The Schools and Libraries Committee of the Universal Service Administrative Company January 26 recommended that an additional $1.687 million be budgeted in 2004 for additional resources for the review of E-rate program invoices.
The recommendation, at the committee's quarterly meeting, is expected to be adopted by the full USAC board.
Although the SLD staff said that 85 percent of E-rate program invoices are processed within 30 days, USAC Vice President George McDonald noted that "that means 15 percent are not," and that many service providers had complained that they were "left hanging out" while they waited to be paid.
McDonald said that the SLD had recently reviewed its procedures for reviewing invoices but concluded that "everything we are doing is catching things that shouldn't be paid." He said that the SLD recently reassigned five application reviewers to the invoicing staff, but that they now need to return to application reviews. The budget increase, he said, would permit those persons to be replaced on a permanent basis. He said the SLD's subcontractors also plan to hire six temporary workers, with an eye to eliminating the current backlog of invoices by the end of 2004. In addition, the SLD will add a person to do service substitution reviews, which are contributing to the delays in paying invoices.
Committee members expressed concern about the volume of submitted invoices that were turning out to be ineligible, but deferred further discussion to an executive session.
The committee also approved final reports on a number of audits of E-rate program beneficiaries, and agreed to ask the Federal Communications Commission for additional guidance on who should be responsible for reimbursing the program when applicants were found not to be in compliance.
In one set of reviews, a school applicant was found not to have a technology plan, in violations of the certifications it had made on a Form 486. In another case, a school district was found to have installed equipment ordered for a 90 percent discount school at an 80 percent discount school "because it had ordered more than it had needed" and its service provider would not permit the equipment to be returned.
Service provider members of the committee reiterated their concerns that service providers could be required to reimburse the Universal Service Fund when applicants were responsible for the mistakes.
Committee member Anne Bryant said that when she first reviewed recent audits of a random sample of applicants, "I was horrified by the number that were not compliant," but then determined that the dollar amounts involved were often quite small. "I didn't sense a plot," she said. "The capacity is just not there. If a technology director is good, you are going to get compliance."
A representative of KPMG, which has been conducting audits for USAC, agreed. "We didn't find intentional fraud. Capacity is an issue at some of the districts."
In other items:
. McDonald reported that the SLD currently has 568 appeals that have been pending for more than 90 days, its current target for turning them around. He said the SLD had just received guidance from the FCC that will enable it to move forward with 121 of them. At this time last year, the SLD had more than 700 appeals awaiting disposition.
. The SLD still has 4,266 applications for funding year 2003 to review. McDonald noted that the SLD is trying to work out a process that would permit it to meet its targets for application review and still be fair to the more complicated applications of states and larger school districts.
. It was reported that the staff of the House Energy and Commerce subcommittee on oversight and investigations has visited the SLD's application-review operations in New Jersey and may make trips to Chicago and Puerto Rico as part of its investigation of the E-rate program. A USAC staff member said that these trips may further delay the committee's planned hearings on the E-rate program.