P. O. BOX 2120
July 31, 1998


TO: Division Superintendents
FROM: Paul D. Stapleton
Superintendent of Public Instruction
SUBJECT: Universal Service (E-Rate) Update

  The federal Universal Service program to provide discounts
  on all telecommunications services, Internet access and
  internal wiring is continuing to move forward. There have
  been several recent developments in the program which
  warrant this update. Please share this information with the
  appropriate staff in your school division.

  E-Rate was established with passage of the
  Telecommunications Act of 1996 and implemented under
  regulations set forth by the Federal Communications
  Commission (FCC). The regulations call for schools,
  libraries and rural health care institutions to apply for
  discounts of 20 to 90 percent on all eligible services.
  Discounts are dependant on  applicants' poverty level and
  location. During the past year five changes have been made
  in the E-Rate regulations.

  The most recent E-Rate regulations, the FCC Fifth Order on
  Reconsideration, significantly changed the funding priority
  for applicants as well as the funding cycle. The FCC
  mandated that all eligible applicants that submitted
  properly completed forms 471 on or before April 15, 1998,
  would receive full discounts for telecommunications services
  and Internet access which, in some cases, are retroactive to
  January 1, 1998. Internal wiring will be funded on a
  priority basis with the highest percentage discount
  applicants funded first. This means that applications
  submitted after April 15 will NOT receive discount funding
  during the first cycle. In the same order, the FCC changed
  the funding cycle from a calendar year to a fiscal year
  ending June 30. This change will be accomplished by
  extending the 1998 funding year by six months to June 30,
  1999. Average monthly payments for telecommunications
  service and Internet access are to continue for the first
  six months of 1999 for all applicants granted funding during
  this past filing period, according to the new regulations. A
  new filing date for fiscal 1999 has been set for October 1,
  1998. More information on the new application process will
  be forthcoming from the Department of Education.

  On July 16, 1998, Ira Fishman, CEO of the Schools and
  Libraries Corporation that administers the E-Rate program,
  testified before the Senate Commerce Committee on program
  issues. During the hearing, it was revealed that only 62
  percent of E-Rate applications from schools and libraries
  have been processed to date. Mr. Fishman indicated that he
  did not expect funding commitment letters to be issued to
  eligible schools before early fall. Discount funding will
  not be available until sometime after the commitment letters
  are issued.

  At the request of the Schools and Libraries Corporation
  (SLC), the Department of Education has provided the SLC a
  list of the number of students eligible for free or reduced
  lunches.  This list may or may not correlate with the
  discount percentage from individual schools or school
  divisions and will be used as a guide by the SLC to aid in
  verifying discount percentages.  Applicants will not be
  refused funding because of discrepancies in discount
  percentage, but may be asked by the SLC to verify discount

  For questions on the program or help with specific
  applications contact Greg Weisiger at (804) 692-0335.