Category 2 Budgets for FY 2021 – FY 2025:

The FCC updated its Category 2 budget rules (FCC 19-117) in December 2019 to become effective as of FY 2021 (FY 2020 was a transitional year).  Beginning in FY 2021:

  • Category 2 budgets will be set for fixed five-year cycles, i.e. FY 2021-2025, FY 2026-2030, etc.
  • Budget factors will be fixed for the entire five-year period and adjusted for inflation only at the start of each new five-year cycle.
  • Budgets will be calculated and administered on a districtwide or systemwide basis for school “districts” and library “systems.”
    • A school district is defined as “all schools that fall under the control of a central administrative agency” (including for example, a group of centrally-managed charter schools).
    • Library systems are defined and handled similarly.
    • Non-Instructional Facilities (“NIFs”) remain ineligible for Category 2 funding.
  • The budget factors for FY 2021-2025 are:
    • $167.00 per student for schools (counting full-time students only).
      Note:  Schools serving students from other districts on a part-time basis (e.g., educational service agencies with half-day career education programs) may count those students as full-time.
    • $4.50 per square-foot for libraries.
    • $25,000.00 minimum budget per entity.
  • An applicant’s budget is set in the first of the five years for which the applicant applies for Category 2 funding.  Student enrollment increases in subsequent years will increase the budget for the remainder of the 5-year period.  Declines in enrollment will not affect the budget.  Budget changes for libraries based on square-footages will be handled similarly.
  • The total budget for a school district or library system is calculated for FY 2021-2025 as the greater of:
    • $167.00 times the number of total students or $4.50 times the total number of square feet; or
    • $25,000.00 (the entity minimum) times the number of schools or libraries.
      Note:  The $25,000 minimum entity option will prove superior if the average size of a district’s schools is less than 150 students or a system’s average library is less than 5,555 square feet.
    • School districts of 10 schools or less, and library systems with 10 libraries or less, have a hybrid option for calculating budgets for individual schools or libraries using either the $167/student, $4.50/sq.ft., or $25,000 minimum calculation, then summing the individual results for a total budget.  Total budgets so calculated may still be used districtwide or systemwide.

To better illustrate how Category 2 budgets are calculated for school districts and library systems with 10 or less schools or branches, consider the following three examples for 4-entity school districts with: (a) all larger-sized schools calculated at $167 per student; (b) all smaller-sized schools at the minimum $25,000 per school; or (c), mixed-size schools using the hybrid calculation method.

District 1 has the following schools, all with more than 150 students.
    School 1A        529   students
  School 1B    576  
  School 1C    247  
  School 1D     371  
    1,732   C2 Budget is $167 x 1,732 students = $287,741
District 2 has the following schools, all with fewer than 150 students.
    School 2A     53   students
  School 2B 81  
  School 2C 121  
  School 2D       20  
        275   C2 Budget is $25,000 min. x 4 schools = $100,000
District 3 has the following schools with more or less than 150 students.
    School 3A          33   students @ the minimum =   25,000
  School 3B 1,806   students @ $167/student = 301,602
  School 3C     591   students @ $167/student =   98,697
  School 3D     107   students @ the minimum =   25,000  
    2,537   Total C2 budget = $450,299

Category 2 budgets for school districts and library systems with more than 10 schools or branches cannot use the hybrid option.  In most cases, their Category 2 budgets will be calculated based on total students (at $167 per student) or total square-footage (at $4.50 per sq.ft.).  In the case of smaller schools (averaging under 150 students per school) or smaller libraries (averaging under 5,555 sq.ft. per branch), the district or system budget will be based on the $25,000 minimum per building.

Within EPC, as shown below, the Category 2 portion of a school district’s profile gives an option for reporting student enrollment in total or by school.  The default is by school and will always provide the optimal Category 2 budget.  Selecting the districtwide button simplifies the EPC profiles but precludes the use of the hybrid calculation.  Library system profiles show only total system square-footage.

E-rate category 2 budget information

The easiest way to confirm a school district’s or library system’s budget is to use USAC’s  FY 2021+ Category Two Budget Tool.  With proper use of the filters, the tool will calculate Category 2 budgets by state, applicant type, city consulting firm,  or for one or more billed entities.  The budget tool display below shows the calculations for three different districts, each with four schools, whose budgets are optimized with the three different budget options: $167 per student, $25,000 per school, or the hybrid model.

Understanding USAC's Category 2 Budget Tool Algorithm

The district data and calculations shown in the example above are admittedly hard to read.  The differences between the three examples depend upon whether the schools in a particular district have more or less than 150 students.  Note the two highlighted columns.

In the first two examples, the Tool’s data lines list the "C2 Budget Algorithm" as "School District Wide," whether the calculation is based on the number of students ($167 per student) or the number of schools ($25,000 per school).  In the third "hybrid" example, the "C2 Budget Algorithm" is listed as "Per Site Basis School District."  The "Per Site" designation is used only for the hybrid calculation.  Note also that the hybrid example is the only one with data in the column labeled "C2 Per Site Basis Difference." The $19,489 shown represents the difference between the higher hybrid budget of $466,548 and what the budget would have been without a hybrid option (in this case. $167 x 2677 = $447,059).


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