The E-rate at five: by saving districts more than $8.2 billion, the E-rate has changed the ed tech landscape. Here are some of the more dramatic differences it has brought, and where it might help districts in the future.

In the first year of the E-rate, schools filed paper applications (some of which got sent back for want of a blue-ink signature) and then waited eight months for funds that looked like they would never come.

In the fifth year of the E-rate, schools filed applications online (85 percent). Within 90 days, money had begun to flow, and there was a decent chance that almost all the commitments would be out by July 1.

Meanwhile, the penetration of Internet connectivity in all American public schools has zoomed to 98 percent--and among even the poorest, 94 percent.

As one big-city district E-rate coordinator puts it, "The landscape has changed completely." That observation would seem to apply equally to the operation of the E-rate program and its impact at its fifth year anniversary.

A Rocky Start

Having been there at the beginning, I can attest to just how rough that first year was.

The E-rate (officially known as the Universal Service Schools and Libraries Support Mechanism) was established in the Telecommunications Act of 1996 but implemented in 1997. I was employee number five of the non-profit organization formed to run the program. My job was to make sure that schools and libraries across the country knew about the E-rate and understood how to apply.

The complexities of the program made that task challenging enough. The E-rate offers discounts, not grants; has a narrow but deep set of eligible services; comes with a sliding scale of benefits; and is paid for not by taxes but by fees from the telecommunications industry. The whole point of the program was to arm schools and libraries with the wherewithal to be players in the open market, and so the application process--with its emphasis on competitive bidding and contingent contracts--felt awkward and complicated to many educators. The program's sheer numbers were staggering: up to $2.5 billion in funds available per year, with hundreds of thousands of eligible applicants.

Political Maneuvers

On top of those problems, was one more concern: politics. My first week on the job, The Wall Street Journal run an editorial blasting the E-rate as "market distorting and possibly illegal. Soon after, Rush Limbaugh was holding forth about the "Gore Tax" (the then-vice president was a major supporter of the program) and Senator John McCain was threatening to shut us down. As applications poured into our processing facility by the binful, the Federal Communications Commission--under whose auspices the program ran--debated whether to cut, delay or kill the program.

In the end, the E-rate was allowed to lurch forward. By the time we began making Year 1 funding commitments, it was a full year alter we'd launched, and just weeks before we had to open the application window for Year 2. But the landscape change had begun, and there would be no reversing it

A View from the South

Mississippi is one of the places where the change has been particularly profound. In 1997, about half of the state's 900 schools had Internet access, the student-to-computer ratio was 28:1, and combined federal funding for technology was about $7 million. Now, after an estimated $123 million in E-rate funds, 100 percent of the schools are wired and there's a computer for every seven students--almost all of them with Internet access. In a 2000 study of the E-rate by the Urban Institute, Mississippi was noted as one of top nine "big winners," with per capita funding above $10.30 (compared to under a dollar per capita in other states).

"We went through a lot to get to this point," says state network director Gary Rawson. "What we worked so hard on in Years 1 and 2 of the E-rate, like our state master contracts, is really paying off for us now."

Mississippi is one of those states where need has inspired powerful cooperation. When the E-rate was still on the horizon, the state's department of education, library system and universities began meeting together as the Council for Education Technology to develop a coordinated technology strategy. The state had already started building a data network linking these institutions together, while a series of successful NetDay implementations in high-poverty Delta schools whetted educators' appetites for Internet access. By E-rate's first year, Mississippi was more than ready for the $24 million it brought in.

Not that it's been a breeze for district-level administrators, who despite an abundance of state help have to stay on top of all the E-rate program developments and get their applications in on time. When the grumbling gets too loud among technology coordinators, Rawson reminds them, "The E-rate deal is, `If you jump through all these hoops, we'll send you all this money.'" That bottom line usually stops the complaining.

"It's a complicated program," Rawson admits. "But it works."

Compact and Connected in California

As superintendent of the Delta View Joint Union School District in central, California--with a total student body of 90--Dale Campbell knows that few of his students have computers at home, whether they live in the poorer rural communities or the more affluent pockets of the district Fewer still have access to the Internet anywhere else but at school.

