Home AdvocacyPolicyWashington Notes2003 Apr

• Budget Update
• E-Rate Update
• IDEA Update
• ITFS Update

Budget Update
House and Senate Pass Budget Resolutions

Last week, the House and the Senate each passed their own versions of an FY04 budget. The separate bills contain some significant differences, most notably on the subject of the President’s proposal to institute $726 million in tax cuts, but also in the area of education funding. Once again, the Senate was more generous than the House with overall education spending limits and with increases in major education programs such as Title I. Both the House and the Senate, though, did support eliminating the smaller education technology programs, as the administration had proposed.

If the House and Senate manage to agree on a budget, something that does not happen every year, their budget will serve as an overall blueprint to guide the FY04 appropriations process. However, neither the spending caps nor the tax provisions would have the force of law; they can only be enacted, respectively, through the appropriations and reconciliation processes.

The Senate’s FY04 Budget Resolution, which passed on March 26 by a vote of 56–44, provides $791 billion in overall discretionary spending, with education receiving $58.3 billion of that amount. The education number represents a $5.2 billion increase over last year and a $4.1 billion increase over what the Senate Budget Committee had approved. The extra dollars over the Committee’s figures were added on the Senate floor and will be directed toward: Pell Grants, which received a bump of $1.8 billion during the Senate’s debate; No Child Left Behind, which gained $2 billion; and K–12 education programs, which received another $275 million. While the Senate agreed to raise the overall spending cap to add this spending, it also adopted a number of other spending increases but refused to raise the spending caps to accommodate them. Thus, in order for Senate-approved increases of $969 million for IDEA, $2 billion for Title V, and $112 million for Impact Aid to become operational in the FY04 budget, the Senate will need to find spending offsets (i.e. spending cuts) in other areas of the budget. It is unlikely that those amendments without offsets will be considered in conference.

The House resolution, adopted by a vote of 215–212, provides $775 billion for overall discretionary spending and $52.7 billion for education programs. The House’s education spending cap is a of $1.4 billion decrease from FY03 Appropriations levels, is $400 million lower than the Administration’s request, and is $5.6 billion lower than the Senate’s approved figures.

On education spending, both the Senate’s and House’s budget resolutions are similar to the Administration’s budget in that they eliminate smaller education technology programs such as the Preparing Tomorrow’s Teachers to Use Technology program (PT3), Star Schools, Community Technology Centers (CTC) and the Regional Technology in Education Consortia (RTEC), and cut 40% of the 21st Century Community Learning Center’s funding. The Senate budget does provide $172 million more for Impact Aid, $334 million for Title I and $331 million more for IDEA. The two budget fund the major programs at the following levels:

The major wrangling during conference on these two bills will likely occur on the President’s proposed tax cuts. The Senate voted to scale back the tax cut to $350 billion, largely over concerns about the cost of the war in Iraq. The House budget, though, includes the $726 billion in tax cuts that is supported by the Administration. In order to offset the costs of the tax cut, the House budget cuts 1% from several mandatory and discretionary programs. If the House’s version of the tax cut is ultimately enacted, it would require the House Education and the Workforce Committee to reduce mandatory spending by $9.7 billion over ten years, which may affect programs such as school lunch and student loans. Recent indications from the Administration suggest that it may not push for approval of the full $726 billion tax cut.

The Budget Resolution Conference Committee is expected to meet soon to negotiate the final budget figures, and will likely complete action by April 15. The reconciliation process, which will be necessary to enact the tax cut, is expected to begin later this spring.

E-rate Update
Waste, Fraud, and Abuse Issues Percolate

Since December, a number of allegations of waste, fraud, and abuse in the E-rate program have appeared in the press and in key reports. One such incident has led to federal prosecutors charging four representatives of Connect2, Internet Networks, Inc. with attempting to bilk the program of millions of dollars by convincing schools that they would pay the undiscounted share of the eligible services for them and that they should order services far more expensive than they could afford. This incident and others led to the publication of a report highly critical of the E-Rate program by the Center for Public Integrity, which included a quote from an auditor with the Inspector General’s Office that states: "It's not unfair to say we have found something wrong everywhere we have looked. It appears to be both intentional and unintentional. "These press reports and negative comments, in turn, spawned the launch of an investigation by the House Commerce Committee’s Subcommittee on Oversight and Investigations early this year. It also emboldened Colorado Congressman Tom Tancredo (R), a persistent critic of the program, to introduce a bill (HR 1252) that would eliminate the program. The bill has four cosponsors but is unlikely to gain sufficient momentum to pass.

