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Senate Commerce Committee to Hold Hearing on E-rate Program

The Senate Commerce Committee has scheduled a hearing October 5 on waste, fraud and abuse in the E-rate program. The session, which was organized on short notice, will likely also review the current freeze on E-rate commitments while the Universal Service Administrative Company and the Federal Communications Commission work to resolve issues related to bringing USAC under the federal government’s accounting standards.

Scheduled to testify are J. Walker Feaster, FCC inspector general, George McDonald, vice president of USAC for the Schools and Libraries Division, Frank Gumper, chairman of the USAC Board of Directors, and Winton Himsworth, a consultant and member of the State E-rate Coordinators’ Alliance. More information about the committee’s webcast of the hearing is available at

State leaders and the E-rate program’s congressional sponsors have written the FCC in recent days, expressing concern that further delays in funding commitments could negatively impact states’ ability to support their educational networks.

In the past, USAC has been able to approve funding commitments in excess of the cash it had on hand because there was a long lag time before applicants actually used the funds, and historically, they have not used all of their approved funding. However, the new accounting rules have changed the way the program must account for these funds, forcing the SLD to put new commitments, for both the 2003 and 2004 funding year, on hold, as of early August. In the meantime, USAC continued to make disbursements against approved commitments.

In recent years, the FCC has also been under pressure to keep the universal service contribution factors—what telecommunications companies are required to contribute—low enough that they would not have a dramatic impact on telephone bills. In mid-September, the FCC announced it would use $150 million in collections from previous quarters to reduce the amount that it would need to collect from the carriers to meet the projected level of demand for the E-rate program in the fourth quarter of 2004.

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