~ Also decides to rollover $850 million to FY 2011 ~

Tuesday, the FCC released a stunning Order that reversed prior directives and announced that ALL Priority 2 funding requests at ALL discount levels for FY 2010 will be funded. We previously thought that the FCC would only fund requests at the 80% level (all P2 requests at the 79% level and below had been previously denied for lack of funding) but apparently there were so few requests below 80% that they were able to fund them all. This is only the second time in E-rate history that Priority 2 requests will be funded at all discount levels. In addition to the 2010 decision, the FCC also authorized $850 million in unused funds from prior years to be rolled forward for distribution in FY 2011, thus increasing the available funds to $3,140,682,250.

A few important notes:

• USAC is currently reviewing FY 2010 P2 requests at the 80% level, and will soon begin reinstating and reviewing previously-denied requests at the 79% level and below. Lists of affected KS entities at 80% and 79% and below are posted at: KS FY2010 E-rate Priority 2 Applicants (xls).
  
  NOTE: If you're on the spreadsheet for Basic Maintenance of Internal Connections and you did NOT actually purchase maintenance between July 1, 2010 - June 30, 2011 (likely because you didn't have the equipment yet), you can just tell your reviewer to cancel the FRN as maintenance is a recurring service that must be provided during the funding year. And since the funding year expired June 30, 2011, it's too late to purchase maintenance and have it funded by E-rate for FY 2010.
  
  NOTE: If you haven't yet purchased the equipment and the contract expiration date listed on the spreadsheet has or will expire soon, you will have to submit a Form 500 after you receive your FCDL to change the contract expiration date (likely to 9/30/2012 to coincide with how long you'll have to purchase the equipment/installation). The deadline to purchase the equipment, according to program rules, will be September 30, 2012.
   
• It's too early to know what P2 discount level can be funded for FY 2011. Demand for Priority 1 + Priority 2 at 90% is $3,180,888 which exceeds the available funding of $3.14 billion. History has shown that funding denials and cancellations will reduce the $3.18 demand and P2 requests lower than 90% will be funded. Based on these actions, it’s hard to know how low Priority 2 funding for FY 2011 will go, but it appears there will be a good chance of reaching 80% not only because of the amount of funding available but also because the FCC seems determined to try to fund as many Priority 2 requests as possible moving forward.
  
  
• The FCC's decision makes it nearly impossible to ever predict how much funding will be available each year for Priority 2 requests. Therefore all applicants may wish to consider applying for Priority 2 funding from now on. The result is likely to be that most applicants across the country will submit P2 requests, demand will spike to $8+ billion, and nothing below 80% will ever be funded again. But you won’t receive any funding if you don’t apply. If you do decide to submit P2 requests for FY 2012, don't forget that your technology plan draft must be written before a 470 is posted.

See the FY 2010 Priority 2 FAQs for anticipated questions and answers about the decision and what the Order means and what actions you may need to take.