The Telecommunications Act of 1996 directs the Federal Communications Commission (FCC) to include support for advanced telecommunications--such as the Internet and computer networking--for elementary and secondary schools, public libraries, and nonprofit rural health care providers among the Universal Service Fund (USF) mandates. In its plan, the FCC created a system of sliding-scale subsidies for schools and libraries that would average 60% of eligible expenses. This Congressional Budget Office (CBO) Paper presents the CBO's baseline estimates for federal outlays and revenues under the FCC's May 1997 plan to provide those federal subsidies. CBO estimates that outlays would rise from about $0.6 billion in fiscal year 1998 to $1.2 billion in 1999. After that, outlays are expected to increase by a little more than $0.1 billion per year, reaching $2.4 billion in 2008. CBO assumes that revenues necessary to fund those expenditures will be collected as required and that the USF will be deficit neutral on a fiscal year basis. The paper includes the basis for CBO's estimates of outlays and revenues. In keeping with the CBO's mission to provide impartial information, the paper contains no recommendations. (SWC)