Now that you understand how to calculate your E-rate Program discount levels, we’ll move on to a topic that always generates a lot of questions – Category Two budgets.

Category Two services include internal connections, managed internal broadband services, and basic maintenance of internal connections. E-rate funding for Category Two services is provided for a five-year period, starting with the first year after FY2014 that you receive funding for any Category Two services.

The full-price cost of products/services that’s eligible for E-rate funding during this five-year period is called the school or library’s “Category Two budget.” A school/library can spend its budget during the five-year period any way they’d like: spend it all in the first year on a major infrastructure investment, spend an equal amount every year, or use it over several of the five years.

Even though your budget covers a five-year period, the amount available in your budget is re-calculated every year based on the number of students (for schools) or square footage (for libraries) for that year (minus any amount you already spent in the five-year period).

Unlike funding for Category One services, a Category Two budget must be spent by the specific school/library it was calculated for. The funds cannot be shifted or averaged across school districts or library systems.

If you’ve applied to the program before, you may be wondering about the “Two in Five” rule. The Two in Five Rule has been suspended the time that five-year Category Two budgets are in place.

What’s my budget?

Your Category Two budget is calculated based on the number of students (for schools) or the square footage (for libraries).

A school budget is $150 per student for the five-year period. In general, a library budget is $2.30 per square foot for the five-year period. However, libraries in urban centers tend to be smaller but still serve a large population, so the budget for an urban library (with an IMLS locale code of 11, 12, or 21) is $5 per square foot.

Category Two budgets are pre-discount, which means they are compared to the full-price cost of the products/services (not the discounted cost). And, there is a $9,200 pre-discount funding floor to ensure each school and library gets enough funding for the five-year period.

Examples of budget calculations

Remember that both your Category Two budget and your Category Two discount level can change from year to year. Here are some examples of school and library Category Two budget calculations:

Example #1: School
# of students in school x $150 = Your five-year Category Two budget
5,063 students x $150 = $759,450
$759,450 is the pre-discount (full price) cost of the products and services that you can receive E-rate program funding for over your five-year period.

Example #2: Small school
# of students in school x $150 = Your five-year Category Two budget
45 students x $150 = $6,750 –> $9,200
The school’s budget is automatically raised to the Category Two budget floor of $9,200.

Example #3: Urban library (with IMLS locale code of 11, 12, or 21)
# of square feet in library x $5 = Your five-year Category Two budget
2,505 ft² x $5 = $12,525
$12,525 is the pre-discount (full price) cost of the products and services that you can receive E-rate program funding for over your five-year period.

Example #4: Small urban library (with IMLS locale code of 11, 12, or 21)
# of square feet in library x $5 = Your five-year Category Two budget
1,500 ft² x $5 = $7,500 –> 9,200
The library’s budget is automatically raised to the Category Two budget floor of $9,200.

Example #5: Most libraries  (all other IMLS locale codes)
# of square feet in library x $2.30 = Your five-year Category Two budget
6,088 ft² x $2.30 = $14,002.40
$14,002.40 is the pre-discount (full price) cost of the products and services that you can receive E-rate program funding for over your five-year period.

Example #6: Most small libraries
# of square feet in library x $2.30 = Your five-year Category Two budget
3,800 ft² x $2.30 = $8,740 –> $9,200
The library’s budget is automatically raised to the Category Two budget floor of $9,200.

Add a locale code

To classify your library as urban, update the locale code in your library’s E-rate Productivity Center profile. To access the profile, log into EPC and select “Manage Organizations” from the top menu (or under “Related Actions” on the left-menu). Select the library, then scroll down to “Library Information” and update the “Locale Code” field. Any full- or partial-rights EPC user can update the IMLS locale code.

Don’t know what your IMLS locale code is? You can look it up by visiting the IMLS Public Library Survey page and downloading the latest survey results. To access the most recent file, click on the FY2013 XLS link (which is a ZIP file), then choose “Puout13a” to get the file with the library branch detail. Locate your library in the results, and look at its classification under the “locale” column.

If your library branch is not listed, call the IMLS or your State Library and ask them for your IMLS locale code.

See your budget and its balance

If Funding Year 2016 (which you’re applying for now and which starts July 1, 2016) is the first year of your five-year Category Two budget period, you can see your budget in the E-rate Productivity Center (EPC) using the instructions below.

If you started your five-year budget last year in Funding Year 2015 (which began July 1, 2015, and ends on June 30, 2016), looking up your budget is more complicated. After you view your FY2016 Category Two budget in EPC you must manually subtract the amount you already spent over the last year to know how much of your budget is left in the five-year period. You can see the amount you spent in FY2015 by using the FY2015 Category Two Budget Tool.

Do not subtract funds your school/library spent in FY2014 (or earlier) from your five-year budget; five-year budgets did not exist before FY2015.

To see your Category Two budget:

1. Log into the E-rate Productivity Center (EPC)
2. On your landing page, select the name of the school/library
3. Select “Category Two Budget” from the left-hand menu
   1. Your FY2016 Category Two budget will appear
   2. For more detail, press the “Show Allocation Breakdown” button
4. If you used part of your Category Two budget in FY2015,
   1. Use your entity number to look up commitments from FY2015 using the Category Two Budget Lookup tool
   2. Identify the FY2015 commitment amount for your Category Two budget
   3. Manually subtract the FY2015 commitment amount (step 4b) from your FY2016 Category Two budget that appears in EPC (step 3a) to find amount remaining in your budget

Use it or lose it

Category Two budgets follow a “use it or lose it” system. If you don’t use your full five-year budget by the end of the five-year period, you cannot carry it over to the next five-year period.

Webinar Recording: Category Two Budgets (25:26 minutes)

In the next post, we’ll cover some specifics about inputs to Category Two budget calculations, like what areas libraries can include in their total square footage, and how to determine total student count. In the meantime, you can visit the Category Two Budgets FAQ page on our website for more information.

 

Editor’s note: If you submitted FCC Form 470 on the same day we wrote about it on the blog (March 3), then at this point you’ll be in the 28-day waiting period. During the 28-day period, we’re covering general information about program rules and topics that are important to know about. We’ll begin posting about FCC Form 471, the funding request form, starting the week of April 4.