E-rate 2.0 and 2.1

What is Means for Your District

Presented by Julie Tritt Schell PA E-rate Coordinator for the Pennsylvania Department of Education March 2015 PASBO Annual Conference 1

THE GOOD AND THE BAD..

2

The Good – What’s NOT Changing

• • Priorities of Service – Now Category 1 and Category 2 – Category 1 (telecom/internet – services TO the building) – Category 2 (internal connections, basic maintenance – equipment/services INSIDE the building) Broadband and Internet Services – Including lit fiber, microwave, ethernet service, Internet access, etc.

– – No eligibility changes whatsoever Category 1 will continue to receive top priority in terms of funding 3

The Good Great – Lots More $$$

• • • The FCC permanently increased the E-rate cap by an additional $1.5 billion – Vote taken in December 2014 – Not aware of additional funding during fall trainings FY 2015 cap will be $3.913 billion + additional $1.575 billion (available rollover amount) = $5.49 billion

All Category 1 and Category 2 requests likely to be funded

4

The Good – More Accurate Rural Statuses

• • • • • 2010 U.S. Census classifications will be used instead of counties Urban applicants are those with addresses in an “urbanized area” or “urban cluster” – Urbanized areas have populations of 50,000 or more – E-rate Urban clusters have populations between 25,000 – 49,999 All areas that are not rural considered “urban” are classified as Rural/urban status of majority of buildings (physical addresses) will be used for entire district The new Form 471 will automatically populate this field – If it shows “?” you can override the system but it doesn’t change their database 5

The Good - District-Wide Discount Calculations

• All discounts for both Category 1 and Category 2 will be calculated on a district-wide simple • average basis Formula: Total district NSLP eligible students / total district enrollment The district-wide NSLP% is then applied directly to the Discount Matrix (along with the urban/rural status) to determine the District’s discount that will be used for all buildings 6

District-Wide Discount Calculations

Example:

School

Plainfield Elementary Jacksonville Middle School Newville High School

Total Rural/ Urban

R U R

R Enrollment NSLP Eligibility

50 105 275

430

45 43 116

204

204/430 = 47.4% NSLP eligibility Discount Matrix for Rural 35% - 49% NSLP Eligible = 70%

District-Wide Discount for All Schools = 70%

7

District-Wide Discount Calculations

INCOME Measured by % of students eligible for NSLP

If the % of students in your school that qualifies for the NSLP...

Less than 1% 1% to 19% 20% to 34% 35% to 49% 50% to 74% 75% to 100%

URBAN LOCATION Discount

...and you are in an URBAN area, your discount will be... 20% 40% 50% 60% 80% 90%

RURAL LOCATION Discount

...and you are in a RURAL area, your discount will be...

25% 50% 60% 70% 80% 90% • • 204/430 = 47.4% NSLP eligibility 35% - 49% Rural

District-Wide Discount for All Schools, C1 & C2 Services/Equipment = 70%

8

The Good – Ability to Use Community Eligibility Provision’s 1.6 Multiplier

• • • • • • • CEP is a new program that derives NSLP data from existing income-based programs Schools opting into CEP will benefit from the 1.6 multiplier as is currently permitted by USDA and other federal programs As a result, CEP school districts typically have seen higher district-wide discounts For 2014, 630 PA schools have opted into CEP New Form 471, Block 4 will ask if school is a CEP school – If yes, form will then ask for enrollment and percentage of directly certified students and perform the 1.6 multiplier calculation PDE NSLP File contains CEP column with CEP% for each school, if applicable CEP Example : 300 students enrolled, 77% CEP Direct Cert = 231 * 1.6% = 369.6 NSLP eligibility (well, 300 is the max) 9

The Good – New Focus on Internal Connections

• • • • Category 2 will fund Wi-Fi and related infrastructure and equipment inside the school (not voice or video equipment) Technology plan requirement has been repealed Maximum Category 2 discount will change from 90% to 85% All schools in a District will receive the District-Wide discount

