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The New E-rate Overview of Changes

The New E-rate Overview of Changes. Presented by: Julie Tritt Schell PA E-rate Coordinator August 4 and 11, 2014. Agenda. Framework for Reform Connectivity Goals Discount Calculation Changes Priority 1 Changes Priority 2 Changes Invoice Changes Program Streamlining Measures

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The New E-rate Overview of Changes

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  1. The New E-rateOverview of Changes Presented by: Julie Tritt Schell PA E-rate Coordinator August 4 and 11, 2014

  2. Agenda • Framework for Reform • Connectivity Goals • Discount Calculation Changes • Priority 1 Changes • Priority 2 Changes • Invoice Changes • Program Streamlining Measures • Cost Effectiveness Efforts • Increased Accountability • Further Notice of Proposed Rulemaking • Important Reminders • Long presentation, broken down into sections • Questions will be taken at the end of each section • Can be asked in the chat box or using your microphone Julie Tritt Schell, PA E-rate Coordinator - August 2014

  3. History of E-rate Reform In July 2013, FCC released Notice of Proposed Rule Making (NPRM) seeking comments on various proposed reforms In December 2013, Tom Wheeler became FCC Chairman, vowing to modernize E-rate In March 2014, FCC issued Public Notice seeking more focused comments on proposed E-rate reforms On July 11, 2014, FCC voted 3-2 to adopt proposed reforms On July 23, 2014, 162+ page Order was released, providing details on E-rate program changes Julie Tritt Schell, PA E-rate Coordinator - August 2014

  4. The Big Picture... • Focus E-rate on funding broadband connectivity to buildings and inside buildings of ALLschools and libraries • Accomplish program overhaul without increasing the funding cap • How? By making hard choices, like • Eliminating or phasing-out certain services and equipment • Establishing P2 funding caps per student • Order also tries to provide some streamlining measures to make the program easier Julie Tritt Schell, PA E-rate Coordinator - August 2014

  5. Internet WAN Connections Internal Connections Connectivity goals Julie Tritt Schell, PA E-rate Coordinator - August 2014

  6. Internet Connectivity Goals • Schools: Internet access of at least 100 Mbps per 1,000 students and staff (users) in the short term and 1 Gbps Internet access per 1,000 users in the long term • Measurement will be at the district level for school districts and school level for schools that are not part of a district • Libraries: Internet access for libraries that serve fewer than 50,000 people of at least 100 Mbps and at least 1 Gbps for libraries that serve 50,000 people or more Julie Tritt Schell, PA E-rate Coordinator - August 2014

  7. WAN Broadband Connectivity Goals • Schools: Dedicated data service scalable to 10 Gbps per 1,000 students in the long term • FCC assumes that in most cases, a 1 Gbps fiber connection can be readily scaled to 10 Gbps with upgraded networking equipment. • Libraries: If libraries are connected by a WAN, the measure will be the total number of libraries that have a connection capable of providing a data service scalable to at least 10 Gbps • There are no short term WAN connectivity goals Julie Tritt Schell, PA E-rate Coordinator - August 2014

  8. Internal Connections Goals No goals set at this time because more information is needed FCC staff will conduct a survey of schools and libraries to determine the sufficiency of their LAN/WLAN capacity and coverage Specific goals will be developed at a later time Julie Tritt Schell, PA E-rate Coordinator - August 2014

  9. District Wide Discount Calculations Library Discount Calculations Rural/Urban Classification Income Surveys Community Eligibility Provision of NSLP Discount calculation changes Julie Tritt Schell, PA E-rate Coordinator - August 2014

  10. District-Wide Discount Calculations • All discounts for both Priority 1 and Priority 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 • This is identical to how libraries currently calculate their E-rate discounts • All districts will now have a straight, district-wide discount taken directly from the discount matrix (i.e., 20, 40, 50, 60%, etc.) • Districts will be permitted to add buildings after a FCDL is issued • For nonpublic schools and other entities that have multiple schools, those entities should use this formula to determine their discount using all E-rate eligible students that fall under their financial or operational control Julie Tritt Schell, PA E-rate Coordinator - August 2014

  11. District-Wide Discount Calculations 204/430 = 47.4% NSLP eligibility Discount Matrix for Urban 35% - 49% NSLP Eligible = 60% District-Wide Discount for All Schools = 60% Example: Julie Tritt Schell, PA E-rate Coordinator - August 2014

  12. District-Wide Discount Calculations District-Wide Discount for All Schools, P1/P2 Services/Equipment = 60% Julie Tritt Schell, PA E-rate Coordinator - August 2014 204/430 = 47.4% NSLP eligibility 35% - 49% Urban

