ERate

1
E-Rate
Status, Steps, and Strategies Michigan Training
Meeting October 12, 2000
2
Workshop Agenda

• Overview of E-Rate Program
• Remaining issues from last year (PY2)
• Current issues this year (PY3)
• Application for next year (PY4)
• Q A

Major Focus
E Expert topic
3
General Concepts

• Funded by carriers under Telecommunications Act
  of 1996
• Not a typical government grant program.
• Funding not based on competitive applications
• Funds are provided indirectly as discounts on
• eligible services from the vendors.
• Four program years so far
• PY1 1/1/1998 - 6/30/1999
• PY2 7/1/1999 - 6/30/2000
• PY3 7/1/2000 - 6/30/2001
• PY4 7/1/2001 - 6/30/2002 -- Upcoming

4
General Framework

• Discounts available on three types of services
• Telecom
• Internet
• Internal Connections (Networking)
• Eligible schools libraries apply for discounts
  
• through the Schools and Libraries Division (SLD)
• Service providers provide discounts to approved
  applicants

5
General Framework

• Annual applications for funding
• Funding level set each year by the FCC
• (capped at 2.25B)
• Rules of Priority (if necessary)
• Priority 1 Telecom and Internet Access
• Priority 2 Internal Connections

6
School Eligibility

• Public schools and school districts
• Non-profit, private K-12 school
• with endowment of 50M or less
• Must meet federal definition of elementary or
  secondary school
• ESAs and other consortiums

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Library Eligibility

• Non-Profit
• Eligible for LSTA (Library Service Technology
  Act)
• Completely separate budget required
• Public library
• K-12 School library
• Research library Public docs freestanding
• State-designated private library
• Library consortia

8
Discount Percentages
of Students Eligible for School Lunch Program
Discounts
9
Establishing Discount

• National School Lunch Program Eligibility
• Information needed for each school
• Libraries use data from local school district(s)
• Officially sanctioned methods exist for
  alternative methods of determining eligible
  students
• Urban/Rural defined by counties

10
Eligible Services General

• Purpose of fund is affordable access to
  Information Superhighway by schools and libraries
  down to the classroom level
• Focus is on infrastructure and transport, not
  content and end-user equipment

11
Eligible Services Telecom/Internet

• Basic telephone (local long distance)
• Advanced telecom (T-1, ATM, Frame Relay, etc.)
• Mobile services (limited)
• PBXs eligible only as Internal Connections
• No end user equipment (phones, faxes, etc.)
• Internet access (not content)

12
Eligible Services Internal Connections

• Eligible
• Wiring
• Routers
• Switches
• Hubs
• Network servers
• System operating software
• Wireless LANs
• PBXs and key systems

• Ineligible
• Personal computers
• FAX machines
• Modems cable modems
• Asbestos removal
• Cameras
• Electrical wiring
• Teacher training
• Curriculum software
• WANs (non-carrier)

13
Technology Plan

• Five SLD technology plan criteria
• Goals and Objectives
• Needs Assessment
• Professional Development
• Budget
• Evaluation
• No Tech plan required for basic phone service
• Tech plans approved for no more than 3 years

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E-Rate Process at a Glance
15
E-Rate Opportunities and Issues

• Important source of technology funding
• 5.6 billion nationwide (PY1 - PY3)
• 190 million for Michigan (PY1 - PY3)
• Time-consuming, bureaucratic, and confusing
  program
• Forms 470, 471, 472, 498, and 500
• Long lead time competitive bidding procedures
• Strict application review process
• Vendor coordination problems (contracts and
  payments)

16
E-Rate A Year Round Program
Summer PY2 Bills and BEARs Grace period
installations PY3 Remaining application
reviews Form 486s and Form 500s SLD (and FCC)
appeals Fall PY2 Out-of-window
applications PY3 Vendor discount coordination
PY4 Form 470s
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E-Rate A Year Round Program, cont.
Winter PY3 Initial bills and BEARs PY4 Vendor
contract negotiation Discount rate
optimization Form 471s Spring PY4
Application reviews Form 486s and Form
500s SLD (and FCC) appeals Renewal of tech
plan approval
18
PY2 Remaining Issues

• BEAR deadline November 20, 2000
• Out-of-the window funding
• Appeals and waivers

19
PY3 Current Issues

• Remaining funding ripples
• Appeal processing
• BEARs vs. discounted bills
• Field audits(?)

