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Friday, September 05, 2014

More simplification

So I was listening to an E-Rate presentation yesterday, and the presenter mentioned that the new $150-in-5 Rule sets up a rolling 5-year window in which to spend your $150, and something occurred to me: no matter what, you want to spend some money next year.  You don't see why?  Check it out.

Let's take the hypothetical case of a 90% district (because only 90% applicants guaranteed to get C2 funding over the next two years) that is planning a complete upgrade of their network in FY 2016-2017 (year 2 of the Chairman's $1-billion-a-year funding goose).  If they apply in FY 2016, then the 5-year window for the $150 cap starts in FY 2016, and expires FY 2020.  But if they apply for funding to put a $1 patch cable in each building in FY 2015, then spend the remaining funds in FY 2016, the 5-year window for the cap starts in FY 2015, and expires in FY 2019.  The budget limit ends a year earlier.  So every single applicant in the program should apply for funding in FY 2015, hoping to get the 5-year window started.

Crazy, right?  But of course it's not that simple.  The FCC perversely chose to make the $150-in-5 cap sunset after 2 years.  So unless the FCC takes action over the next 2 years, in FY 2017 those applicants who were approved for C2 funding in either FY 2015 or FY 2016 will be saddled with the $150-in-5 cap, while the rest of the E-Rate community will be back to the 2-in-5 Rule, where you spend whatever you please every 3 years.

So let's say you're thinking of doing a Wi-Fi refresh in FY 2017.  If you spend $1/building in FY 2015, and the $150-in-5 stays in effect, you win: by pre-spending that $1, you moved the end of your cap up from FY 2021 to FY 2019.  But if the $150-in-5 Rule expires, pre-spending the $1 means you're grandfathered into the $150/student cap, whereas if you'd just waited, you would have no cap on your FY 2017 spending.

Crazier, right?  But it's still not that simple.  Once the Chairman's temporary $billion/year leveraging runs out, the amount of funds available for C2 will be completely inadequate, and possibly non-existent.  The $150-in-5 Rule is really the $150-in-5-but-you-better-spend-it-all-in-the-first-2 Rule.

Priority 2 funding was always a crap shoot.  But now Category 2 funding is a crap shoot with new rules, which may or may not change back to the old rules on your third roll of the dice.  Oh, and by your third roll, the casino probably won't have enough money to make a full payout on your bet, and may even be broke.

Place your bets!

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