This past month has seen several new developments on this front. One of the major catalysts for Hill and FCC action was the School and Library Division’s decision to deny, in a single Year 5 funding wave, approximately $590 million in discount requests on the grounds that the competitive bidding process had been compromised. Large city districts, including Atlanta, Cleveland, Dallas and Fort Worth, lost tens of millions of dollars. This large-scale rejection caused great consternation in the applicant and vendor communities. It also led to some visible federal action.

The House Commerce Committee, which had been quietly pursuing its E-Rate waste, fraud and abuse investigation, publicly demanded documents pertaining to particular E-Rate applications from the FCC and the Schools and Libraries Division. The press release accompanying these requests stated that the investigation was being “stepped-up” and labeled the E-Rate program “troubled.” Prior to Congress’s upcoming Easter/Passover recess, this Subcommittee is likely to hold a full-scale hearing as part of its investigation.

The Senate Commerce Committee held a hearing on universal service fund issues earlier this week that contained a few negative comments about how E-Rate funds were being distributed. Echoing comments made earlier this month by Senator Ted Stevens (R-AK) that the E-Rate’s large disbursals of discounts to urban areas cut against the grain of the universal service program’s goal of assisting high-cost rural areas, Senators Burns (R-MT) and Brownback (R-KS) stated that they thought that the FCC must take a close look at whether E-Rate was undermining this traditional goal. To underscore this point, Senator Burns noted that California had received $1.5 billion over the program’s first five years while his home state of Montana had received but $16 million. Despite these comments, the hearing left the E-Rate issue alone and focused on how best to establish a stable universal service fund collections process.

The FCC and the SLD have also become involved in this issue. FCC Commissioner Kathleen Abernathy announced that she would hold a public forum on May 8 to address potential changes to the E-Rate. The Commissioner stated that recent events “have convinced me that the FCC needs to take a hard look at whether our rules provide an adequate framework to avoid wasteful expenditures and prevent gaming of the system. While our established procedures have successfully uncovered instances of program abuse, we need to consider changes to lessen the potential for waste, fraud, and abuse.” The SLD announced at the end of March that it would be creating a Task Force on the Prevention of Waste, Fraud and Abuse, which will “identify areas where improvements can be made in the support mechanism and in outreach and training and will recommend specific actions to combat potential waste, fraud and abuse by both service providers and applicants.” Task force members will come from the applicant and service provider communities. A final report from the Task Force is expected by early summer.

Year 5 Discounts
Following the large-scale denials in Wave 24 and Wave 25, the SLD announced that it would be able to provide internal connections discounts down to the 81% discount level. While no decision has yet been reached on whether applicants with 80% discount levels will receive internal connections funding, SLD has indicated that by no means will it be able to provide internal connections discounts to those applicants with 80% or lower discount rates. With next week’s Wave 26, 81% and above applicants will begin receiving funding commitment decision letters awarding them internal connections discounts.

To date $1.877 billion in E-Rate discounts has been committed for Year 5.

IDEA Update
IDEA Reauthorization Bill Clears First Legislative Hurdle in the House

Led by Education Reform Subcommittee Chairman Mike Castle (R-DE), on March 19, 2003, Republican members of the U.S. House Committee on Education and the Workforce formally introduced H.R. 1350, legislation to reauthorize the Individuals with Disabilities Education Act (IDEA), which expired in 2002. On April 2nd the Subcommittee on Education Reform accepted five amendments to the bill, and by voice vote favorable reported it out to the Education and the Workforce Committee. The full Education and the Workforce Committee will convene next week to mark up the bill.

H.R. 1350, which contains several new provisions relating to technology, is being characterized by its sponsors as necessary to eliminate overly complex and bureaucratic rules to ensure that children with disabilities get the education results that they deserve – not a massive re-write of the law that as what occurred in 1997. The subcommittee debate focused largely on Democratic attempts to ensure that IDEA funding is mandatory and fully funded at authorized levels. Rep. Tom Osborne of Nebraska included an amendment supported by the technology community to require state agencies, when entering into a contract with publishers, to prepare and supply materials with electronic versions for students with disabilities using the national instructional materials accessibility standard.

