On December 3, 2019, the Federal Communications Commission issued a Report and Order making significant changes to E-rate rules for Category Two funding applications.  The highly anticipated Order adopts a permanent Category Two budget system for all applicants and establishes streamlined Category Two rules which will take effect starting in Funding Year 2021.  The Order also extends the “test period” rules used during Funding Years 2015-2019 for a final year while increasing all applicant budgets by 20% for Funding Year 2020.
 
Highlights from the Order include:
 
Rules starting in Funding Year 2021
 
  • All applicant budgets will be reset
  • The program will adopt “fixed” five-year budget cycles
  • Category Two budgets will be calculated on a school district or library system basis
  • The per-site funding “floor” will be increased from $9,200 per site to $25,000 
  • Category Two budgets will be calculated as an inflation-adjusted $167 per student for schools and $4.50 per square foot for all libraries (both rural and urban)
  • Equipment transfer rules will be eliminated
  • A new budget cycle will begin in subsequent five-year periods (e.g. FY2026) with no rollover of funds from cycle-to-cycle
Rules for Funding Year 2020
  • The eligibility of caching equipment and services, Basic Maintenance of Internal Connections, and Managed Internal Broadband Services will be retained, with no new services added to the program’s Eligible Services List
  • Category Two budgets will be calculated using the same per-site methodology used in FY2015-2019.
  • All applicants’ site budgets will be increased by 20% (i.e. one-fifth of the maximum FY2020 C2 budget) for FY2020
  • Applicants can seek C2 discounts up to each site's maximum budget amount, less any amount utilized in the initial five-year period
  • All C2 site budgets will expire at the end of FY2020 and will not carryover to FY2021
The full Report and Order may be downloaded here .  
 
Commissioners’ statements may be viewed here: