Magazine article Momentum

Closing the Digital Divide with E-Rate

Magazine article Momentum

Closing the Digital Divide with E-Rate

Article excerpt

Recent FCC actions have raised concerns about the future of the E-rate program and telecommunications access for all students and library patrons. In 1996, Congress passed the Telecommunications Act that created the E-rate program. The goal was to provide affordable access to telecommunications services, internet access, and internal connections for schools and libraries. Since 1997, E-rate has provided schools and libraries discounts through their telecom providers. The providers are then reimbursed for the discounted services by the Universal Service Administration Company (USAC), which oversees E-rate and the other universal service programs. For schools, the rate of discount is based on a formula developed by USAC that reflects the school's location and the poverty status of the student population.

Because of the program's administrative structure, E-rate was not considered a federal program, because it was not funded from taxpayer money placed in the federal Treasury. E-rate is funded by a fee on phone bills that is paid into the Universal Sendee Fund (USF), an independent agency, with oversight by USAC. Once it receives sendees, the school or library applicant informs USAC and USAC pays the discounted portion to the service provider. This is a significant aspect of the program for Catholic and other private schools, since the direct recipient of the funds is not the school itself. This is important because a recipient of federal funds must comply fully with federal law and regulations under Title IX, Section 504 and others. Non-recipient status allows for limited exemptions and modifications that would otherwise burden those private schools.

This summer, the FCC made two announcements that may have a chilling effect on the continued participation of Catholic and other private schools in the E-rate program. Despite a 2000 ruling from the Office of Management and Budget (OMB) that E-rate funds were not federal, because they were not part of the congressional appropriations process or held in the U.S. Treasury, the FCC said it always considered USF funds as federal funds. In the coming months, all USF funds will be transferred out of a private bank into the Treasury.

At a recent meeting to discuss the implications of this action, FCC officials assured the private school representatives that USAC will remain the independent administrator and the program structure will not change. However, the question remains as to whether or not the FCC's actions will make E-rate a federal program, and schools that receive discounts recipients of federal funds. In two legal cases, Russo v. Diocese of Greenburg (2010) and Shape v. Cisco Systems lue. et al (2014), the courts reached different conclusions; Russo rendered an affirmative decision and Shupe did not.

Without greater clarity, school applicants would do well to insulate themselves its much as possible. Avoid taking direct payment from USAC by using Form 472, the Billed Entity Applicant Reimbursement (BEAR) method of payment. Schools should not pay the full cost up front to the provider, but insist that the vendor bill the school only the undiscounted portion and claim the discount from USAC directly, using Form 474, the Senice Provider Invoice Form (SPI).

When the E-rate program was first conceived, telecommunications services were provided primarily through telephones. In ensuing years, as new telephony and modes of communications access were developed, phone service became an outmoded way of providing internet connections, resulting in an FCC E-rate modernization order in 2015. …

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