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FY 2012 E-rate Demand Increases 21.5% to $5.237 Billion
April 25, 2012
~ Priority 2 90% Funding in Jeopardy ~
The SLD has released their FY 2012 funding analysis and demand has increased by a whopping (by 21.5%). Total demand for FY 2012 E-rate funding totals $5.237 billion, with only $2,290,683,250 available for funding. Demand for Priority 1 (telecom and Internet) is $2.444 billion, and demand for Priority 2 at the 90% level is $1.379 billion. For the first time in the program's 15-year history there is not enough funding available to fund even the 90% Priority 2 requests. My analysis of this significant problem is below, as well as a granular look at the nationwide and Pennsylvania data.
1) Nationwide demand for Priority 1 services (telecommunications services and Internet access) is $2.444 billion, an increase of 12.5% from last year. I assume this increase is due to the increased bandwidth needed nationwide for 1:1 initiatives and online assessments, and is likely to continue to grow in subsequent years.
Analysis P1: There will be enough funding available to again cover Priority 1 funding requests (telecommunications services and Internet access) at all discount levels. However, should the demand for Priority 1 services continue to increase by 12% each year, the demand likely will exceed available funding beginning in FY 2013. Therefore I hope the FCC will be spending a considerable amount of time over the next 10 months deciding how to solve this problem, although whether this issue is an agency priority especially in an election year is simply not known. Possible solutions could include removing certain services from the eligible services list, prioritizing certain Priority 1 services (like broadband and Internet), adjusting the discount matrix, finding other funding sources to add to E-rate (although in the past this suggestion has never been popular because it imposes more financial burden on the contributing service providers), etc.
2) Nationwide demand for Priority 2 services (internal connections and basic maintenance of internal connections) is $2.793 billion, an increase of 30.7% from last year. I assume this drastic increase is due to the fact that so many applicants applied for P2 in the hopes that funding would be available to all discount levels as it was in Funding Year 2010 (a decision which was made by the FCC in August 2011).
Analysis P2: Priority 1 demand is $2.444 billion, which is expected to be reduced by $268 million to $2.176 billion due to funding cancellations and denials. The E-rate fund size is currently $2.290 billion. If the FCC rolls over unused funding from prior years to FY 2012 (expected to be around $500 million), available funding will be $2.79 billion. This will leave $114 million available to fund Priority 2 requests. Therefore, I think it's safe to predict that Priority 2 requests at 89% and below stand almost no chance of being funded for FY 2012.
Also, there will be a deficit of $1.265 billion needed to fund Priority 2 requests at the 90% level. Under current E-rate rules, if there is not enough funding to cover an entire discount level, the funding will be distributed on a prorated basis (although the specifics of how that would be done are not spelled out). Using the current figures, this could mean that 90% P2 applicants could receive 8% of their funding requests -- obviously not a viable option. So what happens next? The FCC staff will spend the next few months trying to solve this problem. We have asked the FCC to formally seek comments from the E-rate community or setting forth various proposals to solve this unprecedented problem for which stakeholders would have an opportunity to comment. I will keep you updated as this process moves forward as it is unprecedented, yet a problem that is likely to continue.
3) Nationwide, a total of 46,838 Form 471s were received (2699 more than last year), which included 141,077 FRNs. 98.5% of applications were filed online (same as last year) and 81% of Form 471s were certified online as well (nearly the same as last year).
4) In Pennsylvania, 5632 FRNs were filed (125 less than last year), by 1251 different entities (23 less than last year). In fact, only 5 public school districts did not apply (5 others submitted applications immediately after the deadline for which I believe will be reinstated via an FCC waiver), which represents a non-participation rate of about 1.0% which is one of the lowest in the nation particularly for a state as large as Pennsylvania. Although 5 PA school districts did not apply, each of these districts indirectly receives E-rate funding through their participation in their IU's Regional Wide Area Network E-rate applications. Thus, 100% of PA public school districts participate in E-rate. In 2011, Pennsylvania's non-participation rate was 1.2%, with 1.4% in 2010, 2% in 2009 and 5% in 2008.
5) Pennsylvania applicants have requested $113,494,982, consisting of $67,377,269 in Priority 1 services (a decrease of $4.8 million), and $46,117,713 for priority 2 services/equipment.
6) The nationwide breakdown by service category, compared with FY 2011, is provided below. A more detailed breakdown of the SLD’s demand estimates for FY 2012 is available at: http://apps.fcc.gov/ecfs/document/view?id=7021912271.
FY 2012 FY 2011
Telecommunications Services $1,741,927,741 $1,628,229,642
Internet Access $702,159,621 $544,654,792
Internal Connections $2,468,914,596 $1,862,267,687
Basic Maintenance $323,937,690 $274,790,404
Total Demand $5,236,939,649.95 $4,309,942,527
Julie Tritt Schell
PA E-rate Coordinator
717-730-7133 - o
717-730-9060 - f
jtschell@comcast.net
www.e-ratepa.org
Penn*link
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