Law & Courts

Antitrust Suits Yield Windfall in Tech Funds

By Rhea R. Borja — August 29, 2006 4 min read

Public schools in 12 states and the District of Columbia are starting to reap a windfall of up to $865.6 million for educational technology from the settlements of state lawsuits alleging that the Microsoft Corp. violated state antitrust laws. And in the next few years, schools in additional states will see millions of dollars more from similar settlements.

For example, Minnesota gave out $55.2 million in educational technology vouchers in January to eligible public schools, while Vermont began sending $4.7 million in vouchers to schools this summer.

Technology Transfer

Public schools in 12 states and the District of Columbia have received or will soon receive funds for educational technology from the settlement of state antitrust lawsuits against Microsoft Corp., including:

*Click image to see the full chart.

Click to enlarge: Technology Transfer

SOURCE: Microsoft Corp.; State Education Departments

California, which is expecting to get $400 million to $600 million in settlement funds for schools, and Florida, with at least $80 million, plan to start their voucher processes for schools this fall. Arizona, the District of Columbia, Kansas, Massachusetts, Montana, Nebraska, North Dakota, South Dakota, and West Virginia also have distributed vouchers, Microsoft officials say.

School technology experts say the Microsoft money provides a needed infusion for districts, as state funding for such technology has been cut or zeroed out. Federal funding for educational technology has been slashed by 60 percent since 2004, and may be eliminated, noted Mary Ann Wolf, the executive director of the State Education Technology Association, based in Glen Burnie, Md.

“With the dramatic cut in federal funds for technology, this will help fill that gap,” she said.

In California, state aid for education technology has been eliminated. So the settlement money is critical and timely, said Barbara E. Thalacker, the state’s administrator for school technology. “These funds are the only technology funds going to schools if [federal funding] goes away,” she said.

The windfall for schools is the result of state class actions alleging that Redmond, Wash.-based Microsoft illegally monopolized the market for personal-computer operating systems and other software, and consequently overcharged consumers for its products.

Rich Wallis, an associate general counsel for litigation for Microsoft, said that because the claims rate for such lawsuits varies widely, the company wanted to ensure the money would be used. “If we were going to resolve these [lawsuits], we wanted to make sure that some benefit came out of it,” he said. “It was Microsoft’s idea to have the benefit go to poor schools. And the plaintiffs agreed to that.”

New Mexico, North Carolina, Tennessee, and New York have settled their suits, but not yet disclosed when schools will benefit, according to Microsoft.

The amount available to the 17 states and the District of Columbia that have settled their suits totals more than $2.14 billion, Mr. Wallis said. Four states still have class actions pending against the software giant: Arkansas, Iowa, Mississippi, and Wisconsin.

Long Legal Road

The jackpot for schools comes at the end of a long legal road. In all of the settlements, which are for lawsuits filed by states between 1998 and 2002, consumers and businesses must first be paid. After they are reimbursed, schools get their share. The amount going to schools in Florida, Minnesota, and Vermont is 50 percent of the remaining settlement money. In California, it’s two-thirds of the remaining funds.

In the case of Minnesota, consumers could have received up to $174.5 million. But they claimed only $64 million. As a result, half the remaining $110.5 million benefited schools. And the other $55.2 million? That went back to Microsoft.

The definition of eligible schools varies by state. In California and Vermont, eligible schools are public schools, including charter schools, in which 40 percent of the student populations qualified for subsidized lunches in the 2004-05 school year. The schools must also have state-approved technology plans.

In Florida, at least half of a school’s students must come from low-income families. And in Minnesota, virtually all public schools qualify, as they must have a minimum of one low-income student.

Schools can use the one-time money for both hardware, such as computers, printers, and evaluation tools, and for software and professional development, according to state documents. Schools can buy products from various companies, not just Microsoft. For instance, Minnesota schools can choose from more than 1,500 products from many companies.

Minnesota sent vouchers to 467 school districts, for amounts ranging from about $300 to $6.3 million. The $6.1 million that Minneapolis received has already made a difference, said Coleen Kosloski, the executive director of technology for the 39,000-student district.

More than half the classroom computers in Minneapolis schools were at least 4 years old, and other technology was also quickly aging. So the district spent $3 million on new equipment and the rest on instructional software.

“This settlement is extremely important to our school district,” Ms. Kosloski wrote in an e-mail. “With so many online applications and processes that our teachers and staff need, … it’s more imperative than ever to have up-to-date computers.”

In Florida, 1,790 schools with more than 1.1 million students will be able to cash in on the settlement. The state department of education is creating a Web site about the funds, and schools will be able to sign up for the vouchers this fall. Districts will likely get the money in April, said Cathy Schroeder, a department spokeswoman. “The school districts are very excited to hear about this new money for technology,” she said.

A version of this article appeared in the August 30, 2006 edition of Education Week as Antitrust Suits Yield Windfall In Tech Funds


This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Law & Courts Webinar
The Future of Criminal Justice Reform: A Sphere Education Initiative Conversation
America’s criminal justice system is in crisis and calls for reform are dominating the national debate. Join Cato’s Sphere Education Initiative and Education Week for a webinar on criminal justice and policing featuring the nation’s
Content provided by Cato Institute
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Student Well-Being Webinar
Equity, Care and Connection: New SEL Tools and Practices to Support Students and Adults
As school districts plan to welcome students back into buildings for the upcoming school year, this is the perfect time to take a hard look at both our practices and our systems to build a
Content provided by Panorama Education
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Classroom Technology Webinar
Here to Stay – Pandemic Lessons for EdTech in Future Development
What technology is needed in a post pandemic district? Learn how changes in education will impact development of new technologies.
Content provided by AWS

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Law & Courts Court Restores Officers' Immunity Over Seizure of High School Athletes in Peeping Probe
A federal appeals court ruled in the case of two campus officers involved in detaining football camp participants for hours of questioning.
4 min read
Image of cellphones.
Law & Courts Appeals Court Weighs Idaho Law Barring Transgender Female Students From Girls' Sports
The three-judge federal court panel reviews a lower-court ruling that blocked the controversial statute and said it was likely unconstitutional.
4 min read
Image of a gavel.
Marilyn Nieves/E+
Law & Courts Federal Appeals Court Backs Socioeconomic-Based Admissions Plan for Boston 'Exam Schools'
The court denies an injunction to block the plan for next year and says considering family income in admissions is likely constitutional.
3 min read
Image shows lady justice standing before an open law book and gavel.
iStock/Getty Images Plus
Law & Courts U.S. Supreme Court Wary About Extending School Authority Over Student Internet Speech
In arguments, the justices looked for a narrow way to decide a case about the discipline of a cheerleader over a profane Snapchat message.
7 min read
Members of the Supreme Court pose for a group photo at the Supreme Court in Washington on April 23, 2021.
Members of the U.S. Supreme Court pose for a group photo at the court on April 23. The justices heard arguments Wednesday in a major case on student speech.
Erin Schaff/The New York Times via AP