Rural Library System Wins USAC Appeal After Two Denials

The Situation

A rural public library system in the southeastern U.S. operates 7 branches, 4 of which share buildings with county government offices (joint-use facilities common in rural counties). The system serves a service area with an NSLP-equivalent discount tier of 90%. Annual E-Rate-eligible spending across the seven branches totaled approximately $99K (mostly Category 1 broadband and basic-maintenance Category 2 line items).

For two consecutive funding years, USAC fully denied the system’s Form 471 over cost-allocation issues at the four joint-use branches. Reviewers were not satisfied that the library’s share of broadband and Wi-Fi cost was correctly separated from the county government’s share. The library’s in-house staff had attempted to respond to PIA inquiries but the responses kept getting flagged as insufficient.

The library board was preparing a vote to stop participating in E-Rate altogether. The system director engaged erateapp two weeks before the FY25 appeal deadline.

What erateapp Did

Step 1 — Cost-allocation reconstruction (Days 1-9)

The four joint-use branches did not lack a defensible cost-allocation methodology — they lacked one written down. We worked with the system director and county IT to reconstruct, branch-by-branch:

• Floor area dedicated to library use vs. county use (square footage from county facility records)
• Operating hours dedicated to library service vs. county office hours
• Number of public-access computers and Wi-Fi devices on the library’s side of the network

We synthesized those three metrics into a weighted cost-allocation percentage per branch (ranging from 41% to 78% library-share) with footnoted source documents.

Step 2 — Filed FY25 appeal (Day 14)

Two days before the deadline, we filed a Request for Review with USAC including the reconstructed cost-allocation worksheet, county facility records, network diagrams showing the library/government network split, and a narrative explaining the weighted methodology with citations to the FCC E-Rate cost-allocation guidance.

Step 3 — PIA dialogue (Days 15-58)

USAC reviewers requested clarification on three branches where the joint-use arrangement included a county tax-records terminal. We provided a one-page memo signed by the county IT director confirming the terminal was outside the library network entirely. Award letter issued day 58 of the appeal.

Step 4 — FY26 application (filed clean)

Going into FY26, the cost-allocation methodology was already in place and documented. The FY26 Form 471 was filed with the cost-allocation worksheet attached up-front. PIA cleared the application on the first pass with zero clarification requests — the cleanest application the system had ever filed.

The Outcome

• $89,000 in FY25 funding fully recovered
• FY26 application funded clean on first pass at full 90% discount
• Cost-allocation methodology now in place as a reusable template for future years
• Library board reversed the planned E-Rate withdrawal vote

Why It Worked

1. Cost allocation is a documents problem. USAC reviewers will not accept a verbal explanation. A spreadsheet sourced to county facility records and signed by the county IT director is conclusive.
2. Joint-use facilities are explicitly eligible. The program contemplates them. The library does not have to defend the existence of the arrangement — only the math.
3. The methodology is reusable. Once a cost-allocation worksheet is built and accepted, it is the template for every subsequent year. The hardest year is the first one.

If This Sounds Like You

If your library system has joint-use branches, cost-allocation issues in PIA, or an outright denial, erateapp specializes in this exact situation. Run a free audit by BEN to see your funding history.

Related reading:

• E-Rate for Public Libraries
• How to Win an E-Rate Appeal
• erateapp Appeals Service