Schools and Libraries (E-Rate)

FY2019 Application Filing Window Closes at 11:59 PM EDT March 27






FAQs: Category Two (C2) Budgets

Show All Answers

Q1: Does E-rate Program funding received prior to Funding Year (FY) 2015 count against the five-year budget for Category Two (C2) purchases?

A1: No. In FY2015, all schools and libraries are eligible for the full amount of their five-year Category 2 (C2) budgets. The first year that a school or library receives funding for C2 services and/or equipment will be the first year of the five-year period.

Back to top

Q2: How long will the C2 budgets be in effect?

A2: The C2 budgets are in effect for schools and libraries that receive C2 funding for one or more funding years between FY2015 and FY2019. The first year that an eligible school or library receives E-rate Program support for C2 services and/or equipment will be the first year of its five-year funding cycle for its C2 budget.

Back to top

Q3: The cost to update the network and maintain the eligible equipment exceeds my budget. If I spend more than my budget will that affect my E-rate Program request?

A3: No. Although the C2 request limits what the E-rate Program will reimburse, you can spend more than your C2 budget as long as you pay for those additional products and services using non-E-rate funds.

Back to top

Q4: Are contracts for managed internal broadband services limited to $30 per student (or a fifth of the per square foot library budget) each year?

A4: No. You can decide how to spend your Category Two (C2) budget. You can, for example, choose to spread your C2 budget evenly over five years, or you can spend your entire C2 budget in the first year, regardless of the C2 service type. Remember that if you have a multi-year contract, you can only receive reimbursement for the portion of the contract that is delivered during the funding year. You will have to request E-rate Program funding for each year of a multi-year contract.

Back to top

Q5: What happens if my plans change and I can't use all of the Category Two funding committed in a year? Can I reduce or cancel funding that USAC has already approved for the current funding year to "free up" money in its budget for the next funding year's requests?

A5: Yes. If you find that you will not spend the entire amount of C2 funding that USAC has committed in a particular funding year, you can file an FCC Form 500 to return unused funds. School districts and library systems may need to provide additional information so that you and USAC are in agreement about the impact on a particular school or library outlet's five-year budget.

Back to top

Q6: How do I indicate which products or services should be counted against which budgets?

A6: In the FCC Form 471, you will indicate which school or library is getting the products and services in a Funding Request Number (FRN). For C2 FRNs, you will list the entities sharing that service and then indicate how much of the FRN line item costs should be allocated to each school or library. A single FRN line item for the same product or service can include multiple schools or libraries, each with their own cost allocation.

Back to top

Q7: Can school districts or library systems shift funds or average costs between their schools and libraries?

A7: No. C2 funding must be spent for the specific school or library for which they are allotted. These funds cannot be shifted or averaged across your school district or library system.

Back to top

Q9: Are the service substitution requirements - which permit applicants to replace an approved purchase with a similar purchase, under limited conditions - still in effect?

A9: Yes. If you need to request a service substitution, remember to follow the guidance on USAC's website to request approval for such substitution requests.

Back to top

Non-Instructional Facilities (NIFs)

Q10: How does a tech center that houses internal connections equipment, like a central switch, get C2 support?

A10: Although NIFs do not get C2 budgets of their own, to the extent that a NIF houses a piece of shared equipment that is essential to connecting a school's or library's network to the internet, the cost of that equipment can be allocated among the budgets of the schools or libraries that are sharing that piece of equipment.

If the equipment is also used by the NIF itself, then an appropriate portion of the cost must be allocated to the ineligible NIF and removed from the funding request. When completing your application, if you have shared equipment that is located in a NIF, you must indicate in the "Narrative" section of the funding request in which NIF the piece of equipment is located.

Back to top

Q11:Are NIFs with classrooms eligible for a C2 budget?

A11: No. Starting in FY2015, there is no longer a distinction between NIFs and NIFs with classrooms, since all entities within in a school district qualify for the same, single discount rate and NIFs are not eligible for their own C2 budget.

Back to top

Q12: Are residential facilities of a school eligible for a C2 budget?

