B y December 31st, 2011 Congress must vote to exempt E-Rate from the Anti-Deficiency Act if it is to continue operating as it has been. What good time to consider some changes to the program.
In the time that it took for a kindergarten student in 1998 to graduate in 2010, the E-Rate program has issued $29.6 billion dollars in funding commitments. Unlike the Title I program, which is specifically mandated to serve schools with high poverty levels, the E-Rate program aims to “. . . bring every school and library in America into the information age.” Yet, only about $6.6 billion of the $29.6 billion in commitments issued between 1998 and 2010 went to schools with lower poverty rates.
E-Rate has profoundly improved the ability of school systems to implement 21st Century teaching and learning. Over the years, Schools and Libraries Division (SLD) of the FCC become incredibly more efficient. If the SLD would now consider a few changes to the program, E-Rate could become even more effective in impacting “every school and library in America.”
The SLD can start this process by re-examining how well its funding matrix supports this goal. As shown below, more than three-quarters of all E-Rate funding is awarded to those entities with the highest levels of students on the National School Lunch Program.
Based on data taken from the NCES website, approximately 37% of public school students attend schools in the three lowest tiers of the E-Rate matrix while 63% attend schools at the highest three levels. Considering this, a 22% to 78% distribution does not seem unreasonable. However, simply paying a greater portion of the telecommunications expenses of high poverty schools does not fully explain why these schools consume a greater share of the overall E-Rate fund year after year.
Despite the fact that many expensive one-time installations of Wide Area Networks and Internet services were paid for by E-Rate years ago, the distribution pattern of the fund has barely changed (Figure 1). One explanation for this may lie in the fact that poorer schools routinely receive nearly all of the fund’s annual awards for Priority II services.
Figure 1
Distribution of Funds
Each year the SLD describes which products and services schools can get discounts on via its Eligible Services List, or ESL. The specific items on the ESL may change from year to year, but these are always divided into two categories: Priority I Services, which include telecommunications and Internet access, and Priority II Services, which refers to equipment and basic maintenance.
As the name implies, Priority I requests are the first to be funded. This makes sense since telecommunications, wide area networks, and Internet access are essential to the operations of any school district in the modern era. However, there is no ‘per entity’ cap on Priority I funding. A one-room school house with two dozen computers could ask for discounts on gigabit Internet access and very possibly get funded. As a consequence, the pool of money for Priority II funding shrinks.
Between 1998 and 2010, this ‘services first’ triage has meant that 54% of the fund has been awarded for Priority I services, while the remaining 46% of E-Rate money has been spent on equipment and the basic maintenance of that equipment (Figure 2). Don’t let those terms fool you, however. The type of equipment on the ESL is not what teachers and students use to explore the Internet. The most commonly eligible items are things such as network cabling, switches, routers, and PBX phone equipment. This is probably not what the average parent would picture if they were to read the FCC website claim that the program is ensuring “that cutting edge telecommunications technology is available in schools.”
Figure 2
There is no question that switches and routers are essential to providing students and teachers with access to the web. But these devices usually have a longer effective lifespan than the average PC. So why do schools at the highest discount levels continue to receive the lion’s share of Priority II money year after year (Figure 3)? Of the $12.6B awarded for Internal Connections over the last 13 years, schools with poverty levels on the E-Rate matrix of 70% or above were awarded 98% of this money ($12.3B).
Figure 3
E-Rate Processing Time
Over the years the SLD has drastically improved its processing time (Figure 4). But despite this progress, it can still take months or years for the SLD to issue Funding Commitment Decision Letter (FCDL) on all applications submitted in a given E-Rate year. The amount of time it takes for the SLD to process applications has a negative impact on both the schools who apply for discounts and the vendors who sell these discounted services to them.
Figure 4
First, schools which have not received a FCDL may find it difficult to decide whether or not to implement new services or upgraded Priority I services in July. The uncertainty this situation presents may also pose a financial risk to the seller of the services, particularly when they entered into a contract that makes ‘payment-in-full’ contingent on an E-Rate award.
Second, the even longer delays that are encountered for all Priority II applications, particularly for low poverty schools that are routinely the last to receive FCDLs, cause even more complications. It is not unusual for it to take a year or more for these decisions to be made. In the interim, it is likely that the equipment described in the application will have been replaced by newer models, the pricing will have changed, or the vendor will have merged with some other vendor. In these cases, once the FCDL does arrive the school must decide whether to cancel the application or to begin working through the ‘substitution process.’ Substituting new models for old ones might work out, but if the pricing has increased, the SLD does not typically increase the award amount. Whether the items are substituted or the application is cancelled by the applicant this situation results in wasted time on the part of the SLD, the applicant, and the vendor.
