E-rate applicants, who have used little or no Category 2 funding over the last five years, have a one-time opportunity in FY 2020. Under the new Category 2 rules (FCC 19-117), the FCC has effectively extended the previous 5-year budgets by a sixth year and added 20% for FY 2020. As of FY 2021, all budgets will be reset. FY 2020, therefore, is a “use-it-or-lose-it” year. Most strikingly, many applicants will have a larger Category 2 budget in FY 2020 than they will have available to them over the subsequent five years.
Although we have written about this unique opportunity in the past (e.g., our newsletter of December 9th), we recognize that visualization may help. Graphical examples are provided below.
- Schools, which have not yet used any Category 2 funding, have FY 2020 prediscount budgets of $195.63 per student. This one-year only budget is 17% higher than the 5-year budget for FY 2021-2025. For a school with 500 students, the budget comparison (spreading the 5-year budget equally over the next five years) is:
Category 2 School Budget Comparison (500 students)
- The budget comparisons for libraries depend upon where the libraries are located. Urban libraries (with IMLS Locale Codes 11, 12, and 21) have FY 2020 prediscount budgets of $6.52 per square-foot. Rural libraries (with all other Locale Codes) have FY 2020 prediscount budgets of $3.00 per square-foot. For FY 2021-2025, all libraries will have 5-year budgets of $4.50 per square-foot — an increase for rural libraries but a decrease for urban libraries. For 10,000 sq.ft. libraries, the budget comparisons (spreading the 5-year budget equally over the next five years) are:
Category 2 Library Budget Comparisons (10,000 sq.ft.)
Urban Libraries Rural Libraries
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- The declining budget factor for urban libraries makes FY 2020 an even more important year. The one-year urban library budget is 45% higher than their 5-year budget for FY 2021-2025.
- The increasing budget factor for rural libraries makes FY 2020 less important, but it still represents a significant funding opportunity that is not to be missed and that will not be carried-over into FY 2021.
With all Category 2 budgets being reset in FY 2021, we encourage all applicants to review their internal networking requirements for the next fiscal year in light of their remaining — and expiring — FY 2020 E-rate budgets. This advice applies doubly to applicants who have yet to use any Category 2 funding and who may otherwise miss a major E-rate funding opportunity.