GAO report blasts eRate oversight

The Federal Communications Commission (FCC) should assume greater oversight of the eRate, should more closely analyze how the money is being used in the nation’s schools, and should rid the $2.25 billion-a-year program of the waste, fraud, and abuse that have marred its reputation in recent years, according to a government report released March 16.

Issued by the U.S. Government Accountability Office (GAO), the Congressional watchdog agency that investigates how the government spends taxpayer dollars, the report criticizes the FCC for maintaining a largely hands-off approach and states that its lack of oversight makes it nearly impossible to determine “the scope of any waste, fraud, and abuse within the program.”

eRate experts who spoke with eSchool News say the report reflects a clear need for widespread reform.

“The GAO report gives a comprehensive picture of how the eRate program went from a laudable legislative concept to the complex mess it has become,” said Greg Weisiger, state eRate coordinator for the Virginia Department of Education.

The report makes several recommendations for the FCC to consider as it strives to overhaul the eRate and repair its flagging image in the school community. Suggestions include promoting a clearer understanding of federal requirements, outlining a set of performance measures to assess the program’s effectiveness in schools, and taking steps to reduce the massive backlog of funding requests currently clogging the appeals system.

Despite the more than $13 billion reportedly committed to schools and libraries since the program’s inception in 1998, GAO officials contend there remains no way to tell whether eRate funds–which provide discounts on telecommunications services and internet access to eligible schools and libraries–or some other grant is responsible for improving connectivity in a given school or district.

Furthermore, the GAO criticized the FCC for ceding too much authority to the Schools and Libraries Division (SLD), the arm of the independent Universal Service Administrative Co. (USAC) that is responsible for managing the program.

Unlike most federal entitlements, the eRate is unique in that it is directed with oversight from the FCC by a nonprofit corporation–a discrepancy the GAO believes is partly to blame for the eRate’s problems. Instead of deriving its money from the U.S. Treasury, for example, the eRate is funded through the Universal Service Fund, a giant coffer set up by the nation’s telecommunications companies to help support the expansion of telecom services.

Because the eRate is independently funded and maintained, some confusion exists about what federal accountability standards actually apply to the program and who–the SLD or FCC–has final say in terms of compliance.

“Because of this unusual framework, FCC has struggled with determining which fiscal and accountability requirements apply to the eRate program,” the report points out.

Perhaps more troubling, the report found that the rules articulated by the SLD and those handed down by the FCC upon appeal tend to differ, leaving schools and libraries in perpetual limbo over the fate of their funding applications.

“The report correctly points out that USAC has made a number of policy decisions without FCC blessing,” said Weisiger, who added, “USAC has a tendency to make policy in violation of an FCC mandate forbidding it from doing so.”

The GAO report puts the onus on FCC officials, as the stewards of the program, “to ensure that participants use eRate funds appropriately and that there is managerial and financial accountability surrounding the funds.”

In response, the FCC says it is working hard to improve the program. FCC spokesman Mark Wigfield confirmed that more than 250 audits have been performed to ensure that schools are using the funds properly.

But “while audits of eRate beneficiaries have been conducted, FCC has been slow to respond to audit findings and make full use of them to strengthen the program,” the GAO charged. The FCC says it is taking steps to implement performance goals and measures to determine the effectiveness of eRate grants–and it is continually looking for ways to reduce the backlog of appeals it receives from schools whose initial applications for funds are denied. But agency officials disagreed with the GAO’s claim that there is confusion over how federal regulations are applied to the program.

Since 1998, the GAO has issued eight reports discussing various aspects of the eRate. Its latest findings stem from a Congressional request in 2003 to evaluate the FCC’s oversight, any performance goals and measures associated with the program, and the effectiveness of those mechanisms in managing the program.

The GAO report also mentions the appeals backlog at the FCC, where appeals have been known to take more than two years to be processed.

“If FCC attorneys need a great deal of time to learn about the program because of its complexity,” asked Weisiger, “is it any wonder that first-time applicants would feel overwhelmed?”

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Federal Communications Commission

Government Accountability Office

GAO Report: “Concerns Regarding the Structure and FCC’s Management of the E-Rate Program”

Universal Service Administrative Co.

Schools and Libraries Division

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