E-Rate Window Timing
Each year schools must submit their applications for E-Rate discounts within a 2-3 month time period, known as ‘the window.’ For a couple of reasons, the timing of the ‘window’ presents both applicants and vendors with unnecessary challenges. First, the actual dates of the ‘window’ are not set. Often the SLD announces it on the same date as it opens. Secondly, in the past, this ‘window’ has more often than not been scheduled right in the middle of the holiday season.
Although districts can post a 470 application and their bid at any time during the year, most will wait until the ESL is released. Many times the ESL is not released until very late in the year. This makes it difficult for districts to fully research how these new opportunities may be of benefit to their districts. In addition, districts that post 470 applications and award bids early increase their risk that between the date of the bid award and the receipt of the FCDL some factor will have changed that will complicate the implementation of the service.
The result of these practices is that most systems wait until they assume the ‘window’ will be opening to post their 470 applications. This results in vendors responding to dozens or hundreds of bids all at the same time. And, if the ‘window’ spans the holidays, as it has done in many years, both school districts an vendors are forced to work through a complicated bid process and get contracts signed in even less time since work weeks are curtailed for both parties.
So how can the E-Rate program more effectively and equitably meet its goals? Here are a few suggestions:
Suggestion #1: Ensure that Priority I requests are reasonable and restrict the definition of Priority I services to ones that school systems identify as their highest priority needs.
The SLD should examine the possibility of creating service level matrix which places caps on WAN and ISP bandwidth that funded for each year based on need. Because learning environments use diverse tools, this matrix should be developed by individuals who thoroughly understand how school district networks are used. For instance, using the number of computers in a school may not be an appropriate metric to use given the growing trend of Bring Your Own Device (BYOD). Schools promoting BYOD may require robust indoor wireless and more bandwidth to the building that the number of computers alone would justify.
In addition, the SLD should ensure that school districts are the primary consultant as to any expansion or redefining of Priority I services. Adding services that are not essential to school districts into the Priority I category will result in making less money available for Priority II purchases. Schools need equipment just as much, particularly during the recent economic downturn which has led to a steadily aging ‘fleet’ of classroom computers nationwide.
Suggestion #2: Distribute Priority II money via a formula that benefits ALL public schools.
The current practice of reviewing Priority II applications by starting at the highest poverty level districts and working down practically ensures that schools with lower than 80% on the E-Rate matrix will not receive funding awards. This acts to discourage districts below this level from applying for funding in this category. Then, they find themselves caught off guard in the occasional year where lower levels are funded. If the “Two-in-Five” rule was meant to create opportunities for schools at lower levels of the matrix to receive Priority II funding, it has not worked.
The SLD should consider developing a formula for block grants based on enrollment and number of buildings or some other reasonable metric. If a method such as this had been for Priority II awards over the last dozen years, the SLD would have distributed of $4.5M per year to all school systems rather than distributing 98% of this money to just the top ranked districts. If these discounts were available to all schools every year, more school districts would apply for Priority II funding.
Suggestion #3: Expand the definition of Priority II.
The ESL should allow for discounts on the purchase of any technology that can be used by students and teachers to connect to the Internet. Such a move would assist the SLD in responding to Congress’s request that the FCC “check that schools are receiving the advanced communications tools they need.” Currently, thousands of schools and libraries are filled with outdated computers. Yet, technologies such as Skype, desktop VOIP, email, blogs, and other interactive applications, which require end user equipment, can easily fit into the category of “advanced communication tools.” Continually increasing bandwidth cannot compensate for outdated end user devices.
By expanding this definition, and allowing school systems to have input on the ESL in this regard, the FCC will more effectively live up to its claim that it helps “schools and libraries obtain access to state of the art services and technologies at discounted rates.”
Suggestion #4: Use block grants for Priority I and implement a year-round ‘window.’
The SLD should award Priority I services in block grants and allow schools to apply for their portion at anytime during the program year. After more than a decade, the SLD must have enough data on which to base block grants for basic Priority I services. The SLD could apply a sliding scale of funding that takes poverty, rural/urban, and regional telecom pricing into account, but is primarily based on the number of students and buildings being served. Surely, a government that can mastermind all the worksheets and charts used by the Internal Revenue Service can come up with some method for taking $750 million annually and distributing it appropriately to schools and libraries.
In addition, the SLD could implement an application schedule with a ‘window’ for each group of applicants. Just like county governments ask their residents to apply for new automobile tags in a given month according to first letter of their last names, the SLD could group states or districts so that the application process went throughout the year. I’m from Alabama, so we might be first, but if block grants are applied, then there will still be plenty of money left for Wyoming when their ‘window’ comes around.
Suggestion #5: Use 40% of the total fund each year for Priority II and start processing these applications immediately.
If the Priority I funding is distributed in block grants, then this suggestion should be easy to implement. Inform every district what their Priority II portion is and then have them go through whatever bidding process is required. Finally, have them submit evidence that the funding is being used for eligible items before the money is released. As a bonus, this suggestion would allow the SLD to do away with its “Two-in-Five Rule.”
