More than 24% of E-rate funds that were committed to applicants i...

of $3.7 billion was unused, although efforts by E-rate administrators reduced total from 35% -- $1.3 billion -- unused at end of Aug. 2000. FCC and Universal Service Administrative Co. (USAC) have taken steps to reduce level of unused money, including canceling funding commitments if applicants don’t meet deadlines for receiving services associated with E-rate funds. Cancellations make more money available to other applicants, GAO said. FCC told GAO that as of April, figure had been reduced to $774 million. Unused E-rate funds are kept in interest-bearing account. E-rate funds, which are used to reduce cost of Internet projects, don’t go directly to schools and libraries. Instead they are sent to contractors as reimbursement for providing discounted services. GAO report also found that requests for services greatly exceeded $2.25 billion yearly cap in 3rd and 4th years. For 3rd year, more than $4.2 billion in requests were received. USAC estimated that 4th year requests would be nearly $5.2 billion, GAO said. USAC generally has had enough money each year to fund requests for telecom services and Internet access, which are considered first priority. However, E-rate program could support only small part of requests for internal connection, which are lower priority, GAO said. Nearly $2 billion of $3.2 billion worth of requests for internal connections in 3rd year have gone unfunded, agency said. GAO also questioned procedure USAC used to keep track of funding requests. For example, data don’t reflect original amount of funding requested by applicants, only amount approved after application review, GAO said. It prepared similar report for Sen. Rockefeller (D-W.Va.) that offered more detailed state-by-state breakdown of funding by category of service.