Graphic of hands with applications with a growth chart

Skyrocketing Category 2 Form 470s

The E-rate Category 2 program has been a game changer for school districts across America looking to upgrade their internal networks. Since 2015, 83% of school districts nationwide have received federal E-rate Category 2 funding — a dramatic increase from 14% between 2011 and 2014. With potential rule changes on the horizon, we hope to show how the program has improved access to a crucial funding source for schools, provide insight into the future of the program, and share a few ways to make sure your school is taking advantage of it before the E-rate window closes on March 27, 2019.

Current program set up

Starting in Funding Year (FY) 2015, each school site received a pre-discount budget of $150 per student or a minimum budget of $9200 to spend on eligible Category 2 equipment and services. Once a district started spending any of its Category 2 funds at any of its schools, they were given five years to utilize all of their available funding across all schools. Once the five-year clock started, the funding for each school was guaranteed until it was either used up or the five-year clock ran out.

Results to date

As mentioned above, schools have applied and leveraged this funding at a greater rate over the past four years more than ever before. This year alone, Funds for Learning reported that schools have released Category 2 Form 470s at a record pace — and earlier this fall, requests were up 56% over last year. We’re thrilled to see that E-rate modernization spurred increased utilization. We encourage schools – especially in the last year of their five-year clock – to certify any remaining requests via the Form 470 by Feb. 27, 2019.

Potential opportunity

Despite the positive overall results, one area for improvement includes helping small schools take advantage of the funding. Data shows that 41% of very small schools with an enrolled student population of zero to 99 students have not utilized the available Category 2 funding to date — the largest underutilization rate for all school sizes.

There are likely several reasons why very small schools have underutilized the program. From our work, we have learned how the complex filing process is even more strenuous for small schools due to limited staff and resourcing. Some states have recognized this issue and worked to create programs that support small schools with the cost of E-rate consultants. For example, the Broadband for Montana Schools program contracted with several E-rate consultants and provides grants to help Montana schools successfully apply for the E-rate Program. To see if your state has a similar program, we recommend checking in with your state E-rate coordinator.

Our district consulting team is also always here to support districts in understanding and making the best use of Category 2 funding. However, we recognize the potential to tweak this area of the E-rate Program so that schools can provide equitable access to the high-speed Internet needed for digital learning.

More to come

Recently, the FCC’s Wireline Competition Bureau issued a report chronicling the positive impact the modernization rules have had on closing the connectivity gap. In this report, they recommend modifying the rules again – including raising the budget floor in order to encourage small schools and libraries to participate.

We look forward to the FCC releasing the Notice for Proposed Rulemaking (NPRM) to solicit public comment on their proposed rules. In the meantime, we encourage school districts to understand their remaining Category 2 budget and take advantage of their funding before the deadline to certify Form 470 on February 27, 2019.

All of our tools and resources are free of charge and can support you in the upgrade process, including:

470 best practices
On-demand Category 2 webinars
Online training videos

Happy filing!