NSLP Eligibility

Less than 1% 1 – 19% 20 – 34% 35 – 49% 50 – 74%

75 – 100% Urban

20% 40% 50% 60% 80%

85% Rural

25% 50% 60% 70% 80%

85%

10

Category 2 Eligible Items

• • • • • • • • • • “Internal Broadband Equipment” such as: Wireless Access Points Wireless Controllers Routers Switches Antennas Firewall Equipment Internal Cabling Caching Servers - New Racks UPS to support eligible equipment • • • •

Also :

Cloud-based functionality of eligible equipment - New Software that supports eligible equipment Limited basic maintenance services for eligible equipment Managed Internal Broadband Services (MIBS) – New ($30/student/yr) 11

The Good - Category 2 Early Installation

• • • • Eligible equipment may now be purchased and/or installed on or after April 1 prior to the beginning of the funding year – This provides maximum amount of time during the summer to complete the necessary work Disbursements will not be made until on or after July 1 General rule still applies that applicants cannot apply for retroactive funding for equipment purchased and installed in years prior to the funding year When signing C2 contracts, have them begin April 1 and expire September 30, 2017 12

The Good (mostly) - Category 2 Funding Budgets

• • • • • • Each school now has a pre-discount cap of $150 per student, or a minimum building cap of $9200, over a 5-year basis – The District’s E-rate discount is then applied to the C2 cap to determine the E – – rate funded amount The District must pay for the non-discounted amount, as usual District’s not required to apply in a single year Money is allocated per school (not on a district-wide basis), and applicants cannot move funding from one school to another Form 471 application is required to be submitted each year and funding approval is subject to available funds each year – There is no provision to allow applicants to spend funds and be reimbursed in a later year Money must be spent during funding year (cannot apply for full budget and spend down over multiple years)

Good

because it limits large districts from consuming all C2 funding

Bad

because $150/students isn’t much if you need wiring, switches and wireless equipment 13

Category 2 Funding Budget Example

School Enroll ment Budget Multiplier 5-Year Budget Cap $9,200* E-rate Discount E-rate 5-Year Funding Cap District’s Share (30%)

Plainfield Elementary Jacksonville Middle School Newville High School • 50 105 325 $150 $150 $150 $15,750 $48,750 The Budget Cap is the 70% 70% 70% $6,440 $11,025 $34,125 pre-discount price $2760 $4725 $14,625 . E-rate discounts will then apply to the budget cap to derive the amount of E-rate funding per school

* Although 50 x $150 = $7,500, the minimum floor of $9,200 is invoked because school has less than 62 students

14

Category 2 Funding Request Example – Newville High School

Qty Manufacturer Description Unit Cost Extended Cost

20 1 Ruckus or equivalent Ruckus or equivalent ZoneFlex R500 dual-band 802.11abgn/ac Wireless Access Point ZoneDirector 3000 1 92 hours INSTALLATION 3 Cisco or equivalent 1 Tripplite SmartPro 1500RMXL2UA - UPS Installation of WAPs, Wireless Controller & Switch Cisco 48 Port PoE (10G) Switch E4DRS19FM45U Open four post 7ft rack $375.00 $7,500.00 $8,000.00 $8,000.00 $650.00 $650.00 $200.00 $18,400.00 $4,650.00 $13,950.00 $250.00

Pre-Discount

$250.00

$48,750.00

District Discount

E-rate Request

70%

$34,125.00

15

Category 2 Budgets

• • Any funding commitments that include a school as a recipient of service in that funding year will be deducted from your pre discount budget for that school – This is regardless of whether you actually use the committed funds If you are committed funding, but then don’t spend it all, you can file a Form 500 to return the remaining unused commitment to USAC that will then become available in your C2 budget in future years • If entities are sharing the funding, USAC will need specific information so that they know how to credit the returned funds to specific buildings 16

Category 2 - Central/Shared Equipment

• • • Costs of shared equipment must come from the C2 budgets of the schools using the equipment – – Despite where the equipment may be located Equipment used by single school must come from that school’s budget Straight-line cost allocation for shared equipment is not required Allocation can be: – Straight-line (all entities share the cost equally) – – Proportional (based on student count/square footage of each entity) Specific (you specify each entity’s share) - must use tangible criteria that reaches a realistic result 17

