Libraries and theE-rate ProgramFUNDING YEAR 2016

BY GREG GANTZ

What is E-rate? The E-rate program was created as part of the

Telecommunications Act of 1996. Funding for the program is generated through the Universal

Service Fund. The annual budget for the program was recently increased to

$3.9 billion. It is also now scheduled to be adjusted for inflation every year.

All schools and libraries are eligible to participate in the program if they are compliant with the rules that USAC and FCC have set forth.

There are two service categories that are eligible for E-rate funding. Categories One and Two.

The E-rate Modernization Order The FCC passed the E-rate Modernization Order in 2014. The goal was to re-focus the program to provide broadband

connectivity to schools and libraries, and to improve the LAN infrastructure so that this bandwidth could be better utilized.

Specifically they were concerned with closing what has been termed “the Wi-Fi gap”

This is being achieved by increasing the program’s annual budget, and by phasing out support for some Category One Services.

The maximum discount percentage for Category Two services is 85% versus the maximum of 90% for Category One services.

E-rate Discount Percentages

E-rate discount percentages for libraries are directly tied to the discount percentage of their local school district.

There are several ways for the school districts to calculate their discount percentages, but the most common is to use the number of students that are utilizing free and reduced school lunches.

Category One Services Formally referred to as Priority One Services. Category One Services include:

Internet Access (any technology) Dark Fiber Local and long distance telephone service, VOIP, PRI, T-1, WAN,

or Cellular Funding for telephony services is being gradually phased out, and

will be completely eliminated by 2020.

Category One Changes

Category One Changes cont. The following services are no longer eligible for E-rate funding:

Servers Voice and Video Equipment Telephony equipment Power infrastructure Physical Security or construction Application software Internet content Consulting services, Training, an Personnel costs

Category Two Services Formally referred to as Priority Two Services. In the past most Priority Two requests were going unfunded. All Category Two requests were funding for the current funding

year. Category Two Services include:

Internal broadband and Wi-Fi LAN/WAN wired and wireless components including cabling,

switches, routers, racks and UPS. Installation and maintenance of these items is eligible for funding as well.

Managed LAN and Wi-Fi services (referred to as Managed Internal Broadband)

Caching services

Category Two Budgets Each library that receives Category Two support in Funding Years

2015 or 2016 will have a five-year budget for Category Two products and services.

For libraries this budget is based on the total square footage. This includes all areas enclosed by the outer walls of the library and occupied by the library.

The formula that E-rate is using to determine the budget is:

Total Square Feet x $2.30 = Cat. Two Budget

With a minimum budget of $9,200 if the library is less than 4,000 square feet.

Working with Category Two Budgets

Library X E-rate Discount Percentage = 80%

Library X Total Square Feet = 3,500

Library X Cat. Two Budget = $9,200

Library X Cat. Two funding request = $7,500

Discount % x Funding Request = E-rate commitment

80% X $7,500 = $6,000 Library X is responsible for

the remaining $1,500 The five year budget now

has $3,200 remaining for future projects.

E-rate Productivity Center (EPC) Another piece of the E-rate Modernization Order was to streamline

all interactions between applicants and the program. To achieve this goal USAC created the E-rate Productivity Center or

EPC. All forms, contact information, trouble tickets, and funding requests

will be tracked and stored in EPC. The account administrator is whoever certified the Form 471 last

year. Passwords and privileges are required. Passwords have to be reset

every 60 days. There are a lot of very good video resources regarding EPC on

USAC’s website.

Filing for E-rate So you have decided to file for E-rate

What service would you like to receive funding for? Are you already under contract for the service for which you wish

to receive funding? Is the service or product Category One or Two? Do you work with a consultant? If so do you have updated

contact information for that firm? Establish goals, and be prepared to spend to reach them.

Filing for E-rate: Forms 470 and 471

Form 470 Available July, 1 of each new

funding year. Acts as a notice of intent to

acquire goods and services. Both Category One and Two

services can be requested on the same form.

If you have a separate RFP out for the requested services, link it to the form.

Be specific … to a point.

Form 471 Filing window typically opens

some time late to mid January and runs for approximately two months.

Indicates which products or services the library is purchasing for the next year.

Category One and Two services require separate Form 471s.

Requires detailed knowledge of the products and services

Filing for E-rate: Forms 486 and 500

Form 486 Also known as the Receipt of

Service Confirmation and CIPA Certification form.

This form must be filed and certified before USAC will disburse any E-rate funds.

The deadline to file this form is 120 days after the service is delivered or after the funding decision has been made. Whichever date is later.

Form 500 Referred to as the Funding

Commitment Adjustment request form

Only necessary if the products or services that the applicant wishes to purchase do not match those listed on the completed 471

Important in case of audits which may result in funds being returned to USAC.

Invoicing E-rate: BEAR vs SPI

BEAR Billed Entity Applicant

Reimbursement Form 472 Library pays full cost of service,

and after the funding year has completed, files a BEAR form to receive the appropriate disbursement of funds from USAC.

The responsibility for requesting these funds falls solely on the library.

SPI Service Provider Invoicing Form 474 Invoices from Service Providers

are discounted before they are sent to the library.

The responsibility for requesting the funds from USAC falls solely on the Service Provider.

Document Retention and PIA Review All documents must now be retained for 10 years from the end date

of the contracted service. Electronic copies are acceptable, and even preferred. Program Integrity Assurance (PIA) Reviews or Audits can happen to

any entity which takes part in the E-rate program. These reviews can be a very painful process if record keeping is not

well done. This includes maintaining an accurate inventory of all items purchased via Category Two.

Worst case scenario from PIA reviews result in returned funds or potentially being banned from the E-rate program altogether.

Final Thoughts Get out there and apply! The money is available right now, and who

knows how long that may remain the case. You can file a Form 470 and elect not to move forward if all

proposals you receive are out of scope. Be prepared for numerous calls and emails from vendors. If you

need help deciding whether a vendor is on the up and up contact NEKLS or you E-rate consultant if you use one.

Take this opportunity to enhance the experience for your patrons, and to continue to provide awesome service!