Six Habits of Highly Effective E-Rate Applicants

In an atmosphere and economic era in which requests for E-Rate funding are more than double the amount available each year, applicants must be particularly persistent and vigilant when it comes to requesting money from the FCC.

• By John Harrington
• 10/04/11

Since its inception in 1997, the Schools and Libraries Program of the Federal Communications Commission's Universal Service Fund, more commonly known as E-Rate, has committed more than $30 billion to offset the cost of certain digital and telecommunication services and products that are essential for schools and libraries to receive voice, video, and data communications.

While E-Rate funding was originally capped at $2.25 billion annually, the FCC made the decision this year to increase the amount each year to accommodate the rate of inflation. The intent is to give applicants some of the purchasing power they lost due to inflation in previous years. Even so, in the current economic climate, applicants' budgets are tightening and demand is increasing. While $2.29 billion is available this year, demand for E-Rate funding for 2011, $4.6 billion, is twice that amount and the highest it has been since 2002.

While applicants may feel helpless in the face of a demand that is nearly twice the allotted funding, applicants can and should know how to plan and prepare their applications in a way that increases their likelihood of receiving funding. Here is some guidance on how to approach your E-Rate application to ensure that you not only receive funds, but also receive them in a timely fashion.

1) Avoid Unnecessary Delays.
Funding denials have always been a serious issue for applicants, but now funding delays are becoming equally serious. In an effort to prevent waste, fraud, and abuse, since early 2003 the FCC has scrutinized applicants--particularly large applicants--to a greater extent than during the first six years of the program. In some cases, applicants now must wait several years before receiving the approval necessary to seek E-Rate reimbursements.

Therefore, applicants must be vigilant to avoid unnecessary funding delays. They must be prepared for more intense reviews and ready to validate any requests. The best preparation for increased scrutiny is to be familiar with program rule changes and err on the side of caution.

2) File Early.
In previous funding years, as many as 90 percent of applicants waited until the last month of the filing window to submit their applications, with as many as 60 percent of all applicants waiting until the last week. This procrastination often results in costly delays: Last-minute applicants receive their funding commitment decisions later than those who submit their applications earlier in the filing window.

In fact, the most significant factor in predicting whether an application will be funded before the start of the funding year is filing at least 30 days prior to the close of the filing window. Applications that are funded before the start of the funding year typically have the highest utilization rate.

3) Be Thorough on Item 21.
Beginning with Funding Year 2011, submission of Item 21 Descriptions of Service must be received by the close of the Form 471 filing window (sometime in the spring ). But don't let the new deadline cause you to rush through the Item 21 application.

Item 21 provides the Universal Service Administrative Co. (USAC), which administers the program for the FCC, with information it needs to quickly determine eligibility and make a funding decision. If the Item 21 submissions are incomplete or missing pertinent information, the decision will be delayed and the number of Program Integrity Assurance requests an applicant will receive before a decision is made will increase.

To avoid such delays , applicants should be certain to include in Item 21 a detailed description of the products and services that would be funded, including specific detail including but not limited to quantity, unit costs, list of billing account numbers, and so forth.

4) Bundle Strategically.
In order to spread the funding around and avoid having the same large applicants absorbing the lion's share of Priority Two (internal connections and basic maintenance of internal connections) funds, USAC implemented the "2-in-5 rule." Implemented at the start of Funding Year 2005, school districts can only request internal connections twice out of every five years for a particular school site. However, even with the 2-in-5 rule in place, Priority Two funding is anything but a guarantee. Requesting Priority Two services is more than simply filling out and submitting a form. It requires a great deal of foresight and strategy from the applicant level.

Applicants should take into consideration future projects when thinking about making Priority Two requests. Priority Two requests, regardless of size and scope, will register as a strike against the 2-in-5 rule. Applicants thus should consider either applying for funds for larger projects first or bundling a number of projects at different sites together.

When considering applications, individual school sites can receive higher priority status by way of a formula that takes into account the number of students who participate in the National School Lunch Program (NSLP) and whether the applicant is in a rural area. However, when projects are bundled together in an application, that formula determines an average priority status for all the sites to be considered.

Therefore, applicants may increase the likelihood of receiving Priority Two funding by bundling sites that would be considered a higher priority and placing sites that may not have as many students involved in the lunch program on a separate request. With the demand being much higher than the available funding, and with all Priority One requests (telecommunications and internet access) being funded first, the likelihood of USAC being able to fund applications at the lower priority level is highly unlikely. By bundling higher-priority sites together, an applicant increases the likelihood that at least some of its sites will receive funding.

5) Know the New Gift -Giving Rules.
USAC is beginning to focus closely on program abuse, particularly concerning gifts from service providers to applicants. In the FCC Sixth Report and Order, applicants and other school personnel are prohibited from soliciting or receiving gifts or anything of value from a service provider who is participating in or seeking to participate in the E-Rate program. Additionally, service providers may not offer or provide gifts to any personnel involved in the process. As an exception, gifts or meals that are less than $20 in value are permissible, provided they do not exceed a $50 total value per funding year, per employee.

USAC has recently filed a request for supplemental information on this with the FCC, seeking clarification regarding the new gift-giving rules.

6) Retain Documents.
E-Rate requires that applicants maintain all of the documents associated with a funding commitment for a period of five years from the last date of service. Forms such as the 470 and 471, RFPs, technology plans, all received bids, bid evaluations, bid scoring criteria, NSLP Data, evidence of CIPA compliance, and signed contracts should always be archived and available in the case of an audit. A safe rule to adopt is: If it mentions E-Rate--save it.

The E-Rate program is changing and applicants must stay abreast of these changes in order to fully utilize the available funds and stay in compliance. By following these simple guidelines, you can make your application process as efficient and effective as possible.