Education organizations such as the Consortium for School Networking and the American Library Association are urging members to contact their representatives in Congress and express their support for the eRate, the $2.25 billion program that helps connect schools and libraries to the internet.

These renewed lobbying efforts come after two Republican lawmakers asked the nation’s top communications regulator to explain what his agency is doing to prevent fraud within the eRate—and at least five other GOP lawmakers have signed onto a bill that would eliminate the program altogether.

Reps. Billy Tauzin, R-La., and James Greenwood, R-Pa., want the Federal Communications Commission (FCC) to turn over documents on the operation and oversight of the eRate. Tauzin is chairman of the House Energy and Commerce Committee, and Greenwood heads that committee’s oversight and investigations subcommittee.

“We write because of the potential size of waste, fraud, and abuse in this program,” the lawmakers said in a March 13 letter to FCC Chairman Michael Powell. A copy of the letter also was sent to Cheryl Parrino, chief executive officer of the Universal Service Administrative Co. (USAC), which oversees administration of the program under the FCC’s guidance.

FCC spokesman Michael Balmoris said his agency had no immediate comment on the letter.

The eRate is part of a government effort to underwrite communications services for rural areas and the poor by charging phone companies. Most carriers recover these costs by billing customers a line-item charge for “universal service” on monthly statements.

Up to $2.25 billion is available from the fund each year to provide schools and libraries with discounts for telecommunications services, internet access, and the internal connections required to deliver internet access into classrooms.

Tauzin and Greenwood said there are at least 30 federal and state investigations involving the questionable use of some $200 million in eRate funds. They said congressional auditors and the FCC’s own internal investigations have raised concerns that there is not enough oversight of the program.

“The emerging evidence of fraud and abuse around the country may be just the tip of the iceberg,” the lawmakers said.

In a September 2002 report from the FCC’s inspector general, investigators said that because of a lack of funding to watch over the program they were unable to give “any level of assurance that the program is protected from fraud, waste, and abuse.”

In January, these suspected abuses received further attention when the Center for Public Integrity (CPI) released a report based on the FCC’s investigations. The CPI report called the eRate “honeycombed with fraud and financial shenanigans.”

Tauzin’s and Greenwood’s letter came just three days after the Schools and Libraries Division (SLD) of USAC denied nearly $590 million in 2002 applications because of alleged competitive-bidding violations. About $470 million of these applications reportedly listed IBM Corp. as the primary service provider. (See “eSN Special Focus: eRate Under Fire,” page 29.)

The letter asks Powell to hand over all records pertaining to which products and services are eligible for eRate funding; the number of bankruptcy cases that involve eRate funds; all decisions the FCC has issued on appeals; and all changes the agency has made in eRate administration, policy, and eligibility of services. In addition, the letter asks Powell how the FCC plans to increase oversight of the eRate in 2003.

More bad news

The letter also came just one day after Rep. Thomas Tancredo, a Colorado Republican, reintroduced a bill (H.R. 1252) to kill the eRate. Tancredo originally introduced the same bill—dubbed the “eRate Termination Act”—in 1999 during the 106th Congress, but it never advanced.

Tancredo was motivated to reintroduce his bill in light of the recent eRate investigations into waste, fraud, and abuse, as well as the war in Iraq and the lagging economy.

“Given declining revenues and the increasing fiscal demands presented by the impending war in Iraq, eliminating this punitive tax on consumers is a revenue-neutral way to put more money in the pockets of taxpayers,” Tancredo said in a March 21 statement.

He added: “If states and telecommunications companies believe that a program to subsidize internet capabilities is still necessary, they should fund it themselves rather than passing the cost along to hard-working, overtaxed Americans.”

The bill, which has been referred to the House Energy and Commerce Committee, would simply strike any reference to schools or libraries from the section of the Telecommunications Act of 1996 that currently authorizes the program. At press time, the bill had four cosponsors: Reps. John T. Doolittle, R-Calif.; Marilyn N. Musgrave, R-Colo.; Ron Paul, R-Texas; and Charles H. Taylor, R-N.C.

In response to the bill, one eRate supporter noted that schools and libraries in Tancredo’s home state of Colorado were approved for $23.5 million in discounts toward the purchase of eRate-eligible products and services in 2002—”dollars that they would be hard-pressed to come up with now, considering the condition of state and local education budgets,” said Sara Fitzgerald, vice president of communications for the eRate consulting firm Funds for Learning LLC.

In view of these lawmakers’ actions, school leaders should make sure their representatives in Congress understand what the eRate program has helped them accomplish in the past and why they continue to need it in the future, especially considering how tight federal, state, and local budgets are, Fitzgerald said.

“Unfortunately, wherever there is a substantial pot of federal money, there is a danger that bad actors will follow,” she said. “However, the fact that criminal investigations are under way, that vendors are getting arrested, and that some applications are getting rejected tells me that the system is working: the [SLD] is enforcing the rules.” She added, “If Congress decides that it is not satisfied with the job that the SLD is doing, then it should let the SLD devote more resources to administering the complex rules that were put in place.”

See these related links:

House Energy and Commerce Committee

Letter to FCC Chairman Michael Powell

Rep. Tom Tancredo, R-Colo.

Federal Communications Commission

Schools and Libraries Division

Funds for Learning LLC