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Ten Rules for E-Rate Success

The E-rate program has played, and continues to play, a major role in the development and support of telecommunications, Internet access, and other technology services for the K-12 educational community. As many technology directors and business managers know, E-rate is a valuable — and, in many cases, mission critical — source of technology funding.

However, there is a dark side to E-rate. As the program has matured, it has become increasingly complex. It is now disturbingly easy to run afoul of rules and procedures, to lose a year of funding, or in some cases to be asked to return funds disbursed in earlier years. Since E-rate funds are needed, not only for new projects, but for the support of ongoing programs, the importance of proper E-rate planning and execution cannot be overstated.

This article will focus on the key aspects of successfully applying for and receiving E-rate discounts for schools and libraries. While the article will touch on several new aspects of the program that will be important in the next application cycle, details of these changes will be discussed more fully in a companion article.

Here are ten rules for E-rate success:

Rule 1:  E-rate is not, and cannot be treated as, a “file it and forget it” program. It is a full year job.

For most school administrators, E-rate is not a full time job, but it is most certainly a full year job. In the course of any year, E-rate coordinators are typically dealing with three different funding years, each with critical deadlines. There are reimbursements to be claimed from the previous year’s funding; there are review and filing requirements for the current year; and there are new applications to be filed for the next year. While there is a peak of activity in January, just prior to the filing of the next year’s applications, there is something to do all the rest of the year – even during the summer vacation period.

We see too many applicants go to a lot of trouble to file for and obtain E-rate commitments only to lose the actual discounts because they forget the equally critical follow up steps to make sure discounts are actually received. Attention must be paid to E-rate year round.

Rule 2:  Keep up-to date. E-rate rules continue to change and must be monitored carefully.

A corollary to Rule 1 is that changes to the E-rate program, which occur frequently throughout the year, must be tracked continuously. This is a particularly important year to follow because there have been three new FCC Orders released in the past 12 months, and a brand new set of forms and instructions are expected to be released shortly.

Most changes are posted as they arise on the Schools and Libraries Division’s (“SLD”) Website (www.sl.universalservice.org) as Important Notices and Headlines, but others may be reflected only in new language in site’s Reference Area. Applicants, who have not made Internet access and e-mail a part of their working life, will find it very difficult to keep up. Here are three suggestions for keeping current:

  • Visit the SLD’s Web site at least once weekly.
  • If available, subscribe to your state’s E-rate e-mail listserv. E-Rate Central maintains a free weekly E-rate newsletter for applicants in states that don’t have their own listserv (sign up for our E-rate newsletter).
  • Again, if available, attend the E-rate training sessions held in many states each fall in preparation for the next application cycle.

Rule 3:  Carefully read all form certifications.

While it is tempting to fill out, sign, and submit E-rate forms without reading all of the certifications at the end of each, we encourage applicants to read them closely. The E rate program’s administrators place great credence in these certifications and there are civil and criminal penalties for violating them. The certifications provide an excellent summary of major program rules, particularly those dealing with issues of waste, fraud, and abuse, which are the current focus of the program’s compliance efforts.

Rule 4:  Whenever possible, file online.

Three important applicant forms — Forms 470, 471, and 486 — can be largely completed and filed online. For most applicants, this has two advantages. One is that a number of fields are pre-populated based on information already in the SLD database. A second, and even more important advantage, is that final submission cannot be made if any key data is not provided or is internally inconsistent. It is impossible to fail the SLD’s Minimum Processing Standards when filing online.

Applicants filing online, however, should be aware that only those with pre-established electronic signature capability can actually “sign” a form online. All others will have to print out the certification pages, sign and date them, and mail them to the SLD. Forms submitted without electronic certifications will not be deemed complete until the signed and dated certification pages are received by the SLD. In addition, applicants filing Form 471s online have to submit Item 21 attachments separately (these can be e-mailed, faxed, or mailed to the SLD).

Rule 5:  When filing paper forms, use the current versions.

Applicants preparing and mailing paper forms must take care to use currently authorized versions. The dated version of a form is printed on the bottom right-hand corner of each page. Sometimes, when a new version is released, the previous version of the form will be accepted for a transitional period. In other cases, earlier versions of the form will be automatically rejected. The safest course of action is to always check for, and use, the latest version. One way to do this is to print new versions of the forms directly from the SLD Web site.

Form versions will be particularly important this coming year because most forms are being modified to incorporate new and stronger certification language. Once released, we expect that they will immediately supplant the earlier versions.

Rule 6:  Pay strict attention to deadlines.

E-rate is a deadline driven program. All four of the most common applicant forms have deadlines or timing requirements which, if missed, will result in funding denials or reductions. Appeals, SPIN changes, and service substitutions also have deadlines. To further compound the problem, some deadlines are fixed for all applicants while others depend upon applicant-specific conditions.

