Law & Courts

Antitrust Suits Yield Windfall in Tech Funds

By Rhea R. Borja — August 29, 2006 4 min read
  • Save to favorites
  • Print

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

Events

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.
Sponsor
School & District Management Webinar
Stop the Drop: Turn Communication Into an Enrollment Booster
Turn everyday communication with families into powerful PR that builds trust, boosts reputation, and drives enrollment.
Content provided by TalkingPoints
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.
Sponsor
Special Education Webinar
Integrating and Interpreting MTSS Data: How Districts Are Designing Systems That Identify Student Needs
Discover practical ways to organize MTSS data that enable timely, confident MTSS decisions, ensuring every student is seen and supported.
Content provided by Panorama Education
Artificial Intelligence Live Online Discussion A Seat at the Table: AI Could Be Your Thought Partner
How can educators prepare young people for an AI-powered workplace? Join our discussion on using AI as a cognitive companion.

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 How One Lawyer Helped Reshape Special Education at the Supreme Court
A documentary follows a lawyer behind major Supreme Court wins for students with disabilities.
9 min read
Roman Martinez, an attorney with Latham & Watkins, is featured in the Bloomberg Law documentary 'Supreme Advocacy.'
Roman Martinez, a Washington lawyer who has played a role in four U.S. Supreme Court cases about the rights of special education students, is featured in the Bloomberg Law documentary "Supreme Advocacy."
via YouTube
Law & Courts Supreme Court Weighs IQ Tests and Other School Records in Key Death Penalty Case
The court weighs the proper role of IQ tests for defendants claiming an intellectual disability.
8 min read
IQ test, paper sheet with test answer on the table
iStock/Getty
Law & Courts Supreme Court Orders New Review of Religious Exemptions to School Vaccines
The U.S. Supreme Court ordered a new look in a school vaccination case and declined to review library book removals.
6 min read
A U.S. Supreme Court police officer walks in front of the Supreme Court amid renovations as the justices hear oral arguments on President Donald Trump's push to expand control over independent federal agencies in Washington, D.C., on Dec. 8, 2025.
A U.S. Supreme Court police officer walks in front of the court amid renovations in Washington, on Dec. 8, 2025. The court took several actions in education cases, including ordering a lower court to take a fresh look at a lawsuit challenging a New York state law that ended religious exemptions to school vaccinations.
J. Scott Applewhite/AP
Law & Courts Supreme Court to Weigh Birthright Citizenship. Why It Matters to Schools
The justices will review President Trump's bid to end birthright citizenship, a move that could affect schools.
4 min read
President Donald Trump signs an executive order on birthright citizenship in the Oval Office of the White House, Monday, Jan. 20, 2025, in Washington.
President Donald Trump signs an executive order to on birthright citizenship in the Oval Office on Jan. 20, 2025. The U.S. Supreme Court will consider the legality of Trump's effort to limit birthright citizenship, another immigration policy that could affect schools.
Evan Vucci/AP