E-Rate: A Pit of Waste, Fraud and Abuse

What do you think happens to a program designed to bring the internet to the neediest schools in the country and provide zero accountability? You guessed, you get a “pit of waste, fraud and abuse“.

There have been bribes, kickbacks, overcharges, faulty equipment, billing for no equipment, and many other abuses. A conservative estimate shows over $200 million dollars in waste and fraud. NEC for instance settled with payments and fines totaling over $20.6 million dollars.

Here are just a few more examples (Emphasis Mine):

San Francisco:


          

Arlene Ackerman, the San Francisco Independent School District’s superintendent, didn’t like the looks of a $50 million project proposal submitted for her approval shortly after her appointment in 2000.

As she delved into the project application—made under a program known as E-Rate—Ackerman began a five-year journey into the sordid maze of a well-intentioned but disastrous effort to provide hard-pressed schools and libraries with access to broadband service.

Houston and Dallas:


          

E-Rate Probes Target Texas Vendor (Apr 17 2006)
The flap over how value-added reseller Micro System Enterprises Inc. and the Houston and Dallas school districts may or may not have abused the E-Rate program shows the pattern of the civil and criminal cases due to emerge over the coming months.

Here is what the OMB said in its evaluation:


          

In a PART evaluation last updated in January and covering 2005, OMB gave the E-Rate program the following scores:
• Program purpose and design, 60 percent
• Strategic planning, 11 percent
• Program management, 31 percent
• Program results and accountability, 0 percent

Everyone to blame:


          

Committee chairman Joe Barton (R-Texas) said as the hearings opened in March 2005, “The government mismanagement of the E-Rate program seems to know no bounds.” Committee investigators had found that, “Unscrupulous vendors also fleeced the program while underserved communities and telephone customers pay the price,” Barton said. “The FCC, these merchants and certain schools all must share in the blame for this disgrace.”

More examples from Puerto Rico, Chicago, and El Paso:


          

The subsequent hearings revealed:
• Puerto Rico’s E-Rate program, which cost more than $100 million, did not provide effective equipment or services for the island’s school children as a result of mismanagement by USAC and the FCC, and led to a three-year prison sentence and $4 million fine for Puerto Rico’s former secretary of education.
• Chicago’s public schools had stockpiled more than $8.5 million of Internet connection equipment, while the E-Rate program and the Chicago school system paid twice for equipment that was never installed.
• Investigators charged that IBM Corp. had convinced officials of the El Paso Independent School District in Texas that they needed a gold-plated $27 million E-Rate program, which eventually failed, for a single year; IBM testified that it had acted properly.

Don’t forget to take a look at the E-Rate chart at this link.

Although this program has helped many schools, its lack of accountability has allowed taxpayer money to be ripped off by companies and school districts. We need more transparency into this and every other government program. This includes public government schools. The taxpayers need to see where their money is being spent so they can help prevent these types of waste and abuse.

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