§ 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. 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 discount rate when applying as a library system or on behalf
   of individual libraries within that system. Library systems that have
   branches or outlets in more than one public school district 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 discount rate when applying as a library
   system or on behalf of individual libraries within that system. 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" based on location in an urban or rural area, according to
   the following desigantions.

   (i) The Administrator shall designate a school or library as "urban" if
   the school or library is located in an urbanized area 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."

   (ii) Any school district or library system that has a majority of
   schools or libraries in a rural area qualifies for the additional rural
   discount.

   (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 paragraph (d) 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.
      % of students eligible for National School Lunch Program Category
   one schools and
   libraries discount matrix Category two schools and
   libraries discount matrix
   Discount level Discount level
   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) State support. 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.

   [ 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]

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