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Thursday, July 24, 2014

Meet the new rule, worse than the old rule

Oh, now I get it.  The 7th Report & Order is out, and I'm still working my way through it, and I think I finally understand what they mean when they say you have a 5-year budget for "Category 2" (née Priority 2) expenses.  I thought you'd apply in 2015, get your $150/student, then spend it any time in the next 5 years.  I was wrong.

If I'm reading the order right, if you apply for any C2 funding in FY 2015 or 2016, then you have a total of $150/student (or $2.30/sq.ft. for libraries) to spend over the next 5 years.  Whenever you need some C2 equipment, you apply, and if you're approved, the cost of that equipment is deducted from your $150/student budget, and if there's money left, you can apply for C2 again next year.  There's a good example at the end of paragraph 105.  And you're exempt from the 2-in-5 Rule, at least for the next 5 years.  Let's call the new rule "the $150-in-5 Rule" (sorry, libraries).

Rationing C2 money is just bad thinking.  If your incentive is encouraging applicants to spend too much, cut your incentive.  But you know what?  $150-in-5 could be better than 2-in-5.  Except for the bookkeeping nightmare.  And applying the cap to individual schools makes the bookkeeping much worse.  Instead of keeping track of whether a particular location has gotten funding in the last 5 years, you have to keep of how much money that location has gotten.  And I guess consortia have to keep track of every location of every member.  That's not simplifying the process.

But it gets worse.  Much worse.

First of all, what about the district's WLAN controller?  You're not going to put a controller in each building; you'll get one or two for the whole district.  Let's say you decide to buy a new WLAN controller and a new Internet router for the district.  So you plunk down $48,000 for the WLAN controller and $12,000 for the router to cover your 10 schools, the district office and a maintenance garage.  Well, it looks like you're supposed to divide the cost of the locations, so you allocate $5,000/location; the schools' cost is eligible for E-Rate funding.  If you're a 90% district, you'll get 85% of that $5,000, or $4,250/school, for a total of $42,500.  And then for each school you'll have to keep track of that number to see how much you have left on your $150/student allotment.  And if one of your schools has fewer than 29 students, or has used some of its cap elsewhere, then you wouldn't get the full discount for that school.

But wait a minute, the maintenance garage has one computer connected to the Internet, but doesn't have a wireless access point, so now we allocate the $48,000 across 11 locations since the WLAN controller doesn't serve the garage, but the $12,000 router covers 12 locations, so now the pre-discount amount allotted to each school is $48,000/11+$12,000/12=$5,363.64.  And then after 2 years, the maintenance crews get tablets [yes, they will] and they need Wi-Fi in the garage, so you install an access point.  Oh, crap, now you have to give money back because the schools got funding based on a 1/11 share, and now they're only using a 1/12 share.  If you're head's not ready to explode yet, think about the math when your statewide network upgrades equipment at the core.  Suddenly the budget calculations of every district in the state are affected by whether I connect my maintenance garage to the Internet.

Second, what about changing enrollments?  OK, paragraph 115 covers that.  The good news: if enrollment at a school drops, you don't have to give the money back.  [Got a school closing in the next couple of years?  Think of it as a Wi-Fi equipment factory.]  More good news: students that split time between districts (think vo-tech) can be double-counted.  The bad news is for new charter schools.  A new charter high school will frequently start up with just the 9th-grade class, then the next year accept a new 9th-grade class, and so on.  It takes 4 years to reach full enrollment.  Under this plan, they'd have to install their Wi-Fi infrastructure in 4 stages.  That's costly and disruptive.  And they have to make a guess about the availability of C2 funding in 4 years when they're planning the network.  What if I have a school with 500 kids and I get my $75,000 in FY 2015, and then my enrollment climbs to 600 by FY 2017.  Am I eligible for another $15,000?  Not screwy enough for you?  How about this: a district is opening a new school in FY 2017.  The district is allowed to estimate how many kids will be transferred into the new school, but those kids were already counted in in calculating the cap for the existing schools they were crowded into in FY 2015.  If it's a replacement school, the district will get $150 for each student for both the new school and the old school, and then just tear the equipment out of the closing school and distribute it around the district as needed.

Third, not every school's needs are the same.
  • How much Wi-Fi does a pre-school with 200 kids need?  Just pay your cable company $200/month and they'll throw in a wireless access point; whatever district resources they need, they can get over the Web.  Maybe you need to put a second WAP at the far end of the building; splurge and buy 802.11n, though 802.11g would be more than enough.  Total cost?  $125 for the WAP, $200 for the cable run.
  • How much Wi-Fi does a 200-student technology charter high school need?  Each kid will have a school-supplied device and a BYOD, so you'd better have at least 10 WAPs, and you're going to need some other drops in each classroom, so you're looking at a 48-port switch (and since you'll want 802.11ac WAPs, you'll need 10 Gbps ports on that switch), and those kids change classrooms every 40 minutes, so you'll need a WLAN controller.  And you'll need access to the district WAN, so you'll have to install a router.  With cabling and installation, we're over $40,000.  And we haven't yet installed a lab for these kids to work on technology yet.
  • How much will E-Rate support in those locations?  $30,000 over 5 years.
Why would they do all this?  Why?  Actually the order tells us why, starting in paragraph 108:
  1. "greater predictability"
  2. "this approach maintains the E-rate program’s priority for the highest poverty schools and libraries...  At the same time, this approach guarantees a broader distribution of funding for internal connections..."
  3. " promotes cost-effective purchasing"
To which I say:
  1. What predictability?  I am pretty confident that all 90% applicants (or should I call them 85% applicants or 90%/85% applicants, or 90%/85%/70%-50%-30%-10%-0% applicants to include their voice discount) who choose to apply in the next 2 years will receive C2 funding.  I'm not so confident for 80% (80%/80%/60%-40%-20%-0%?) applicants.  40% (40%/40%/...forget it) applicants?  Don't waste your time.  And even for 90% applicants, there is confidence of funding for the next 2 years, but after that, it's dicey.  C2 is still a lower priority than C1, and once we've spent this one-time $2 billion leverage, where will the funding come from?  Savings?  Spare me.
  2. I don't feel like I need to rebut this; the two sentences I quoted rebut each other.
  3. My favorite part of the order so far.  The text says that setting a budget for C2 funding will keep applicants from choosing more expensive C1 options, and then the footnote has comments which all say that limiting C2 funding causes applicants to choose more expensive C1 options.  Setting a 5-year budget of $150/student, but then not providing enough funding to support that, is worse than the 2-in-5 Rule: applicants will overbuy right now, then try to shove as much functionality as possible into C1 in the future.
The $150-in-5 Rule would be a little better than the 2-in-5 Rule if the Commission made 2 changes:
  1. Guarantee at least $5.5 billion for C2 over the next 5 years.
  2. Make the $150/student-$2.30/sq.ft. budget apply to organizations (billed entities), not locations.  Take total enrollment per district and total square feet per library system.  It drastically simplifies things, and removes the stupid idea that a pre-school needs as much Wi-Fi coverage as a high school.  And stops student-transfer shenanigans.  Also, with the per-district discount, there is now no reason for the complicated equipment transfer rules.
Note I said "better than the 2-in-5 Rule."  Not good, just better than one of the worst rules in the program.  As it stands now, $150-in-5 is worse than 2-in-5.  Astounding.

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