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The E-Rate program was mandated by the 1996 Telecommunications Act to fund telecommunications and internet access in U.S. schools and libraries, in a manner that the most needy schools and libraries are preferentially funded. However, the complex, multi-stage application process may prevent some school districts from availing of E-Rate funds due to lack of technical expertise and administrative support. Thus, the intent of the act to provide support to the neediest schools is at least partially neutralized by procedural hurdles and resource constraints. The objective of the paper is to assess the cumulative impact of these two contradictory effects. We also examine learning effects and hypothesize that the funding gap between poor/rural school districts has narrowed over time due to experience and better information. Data on all E-Rate funded projects where the recipient is a school district were collected for two years, 1999 and 2004, for the state of Pennsylvania. This data were analyzed using multiple regression and repeated measures ANCOVA. Among other results, we found that rural school districts continue to be disadvantaged compared to their urban peers. The consequences of this for policy-making are discussed in the conclusions. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]