Category 2 - Non-School Buildings

• • • Non-school buildings (NIFs) are not eligible for C2 funding – No students = No C2 $ If there is – central equipment housed at a NIF (such as the data center or admin building), applicants must allocate a portion of the C2 budget of the schools sharing or being served by the equipment Central equipment also could be located in any school – Allocation from benefiting schools must be used (not just the school building in which the equipment is located) If a NIF uses equipment, you must deduct associated costs from your E-rate funding requests – For example, if there are 4 schools and 1 admin building using the equipment, the admin portion would be ineligible • But you could use a weighted cost allocation to determine ineligible cost 18

C2 Cost Allocation for Shared Equipment or Services

• Example: A school district has three schools – School A with 50 students, School B with 80 students, and School C with 100 students. How do I correctly allocate a shared piece of equipment with a pre-discount cost of $3,000?

Straight line A = $1,000 B = $1,000 C = $1,000 $3,000 Proportional by students A = 50/230 x $3,000 = $652.17 B = 80/230 x $3,000 = $1,043.47 C = 100/230 x $3,000 = $1,304.35

$3,000 Specific (e.g., usage) A uses 30% = $900 B uses 15% = $450 C uses 55% = $1650 $3,000 19

Little Known C2 Requirements

• • • You must retain a detailed – – Make, Model asset inventory of all equipment purchased with E-rate funding that includes: Equipment’s current location, including room # – – – – – Equipment serial numbers, if available Funding Year purchased Date installed E-rate Funding Request Number PO or invoice reference number Equipment must remain in the location specified on the E rate application for a period of 3 years from the date of purchase – Unless the school closes , then you must notify USAC of new location Equipment cannot be sold or given away for at least 5 years from the date of installation.

20

The Good - New Form 471/Templates

• • New Online 471 Format – Longer time-out periods (after 25 min) – Modern interface • Form navigation arrows at the top of the screen to show progress and pages completed Block 4 and Block 5 Templates available that can be created offline and uploaded into Form 471 – Block 4 template is easy and recommended for all – Block 5 template is recommended just for C2 applications with multiple rows • No template for “Manage Recipients” requirement of Block 5 – see more under “

The Ugly

” 21

The Good - Direct Invoicing in FY 2016

• • • • Beginning in FY 2016, applicants can submit BEARs directly to USAC without requiring service provider approval USAC will send funds directly to applicants using electronic funds transfer (EFT) Applicants will need to provide bank account information to USAC in order set up EFT arrangements – Procedures are not yet in place to collect this data Not effective for FY 2013, 2014 and 2015 invoices 22

The Good – Ability to Build and Own Fiber in FY 2016

• • • In probably the biggest change for FY 2016, the FCC is going to permit, under limited circumstances , applicants use E-rate to fund “self constructed” fiber networks (i.e., build and own) Applicants will be required to competitively bid a leased lit/leased dark fiber solution – AND Or by posting a separate Form 470 for self previous, services-only Form 470 posting a self construction solution on the same Form 470 construction only after receiving no bids on a More information likely will be coming on this issue in the coming months.

23

THAT’S THE GOOD, HERE’S THE BAD...

24

The Bad - Category 1 Services No Longer Eligible

• • • • Beginning in FY 2015, webhosting, paging, hosted e-mail are no longer eligible In addition, these telephone service components are no longer eligible – Directory assistance charges – – – Text messaging Custom calling services Direct inward dialing (DIDs) – – 900/976 call blocking Inside wire maintenance plans Cellular data and mobile broadband plans (such as data to ipads) also are presumed to be ineligible – Exception would be a bookmobile or building where a wireless LAN cannot be installed (prison?) or where it is too costly to install Doesn’t matter if you are in a multi-year agreement for these services or not 25