  13. Library Discount Calculation Library systems that have branches or outlets in more than one public school district will use the address of the central outlet or main administrative office to determine which public school district the system is in Use school district’s discount applicable to central outlet or main office when applying as a library system or on behalf of individual libraries within that system Julie Tritt Schell, PA E-rate Coordinator - August 2014

  14. New Urban/Rural Definition • No more county classifications • 2010 U.S. Census will be used instead • Urban applicants are those with addresses in an “urbanized area” or “urban cluster” • Urbanized area has 50,000 or more people in a densely settled core of census tracts • Urban clusters are adjacent to an urbanized area and have at least 2,500 people • All areas that are not considered “urban” are classified as rural • Rural/urban status of majority of buildings (physical addresses) will be used for entire district • Question asked of FCC: What if a district has two buildings, and one has a rural address and the other has an urban address? • Full list of urban areas are at http://www2.census.gov/geo/ua/ua_st_list_all.xls. • If your town is NOT on this list, then it is considered rural. (subject to verification with FCC) Julie Tritt Schell, PA E-rate Coordinator - August 2014

  15. Surveys Income survey results can no longer be extrapolated Discounts will only be based on the income surveys actually collected Julie Tritt Schell, PA E-rate Coordinator - August 2014

  16. Community Eligibility Provision • CEP is a new program that derives estimates of the NSLP eligible population from existing data from other income-based programs • Income NSLP eligibility applications are not collected • Schools that have an Identified Student Percentage of 40% or more can qualify (similar to Direct Certification) • CEP schools must offer both free breakfast and free lunch daily to all students • Schools opting into the CEP under the National School Lunch Program will use the 1.6 multiplier as is currently permitted by USDA and other federal programs • The previous FCC guidance that CEP schools must use the NSLP data from the year before they opted into CEP has been repealed Julie Tritt Schell, PA E-rate Coordinator - August 2014

  17. Community Eligibility Provision • PDE NSLP file that’s released each January should contain NSLP eligibility figures that already include the 1.6 multiplier • That data will then be used on the Form 471, Block 4 discount calculation worksheet • CEP schools must retain back-up calculations which may be requested during PIA and audits • CEP-based discount rate can be used for 4 years, even if NSLP eligibility decreases • Discount rate can be increased if NSLP eligibility increases Julie Tritt Schell, PA E-rate Coordinator - August 2014

  18. Questions about Discount Calculation Changes?

  19. Priority Name Change Newly Ineligible Services Phase out of Voice Services Wireless Data Plans Bidding Exemption for Certain Bundled Internet Service Bundled End-User Equipment Priority 1 changes Julie Tritt Schell, PA E-rate Coordinator - August 2014

  20. Priority 1 Overview Traditional Priority 1 will be called Category 1 Category 1 will fund broadband connectivity and Internet access to buildings Category 1 services will be funded first before Category 2 equipment and services are funded in order to ensure there is enough funding available to cover all Category 1 funding requests Julie Tritt Schell, PA E-rate Coordinator - August 2014

  21. Priority 1 Service Eligibility Changes • Beginning in FY 2015, paging, webhosting, certain telephone service components and e-mail will no longer be eligible • Beginning in FY 2015, all voice services will begin to be phased out by 20 discount percentage points/year • This includes cellular voice, local and long distance, PRI service, and hosted VOIP service • No voice services will be eligible beginning with FY 2019 • Cellular data and mobile cellular broadband services subject to strict cost effective scrutiny Julie Tritt Schell, PA E-rate Coordinator - August 2014

  22. Voice Phase Out Schedule Julie Tritt Schell, PA E-rate Coordinator - August 2014

  23. Wireless Data Plans • Cellular data plans and mobile broadband services (such as wireless services to an iPad or aircards) are no longer eligible in buildings that have Wi-Fi access • In buildings without Wi-Fi: These services are only eligible upon a showing that individual data plans are the most cost effective option for providing internal broadband access for portable mobile devices • Must prove either that installing a WLAN is not physically possible, or provide a comparison of the costs of individual data plans vs. installing a WLAN solution • Be prepared for extensive cost effectiveness review from PIA • Library bookmobiles are an exception to heightened review Julie Tritt Schell, PA E-rate Coordinator - August 2014

  24. Voice Telephone Service Components • Ineligible as of FY 2015: • Directory assistance charges • Text messaging • Custom calling services • Direct inward dialing (DIDs) • 900/976 call blocking • Inside wire maintenance plans • 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 • Such charges do NOT have to be deducted for FY 2013 or 2014 BEARs or SPIs Julie Tritt Schell, PA E-rate Coordinator - August 2014

