In This Week's Issue
»	FY 2008 and FY 2007 Funding Status
»	$600 Million Roll-over for FY 2008
»	Schools and Libraries News Briefs for June 27th

E-Rate Central News for the Week
June 30, 2008

The E-Rate Central News for the Week, prepared for New York applicants by E-Rate Central, is sponsored by the New York State Education Department. Additional E-rate resources are on the E-Rate Central Web site and on the New York State E-rate site. We can be contacted by phone (516-832-2880), fax (516-832-2877), or e-mail.

FY 2008 and FY 2007 Funding Status
Wave 10 for FY 2008 is scheduled to be released on Tuesday, July 1st. Funding in this wave is expected to be $27.6 million, including $615 thousand for 18 New York applicants. The cumulative national FY 2008 funding total is now $667 million, including $78 million for New York. As shown in the following table, this is well above the level of funding that had been committed by the July 1st start of the most recent four funding years.

Prior to FY 2004, the history is more mixed. Two funding year starts (FY 2000 and FY 2003) benefited from the early approval of Internal Connections, at least starting at the 90% level. But there were another two years (FY 1999 and FY 2001) in which the first funding waves were not issued until later in July. In the program's first year, the SLD was not even accepting applications by the time the funding year started January 1, 1998.

As indicated in the graph, no Internal Connections requests have yet been funded for FY 2008. In part because of the additional funding now available for this year (see article below), we expect Priority 2 funding to begin shortly.

Wave 57 for FY 2007 is scheduled for release on Wednesday, July 2nd, for $13 million - none for New York applicants. The cumulative national FY 2007 funding total is $2.42 billion, including $305 million for New York. The final Internal Connections funding threshold for FY 2007 is 81%.

$600 Million Roll-over for FY 2008
The FCC announced last week that it will carry forward $600 million in previously unused funds from earlier years into FY 2008 (see DA 08-1470). This will raise the nominal funding cap for FY 2008 from $2.25 billion to $2.85 billion. This is slightly less than the $650 million that the FCC rolled over into FY 2007 last year. With this additional funding, we expect the SLD to begin funding Internal Connections shortly.

The critical issue for many high-discount applicants, however, is what the roll-over funding will do to the final Priority 2 funding threshold for FY 2008. The unfortunate likelihood is that it will not be sufficient to lower the threshold to 80%. Nor is it safe to assume that it will reach FY 2007's 81% level. The critical supply and initial demand figures are shown below:

The key concern is that initial FY 2008 demand for both Priority 1 funding (to which all applicants are entitled) and 80%-plus Priority 2 funding increased almost 20%. Indeed, the total FY 2008 initial demand for all Priority 1 and 90%-only Priority 2 was over $3 billion — more than the available funding. While we would expect final demand to fall over the course of the year as a result of funding cancellations, denials, and reductions, it would be overly optimistic to project demand falling significantly more than it did in FY 2007. As such, the final Priority 2 threshold is more likely to be closer to the 85-89% level than to FY 2007's 81% (much less 80% or below).

For readers interested in a more in-depth analysis of E-rate funding trends, we recommend re-reading our newsletter of April 7th (see newsletter of April 7th). In summary, this analysis highlighted the following three trends:

1. The demand for Priority 1 continues to grow. Every additional dollar committed to Priority 1 means one less dollar for Priority 2.
2. Demand for Priority 2 funds by high-discount applicants dropped for a few years preceding implementation of the 2-in-5 Rule, but then flattened. It is up again for FY 2008.
3. New SLD application review procedures, implemented in the aftermath of the FCC's Bishop Perry decision in early 2006, have reduced the denial rate on funding requests.

Schools and Libraries News Brief for June 27th
As a companion piece to last week's issue, which discussed applicant activities, the SLD's News Brief for June 27th provides a short "What Should I Be Doing This Summer?" list for service providers, briefly discussing the following:

1. Revise your Form 498 if necessary (particularly important to applicants trying to contact their service providers).
2. Monitor the progress of any paper forms you submit to USAC (Form 473 SPACs and Form 474 SPIs).
3. Assist applicants with responses to PIA review questions if requested.
4. Log in to the E-File System once a week to check for online BEAR Forms.
5. Review FY 2009 Form 470s filed by applicants.
6. Label and file program-related documents.