School Internet Program Lacks Oversight, Investigator Says

[David Farber <dave () farber net>]

From the New York Times -- 
http://www.nytimes.com/2004/06/18/education/18computer.html?th

School Internet Program Lacks Oversight, Investigator Says
By SAM DILLON

WASHINGTON, June 17 - Representative Joe L. Barton listened to an hour 
or so of Congressional testimony on Thursday about waste and fraud in 
the federal program that helps poor schools connect to the Internet 
before questioning an official who has been investigating it.

"Is it your view that these applicants view this program as a big candy 
jar, free money?" Mr. Barton, Republican of Texas and chairman of the 
House Energy and Commerce Committee, asked H. Walker Feaster III, 
inspector general for the Federal Communications Commission, the agency 
that oversees the program.

"I'd agree with that," Mr. Feaster replied.

The E-rate program, administered by a little-known corporation, the 
Universal Service Administrative Company, is financed by a fee 
collected from all telephone users. It has disbursed $8.1 billion since 
it began wiring schools in 1998. Most of the 30,000 or more districts 
and libraries that receive financing each year pay only about 10 cents 
on the dollar for equipment and Internet services. This arrangement has 
led contractors to prey on the program and school officials to be less 
careful in acquisitions than they might be in spending district money, 
several witnesses testified Thursday.

Representative James C. Greenwood, Republican of Pennsylvania and 
chairman of the Subcommittee on Oversight and Investigations, opened 
the hearings by listing the dismal findings of a string of recent 
investigations. In Puerto Rico, Mr. Greenwood said, investigators found 
$23 million worth of telecommunications equipment sitting 
shrink-wrapped on pallets in a government warehouse years after it had 
been bought with program money. In Milwaukee and New York, there have 
been indictments in the defrauding of schools, he said. In Chicago, 
SBC, one of the largest telephone companies in the United States, 
returned $8.8 million in federal money after vast quantities of 
Internet routing equipment bought for use in schools were found 
stockpiled improperly in a warehouse, Mr. Greenwood said. In San 
Francisco, NEC pleaded guilty to felonies for preying on schools there 
and in Michigan, Oklahoma, Arkansas and South Carolina.

"And I fear that we may be only seeing the tip of the iceberg,'' Mr. 
Greenwood said.

Much testimony focused on oversight for the program.

Carol Mattey, a deputy bureau chief in the Federal Communications 
Commission, said that audits conducted to date suggested that rule 
breakers were few. Ms. Mattey cited an error rate of less than 1.2 
percent in the audits conducted last year but said her agency would be 
"expanding the scope of our auditing work in the coming year 
substantially."

But Mr. Feaster said there were not enough full-time auditors devoted 
to the program. Together, the Universal Service Company and the F.C.C. 
have about 15 auditors who review E-rate programs, and private auditing 
companies are contracted to do additional work, Mr. Feaster said. But 
all of the auditors combined scrutinize only a tiny percentage of the 
vast number of projects the program approves each year, he said.

Under questioning from Representative Greg Walden, Republican of 
Oregon, Mr. Feaster estimated that since the program began disbursing 
in 1998 it had given upward of 200,000 grants. Yet F.C.C. and Universal 
Service Company auditors have carried out or overseen fewer than 200 
audits, Mr. Feaster said.

Several lawmakers were at pains to praise the goals of the program.

"We should not let a few bad apples spoil the bushel," said 
Representative Bobby L. Rush, Democrat of Illinois, noting that the 
program had helped schools in his Chicago district obtain Internet 
access. "It's clear that this is a program that is helping to bridge 
the gap between the haves and the have-nots."

Copyright 2004 The New York Times Company
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