The introduction and subcommittee markup represents the first formal step in what is expected to be a long and emotional debate over reauthorization of the law that governs the education of more than 6 million students with learning, physical and emotional disabilities. The Senate has yet to introduce legislation, but many expect a bill to be dropped before the beginning of the spring recess (scheduled to begin April 14th), which would allow a few weeks for interested parties to review and comment before a markup is scheduled. It is widely anticipated that that there will be much discussion, lobbying and Democratic attempts at amending the legislation during committee markup and during consideration on both the House and Senate floor. Senate Democrats thus far seem especially interested in addressing and improving the technology provisions.

There are many provisions of importance to the technology community, especially with the proposed changes within Part D of the House’s draft IDEA bill. There is also a positive new "finding" included in Part D establishing that "support is needed to improve technological resources and integrate technology into the lives of children with disabilities, parents of children with disabilities, school personnel and others through curricula, service, and assistive technologies." Additionally, under the new bill, the State Improvement Grants section would be replaced by the establishment of a new State Professional Development Grants program that could be used for a variety of professional development activities to improve access to the general curriculum, including activities that support the training of teachers to effectively integrate technology into the classroom.

The new bill transfers the administration of grants for Research to Improve Results for Children with Disabilities to the Institute for Education Sciences (IES) and directs the Secretary of Education to publish a research agenda public comment with the intention of moving toward a more comprehensive research approach. Of concern is the elimination of provisions that encourage funding for integrating research and practice.

Other provisions of interest to the technology community include provisions to eliminate support for the implementation of research programs on captioning and video description. Also, several technology innovation activities have been transferred to the research agenda, including the development of technology with universal-design features. Furthermore, the use of grant money to provide video description, open captioning or closed captioning of television programs would be limited to those "with an education-based content for use in the classroom setting when such services are not provided by the producer or distributor of such information." The new language would prohibit grant money from being used for the general closed captioning and video description of educational, news informational programs, videos and other materials as is the current practice.

While raising a host of questions and concerns, the authors of the new IDEA bill managed to sidestep one major controversy during the mark-up: it eliminated a much-decried proposal that would have barred nonprofit organizations from lobbying if they have even tangential connections to recipients of federal parent resource center grants. The adoption of such a provision would have severely limited the ability of nonprofits to even provide information on federal legislation. Other controversial issues such as voucher and school choice provisions, along with continued debate on the mandatory full-funding issue are likely to debated further during full committee markup and the House floor debate.

ITFS Update
FCC Initiates Proceeding to Facilitate Wireless Broadband Access in the ITFS Spectrum

Last month, the Federal Communications Commission began a proceeding designed to facilitate the provision of fixed and mobile broadband access, educational and other advanced wireless services in the 2500-2690 MHz bands. The proceeding is intended in part to review the longstanding technical rules that currently apply to transitioning ITFS, and its commercial counterpart MDS, services to two-way digital operation. The current rules are generally considered burdensome and difficult to implement, and revisions are largely welcomed by ITFS licensees.

However, ITFS licensees have become alarmed at word that the proposed rulemaking will also seek comment on whether the ITFS spectrum, the only spectrum owned by educational institutions and committed to an educational mission, should be permitted to be sold. Right now, ITFS licensees have considerable flexibility to lease substantial portions of their spectrum to MDS providers. In return, they receive needed cash and often assistance with equipment and services. As the ITFS spectrum transitions to broadband, this arrangement promises to provide the needed resources to help educational institutions modernize their systems. Many licensees are worried, however, that if the rules permit sale of the spectrum, they will be pressured, in a time of limited resources, to sell to the higher bidder. Over time, educational ownership of the spectrum could dwindle and the political voice of the ITFS community to protect and develop the educational spectrum could be lost.

Two years ago, the FCC considered whether to move ITFS to less desirable spectrum in order to make way for commercial interests. That proposal was rejected by the FCC after a high profile campaign by licensees and educational organizations under the banner of WebNow. Now there is concern that the current rulemaking may provide a “back door” way of achieving the same result. Although the FCC announced the Proposed Rulemaking in early March, the text has just been released and has not yet been posted in the Federal Register. When it is posted, comments will be due in ninety days. With the Commission seeking to maximize spectrum efficiency and flexibility and to find additional spectrum for new services, there is no question that the future of ITFS is on the line.