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The E-rate was created by the Telecommunications Act of 1996 to provide discounted telecommunications connections and services to the nation’s schools and libraries as part of the universal service framework. Universal service seeks to ensure the availability of telecommunications services for all consumers, including low-income consumers as well as those in rural and high-cost areas.
Legislative Outlook
In late 2004, funding for the E-rate program was frozen after the Office of Management and Budget determined that the program was subject to the spending requirements of the Antideficiency Act (ADA). The Antideficiency Act prevents federal agencies from making "obligations" on the U.S. Treasury unless the funding is in the Treasury when the obligation is made. This requirement is appropriate and reasonable for government programs appropriated out of the Treasury. E-rate funding, however, is not drawn on the Treasury and instead is supported through revenues raised and distributed by the telecommunications industry (through the Universal Service Administrative Company) with FCC oversight. The funds are collected and distributed without ever touching the U.S. Treasury. Nonetheless, the Office of Management and Budget and the FCC Inspector General's Office in 2004 determined that the Antideficiency Act did apply to the E-rate program.
CCSSO recently played a major role in obtaining another temporary ADA exemption (as part of the FY08 Financial Services bill in the omnibus appropriations package) for the program in order to ensure E-rate funds continue to flow unimpeded to schools and libraries. CCSSO is also working with a diverse coalition of education, telecommunications, and other entities in seeking to permanently exempt E-rate from ADA through the passage of H.R. 278 (sponsored by Rep. Cubin) and S.609 (sponsored by Sen. Rockefeller).
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Council of Chief State School
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document last updated 1/2/2008
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