Are You Ready For E-Rate II?

There's an old saw ineducational technology circles that g'es something like this: You canalways tell the trailblazers by the arrows in their backs. Educatorswho made it through the first year of the E-rate - the massive newprogram to help wire every school and library in America to theInternet - are definitely trailblazers. They've survived a formidablecombination of start-up challenges and political uncertainties, andhave both battle scars and funding commitments to show for it.They've also helped clear the way for the easier, faster applicationprocess currently underway for Year 2.

The following questionsand answers lay out the basics that any applicant - newbie or veteran- should know for Year 2.

Q:What is the E-rate, anyway?

A: "E-rate" (shortfor "education rate") is a nickname for the Universal Service Programfor Schools and Libraries. Created under the Telecommunications Actof 1996, it is a program of discounts on modern telecommunicationsservices for eligible schools and libraries. The program is funded atup to $2.25 billion per year through fees from the telecommunicationsindustry. The Schools and Libraries Corporation (SLC) is a non-profitorganization created specifically to administer the E-rate under thedirection of the Federal Communications Commission (FCC).

Q: Who is eligiblefor the E-rate?

A: Virtually allK-12 schools, public or non-public, can participate in the E-rate, ascan virtually all libraries accessible to the public. The onlyineligible K-12 schools are those that are for-profit, proprietary,or possessing an endowment in excess of $50 million. Libraries mustbe not-for-profit, publicly accessible, and have budgets completelyindependent of an educational institution.


Measured by % of students eligible for the National School Lunch Program


E-Rate Discount


E-Rate Discount

If the percentage of students in your school that qualify for the National School Lunch Program is...

...and you are in an URBAN area, your E-rate discount will be...

...and you are in a RURAL area, your E-rate discount will be...

Less than 1%



1% to 19%



20% to 34%



35% to 49%



50% to 74%



75% to 100%



Q: What is coveredby the E-rate?

A: There are threecategories of service that qualify for E-rate discounts:

  • Telecommunications services: Including local and long distance phone service, high-speed data lines, and most other services commercially available from a telecommunications provider.
  • Internet access: Including Internet service, but not online content.
  • Internal connections: Local area networking wiring and equipment needed to bring telecommunications to the classroom.

For a detailed list ofeligible services, see the SLC Web Site.

Q: How are thediscounts figured?

A: For individualschools, discounts are based on the proportion of students who areeligible for free and reduced price lunch under the National SchoolLunch Program. Schools where more than 75% of the kids are eligiblefor free and reduced price lunch (note that the criteria is studentswho are eligible, not students who actually participate) qualify fora 90% E-rate discount. Schools whose free and reduced price lunchcount is zero qualify for a 20% discount. Relatively affluent ruralschools get a slightly higher discount than urban schools in the samefree-and-reduced lunch bracket, while high-poverty rural and urbanschools both qualify for the highest discounts.

School districts use aweighted average of their schools' discounts, and libraries use thediscount for the school district in which they're located. Thecomplete discount matrix is seen below.

Q: How do I goabout applying for the E-rate?

A: Your E-rateapplication process begins and ends with a technology plan. Unlessyou're applying for discounts on basic phone service and nothingelse, you need to have a technology plan approved by your statedepartment of education or non-public school association. Your planshould address your school's goals and how technology can help youmeet them; provide an assessment of your tech resources and a budgetfor the resources you need to buy; a plan for training your teachersand other staff; and a method for evaluating it all at the end of theday.

The first form you file isForm 470, which tells the world - including the world of vendors -that you're in the market for the E-rate and the services it can buy.This form is posted on the SLC's Web site, which service providerstroll on a regular basis, looking for potential customers. If theyhave what you're looking for, they'll contact you to make a bid. Andafter 28 days of this, you can choose your best deal and sign acontract.

