New Category 2 Budget Calculations for FY 2021

September 2, 2020

Attached: PA C2 Budget Calculations 9-1-2020

~ Starting C2 budgets for all PA applicants is attached ~

Beginning in Funding Year 2021, the new Category 2 rules go into effect and all applicants will start fresh with a new, 5-year C2 pre-discount budget.  Below is a summary of the changes and attached is a list containing each applicant’s 5-year, C2 pre-discount budget under the new rules (please read the message below to understand how the budgets are calculated).

  • C2 budgets will be on a fixed, 5-year cycle and applicants can use their C2 budget during any of those 5 funding years.  The next C2 cycle will be FY 2021 – 2025.   Any C2 budgets not used at the end of the cycle will not carry forward to the next C2 budget cycle (which will be FY 2026 – FY 2030).
  • Different budget calculation options depending on entity size.  Larger entities (10 or more schools/libraries) will have two options and smaller entities will have the same two options plus a hybrid option to potentially provide a higher C2 budget.  See below for details on all of these budget calculation options.
  • C2 budget multipliers and the funding floor (minimum building budget) will be set by the FCC at the beginning of each 5-year budget cycle and apply to the entire cycle (no yearly adjustments for inflation).  For the FY 2021 – FY 2025 cycle the multiplier and funding floor have been set as follows:
  • School multiplier is $167.00 per student.
  • Library multiplier is $4.50 per square foot for all libraries, regardless of IMLS locale code.
  • Funding floor is $25,000.
  • C2 budgets are calculated at the school district or library system level, with no more individual school or library building C2 budget caps.  This means school districts and library systems can use their C2 budgets to purchase equipment/services for whichever schools/libraries they need to.
  • C2 budgets are set at the beginning of the cycle, using the enrollment in EPC for FY 2021.  However, if enrollment or library square footage increases in future years, applicants have the option to “recalculate” their C2 budget with the higher figures, thus giving them a higher C2 budget.  Applicants must validate their student counts or library square footage in the first year they apply for C2 funding in the relevant 5-year budget cycle.  If enrollment decreases, the C2 budget will not decrease.  However, schools will continue to be required to update their enrollment/NSLP data each year for discount calculations purposes.
  • New school construction: School districts with buildings under construction are no longer permitted to estimate the number of students for those buildings because those students will otherwise be counted in the district-wide enrollment data.  An independent school (not part of a district), such as a charter school or private school, that is adding a new school will be allowed to estimate its enrollment in order to request funding while construction is underway.
  • Equipment purchased beginning in FY 2021 may be transferred between buildings.  If equipment is transferred between buildings within 5 years from date of purchase, applicants must update their asset inventory and record reason and date of transfer.  No notice to USAC is required.  There is no change to the rule which allows equipment to be disposed of, sold, transferred, etc. from 5 years from the date of installation.
  • Reminder:  C2 budgets remain PRE-DISCOUNT budgets, meaning your E-rate discount will then apply.  For example, if your 5-year pre-discount budget is $300,000 and your E-rate discount is 50%, you are eligible for E-rate funding up to $150,000, not the full $300,000.

How to Calculate Your 5-year C2 Budget
Depending on your entity type and size, there are different options to calculating your available C2 budget as follows:

  • School District with 11 or more schools:  Greater of these two options:  1) district enrollment X $167, OR 2) Number of schools X $25,000.
  • Library System with 11 or more libraries:  Greater of these two options:  1) total square footage of the library branches in the library system X  $4.50, OR 2) # of library branches in the library system X $25,000.
  • School Districts and Library Systems with 10 or fewer schools/libraries (USAC calls these ‘child entities’) have a third “hybrid” option.  The hybrid method allows these smaller entities to calculate their C2 budgets on a per-site (per school/library) basis using the greater of either the $25,000 funding floor and the budget multiplier, then adding up each school/library’s individual school budgets to obtain the district-wide/system wide C2 budget.  (Hint: a school with fewer than 150 students would want to use the $25,000 funding floor for that school instead of the $167/student.  Likewise, a library branch with less than 5,556 square feet would want to use the $25,000 funding floor instead of the $4.50/sq ft.)
  • Single School:  School enrollment X $167, OR $25,000, whichever is greater.
  • Single Library:  Square footage X $4.50, OR $25,000, whichever is greater.

USAC Category 2 Budget Tracker

USAC has a great new C2 budget tool that calculates the total amount of C2 funding available (no funding has been “used” thus far), using the most advantageous budget calculation option for each entity type.  In future years, the tool will track each entity’s C2 budget, including amounts pending and committed, and remaining budgets.  The tool is available in USAC’s Open Data platform:  To see specific data, use the simple Filters on the right toolbar (be sure to click ‘Apply’ after selecting your filter).  Then click ‘Export’ to download the results into Excel.

Attached is the entire database of PA schools and libraries taken from the USAC C2 Budget Tracker, showing their Category 2 budgets as of 9/1/2020.  These amounts will change as entities update their enrollments when the Admin Window opens in a few months.  But for now, it will give you a good sense of what your 5-year pre-discount budget will be so you can begin making plans.  Note:  I especially appreciate that the USAC C2 Tool provides the # of buildings and the “C2 Budget Algorithm” used to calculate the C2 budget, meaning which budget calculation method was determined by the system to be the most advantageous.  I also love that it will include “pending” C2 funding requests so we can monitor in real time when an applicant has requested funding in excess of their available C2 budget.

If you have any questions about the new Category 2 budget rules, please let me know.  I will be scheduling a C2-specific webinar this fall to go over all of these changes as well as to provide an overview of what’s eligible for C2 and the C2 bidding options/requirements.

– Julie

Julie Tritt Schell
Pennsylvania E-rate Coordinator
717-730-7133 – o

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