Category 2 Eligibility and Budget Information for PA Applicants

November 9, 2015

…Bidding Options/Requirements Coming Next…

Category 2 (previously known as Priority 2) is the funding mechanism under the E-rate program designed to fund networking equipment and infrastructure within a school or library building.  Unlike the old P2 structure, all eligible requests that have followed the proper bidding rules will be funded, regardless of E-rate discount, up to a building’s 5-year cap.  There are three important components to applying for C2 funding:

1) Understanding the Category 2 purchasing timeline

2) Knowing what’s eligible
3) Calculating your 5-year C2 E-rate funding caps for each building
4) Understanding the procurement/bidding options and requirements for PA applicants.

This message will cover the C2 purchasing timeline, what’s eligible and the C2 funding caps.  I will send a separate message regarding the bidding options and requirements.  If you are planning to apply for C2 funding for FY 2016, please read these messages carefully.

Attached is a PowerPoint presentation I used for the Category 2 webinar held on Friday, November 6.  I encourage you to review this document.

Category 2 Purchasing/Installation Timeline

Category 2 equipment related to Funding Year 2016 may be purchased/installed between April 1, 2016 – September 30, 2017.  It is unlikely that any Category 2 funding commitment letters will be issued before April 1, so please only make purchases prior to the receipt of your FCDL if you intend to purchase them without E-rate funding.  After the funding is approved, you can then go back and submit a BEAR to seek reimbursement for the E-rate eligible amounts.

Category 2 services, such as MIBS and basic maintenance, are considered recurring services and are only eligible for the 12 months of the actual funding year which is between July 1, 2016 – June 30, 2017.

What is Eligible for Category 2 Funding? 

  • Wireless Access Points/Wireless Controllers
  • Routers
  • Switches
  • Antennas (must be integral to the LAN/WAN)
  • Firewall Equipment
  • Internal Structured Cabling (unless solely dedicated to voice)
  • Caching Servers – (these are the only eligible servers)
  • Racks that house eligible equipment
  • UPS that support eligible equipment
  • Cloud-based functionality of eligible equipment
  • Licenses for eligible equipment (can apply for multi-year license in Year 1 of your contract)
  • Software that supports eligible equipment
  • Limited basic maintenance services for eligible equipment
  • Managed Internal Broadband Services (MIBS) – (see more below)
  • Taxes, surcharges and other similar reasonable charges
  • Shipping charges
  • Training on how to use eligible equipment
  • Installation and configuration (not required to be the equipment vendor)

No voice or video equipment is eligible for Category 2 E-rate funding.

MIBS:  Managed Internal Broadband Services are considered services which cover the 3rd party operation, management, and/or monitoring of a LAN or WLAN.  This new category of service can include managed Wi-Fi, installation, activation, maintenance, initial configuration and on-site training of eligible equipment.  In some arrangements, the applicant will sign a contract with a vendor who would own, manage, operate and maintain the network equipment; or, the applicant will own the equipment, but have a vendor manage it for them.

Calculating Your Category 2 Building Funding Caps
All schools and libraries are eligible to receive Category 2 E-rate funding up to a maximum 5-year pre-discount amount, known as a Category 2 budget.  There are no budget caps for Category 1 services.  Each individual school and each library has a C2 budget; districts and library systems may not average their costs across multiple school or library budgets or move funding from one school to another.  Non-instructional facilities (NIFs) do not have C2 budgets. If central equipment that serves schools is located in a separate non-school building, you may purchase such equipment using C2 funding from the schools served by the equipment and must allocate on the Form 471 the cost of the eligible product to one or more of the entities benefiting from the service.  C2 budgets are subject to a rolling five-year cycle beginning with the first funding year in which you receive C2 support. However, the budgets can be used as needed, and schools and libraries are not required to request all of the funding in a single year.

               Schools:  To calculate the pre-discount C2 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.  Note: If a student attends more than one school (e.g., if the student from one school attends a vocational training school in the afternoons), both schools can count that student for the purpose of calculating their respective budgets.  An example of how three schools would calculate their C2 budgets is shown at the bottom of this message.

               Libraries:  To calculate the pre-discount C2 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 greater than 250,000 have a per square foot budget of $5.00.

A school or library’s C2 budget is based on the enrollment (maximum density of students) of the year in which you apply.  If you received C2 funding in FY 2015, you would subtract the enrollment number from your FY 2015 request from your total enrollment for FY 2016 to determine your remaining C2 budget.  For example, if you receiving C2 funding based on a 200 student enrollment in FY 2015, and your enrollment for FY 2016 is 400 students, your remaining C2 budget would be based on 200 students ($150 * 200 = $30,000).   For new schools, you can estimate the # of students who will attend the school; however, if you overestimate your student count and exceed the five-year pre-discount budget the next funding year, you must return any funds in excess of the allowable budget.

Remember that your Category 2 budget is based on the PRE-DISCOUNT cost of the products and services allocated to your school or library. The applicant will always have to then pay for their non-discounted share of the costs.

Shared equipment:  If a piece of equipment is being shared among two or more buildings, you must use the budgets of the schools or libraries for which the equipment services.  How to allocate those costs is up to you and the Form 471 is expected to give you those options.

Unused commitments:  If you are committed funding, but do not spend the full amount of your commitment, you should file a Form 500 to return the unused commitment to a school’s C2 budget so those funds will be available for use in a future year. 

School School Enrollment Budget Multiplier 5-Year E-rate Budget Cap (Pre-Discount E-rate Discount E-rate 5-Year Funding Cap District Match (30% in this example)
Plainfield Elementary 50 $150 $9,200* 70% $6,440 $2760
Jacksonville Middle School 105 $150 $15,750 70% $11,025 $4725
Newville High School 325 $150 $48,750 70% $34,125 $14,625

* Although 50 x $150 = $7,500, the minimum floor of $9,200 is invoked because school has less than 62 students.

If you have any questions about any information contained in this message, please don’t hesitate to contact me.  The next message will relate to the procurement options and requirements for PA applicants.

– Julie

Julie Tritt Schell

PA E-rate Coordinator

717-730-7133 – o
717-730-9060 – f


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