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Research

Inside the walls: what K-12 technology funding covers after the reset

Three federal funding streams moved in 2025 and 2026. One ended, one was cut back, and one grew by 20.7 percent. The net effect is that the money left pays for connectivity inside school buildings and nothing outside them.

September 12, 2026

9 min

Key findings

E-Rate Category Two budgets rose 20.7 percent for the FY2026-2030 cycle, and the increase was applied uniformly to every multiplier and funding floor.

The FCC removed both Wi-Fi hotspots and school bus Wi-Fi from E-Rate eligibility on 30 September 2025, in two separate 2-1 votes, and directed USAC to deny pending FY2025 requests.

A district's entire five-year Category Two budget is fixed by the student count it certifies on its first application of the cycle. The earliest available correction is FY2027.

Because the adjustment was uniform, the structural thresholds did not move. A school still receives the funding floor rather than the multiplier below roughly 150 students, the same as the previous cycle.

Three federal funding streams that paid for school technology changed between September 2025 and March 2026. Read individually, each is a routine program update. Read together, they describe a deliberate narrowing of what federal money will pay for.

What ended

The Elementary and Secondary School Emergency Relief programs are closed. The final late liquidation deadline for the last and largest ESSER allocation passed on 28 March 2026, and no new ESSER allocations exist. The Emergency Connectivity Fund, which paid for off-campus connectivity during the pandemic, is likewise finished.

Those were one-time programs and their expiry was scheduled. The consequence is not that the money stopped, which was always going to happen, but that districts bought things with it that carry recurring costs.

What was cut back

On 30 September 2025 the FCC took two separate actions, each on a 2-1 vote, with Chairman Carr and Commissioner Trusty approving and Commissioner Gomez dissenting.

A Declaratory Ruling, FCC 25-63, found that Wi-Fi on school buses exceeds the Commission’s statutory authority and does not serve an educational purpose as defined by E-Rate rules, reversing a 2023 decision.

A separate Order on Reconsideration reversed the 2024 Wi-Fi Hotspots Order, finding that E-Rate funding for off-campus hotspot use is inconsistent with the statutory authority Congress provided.

Both actions rest on the same reading of section 254 of the Communications Act of 1934: that the program’s authority extends to classrooms and libraries, and not beyond them.

The Commission also directed USAC to deny pending FY2025 funding requests for both services, which means districts that applied in good faith for the 2025-26 school year will not be reimbursed.

What grew

E-Rate Category Two, which funds connectivity inside school and library buildings, reset for a new five-year cycle beginning FY2026, and every figure rose by the same 20.7 percent.

20.7%

uniform increase applied to every Category Two multiplier and funding floor for the FY2026-2030 cycle

E-Rate support now available for Wi-Fi hotspots or school bus Wi-Fi, after both were removed from eligibility

years your Category Two budget is fixed for, set by the student count certified on your first application of the cycle

~150

student count below which a school receives the funding floor rather than the multiplier, unchanged from the previous cycle

USAC, Category Two Budgets, page modified 30 September 2025, citing FCC DA 25-471 and FCC 19-117. FCC Declaratory Ruling 25-63 and Order on Reconsideration, 30 September 2025. Threshold in stat four is Qwalora arithmetic on the published multipliers and floors.

The Category Two numbers

	FY2021-2025	FY2026-2030
School multiplier	$167.00 per student	$201.57 per student
Library multiplier	$4.50 per square foot	$5.43 per square foot
Funding floor	$25,000	$30,175
Tribal library floor	$55,000	$66,385

The FCC’s Wireline Competition Bureau announced these in June 2025 under DA 25-471. The underlying rules come from the Category Two Report and Order, FCC 19-117, with the Tribal library floor established separately by FCC 23-56.

Dividing through, every figure rose by 20.7 percent. That uniformity has a consequence worth noticing.

The thresholds did not move

A school receives the funding floor instead of the multiplier when its student count is low enough that the multiplier produces a smaller number. Under the old cycle that boundary sat at $25,000 divided by $167, or about 150 students. Under the new one it is $30,175 divided by $201.57, which is also about 150 students.

The same holds for libraries and for the aggregate funding floor that applies to multi-site districts. Because the inflation adjustment was applied uniformly, the shape of the program is unchanged. Every entity has more money and no entity has moved between categories.

This is worth knowing mainly because it means last cycle’s planning assumptions still hold structurally. A district that modelled its position in 2021 can scale the result rather than rebuild it.

The decision that fixes five years

USAC’s guidance is explicit: applicants must validate their student counts or library square footage in the first year they apply for Category Two support during the cycle, and their budget is then set for the five-year period.

A replacement budget can be requested if counts change. But because the cycle begins in FY2026, FY2027 is the earliest funding year for a replacement request.

