Law & Courts

Billions of School Tech Dollars At Risk as Supreme Court Takes Up E-Rate Case

By Mark Walsh — November 22, 2024 3 min read
digital citizenship computer phone 1271520062
  • Save to favorites
  • Print

The U.S. Supreme Court has agreed to take up a major case about the constitutionality of the funding mechanism for the Universal Service Fund, which distributes some $4 billion annually under the E-rate program for connecting schools and libraries to the internet.

The justices on Nov. 22 granted appeals by the Federal Communications Commission and the Schools, Health, and Libraries Broadband Coalition of a federal appeals court ruling that struck down the funding mechanism as a “misbegotten” and unconstitutional tax on consumers.

Under the Telecommunications Act of 1996, telephone and cable companies make required contributions to the Universal Service Fund, which through a private entity distributes money to schools and other recipients. The companies pass along such costs to their customers.

“American telecommunications consumers are subject to a multibillion-dollar tax nobody voted for,” said the July 24 ruling by the full U.S. Court of Appeals for the 5th Circuit, in New Orleans, “The size of that tax is de facto determined by a trade group staffed by industry insiders with no semblance of accountability to the public.”

The practical effect of the 5th Circuit ruling has been limited thus far. While the decision on the constitutionality of the funding mechanism was sweeping, the appeals court delayed the effect of its decision, and the E-rate program has continued to operate normally.

In August, FCC Chairwoman Jessica Rosenworcel called the 5th Circuit decision “misguided.” And a coalition of more than a dozen education organizations, including the Consortium for School Networking and AASA, the School Superintendents Association, called the ruling “absurd.”

The FCC and the broadband coalition each asked the Supreme Court to take up the case.

The 5th Circuit decision “threatens to nullify the universal service programs—to the detriment of the millions of Americans whom those programs serve,” U.S. Solicitor General Elizabeth B. Prelogar told the justices in a September filing.

The broadband coalition said in its appeal that the 5th Circuit’s decision casts “doubt on billions of dollars in telecommunications subsidies that strengthen the networks that serve as critical lifelines” to schools and libraries and other Universal Service Fund recipients.

Challengers agree to have justices take up their issue

The funding mechanism was challenged by the Vienna, Va.-based watchdog group Consumers’ Research, which contends that the USF funding mechanism is an unprecedented and illegal delegation of federal taxing power to an “unelected agency bureaucracy.”

The group filed several challenges around the country, and two other federal appeals courts had upheld the funding mechanism, and the Supreme Court declined to review those decisions earlier this year.

But with the 5th Circuit’s decision creating a clear circuit split, Consumers’ Research essentially agreed that the Supreme Court should take up the issue.

“The challengers agree the constitutionality of the USF funding mechanism warrants this court’s review,” Consumers’ Research said in a brief.

There is one wrinkle that came with the Supreme Court’s order granting review. The justices asked the parties to also address the question of whether the case is moot because the challengers’ failed to seek certain forms of preliminary relief before the 5th Circuit.

It isn’t entirely clear what the court means by that, because the parties didn’t address that question in their preliminary briefing. But it could give the court an off-ramp for disposing of the case without any major disruption to the USF and the E-rate program.

The case will likely be argued next March or April and decided by the end of the current term next June. The petitions are Federal Communications Commission v. Consumers’ Research and Schools, Health, and Libraries Broadband Coalition v. Consumers’ Research.

Events

School & District Management Webinar Crafting Outcomes-Based Contracts That Work for Everyone
Discover the power of outcomes-based contracts and how they can drive student achievement.
School & District Management Webinar EdMarketer Quick Hit: What’s Trending among K-12 Leaders?
What issues are keeping K-12 leaders up at night? Join us for EdMarketer Quick Hit: What’s Trending among K-12 Leaders?
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Artificial Intelligence Webinar
Teaching Students to Use Artificial Intelligence Ethically
Ready to embrace AI in your classroom? Join our master class to learn how to use AI as a tool for learning, not a replacement.
Content provided by Solution Tree

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Law & Courts Ten Commandments Law for Public Schools Is 'Impermissible,' Judge Rules
The Louisiana law would require displays of the Ten Commandments in every public school classroom.
4 min read
Photo of Ten Commandments poster on school wall.
Getty
Law & Courts Supreme Court Weighs High-Stakes Fraud Issue for E-Rate Program
The justices appear to lean toward a ruling that could help keep schools from being overcharged by telecommunications companies.
8 min read
Image of students working on a computer.
Carlos Barquero Perez/iStock/Getty
Law & Courts Court Battles and Presidential Election Have Big Implications for Title IX Regulation
A federal appeals court heard arguments about whether some provisions of the Title IX regulation should be allowed to go into wider effect.
4 min read
Image of a gavel
iStock/Getty
Law & Courts Top Affirmative Action Foe Has New Target: Scholarships for Aspiring Minority Teachers
The legal activist behind the U.S. Supreme Court college admissions decision has now sued over an Illinois minority scholarship program.
3 min read
A picture of a gavel on a target.
Bill Oxford/Getty