Looking to stem the reported waste, fraud, and abuse that has plagued the eRate–the $2.25 billion-a-year federal program that provides telecommunications discounts to eligible schools and libraries–the Federal Communications Commission (FCC) on June 14 said it would seek public feedback regarding its administration and oversight of the Universal Service Fund (USF), the federal coffer from which the eRate draws its money.

The announcement, which could lead to the most significant changes yet made to the eRate in its eight-year history, comes in the wake of a congressional report that openly criticized the FCC for its lax oversight of the program and called on the commission to reevaluate its approach to approving and administering eRate funds.

“Managing the USF in an efficient, effective manner is one of the commission’s core functions,” said FCC Chairman Kevin J. Martin, a Republican, in a statement following the announcement. “It is incumbent upon us to take the steps necessary to improve the operational efficiency of the program while providing greater certainty to the recipients.”

State eRate coordinators and school officials who spoke with eSchool News said the inquiry is an important first step in restoring credibility to a program that some have dubbed “honeycombed” with fraud.

“It’s clear that the FCC is opening the program up to anything and everything,” said Virginia State eRate Coordinator Greg Weisiger, who added that his state “looks forward to working with the FCC to chart a new course and sustainable direction for the eRate program.”

In the Notice of Proposed Rulemaking (NPRM) on its web site, the FCC welcomes comments across the full scope of the program, with an emphasis on four specific areas: program management; improved oversight; administrative structure; and performance measures to help assess the effectiveness of the eRate going forward.

FCC officials are exploring ways to simplify the process by which schools apply for and receive eRate funds. Among the potential changes the commission, which currently consists of two Democrats and two Republican members, is considering: A new management structure that would enable schools to apply for multi-year funding commitments on telecommunications services, rather than reapplying for the same services year after year, as is now the case.

Several eRate insiders who spoke with eSchool News said the application process is so tedious that many eligible schools have opted to forgo eRate funds in favor of sparing staff members the hassle of applying.

This is especially true for schools seeking funding for non-essential Priority Two services, said one program insider who spoke on the condition of anonymity. “I’ve got applicants dropping out of the program left and right,” he said. “It’s just not worth the hassle.”

Primarily, the FCC wants to establish an audit system for ensuring that eRate funds are being spent legally and is inviting comment on what rules would make the process effective and fair. Other potential safeguards include a recovery process for recouping program dollars not used in accordance with eRate rules.

“We must … always be mindful of protecting the program from those few who would abuse it,” said Commissioner Michael Copps, a Democrat, following the agency’s announcement. “While instances of intentional fraud are infrequent, our goal must be to eliminate them altogether. I therefore support the NPRM’s conclusion that we will strengthen our debarment rules and take new steps to identify and punish predatory contractors.”

The commission also said it will look internally, vowing to reconfigure its own administrative functions in efforts to rebuild the troubled program. It seeks comment on whether any rule changes are needed “to ensure the USF is administered in an effective, competitively neutral way.”

One suggestion, which Martin has raised in the past, is to replace the current application process with a funding formula that would dole out money to eligible schools based on the size of enrollment.

But the suggestion has met with less enthusiasm from the Democratic half of the commission.

For his part, Copps has questioned whether such a change would limit the potential for one form of abuse while propagating another.

“So many questions about this approach remain unaddressed,” wrote Copps in his statement. “Tying funds to school size could conceivably result in our rural and insular schools being denied the funds they need for the extraordinary cost of services in these areas, just because they have fewer students. And if schools are given a sum of money to be used for unspecified purposes rather than for specified and verifiable services and equipment, it could be much more difficult to identify fraud.”

At press time, the NPRM had yet to be posted in the Federal Register. Once that happens, educators will have up to 150 days to respond with their comments, FCC officials said.

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