So the number entered on one form determines a five-year ceiling, and if it is wrong, the earliest correction takes effect a year later. For a district with volatile enrollment, or one that has not reconciled its entity profile recently, that is a single point of failure sitting inside an administrative task.

Two further mechanics compound it. Budgets are calculated at district or system level rather than per site, so the number that matters is the aggregate. And only full-time students count; part-time students are neither reported to USAC nor included in the calculation.

Where the funding moved

Before

Now

ESSER and ECF funded devices and off-campus connectivity

→

Both programs closed; final ESSER liquidation deadline passed March 2026

E-Rate covered Wi-Fi hotspots for off-campus student use

→

Removed from eligibility, with pending FY2025 requests directed to be denied

E-Rate covered Wi-Fi on school buses

→

Removed from eligibility by Declaratory Ruling FCC 25-63

Category Two at $167 per student, $25,000 floor

→

Category Two at $201.57 per student, $30,175 floor

Budgets calculated per site for many applicants

→

Calculated at district or system level, allocated across sites at the applicant's discretion

What this means

The funding now stops at the building line. Both FCC actions rest on the same statutory reading: that E-Rate’s authority reaches classrooms and libraries and not past them. A district planning any program that depends on federal support for connectivity a student takes home should treat that support as unavailable rather than delayed.

Check your contracts before you check your budget. The American Library Association’s guidance on the reversal is blunt on this point: if a contract does not include a clause making enforcement contingent on receiving E-Rate funding, the applicant is likely responsible for the entire amount. Districts that signed hotspot contracts expecting reimbursement may be carrying the full cost, and that is a legal question rather than a budget one.

The Category Two increase does not replace what was lost. Category Two pays for internal connections: cabling, switches, access points, and the equipment that moves the internet around inside a building. It has never paid for the connectivity a student uses at home, and the 20.7 percent increase does not change its scope. The two things are not substitutes and should not be modelled as if they were.

Get the first application right. The student count certified in FY2026 is the one that matters for five years. Reconcile the entity profile in the E-Rate Productivity Center before filing rather than during it, and confirm that the full-time count is what the district actually means to certify.

Plan the five years, not the year. Unused Category Two funds roll forward within the cycle. What is not spent by the end of FY2030 is not carried into the next one. Core network hardware has a refresh life that fits a five-year window reasonably well, which makes front-loading a defensible strategy, but it is a strategy that has to be chosen rather than arrived at.

Method and limits

Program figures come from USAC’s Category Two Budgets guidance, modified 30 September 2025, and from the FCC news releases accompanying the 30 September 2025 actions. The multipliers and floors are quoted as published. The 20.7 percent figure and the roughly 150-student threshold are our arithmetic on those published numbers.

Three limits.

We have not analyzed application-level E-Rate data. USAC publishes detailed commitment data through its open data platform, and an analysis of what districts actually requested and received would answer questions this piece only frames. That is a separate piece and it needs the underlying dataset.

Reported demand figures for the withdrawn programs conflict. Coverage of the FY2025 requests cites $50.2 million and $42.6 million for hotspots in reports four days apart from the same outlet, alongside $15.3 million for school bus Wi-Fi. We have not been able to reconcile those against a primary source and have therefore not used them.

Everything here reflects the position in September 2026. E-Rate rules, eligible services lists, and funding figures change, and the two FCC actions remain subject to the normal processes that follow any Commission order.

Qwalora holds no relationship with any service provider or consultant named or implied in this piece, and nothing here is legal or procurement advice for a specific district.

Sources

Universal Service Administrative Company. Category Two Budgets. Page modified 30 September 2025. https://www.usac.org/e-rate/applicant-process/applying-for-discounts/category-two-budget/
Federal Communications Commission. Wireline Competition Bureau, DA 25-471. June 2025. C2 budget multipliers and funding floors for FY2026-2030. https://docs.fcc.gov/public/attachments/DA-25-471A1.pdf
Federal Communications Commission. Category Two Report and Order, FCC 19-117. Read September 2026. https://docs.fcc.gov/public/attachments/FCC-19-117A1.pdf
Federal Communications Commission. FCC to End Unlawful Expansion of COVID Spending Program. Declaratory Ruling FCC 25-63, 30 September 2025. https://docs.fcc.gov/public/attachments/DOC-414952A1.pdf
Federal Communications Commission. FCC to Reverse Unlawful Expansion of COVID Spending Program for Wi-Fi Hotspots. Order on Reconsideration, 30 September 2025. https://docs.fcc.gov/public/attachments/DOC-414950A1.pdf
American Library Association. Frequently Asked Questions on the FCC’s Recent Reversal of E-Rate’s Hotspot Lending Program. Read September 2026. https://www.ala.org/advocacy/federal-resources/broadband-policy/erate/hotspot-FAQ

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