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Planning Your Category 2 E-rate Discounts

On-campus broadband connectivity is a major element of E-rate reform. The updated program has been redesigned by the FCC with a renewed emphasis on helping schools and libraries receive financial support for Wi-Fi and other forms of on-campus Internet access. Understanding the rules surrounding this new component is essential for applicants who hope to leverage E-rate support to increase broadband connectivity for their students or library patrons.

Single Discount Rate Calculation

Category 2 discounts range from 20% to 85%. Applicants will continue to submit site-specific funding requests for internal connections and other Category 2 services. However, rather than each site having a unique E-rate discount rate, applicants will now have a single discount rate that is applied to each of their sites. For a school district, this new single discount rate is calculated by dividing the total number of students eligible for free and reduced price lunch by the total district enrollment and using the new Category 2 discount matrix to find the corresponding discount rate. Library systems will use the discount rate of the school district in which its central outlet is located.

The new single discount rate will be associated with every funding request submitted by an applicant. Therefore, to properly plan and budget, it is important to estimate next year’s discount rate early in the planning process.

Category 2 discounts capped for each site

It is wise for applicants to start planning now for how they will use their Category 2 budgets. A good first step is to calculate the estimated budget for each school site or library branch. 

Over a 5-year period, beginning in FY2015, each site can receive discounts up to a pre-defined budget amount. For school sites, budgets are based on the enrollment of the school building. For libraries, budgets are based on the square footage of each building.  Because budgets are tied to an applicant’s discount rate, applicants who serve communities of higher economic need will continue to receive higher levels of E-rate support.  There is an alternative minimum budget amount of $9,200 (pre-discount) available to help small schools and libraries receive additional support that is not tied to their enrollment or square footage.

After a site’s budget has been spent, no additional Category 2 E-rate discounts can be received at that site. This rule is intended to help spread out E-rate support to all schools and libraries across the country.

Try the Funds For Learning school budget calculator to estimate your school’s Category 2 budget.  

Prior Years Do Not Impact Budget

Funding for internal connections from prior years does not count against the new Category 2 budgets. Applicants who received “Priority 2” support in FY2012 or earlier can still submit a request for Category 2 discounts in FY2015 without any reduction to their budget calculation based on previous funding years.

FY2015 and FY2016

The Category 2 budget system was created as a two-year pilot program. There is no guarantee as to how Category 2 funds will be allocated and prioritized from FY2017 and beyond. Therefore, applicants should consider maximizing their utilization of Category 2 budgets in FY2015 and FY2016 according to their specific needs and ability to effectively utilize the goods and services requested.

With the program updates, much of E-rate has become uncharted territory. However, applicants already have one of the most basic tools at their disposal to help them navigate the new program: proactivity. By planning ahead and getting a jump start on calculating budgets, identifying technology needs, and developing a plan for utilizing C2 budgets, applicants will be best positioned to have a successful Funding Year 2015!


Take a moment to register for our E-rate community with edWeb, and join us monthly for free online E-rate applicant training seminars. Our latest training, which is available to watch online for free, provided a recap of the USAC fall E-rate training sessions. The next online seminar will cover the latest news concerning the new FCC Form 470 and competitive bidding process.


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Our mission is to provide high-quality consulting and support services for the needs of E-rate program participants. We consult with applicants to help them understand, effectively utilize, and maintain compliance with E-rate rules and regulations. We help prepare and submit paperwork, and interact with program administrators on our clients’ behalf.

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