1. E-Rate Reform & The Impact for Kansas January 20, 2015

2. General Agenda  Major Program Changes  Overview of E-Rate Process  FY2015 Funding Overview  Eligible Services Changes  The Wild and Wonderful World of Discounts  Kansas E-Rate Funding Summaries

3. Major Program Changes  Priority 1 and 2 changed to Category 1 and 2  Technology Plan Requirement Eliminated  Document Retention requirement increased from 5 to 10 years  Category 2 services subject to a 5-year pre-discount budget  Schools - $150/per student  Libraries - $2.30/per SF; $5.00/per SF in urban areas with 250,000 populations  Category 2 minimum budget for small schools and libraries - $9,200  Priority processing to be given to Consortia applications  All appeals must first be filed with USAC  Item 21 data now included in new Form 471

4. Major Program Changes (Cont.)  Streamlined approval for multiple year contracts  Signed contracts no longer required before filing application, so long as “legally binding agreement” in place (offer & acceptance)  Direct reimbursement to be made to applicants for Form 472 (BEAR) invoicing beginning in FY2016  FY2015 Form 470 and 471 to be filed online; electronic filing to be required for all other forms within next 2 years  Applicants eligible for a one-time 120 day extension to invoicing deadline (only)  Internet requests for $3,600/year or less are exempt from competitive bidding  Provided bandwidth speeds equal at least 100 MBPS downstream/10 MBPS upstream

6. Decoding Available E-Rate Funding = ~$4.9 Bn  Total 2015 funding cap = $3.9 Bn  USAC to collect only what it needs up to funding cap  $1 Bn set aside for Category 2  2015 Roll over = ~$1 Bn for 2015  Designated for Category 2 funding  Total set aside for Category 2 Funding for FY 2015 = $2bn

7. Eligible Services  What’s In Category 1Category 2 Digital Transmission & Internet Broadband Internal Connections ATMWireless AP & Controller Systems Broadband over Power LinesAntennas, Cabling, Connectors, etc. Cable ModemCaching Digital Subscriber Line (DSL)Firewall Services & Components DS-1 (T-1), DS-3 (T-3) and FractionalSwitches EthernetRouters Fiber (Lit and Dark)Racks Frame RelayUPS Battery Backup Integrated Services Digital Network (ISDN)Software for Eligible Components Multi-Protocol Label Switching (MPLS) Basic Maintenance of Internal Connections OC-1, OC-3, OC-12, OC-n NEW – Managed Internal Broadband Services Satellite Service Switched Multimegabit Data Services Telephone Dial-Up Wireless Services (e.g., Microwave) Data Plans and Air Cards (Conditional)

8. Eligible Services Continued  What’s Out Category 1Category 2 Voice ServicesCircuit Cards/Components PagingInterfaces Directory AssistanceGateways Text MessagingAntennas Custom CallingServers Direct Inward DialingSoftware 900/976 Call BlockingStorage Devices Inside Wire MaintenanceTelephone Components (e.g., key system) Other ServicesVideo Components Web HostingVoIP/Video Over IP Components Voice Mail Email

9. Eligible Services Continued  What’s Being Phased Out The following voice services are subject to an annual 20% phase down: Centrex Interconnected VoIP Local, long distance, 800 Services Plain Old Telephone (POTS) Radio Loop Satellite Telephone Service Shared Telephone Service Wireless Telephone Service (Excluding cellular data & texting)

10. Discounts  Discounts now calculated for organization as a whole, regardless of which entities receive the services  Library discounts to be based on discount of the district in which the main outlet is located  Consortia continue to use simple average of member discounts.  Category 2 discount maximum reduced from 90% to 85%  Surveys continue to be valid methods for determining discounts, but survey results can no longer be extrapolated; starting in FY 2015, applicants can use NSLP applications as their survey instruments

11. Discounts – Alternative Method Community Eligibility Program  Schools must have at least 40% of their students directly certified to qualify for CEP  All students eat free, but eligibility percentage must still be calculated  Schools apply national multiplier (1.6) to directly certified population to determine NSLP eligible population  Schools are capped at 100% NSLP eligible for purposes of determining the E-rate discount

12. Discounts - Urban vs. RuralClassification  School or libraries will be designated as “urban” if located in an “Urbanized Area” or an “Urban Cluster” with a population equal to or greater than 25,000  Urban/rural status now determined for entire school district or library system rather than for individual entities  More than 50% of the entities in a district/system must be rural for district/system to be classified as rural  Non-instructional facilities do not get an urban/rural status and are not counted in the determination of whether more than 50% of the entities are rural

13. 5 Year E-Rate Funding Summary - Kansas

14. Breaking Down Category 2 for Kansas