Barton Wants E-Rate Funding Reform With Local Money Added
The federal E-rate program should be revamped so more of the funding comes from local taxes, House Commerce Committee Chmn. Barton (R-Tex.) said Wed. at the 3rd investigative hearing into the program held by the committee’s Oversight & Investigations Subcommittee (CD July 23 p7). Barton said requiring local govts. to provide more of the money for E-rate projects to provide Internet connections for schools and libraries might mean better accountability. “This program needs wholesale restructuring,” he said.
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FCC Inspector Gen. Walker Feaster said that would be an “excellent idea” because if more money comes from local sources, there’s more incentive for local govts. to oversee the way schools use the money. However, George McDonald, vp of the Universal Service Administrative Co.’s (USAC) Schools & Libraries Div., warned the proposal might cause lower participation from poorer schools with smaller lower tax bases.
Barton also questioned whether the program still needed $2.25 billion a year, especially after FCC Wireline Bureau Chief Jeffrey Carlisle said more than 90% of schools have Internet connections. Carlisle, who provided the statistic in reply to a question from Barton, said schools still needed funding to maintain existing services. Barton responded that “if there is money, there are people who will ask for it.” He said he understood the concern about poorer schools and maybe Congress could set up a loan program to handle that problem. Perhaps it could work this way, he said: If funds were spent properly, the loan wouldn’t have to be repaid.
Carlisle told Barton, who was chairing the subcommittee during part of the hearing, that his bureau is considering changing the maximum discount available from the E-rate program to 80%, from 90%, which “would require school districts to put more money up.” Carlisle said the bureau was writing a proposal, which was teed up in the agency’s 3rd notice of proposed rulemaking on E- rate reform. The E-rate program offers a range of discounts, depending on the poverty level of the school, with the poorest schools getting the 90% reduction.
Rep. DeGette (D-Colo.) expressed concern about the FCC proposal, saying it might hurt poor children. She said she agreed some E-rate money is being “grossly” mishandled and there’s a lack of oversight, but said it’s important fix it without hurting the children who benefit from the E-rate.
At one point, Barton asked whether Congress should just suspend the E-rate program, providing no money, until the rules are revised to improve its operation. The hearings so far have offered “one horror story after another” of malfeasance, he said. Feaster -- who had been critical of the FCC’s lack of speed in fixing program rules -- said suspension might be too strong a remedy. “The schools are very dependent on the program” to get wiring for Internet access, he said: “Suspension would be a radical decision.” One would have to weigh such action “against disruption to the schools,” said McDonald.
McDonald said audits have identified several issues but “not that much of it has been fraud.” He said he hoped the public wouldn’t come away from the hearings with the idea that the entire program was marred by major problems. However, Barton said the self-certification nature of E-rate oversight means no one knows how much fraud exists. It operates “on the honor system,” he said. Feaster told Barton that audits the past several years show 36% of school districts “are not following the rules” properly.
As it did in earlier hearings, the subcommittee highlighted notable cases of fraud by inviting representatives from school districts involved and their E-rate contractors. This time, several participants in a San Francisco case appeared but refused to testify under the 5th Amendment, including Judy Green, a salesperson for Video Network Communications Inc. (VNCI), who Barton said had ducked an earlier subpoena for the July 22 hearing. Carl Muscari, former VNCI CEO, and Quentin Lawson of the National Alliance of Black School Educators, which reportedly was in partnership with VNCI, also took the 5th. Lawson said he was “reluctantly following legal counsel” in not testifying because of an ongoing federal criminal investigation into VNCI’s E-rate activities. “I hope the subcommittee will not draw a negative inference,” he said. The San Francisco scandal, the topic of the July 22 hearing, involved bid rigging, filing fraudulent forms with USAC and other improper actions 4-5 years ago by a school system employee and a group of contractors. The case was discovered when a new superintendent arrived at the San Francisco Unified School Dist.