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Schools Required to Return E-rate Discounts for CIPA Compliance Violations

A number of schools have been required to repay some E-rate discounts they received because they were not in compliance with the requirements of the Children's Internet Protection Act by the date they were supposed to be.

The situation came to light in mid-January as a result of petitions filed by Verizon Network Integration Corp. and Verizon-New Jersey with the Federal Communications Commission.

According to the Verizon appeals, the Morris Catholic High School in Denville, NJ, and the Queen of Peace High School in North Arlington, NJ, had certified that they were in compliance with CIPA when they sought discounts on Internet access for the E-rate funding year that started on July 1, 2002. In the case of Morris Catholic, the Schools and Libraries Division determined that they were not in compliance until August 12, 2002, and required them to return $526.05 in discounts received on Verizon services. In the case of Queen of Peace, the SLD found that they were not in compliance until January 14, 2003 and required them to return $1,036.27.

The Verizon petitions were focused on the FCC's Commitment Adjustment procedures, not CIPA per se. So-called COMADs require service providers to reimburse the Universal Service Fund for disbursements made in error or when rules are violated and then to seek restitution from their customers. The service provider community has long objected that this, in effect, turns service providers into the E-rate program's debt collectors. The FCC recently asked if there were any circumstances in which this requirement should be waived and Verizon argued that service providers should not be required to recover funds from applicants when there is no evidence that the service provider was at fault. It argued that Verizon had no way of knowing that the schools had not met the CIPA requirements by the start of the funding year.

An SLD spokesman said that the schools were contacted in the course of the review of their Form 486 applications because of "discrepancies" in the certifications they had made for 2001 and 2002 funding year requests. In 2001, recipients of E-rate discounts for Internet access and internal connections were required to certify that they were "undertaking" compliance with CIPA, which was passed in December 2000. By July 2002, these applicants were expected to be in full compliance unless they could qualify for a waiver because of delays associated with state and local procurement requirements. Applicants that seek discounts solely for telecommunications services are not subject to the CIPA requirements.

The SLD spokesman said additional applicants had been found in violation of the CIPA timetable, but he could not say how many. The SLD and its auditors, he said, do not review the precise solutions that schools and libraries have chosen to adopt when they certify that they have complied with CIPA.

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