IG Audits Show Continuing Problems in USF
Incorrect payments continue in the universal service schools and libraries E-rate program and low income fund, the FCC’s inspector general said Friday. These are payments that shouldn’t be made or are for the wrong amount. The E-rate program had a rate of payment errors of 13.9 percent in audits just completed, up from 12.9 percent in 2007, the IG said. The incorrect payments totaled $232.7 million, compared to $210 million in 2007. The problem puts the program “at risk,” according to Office of Management and Budget guidelines that set 2.5 percent as the highest acceptable rate.
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Audits of the low-income fund were inconclusive because the Universal Service Administrative Co. didn’t save documents verifying calculations for how much was spent. The company runs the fund. The audit found that all $810.6 million payments made during 2007-2008, as well as the $795.8 million in 2006-2007, “must be considered erroneous payments,” the IG said. The IG recommended that USAC keep documents so the amounts paid can be verified. “The Commission may want to re-examine” the program’s disbursement structure, the IG said.
The audit comes as Congress is taking a close look at the fund as a possible vehicle for subsidized expanded broadband services. But there’s concern, particularly among some Republicans, that the fund needs to be overhauled before further spending is allowed. The IG flagged the high-cost fund last week in a report to Congress (CD Dec 2 p2) urging closer scrutiny because of the program’s 23.3 percent error rate.
Meanwhile, FCC Chairman Kevin Martin voted Thursday in favor of a plan revamping the USF fund, commission officials said Friday. The plan, which incorporated recommendations by long-time fund critic Rep. Joe Barton, R-Texas, is the second of three overhaul proposals that the FCC released for public comment last month, and doesn’t deal with intercarrier compensation. Barton proposed a cap on the fund and reverse auctions for the high-cost fund. “Any commissioner can decide at any time what he or she thinks is the right course of action,” an FCC spokesman said. “Indeed, we have been informed that all three of the Republican commissioners support the universal service fund reform proposal based on legislation by Congressman Joe Barton.”
But the proposal isn’t on the agenda for the Dec. 18 meeting, and there are doubts that it will be considered for the January meeting. Congress could begin closer study of the program when it takes up economic recovery proposals including broadband projects in January. Industry and Hill sources think USF is a likely vehicle for distributing broadband money, but Republicans like Barton may fight the spending until the problems are solved.