Category 1: No Longer Eligible

• • All such charges must be deducted from both the pre-discount cost included on the Form 471 and all associated vendor or applicant reimbursement invoices (SPIs and BEARs) for 2015 invoices – Use 50% data – 50% voice for Form 471 estimates • Certain plans have higher eligibility depending on voice minutes Such charges do NOT have to be deducted for FY 2013 or 2014 BEARs or SPIs 26

The Bad – Voice Service Being Phased Out

• Beginning in FY 2015, all voice services will begin to be phased out by 20 discount percentage points/year, including: – Cellular voice – – – – – – POTS and long distance PRI service Hosted VOIP service PRIs SIP trunks Centrex 27

Voice Phase Out Schedule

If Your District’s Discount is (in a given year): 20% 25% 40% 50% 60% 70% 80% 90%

FY 2015 No Funding 5% 20% 30% 40% 50% 60% 70% FY 2016 No Funding No Funding No Funding 10% 20% 30% 40% 50%

Voice Discount Will Be:

FY 2017 No Funding No Funding No Funding No Funding No Funding 10% 20% 30% FY 2018 No Funding No Funding No Funding No Funding No Funding No Funding No Funding 10% FY 2019 No Funding No Funding No Funding No Funding No Funding No Funding No Funding No Funding 28

The Ugly – More Complicated Forms

• • • • • Block 5 – Funding Requests Section is much more complicated Old Item 21 attachment is now embedded in the Form Requires you to identify exactly which entities are receiving what services/what equipment – Called “manage recipients” Some C2 applications may have 50+ line items within a single FRN – Each line item requires at least 3 clicks, maybe more depending on how many schools are using the equipment The Good? Next year you will be able to “Copy My App” and just make minor changes – E-rate Portal coming soon!

29

The Ugly - New Strict Invoicing Deadlines

• • • • One 120 day invoice deadline extension will be granted if the request is made on or before the original invoice deadline (which is typically October 28 following the funding year) – Reason will not be required Late be invoice deadline extension requests will not granted by USAC Requests for extensions made after invoice deadline must be requested via a waiver request to the FCC – FCC will only grant requests where applicants can prove truly extraordinary circumstances to justify a waiver Purpose of New Procedure: Unused funds will be able to be de-obligated more quickly to be used to make other funding commitments 30

The Ugly - Expanded Document Retention Rules

• • The document retention requirement has been expanded from 5 years to 10 years from the last date to receive service or service delivery deadline, whichever is later • Example: For FY 2015, the last date to receive service is June 30, 2016. All documents related to FY 2015 must be kept through June 30, 2026 For multi-year contracts , contract documentation and bids must be kept 10 years from the last date of service under the contract – Example: A 5 year contract started July 1, 2015 expires June 30, 2020. All documents related to this contract must be kept through June 30, 2030 31

What Does E-rate 2.0 Mean for Your District?

• • • • • • Loss of all voice funding within 4 years Loss of webhosting, cellular data funding starting this year More data-focused Form 471 to complete Complicated C2 budget tracking Longer document retention requirements – inform your staff!

Unforgiving BEAR invoicing deadline – inform your staff!

• • • • • • * * * District-wide discounts – CEP multiplier usage (for CEP schools) Better rural/urban designations

Ability to finally receive Internal Connections funding

Improved 471 interface Direct invoicing in 2016 Ability to build/own private fiber networks in 2016 32

What Does it Mean for Your Budget?

• • • • Begin to budget full amount for voice services Consider moving to SIP trunks or VOIP services to save money on voice Consider whether to reduce cell phone users or pay stipend for personal cell phone use Be strategic about technology purchases to maximize your C2 budgets – Think strategically about moving existing (non-E-rate funded) equipment from a high-C2 budget school to another building (admin?) and then using the C2 budget to purchase equipment for that building 33

Reminder:

• • Form 471 Window is

OPEN NOW

Form 471 Filing Window closes at 11:59pm on Thursday March 26, 2015

April, 16, 2015

 DO NOT miss this deadline!



DON’T WAIT UNTIL THE LAST MINUTE!

 Or even the last week!

 Applications submitted early will be funded first!

34

Questions?

35