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Overcoming K-12 Budget Challenges with E-Rate

One of life’s many lessons: When confronted with a complex task that needs to be efficiently completed, having the right tools makes all the difference. If the tool set is lacking, completing the to-do list frequently takes much longer. If you’re responsible for IT network or operations in a K-12 environment with their stretched thin budgets, you may be living the ongoing strain of insufficient tools to maintain a secure, optimally running network. If so, there may be a way to get some relief: E-Rate. In this blog, we’ll describe the basics of E-Rate and how you may be able to utilize it to procure select IT services and equipment including NetAlly tools.

Table of Contents

Introduction to E-Rate

E-Rate1 is a federally based universal-service program that aids K-12 schools and public libraries in obtaining affordable broadband, telecommunications, and related network services and equipment. It’s administered by the Universal Service Administrative Company (USAC) under FCC oversight. K-12 and public libraries compete via a required, formal bidding process. This includes determining their discount percentage using a federal discount matrix (based on poverty and rural status). Once this is done, they file a series of FCC/USAC forms in the E-Rate Productivity Center (EPC) to request funding and invoicing for discounts. Funding years run from July 1–June 30 and applicants must reapply every year.

What IT Services and Equipment are Eligible for E-Rate Funding?

It’s important to keep in mind that E-Rate service and equipment support is structured by a yearly Eligible Services List (ESL) which falls into two generally funded categories:

  • Category One (C1) – Services that bring broadband/telecom to schools/libraries. Examples here include internet access, data transmission, and WAN.
  • Category Two (C2) – Equipment such as internal connections, Wi-Fi equipment, cabling, switches, and managed Wi-Fi services.

Each fiscal year USAC/FCC publishes the ESL with clarifications updates. Recent changes (e.g., hotspot/mobile wireless eligibility) are reflected in this most recent ESL.

The discount range varies from 20 percent to 90 percent depending on the district poverty level as measured by the National School Lunch Program (NSLP) eligibility as well as rural versus urban status.

Ten Steps to a Successful E-Rate Submission

Just a heads up, you are entering into a world of acronyms and a process that can appear a bit confusing. The most important takeaway: meticulously follow these steps and processes!

  1. Obtain FRN (FCC Registration Number) in CORES – Schools seeking E-Rate support must begin the process by registering in the FCC CORES portal to obtain their FRN. The sooner you do this the better. Here’s a link to the FCC Registration Portal.
  2. Create an EPC account and register with USAC — After completing step 1, getting an FRN, you need to contact the USAC Customer Support Center (CSC) to establish your EPC account and Billed Entity Number (BEN). USAC uses your EPC for Forms 470/471/486 and for invoicing. We’ll talk more about Forms 470/471/486 below.
  3. Assess and Document your IT Needs – Build out a technology plan and complete an evidence of needs assessment. Also, be sure to confirm all local/state procurement/board approvals are in order. Many districts centralize E-Rate management so be sure to determine if this applies to you before proceeding.
  4. File FCC Form 470 – This begins the formal competitive bidding. The filing is done by posting your request for services (Form 470) in EPC to start the required competitive bidding process. Note, Form 470 must be posted for at least 28 days before you can select a vendor. This is referred to as the Allowable Vendor Selection/Contract Date (ACD).
  5. Evaluate Bids and Then Select Provider – You must use the price of eligible items as the main factor and document your selection rationale. Be sure to comply with all state/local procurement rules and document evaluations. If relying on an existing state master contract, document your evaluation per USAC guidance.
  6. File FCC Form 471 – This is the step where you request funding. After satisfying the ACD stipulation, certify the Form 471 in EPC during the annual Form 471 filing window. Details are available here. This is the official funding request. Be aware USAC announces filing windows each year.
  7. USAC issues Funding Commitment Decision Letter (FCDL) – If approved, USAC issues an FCDL describing approved FRNs, funding amounts, and conditions. Here’s a useful recent example.
  8. File FCC Form 486 — After service starts or equipment is delivered, you must file Form 486 to confirm the service start/equipment and to certify compliance with the Children’s Internet Protection Act (CIPA) if required. Only after Form 486 is processed can you begin the process of invoicing USAC for the discount share of costs for the approved eligible equipment and services.
  9. Invoicing USAC – There are two primary ways to request discounts):
    • SPI (Service Provider Invoice, Form 474) – The service provider or equipment manufacturer deducts discount and bills you only the non-discounted amount.
    • BEAR (Billed Entity Applicant Reimbursement, Form 472): In this case, you pay the service provider (or equipment manufacturer) in full and requests reimbursement from USAC. In this case, you’ll need an “applicant 498 ID”.
  10. Maintain Documentation – It’s crucial you keep procurement records, contracts, asset registers, invoices, and any other potentially relevant documents for USAC audits. Note, these audits can occur between 5 and 10 years, based on record type. When it comes to equipment, asset transfer rules and depreciation periods are specific, so it is essential you follow USAC guidance.

