RE: [WWWEDU] E -Rate Funding on Hold.. What to do? How to keep schools on line?
- It's hard to figure out just exactly what game Powell's FCC is playing
here. The E-Rate program has $3,000,000,000 (that's three billion) in
idle funds waiting to be disbursed to schools and libraries. In fact,
they have accumulated so much money that the FCC recently reduced, at
least temporarily, the amount of money the telephone companies were
required to pay in. OK, that's one part of the picture; they have too
The "rest of the story" as Paul Harvey would say, is that the FCC won't
let the E-Rate folks commit any more money to schools and libraries
because the E-Rate folks do not have enough money. Yes, you read that
right! Here's why:
The E-Rate program is a bit like airline ticket sales. More airline
tickets are sold than the plane will hold because there are a lot of no
shows. There is a very high no-show rate in the E-Rate program for
various reasons (a major one of which is the the beyond needless delays
and pointless paperwork required by the E-Rate folks but that's a whole
Consequently, the E-Rate folks quite correctly roll over unused, and
reasonably anticipated to be unused, money from previous years to fund
current year projects. If anything, they could do more of it judging by
the huge amount of idle cash on hand but the FCC itself decides how much
to roll over.
Apparently because the Clinton administration, in trying to make the
Federal deficit look smaller, counted the E-Rate fund balance as
belonging to the government and now standards that apply to government
funds are being applied for the first time. What this means here is that
no money can be committed (except in the Social Security and Medicare
fund apparently) that isn't on hand in the form of uncommitted cash.
This means that until the old unused previous year commitments expire or
are cancelled, those funds are unavailable. So rather than cutting back
on telephone company payments, the FCC should have increased them to be
able to fund the current year.
So the FCC knew the accounting standards were going to be imposed, went
ahead and mandated the now "improper" rollovers, then made the problem
even worse by delaying incoming cash and then ordered the E-Rate program
to stop making funding commitments until it had adequate funds on hand.
I'm sure there are numerous available conspiracy theories to account for
it all but the bottom line is the FCC, whether through incompetence or
design, has thoroughly botched this year's E-Rate program.
Then, in what is either monumental hypocrisy or schizophrenia, having
imposed its own immediate and total freeze, it has protested vigorously
against Congressional suggestions of just such a freeze.
Meanwhile the schools and libraries have a real dilemma, whether or not
to go ahead and commit to spending not knowing for sure if the money
will actually come through. This problem is worst for the high-discount
poor schools who would have to come up with 100% of the funds instead of
10%. The better-off schools who have both more money and weren't going
to get such a high percentage of aid anyway are in a better position to
make the expenditure on their own. Net result (pun intended), is that
the Digital Divide is widened by the program that was supposed to make
it narrower. The Law of Unintended Consequences strikes again!
James Punderson, CEO
K12USA.com -- "Cool Tools For Schools"
PS. As our contribution to helping folks deal with this mess, if there
are any schools and libraries whose E-Rate funded mail service is
currently disrupted, our company is willing to temporarily provide them
with e-mail services during the funding disruption at the same,
after-discount, cost they were planning on (even though we will receive
no E-Rate funding to make up the difference). Feel free to pass this
offer on to anyone affected.
From: BBracey@... [mailto:BBracey@...]
Sent: Monday, October 04, 2004 21:00
Subject: [WWWEDU] E -Rate Funding on Hold.. What to do? How to
keep schools on line?
E-RATE FUNDING ON HOLD
A suspension of payments under the federal E-Rate program has
public schools and libraries around the country in a financial
to pay ongoing costs of technology projects. Payments were
months ago, without warning, as a result of changes made by the
Communications Commission (FCC) designed to limit fraud and
the program. Critics have said that abuse and fraud are rampant
E-Rate program, which provides $2.25 billion annually to the
schools and libraries for technology services. Michael K.
chairman of the FCC, called the program "vital for America" but
must comply "strictly with the highest government accounting and
auditing standards." No word has been given, however, on how
moratorium will last. In the meantime, many state agencies are
to figure out how they will pay the bills. Curt Wolfe, CIO for
Dakota, said his state is short about $1.7 million from the
that the problem will become very serious if not resolved this
Robert Boucher, of a Wisconsin education agency, said his state
received $22 million promised under the program, money that is
fund Internet and phone service for 426 school districts and 387
New York Times, 4 October 2004 (registration req'd)
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