Applicants receiving Category Two funding support are subject to a fixed five year pre-discount budget for Category Two products and services.

The pre-discount cost of the products and services approved for E-Rate discounts is charged against the Category Two budget.

The following ONLY applies to Category Two. Category One services are not limited in cost or subject to a budget as long as they are cost-effective.

Category Two budgets run on a fixed five-year cycle.

An applicant's entire budget can be spent in one funding year or spread across any or all of the five funding years.

If the funding request in the first year is for less than the total five-year budget amount, the applicant can apply in the subsequent years for the remainder of their budget.

Funding commitments must be spent in the funding year in which they are awarded.

Products and services ordered in excess of an entity's Category Two budget will not receive E-Rate discounts.

The first fixed five-year budget funding plan encompasses Funding Year 2015 through Funding Year 2019.

Each school within a school district has its own budget that is separate and distinct from any other schools in that district.

Budgets are calculated at the individual school level and cannot be spread across other schools in the district.

• Funding cannot be moved from one school to another.
• Districts may not average their costs across multiple schools.
• One school in multiple buildings that is recognized as one single school gets one budget to work with, not two.

Non-instructional facilities (NIFs) do not have Category Two budgets. This includes school NIFs with classrooms and administrative buildings. However, if and only if a NIF is essential for the effective transport of information to or within a school, the applicant must allocate the NIF costs to the entities benefiting from the service and additionally the costs for the ineligible services to the NIF must be allocated out.

FY2020 is a transition year and is in effect treated as a sixth year of the initial five-year budget term (FY2015 - FY2019 is actually FY2015 - FY2020).

A prorated portion of Category 2 funding is available to all applicants in FY2020, regardless of whether or not they spent all of their initial five-year budget. Unused C2 budgets from the FY2015 - FY2019 five-year cycle will be available for FY2020, plus a 20% increase in the C2 budget multipliers as a one year additive.

Budgets for FY2020 are calculated on an individual school basis using the following formula for each school:

$195.63 budget multiplier x school building enrollment, less any committed C2 funding beginning in FY2015 (pre-discount amounts)

funding floor = $11,998.43

LEARN MORE Learn more about the Category 2 Changes for FY2020 & FY2021

Budget Rules:

• All applicant budgets will be reset beginning in FY2021
• All applicants will begin a new fixed five-year budget cycle and may submit applications in any funding year during the five-year cycle
• The five-year cycle is the same for all applicants regardless of the first year in the cycle that they receive funding
• Budget calculations will be district-wide rather than at the school building or entity level and the district will have the flexibility to allocate Category 2 funding among its schools as it sees fit
• Budgets will be set in the first year of the cycle with the ability to adjust in subsequent years
  • in order to calculate their five-year budget, applicants must validate their student counts for each school in the district in the first year that applicant applies for Category 2 support during the relevant five-year cycle
  • if they choose to do so, applicants can update their student counts in subsequent funding years to reflect, for example, an increased budget due to increased student enrollment
• Budget multipliers and the funding floor will be set for each five-year budget cycle:
  • Will be set once at the beginning of the cycle
  • Will apply to the entire cycle
  • Will always be rounded to two digits (dollars and cents)
  • Will be adjusted for inflation at the beginning of the cycle

Calculating Budgets:

Small school districts (this applies to virtually all Maine school district applicants) with 10 or fewer sites have the option to calculate their budgets on a per-site basis by adding together the budgets of each eligible school within the district. The budget is calculated by adding up the number of schools with less than 150 students times the funding floor AND the number of schools with 150 or more students times the budget multiplier.

Large school districts (very few Maine districts) will enter one aggregate district enrollment number without detailing the precise number of students attributable to any individual school. The budget is calculated by taking whatever number is larger: the budget multiplier times the aggregate student count of the district OR the funding floor times the aggregate number of schools in the district.

LEARN MORE Learn more about the Category 2 Budgets for FY2021 - FY2025

This period represents a new fixed five-year budget term. The same program rules indicated for the FY2021 - FY2025 term apply, and any unused Category 2 budget from that term will not rollover to this term. A one-time adjustment for inflation to both the funding floor and budget multipliers will be announced at least 60 days prior to the five-year cycle.

USAC assumes that, if a commitment has been made on a Category 2 request, that the pre-discount amount of that request should be charged against the Category 2 budget.

Applicants can file an FCC Form 500 to return unused Category 2 funds. Unless funding is returned via an FCC Form 500, USAC assumes that the applicant is using the entire Category 2 funding that has been committed (not the amount disbursed via BEAR or SPI), and the full pre-discount amount of the committed funding request will remain charged against the entity's budget.