal agencies.

Through the Order, applicants and/or other school personnel are prohibited from soliciting and/or receiving gifts or anything of value from a service provider who is participating in or seeking to participate in the E-rate program. Additionally, service providers may not offer or provide gifts to any personnel involved in the E-rate process. An exception to this rule is that gifts and/or meals are permissible if the total value of that gift and/or meal is less than $20.00 and does not exceed a $50.00 total value per funding year, per employee.

Everyone supports keeping the integrity of the E-rate program intact and trying to eliminate any temptation for bribery or kick-backs. But after the initial acceptance, the ambiguity of the rules became apparent and questions started to arise.

“What about tech company that buys an ad in the yearbook?”

“What if our teachers accept the educator discount provided by our cell provider?”

“What about the cellular carrier that wanted to be the title sponsor of our new scoreboard?”

“What about gift basket filled with fruit and nuts the school received at Christmas?”

“What about the door prize our IT guy won at this conference?”

“What about‚Ķ” “What about‚Ķ” “What about‚Ķ”

Ad nauseam.

There have been clarification Orders released regarding the new gift giving, and USAC has been vocal in stating that the new rule was not meant to discourage companies from making charitable contributions to schools. However, many applicants and service providers are apprehensive to make contributions or participate in fundraising activities. The risk and potential loss is simply too high.

So Long, Farewell…

One E-rate requirement that we bid adieu in FY2011 is the technology plan requirement for Priority One (telecommunications and Internet access) services.

Previously, all applicants had to develop a technology plan that covered five required elements, including the applicant’s technology goals, strategy, and a budget necessary to meet the outlined goals. This was an administrative burden on many of the smaller applicants that were simply looking for basic telecommunications and Internet services.

The Sixth Report and Order eliminated the requirement for applicants to have a technology plan for Priority One services. Applicants must still budget funds and competitively bid these services, but will no longer need a specific technology plan for using these services.

Applicants should note that the technology plan requirement still applies to Priority Two requests (internal connections and basic maintenance).

Not With a Bang, But a Whimper

For a funding year that started with the largest funding wave in the history and included major program changes through the Sixth Report and Order in September, FY10 left some stakeholders with a little left to be desired.

Funding at 80%

One FY10 item left in limbo is the final discount threshold for FY10. At the USAC Schools and Libraries Committee quarterly meeting held on January 24, 2011, the committee recommended to the FCC that the final FY 2010 Priority Two Discount Level be 81%. The committee cited their belief that they will ultimately not have enough funds to cover any Priority Two requests at the 80% level.

One week after this recommendation, USAC released their Quarterly Report announcing that they have $400 million currently available for potential rollover.

The P2 requests at the 80% level for FY10 total $279.43 million. The money is available to fund these requests, but as of now a decision has yet to be made.


Below is an excerpt from a blog Funds For Learning published in June 11, 2010:

In October of 2008, Congress passed a bill amending the Children’s Internet Protection Act (CIPA) requiring E-rate participants to create online safety education programs by July 1, 2010 in order to receive funding. In November of 2009, the FCC finally released a Notice of Proposed Rulemaking (NPRM) providing further details about how this would impact E-rate stakeholders. A final Order has not yet been released as of the date of this writing.

One of the most significant proposed changes to CIPA would be to require schools to revise their Internet safety policies to include education about appropriate online behavior and cyberbullying awareness. This would include teaching kids about how to interact with one another on social networking sites and in chat rooms. More importantly, the proposed revisions would require E-rate applicants to certify on their Forms 486 that they have amended their Internet safety policies to reflect such programs, in order to receive funding.

If we were to write a blog about the topic now, it would simply be a cut and paste job, as there is still nothing new to report (thus the cutting and pasting in this blog).

Rumor has it that the new CIPA guidance should be coming through the pipeline very soon, but if history is any indication, you may see this same text cut and pasted in its entirety next year.

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