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The Origins Of E-rate And How It Works

The Origins Of E-rate And How It Works

E-rate was created under President Bill Clinton, part of the sweeping Telecommunications Act of 1996. That legislation established the Universal Service Fund, a pool of money collected through a fee on long-distance phone service and then used to “help communities across the country secure access to affordable telecommunications services,” according to the Universal Service Administrative Company (USAC) website. The idea was to prevent low-income communities and nonprofit educational institutions from being left behind in the Internet revolution.

Collected and administered by USAC, a nonprofit under the oversight of the Federal Communications Commission, the fund helps rural and low-income communities, rural health-care providers and, through its E-rate division, schools and libraries purchase and maintain telecommunications services. In 2011, USAC disbursed just over $8 billion, of which $2.2 billion was for E-rate.

Under E-rate, public and private schools apply directly to USAC and can be reimbursed up to 90 percent for things like phone service, Internet service, wiring and maintenance. In exchange, they are required to conduct a competitive bidding process for the services, have the proper infrastructure to make use of the services and are expected to pay their portion of the expense directly to the service provider.

Reimbursement rates are determined based on the relative poverty of the student population, with schools where at least 75 percent of students qualify for free or reduced-price lunches — a category in which virtually all of New York State’s fervently Orthodox schools apparently fall — getting 90 percent reimbursements.

Eric Iversen, USAC’s director of external relations, told The Jewish Week in a phone interview that the majority of the nation’s schools participate in the E-rate program and explained that the funds are divided into “two buckets, Priority 1 and Priority 2.”

Priority 1 is for telecom services (phone, cell phone, Internet access), whereas Priority 2 is for installation and maintenance of internal connections (the wiring that then connects multiple devices throughout the building to the phone and Internet service).

In the past two years, while all schools that applied received Priority 1 funding, only high-poverty schools, which are given preferential treatment, were approved for Priority 2, allocated with whatever money remains after all the Priority 1 requests are processed.

In recent years Priority 2 dollars have been increasingly scarce, preventing all but the poorest schools from obtaining money to connect not just their buildings, but also their classrooms, to the Internet. Ironically, the coveted Priority 2 services account for 68 percent of the funding that fervently Orthodox schools like Rockland County’s Avir Yakov received in 2011, even though these schools — and the communities in which they operate — for the most part officially prohibit Internet use.

Scarcity of all kinds is a growing problem for E-rate.

“The big question they’re facing is there’s not enough money to go around,” said one professional who has been involved with E-rate in various capacities since its inception but asked not to be identified.

Noting that E-rate’s annual funding cap hasn’t changed since 1998, this professional said, “We’re trying to equip all these schools and libraries based on 1998 prices, and in addition, there’s increasing demand for bigger pipes because people are doing so much more online. … As schools’ reliance on technology has grown, E-rate has not grown.”, @Julie_Wiener

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