E-Rate Program Told to Direct Money to Schools Now

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Trying to alleviate a severe cash crunch in the federal E-rate program, the Federal Communication Commission directed the program’s manager last week to convert $210 million in investments to ready cash that could be provided to schools and libraries.

But an official at the Universal Service Administrative Co., the nonprofit company that runs the E-rate program, was unsure whether any schools and libraries would receive funding commitments before November—usac’s most optimistic estimate before the FCC’s announcement last week. ("Cash Freeze for E-Rate Hits Schools," Oct. 6, 2004.)

“It’s almost fluid every day—we are taking a look at available cash on hand, funding commitments that are obligated right now, and how much money we get from [telecommunications] carriers,” Mel Blackwell, USAC’s vice president for external communications, said Oct. 7.

Capitol Hill Heat

In August, USAC halted funding of nearly $3.4 billion in requests for the “education rate” discounts on telecommunications services, which are awarded each year to support eligible projects and services requested by schools and libraries. Most of those projects go nowhere until the E-rate funding commitments are mailed out.

Usac froze funding for projects because officials feared that they did not have enough money to meet their obligations under accounting rules for federal agencies that went into effect this month, according to Mr. Blackwell.

Over the past few weeks, however, a chorus of protest has risen from state and school officials. And a hearing last week of the U.S. Senate Committee on Commerce, Science, and Transportation that had been scheduled to focus on waste, fraud, and abuse in the E-rate program instead highlighted the fiscal jam.

In a statement released before the hearing, Sen. Olympia J. Snowe, R-Maine, charg ed that the accounting change “could imperil a program that helps countless communities around the country. As a result, no school or library in the country has received any funding, nor even a commitment for funding, since Aug. 3.”

Vol. 24, Issue 07, Page 7

Published in Print: October 13, 2004, as E-Rate Program Told to Direct Money to Schools Now
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