E-rate 2.0 and 2.1 What is Means for Your District

Presented by Julie Tritt SchellPA E-rate Coordinator

for the Pennsylvania Department of EducationMarch 2015

PASBO Annual Conference

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THE GOOD AND THE BAD..

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The Good – What’s NOT Changing

• Priorities of Service– Now Category 1 and Category 2– Category 1 (telecom/internet – services TO the building) – Category 2 (internal connections, basic maintenance –

equipment/services INSIDE the building)• Broadband and Internet Services

– Including lit fiber, microwave, ethernet service, Internet access, etc.

– No eligibility changes whatsoever– Category 1 will continue to receive top priority in terms

of funding

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The Good Great – Lots More $$$

• The FCC permanently increased the E-rate cap by an additional $1.5 billion– Vote taken in December 2014– Not aware of additional funding during fall trainings

• FY 2015 cap will be $3.913 billion + additional $1.575 billion (available rollover amount) = $5.49 billion

• All Category 1 and Category 2 requests likely to be funded

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The Good – More Accurate Rural Statuses• 2010 U.S. Census classifications will be used instead of counties• Urban applicants are those with addresses in an “urbanized

area” or “urban cluster”– Urbanized areas have populations of 50,000 or more – E-rate Urban clusters have populations between 25,000 –

49,999• All areas that are not considered “urban” are classified as rural• Rural/urban status of majority of buildings (physical addresses)

will be used for entire district• The new Form 471 will automatically populate this field

– If it shows “?” you can override the system but it doesn’t change their database 5

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The Good - District-Wide Discount Calculations• All discounts for both Category 1 and Category

2 will be calculated on a district-wide simple average basis

Formula: Total district NSLP eligible students / total district enrollment

• The district-wide NSLP% is then applied directly to the Discount Matrix (along with the urban/rural status) to determine the District’s discount that will be used for all buildings

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District-Wide Discount CalculationsExample:

204/430 = 47.4% NSLP eligibilityDiscount Matrix for Rural 35% - 49% NSLP Eligible = 70%

District-Wide Discount for All Schools = 70%

School Rural/Urban

Enrollment NSLP Eligibility

Plainfield Elementary R 50 45

Jacksonville Middle School U 105 43

Newville High School R 275 116

Total R 430 204

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District-Wide Discount Calculations

• 204/430 = 47.4% NSLP eligibility

• 35% - 49% Rural

INCOME Measured by % of

students eligible for NSLP

URBAN LOCATION Discount

RURAL LOCATION Discount

If the % of students in your school that

qualifies for the NSLP...

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

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

Less than 1% 20% 25%

1% to 19% 40% 50%

20% to 34% 50% 60%

35% to 49% 60% 70%

50% to 74% 80% 80%

75% to 100% 90% 90%

District-Wide Discount for All Schools, C1 & C2 Services/Equipment = 70%

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The Good – Ability to Use Community Eligibility Provision’s 1.6 Multiplier

• CEP is a new program that derives NSLP data from existing income-based programs

• Schools opting into CEP will benefit from the 1.6 multiplier as is currently permitted by USDA and other federal programs

• As a result, CEP school districts typically have seen higher district-wide discounts

• For 2014, 630 PA schools have opted into CEP• New Form 471, Block 4 will ask if school is a CEP school

– If yes, form will then ask for enrollment and percentage of directly certified students and perform the 1.6 multiplier calculation

• PDE NSLP File contains CEP column with CEP% for each school, if applicable

• CEP Example: 300 students enrolled, 77% CEP Direct Cert = 231 * 1.6% = 369.6 NSLP eligibility (well, 300 is the max)

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The Good – New Focus on Internal Connections• Category 2 will fund Wi-Fi and related infrastructure and

equipment inside the school (not voice or video equipment)• Technology plan requirement has been repealed• Maximum Category 2 discount will change from 90% to 85%• All schools in a District will receive the District-Wide discount