At that point, you fileyour second form, Form 471, where the rubber hits the road in termsof dollars and discounts. You list the services you plan to buy, howmuch you expect them to cost in total, and what discount your mathshows you're entitled to. While the E-rate program pretty much runson the honor system, the SLC d'es do systems and spot checks toverify that your cost and discount figures are accurate.

Once your Form 471 hasbeen approved and you get a funding commitment letter, you file onelast form - Form 486 - to confirm that the services you've listedhave begun to flow. Then the vendors you're working with will beginsending you discounted bills and invoicing SLC for thedifference.

Q: So how did Year1 work out?

A: Although theE-rate was conceived of as a first-come, first-served program, Year 1began with a 75-day application "window" during which everyone whofiled Forms 470 and 471 were handled as if they'd appliedsimultaneously. By the time the window closed, the SLC received morethan 30,000 applications from schools and libraries, equaling a totalestimated demand of just over $2 billion. In June, the FCC extendedthe first program year to run through June 1999 (with the happy sidebenefit of bringing future funding years into synch with mostschools' fiscal years, from July 1 through June 30). The fundinglevel was set at just over $1.9 billion for that first 18 months - asizable chunk of change by anyone's estimation, but still short ofboth the $2.25 billion cap and the overall estimated demand.

To make ends meet, the FCCset funding priorities that basically covered all approved requestsfor telecommunications services and Internet access, while providinginternal connections funding for the neediest applicants first.Funding commitments began flowing out in November, with the lastfunding letters reaching applicants just this past month. Meanwhile,the application process for Year 2 began on December 1, 1998.

Q: What's differentfor Year 2?

A: First of all,the application window for the 1999-2000 funding year is longer:stretching for 100 days from December 1 through March 11, 1999. Theapplications themselves haven't changed from last year, but theinstructions and guidance materials around them have all beenrewritten to reflect many, many lessons learned.

As in 1998, Form 470 isavailable to file online. But this year, Form 471 can be filedelectronically as well. Last year's applicants can even call up someof their 1998 data to make completing these forms much lesstime-consuming. No one knows yet what the overall funding will be forYear 2, which runs from July 1, 1999 through June 30, 2000. But ifdemand outstrips available dollars, the same funding priorities thatheld for Year 1 will be applied again.

Q: What's thetimeline for Year 2?

A: The applicationwindow is wide open for Year 2 - and schools that want to be sure tobe in the running for funds should file both their Forms 470 and 471before the window closes on March 11, 1999, at 11:59 p.m. ET. If youdon't have a technology plan, or if yours will be out of date withinthe year, you should get moving on a new plan. The SLC is bound anddetermined to make funding commitments by mid-June, 1999 - before theE-rate supported services begin to flow on July 1. Sometime nextfall, the process will start up again for 2000-2001. What a way tomark the millennium!

Q: Where can I getmore information?

A: Your first stopshould be the SLC Web site,'s jam-packed with information for you and for your serviceproviders, too. While you're there, you can download forms, fileonline, check out helpful guidance documents, even search for otherapplications from your state, city or Zip code. If your schoold'esn't have Web access, you can get all the guidance materials viaSLC's toll-free, fax-on-demand service, (800) 959-0733 (key indocument #001 for a complete menu). For help via telephone, call(888) 203-8100 Monday through Friday, 8 a.m. to 8 p.m. ET. You canalso fax your questions in to (888) 276-8736, or e-mail them to[email protected].

Your very best source ofhelp, though, is the collective wisdom of the trailblazers of 1998.They can give you the real scoop on the E-rate: what it demands ofyou, and what it gives back. Chances are you can find one in a schoolnear you.

Mickey Revenaugh is VicePresident for Outreach and Education at the Schools and LibrariesCorporation. She served previously as editor-in-chief of ElectronicLearning and Instructor magazines, both published by Scholastic, andhas worked in the educational technology field for more than a dozenyears.

E-mail: [email protected]

This article originally appeared in the 02/01/1999 issue of THE Journal.