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DOC-327725A3

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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

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Legacy E-Rate Program

Student-Centered E-Rate Program

Prioritizes voice telephone service, long-

distance calling, cellphone service, and paging

ahead of connecting classrooms with

broadband Internet access

Funding available for non-instructional

facilities such as bus garages and sports

stadiums

Focuses on next-generation services; no funding

for stand-alone telephony service

All eligible services treated equally (including

connecting classrooms); local schools, not

Washington, should set priorities

Students come first; funding directed only to

instructional facilities

Spending

Priorities

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 tied to discounts; higher-discount

schools get more funding overall and funding

for more services

Complex rules encourage arbitrage and gaming

Differences in spending among states and

within states are largely arbitrary

>$400 million lost each year due to red tape

Funding follows the student

Funding allocated to all schools based on student

population, adjusted for challenges that schools

in rural and low-income areas face

Additional allocation for very small schools and

schools in remote areas like Alaska

Much less money lost as a result of red tape

means more money for students

Funding

Allocation

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

matching requirement of one dollar for every

three from E-Rate promotes prudent spending

Reducing wasteful spending allows the program

to accomplish a lot more with the same amount

of money; over $1 billion more provided in first

year for next-generation technology

Cap overall Universal Service Fund before any

increase in E-Rate budget

The more you spend, the more you get

Some schools have little skin in the game by

receiving up to a 90% discount

Priority and group-discount rules discourage

long-term, efficient-scale purchasing

Cap on E-Rate but not overall Universal

Service Fund

Fiscal

Responsibility

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

and

Schools to report online exactly what they’re

Accountability

catalog just shows funding for each recipient

getting for E-Rate dollars; school administrators

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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