October 16, 2026
Written by Noelle Ellerson Ng, Associate Executive Director for Advocacy & Governance
A federal appeals court decision raises significant questions about the administration and funding of the nation’s universal service fund (USF) programs, including E-Rate.
In a court decision released yesterday, the U.S. Court of Appeals for the Fifth Circuit ruled that the Federal Communications Commission (FCC) lacked authority to establish the Universal Service Administrative Company (USAC), the entity involved in administering universal service contributions. The court vacated the fourth-quarter 2025 universal service contribution factor at issue in the case and remanded the matter to the FCC for further action.
AESA is monitoring this decision because USF supports connectivity for schools and libraries nationwide. While the immediate implications for E-Rate remain unclear, the ruling raises important questions about the future administration and legal foundation of universal service programs. Several key questions remain unanswered; we will continue to monitor this decision.
For schools and libraries, the timing of any changes will be important. E-Rate funding for Program Year 2026 has largely been committed, and funding decisions for Program Year 2027 are not expected until May. As a result, the decision may not immediately affect schools’ current E-Rate funding. However, its broader implications for the USF system remains uncertain.
We will continue to monitor developments and assess their implications for schools and libraries.