By Sam Rawdon, Grants Development Associate (K-12 Education)
With school districts facing tight budgets alongside an increased reliance on Internet connectivity for learning purposes, the Universal Service Administrative Company’s (USAC) E-Rate program has proven to be quite beneficial. E-Rate assists schools and libraries in purchasing affordable high-speed Internet access and telecommunications. This program, under the authority of the Federal Communications Commission (FCC), has been utilized by nearly every K-12 school district in the United States throughout its 28-year history. In fact, with an annual funding cap of $4.94 billion, schools and libraries requested $3.2 billion in E-rate funding in Fiscal Year 2024 alone. The utilization of the E-rate program by K-12 schools, especially those in rural and high-poverty areas, has allowed these communities to afford quality Internet access, supply high-performance networks, and support the expansion of digital learning.
In July 2024, the 5th U.S. Circuit Court of Appeals ruled the FCC’s method of providing E-rate funding through its Universal Service Fund (USF) unconstitutional, with the argument being the FCC violated the Consitution’s nondelegation clause based on the separation of powers between the three branches of government by granting a private non-profit organization the power to administer federal funds. Two separate cases challenging this have been taken to the Supreme Court of the United States (SCOTUS), and arguments are anticipated to be made in March or April 2025.
This turn of events has left the future of the E-Rate program in a state of uncertainty. If SCOTUS sides with the 5th U.S. Circuit Court of Appeals’ July ruling, many K-12 schools will have to reassess their budgets, leading to certain financial chaos for many, especially those in rural and economically disadvantaged areas. If SCOTUS rules against the USF and E-Rate, it is not likely the effects will be felt immediately, as it would take several months for the program to end. Due to E-Rate’s bipartisan support, Congress will likely work to pass legislation to replace E-Rate, especially due to constituents’ high demand and reliability of the program in the K-12 sector.
It is currently unclear whether SCOTUS will side with the ruling or not, and a decision is not expected to be made until June or July 2025. As of the writing of this article, schools are still able to apply for and take advantage of E-Rate funding in 2025. K-12 schools should not panic but should prepare for the potential ending of E-Rate. One major action item is for K-12 school districts to speak to their respective Congressional representatives to help them understand the merits of the program and what it means to them, not only from an operational standpoint but also from the perspective of how E-Rate has allowed them to provide quality education to their students.
With many K-12 schools across the country leveraging E-Rate monies for their Internet connectivity and telecommunications needs to deliver educational services, the idea of the program shutting down is cause for concern for many K-12 schools. From a financial perspective, district budgets may need to be completely reworked to allow ample funding for continued access to reliable and affordable Internet. In a worst-case scenario, funding may need to be cut for these services, leaving K-12 schools unable to deliver key learning services. While it is premature to expect the E-Rate program to end since SCOTUS will not make a final ruling on the future of E-Rate funding until the summer, now is the time for K-12 schools to voice their support and concerns to Congress by elaborating on the benefits E-Rate provides to their communities.
Update to E-Rate and Rural Health Care Funding Caps for Fiscal Year 2025
Sam Rawdon, Grants Development Associate (K-12 Education)
In our last issue of Funded (published Feb. 7), we included an article titled “The Future of E-Rate Funding for K-12 [https://www.grantsoffice.com/Grants-Intelligence/Grant-News/article/1582] . This article provided an overview of the program, along with details about two Supreme Court cases related to E-Rate funding.
Regarding the first case, Wisconsin Bell, Inc. v. United States ex rel. Heath [https://www.supremecourt.gov/opinions/24pdf/23-1127_k53l.pdf], the Supreme Court ruled unanimously that because a portion of E-Rate funding is provided by the government, submitting false claims for E-Rate funding can be held liable under the False Claims Act (FCA). This ruling on February 21, 2025, serves as a “win” for the E-Rate program.
As for the second case, FCC v. Consumers’ Research, challenging the constitutionality of the Universal Service Fund’s (USF) funding mechanism, which supports E-Rate funding, the Supreme Court heard oral arguments on March 26, 2025, and a decision is anticipated by June 2025.
We will provide updates on any SCOTUS rulings related to E-Rate as news becomes available via social media [https://www.linkedin.com/company/grants-office-llc/].
In the meantime, for the fiscal year 2025, the Federal Communications Commission (FCC) has announced an increase in funding caps for the E-Rate and Rural Health Care (RHC) programs by 2.4 percent to represent inflation-adjusted raises. The E-Rate program, which supports broadband access for schools and libraries, will see its funding cap raised to roughly $5.05 billion to better meet growing demands for high-speed internet, especially in underserved areas. Similarly, the RHC program will receive additional funding of approximately $723.8 million to expand telehealth services in rural communities, improving access to vital healthcare resources. These increases aim to address the digital divide and support equitable access to education and healthcare nationwide.
Read our recent article on E-Rate Funding. [https://www.grantsoffice.com/Grants-Intelligence/Grant-News/article/1582]
For more information: https://www.fcc.gov/document/e-rate-and-rhc-programs-inflation-based-caps-funding-year-2025