Could Applicants Bear the Cost of an Audit? An FFL Analysis
Congressional proposals to require E-rate applicants to bear the cost of audits of their funding commitments may not reflect how little funding the average applicant actually receives.
For the 2002 funding year, the last year for which funding commitments are substantially complete, the median funding commitment was only $10,520, according to an analysis of Schools and Libraries Division data by the E-rate consulting firm Funds For Learning. Of the 20,636 entities whose applications were reviewed, only 269 received approved funding commitments totaling as much as $1 million for that year. Another 1,949 received approved commitments of between $100,000 and $999,999. Another 8,306 applicants received approved commitments totaling between $10,000 and $99,999. Another 10,112 applicants, or roughly half of the total applicant pool, received commitments of less than $10,000. There were 1,960 applicants who received commitments of less than $1,000.
The numbers are even smaller when actual disbursements, rather than commitments, are reviewed. Disbursements for the 2002 funding year have not yet been completed, in part because some applicants qualified for additional time in which to complete their projects.
So far, for the 2003 funding year, only 46 applicants have received approved commitments totaling as much as $5 million. For the 2004 funding year, only 43 applicants that have submitted funding requests totaling $10 million or more.
Among the recommendations of the Schools and Libraries Division's Task Force on the Prevention of Waste, Fraud and Abuse last year was that the program administrators "convene a process to better match the complexity of the application review processes with the complexity of individual application situations."
During a June 17 hearing of the House Energy and Commerce Subcommittee on Oversight and Investigations, Subcommittee Chairman James Greenwood, R-Pa., suggested requiring applicants to pay the costs of their audits. Rep. Diana DeGette, D-Colo., expressed support for Greenwood's idea, saying "I think it's a great idea for schools to pay out of the E-rate funds they receive."
Some have also suggested applying the auditing approaches used by other federal government agencies. Under the Single Audit Act, state and local governments and non-profit organizations are required to complete an audit when they receive more than $500,000 in federal funds. In the 2002 funding year, only 488 E-rate applicants were approved for commitments totaling $500,000 or more.