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A Decade Later, FCC's E-Rate Program Still A Mess
Welcome to dysfunction junction...
by Karl Bode 09:51AM Thursday Apr 30 2009
We've been writing about the dysfunction of the FCC's E-Rate program for what feels like an eternity. The system, which you pay into via Universal Service Fund (USF) fees, is designed to deliver broadband and technology services to the nation's schools and libraries. Instead, like the larger USF, it's more like a slush fund, where money paid in frequently isn't tracked by the government, and spending accountability is minimal to non-existent. As you might expect, this has traditionally resulted in oodles of fraud by both carriers and schools.

40% of USF funds are poured into E-Rate, and the program has doled out $22 billion since its inception in 1998. The program has great potential, yet the FCC does not track how the money is spent or if the program is effective. For years now, the General Accounting Office (GAO) has issued an endless flood of reports on how the FCC should actually pay attention, and for just as many years the FCC has insisted they'd get right on that. So it's not too surprising that it's now 2009, and the GAO is saying the exact same thing:
quote:
A report issued by the by the Government Accountability Office this week claims that it is virtually impossible to measure the success of the Federal Communications Commission's E-Rate program because the agency has still not set concrete performance goals.
The FCC could take a new look at the program when new FCC Commissioner Julius Genachowski finally gets Congressional approval. But any serious telecom reform may not happen until August, and USF reform may again be buried under the clamor surrounding the creation of a new national broadband policy. Even then, should lobbyists get their way, most of the USF "reform" could focus on ensuring that Verizon and AT&T get a broader slice of the USF pie, not on holding carriers and E-Rate money recipients more accountable.

In other words, we'll see you next year, when the GAO issues the exact same report.

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Mr Anon

@k12.il.us

Yep.

All I can say is that we are waiting for them to get to our funding level so we can kick our old Phone system for VOIP *crosses fingers*

The program has a ton of paper work and proceedings and is larger than most of you think I believe. Where I work I have been apart of the process and I can tell you that there are many places where things can go wrong and waste can happen. We've caught a vendor that tried to pad the bill after they won the contract and had the price of equipment off by 50k!

The fact is that its a money parade and we all have heard the saying about a fool and his money.
Sammer

join:2005-12-22
Canonsburg, PA

The problem is structural

The problem with the Universal Service Administrative Company is structural and no amount of stating goals or reporting to the FCC is going to change that.

Hpower
Roflmao

join:2000-06-08
Glendale, CA

1 edit

FCC = fail

I wonder which of their programs work anyway :P

IowaMan
Premium
join:2008-08-21
Grinnell, IA

Re: FCC = fail

None, look at the whole DTV Mess.

SLD
Premium
join:2002-04-17
San Francisco, CA

Re: FCC = fail

Yeah... now every recording of CSI that I watch gets shrunk for 5 minutes while they pound an additional 5 weeks for transition announcements. Get it over with!
mj3431

join:2003-04-21
STL, MO
Reviews:
·Charter

Auditing

While I'm not going to say that there isn't waste involved, the e-rate program does help a great deal of schools throughout the country. I'm personally familiar with the process and have file the paperwork and jumped through the hoops for almost 5 years now. What Karl didn't mention here is that for the first time ever, the USAC has budgeted more money for auditing than any other individual operating cost. This may help to reduce some of the wasteful spending. Link: »www.e-ratecentral.com/archive/Ne···0413.asp

POB
Res Firma Mitescere Nescit
Premium
join:2003-02-13
Stepford, CA

Re: Auditing

said by mj3431:

[...] the USAC has budgeted more money for auditing than any other individual operating cost. This may help to reduce some of the wasteful spending.
Highly doubtful. The USF is a universal slush fund. Money goes into the fund and walks out in executive management's pockets. Period. It will never be tracked/audited in any meaningful way because this particular gravy train has been rolling along for over a decade with zero oversight and only the GAO to point out what needs to be done.
--
The Toll

Tracking Lord Stanley
mj3431

join:2003-04-21
STL, MO
Reviews:
·Charter

1 edit

Re: Auditing

Did you look at the link I posted? The numbers were clearly printed in black and white. There is also money that goes into that fund that gets sent back to schools for telecom services. If you think I'm being silly, call all of the school districts around you and ask them what their e-rate funding level is and total annual amounts on their recent FCDLs (funding committment decision letters).