A12: No, residential facilities are not eligible for a separate C2 budget. If, however, the residential facility is eligible for E-rate Program funding because it serves unique populations as set out in paragraph 31 of the Sixth Report and Order , the cost of the internal connections, basic maintenance of internal connections or managed internal broadband services for the dormitory can come from the associated school's C2 budget.

Back to top


Q13: Can a school's budget change from year to year?

A13: Yes, a school's C2 budget is based on the school's student count, and therefore it can increase or decrease year to year.

Back to top

Q14: How do I count part-time students?

A14: Schools may count part-time students for the purposes of determining the school's C2 budget. However, schools should include part-time students in their student count only when doing so regularly increases the maximum number of students on the school premises at the same time during the school day. For example, a vocational school that has 100 students in the morning and 100 different students in the afternoon should report a student count of 100. However, students attending after-school activities or after-school events cannot be included in the student counts.

Back to top

Q15. How do I count virtual students?

A15: Students who attend a virtual class that originates at a school, but who are not on the school premises, cannot be counted in that school's student count for the purposes of C2 budgets.

Back to top

Q16. What types of documentation should I have in order to validate a regular increase in enrollment due to part-time students?

A16: Acceptable third-party documentation of full- and part-time students can include, for example, an official state report or state website indicating the total numbers of full and part-time students, or other types of documentation held by the school or school district that will help ensure a timely review of the indicated student counts.

Back to top

Q17. What happens if I spend my school's entire C2 budget and then my student population decreases in a subsequent year? Do I have to return any funding?

A17: No, schools with decreasing student counts do not have to repay funding received in prior years in excess of the current year's budget. There is an exception, however, for new schools, as discussed immediately below.

Back to top

Q18. How should new schools determine their C2 budgets before they have enrolled students?

A18: If you are applying for a new school that has not yet opened, you can determine your C2 budget based on an estimate of the number of students that will attend that school in the upcoming funding year. However, in order to decrease the incentive for schools to overestimate student counts to obtain more funding, these schools will be required to repay USAC in the subsequent funding year for any E-rate Program support received in excess of the available budget based on the actual student enrollment. The school should report the actual student count to USAC within the year. USAC will follow up with the schools to determine their actual student enrollment counts and will seek recovery of funds if necessary.

Back to top

Q19. If a new school estimates that it will have 1,000 students in FY2015, but only 800 enroll, what happens?

A19: A new school may request C2 services based on the estimate of 1,000 students, but it will have to repay any support received in excess of available funding based on actual enrollment.

Funding Year

Student Count

Five-year Pre-discount Budget

Five-year Post-discount Amount

2015 (Estimate)


1,000 * $150 = $150,000 

$150,000 * 50% = $75,000 

2015 (Actual)


800 * $150 = $120,000 

$120,000 * 50% = $60,000 

For the example above, the school would have to return any committed support above $60,000, which is the C2 post-discount amount based on the actual student population. If the school requested and received commitments for their entire C2 budget based on the estimated student population ($75,000), USAC would then rescind commitments for the difference between the actual and the estimated budget amounts, which in this case would be $15,000.

Back to top


Q20. Can a library's budget change from year to year?

A20: Yes, a library's C2 budget is based on the library's square footage. If a library increases its square footage, its budget can increase.

Back to top

Q21. How should a library determine its square footage for purposes of determining its C2 budget? Can it include outdoor spaces that get Wi-Fi service?

A21: To determine a library outlet's C2 budget, add up the total square footage for all floors occupied by the library outlet and enclosed by the outer walls of the library outlet, including those areas off-limits to the public. This is the same floor area collected by the Institute of Museum and Library Services (IMLS) annually. Libraries cannot include patios or other outdoor spaces such as parking lots unless they are enclosed by the outer walls of the library.

Back to top

Q22. How should libraries count the square footage of bookmobiles?

A22: They should be counted like any other outlet - count the area enclosed by the outer walls of the bookmobile. Generally, bookmobiles would qualify for the funding floor.

Back to top