  25. Bidding Exemption for Bundled Internet • “Commercially available” bundled Broadband/Internet packages that cost less than $300 per month per building (prediscount) can be purchased without first posting a Form 470 • Minimum speed must be 100 mbps downstream and 10 mbps upstream • Cost must be based per building and cannot be averaged across multiple buildings • Annual cost of $3600 must include all equipment and installation charges and monthly recurring charges • Presumably applies to small schools and libraries that wish to purchase cable modem or FIOS-type bundles • Applicants still must submit an annual Form 471 to request funding Julie Tritt Schell, PA E-rate Coordinator - August 2014

  26. Priority 1 Bundled Equipment Limitations Beginning in FY 2015, equipment is prohibited from being bundled at no cost with an eligible service This includes free cellular phones, iPads/tablets, and VOIP equipment Applicants will be required to perform a cost allocation to remove the value of the ineligible equipment from the pre-discount price claimed for the annual service costs Previously signed contracts are not grandfathered This rule resulted from an FCC Order in May 2014 and is not technically in July Reform Order Julie Tritt Schell, PA E-rate Coordinator - August 2014

  27. Questions about Priority 1 Eligibility Changes?

  28. Priority Name Change National Funding Amounts Discount Matrix Change Budgets for Funding Requests Service/Equipment Eligibility Changes April 1 Installations Preferred Master Contracts Technology Plans Priority 2 changes Julie Tritt Schell, PA E-rate Coordinator - August 2014

  29. Priority 2 Overview Traditional Priority 2 will be now be called Category 2 Category 2 will fund Wi-Fi and related infrastructure and equipment Category 1 services will be funded first in order to ensure there is enough funding available to cover all Category 1 funding requests Julie Tritt Schell, PA E-rate Coordinator - August 2014

  30. Priority 2 Discount Matrix Changes Maximum Category 2 discount will change from 90% to 85% All other discount bands will remain the same Julie Tritt Schell, PA E-rate Coordinator - August 2014

  31. Priority 2 Annual E-rate Funding Targets • At least $1 billion will be available each year in FY 2015 and FY 2016 for Priority 2 funding • Intent is to have $1 billion available for FY 2017, 2018, and 2019 as well • Funding will come from phase out of voice services and tightening of certain USAC administrative procedures • Should not enough funding be available to cover an entire discount band, pro-ration will be applied using the NSLP percentage (100% NSLP funded first, then 99%, 88%, etc.) • FCC Chairman: “All schools and libraries will have access to P2 funding once every 5 years.” Julie Tritt Schell, PA E-rate Coordinator - August 2014

  32. Priority 2 Predictability Unfortunately, not all applicants will be funded in the year in which they apply There is no provision to allow applicants to spend funds and be reimbursed in a later year Intent of FCC to connect at least 10 million students each year in FY 2015 – FY 2019 Julie Tritt Schell, PA E-rate Coordinator - August 2014

  33. Category 2 Funding Budgets • Each school building will be permitted to apply for a pre-discount cap of $150 per student, or a minimum building cap of $9200, over a rolling five year basis • Each library building will be permitted to apply for a pre-discount cap of $2.30 per square foot or a minimum building cap of $9200, over a rolling five-year basis • Square footage shall include areas off-limits to the public. • Money is allocated per building (not on a district-wide basis), and applicants cannot move funding from one school to another • Annual application is required and funding approval is subject to available funds each year Julie Tritt Schell, PA E-rate Coordinator - August 2014

  34. Category 2 Funding Budget Example The Budget Cap is the pre-discount price, not the E-rate eligible price. E-rate discounts will then apply on top of the budget cap. * Although 50 x $150 = $7,500, the minimum floor is invoked because school has less than 62 students Julie Tritt Schell, PA E-rate Coordinator - August 2014

  35. Category 2 Funding Budgets (Cont’d) If an applicant requests less than the maximum budget available for a building in a single year, the applicant may request the remaining balance in subsequent funding years of a 5-year cycle No look-back provision for applicants funded in years prior to FY 2015 All competitive bidding requirements will continue to apply and applicants can only apply for what they need After 2 years, the per-pupil/per building/per square foot formula will be reviewed and will likely continue through FCC action or administrative procedure Do NOT apply for more than your cap in a single year! Julie Tritt Schell, PA E-rate Coordinator - August 2014

  36. Priority 2 Eligibility Changes Beginning in FY 2015, Priority 2 eligible services will become focused solely on Wi-Fi and building infrastructure and networking Certain equipment and services will be permanently eligible Other equipment and services will be eligible for FY 2015 and 2016 and may sunset unless FCC extends eligibility for FY 2017 and beyond Beginning in FY 2015, no voice or video equipment will be eligible Julie Tritt Schell, PA E-rate Coordinator - August 2014

