FCC adopts five-year budget cycles for C2 starting in FY2021

On December 3, the FCC released a Report and Order regarding E-rate Category Two services.  Below is a brief summary of the draft order.


Briefly, the Commission issued a Notice of Proposed Rulemaking in July of this year, proposing to make the category two budget approach, which is currently in a five-year test period, permanent.  The Order adopts this proposal, along with some additional improvements to the category two budget approach.

Other Highlights:

• New rules begin in FY2021, with the first five-year budget cycle running from FY2021 through FY2025.  All applicants will be on the same five-year budget cycle.
• Applicants can select the highest funding amount from the following three options:
• Receive $167 per student for all students for schools/school districts and $4.50 per square foot for libraries
• Receive minimum of $25,000 per location for each location; or
• For school districts and libraries with under 10 locations, receive a mixture of per student/funding floor as determined by building. 
• MIBS, caching and basic maintenance for internal connections (BMIC) are added permanently to the Eligible Services List.
• The Commission declined to add filtering or other network security services to the ESL. 
• Applicants that transfer equipment between eligible locations no longer must notify USAC of the transfer, but detailed records documenting the transfer and the reason for the transfer must be kept for five years, and applicants must maintain asset and inventory records for ten years after purchase.
• For FY2020, the Order provides an additional 20% of the total pre-discount C2 budget for the current five-year budget cycle for all applicants, regardless of whether they have used any funding.