A Student-Centered E-Rate Program
In his speech today at the American Enterprise Institute, Commissioner Ajit Pai of the Federal 
Communications Commission proposed to establish a student-centered E-Rate program.  His plan 
focuses on five key goals:
1. Simplify the Program
? Schools need to fill out only two forms: an initial application and a report back on how the 
money was spent
? Initial application can be no more than one page
? USF administrator does all the calculations, reducing the burden on schools
? Less red tape means fewer delays, more predictability, and no need to hire consultants
2. Fairer Distribution of Funding
? Allocates E-Rate budget across every school in America; every school board and parent knows 
how much funding is available on day one
? Schools receive money on a per-student basis; funds follow students when they change schools
? Additional funds allocated for schools in rural and/or low-income areas as well as small schools
to account for higher costs and different needs
3. Focus on Next-Generation Technologies for Kids
? Eliminates disincentive to spend money on connecting classrooms
? No more funding for stand-alone telephone service
? Students come first; funding directed only to instructional facilities, rather than non-educational 
buildings like bus garages
? Equal funding for all eligible services; local schools (not Washington) set priorities
4. More Transparency and Accountability
? Creates website where anyone can find out exactly how any school is spending E-Rate funds; 
enables parents, schools boards, press, and public to conduct effective oversight
? School district superintendent or school principal must certify that E-Rate funds were used to 
help students
5. Fiscal Responsibility
? Ends the “more you spend, more you get” phenomenon: Schools given fixed amount of money 
and must contribute at least one dollar for every three E-Rate dollars they receive
? Better incentives, reduced waste, and less red tape allows program to accomplish a lot more with 
the same amount of money; over $1 billion more in first year provided for next-generation 
technology
? Caps overall USF budget before any increase in E-Rate budget; any expansion in E-Rate must be 
accompanied by corresponding cuts elsewhere in USF
Legacy E-Rate Program Student-Centered E-Rate Program
Spending 
Priorities
? Prioritizes voice telephone service, long-
distance calling, cellphone service, and paging 
ahead of connecting classrooms with 
broadband Internet access
? Funding available for non-instructional 
facilities such as bus garages and sports 
stadiums
? Focuses on next-generation services; no funding 
for stand-alone telephony service
? All eligible services treated equally (including 
connecting classrooms); local schools, not 
Washington, should set priorities
? Students come first; funding directed only to 
instructional facilities
Process
? Complicated
? Schools face up to 6 separate forms plus 
outside review by an approved planner
? Schools must spend money on consultants to 
navigate web of rules such as the 28-day rule, 
the 2-in-5 rule, and discount calculations
? Backlog of appeals stretches back a full decade
? Simple
? Only 2 forms required; initial application is only 
one page
? Streamlined rules eliminate need for consultants
? USF Administrator does all the calculations
Funding 
Allocation
? Funding tied to discounts; higher-discount 
schools get more funding overall and funding 
for more services
? Complex rules encourage arbitrage and gaming
? Differences in spending among states and 
within states are largely arbitrary
? >$400 million lost each year due to red tape
? Funding follows the student
? Funding allocated to all schools based on student 
population, adjusted for challenges that schools 
in rural and low-income areas face
? Additional allocation for very small schools and 
schools in remote areas like Alaska
? Much less money lost as a result of red tape 
means more money for students
Financial 
Planning
? Funding available to a school may change 
dramatically from one year to the next
? Funding tied to decisions of every other school 
in the country
? Schools must bid out services before they 
know if funding is available
? Funding not secured until months or even years 
after funding year starts 
? Funding available immediately to all schools, 
independent of decisions made by other schools
? Minimal fluctuations from one year to the next 
allow for long-term financial planning
Fiscal 
Responsibility
? The more you spend, the more you get
? Some schools have little skin in the game by 
receiving up to a 90% discount
? Priority and group-discount rules discourage 
long-term, efficient-scale purchasing
? Cap on E-Rate but not overall Universal 
Service Fund
? Fixed pot of money for each school and 
matching requirement of one dollar for every 
three from E-Rate promotes prudent spending
? Reducing wasteful spending allows the program 
to accomplish a lot more with the same amount 
of money; over $1 billion more provided in first 
year for next-generation technology
? Cap overall Universal Service Fund before any 
increase in E-Rate budget
Transparency 
and 
Accountability
? Funding available to schools not disclosed until 
after the fact
? Parents can’t go online to see precisely how a 
school’s E-Rate funds are being spent; online 
catalog just shows funding for each recipient 
divided into four broad categories
? Relies on complicated rules and federal audits 
and investigations for accountability
? Funding available to schools publicly disclosed 
immediately to enable parents, school boards, 
press, and public to conduct local oversight
? Schools to report online exactly what they’re 
getting for E-Rate dollars; school administrators 
must certify it’s spent on students
? Transparency and local control are key; federal 
oversight a backstop
Relation to 
Libraries
? Libraries receive about 10% of E-Rate funding ? Libraries receive about 10% of E-Rate funding