So Campbell made sure his one-campus K-8 district is completely wired. The more than $180,000 the district received in E-rate funds has gone largely into updating its local area network to connect the classrooms and take full advantage of the school's T-1 connection. Every classroom now has five Net-connected computers, and there are six more in the media lab. The student-to-computer ratio at Delta View is 3:1.

Campbell hasn't had to tackle the E-rate on his own. Along with other small districts in his area, he contracts with the Kings County Office of Education for technical assistance in developing and filing the applications. "I'm both the principal and the superintendent for Delta View," Campbell says. "If I want to be the instructional leader, I can't spend all my time on this kind of paperwork."

What he does do himself is make sure students and teachers take full advantage of their technology resources. Delta View's 20 seventh and eighth graders, who share one classroom. created and maintain the district's Website. All of the district's five teachers have their own sites as well and use the technology to help manage the two-grade span in each classroom. "They can be teaching part of the class while the other half is working on research or completing an online assignment," Campbell says.

Campbell says that the infusion of technology has boosted student achievement. Even beyond the motivation factor ("The students don't look at being on the computer as work," Campbell says), the district uses the computer network for ongoing assessment of math and reading progress. It seems to be paying off. In the 1998-99 school year, about 30 percent of Delta View's fifth graders scored at the 50th percentile on the SAT-9 in math and language; by 2000-01, 50 percent of the same students had crossed the 50th percentile in math and 60 percent had made the mark in language.

"For a small rural district like mine," Campbell says, "the E-rate is the great equalizer."

The Big Apple's Big Bang 

New York City has one and a third times more schools than the entire state of Mississippi, and 10,000 times as many students as Delta View. But the impact of the E-rate has been equally profound here, according to the man who's coordinated all program activities in the city's schools since Year 1.

Joe Salvati remembers well the city's pre-E-rate technology profile. "The typical school had two 28K dial-up accounts, usually in the library or somebody's office," he says. "They had no impact on anything."

Now, after some $750 million in E-rate funds, all 1,200 New York City schools are connected to the Internet through the district's frame relay network; 39,000 of the 48,000 classrooms city-wide are wired; and more than 85,000 computers are active on the network. "Things are different," Salvati says with understatement

Despite the immensity of the undertaking, New York City's E-rate applications have never been the largest on file in any given year. "We've been very conservative," Salvati says. "We always took the position that we would only ask for what we could use, we'd use whatever we got, and if the E-rate were to go away, we'd still have a system we could sustain."

That has meant adding layer upon layer of service to the schools each year, following what Salvati calls "the cookie-cutter approach." Rather than completely wiring one school before moving onto the next, "we gave everybody something from the very beginning," he explains. "Each school got at least seven moms wired in the first year, and we've now gone back to every school several times. If we hadn't done it that way, some of our schools would have been waiting four or five years with nothing."

Now as Salvati makes his rounds, he sees the difference technology is making. "I'm originally from the instructional side, so I know you're not going to change the culture of the classroom overnight," he says. "But I see things starting to snowball now. There's an expectation among students and teachers that you will use the technology. We're starting to invest real instructional time and real instructional dollars in it."

The technology infusion is also Salvati's legacy. After 32 years with the New York City schools he is retiring in 2002. "It's been a tremendous challenge, with the detail of applying for the program, the size of this city, the complexity of our system," he says. "But although there have been other things I've really enjoyed doing in my time here, there's been nothing like the E-rate in terms of impact, that sense of really changing the landscape."

Fine-Tuning for the Future

George McDonald had the ideal retirement gift for Joe Salvati. As vice-president in charge of the Schools and Libraries Division of the Universal Service Administrative Company, the nonprofit that runs the E-rate, McDonald made it possible in 2002 for the nation's largest school district to file for the E-rate entirely online. That's exactly what Salvati did for his fifth set of multi-thousand line E-rate applications, thanks to a new feature that allows applicants to electronically copy and then modify key blocks of their data-processed forms from previous years--saving hours of manual effort

Improvements like that are what McDonald is all about. "My mission is to make the trains run on time," he says. McDonald has been with the program from the beginning, hired as employee No. 4 to oversee operations. He picked up the reins of leadership from Kate Moore, who left in 2001 to be a teacher in the Washington, D.C., public schools after running the program for almost three years following the departure of founding CEO Ira Fishman.

