The Federal Communications Commission has released the long-awaited Category Two Budget Order making the budget mechanism permanent starting with the 2021 Funding Year. In 2014, as part of the E-rate Modernization Order, the Commission established a new budget approach for Category Two services, adopting a five-year, pre-discount budget for applicants requesting equipment identified as Category Two services. Under the existing budget rules, applicants are eligible for discounts on a per-student basis (for schools) and per square foot basis (for libraries).
For the upcoming 2020 Funding Year, the Commission extended the existing five-year Category Two Budget test period for an additional year through 2020 and provided a prorated portion of funding for each applicant for the additional year. Beginning in Funding Year 2021, the five-year budget approach will be permanent and revised to include enhancements such as district-wide/library system-wide budgets, an increased funding floor and the ability to transfer equipment between district/system buildings without prior notification to USAC. The Commission also made managed internal broadband service, caching and basic maintenance of internal connections permanently eligible as Category Two services.