Now there is most certainly abuse of the program by providers and applicants but that is what the auditing is for. I'm also familiar with that process....in case you were wondering.

POB
Res Firma Mitescere Nescit
Premium
join:2003-02-13
Stepford, CA

Re: Auditing

said by mj3431:

Did you look at the link I posted? The numbers were clearly printed in black and white.
So you don't think there is any waste/fraud whatsoever going on at the schools allegedly receiving those funds, and, even if there is, that's A-OK with you because even if the entire USF program is a scam/joke, the very few schools that may be the recipients of the USF outweigh any oversight. Sorry, I'm not with you on that count. The entire fund needs to go away or else have some serious auditing and accountability processes implemented.
--
The Toll

Tracking Lord Stanley
mj3431

join:2003-04-21
STL, MO
Reviews:
·Charter

Re: Auditing

I never said I didn't think there was some amount of fraud/abuse (as with any federal program). You're obviously not reading my posts or you would have seen that I already agreed to some level of abuse. However, there are a lot more schools than you think that take advantage of funding from this program. In Missouri that number is close to 85% with funds showing up out of almost every wave of funding (I think there have been 45 already from last year). Unless you have personally been through the e-rate process, an audit, or a PIA review I don't expect you to understand the specifics or do any real homework before you start challenging me on the numbers. I also said that auditing was increasing and I provided proof, but it seems that nobody really cares about the actual facts.
Sammer

join:2005-12-22
Canonsburg, PA
said by mj3431:

What Karl didn't mention here is that for the first time ever, the USAC has budgeted more money for auditing than any other individual operating cost.
Doesn't matter because the programs funded by the USF were built on top of a fundamentally flawed foundation. The GAO needs to "bite the bullet" and tell the members of Congress in no uncertain terms that the USAC needs to be torn down or imploded. Perhaps then what ever is worth saving of the programs can be moved to more accountable administration within an existing government department.

waste

@sbc.com

pooring money down a toilet

Anyone that believes that a government entity can and will operate effectively and efficiently is fooling themselves. It hasn't been done in the 200+ years of the republic, I don't see it happening in the future.
elray

join:2000-12-16
Santa Monica, CA

Shut it down

School districts already get way too much money.
They certainly don't need ANY federal money.
It isn't a "a mess". It is a fraud.
bac522

join:2003-08-04
Manchester, NH

Re: Shut it down

When I worked at a CLEC we loved billing for this fund because CLEC's didn't have to pay for it, but not one customer ever questioned it...yes it was a nice little "slush" fund...although to be honest it troubled me that we were duping customer's like this with bogus charges. We also charge a billing fee too! Yup, we charged you $5 to bill you and again most customers paid it because the Accounts Payable dept. didn't care! Added up to $50K a month in extra money.

Its rather sad how sleazy the telecom industry has become !
mj3431

join:2003-04-21
STL, MO
Reviews:
·Charter
said by elray:

School districts already get way too much money.
They certainly don't need ANY federal money.
It isn't a "a mess". It is a fraud.
To say in a blanket statement that school districts already have too much money is nothing more than a dumb remark fueled by your ignorance of the subject. While this may be the case in your particular area I suggest that you do some additional homework on other districts in the nation, particularly the rural ones.

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK

Re: Shut it down

It doesn't matter that the schools benefit from it, there is no doubt, we agree they do. The problem is the fund is overrun with waste and lack of oversight, not so much at the school level, but the telecom level.

The Telecom provides the school, which is great for the school. Benefit received. The Telecom then massively overinflates or exaggerates the costs of providing the school's services, and they just print their own bill and submit it to the E-rate program for full payment. THIS is the fraud, the waste, the slush.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini
mj3431

join:2003-04-21
STL, MO
Reviews:
·Charter

1 edit

Re: Shut it down

While I don't disagree that there is some amount of fraud in the program I believe that you may be foggy on how the process works. The applicants of the program file for services and state the costs up front (from provider). Funding is either approved or denied and the telecom is reimbursed up to approved dollar amounts, which is based on funding level, which is based on NSLP data. Discounts are passed on to school by either SPI or BEAR until approved amount is absorbed. Contracted services further enable the applicant to lock in prices with the provider and statements are provided to the applicant quarterly. Applicants are also required to keep paperwork for 5 years after the last date of service.

