§ 54.505   Discounts.

   (a) Discount mechanism. Discounts for eligible schools and libraries
   shall be set as a percentage discount from the pre-discount price.

   (b) Discount percentages. Except as provided in paragraph (f), the
   discounts available to eligible schools and libraries shall range from
   20 percent to 90 percent of the pre-discount price for all eligible
   services provided by eligible providers, as defined in this subpart.
   The discounts available to a particular school, library, or consortium
   of only such entities shall be determined by indicators of poverty and
   high cost.

   (1) For schools and school districts, the level of poverty shall be
   based on the percentage of the student enrollment that is eligible for
   a free or reduced price lunch under the national school lunch program
   or a federally-approved alternative mechanism. School districts shall
   divide the total number of students eligible for the National School
   Lunch Program within the school district by the total number of
   students within the school district to arrive at a percentage of
   students eligible. This percentage rate shall then be applied to the
   discount matrix to set a discount rate for the supported services
   purchased by all schools within the school district. Independent
   charter schools, private schools, and other eligible educational
   facilities should calculate a single discount percentage rate based on
   the total number of students under the control of the central
   administrative agency.

   (2) For libraries and library consortia, the level of poverty shall be
   based on the percentage of the student enrollment that is eligible for
   a free or reduced price lunch under the national school lunch program
   or a federally-approved alternative mechanism in the public school
   district in which they are located and should use that school
   district's level of poverty to determine their discount rate when
   applying as a library system or as an individual library outlet within
   that system. When a library system has branches or outlets in more than
   one public school district, that library system and all library outlets
   within that system should use the address of the central outlet or main
   administrative office to determine which school district the library
   system is in, and should use that school district's level of poverty to
   determine its discount rate when applying as a library system or as one
   or more library outlets. If the library is not in a school district,
   then its level of poverty shall be based on an average of the
   percentage of students eligible for the national school lunch program
   in each of the school districts that children living in the library's
   location attend.

   (3) The Administrator shall classify schools and libraries as “urban”
   or “rural” according to the following designations.

   (i) The Administrator shall designate a school or library as “urban” if
   the school or library is located in an urbanized area or urban cluster
   area with a population equal to or greater than 25,000, as determined
   by the most recent rural-urban classification by the Bureau of the
   Census. The Administrator shall designate all other schools and
   libraries as “rural.”

   (4) School districts, library systems, or other billed entities shall
   calculate discounts on supported services described in § 54.502(a) that
   are shared by two or more of their schools, libraries, or consortia
   members by calculating an average discount based on the applicable
   district-wide discounts of all member schools and libraries. School
   districts, library systems, or other billed entities shall ensure that,
   for each year in which an eligible school or library is included for
   purposes of calculating the aggregate discount rate, that eligible
   school or library shall receive a proportionate share of the shared
   services for which support is sought. For schools, the discount shall
   be a simple average of the applicable district-wide percentage for all
   schools sharing a portion of the shared services. For libraries, the
   average discount shall be a simple average of the applicable discounts
   to which the libraries sharing a portion of the shared services are
   entitled.

   (c) Matrices. Except as provided in paragraphs (d) and (f) of this
   section, the Administrator shall use the following matrices to set
   discount rates to be applied to eligible category one and category two
   services purchased by eligible schools, school districts, libraries, or
   consortia based on the institution's level of poverty and location in
   an “urban” or “rural” area.
       Category one schools and libraries discount matrix Category two
   schools and libraries discount matrix
       Discount level Discount level
   % of students eligible for national school lunch program Urban
   discount Rural
   discount Urban
   discount Rural
   discount
   <1 20 25 20 25
   1-19 40 50 40 50
   20-34 50 60 50 60
   35-49 60 70 60 70
   50-74 80 80 80 80
   75-100 90 90 85 85

   (d) Voice Services. Discounts for category one voice services shall be
   reduced by 20 percentage points off applicant discount percentage rates
   for each funding year starting in funding year 2015, and reduced by an
   additional 20 percentage points off applicant discount percentage rates
   each subsequent funding year.

   (e) Interstate and intrastate services. Federal universal service
   support for schools and libraries shall be provided for both interstate
   and intrastate services.

   (1) Federal universal service support under this subpart for eligible
   schools and libraries in a state is contingent upon the establishment
   of intrastate discounts no less than the discounts applicable for
   interstate services.

   (2) A state may, however, secure a temporary waiver of this latter
   requirement based on unusually compelling conditions.

   (f) Additional discounts for State matching funds for special
   construction. Federal universal service discounts shall be based on the
   price of a service prior to the application of any state-provided
   support for schools or libraries. When a governmental entity described
   below provides funding for special construction charges for networks
   that meet the long-term connectivity targets for the schools and
   libraries universal service support program, the Administrator shall
   match the governmental entity's contribution as provided for below:

   (1) All E-rate applicants. When a State government provides funding for
   special construction charges for a broadband connection to a school or
   library the Administrator shall match the State's contribution on a
   one-dollar-to-one-dollar basis up to an additional 10 percent discount,
   provided however that the total support from federal universal service
   and the State may not exceed 100 percent.

   (2) Tribal schools. When a State government, Tribal government, or
   federal agency provides funding for special construction charges for a
   broadband connection to a school operated by the Bureau of Indian
   Education or by a Tribal government, the Administrator shall match the
   governmental entity's contribution on a one-dollar-to-one-dollar basis
   up to an additional 10 percent discount, provided however that the
   total support from federal universal service and the governmental
   entity may not exceed 100 percent.

   (3) Tribal libraries. When a State government, Tribal government, or
   federal agency provides funding for special construction charges for a
   broadband connection to a library operated by Tribal governments, the
   Administrator shall match the governmental entity's contribution on a
   one-dollar-to-one-dollar basis up to an additional 10 percent discount,
   provided however that the total support from federal universal service
   and the governmental entity may not exceed 100 percent.

   [ 62 FR 32948 , June 17, 1997, as amended at  62 FR 41304 , Aug. 1, 1997;
    63 FR 2130 , Jan. 13, 1998;  63 FR 70572 , Dec. 21, 1998;  75 FR 75414 ,
   Dec. 3, 2010;  79 FR 49201 , Aug. 19, 2014;  79 FR 68634 , Nov. 18, 2014;
    80 FR 5989 , Feb. 4, 2015]

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