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Monday, June 11, 2007

2-in-5 is 0-2

So the 2-signature/2-date rule has been killed, the 30% rule has been eviscerated. It's time to turn to another bad rule: the 2-in-5 rule. This rule has to go for 4 reasons:
1) it adds complexity
2) it isn't fair
3) it isn't working
4) it encourages waste

The complexity issue is obvious. Priority Two funding has always been tricky, because if you wanted to do a phone system upgrade in say, August 2008, the right time to apply would be for the 2007-2008 funding year. That way you might have approval before installation. If your district is not all 90% schools, you also have to get into guessing where the denial threshold will be and decide whether to include 80% schools in your request. Now along comes the 2-in-5 rule, which means you really should think about doing a data network upgrade at the same time and keep track of any upgrades that were done in any of the buildings in the last 5 years.

The rule is unfair to small applicants. You know who really gets killed? Charter schools. Generally, they only have one building, their budgets are very stretched, and they're generally starting with buildings that have no infrastructure. It's not easy for them to come up with even the 10% to cover their costs (plus training, support, etc.). So the best thing for them would be to buy a cheap wireless data network the fist year, then a phone system the second year, then wired data the next, then maybe video distribution, etc. But because of the 2-in-5 rule, they have to do everything at once. The effect is to decrease the availability of E-Rate funding.

The 2-in-5 rule was supposed to restrain to buying of the 90% applicants and spread the money around, allowing applicants with lower discount levels to get equipment funding. It's been a failure. For 2006-2007, only applicants with discounts at 86% or above got Priority Two funding. That's the highest since 2001, and second highest ever. The demand numbers for Internal Connections have not dropped, and 2007-2008 looks just as high. It isn't working.

Why isn't it working? Because applicants have adjusted their cost-benefit analyses. Normally, the prudent approach for an applicant would be to install/upgrade/repair systems as needed. There is not much point in future-proofing data or voice systems (except cabling), because the same equipment will be less expensive in the future when you actually need it. But because of the 2-in-5 rule, applicants are now thinking: "Since I'm putting in a PBX in this building this year, it is prudent to think of everything that might need to be replaced in the next 3 years, and buy it now." Rather than thinking about what they need now, applicants are thinking about what they might need 3 years from now.

The 2-in-5 rule encourages applicants to install or replace systems before it's really necessary. A district trying to be prudent might have had a 4-year replacement cycle on their email server, and a 5-year replacement cycle on data network switches. The 2-in-5 rule forces them to choose between a 3-year or a 6-year replacement cycle. Six years is too long, so they have to go down to a 3-year cycle.

The 2-in-5 rule needs to go. Which is too bad, because the SLD had made such a nice little tool for calculating 2-in-5 issues.

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