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Alternative Discount Mechanisms Fact Sheet

1. Primary measure for E-rate
2. Alternative mechanisms
3. Survey guidelines
4. Acceptable alternative measures of poverty
5. Existing sources
6. Matching siblings
7. Projections based on surveys
8. Unacceptable alternative mechanisms

1. Primary measure for E-rate

The primary measure for determining E-rate discounts is the percentage of students eligible for free and reduced lunches under the National School Lunch Program, calculated by individual school. Students from family units whose income is at or below 185% of the federal poverty guideline are eligible for the NSLP.

The FCC’s rationale for using NSLP data is as follows:

"[T]he national school lunch program determines students’ eligibility for free or reduced-price lunches based on family income, which is a more accurate measure of a school’s level of need than a model that considers general community income."

— FCC 97-157 ¶ 509

A chart defining the Income Eligibility Guidelines (IEG) for NSLP eligibility for the current year (07/01/2000 – 06/30-2001) is available by clicking here.

2. Alternative mechanisms

The FCC also sanctions other mechanisms to determine a school’s level of need, as long as those mechanisms are based on — or do not exceed — the same measure of poverty used by NSLP:

"[A] school may use either an actual count of students eligible for the national school lunch program or federally-approved alternative mechanisms to determine the level of poverty for purposes of the universal service discount program…

"[S]chools that choose not to use an actual count of students eligible for the national school lunch program may use only the federally-approved alternative mechanisms contained in Title I of the Improving America’s School Act, which equate one measure of poverty with another."

— FCC 97-157 ¶ 510

These federally-approved alternative mechanisms use data comparable to NSLP data which are:

(1) [c]ollected through alternative means such as a survey; or

(2) [f]rom existing sources such AFDC or tuition scholarship programs."

— 34 CFR Ch. II, § 200.28 (a)(2)(i)(B)(1) and (2)

3. Survey guidelines

If a school chooses to do a survey, the following guidelines apply:

  1. The survey must be sent to all families whose children attend the school.
  2. The survey must attain a return rate of at least 50%.
  3. The survey must, at a minimum, contain the following information:
    • Address of family
    • Grade level of each child
    • Size of the family
    • Income level of the parents
  4. The survey must assure confidentiality. (The names of the families are not required.)

4. Acceptable alternative measures of poverty

The following measures of poverty are currently acceptable alternatives to NSLP eligibility:

  1. Family income level at or below 185% of the federal poverty guideline cited above.
  2. Participation in one or more of the following programs:
    • Medicaid
    • Food stamps
    • Supplementary Security Income (SSI)
    • Federal public housing assistance or Section 8 (a federal housing assistance program administered by the Department of Housing and Urban Development)
    • Low Income Home Energy Assistance Program

Participation in Temporary Assistance for Needy Families (TANF) is an acceptable alternative measure of poverty ONLY IF the family income of participants is at or below the IEG for NSLP. Similarly, participation in need-based tuition assistance programs is acceptable if the family income of participants is at or below the IEG for NSLP.

5. Existing sources

Schools may also use existing sources of data which measure levels of poverty, such as TANF or need-based tuition assistance programs. However, these measures are acceptable for E-rate purposes only if the family income of participants is at or below the IEG for NSLP.

6. Matching siblings

The siblings of a student in a school that has established that the student’s family income is at or below the IEG for NSLP may also be counted as eligible for E-rate purposes by the respective schools the siblings attend. For example, an elementary school has established, through a survey, that a student’s family income is at or below the IEG for NSLP. That student has a brother and a sister who attend the local high school. The high school may use the status of the elementary school sibling to count his high school siblings as eligible for E-rate purposes, without collecting its own data on that family.

7. Projections based on surveys

If a school has sent a questionnaire to all of its families, and if it receives a return rate of at least 50 percent of those questionnaires, it may use that data to project the percentage of eligibility for E-rate purposes for all students in the school. For example, a school with 100 students sent a questionnaire to the 100 homes of those students, and 75 of those families returned the questionnaire. The school finds that the incomes of 25 of those 75 families are at or below the IEG for NSLP. Consequently, 33 percent of the students from those families are eligible for E-rate purposes. The school may then project from that sample to conclude that 33 percent of the total enrollment, or 33 of the 100 students in the school, are eligible for E-rate purposes.

8. Unacceptable alternative mechanisms

The following alternative measures of poverty are NOT acceptable for determining E-rate discounts. They rely on projections rather than on the collection of actual data:

  1. Feeder school method. This method projects the number of low-income students in a middle or high school based on the average poverty rate of the elementary school(s) which "feeds" students to the middle or high school.

  2. Proportional method. This method projects the number of low-income students in a school using an estimate of local poverty.

  3. Extrapolation from non-random samples. This method uses a non-random sample of students chosen to derive the percentage of poverty in a school, such as those families personally know by the principal ("Principal’s method") or the families of students who apply for financial aid (a non-random sample).

  4. Title 1 eligibility. This method uses eligibility for Title 1 funds as the criterion for estimating the level of poverty in a particular school. Some measures of poverty eligible under Title 1 are indirect estimates of poverty, and do not necessarily equate to the measure of poverty for E-rate, namely eligibility for NSLP.

  Content Last Modified: January 3, 2005