During site visits to various schools, the OI’s E-Rate team noted a discrepancy between their observations and the percentages of students reported as eligible for free and reduced lunch (i.e. NSLP data). In response, the OI is working with the USDA to obtain information and documentation on schools identified with apparent discrepancies as part of an investigation into potential fraud. At the time that the FCC’s semiannual report to Congress was written, the OI identified over 100 schools with a discrepancy of at least 10% between data reported to the State versus data reported to the USAC. The OI of the FCC is also working with the U.S. Department of Education’s OIG and the FBI in anticipation of potential criminal, civil and/or administrative cases (FCC OIG, 2017).

Food and Nutrition Service of USDA maintains that SEAs and LEAs, schools and school districts, are responsible for ensuring the accuracy of eligibility determinations through the verification process. To accurately determine, certify and verify children’s eligibility for NSLP benefits, the FNS provides comprehensive information on the Federal requirements, policies and procedures. Refer to the FNS Eligibility Manual for 2017-2018 School Year here.

What would a 10% increase in the percentage of students eligible for NSLP impact E-Rate funds?

An increase in student percentage of NSLP data as little as 1-5% could mean that schools close to transition points on the USAC’s E-Rate Discount Matrix move up to the next discount bracket. However, according to the Matrix, a 10% increase could yield an even deeper E-Rate discount for schools and school districts. For example, a school district in an urban area with a percentage of 40% student eligibility for NSLP would qualify for a 60% discount for both Category One and Category Two products and services. However, a 10% increase in the percentage of eligible student data would raise the discount to 80% for products and services for Categories One and Two. Considering that, on average, the E-Rate funding program has annually provided public schools approximately $55 per K-12 student for Internet, data plans, telephone, on-campus Wi-Fi and networking services, a deeper discount could amount to thousands of dollars in additional subsidies for schools. See FY2015-FY2017 E-Rate Discounts by State.

Products & Services Covered by E-Rate
Category One Category Two
• Data Transmission Services and Internet Access
• Voice Services
• Internal Connections
• Managed Internal Broadband Services
• Basic Maintenance of Internal Connections
What does each E-Rate Category Cover?

Category One services covers connectivity basics—not equipment purchases or other services beyond basic access to the Internet channel. Voice services may include local and long distance phone lines, VoIP and cell phone service, but this service is being phased out in FY2019.  Category Two services include equipment purchases; products that are necessary to construct a network that transports information through classrooms and libraries: access points, routers, switches, hubs, and wiring. Of course, these internal connections will need regular maintenance, tech support and occasional repair. These services are also supported by the Category Two budget. Discover more details on what is covered under each Category of Eligible services here. Note that Category Two budgets are set at the school level and cannot be shared between schools (USAC).

In addition to increasing the spending cap from $2.4 billion to $3.9 billion, the Modernization Order dedicated $1 billion to Category 2 services including Wi-Fi; internal connections. A phase-out of older Category 1 services conserves funds for the type of technologies that schools need to update their networks and systems.

How much does an overhaul cost? An infrastructure overhaul to expand broadband in a rural communities and update to fiber optics has been estimated to cost anywhere from $75,000 to $420,000 per school in a given district (Moore, 2018). State policymakers are working to help close the digital divide using federal funds set aside for modernization.

What would E-Rate data discrepancies spell for schools?

Schools have encountered challenges with collecting information from households to determine student eligibility for NSLP.  Miscalculations of NSLP eligibility data could mean that schools miss out E-Rate funds, but discrepancies between data reported to the State versus the USAC could mean that persons working on behalf schools and districts face liability charges for E-Rate fraud resulting in suspension and debarment. Moreover, districts found in violation of E-Rate have had to relinquish millions of dollars in funding and pay hefty settlements.

During the reporting period, we shared recommendations to prevent and detect fraud in the E-Rate program with Commission and Universal Service Administrative Company (USAC) staff.

Office of Inspector General

The reality is that districts often face employee turnover.  Moreover, the E-Rate filing process, rules and compliance requirements have been characterized as complex. To prevent a denial of funding and costly penalties, educational leaders appoint district and school staff as subject matter experts on E-Rate compliance. However, since the FNS maintains that schools and school districts are responsible for ensuring the accuracy of eligibility determinations for free and reduced price lunch, schools and districts must make careful calculations and retain documentation that will justify any seeming discrepancies related to the E-Rate program. ISAFE Enterprises has successfully helped over 4,000 school districts establish a compliance solution that meets their needs. Safeguard critical district funding for technology infrastructure through accurate documentation and reporting while streamlining communication across stakeholders. Contact us for a quote.

About ISAFE Enterprises

ISAFE Enterprises is a hybrid organization (non-profit and for-profit LLC) focused on helping educational and commercial organizations comply with statutory regulations safeguarding child privacy. We offer a suite of technology services and solutions which enable identity management and age-appropriate e-safety instructional programming which meets and exceed regulatory requirements. We are on the cutting-edge of technology and education.

Learn more at isafeventures.com.

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