News of the Week

Funding Demand for PY4

Early - and we stress "early" - indications are that the demand for E-rate funding for PY4 (based on Form 471s submitted prior to the close of the application window on January 18) is of the same order of magnitude as PY3. If true, this would imply that internal connection funding will again be allocated and be made available only to high discount rate applicants.

A formal estimate of PY4 demand is expected on or about February 6 after the SLD makes its report to the FCC. A preliminary count of the number of applications received within the window, without dollar figures, may be available next week.

Year 2 Funds Cancellation Letters

Applicants, who have not yet filed Form 486s for funds awarded for PY2 and who otherwise have not been granted extensions for the use of those funds (because of outstanding appeals or SPIN change requests), should have received "Year 2 Funds Cancellation" letters from the SLD this week.

These letters are part of a SLD initiative to free up previously encumbered PY2 funds, that would not otherwise be used, so that the dollars can be reassigned to out-of-the-window PY2 applications. Applicants who do not respond to these cancellation letters will see their funding canceled next month.

Applicants who receive these letters, but who believe that they have properly submitted the associated Form 486s and, perhaps, related BEAR forms, need to clear up this discrepancy immediately by calling the SLD (888-203-8100) to determine exactly which forms, if any, have been received. If the SLD has no record of a previously submitted Form 486, a new copy should be filed quickly.

Two deadlines are important.

1. Any new request for a SPIN change (i.e., to change PY2 funding from one supplier to another) must be received by the SLD by January 31, 2001.
2. Unless otherwise extended (e.g., by reason of a SPIN change), a Form 486 covering the FRNs listed in the cancellation letter must be received by the SLD by February 15, 2001.

   Notes:

• The deadline dates are for receipt by the SLD. These are not postmark dates as was used for Form 471 applications.
• Even if a Form 486 is submitted by February 15, there is a limited amount of time in which the related BEAR forms can be submitted seeking actual reimbursements of PY2 discounts. The SLD is still processing PY2 BEAR forms, but the initial "deadline" by which they guaranteed payment (November 20, 2000) is long past.

FCC request for Comments on Internet Filtering

The FCC released a request for comments on its proposed rules for implementing the E-rate funding provisions of the Children's Internet Protection Act ("CHIP Act"). Under the law, new FCC regulations must be in place by April 20, 2001, allowing little time for comments and reply comments. A copy of the FCC's proposed rule making can be found at their Web site.

With certain exceptions, the CHIP Act requires schools and libraries receiving E-rate funds for Internet access and internal connections to certify that they are implementing and enforcing policies to:

1. Protect children and adults from visual depictions of material deemed obscene, pornographic, and/or harmful to minors;
2. Monitor the online activities of minors; and
3. Address other Internet safety issues re. e-mail, chat rooms, etc.

For PY4 funding, the proposed rules would require applicants to certify compliance in their Form 486s later this year. Such certification must occur by October 28, 2001. It is our understanding that "compliance" in the first year means that the policies are either in place or being implemented.

E-rate and the Bush Education Agenda

The new Bush administration has released a summary of its education agenda entitled "No Child Left Behind." A copy of this document can be found online.

Bush's education agenda includes several proposals that, if enacted, would significantly affect the E-rate program. In particular, Bush proposes to:

1. Send more dollars to schools for technology. Consolidated technology grant programs and E-rate funds would be allocated by formula to states and school districts to ensure that more technology funds reach the classroom. Funds would be targeted to high-need schools, including rural schools and schools serving high percentages of low-income students.
2. Reduce paperwork and increase flexibility. Purportedly, burdensome paperwork requirements would be eliminated by sending E-rate funds to schools by a formula instead of the current application process. Flexibility would be increased by allowing funds to be used for purposes that include software purchases and development, wiring and technology infrastructure, and teacher training in the use of technology.
3. Allow funds to be used for Internet filters. In support of the Children's Internet Protection Act of 2000, funds could be used to purchase filters to protect children from obscene and adult material on the Internet.

Please note that these are proposals, not law. Since the E-rate program is funded by telecommunications carrier contributions, rather than by taxes, we expect that it would take an enormous political effort fought at every step by the carriers, to consolidate E-rate funds with various federal grant programs into a new Department of Education technology fund. In particular, it would presumably require changes to the Telecommunications Act of 1996 (and might lead to outcries over a "Bush Tax").

Note:

Within the week, documents related to the Internet filtering requirements and Bush initiatives affecting E-rate, including those discussed above, will be available in a special Archive section of the E-Rate Central Web site.