NSLP Eligibility Urban Rural

Less than 1% 20% 25%

1 – 19% 40% 50%

20 – 34% 50% 60%

35 – 49% 60% 70%

50 – 74% 80% 80%

75 – 100% 85% 85%

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Category 2 Eligible Items“Internal Broadband Equipment” such as:• Wireless Access Points• Wireless Controllers• Routers• Switches• Antennas• Firewall Equipment• Internal Cabling• Caching Servers - New• Racks• UPS to support eligible equipment

Also:• Cloud-based functionality of eligible equipment - New• Software that supports eligible equipment• Limited basic maintenance services for eligible equipment• Managed Internal Broadband Services (MIBS) – New ($30/student/yr)

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The Good - Category 2 Early Installation• Eligible equipment may now be purchased and/or

installed on or after April 1 prior to the beginning of the funding year– This provides maximum amount of time during the summer

to complete the necessary work• Disbursements will not be made until on or after July 1• General rule still applies that applicants cannot apply

for retroactive funding for equipment purchased and installed in years prior to the funding year

• When signing C2 contracts, have them begin April 1 and expire September 30, 2017

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The Good (mostly) - Category 2 Funding Budgets• Each school now has a pre-discount cap of $150 per student, or a minimum

building cap of $9200, over a 5-year basis– The District’s E-rate discount is then applied to the C2 cap to determine the E-rate

funded amount– The District must pay for the non-discounted amount, as usual– District’s not required to apply in a single year

• Money is allocated per school (not on a district-wide basis), and applicants cannot move funding from one school to another

• Form 471 application is required to be submitted each year and funding approval is subject to available funds each year– There is no provision to allow applicants to spend funds and be reimbursed in a later year

• Money must be spent during funding year (cannot apply for full budget and spend down over multiple years)

• Good because it limits large districts from consuming all C2 funding• Bad because $150/students isn’t much if you need wiring, switches and wireless

equipment

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Category 2 Funding Budget Example

• The Budget Cap is the pre-discount price. E-rate discounts will then apply to the budget cap to derive the amount of E-rate funding per school

* Although 50 x $150 = $7,500, the minimum floor of $9,200 is invoked because school has less than 62 students

School Enrollment

Budget Multiplier

5-Year Budget Cap

E-rate Discount

E-rate 5-Year Funding Cap

District’s Share (30%)

Plainfield Elementary

50 $150 $9,200* 70% $6,440 $2760

Jacksonville Middle School

105 $150 $15,750 70% $11,025 $4725

Newville High School

325 $150 $48,750 70% $34,125 $14,625

Category 2 Funding Request Example – Newville High School

Qty Manufacturer Description Unit Cost Extended Cost

20 Ruckus or equivalent

ZoneFlex R500 dual-band 802.11abgn/ac Wireless Access Point $375.00 $7,500.00

1 Ruckus or equivalent ZoneDirector 3000 $8,000.00 $8,000.00

1 Tripplite SmartPro 1500RMXL2UA - UPS $650.00 $650.00

92 hours INSTALLATION Installation of WAPs, Wireless Controller &

Switch $200.00 $18,400.00

3 Cisco or equivalent Cisco 48 Port PoE (10G) Switch $4,650.00 $13,950.00

1 E4DRS19FM45U Open four post 7ft rack $250.00 $250.00

Pre-Discount $48,750.00

District Discount 70%

E-rate Request $34,125.00

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Category 2 Budgets

• Any funding commitments that include a school as a recipient of service in that funding year will be deducted from your pre-discount budget for that school– This is regardless of whether you actually use the committed funds

• If you are committed funding, but then don’t spend it all, you can file a Form 500 to return the remaining unused commitment to USAC that will then become available in your C2 budget in future years• If entities are sharing the funding, USAC will need specific information

so that they know how to credit the returned funds to specific buildings

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Category 2 - Central/Shared Equipment• Costs of shared equipment must come from the C2

budgets of the schools using the equipment– Despite where the equipment may be located– Equipment used by single school must come from that school’s

budget• Straight-line cost allocation for shared equipment is not

required • Allocation can be:

