How to Allocate C2 Budgets/Complete the Form 471 for Shared Equipment

March 11, 2020

~ What to do if a school doesn’t have enough C2 funding remaining ~
~ Form 471 Example screenshots attached ~ 

If a piece of Category 2 equipment is utilized by two or more schools/libraries (called ‘shared equipment’), the cost of the equipment must be allocated from the C2 budgets of the entities sharing the equipment – regardless of where the equipment is physically located.  Core switches, firewalls, and wireless controllers are good examples of shared equipment.  After you enter the costs in the FRN Line Item and identify the schools utilizing the equipment, the 471 will ask “Are the costs shared equally among all of the entities?”.   How you answer this question is important!

• If you answer “Yes,” the system will split the costs of this line item equally among the recipients identified.  For example, if the equipment costs $30,000 and there are 3 schools sharing the equipment, the system will take $10,000 from each school’s C2 budget.  This is usually not the method that most applicants will want to choose, even though it’s very tempting to click “Yes” and let the system do the math for you.

• You may want to answer “No,” and use a weighted allocation, performing the math offline.  Note:  A cost allocation methodology (where different costs are formulaically allocated to different schools’ C2 budgets) can only be done for a piece of equipment that is shared by two or more entities.  You can’t do a weighted allocation if equipment is site-specific (just being used by a single school).

• This won’t be an issue for FY 2021 when the C2 budgets become district-based.

Weighted Allocation Options

You are free to develop your own cost allocation methodology but the formula must be defendable.  This could be an allocation based on a % of enrollment, % of usage, % of total users (not just students), etc.  Whichever method you choose, keep your calculations so you can easily show your math to USAC or an auditor.

The most common method of weighted allocation is by % of users.  Here are the steps and an example:

• Take total users for all schools being served by the shared equipment.
• Divide # of users by total # of users to obtain % users for that school.
• Multiply school % users by total cost of equipment.

How to Handle Schools with Too Little (or no) Remaining Category 2 Budgets

As I’ve said previously, never ever request more funding than is available in a school’s C2 budget.  If you find that a school with no remaining C2 budget will be sharing a piece of equipment, the best thing to do is list the total amount of the equipment, then list the amount that is over the C2 budget as ineligible.  Then allocate the remaining eligible amount to the schools sharing the equipment, according to your cost allocation calculations (or an equal allocation).  Do not include schools with no C2 budget remaining as Recipients of Service.

In this example, if a district’s discount is 50%, E-rate will pay $11,600 (50% of $23,200) and the District will be responsible for the other 50%, plus 100% of the ineligible amount ($11,600 + $6800 = $18,400).  Only Boone and Franklin schools would be included as Recipients of Service because they have some C2 funding remaining.

Note:  In the December 2019 Order, the FCC made it clear that a proportional share of the cost must be deducted to account for any NIF (Non-Instructional Facility) usage.  The example above includes a NIF (the Admin Building) to illustrate the math.  Obviously, this would not be possible if the formula is based on enrollment, so I used a “user-based” weighted cost allocation instead.

To help guide you through the Form 471 relative to cost allocations for shared equipment, attached are screenshots using the above example.

If you have any questions about cost allocations for shared equipment, please let me know!

– Julie

Julie Tritt Schell
Pennsylvania E-rate Coordinator
717-730-7133 – o
jtschell@comcast.net
www.e-ratepa.org