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Gee, wouldn't you like to have this IT budget.  And these districts are supposed to be "poor"??

John Lee
Vaske Computer Solutions



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Waste and Fraud Besiege U.S. Program to Link Poor Schools to Internet

June 17, 2004
 By SAM DILLON





WASHINGTON, June 16 - When the El Paso school system wanted
to upgrade its Internet connections three years ago, it
tapped into a federal program that offers assistance for
such projects.

The program paid the International Business Machines
Corporation $35 million to build a network powerful enough
to serve a small city. But the network would be so
sophisticated that the 90-school district could not run it
without help.

Foreseeing the problem, I.B.M. charged the district an
additional $27 million, paid by the federal program, to
build a lavish maintenance call-in center to keep the
network running. The center operated for nine months. Then,
with no more money to support it, I.B.M. dismantled it and
left town.

The federal effort to help poor schools connect to the
Internet, the E-rate program, which collects a fee from all
American phone users to distribute $2.25 billion a year to
such schools and libraries, wasted enormous sums as El Paso
built its extravagant network in the 2001-2 school year,
according to documents and federal lawmakers.

But the problems have not been there alone. In Brevard
County, Fla., school officials used E-rate money to install
a $1 million network server, a powerful device more suited
to the needs of a multinational corporation, in a 650-pupil
elementary school. And just three weeks ago in San
Francisco, a subsidiary of the computer giant NEC agreed to
plead guilty to two federal felony counts related to the
program.

Across the nation in recent months - in El Paso and in New
York and Pennsylvania, in Puerto Rico and Atlanta, in
Milwaukee and Chicago - investigations or audits of the
program have turned up not only waste but also bid-rigging
and other fraud, according to lawmakers and investigators.
A report issued last week by the Federal Communications
Commission, which oversees the E-rate program, said 42
criminal investigations were under way.

On Thursday, Congress is to open hearings on all that has
gone wrong. The hearings will be held by the House Energy
and Commerce Subcommittee on Oversight and Investigations,
whose chairman, Representative James C. Greenwood of
Pennsylvania, says the F.C.C.'s supervision was weak.

Mr. Greenwood said that since schools often must pay only
10 percent of the cost of equipment and services while
E-rate picks up the rest, "contractors have mastered the
art of coming into these districts, recommending
gold-plated architecture, and school officials, buying at
10 cents on the dollar, take everything they recommend.''

"You couldn't invent a way to throw money down the drain
that would work any better than this," he added.

The Universal Service Administrative Company, a nonprofit
government corporation overseen by the communications
commission and known to school administrators as USAC
(pronounced YOU- sack), is in charge of the E-rate program,
which has many enthusiastic backers.

"Every mammoth government program has problems," said Gregg
Downey, editor of eSchool News, a paper that covers
educational technology. "The sloth, the waste and the cases
of outright fraud shouldn't be a reason to get rid of a
program that's doing a lot of good. This is a program that
helps schools serve students better through technology."

Michael Balmoris, a spokesman for the communications
commission, said that E-rate was not "waste- and
fraud-free" but that abuses were not "endemic."

Narda M. Jones, an acting chief in the F.C.C. division that
oversees the program, said it was designed to give schools
"maximum flexibility" to build technology systems that
suited their needs.

"But as the system has grown, we've seen that that design
has given people an opportunity to push at the margins of
the program," Ms. Jones said.

In the last year, she said, the commission has adopted
rules that "significantly tighten" the wiggle room for
abuse. One such rule bars people found guilty of crimes
from participation, she said.

But Thomas D. Bennett, an assistant inspector general at
the commission, remains concerned about oversight. He
pointed to evaluations of 122 E-rate beneficiaries carried
out or overseen by F.C.C. and USAC auditors in the last
year or so. The auditors characterized 62 beneficiaries as
"compliant" with E-rate rules, 21 as "generally compliant,"
and 39 - nearly a third of the total - as "not compliant,"
Mr. Bennett said.

"That doesn't give us much comfort that beneficiaries are
complying with our rules," he said.

In the case of the $1 million server, installed for the
Endeavour Elementary School in Cocoa, Fla., Mr. Bennett's
auditors are midway through an examination of documents
relating to the Brevard County school district's purchase
of it. He declined to characterize the interim findings.

Lee A. Berry, the Brevard district's deputy superintendent,
defended the purchase.

"We violated no rules," Mr. Berry said. "Was that server
appropriate for that school? In our mind it was. It allowed
each teacher and child to have a Web site."

In El Paso, school authorities applied for a total of $10.6
million in the first three years of the E-rate program,
which got under way in 1998. They used the money they
received to wire classrooms and offices.

Then El Paso formed a strategic alliance with I.B.M. and in
December 2000 filed an application for $77 million, at
least 20 times as much as in any previous year. Of that
total, the E-rate agency ultimately disbursed about $62
million.

The I.B.M.-El Paso plan called for creation of a
fiber-optic network with videoconferencing capabilities,
managed by top-of-the-line switches, routers and other
hardware. The project was so sophisticated, and so much
money had to be spent so fast, that the district's in-house
technology staff was quickly overwhelmed.

After financing was approved, I.B.M moved immediately to
roll out the new network. But it took until April 18, 2002,
to commence operations at the $27 million maintenance
support center, Andrew Kendzie, an I.B.M. spokesman, said
by e-mail in response to questions. Eleven weeks later, the
budget year ended, and since I.B.M. was only renting the
center to the district, its continued operation required
new E-rate money.

Hoping that El Paso would gain approval of a $46 million
request for the new budget year - approval that never came
-I.B.M. operated the maintenance center at its own expense,
of $3 million, through December 2002, Mr. Kendzie said.

"We informed the district that we could no longer continue
to provide these services for free," he said, and in
January of last year the company dismantled the maintenance
center and left El Paso.

http://www.nytimes.com/2004/06/17/politics/17computer.html?ex=1088493082&ei=1&en=33810ff380fae393


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