– Straight-line (all entities share the cost equally)– Proportional (based on student count/square footage of each

entity)– Specific (you specify each entity’s share) - must use tangible

criteria that reaches a realistic result

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Category 2 - Non-School Buildings

• Non-school buildings (NIFs) are not eligible for C2 funding– No students = No C2 $

• If there is central equipment housed at a NIF (such as the data center or admin building), applicants must allocate a portion of the C2 budget of the schools sharing or being served by the equipment– Central equipment also could be located in any school– Allocation from benefiting schools must be used (not just the school

building in which the equipment is located)• If a NIF uses equipment, you must deduct associated costs from

your E-rate funding requests– For example, if there are 4 schools and 1 admin building using the

equipment, the admin portion would be ineligible• But you could use a weighted cost allocation to determine ineligible

cost

C2 Cost Allocation for Shared Equipment or Services• Example: A school district has three schools – School A with

50 students, School B with 80 students, and School C with 100 students. How do I correctly allocate a shared piece of equipment with a pre-discount cost of $3,000?

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Straight line

A = $1,000

B = $1,000

C = $1,000

$3,000

Proportional by students

A = 50/230 x $3,000 = $652.17

B = 80/230 x $3,000 = $1,043.47

C = 100/230 x $3,000 = $1,304.35

$3,000

Specific (e.g., usage)

A uses 30% = $900

B uses 15% = $450

C uses 55% = $1650

$3,000

Little Known C2 Requirements

• You must retain a detailed asset inventory of all equipment purchased with E-rate funding that includes:– Make, Model– Equipment’s current location, including room #– Equipment serial numbers, if available– Funding Year purchased– Date installed– E-rate Funding Request Number– PO or invoice reference number

• Equipment must remain in the location specified on the E-rate application for a period of 3 years from the date of purchase– Unless the school closes, then you must notify USAC of new location

• Equipment cannot be sold or given away for at least 5 years from the date of installation.

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The Good - New Form 471/Templates

• New Online 471 Format– Longer time-out periods (after 25 min)– Modern interface

• Form navigation arrows at the top of the screen to show progress and pages completed

• Block 4 and Block 5 Templates available that can be created offline and uploaded into Form 471– Block 4 template is easy and recommended for all– Block 5 template is recommended just for C2 applications with

multiple rows• No template for “Manage Recipients” requirement of Block 5 – see

more under “The Ugly” 21

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The Good - Direct Invoicing in FY 2016

• Beginning in FY 2016, applicants can submit BEARs directly to USAC without requiring service provider approval

• USAC will send funds directly to applicants using electronic funds transfer (EFT)

• Applicants will need to provide bank account information to USAC in order set up EFT arrangements– Procedures are not yet in place to collect this data

• Not effective for FY 2013, 2014 and 2015 invoices

The Good – Ability to Build and Own Fiber in FY 2016• In probably the biggest change for FY 2016, the FCC is

going to permit, under limited circumstances, applicants use E-rate to fund “self-constructed” fiber networks (i.e., build and own)

• Applicants will be required to competitively bid a leased lit/leased dark fiber solution AND a self-construction solution on the same Form 470 – Or by posting a separate Form 470 for self-construction only

after receiving no bids on a previous, services-only Form 470 posting

• More information likely will be coming on this issue in the coming months.

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THAT’S THE GOOD, HERE’S THE BAD...

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The Bad - Category 1 Services No Longer Eligible• Beginning in FY 2015, webhosting, paging, hosted e-mail are no longer

eligible• In addition, these telephone service components are no longer eligible

– Directory assistance charges– Text messaging– Custom calling services– Direct inward dialing (DIDs)– 900/976 call blocking– Inside wire maintenance plans

• Cellular data and mobile broadband plans (such as data to ipads) also are presumed to be ineligible– Exception would be a bookmobile or building where a wireless LAN cannot be

installed (prison?) or where it is too costly to install

• Doesn’t matter if you are in a multi-year agreement for these services or not

Category 1: No Longer Eligible

• All such charges must be deducted from both the pre-discount cost included on the Form 471 and all associated vendor or applicant reimbursement invoices (SPIs and BEARs) for 2015 invoices– Use 50% data – 50% voice for Form 471 estimates