20
PY4 Workshop Focus

• Flexible Form 470 preparation
• Accurate Form 471 preparation
• Contract issues
• Tariff and MTM services
• Contingent contracts
• State master contracts
• Technology plan renewal

21
Application Schedule
2001-2002 Program Now
1999-2000 Program Oct. 23 1999
Mid-Jan 2001
Jan. 19 2000
Apr.-Oct. 2000
Spring/Summer 2001
22
Funding Schedule
2001-2002 Program Sprint/Summer 2001
2000-2001 Program Apr.-Sept. 2000
Now
July 2001
23
New for PY4

• Minor revisions to Form 471
• Improved online Form 471 filing
• Upgraded SLD correspondence
• Pink stationary for PY4
• IVR on SLD help line
• Unified SLD application database

24
Form 470 Purpose

• Identifies applicant
• Generally describes services needed
• Begins mandatory 28-day waiting period
• Does not replace state and local competitive
  bidding rules

25
Form 470 Block 1

• Form Identifier (e.g. 470-2000-01)
• Application SLD assigns
• PY4 July 1, 2001 June 30, 2002
• Contact Person For SLD and vendors
• Can use Item (11) for alternative vendor contact
• Do NOT let a vendor act as applicant contact

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Form 470 Block 2

• Be broad and inclusive
• Item (7) Check ALL that could apply
• Tariff has specific regulatory connotation
• MTM is an allowable category for
• Internet, cellular, paging
• Items (8) - (10) Check YES or NO

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Form 470 Block 2 Examples
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Form 470 Block 2

• Item (11) Optional/alternative vendor contact
• Item (12) Sample language (public schools)
• Public work and purchase contracts for public
  schools in the State of ______are governed by the
  provisions of the States General Municipal Law.
  Public schools may also purchase equipment and
  services under publicly bid centralized
  procurement contracts administered by the States
  Office of _______ or under cooperative bidding
  contracts administered by a local educational
  service agency (ESA").
• Item (13) Purely optional

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Form 470 Block 3

• Avoid checking Item (14)
• Item (15a-e) OK to check both boxes
• Item (15f) Purely optional

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Form 470 Block 4

• Item (16) Check (a) or (c), and add area codes
  and exchange codes
• Item (17) One, for most applications
• Item (18) Ties in with last line of Item (16c)

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Form 470 Block 5

• Certifications taken seriously
• Item (20) Tech plan needed for Form 486
• Item (23) Subject to review
• Item (25) Sign in BLUE ink

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Form 470 Automatic Rejection

• Early version form (should be Sept. 1999)
• Missing applicant and contact information
• Other missing blocks/pages
• Invalid certification Not an original signature
  in ink
• Wrong program year specified
• Not many Form 470s are rejected, but many
• are filed too late for Form 471 filings

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Form 470 Filing Online

• Assures earliest Allowable Contract Date
• Use Form 470 Application to resume data entry
  at any point before submission
• Important Print signature page before
  submission, sign, and mail to SLD

34
Form 470 Filing by Mail

• 28 day waiting period starts after form is
  posted, NOT received.
• Form 470 receipt acknowledgment letter will show
  Allowable Contract Date
• Can check posting in Vendor Area of SLD web site

35
Form 471 Purpose

• Calculation of discount rate(s)
• Requests specific discount on each tariffed,
  monthly, and contract service
• Separates eligible from ineligible costs
• An important and complex form

36
Form 471 Blocks 1-3 and 6

• Block 1 Similar to Form 470
• Plus holiday/vacation contact information
• Block 2 Special case
• Minor contract modifications
• Filed by mail only
• Block 3 Program impact data
• Block 6 Similar to Form 470

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Form 471 Block 4

• Three types of worksheets
• A Schools and school districts
• B Library outlets and systems
• C Consortia
• Worksheets link to Funding Requests (Block 5)
• Key concept Shared vs. site-specific services
• Consortia (and groups) require multiple sheets

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Discount Rates

• All flow from individual school data
• Based on need
• Poverty
• Defined by National School Lunch Program
• www.fns.usda.gov/cnd/Lunch/Governance/Notices
  /00-01ieg.htm
• Location
• Rural vs. Urban

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Discount Percentages
of Students Eligible for School Lunch Program
Discounts
40
Discount Percentages

• Discount Matrix applies ONLY to individual
  schools
• All other applicants use weighted or simple
  average depending on type of applicant

41
Discount Rate Calculations

• Individual school rates based on number of
  students eligible for National School Lunch
  Program
• School districts use weighted average discount
  based on individual schools.
• Libraries use simple average discount based on
  school districts.
• Consortia use a simple average of their members
  appropriately calculated discounts.

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Alternative Measures

• Comparable measures (milk/breakfast programs,
  Medicaid/public housing data)
• Survey (can extrapolate from 50 response rate)
• Sibling searches
• Feeder system not approved

E
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Discount Rate Tips

• Focus on schools close to next level
• Question lower secondary school numbers
• SLD reviews using state lunch program
  participation data, so document all higher
  eligibility data

E
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Individual School
Complete Worksheet A, Columns (1)-(7) Columns
(3)-(7) step through discount calculation
45
School District
Complete Worksheet A, all columnsColumn (7)
gives site-specific discountsItem (10c) gives
the shared (weighted average) discount
46
Library System
Complete Worksheet B, all columns Column (5)
provides site-specific discountsItem (10c) gives
the shared discount
47
Consortium
Complete Worksheets A or B, as appropriate
Complete Worksheet C to calculate consortium
discount(s).
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Form 471 Block 5

• One page per funding request (FRN)
• Single service may require multiple pages
• Original Form 471 had one line per FRN
• Each page links elsewhere
• Associated Form 470
• Vendor identification and account information
• Discount rate worksheets
• Contract and service information

