The short summary is that a full budget refresh will happen in 2021 with district-wide budgets. For 2020, there will be additional funding available. Five-year per-site budgets for 2020 will have a 20% increase – essentially adding a 6^th year to the current five-year cycle. School districts with the unspent budget from the past 5 years, add that to the 20% this year. The line has been drawn in the sand making this year a “use it or lose it” year. If your district has leftover budget, you now have extra incentive to put it all to good use.

One way to look at the program is that we are now in year six of a six-year budget, and there will be even more funding available next year. There is funding available this year that is use-it-or-lose-it, plus more funding next year that can be spent over the course of several years. Now is the time to be strategic in developing a network path for your district that makes sense, with the current year budget, transitioning into the new budget coming next year. 

SUMMARY OF C2 BUDGET ANNOUNCEMENT

On December 3, 2019, the Federal Communications Commission issued a Report and Order making significant changes to E-rate rules for Category Two funding applications.  The highly-anticipated Order adopts a permanent Category Two budget system for all applicants and establishes streamlined Category Two rules which will take effect starting in Funding Year 2021.  The Order also extends the “test period” rules used during Funding Years 2015-2019 for a final year while increasing all applicant budgets by 20% for Funding Year 2020.

Highlights from the Order

Rules starting in Funding Year 2021

• All applicant budgets will be reset
• The program will adopt “fixed” five-year budget cycles
• Category Two budgets will be calculated on a school district or library system basis
• The per-site funding “floor” will be increased from $9,200 per site to $25,000 
• Category Two budgets will be calculated as an inflation-adjusted $167 pre-student for schools and $4.50 per square foot for all libraries (both rural and urban)
• Equipment transfer rules will be eliminated
• A new budget cycle will begin in subsequent five-year periods (e.g. FY2026) with no rollover of funds from cycle-to-cycle

Rules for Funding Year 2020

• The eligibility of caching equipment and services, Basic Maintenance of Internal Connections, and Managed Internal Broadband Services will be retained, with no new services added to the program’s Eligible Services List
• Category Two budgets will be calculated using the same per-site methodology used in FY2015-2019.
• All applicants’ site budgets will be increased by 20% (i.e. one-fifth of the maximum FY2020 C2 budget) for FY2020
• Applicants can seek C2 discounts up to each site’s maximum budget amount, less any amount utilized in the initial five-year period
• All C2 site budgets will expire at the end of FY2020 and will not carry over to FY2021

Here is the full Report and Order.