Software can help track e-Rate compliance.

Houston schools will use software to help track e-Rate compliance.

The Houston Independent School District (HISD) will implement monitoring software to ensure that district employees abide by federal e-Rate compliance rules, after the district settled a lawsuit with the Federal Communications Commission (FCC) in which former district employees were accused of accepting gifts and meals from e-Rate vendors.

HISD is in the process of purchasing Hoover’s Relationship Manager, which district e-Rate Compliance Manager Richard Patton said will help the district monitor its e-Rate vendors. The district will pay almost $8,000 a year for the service, which officials hope will keep HISD from missing out on additional e-Rate funding as a result of program violations. According to the Houston Chronicle, HISD lost out on at least $82 million in potential e-Rate funding during the FCC’s investigation.

Patton said the software will help district officials identify potential conflicts of interest among board members and e-Rate vendors through campaign and business receipts, which must be turned in within seven business days.

HISD’s agreement with the FCC stipulates that HISD board members, as well as e-Rate program employees, are not permitted to accept gifts of any kind from e-Rate vendors. If a trustee on the board has accepted more than $500 in annual campaign contributions or $2,000 in business contributions from an e-Rate vendor, that board member is not allowed to vote on e-Rate contracts. Additionally, once a request for a proposal is issued, HISD trustees must not communicate with or contact e-Rate vendors until a contract is awarded.

“This software will help me determine the parent-child relationship of these companies, as well as individuals associated with those companies,” Patton said. “[It will] help me identify those individuals in an efficient manner.”

The $2,000 settlement figure applies to outside businesses; if an HISD board member owns a technology consulting business, the agreement precludes that board member from receiving funds from an e-Rate vendor, Patton said.

“None of our board members have that relationship, but I think the agreement is being cautious just in case,” he said.

“We’re taking the settlement agreement very seriously, and we’re establishing the best practices to monitor compliance,” Patton added. “In my opinion, we have no reason to believe that we haven’t met the expectations and exceeded the expectations.”

Many school district officials wear many hats and juggle different tasks, but e-Rate rules are complex and can change from year to year, said Peter Kaplan, director of regulatory affairs for e-Rate consulting firm Funds For Learning.

Funds For Learning offers e-Rate Manager, a service for both e-Rate applicants and service providers, in addition to other compliance services.

“Many of the issues tied to competitive-bidding violations are [a result of] not understanding the various components of the e-Rate procurement process, as opposed to the school officials engaging in a fraudulent manner,” Kaplan said.

When a district like HISD has had serious compliance issues that result in federal involvement, that district will have to establish policies and a procedures manual to document that it is in compliance with e-Rate rules before participating in the e-Rate program again.

“That process can take months, if not years, to get resolved,” Kaplan noted.