• PY3 funding status
• Revised income levels for NSLP and E-rate
• Questionable service provider practices, cont.

The following is a summary of the E-rate News for the Week July 17, 2000, prepared by E-Rate Central. Official SLD news appears in the "What’s New!" section of the SLD’s Web site. Additional and archived information appears in the Archive Section on this Web site.

PY3 funding status

Wave Fifteen of Funding Commitment Decisions Letters ("FCDLs") for program year three ("PY3") will be mailed on Friday, July 21. Funding awards announced in this Wave will be only about $26 million, but will include $6.5 million for NYS applicants (including $4 million for one of the NYC districts).

Cumulatively, through Wave Fifteen, the SLD has awarded funding on over 22,850 applications totaling about $1.12 billion in discounts (including $47.2 million for NYS applicants). At this point, internal connection services are still being funded at the 85% discount level and above. About $200 million in internal connection requests by applicants with 81-84% discount rates are being held pending a more precise calculation of available funding.

We are expecting that major funding waves will continue into September, with a few smaller funding "ripples" thereafter.

Revised income levels for NSLP and E-rate

New National School Lunch Program ("NSLP") income eligibility guidelines for the 2000-2001 school year are posted on the Department of Agriculture’s Web site. The new qualifying annual income levels for reduced priced lunches, which govern the allowable discount rate for E-rate purposes, have been raised by $204 to $1,240 for household sizes of one to eight members, respectively.

Now is a good time for schools, which normally distribute Free and Reduced Price Lunch program surveys in the fall, to update the income criteria on their forms and to rethink their survey instruction language. Since E-rate discounts are based on the number of students eligible for reduced prices lunches, not just on the number participating in the NSLP, the goal should be to encourage families to respond to the survey, whether or not they wish to have some or all of their children utilize the lunch program.

If income surveys are distributed to all families of a school’s or school district’s students, and responses are received from 50% or more, E-rate guidelines permit an applicant to extrapolate the results to its entire student base. This process can often be used to qualify an applicant for a higher discount rate.

Questionable service provider practices, cont.

Several months ago, we included a Weekly News item on practices by certain vendors rumored to be providing essentially "free" services to selected high-discount schools (see Weekly News 85). Under the alleged plan, a 90% discount school might be offered services — perhaps involving more equipment than it needed and at inflated prices — under an arrangement by which the school’s 10% share would be covered by a "grant" by the vendor (or related party).

It now appears, based on recently filed comments in connection with appeals to the FCC, that the SLD has been concerned about these types of arrangements and has, in some cases, denied funding. Separately, there are indications that the SLD is developing procedures to deal with service providers deemed to be abusing E-rate rules. The following should be read as a cautionary tale:

According to one recent SLD letter to the FCC regarding the appeal of a funding denial, the SLD had questioned the school about a request for services "…since it appeared that twice as many connections were planned for installation as the school had students." The SLD noted that it had been told by the school’s director that "…the school did not know why the consultant who had filed the application on its behalf had indicated that the school needed all the equipment that had been requested," and that "…the school could not afford the non-discounted cost of the equipment." The school did fax a copy of correspondence between the school and the vendor indicating that the 10% non-discounted portion will be paid by grants located by the vendor and that the school is "…not liable for any money of this proposal."

In an apparently related FCC appeal on behalf of another applicant, the SLD noted that the application "…requested a total of more than $180,000 for a school with 60 students. In the course of the SLD’s PIA review, the information provided about resources that had been secured raised serious questions about whether [the school] had adequate funding for required hardware, software, teacher training, or electrical capacity….For example, the school indicated it had six computers on hand with plans to have 14 more…, but the applications requested discounts for three servers, plus wiring for 48 network drops in the school. The school’s technology plan did not provide evidence of resources available in future years for additional equipment."