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SLD Takes Steps to Toughen Its Enforcement Efforts

The Schools and Libraries Division is planning to more than double the size of the staff that performs its "Selective Reviews" in the coming months to better address issues that are turning up in both internal and external audits of program participants. 

These staffers are involved with reviews of such issues as competitive bidding irregularities, patterns of fraud and responding to whistleblower calls. The staff will grow from nine to 19 persons, including the addition of three special investigators. An additional $1.7 million will be budgeted to support this effort, including, for the first time, a travel budget that will enable reviewers to visit schools and libraries, even before funding commitments are approved.

"We work on paper, " SLD Chief George McDonald said. "If that differs from what goes on the field," he said the agency needs to deal with it.

The SLD reported that six recent internal audits had found violations that would lead to the canceling of $1.6 million in funding commitments; the SLD will be seeking the recovery of $1.1 million that was disbursed. These cases appeared to involve instances where applicants had not paid their share of the cost of the E-rate eligible equipment.

Board member Anne Bryant, executive director of the National School Boards Association, termed the reports "depressing." She added, "It gets to you when you read this. I want to be more threatening about this."

McDonald noted that in addition to recently posted Web site warnings, the latest version of the Receipt Acknowledgement Letter will include a prominent warning that applicants are required to pay their share of the cost of E-rate-supported equipment.

Robert Rivera and Frank Gumper, members of the board of the Universal Service Administrative Company, suggested steps designed to encourage schools to determine whether vendors were licensed in their states and were covered by performance bonds. Gumper noted, "One problem is that we are attracting almost 'fly by night' characters. Rivera added that 43 out of 50 states have business licensing requirements.

The SLD expects that it will be able to release the findings of the Arthur Andersen audit of 25 Year 2 beneficiaries at its next quarterly meeting. In addition, KPMG has been retained to audit about 80 applicants, chosen at random, to determine the program's overall compliance level.

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