After months of hearings and government investigations into the eRate, Congress has issued a new report that says lax oversight and poor communication by federal regulators is to blame for millions of dollars worth of waste, fraud, and abuse linked to the embattled school wiring program. The findings mirror assertions made as part of another high-profile federal investigation released earlier this year.
The $2.25 billion-a-year eRate, which is overseen by the Federal Communications Commission (FCC), provides discounted telecommunications services, internet access, and networking equipment to help expand internet availability in schools and libraries, especially in rural and low-income areas.
For the most part, the Congressional report reaffirms what eRate watchers already know: that the program, while valuable to schools, “is extremely vulnerable to waste, fraud, and abuse, is poorly managed by the FCC, and completely lacks tangible measures of either effectiveness or impact,” according to the report, released Oct. 18 by the oversight subcommittee of the House Energy and Commerce Committee.
The conclusions reached by Congress are nearly identical to those asserted by the General Accountability Office (GAO) in a separate report issued in March. As part of that report, the GAO, which is responsible for monitoring how the government spends taxpayer dollars, criticized the FCC for taking a largely hands-off approach to the eRate and said that its lack of oversight makes it nearly impossible to determine “the scope of any waste, fraud, and abuse within the program.”
The GAO report went on to make several recommendations for the FCC to consider as it overhauls the program, including 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.
Congress, with the release of findings from its own investigation, provides further momentum for such reforms. But change isn’t likely to happen overnight.
“The FCC has been working on these issues for a long time,” said Peter Kaplan, director of regulatory affairs for Funds for Learning, a national eRate consulting firm. “The agency will continue to streamline and reform these issues as best it can.”
If the FCC doesn’t show progress soon, he said, Congress could force the agency’s hand.
“It’s really unclear what’s going to happen with the program over the next year,” Kaplan said. “Will Congress act by passing legislation to reform the program, or will the threat of legislation force the FCC to act? … At this point, no one knows.”
Either way, one thing is clear: the eRate isn’t going anywhere.
Despite the criticisms, “no one is talking about killing or abolishing the eRate,” explained Kaplan. Instead, he said, the focus is on “much-needed reform.”
From the tone of at least some in Congress, reforms could happen as a result of new legislation.
“It is clear to me,” said subcommittee Chairman Ed Whitfield, Republican representative from Kentucky, “that many eRate program weaknesses must be addressed legislatively to avoid waste and misuse.”
Ranking Democratic Rep. Bart Stupak of Michigan said, “We simply cannot allow self-interested vultures and incompetent administrators to undermine this essential program.”
The FCC crafted an ambitious and well-intentioned program, but it failed to conduct a comprehensive assessment of the eRate program, the Congressional report found. It also faulted the agency for having no performance goals and measures to gauge the impact and management of the funds.
The FCC, meanwhile, is working on developing performance standards.
“Chairman Martin was aware of concerns with the program, and one of his first initiatives was to open a proceeding considering fundamental, structural reform to try to address those issues,” said FCC spokesman Mark Wigfield. Republican Kevin Martin was elevated from commissioner to FCC chairman in March.
The subcommittee’s two-year investigation cited problems with the eRate program in Puerto Rico, San Francisco, Chicago, and Atlanta.
For example, the report said more than $100 million was provided to Puerto Rico for an eRate-funded network that was implemented in only a few schools, and almost no students had access to it. In Chicago, more than $8 million in unused connection equipment sat in distribution warehouses.
But not all the findings focused on program abuses. Congressional investigators also shed light of some eRate successes, including a massive, five-year technology upgrade in the School District of Philadelphia financed, in large part, with eRate funds.
“Instead of falling for vendor temptation to ‘gold-plate’ problem schools,” the report said, “Philadelphia chose a slower and economically reasonable path to maximize the efficient use of technology. The school district applied for eRate program funds only as the technology plan dictated, and it never requested more than could be effectively integrated in any given year.”
Despite the vast amount of cynicism surrounding the program, it’s success stories like Philadelphia’s that illustrate how valuable the eRate is to schools, says Kaplan.
To help more schools and districts achieve that success, the report makes a number of recommendations, including the development of performance goals and more rigorous oversight and audits by the FCC and the Universal Service Administrative Co., which handles day-to-day management of the eRate.
The eRate is financed through charges paid by telephone companies and typically passed along to consumers in the form of a universal service fee on consumers’ phone bills.
The FCC plans to use about $132 million from the program to fund a relief plan for Hurricane Katrina-devastated schools and libraries on the Gulf Coast to reconnect to the internet (see http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-05-178A1.pdf). Some lawmakers have expressed concern the plan could siphon eRate money from other states.
FCC issues eRate guidance for hurricane-affected schools
House Energy and Commerce Committee
Federal Communications Commission
FCC’s eRate web site
Universal Service Administrative Co.
Funds for Learning LLC