§  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
   measured by the percentage of their 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
   applying for eligible services on behalf of their individual schools
   may calculate the district-wide percentage of eligible students using a
   weighted average. For example, a school district would divide the total
   number of students in the district eligible for the national school
   lunch program by the total number of students in the district to
   compute the district-wide percentage of eligible students.
   Alternatively, the district could apply on behalf of individual schools
   and use the respective percentage discounts for which the individual
   schools are eligible.

   (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. 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. Library systems applying for discounted services on
   behalf of their individual branches shall calculate the system-wide
   percentage of eligible families using an unweighted average based on
   the percentage of the student enrollment that is eligible for a free or
   reduced price lunch under the national school lunch program in the
   public school district in which they are located for each of their
   branches or facilities.

   (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) Schools and libraries located in metropolitan counties, as measured
   by the Office of Management and Budget's Metropolitan Statistical Area
   method, shall be designated as urban, except for those schools and
   libraries located within metropolitan counties identified by census
   block or tract in the Goldsmith Modification.

   (ii) Schools and libraries located in non-metropolitan counties, as
   measured by the Office of Management and Budget's Metropolitan
   Statistical Area method, shall be designated as rural. Schools and
   libraries located in rural areas within metropolitan counties
   identified by census block or tract in the Goldsmith Modification shall
   also be designated as rural.

   (4) School districts, library systems, or other billed entities shall
   calculate discounts on supported services described in § 54.502 or
   other supported special services described in § 54.503 that are shared
   by two or more of their schools, libraries, or consortia members by
   calculating an average based on the applicable 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 average discount shall be a weighted average of the
   applicable discount of all schools sharing a portion of the shared
   services, with the weighting based on the number of students in each
   school. 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) Matrix. The Administrator shall use the following matrix to set a
   discount rate to be applied to eligible interstate services purchased
   by eligible schools, school districts, libraries, or library consortia
   based on the institution's level of poverty and location in an "urban"
   or "rural" area.
   Schools and Libraries discount matrix Discount level
   How disadvantaged? Urban discount Rural discount
   % of students eligible for national school lunch program
   <1 20 25
   1-19 40 50
   20-34 50 60
   35-49 60 70
   50-74 80 80
   75-100 90 90

   (d) [Reserved]

   (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]