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A Student-Centered E-Rate Program

In his speech today at the American Enterprise Institute, Commissioner Ajit Pai of the Federal
Communications Commission proposed to establish a student-centered E-Rate program. His plan
focuses on five key goals:
1.

Simplify the Program

Schools need to fill out only two forms: an initial application and a report back on how the
money was spent
Initial application can be no more than one page
USF administrator does all the calculations, reducing the burden on schools
Less red tape means fewer delays, more predictability, and no need to hire consultants
2.

Fairer Distribution of Funding

Allocates E-Rate budget across every school in America; every school board and parent knows
how much funding is available on day one
Schools receive money on a per-student basis; funds follow students when they change schools
Additional funds allocated for schools in rural and/or low-income areas as well as small schools
to account for higher costs and different needs
3.

Focus on Next-Generation Technologies for Kids

Eliminates disincentive to spend money on connecting classrooms
No more funding for stand-alone telephone service
Students come first; funding directed only to instructional facilities, rather than non-educational
buildings like bus garages
Equal funding for all eligible services; local schools (not Washington) set priorities
4.

More Transparency and Accountability

Creates website where anyone can find out exactly how any school is spending E-Rate funds;
enables parents, schools boards, press, and public to conduct effective oversight
School district superintendent or school principal must certify that E-Rate funds were used to
help students
5.

Fiscal Responsibility

Ends the "more you spend, more you get" phenomenon: Schools given fixed amount of money
and must contribute at least one dollar for every three E-Rate dollars they receive
Better incentives, reduced waste, and less red tape allows program to accomplish a lot more with
the same amount of money; over $1 billion more in first year provided for next-generation
technology
Caps overall USF budget before any increase in E-Rate budget; any expansion in E-Rate must be
accompanied by corresponding cuts elsewhere in USF

Legacy E-Rate Program

Student-Centered E-Rate Program

Prioritizes voice telephone service, long-
Focuses on next-generation services; no funding
distance calling, cellphone service, and paging
for stand-alone telephony service
ahead of connecting classrooms with
All eligible services treated equally (including

Spending

broadband Internet access
connecting classrooms); local schools, not

Priorities

Funding available for non-instructional
Washington, should set priorities
facilities such as bus garages and sports
Students come first; funding directed only to
stadiums
instructional facilities
Complicated
Schools face up to 6 separate forms plus
Simple
outside review by an approved planner
Only 2 forms required; initial application is only

Process

Schools must spend money on consultants to
one page
navigate web of rules such as the 28-day rule,
Streamlined rules eliminate need for consultants
the 2-in-5 rule, and discount calculations
USF Administrator does all the calculations
Backlog of appeals stretches back a full decade

Funding follows the student
Funding tied to discounts; higher-discount
schools get more funding overall and funding
Funding allocated to all schools based on student
for more services
population, adjusted for challenges that schools

Funding


in rural and low-income areas face
Complex rules encourage arbitrage and gaming

Allocation


Additional allocation for very small schools and
Differences in spending among states and
schools in remote areas like Alaska
within states are largely arbitrary

Much less money lost as a result of red tape
>$400 million lost each year due to red tape
means more money for students
Funding available to a school may change
dramatically from one year to the next
Funding tied to decisions of every other school Funding available immediately to all schools,

Financial

in the country
independent of decisions made by other schools

Planning

Schools must bid out services before they
Minimal fluctuations from one year to the next
know if funding is available
allow for long-term financial planning
Funding not secured until months or even years
after funding year starts
Fixed pot of money for each school and
The more you spend, the more you get
matching requirement of one dollar for every
Some schools have little skin in the game by
three from E-Rate promotes prudent spending
receiving up to a 90% discount
Reducing wasteful spending allows the program

Fiscal


to accomplish a lot more with the same amount

Responsibility

Priority and group-discount rules discourage
long-term, efficient-scale purchasing
of money; over $1 billion more provided in first
Cap on E-Rate but not overall Universal
year for next-generation technology
Service Fund
Cap overall Universal Service Fund before any
increase in E-Rate budget
Funding available to schools not disclosed until Funding available to schools publicly disclosed
after the fact
immediately to enable parents, school boards,
Parents can't go online to see precisely how a
press, and public to conduct local oversight

Transparency

school's E-Rate funds are being spent; online
Schools to report online exactly what they're
and
catalog just shows funding for each recipient
getting for E-Rate dollars; school administrators

Accountability

divided into four broad categories
must certify it's spent on students
Relies on complicated rules and federal audits
Transparency and local control are key; federal
and investigations for accountability
oversight a backstop

Relation to

Libraries receive about 10% of E-Rate funding
Libraries receive about 10% of E-Rate funding

Libraries


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