Published Online: March 15, 2010
Published in Print: March 17, 2010, as E-Rate Claims Lead to Fine for Houston

Houston Settles Over E-Rate Corruption Allegations

The largest public school system in Texas has agreed to pay $850,000 as part of a civil settlement relating to claims that employees accepted meals and other gifts in connection with the federal E-rate program.

The agreement settles allegations by the U.S. Department of Justice that the Houston school district provided false information to the Federal Communications Commission’s education-rate program, which provides funding for schools and libraries to connect to and utilize the Internet.

The Justice Department said last week that the Houston district, which has more than 200,000 students attending 295 schools, also engaged in noncompetitive bidding practices for E-rate contracts.

Greg Meyers, the president of the Houston school board, said settling the allegations was a sound business decision that will help level the digital playing field for students by restoring school technology funding awards.

Under the E-rate program, created by Congress in the Telecommunications Act of 1996 and funded by fees collected from telephone users, schools apply for aid to pay for hardware and monthly service fees for Internet connections.

Protecting ‘Integrity’

The Justice Department contended that the Houston Independent School District provided false information to the E-rate program and otherwise violated the program’s requirements by engaging in noncompetitive bidding practices for E-rate contracts. It further alleged that district officials received gratuities from technology vendors, including trips, meals, and loans.

Education Week recently began a special technology feature that will appear in every issue of the newspaper, covering news, trends, and ideas about digital learning and administrative uses of tech tools in schools.

Visit Education Week Digital Directions Web site for regular updates on news, trends, and ideas in education technology.

“The E-rate program provides critical support for Internet access and wiring to the most underserved schools in the country,” Tony West, the assistant attorney general for the civil division of the Justice Department, said in a statement. “We are committed to protecting the integrity of this important program that benefits our neediest children.”

Mr. West noted that the resolution announced last week resulted from an ongoing federal investigation of possible fraud and anti-competitive conduct in the E-rate program in Texas. The investigation is a collaborative effort involving the Justice Department’s civil division, the U.S. attorney’s office for the Northern District of Texas, and the FCC’s office of the inspector general.

The settlement with the Houston district is part of the federal government’s efforts to combat fraud through the use of enforcement tools such as the False Claims Act. Since January 2009, the Justice Department’s total recoveries in False Claims Act cases have topped $3 billion.

Vol. 29, Issue 25, Page 11

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