Congress passes bill to protect e-rate funding

12/14/04 — Congress handed school boards a major victory when it approved an amendment to make the e-rate exempt from the Anti-Deficiency Act for one year. That means funding commitment letters for school districts will resume as scheduled.

The Senate passed the measure Dec. 8 as part of a broad telecommunications package, and the House passed an identical measure in November. The chief sponsors are Sen. Olympia Snowe (R-Maine) and Sen. John D. Rockefeller IV (D-W.Va.).

Deborah Rigsby, director of federal legislation at NSBA, credits the intense lobbying efforts of local school board members with saving the e-rate. “School board members got the message across to members of Congress. Thanks to the grassroots effort of local school boards, we were able to win this victory.”

The problem arose in August when the Federal Communications Commission (FCC) ruled that the $2.25 billion-a-year e-rate program is a federal program and, a result, must comply with the accounting procedures in the Anti-Deficiency Act. That meant the FCC had to have enough cash on hand to cover its commitments, so it placed a moratorium on new commitments.

The FCC has since received sufficient revenues — from the fees charged to customers by telephone companies — and the Universal Service Administrative Co. (USAC), which administers the program, liquidated more than $3 billion worth of investments. Still, USAC reports, there was a backlog of some 4,000 applications totaling more than $400 million.

“If the measure hadn’t passed, schools would have had to deal with delays in funding or even shortages,” Rigsby says. USAC would have had to send “soft commitment letters” to schools saying they might receive funding for an uncertain amount. As a result, schools couldn’t contract for services. Several schools in Alaska actually lost their Internet connections.