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Updated September 2015
Starting with Funding Year (FY) 2015, products and services eligible for E-rate Program discounts will be divided into Category One and Category Two. Category Two consists of the internal connections equipment or services necessary to bring broadband into, and provide it throughout, schools and libraries. Connections are limited to broadband connections used for educational purposes within, between, or among instructional buildings that comprise a school campus or library branch, basic maintenance of these connections, and services that manage and operate owned or leased broadband internal connections.
Each school or library receiving Category Two support in FY2015 or FY2016 will have a five-year, pre-discount budget for those products and services.
Each individual school and each library outlet/branch has a Category Two budget. School districts and library systems may not average their costs across multiple school or library budgets.
Non-instructional facilities (NIFs) do not have Category Two budgets. If a NIF is essential for the effective transport of information to or within a school or library, the applicant must allocate the cost of the eligible product or service associated with the NIF to one or more of the entities benefiting from the service.
To calculate the budget for a school, multiply the number of students who attend the school by $150. Because there is a funding floor, if fewer than 62 students attend the school, the budget is set at $9,200.
If a student attends more than one school (e.g., if the student from one school attends a vocational training school one afternoon a week), both schools can count that student for the purpose of calculating their respective budgets.
To calculate the budget for a library, multiply the total area of the library in square feet, including all areas enclosed by the outer walls of the library and occupied by the library, by $2.30. Because there is a funding floor, if the library's total area is less than 4,000 square feet, the budget is set at $9,200.
Libraries that serve populations of 250,000 or more are eligible for a $5.00 per square foot budget. If such a library's total area is less than 1,840 square feet, that library's budget is also set at $9,200.
Category Two budgets are subject to a five-year cycle beginning with the first funding year in which you receive Category Two support. However, the budgets can be used as needed, and schools and libraries are not required to use one-fifth of the budget each year.
Your budget is impacted by commitments featuring your school or library, which could be on an application you file or an application filed on your behalf, such as a consortium application.
On the FCC Form 471, each applicant will allocate the cost of the Category Two products and services to the entities sharing them. Each amount allocated to a particular school or library will count against the budget for that school or library.
Remember that your Category Two budget is based on the pre-discount cost of the products and services allocated to your school or library. A change in your E-rate Program discount from year to year does not affect the amount of your Category Two budget, only the amount of the cost that USAC will reimburse.