  37. Category 2 Permanently Eligible Items Wireless Access Points Wireless Controllers Routers Switches Firewall Equipment Internal Cabling Racks UPS to support eligible equipment Cloud functionality of this equipment Software that supports eligible equipment Julie Tritt Schell, PA E-rate Coordinator - August 2014

  38. Category 2 Eligibility in FY 2015 and 2016 • Caching Servers and Software – NEW! • Managed Internal Broadband Services (MIBS) – NEW! • Services which cover the operation, management, or monitoring of a LAN or WLAN • Includes managed Wi-Fi • Could have a contract that a vendor manages, operates and maintains network; or, • School could own the equipment, but have a vendor manage it for them • Basic Maintenance Services for eligible equipment • Defined as: “But for the maintenance at issue, the internal connection would not function and serve its intended purpose with the degree of reliability ordinarily provided in the marketplace to entities receiving such services” Julie Tritt Schell, PA E-rate Coordinator - August 2014

  39. Category 2 Eligibility in FY 2015 and 2016 • Applicants are allowed to apply for up to $30 per year/per student for these ‘managed’ or ‘maintenance services’ • Services are slated to sunset at the end of FY 2016 unless FCC extends eligibility • Exception to Sunset: Applicants that received funding approval in FY 2015 and/or FY 2016 for these items may continue to obtain funding for FY 2017-FY 2019 Julie Tritt Schell, PA E-rate Coordinator - August 2014

  40. Category 2 - Non-Instructional Facilities • Non-Instructional Facilities (NIFs) are not eligible for equipment unless the NIF has classrooms or the NIF houses the WAN/WLAN central equipment (such as the network operations center) • For Network Operations Centers (NOCs), applicants must allocate a portion of each school’s $150 budget toward the purchase of such equipment • Details on how this will be implemented will be given later Julie Tritt Schell, PA E-rate Coordinator - August 2014

  41. Category 2 – New Schools New schools may estimate the number of students who will be attending the new school and seek funding based on that estimate However, if an applicant overestimates the number of students who enroll in that school, it must return to USAC by the end of the next funding year any excess funding based on the actual number of enrolled students Julie Tritt Schell, PA E-rate Coordinator - August 2014

  42. Category 2 – Students In Multiple Schools Students who attend multiple schools, such as those that attend CTC or Intermediate Units part-time, may be counted by both schools in order to ensure appropriate LAN/WLAN deployment for both buildings Julie Tritt Schell, PA E-rate Coordinator - August 2014

  43. Category 2 Early Installation Eligible equipment may 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 Disbursementswill 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 Julie Tritt Schell, PA E-rate Coordinator - August 2014

  44. Preferred Master Contracts • FCC staff is empowered to designate certain equipment contracts that offer excellent nationwide pricing as “Preferred Master Contracts” • May allow such contracts to be exempted from the Form 470 competitive bidding requirement and/or • May require applicants to include the preferred master contract in their bid evaluations even if the PMC is not submitted as a bid in response to the applicant’s Form 470 • PMC designations must be reevaluated every two years • No additional information is known at this time about these contracts or when they will be designated Julie Tritt Schell, PA E-rate Coordinator - August 2014

  45. Technology Plan Requirement Changes Beginning in FY 2015, the technology plan requirement will be repealed entirely This means there is no federal technology plan requirement for Priority 1 or Priority 2 funding I am working with PDE to revise Comprehensive Planning questions in light of this repeal Julie Tritt Schell, PA E-rate Coordinator - August 2014

  46. Questions about Priority 2 Changes?

  47. Letters of Agency Discount Calculations Clarification on Member Discount Benefits Priority of Application Processing Changes for Consortia Julie Tritt Schell, PA E-rate Coordinator - August 2014

  48. Letters of Agency The LOAs requirement has been expanded to now require signed LOAs from all consortium members prior to posting a Form 470 Previously, the rules only required LOAs to be signed prior to submitting the consortium Form 471 Julie Tritt Schell, PA E-rate Coordinator - August 2014

  49. Discount Calculations 50 + 60 + 80 = 190 190 / 3 = 63% Consortium Discount Consortia will continue to use the simple average of each member’s discount, BUT Each school district member’s discount will be calculated usig the new district-wide simple average Example: Julie Tritt Schell, PA E-rate Coordinator - August 2014

  50. Clarification on Member Discount Benefits FCC clarified that consortia leads must “strive to ensure” that each school and library in a consortium receive the full benefit of the discount to which it is entitled In other words, each district is still entitled to their district discount when receiving consortium-purchased services Julie Tritt Schell, PA E-rate Coordinator - August 2014

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