E-Rate Program Challenged as FCC Proposes Hurricane Relief
The FCC’s plan to provide about $132 million through the federal E-rate program to rebuild schools and libraries destroyed in the hurricanes should be considered carefully in light of the program’s history of “waste, fraud and abuse” uncovered, said House Commerce Oversight Subcommittee Chmn. Whitfield (R-Ky.). “We want to explore ways to improve this program,” he said. The committee today (Fri.) plans to vote on releasing a report that caps over a year’s work including information from 4 hearings examining abuse in the program. House Commerce Committee Chmn. Barton (R-Tex.) has long been a critic of the program, last year calling for a wholesale restructuring and audit into the $2.5 billion fund to see whether it’s actually needed.
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“Everyone’s promising money, but no one knows where it’s going,” said Rep. Stupak (D-Mich.), referring to the FCC’s overall package of $211 million in universal service fund support for hurricane relief. He questioned whether there should be a plan to see which schools and libraries would be rebuilt before opening the floodgates to E-rate funding. He also said the committee should advance carefully, taking the time to review audits from the FCC inspector general’s office to identify sources of fraud. “I'm perplexed we haven’t had those audit reports completed yet,” he said. “I get the feeling we're throwing good money after bad.”
“The audits and investigations performed to date indicated a high level of risk for misused funds in the E- rate program,” said FCC Inspector Gen. Walker Feaster. He said lack of clarity in the program’s rules prompt “inadvertent errors and deliberate waste” in the bidding process used to purchase E-rate goods and services. The program’s weaknesses could be compounded by overworked school and library administrators trying to rebuild schools quickly, he said. “I fear these rule waivers or exemptions will be taken advantage of by unscrupulous E- rate service providers that federal criminal investigations have turned up time and again.” Feaster was referring to the FCC’s decision in Sept. to temporarily suspend some filing and recordkeeping requirements related to E-rate funding.
Feaster’s office has completed 158 audits of beneficiaries of E-rate funds, of which 34% were found to be improper. Recoveries in those cases would yield $18 million, he said. The office is providing “audit support” to another 26 investigations and is monitoring 13 other investigations. So far, $30 million has been recovered in criminal prosecutions for E-rate fraud. One major area of concern is the program’s reliance of “self-certification” by participants, he said. While the $2.5 billion program deserves expanded oversight, he said, “we have not had the resources to establish an effective oversight program.” Feaster told the committee he has 10 staff members, one on the road to assisting criminal investigations.