McDonald points to the growing number of improvements designed to streamline the E-rate process, including the online deployment of the program's first two application steps; development of electronic "signatures" to further speed online filing; the ability to track application status online; and the predictability of the application calendar. Even the naming of program years has been revised to reflect the institutionalization of the E-rate; What had been known as Year 5 is now Program Year 2002.

With the new name comes another breakthrough. For the first time, waves of funds began to flow this year just a few short months after applications had been submitted, and in advance of the actual flow of services those funds are intended to cover. "Our goal is to reach a decision on each application within 90 days of receiving it, and then release funds within 30 days of that," McDonald says.

Asking the Larger Questions

In addition to continuing to improve program systems, McDonald and his staff--along with the school, library, and vendor groups they consult with weekly--are grappling with other challenges that may shape the future of the E-rate. Many of these issues have been presented to the FCC in response to its Spring 2002 request for suggestions for improving the program. Among them:

* Escalating demand: Each year, applicants have asked for support for an ever greater level of service. In Program Year 2002, the demand estimate was $5.7 billion--more than two times the amount available in the fund. Since the beginning, the program has dealt with excess demand by prioritizing services. All applicants received funding for approved telecommunications and Internet access requests; remaining funds would go for internal connections to the schools and libraries in the neediest communities first. If the Program Year 2002 demand holds, however, even the highest-poverty areas won't receive all they ask for.

* The gap between request and expenditure: Closely tied to the increase in demand is the dilemma of unclaimed funds. Because E-rate dollars flow to vendors rather than the applicants themselves, applicants must certify they are actually receiving approved services before the committed funds are released. But each year there is a gaD-as much as 30 cents on the dollar-between the funds applicants say they need and what they actually spend. If an applicant notifies the E-rate staff soon enough that some funds will not be used, those funds can be returned to the pool for allocation to others. What happens to these dollars in the aggregate at the end of each program year is a matter of much debate: Should they roll over to the next year or be used to reduce collection of fees from the telecommunications providers?

* The reverse digital divide: That's what some applicants call the fact that only the highest poverty schools are likely to receive funding, which they do year after year while slightly wealthier applicants get nothing. Some are suggesting that schools not receive such funding two years in a row, or that some other measure of need be added to the free-and-reduced-lunch data that now underpins the program's sliding scale.

* Rogue vendors: Since service providers are so closely involved in each step of the program-from responding to requests for bid, to receiving funds on behalf of applicants, the temptation to overstep bounds must be great for any technology business. Cases of proven abuse by vendors are still relatively rare, but several people interviewed for this piece expressed concern about the impact of such vendors on the future of the program. "It's our responsbility as applicants to put a stop to those who would rape the program," Mississippi's Rawson says.

* Changing technology: Since the E-rate launched in 1997, cell phones have become ubiquitous and wireless networking has become popular in schools--two developments that the program is taking in stride, with guidance from the FCC. Even newer technology applications, from video over IP to virtual schools, will continue to push the E-rate envelope.

When is enough enough?

Now that almost every school in America is connected to the Internet, some argue the original goals of the E-rate will soon be fulfil]ed. For how much longer should funds flow? Until every classroom is wired--or beyond? "Demand keeps growing," McDonald says, "because applicants are learning that once you have the technology in place, you have to keep it working and keep it current."

Answers on these issues may emerge from the FCC's consideration this summer and fan of hundreds of comments received during its proposed rulemaking process. Whatever happens, most hope that any significant changes won't be made until Program Year 2004. That's because schools and libraries are already initiating their applications for 2003, with an eye to their immediate technology future.

Mickey Revenaugh, [e-mail], is vice president at Sylvan Ventures. Formerly, she helped launch the E-rate program.