NSBA's Issue Brief on Education Technology (E-rate)
BACKGROUND
The E-rate program is a $2.25 billion annual program which provides significant discounts of up to 90% to schools and libraries to help them build technology infrastructure and provide telecommunications and Internet services for students in low-income areas. Schools and districts get funding from the Universal Services Administrative Company (USAC), which in turn collects the funds from levies imposed on interstate phone calls by telecommunications companies. Since 1998 when the program was launched, USAC has committed over $15 billion in discounts for telecommunications projects throughout the country.
Over the past three years, E-rate has faced two serious challenges which threatened the program’s integrity and ultimately its impact on school districts. The first occurred as a result of a change in FCC policy regarding how schools would be notified about their funding awards; the second concerned reports of fraud and abuse by contractors and schools participating in the program. These two issues are described in more detail below.
ADA Exemption
In summer 2004, the FCC ruled that E-rate fell under the Anti-Deficiency law, which effectively forced the suspension of E-rate funding commitment decision letters to schools because they were considered legally binding commitments for which the federal government had not yet collected funds. The suspension of funding obligations from August to November 2004 affected over 4,000 schools and library applicants where some schools lost Internet connections. As a result, many school districts were unable to pursue year-round service contracts with providers.
Thanks to strong efforts by Senators Olympia Snowe (R-ME), John Rockefeller (D-WV), and Ted Stevens (R-AK), Congress has included temporary one-year exemptions of rules relating to the Anti-Deficiency Act in appropriations legislation for the past several years. As a result, E-Rate funding commitment letters have continued to flow to schools and libraries so that they can maintain telecommunications services and Internet connectivity.
Fraud and Abuse
Allegations of fraud and abuse have also plagued the program due to news reports of one large school system vendor being indicted on federal fraud charges and several other Federal and state investigations of vendors and program recipients. In the 109th Congress, Chairman Joe Barton (R-TX-6) of the House Energy and Commerce Committee held a number of hearings about abuses within the program, and in October 2005, the House Energy and Commerce Oversight and Investigations Subcommittee, approved a bipartisan staff report on E-rate waste, fraud, and abuse, stemming from a yearlong investigation into the program. Among other findings, the 52-page report concludes that some school districts have acquired goods and services through the E-rate program without using a formal bidding process (contrary to program rules), inadequate oversight allowed a group of vendors to completely manipulate the competitive process, and that the FCC's oversight mechanisms for the program are not sufficient. The subcommittee also endorsed many of the recommendations for improving Universal Service programs previously made by the Government Accountability Office (GAO).
In addition, the FCC released a Notice of Proposed Rulemaking (NPRM) in June 2005 seeking public comment on ways to improve the management, administration, and oversight of Universal Service Fund programs. NSBA responded to this notice as part of the Education and Libraries Networks Coalition (EdLiNC) coalition. To-date no final regulations have been released regarding this notice.
RECENT LEGISLATIVE ACTIONS
In February 2007, Senators Olympia Snowe (R-ME), John Rockefeller (D-WV), and Ted Stevens (R-AK) reintroduced legislation to permanently exempt Universal Service monies from the Anti-Deficiency Act to address the accounting and cash management problems of the past. This bill is identical to legislation introduced in the 109th Congress, which would ensure that funding commitment letters continue to flow to schools so that they can maintain telecommunications services and Internet connectivity.
Last year, similar language was also incorporated into broader telecommunications legislation (S. 2686), which passed the Senate Commerce, Science and Transportation Committee, but never made it to the Senate floor. The ill-fated telecommunications bill included a number of provisions which NSBA supported, including expansion of the base of contributors to the Universal Service Fund and ensuring greater integrity and accountability of Universal Service programs. Specifically, the bill would have developed processes for measuring the progress of schools and libraries toward achieving their individual connectivity goals and instituted sanctions for those who knowingly and repeatedly violate program rules.
These issues have begun to resurface in the 110th Congress as House and Senate committees work to draft new telecommunications legislation, however, it is unlikely that Congress will accomplish much in the area of major telecommunications reform during a Presidential election season.
NSBA POSITION
NSBA believes that the E-Rate program is a vital source of assistance for schools in maintaining Internet connectivity, bringing new learning opportunities to special education students, and enhancing distance-learning in rural areas. Since its inception, the E-rate program has connected 94 percent of our nation’s public school classrooms to the Internet.
While the program has been a tremendous success, NSBA believes that more can be done to strengthen the program. NSBA supports efforts to ensure efficient operation and integrity of the program, increase the quality and speed of connectivity in our nation’s schools, and address the technology gaps that remain. NSBA will continue to proactively engage in the legislative and regulatory processes as they move forward in the 110th Congress. NSBA will support efforts to strengthen the management of E-Rate and ensure dedicated universal service fund resources for the program. NSBA will oppose any efforts that would impose barriers that would negatively affect schools or diminish the scope of the program.
For additional information, please contact Chrisanne Gayl, director of federal programs at (703) 838-6763, or via e-mail: cgayl@nsba.org.