This report proposes establishing sufficient technological capability within New Jersey's K-12 classrooms and public libraries in response to the universal service mandate of the Federal Telecommunications Act of 1996. Sections cover: (1) Goals; (2) Networked Education and Life-Long Learning Model for New Jersey Schools and Libraries, Technology for New Jersey Schools and Libraries, Effective Use of Technology; (3) Educational Networking for New Jersey: the Costs, Public School Costs, Library Costs; (4) Funding Options for New Jersey, State Technology Funding Approaches, Overview of Tax-Exempt Leasing as a School Funding Source, Discounts for Schools and Libraries: an Overview of Federal and State Regulatory Proceedings Regarding Universal Service, Additional Funding Options for New Jersey; (5) Cost Reduction Opportunities; and (6) Some Immediate Steps to be Taken. A detailed 5-year cost model proposes to provide access to the Internet and other multi-media products to enhance distance learning and telecommunications. Identified are over 30 cost-reducing initiatives saving $250 million. The Ratepayer Advocate's Universal Service proposal filed with the Board of Public Utilities is also summarized. Appendices include: (1) Assumptions; (2) Educational Telecommunications Online in New Jersey; (3) School and Library Cost Data; (4) Revenue and Cost Reduction Initiatives; (5) Educational Technology Funding for K-12 Schools--Sources of Funding for Educational Technology, State by State; (6) Telecommunications Act of 1996 (Excerpted); (7) Brief on Behalf of the Division of the Ratepayer Advocate on Universal Service Issues (Excerpted); (8) Sources of Federal Technology Funds; and (9) Sources of Further Information. (Contains 106 references.) (JAK)