E-Rate Funding: Are You Ready for It?

Posted by Matt Berringer on February 23, 2011

Okay, so the window to apply for e-rate funding has just opened for the 2011 funding year. What does that mean? How does this apply to public schools? Is it worth all the fuss? Well let me explain the basics of e-rate first and then I’ll share my opinion on this funding opportunity.

Basically, e-rate is a funding opportunity where the federal government provides monies to public schools to help offset the cost of telecommunications services and continuously providing internet access to students. The monies come in the form of reimbursements or discounts to public schools for things like high capacity phone lines (broadband), wireless phones, telephone service, and cabling infrastructure.

The general process requires that public schools complete applications that detail the type of equipment and services for which reimbursements are allowed. The entity that oversees e-rate reviews each application submitted by a school district and determines whether reimbursements will be funded. School districts can receive anywhere from 20% to 90% funding on their applications. The funding percentage is determined mostly by the percentage of students that are eligible for free or reduced lunches. The higher the percentage of students eligible, the higher the discount or reimbursement that schools will receive.

For example, if a school district spends $ 1,000,000.00 in telecommunications equipment (telephones, switchgear, phone lines, etc.) and they are to receive a 90% reimbursement, the school district will eventually receive a reimbursement check in the mail for $ 900,000.00.

A second method for acquiring the same equipment is where a vendor will sell the school district the same equipment for $100,000.00 instead of the $ 1,000,000.00, which represents a 90% discount. The vendor then applies for reimbursement where they get the remaining $ 900,000.00 directly.

Of course, neither a vendor nor school district will see any money until the overseeing entity is satisfied that the equipment has actually been purchased.

If you are thinking that this is a sweet deal, it is! Vendors are selling their equipment and getting 100% of their selling price and school districts are getting awesome deals on equipment and services. And our students are enjoying the benefits. It’s a win-win-win scenario, right?

Well, the truth is, it can be, however the caveats I would suggest are as follows:

1. Funding is not guaranteed. This is a federal initiative that can be taken away at any time! Vendors will tell you that e-rate is here to stay. Don’t believe them. Yes, e-rate has been around for many years now, and the likelihood that this program being terminated is slim. However, think about it. The program was created to help schools obtain internet access. As of today, virtually every school in America has accomplished this. Wouldn’t you say the program has reached its objective? And given the economic situation? You just can’t believe that the well will never run dry.

2. If your application does not get approved, and you have purchased equipment at a discount, your district will be responsible for paying the vendor for the remaining balance. Trust me, there is no vendor on earth that will let your district “off the hook.” They are not going to want their equipment returned. In most cases, you will have signed a contract so you won’t be able to return equipment.

3. Remember, even if you file for and get reimbursed $ 900,000.00 on a $ 1,000,000.00 project, you still have to foot the bill up front. Do you have the $ 1,000,000.00 in your budget? The reimbursement process may take more than six months or longer before you actually receive a check.

4. The reason that reimbursements can take so long is the level of scrutiny that your applications and related documents will receive. Know that the higher your discount rate, the more scrutiny your applications and subsequent documents will receive. In fact, more often than not, you will be asked to furnish additional documentation well after you have spent your reimbursements. If your documentation does not support the intent of your application, your district or vendor could be asked to return monies, even if it is in the millions of dollars.

5. The deadlines are absolute. If you miss an application deadline, you will have to wait until the next funding year. Period!

6. The process calls for very rigid guidelines that will help ensure the highest level of integrity. Vendors and school districts pay a heavy price in being barred from the process and possible criminal prosecution. Know that many have paid the price for trying to scam this opportunity. Many vendors will come to your door and tell you that they can provide consulting services, which means they will want to fill out all applications and related bid documents in their favor. Hello!!! “Bid Rigging!” Do it and you may go to jail.

7. If you become involved with this process in your district, do not make decisions by yourself. Make sure you include your purchasing department, business manager, deputy superintendents, and superintendents, at the very least. Consult your network specialists or other technical personnel from within the district. Make sure everyone is comfortable with the process and deadlines. You do have the option of hiring an external consultant to assist but make sure they cannot benefit or participate in any of the projects to be funded. Another option is to hire an E-Rate Specialist as a district employee. This person would be responsible for keeping everyone on task and on track.

I do believe e-rate to be one of the best programs that the federal government has created for school districts and our communities as a whole. I say every district should take advantage of such a great funding opportunity, just make sure you are spending money wisely and not just spending for the sake of spending. A 90% discount is great but if you don’t spend any money on unnecessary equipment your district will save 100%.

The Universal Service Administration Company (USAC) is the overseeing entity for e-rate. Here is the link to their website if you are interested in greater details on e-rate: www.usac.org.

Topics: technology, federal programs, education, funding, computers in the classroom, e-rate