E-rate is having enormous impact on schools

By Del Stover

7/13/04 -- Tracy Carrington is somewhat wary as Congress looks into allegations of fraud and waste in the federal E-rate program. He's all for responsible oversight of the program, but he worries lawmakers will overreact to a few horror stories and lose sight of the program's benefits.

That would be a shame, because the E-rate has made all the difference in bringing technology and the Internet to schools in Whiteriver, Ariz., a remote community that's a four-hour drive from any major city.

"For us, it's been good," says Carrington, the district's technology director. "We started with basically nothing, and now every classroom and school is connected to the Internet." He says the E-rate has also meant "a big savings on our phone bill, which is very expensive for rural schools."

Talk to educators across the nation, and you'll hear similar comments. Financed by a surcharge collected from telephone users, the $2.25 billion-a-year E-rate program finances discounts of up to 90 percent for telecommunications equipment and Internet services.

The impact on public education has been enormous. Since 1998, the share of classrooms with Internet access has climbed from 27 percent to 92 percent. Many educators say the E-rate has helped change the face of American education, particularly for poor and rural communities that could not otherwise afford the technology.

That's a message that educators want Congress to hear, particularly after recent hearings on E-rate fraud and waste conducted by the oversight subcommittee of the House Energy and Commerce Committee -- and after news that at least 40 criminal investigations are under way across the country.

"We should continue to bring these bad actors to justice," says NSBA Executive Director Anne L. Bryant, vice chair of the nonprofit Schools and Libraries Committee, created by the Federal Communications Commission (FCC) to oversee the E-rate program.

At the same time, she says, it's important to remember that "the E-rate program has benefited literally millions and millions of schoolchildren."

That assessment would win the approval of school officials in Roane County, W.Va., where nearly $250,000 in federal funds over the past six years has helped wire rural classrooms and establish a high-speed telephone connection.

Federal discounts on telephone charges also have allowed school officials to redirect local funds to the purchase of computers and other needed technology in the schools.

That's allowing the county's students to conduct research online for classroom projects. A long-distance learning program is making it possible for high school students to enroll in foreign language, calculus, and Advanced Placement courses that were unavailable a few years ago.

"The classrooms have no walls anymore," says David A. Kinison, treasurer for the school system. "Students can go anywhere, see anything, and get any information they want. It helps them with what they're studying in the classroom."

Similar enthusiasm for the E-rate exists in Berrien County, Mich., schools, which use the Internet to tour museums across the nation. Every spring, students also take a "virtual field trip" to Washington, D.C., to meet with their county's representatives in Congress.

"Kids can take field trips where they watch open-heart surgery and talk to the surgeons and nurses while it's going on. They're getting fantastic experiences," says Jim Bembenek, technology director for the county's education service agency.

The E-rate's impact on thousands of school systems nationwide is expected to blunt calls by some critics who want to terminate the program. But many political observers say there's little doubt that tales of fraud and mismanagement will lead to tougher oversight.

Hearings on Capitol Hill last month provided plenty of ammunition for critics of the E-rate. Several school systems were accused of misspending federal funds.

In Puerto Rico, officials allegedly spent $101 million, yet Internet access remains severely limited and students still largely use slow, dial-up connections. As much as $23 million in unused equipment was found stored in a warehouse and now is obsolete.

Meanwhile, telecommunications giant NEC Corp. recently agreed to plead guilty to charges of rigging bids at six school systems. Several other firms, including IBM, have been accused of improprieties ranging from overcharging for equipment to obtaining school contracts won without competitive bidding.

"While a well-intentioned idea, the E-rate program as it is currently structured is an invitation to disaster," Rep. James C. Greenwood (R-Pa.), chair of the oversight subcommittee, said during the hearings. "Indeed, if one were to design a program to pour money out the window, this would be the way to do it."

FCC officials contend they're taking steps to improve oversight of the program. In addition to creating a whistle-blower hotline, they've conducted more than 120 audits in the past year. About a third showed signs of substantial problems with how funds were spent.

"We've got to put in context the fact that the E-rate dispenses $2.25 billion a year to schools and libraries," Bryant says. "We get more than 35,000 applications a year from schools. My fear is that we will overreact to the few instances of fraud, and we will build a huge new bureaucracy of audit police instead of providing resources for educating children."

Federal officials also are taking a closer look at the 90 percent discount rate awarded to the poorest schools. Because these schools contribute so little in matching funds, some critics contend school officials have little incentive to seek the lowest prices and can be talked into buying more than they need.

In addition, critics contend the rules are so complex that local school officials are turning to consultants who can easily pad grant applications with costly extras. In other instances, school people simply have made mistakes filling out the complex application forms.

"The vast majority of problems I see are where applicants have broken E-rate rules unconsciously," says Brett Himsworth, vice president of E-Rate Central, a consulting firm in Seaford, N.Y. "They've done it because they didn't understand or were confused by the rules, not because they're trying to defraud the government."

The Universal Services Administrative Co., which administers the E-rate, plans to hire outside consultants to conduct as many as 1,000 site visits to schools across the nation. They will interview school officials and review E-rate programs to spot potential problems.

Such reviews won't bother Roane County officials, who take pride in the care they put into overseeing technology purchases. Kinison says school and district technology teams look at all E-rate spending, which also is overseen by state officials.

Meanwhile, Patricia Miller, technology director in Las Cruces, N.M., would like Congress to know that she buys only the equipment she needs -- and no more -- and keeps equipment long past its expected life span.

"We have some network electronics in our district that are nine years old," she says. "We've never been pigs at the trough."

As for comments like those of Rep. Tom Tancredo (R-Colo.), who told USA Today that the program could be cut or killed because nearly all schools are wired to the Internet, technology directors point out that there's still a lot to be done. Only this spring, for example, Syracuse, N.Y., school district officials began work to wire 22 schools for Internet access.

Equipment must be maintained, older equipment replaced, and telephone bills paid, says Whiteriver's Tracy Carrington. If E-rate funds were cut, his school system could not afford the $100,000 a year in telephone charges to bring Internet access to students.