THE TRUTH about e-discounts.

E-rate and CTF discounts can mean huge savings to schools. But are you prepared for the possibility that those discounts may vanish?

In the perfect world, tails do not wag dogs and ample school technology funding is easily available from many sources. The federal telecommunications discount program (E-rate) and the California telecommunications discount program (California Teleconnect Fund, CTF) have skewed the perfect world through their deep discounting of essential educational technology goods and services.

Discounts, ranging from 20 percent to 90 percent, are almost always welcomed, especially for the neediest schools who receive the highest E-rate discounts, based on their students' eligibility for the national lunch programs. Yet, there are inherent warning signs we must watch in the scramble to obtain these cost savings.

The fiscal term "total cost of ownership" may morph into "total cost of discountship" as some avail themselves of these programs without longer-range precautions.

Telecommunications discount options

At no prior time have there been so many telecommunications discount options available for public schools. The federal E-rate program provides roughly $200 million per year in discount commitments to California public schools, with approximately 60 percent of the discounts going to the installation of local area networking goods and services to bring the Internet to instructional settings. The other 40 percent goes to discounts for telephone service (and the high-capacity telecommunications circuits) and for Internet access. Vendors who wish to receive discount reimbursements from the E-rate program must obtain a Service Provider Information Number (SPIN), and most have.

The CTF program, which provides 50 percent discounts on many telephone or telecommunications services regardless of students' eligibility for national lunch programs, commits to about $40 million annually in discounts. Using CTF typically results in a phone bill that is reduced by approximately 35 percent to 40 percent. Vendors who wish to receive discount reimbursements from the CTF program must apply through the California Public Utilities Commission to take part, and most have.

Further sources of discounted or established pricing can be found through the California Department of General Services and its California Multiple Award Schedule Directory program and through its CALNET contract, an advanced public/private network.

The statewide educational technology service called C-SMART, housed at the Monterey County Office of Education (http://www.c-smart.org/index.shtml), arranges statewide licensing purchases and group discounted pricing on many education technology items.

On the horizon may be other connectivity options such as the recently funded project administered by the Corporation for Education Network Initiatives in California, which provides high speed Internet2 access via 225 hubs and nodes throughout the state.

In the ultimate analysis, California school leaders must sort through the varying discount opportunities and choose which ones (if any) are beneficial and feasible in their settings. The CDE advises and supports districts and county offices of education in their dealings with federal and state authorities. The CDE approves county office of education technology plans for E-rate compliance, and the county offices, on behalf of the CDE, approve district technology plans for E-rate compliance.

The reality of receiving discounts

In the perfect world, local education agencies should be able to negotiate their best telecommunications deal (in E-rate jargon called the "undiscounted amount"), which is further reduced by discounting their E-rate percentage and then by discounting their CTF percentage. In theory, even the wealthiest districts that receive the smallest E-rate discount should be able to reduce their overall telephone/telecommunications bills by nearly 55 percent to 60 percent (20 percent off from E-rate, followed by the approximately 35 percent to 40 percent through CTF).

In reality, many districts are not taking advantage of the discounts, due to the complexity of applying and managing the many program accountability requirements, or due to overriding local priorities.

Additionally, major telephone carriers have had some difficulty showing the discounts clearly on phone bills. Part of the problem is with the order of taking the discounts, which is called "stacking." Because E-rate discounts are not usually known to the applicant or vendor by the start of the fiscal year but CTF discounts are more often known, many bills show CTF discounts ahead of E-rate discounts. This is the wrong order, and it results in much retroactive adjusting to show credits for past due discounts. To accurately track this process, applicants must have knowledge of each billed telephone line and its eligibility for discounting under the two programs.

The above examples are given to remind school leaders how complex it is to manage a multiple-discount program. Yet, because we still want and need the discounts, California schools and districts are increasing their involvement in E-rate and CTF to save money and build up their capacity to bring the Internet to classrooms.

Prepare now in case of changes

What happens if or when these discount programs change or vanish? The perfect world may look considerably different for those who have grown accustomed to a telecommunications system deeply underwritten by "soft" money. The California Department of Education offers some advice.

Superintendent of Public Instruction Delaine Eastin sent a letter last April to all superintendents reminding them about E-rate and CTF, with a special advisory about options for use of the savings realized by these programs (http:// www.cde.ca.gov/erate/de4-11-00.pdf).

The special advisory said, "The CDE's advice is that the best use of savings realized by those participating in the E-rate or CTF discount program requires two components. (1) Take measures to ensure that if the discounts stop there will be sufficient locally available funds to maintain the level of access to connectivity stated in your technology plans. (2) Take measures to ensure that savings are directed back into education technology so that sustainability and growth of the system can continue as stated in your technology plans."

The point is this: The possibility of these discounts diminishing or vanishing over time is real, and this may leave local education agencies facing full, non-discounted telecommunications bills.

In the cases of highest-discount LEAs, their bills could jump 900 percent if E-rate and CTF were to disappear. The effect could be a sudden shrinkage or abandonment of some networks and a corresponding reduction in Internet access.

For further consideration is the E-rate requirement that the applicant remain positioned to make use of the discounted goods and services as stated in their technology plans. E-rate dollars will shrink for internal connections (cable plant, LANs and eligible hardware) but continue on for telecommunications and Internet access, based on the FCC's policy of funding all telecommunications and Internet access applications as first priority.

Given this, it is possible that some LEAs will have discount-based high-capacity wide area network access to the Internet without local area network and other downstream-end user equipment to make use of it -- giant pipes filling tiny cups.

The CDE advisory is not designed to discourage, rather to refocus each LEA's attention on what is stated in its technology plan and how it will deliver on promises if the downpour of discounting dries up.

VET may help

In March 1999, technology leads knowledgeable about E-rate and CTF were invited from districts and county offices throughout the state to a meeting. The goal was to see how California could best provide assistance in sorting out these programs so that all who wanted to participate could do so. One of the main requests voiced at this meeting was to include major vendors in the preparation and delivery of the training materials to reduce the inconsistent versions of "truth" being provided by various parties.

The CDE's Volunteer E-rate Trainer program created a voluntary venue in which California public agencies and selected vendors work to develop and deliver statewide training opportunities regarding E-rate and CTF. Through collaborative work started after the first VET meeting in June, training materials and sessions have been provided to benefit school applicants. These materials are vendor-neutral and presented under the direction of the CDE.

A main VET goal is to reduce much of the confusion surrounding state and

federal technology discount programs. The VET may indeed help stop the tail from wagging the dog.

Van Wilkinson is a consultant for the Education Technology Office, California Department of Education. More information is available at www.cde.ca.gov/erate