The funding year begins July 1 and ends the following June 30. The application cycle opens with Form 470 filings, normally July through December. The Form 471 window is announced annually, frequently in winter to early spring. This varies by fiscal year. Check USAC’s filing-window page for the current FY schedule.

The Five Most Important E-Rate Things to Remember

  1. You Must Reapply Each Year – E-Rate is annual, so you must file Form 471 each funding year for services or equipment you wish to be reimbursed.
  2. Competitive Bidding is Mandatory – It is essential you post a Form 470, wait at least 28 days, evaluate all bids received with price as the primary factor, and keep records. Never let vendors write your Form 470.
  3. Eligible Discount Amount – It’s based on poverty level and rural status. You need to know your NSLP numbers and how the discount matrix affects Category 1 and Category 2 funding.
  4. Timing is Everything – It really is all about flawless execution! Filing windows, contract dates, and invoice deadlines drive eligibility. Be sure to align with your procurement calendar, board approval timeline, and any other relevant stakeholder’s schedules.
  5. Rigorous Documentation and Compliance are a Must – Maintaining records, CIPA compliance (for equipment), vendor contracts, and asset tags are essential. Always be ready for audits! Failure to comply or poor documentation can cause denials and even claw backs.

Five Gotchas to Funding and Ways to Avoid

GotchaWays to Avoid
Missing the 28-day competitive bidding windowStart Form 470 early and track the ACD.
Vendor-prepared Form 470 / vendor conflictsEnsure impartial bidding! Do not allow vendors to write your Form 470!!
Poor or missing documentationKeep contracts, bid evaluations, invoices and any other germane documents. Remember, audits WILL occur!
Insufficient coordination state procurement timelinesIf you are relying on state contracts, be sure to confirm timing with state procurement officers or your State E-Rate Coordinators Alliance (SECA) coordinator.
Incorrect discount valuesVerify NSLP percentage calculations and urban/rural status before filing.

E-Rate is a Multi-Stakeholder Effort

As should be clear by this point, successfully receiving funding via E-Rate is a significant effort and one that cannot be handled by any single person. Hence, depending on the school district governance and leadership structure, each of the following individuals or groups may play a part. Regardless of the existence of the specific titles highlighted below in your district, the actions below will need to be done by someone.

Typical Individual/GroupActivities /Responsibilities
District Superintendent / District Leadership• Ensure an E-Rate central manager is assigned. This is often the IT director or finance officer
• Approve and sign off on district technology plan and board actions required for bidding/contracts
• Confirm budget for non-discounted portion or service or equipment) and authorize funding strategy (SPI vs BEAR)
School Board / Legal Counsel• Adopt or confirm procurement policies that align with state law and E-Rate competitive-bidding requirements
• Understand contract award authority and sign contracts before Form 471 or document any exceptions based on unique state and/or county rules
Chief Financial Officer / Business Office• Register entity for FRN and FCC Form 498 if expecting BEAR reimbursements, then maintain remittance information
• Track cost allocations for eligible versus ineligible services, maintains documentation
• Keep asset registers and financial records for required retention periods
IT Director / Technology Team• Prepare the technical needs assessment and technology plan tied to specification for equipment and service scope used in Form 470
• Manage EPC entries including uploading contracts into EPC if required, then monitor FCDLs and Wave releases
• Handle acceptance testing and confirm service start dates before filing Form 486
Procurement / Purchasing• Manage the RFP/RFQ process, keep bid evaluation documentation, then check state master contracts versus local bidding rules
• Ensure no vendor conflicts on Form 470/471 as vendor involvement in preparing Form 470 can taint process
Teachers• Provide input on classroom needs to IT and leadership such as Wi-Fi coverage and required IT devices
Parents / Community• Be informed, know that E-Rate helps reduce district broadband costs while the community may be asked to approve bond or other local matching funds for broader projects

Summary

The E-Rate program is designed to provide financial assistance for districts in procuring their important IT service and equipment needs. However, the process and specific requirements are detailed and must be followed flawlessly. Be sure to review the additional resources below for more information.

How does NetAlly fit into this story? NetAlly Network Testing and Cybersecurity Tools have been extensively used in the K-12 space for more than 30 years. Over that time, we’ve heard from numerous users that highlight the value of NetAlly in keeping their network running smoothly and secure. NetAlly tools can be eligible for reimbursement in E-Rate.

Additional Resources

Here are more resources you may find helpful:

1E-Rate – Schools & Libraries USF Program
2 USAC Webinar Beginning E-Rate Services

Author Bio – Brad Reinboldt
Linkedin
Product Manager – Wired
As a Product Manager at NetAlly, Brad Reinboldt is responsible for wired and cybersecurity solutions. He has more than 30 years’ of experience in the computing, networking, and storage sectors in various development and technical management roles. He holds a master’s degree in electrical engineering as well as an MBA in management.
Brad Reinboldt