A federal appeals court ruling has thrown more than $2 billion in annual funding for internet connectivity for schools and libraries into legal jeopardy.
The funding mechanism for the or USF, which finances the E-rate, a federal program critical to K-12 broadband connectivity, amounts to a 鈥渕isbegotten tax鈥� and is therefore unconstitutional, the 9-7 on July 24.
It鈥檚 hard to overstate the importance of the E-rate鈥攖he largest federal investment in education technology鈥攖o teaching, learning, and basic school operations, said Doug Levin, the co-founder and national director of the .
鈥淲e are in a post-textbook world where the vast majority of students in the country are using devices in the classroom,鈥� he said. On top of that, 鈥渋nternet access is required to route the buses, operate physical security systems, serve lunches to kids,鈥� he said.
The Education Networks and Libraries Coalition鈥攚hich includes more than a dozen education organizations such as the Consortium for School Networking and AASA, the School Administrators Association鈥�
The decision 鈥渃ould lead to cutting off broadband access for tens of millions of students, educators, and library patrons,鈥� a statement from the coalition said.
Court majority says the program is 鈥榣audable鈥� but not legal
The lawsuit was brought against the Federal Communications Commission, which oversees the USF, by , a nonprofit watchdog organization. Its website encourages readers to report 鈥渃ompanies who are going woke to distract from bad business practices or engaging in political activity not aligned to their mission.鈥�
The USF, which is financed through fees on certain telecommunications services, funds four different programs aimed at providing telecommunications services鈥攊ncluding broadband鈥攖o schools, libraries, rural hospitals, those in poverty, and people living in remote rural areas. In 2022, the program disbursed more than $7.4 billion, including about $2 billion for the E-rate.
鈥淓ach program has a laudable objective,鈥� Judge Andrew Oldham, who was nominated to the 5th Circuit by former President Donald Trump, wrote for the majority.
But he added that the telecommunications fees that finance the USF unconstitutionally delegates congressional taxing authority to the FCC and a private entity tapped by the agency, the , which determines how much to charge telecommunications companies.
Under that logic, Oldham argued, Congress could fund major health programs, such as Medicare and Medicaid, 鈥渨ithout taxing anyone. It could simply allow hospital executives to set the Medicare-Medicaid budget, then have [the Department of Health and Human Services] rubber-stamp the hospitals鈥� health care taxes, which could then be passed through to consumers鈥� hospital bills,鈥� he wrote.
The court is dominated by judges nominated by Republican presidents. Three Republican nominees joined four nominees of Democratic administrations in a dissent.
Court鈥檚 ruling raises questions about short-term impact
Big questions continue to swirl about the decision鈥檚 short-term impact and legal next steps.
It wasn鈥檛 immediately clear, for instance, if the prohibition on collecting Universal Service Fund fees applies to just the states under the 5th Circuit鈥檚 jurisdiction鈥攚hich includes Louisiana, Mississippi, and Texas鈥攐r to the nation as a whole. Two other federal appeals courts issued conflicting rulings on similar issues.
There will be no changes to USF programs until the court鈥檚 mandate goes into effect on Sept. 16, an FCC spokeswoman said.
In the meantime, the Biden Administration could ask for a 鈥渟tay,鈥� or pause on the ruling鈥檚 implementation, so that fee collection can continue, pending a possible appeal of the decision to the U.S. Supreme Court.
FCC Chairwoman Jessica Rosenworcel, who has sought to expand the program to cover Wi-Fi on school buses and cybersecurity assistance, pledged to fight the ruling.
鈥淭his decision is misguided and wrong,鈥� she said in a statement. 鈥淚t upends decades of bipartisan support for FCC programs that help communications reach the most rural and least-connected households in our country, as well as hospitals, schools, and libraries nationwide. 鈥� We will pursue all available avenues for review.鈥�
Advocates tout 鈥榩rofound impact鈥� of the E-rate program
If the ruling results in the end of the E-rate program, it could be 鈥渄isastrous for schools,鈥� said Keith Krueger, the executive director of the Consortium for School Networking, in a statement. 鈥淭he potential impacts of this decision on K-12 education include steep funding uncertainty, with potentially profound impact on high-speed internet, Wi-Fi, and cybersecurity funding.鈥�
The program 鈥渉as been critical in ensuring that our nation鈥檚 schools and students have access to the broadband connections that are central to a modern education,鈥� said David R. Schuler, the executive director of AASA, the School Superintendents Association, in a statement. 鈥淲e are saddened to see one ruling upend 25 years of hard work and progress, knowing it will be especially consequential for our most vulnerable students and communities, and stand ready to defend and protect E-rate.鈥�
But even if the U.S. Supreme Court takes the case, it鈥檚 possible that institution, which is dominated by Republican-appointed justices, will uphold the 5th Circuit鈥檚 ruling鈥攕hutting down the E-rate鈥檚 funding mechanism nationwide.
In that case, advocates would likely have to turn to Congress to replace the more than $2 billion in connectivity funding for schools and libraries, as well as the other priorities covered by the Universal Service Fund.
That鈥檚 exactly what Consumers鈥� Research wants to see.
鈥淥ur position is that unelected bureaucrats should not be setting a universal service tax on telecom consumers,鈥� said Will Hild, the organization鈥檚 executive director, in an email. 鈥淚f Congress wishes to set the tax to fund the [E-rate and other programs], they should do so directly.鈥�
To keep the money flowing, Congress would need to enact legislation creating a nearly $9 billion program to cover all the services paid for under the USF鈥攑lus allocate those dollars through a separate process for passing spending bills.
Recreating the program through congressional legislation is far from a sure thing.
鈥淲e have to be realistic about the politics, and the willingness and ability of Congress to pay for a program that it authorized since 1996 but hasn鈥檛 paid a single dime for since then,鈥� said Noelle Ellerson Ng, the associate executive director of AASA.