49
Form 471 Form 470 Link

• Item (12) Form 470 application number
• Previously called USCN
• Items (17) - (18) Allowable Vendor
  Selection/Contract Date must be earlier than
  Contract Award Date

50
Form 471 Vendor Link

• Item (13) SPIN
• Source SLDs BEAR SPIN Contact Search
• Check SLDs Service Provider Information by SPIN
• Items (14) Beware d.b.a names
• Item (16) Billing Account Number

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Form 471 Discount Rate Link

• Item (22) Block 4 Entity or Worksheet number
• Item (23), Column (J) Discount rate from
  Worksheet

52
Playing the Discount Rate Game on Shared vs.
Site-specific Services

• Multi-site internal connection projects could be
  site-specific or shared
• Funding threshold established post-window
• Possible results of any choice
• All sites funded
• Some sites funded
• No sites funded

50 65 80
E
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Playing the Discount Rate Game, cont.

• Aggregate Rate All or Nothing!
• Use if
• Aggregate rate is high
• Full funding is necessary to do project
• Do not use if
• Aggregate rate is low, but one site is high
• Some funding is better than nothing

E
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Form 471 Contract Link

• Item (15) Contract ID, T, or MTM
• Items (17) - (18) Contract Award Date must be
  later than Allowable Vendor Selection/Contract
  Date
• Item (19) No earlier than 07/01/2001
• Item (20) Hopefully 06/30/2002 or later
• Item (21) Attachment
• Item (23) Charges, eligibility, and funding
  request

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Form 471 Attachment
56
Complete Form 471 (example)Type of Page
Number
57
Form 471 Filing Online

• Promotes early SLD processing
• Use Form 471 Application to resume data entry
  at any point before submission
• Important Printed signature page and exhibits
  must be received by SLD within the application
  window

58
Form 471 Examples

• Local telephone
• Long distance
• Cellular
• Internet (direct)
• Internet (dial-up)
• PBX maintenance
• New LANs

• Tariff (monthly)
• State contract (monthly)
• Annual contract (monthly)
• Annual contract (quarterly)
• Month-to-month billing
• 2nd year of 3 year contract
• Contract (non-recurring)

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Local Telephone (tariff)Form/Item
Description
60
Long Distance (State)Form/Item
Description
61
Cellular (annual contract)Form/Item
Description
62
Internet - Direct (quarterly)Form/Item
Description
63
Internet - Dial-up (monthly)Form/Item
Description
64
PBX Maintenance (2nd year)Form/Item
Description
65
LANs (new contract)Form/Item
Description
66
Form 471 Automatic Rejection

• Early version form (should be Oct. 2000)
• Missing applicant and contact information
• Other missing blocks/pages
• At least one Block 4 worksheet
• At least one valid Block 5 funding request
• Invalid certification Not an original signature
  in ink
• Filed after the window closes
• Few timely Form 471s are rejected completely, but
  funding is denied on numerous FRNs

67
Eligibility Warning Tip

• If SLD determines that more than 30 of requested
  amount is ineligible, entire FRN may be denied
• When in doubt break it out!

68
Service Warning Tip

• If SLD determines that any portion of requested
  amount is not Priority 1, entire FRN may be
  categorized as Priority 2
• Typical problem Internet routers included in
  access
• When in doubt break it out!

69
Seven Deadly Words/Phrases

• Filters and firewalls
• Intercoms
• Modems
• Network management/monitoring
• Remote access
• Video
• WANs

E
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Problem Narrow and Early Contract Window
Form 470 Posting
Form 471 Application Window
Oct./Nov. Dec.
Jan.
Contract Signing Window
71
Contracting Tips

• Broadly define service requirement in Form 470
• Work closely with vendors
• Structure contract
• Prepare eligibility exhibits
• Set contract signing date
• Contract can be a contingent agreement
• Subject to final board and budget approval
• Allow substitution of equipment models
• Prices subject to change
• Consider use of State master contracts
• Can serve as standing bids
• Must specify specific vendor in multi-vendor
  contracts

72
Post-commitment Changes

• Can change services/equipment/terms
• Minor modifications are troublesome
• Tip Keep contract specifications flexible
• Can change service provider (SPIN)
• Currently allowed in limited cases
• More flexible conditions pending FCC action

E
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PY4 Other Issues

• Receipt acknowledgment letters
• PR and PIA reviews
• Funding commitment letters
• Corrections, inquiries, and appeals
• Form 486 and Form 500
• Audits

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Important Numbers/Dates

• Days
• 28 days for Form 470 posting
• 30 days to submit SLD/FCC appeals
• Percentages
• No internal connections in Priority 1 requests
• Less than 30 ineligible items in funding
  requests
• High as possible eligibility in NSLP (or
  equivalent)
• Dates
• Form 470 allowable vendor selection/contract date
• Form 471 application window
• Signature dates (contracts and Form 471)

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SLD Help

• Web www.sl.universalservice.org
• Help lines 888-203-8100 (Tel)
• 888-276-8736 (Fax)
• E-mail question_at_ universalservice.org
• Fax on demand 800-959-0733

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See also www-e-ratecentral.com