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Universal Service Administrative Company

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Released: July 31, 2012
Federal Communications Commission
Washington, D.C. 20554
July 31, 2012

DA 12-1196

Mel Blackwell
Vice President
Schools and Libraries Division
Universal Service Administrative Company
2000 L Street, NW
Suite 200
Washington, DC 20036
Dear Mr. Blackwell:
The purpose of this letter is to provide the Universal Service Administrative Company (USAC) with
guidance on the impact of the United States Department of Agriculture’s (USDA) new National School
Lunch Program (NSLP) reimbursement mechanism, known as the Community Eligibility Option (CEO),
on the universal service E-rate program.1 Pending further guidance, schools utilizing the CEO may use
the NSLP eligibility data that they previously submitted to USAC regarding participation in the NSLP for
the most recent funding year in which such schools did not participate in the CEO to determine discounts
on services received under the E-rate program (also known as the schools and libraries universal service
support mechanism).
As you know, the E-rate program currently uses USDA’s NSLP eligibility, or a federally approved
alternative mechanism, as a proxy for poverty when calculating discounts on services received under the
E-rate program.2 Thus, schools are currently required to collect income eligibility applications or surveys
from each family whose student attends the school in order to determine a school’s poverty level.
Libraries’ discount percentages are based on the public school district in which they are physically
located. The CEO, which the USDA is phasing in over several years, provides a new alternative to NSLP
household applications for free and reduced price meals in high poverty local educational agencies and
schools. The USDA does not require schools using the CEO to seek individual income eligibility
applications from each student but instead derive estimates of the NSLP eligible population from existing
data in order to, among other objectives, reduce the burden on students and families. Three states
(Kentucky, Michigan, and Illinois) started participating in the CEO for the school year beginning July 1,
2011 and an additional three states (New York, Ohio, and West Virginia) plus the District of Columbia
started implementing the CEO for the school year beginning July 1, 2012. We understand that four more
states may begin participating beginning July 1, 2013, with the option available nationwide beginning
July 1, 2014.
Last year, we provided informal staff guidance to USAC to use funding year 2010 data for schools
participating in the CEO program in school year 2011. For funding year 2012, schools participating for a

1 See United States Department of Agriculture, Food and Nutrition Service, Community Eligible Option, available at (last visited July 30, 2012) for
more information regarding the CEO.
2 See 47 U.S.C. § 54.505(b)(1).

Mr. Mel Blackwell
July 31, 2012
second year in the CEO program may continue to use funding year 2010 data. Similarly, we direct USAC
to allow the schools from the District of Columbia, New York, Ohio, and West Virginia who are
participating in the CEO for school year 2012 for the first time, and any schools from the three initial
states (Kentucky, Michigan, and Illinois) that are participating in the CEO for the first time, to use
funding year 2011 data. Thus, pending further guidance, schools opting to participate in the CEO will be
permitted to use data from the most recent funding year in which they did not participate in the CEO to
determine their level of poverty when calculating discounts on services received under the E-rate
Thank you for your attention to this matter. Please let us know if you have any questions or concerns.
Trent B. Harkrader
Telecommunications Access Policy Division
Wireline Competition Bureau
cc: Cindy Long, Food and Nutrition Service, USDA
Margaret Applebaum, Food and Nutrition Service, USDA

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