Here are the most important deadlines:

  • A Form 470 must be posted at least 28 days before the selection of vendors, the signing of contracts, and the signing and filing of a Form 471.
  • A Form 471 must be filed within a defined application window, usually announced in October. For the last few years, the application window has run from early November to early February. Unless the FCC waives some of its rules, the window may be delayed this year.
  • The Form 486 must be filed within 120 days of the issuance of a Funding Commitment Decision Letter or the Service Start Date, whichever is later. For many, but not all applicants, this deadline is October 29th.
  • Form 472 (BEAR) forms must generally be filed within 120 days of the Last Date of Service, normally October 28th for recurring services and January 28th for non-recurring services.
  • Appeals must be filed within 60 days of the decision being questioned.

Rule 7:  Respond promptly – and carefully – to all review inquiries.

The SLD’s form review process often generates questions that may be phoned, faxed, or e-mailed to applicants. Generally, these informational requests have a seven-day deadline. Ignoring an inquiry is not a good strategy. It can only lead to unilateral SLD action, guaranteed not to be in an applicant’s favor.

Inquiries can come from either Kansas or New Jersey. The Kansas inquiries are made by Problem Resolution, the group responsible for data entering forms submitted by mail. Generally, these are simple inquiries that can be handled quickly.

The New Jersey inquiries are made by Program Integrity Assurance (“PIA”) and are of more substance. Approval, modification or denial of funding can result from PIA decisions, so these inquiries (often requests for additional service information or certifications) must be handled with particular care. Our advice is to work cooperatively with the reviewers. If an inquiry is complicated or will require additional time to respond to, the reviewer can often provide clarification or time extensions.

Rule 8:  Technology planning and procurement practices are important.

The increasing focus by Congress, the FCC, the SLD, and the press on alleged waste, fraud, and abuse in the E-rate program has led to new rules and to more intensive reviews dealing specifically with applicant planning and procurement practices. There are three key considerations.

  • Although technology plans do not have to be formally approved until the start of the funding year, the rules require applicants to base their funding requests on pre-existing plans that cover all services requested and that demonstrate adequate budget resources.
  • Services funded by E-rate must be cost-effective and must be competitively bid in a fair and open manner.
  • Applicants must be able to demonstrate that price is the most important factor in their bid analysis and vendor selection procedures.

Rule 9:  Maintain records for at least five years.

E-rate auditing activity is about to increase dramatically. The FCC is pressing for additional resources to support another 250 audits annually. The SLD has just announced a plan to conduct 1,000 “site visits” annually (which can be viewed as shorter, more targeted, audits). Applicants should assume that sooner or later they will be audited.

The FCC strengthened its rules this year requiring applicants and vendors to maintain records for at least five years. The retention requirements are quite detailed, going well beyond simply keeping copies of E-rate forms. Documentation is required for discount rate calculations, technology plans and budgets, RFPs, all records related to winning and losing bids, inventory, etc. Failure to produce these records can lead, and already has led, to formal actions to recover E-rate funds.

Rule 10:  Know when you need help and where to turn for it.

Many applicants are fully capable and willing to manage all aspects of their E-rate applications. However, as the program has become more complex and as more applicants have experienced funding difficulties in one year or another, more and more are using or looking for outside assistance. Here are a few tips for getting help:

  • For answers to specific questions, the first place to turn is to the SLD. Questions can be submitted by phone (888-203-8100), by fax (888-276-8736), or by using the Submit a Question feature on the SLD Web site.
  • Most states have State E-rate Coordinators which are available to help their school and library applicants (see State Information).
  • Many vendors are quite knowledgeable about E-rate, but vendors must be used with the utmost of care. Any vendor involvement in the E-rate process prior to the awarding of bids is highly suspect. The burden of proof is on the applicant and vendor to show how such E-rate support did not unfairly prejudice the bidding process. Once a contract is awarded, however, vendors can be quite helpful in preparing Form 471 Item 21 attachments and in supporting subsequent invoicing activities.
  • We are seeing, both in our own business and more broadly, a growing trend to use independent E-rate consultants either to assist on or oversee particular aspects of the E-rate process, or to take over primary responsibility for forms processing (much like a good tax preparer works with its clients). Applicants choosing this approach, however, should make sure that the consultants are truly independent. For E-rate purposes, a consultant with a stake in a particular vendor’s business success has a potential conflict of interest which will be looked at closely by the SLD.

While increasingly complex, the program is worth the effort. We wish you every success in the coming funding year.


This article was written by Winston E. Himsworth, Executive Director of E-Rate Central and was originally published in eSchool News on November 11, 2004.
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