It sounds to me like the slush you refer to is at fault of the applicants for not keeping up with their statements and discounts. Edit: I firmly believe that unless you have personally dealt with the paperwork and the forms (470, 471, 486, 479, BEAR etc.) then you're going to have to really convince me that you know what you're talking about and provide factual information to back it.

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK

Re: Shut it down

said by mj3431:

It sounds to me like the slush you refer to is at fault of the applicants for not keeping up with their statements and discounts.
Because of lax oversight there's little incentive to try and do it efficiently.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini
mj3431

join:2003-04-21
STL, MO

Re: Shut it down

And that's why I posted above that budgeting for audits has significantly increased this year. Again, I'm very familiar with the e-rate process and I feel your opinion may be different had you seen it from my perspective.
elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink
said by mj3431:

said by elray:

School districts already get way too much money.
They certainly don't need ANY federal money.
It isn't a "a mess". It is a fraud.
To say in a blanket statement that school districts already have too much money is nothing more than a dumb remark fueled by your ignorance of the subject. While this may be the case in your particular area I suggest that you do some additional homework on other districts in the nation, particularly the rural ones.
Sorry, but I live in a town where we increase school funding by leaps and bounds every year, and yet, the district has a 50% dropout rate. If you're looking for ignorance, it is found in the classroom, not in my wallet.

School districts have TOO MUCH money - the mission is lost by the pursuit of funding. At our local high school (now an "inner city school", though its under a mile to the beach), the most important article in the school newspaper covers the cafeteria manager's quest to get students to submit their free-meal-ticket forms in order to get her federal funding. Our county is spending in excess of $20 billion dollars to build schools they acknowledge don't need, but they're willing to evict thousands from their homes under eminent domain to achieve their "goal" "for the children".

The last thing they need is the federal government offering to tax us to pay their phone and internet bills. Our local school district can't even FIND the millions of dollars of PCs they bought with e-rate, having allowed students and staff to pilfer them with a wink and a nod.

If we are to have government that is responsible and accountable, we must be willing to pull the plug, to stop the funding outright, when there is abuse.

If there are rural schools that need assistance, that should be handled at a local level, not from Washington.
mj3431

join:2003-04-21
STL, MO
Reviews:
·Charter

Re: Shut it down

Should we handle social security and health care at the local level also? Every student needs an education and it is up to the government to see that they get it with programs that aid based on needs like e-rate does. It truly sounds like the schooling in your area has some major issues and I can see your frustration, but I can assure that it is not that way everywhere. The STL metro area is closing schools instead of building new ones because they cannot afford to keep them all open, and class sizes are growing.
elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink

Re: Shut it down

said by mj3431:

Should we handle social security and health care at the local level also? Every student needs an education and it is up to the government to see that they get it with programs that aid based on needs like e-rate does. It truly sounds like the schooling in your area has some major issues and I can see your frustration, but I can assure that it is not that way everywhere. The STL metro area is closing schools instead of building new ones because they cannot afford to keep them all open, and class sizes are growing.
E-Rate demonstrates exactly why we must keep things at a state or local level. Once such a program is enacted, it never goes away, regardless of how corrupt it is. At the city/county/state level, we have a chance of reversing such tomfoolery, and prosecuting the offenders. At the national level, it is the offenders who write the law, and they protect their own.

There is nothing wrong with requiring schools to operate on a reasonable budget. $8K per kid is more than enough - private schools do well on half that amount. If that means closing buildings you don't need, so be it. Class size is not particularly relevant - LA has had "small class size" funding for over a decade, but still cranks out 50% dropouts.

Show us schools that allegedly are underfunded, make the budget completely transparent, so we can click open on every single payment made, as our new president promised us, and we'll find ways to make the available funds work. But such decisions should be made in a local context, at the grass-roots level, where folks "on the ground" actually know whats going on, not made by staffers in the beltway 2000 miles away based on testimony from lobbyists.

Homemakers across the nation make such decisions every month, and manage to squeak by. Just because you're a guvmint entity doesn't mean you have the right to infinite funding.

As for social security and healthcare, you're right. We shouldn't "handle" them at the local level. They shouldn't be "handled" at ANY level. By expecting a big nanny government to "handle" these things, they treble in cost and complexity, and only the bureaucrats and party regulars benefit, while the rest of us pay.
Expand your moderator at work

anonguy0999

@k12.co.us
You obviously don't work in education, with such a poor interpretation of the matter.