Schools, Libraries Praise Expected E-rate Fund Changes

The bill would exempt schools and libraries from the Antideficiency Act, so those qualifying for E-rate wouldn’t have to adhere to certain govt. accounting practices. The act requires govt. agencies to obligate funds if there’s enough money in an account, but the E- rate collects its funds from Universal Service Fund providers every quarter, so promised money isn’t always in the account.

Last year collections delays caused some locations to indefinitely discontinue services, until Congress gave the program a last-minute one-year exemption. The Stevens bill would end that uncertainty. “We are very excited. This makes sense and supports the intent with which the E-rate was established,” Don Knezek, CEO of the International Society for Technology & Education, said: “Now we are not going to have to wait on an annual basis.”

The bill would create methods for assessing integrity and accountability. E-rate success now is measured by how many institutions are connected to the Internet. The bill would take into account each connection’s substance, bandwidth and speed, a surer gauge of penetration. The new approach would chart a way to the E-rate program’s next phase, an industry expert said.

The bill would set up a program to control fraud abuse. Despite frequent reports of attempted manipulation, those accused could be punished only in criminal or civil court. The bill would create a graduated sanctions system letting the Universal Service Administrative Co. and the FCC punish rule breakers, Knezek said: “This will ensure that the funds are being well cared for.”

Hurricane Katrina Impact Eyed

E-rate watchers are awaiting requests from schools and libraries affected by Hurricane Katrina to weigh the storm’s impact on the program. The FCC pegs it at about $132 million for fiscal 2005, estimating $96 million for 600 Gulf Coast schools and libraries and $36 million for 2,400 schools and libraries nationwide serving evacuees. E-rate coordinators in Ala., La., and Miss., said 122 schools and libraries won’t require funding from 2005 because they've been destroyed and will have to be rebuilt, an FCC said.

While the E-rate cap is $2.25 billion annually, money is released to schools and libraries in waves, according to need. Wave 8 for FY 2006, released June 13, involved about $32 million. Wave 9 was expected to be released June 20. Each of fiscal 2006’s first 6 waves gave $35 million to $45 million to about 1,000 schools.

Waves for 2006 are on schedule, in stark contrast to fiscal 2005, said Winston Himsworth, exec. dir. of E-rate Central an E-rate consulting firm. FY 2005 funding lagged significantly due to a May 19 FCC appeal decision remanding 196 applications on appeal 3-4 years, Himsworth said. So far, only $1.68 billion has been disbursed for 2005, with only one wave released before June 30, Himsworth said.

Another key change this year is the “two-out-of-five rule,” a stipulation that eligible entities can get support for internal connections in 2 of every 5 funding years. But the rule isn’t binding until 2008, Himsworth said: “More astute applicants and larger ones who have lots of things to do are probably spreading the services used in interesting ways.”

Under a 2005 audit program, USAC visited 851 school and library recipients. The visits, by auditing firm Bearing Point, verified that facilities received funds and are using them in compliance with E-rate requirements. USAC plans to expand this initiative to other USF programs in 2006.

Changes in the Stevens bill and those initiated by USAC would improve a successful program, said Lynne Bradley, dir.- govt. relations for the American Library Assn. In its decade-long history, the fund has withstood much scrutiny, debate and heavy auditing, Bradley said, noting that it has borne out its mandate of increasing library use. “It has survived because it’s working,” she said: “People are benefitting from it and it is increasing demand for these services.”