• Certain plans have higher eligibility depending on voice minutes

• Such charges do NOT have to be deducted for FY 2013 or 2014 BEARs or SPIs

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The Bad – Voice Service Being Phased Out• Beginning in FY 2015, all voice services will

begin to be phased out by 20 discount percentage points/year, including:– Cellular voice– POTS and long distance– PRI service– Hosted VOIP service– PRIs– SIP trunks– Centrex

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Voice Phase Out Schedule If Your

District’s Discount is (in a given

year):

Voice Discount Will Be:

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

20% No Funding No Funding No Funding No Funding No Funding

25% 5% No Funding No Funding No Funding No Funding

40% 20% No Funding No Funding No Funding No Funding

50% 30% 10% No Funding No Funding No Funding

60% 40% 20% No Funding No Funding No Funding

70% 50% 30% 10% No Funding No Funding

80% 60% 40% 20% No Funding No Funding

90% 70% 50% 30% 10% No Funding

The Ugly – More Complicated Forms

• Block 5 – Funding Requests Section is much more complicated• Old Item 21 attachment is now embedded in the Form• Requires you to identify exactly which entities are receiving

what services/what equipment– Called “manage recipients”

• Some C2 applications may have 50+ line items within a single FRN– Each line item requires at least 3 clicks, maybe more depending on

how many schools are using the equipment• The Good? Next year you will be able to “Copy My App” and

just make minor changes– E-rate Portal coming soon!

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The Ugly - New Strict Invoicing Deadlines• One 120 day invoice deadline extension will be granted if the

request is made on or before the original invoice deadline (which is typically October 28 following the funding year)– Reason will not be required

• Late invoice deadline extension requests will not be granted by USAC

• Requests for extensions made after invoice deadline must be requested via a waiver request to the FCC– FCC will only grant requests where applicants can prove truly

extraordinary circumstances to justify a waiver• Purpose of New Procedure: Unused funds will be able to be de-

obligated more quickly to be used to make other funding commitments

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The Ugly - Expanded Document Retention Rules• The document retention requirement has been expanded

from 5 years to 10 years from the last date to receive service or service delivery deadline, whichever is later• Example: For FY 2015, the last date to receive service is

June 30, 2016. All documents related to FY 2015 must be kept through June 30, 2026

• For multi-year contracts, contract documentation and bids must be kept 10 years from the last date of service under the contract– Example: A 5 year contract started July 1, 2015 expires

June 30, 2020. All documents related to this contract must be kept through June 30, 2030

What Does E-rate 2.0 Mean for Your District?• Loss of all voice funding within 4 years• Loss of webhosting, cellular data funding starting this year• More data-focused Form 471 to complete• Complicated C2 budget tracking• Longer document retention requirements – inform your staff!• Unforgiving BEAR invoicing deadline – inform your staff!

* * *• District-wide discounts

– CEP multiplier usage (for CEP schools)• Better rural/urban designations• Ability to finally receive Internal Connections funding• Improved 471 interface• Direct invoicing in 2016• Ability to build/own private fiber networks in 2016

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What Does it Mean for Your Budget?

• Begin to budget full amount for voice services• Consider moving to SIP trunks or VOIP services to

save money on voice• Consider whether to reduce cell phone users or

pay stipend for personal cell phone use• Be strategic about technology purchases to

maximize your C2 budgets– Think strategically about moving existing (non-E-rate funded)

equipment from a high-C2 budget school to another building (admin?) and then using the C2 budget to purchase equipment for that building

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Reminder:

• Form 471 Window is OPEN NOW• Form 471 Filing Window closes at 11:59pm on

Thursday March 26, 2015 April, 16, 2015DO NOT miss this deadline!DON’T WAIT UNTIL THE LAST MINUTE!

Or even the last week!Applications submitted early will be funded first!

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Questions?

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