Home AdvocacyPolicyWashington Notes2003 Oct

• Appropriations Update
• E-Rate Update
• ITFS Proceeding Continues at FCC
• Microsoft Settling Class Actions on State-by-State Basis; Schools May Benefit

Appropriations Update
Congress Cuts Spending for Education Technology

As the Congressional calendar winds down, education funding for FY04 remains up in the air. Unable to settle the vast majority of the FY04 appropriations bills by the beginning of the fiscal year, Congress has elected to continue funding most federal departments through a continuing resolution (CR), which funds all federal programs at last year’s levels until October 31. Although hope lingers that some of the appropriations measures will pass through the regular order of conference reports, it is becoming increasingly likely that many FY04 spending bills will be wrapped into an omnibus bill and passed. The timing on this action is uncertain, but observers speculate that the period between Veterans’ Day and Thanksgiving will be the most likely time for Congress to complete its work on appropriations and recess for the year.

The Labor, HHS and Education Appropriations bill has become yet another victim of the delay and is currently bogged-down in conference. Last month, the Senate passed its version of this bill by a 94-0 vote. It provides $55.8 billion for all federal education programs, an increase of $2.7 billion from FY03, with the bulk of funding increases directed to Title I and IDEA programs (each of which received an additional $1 billion in funding). The Senate bill also contains approximately $400 million more for education than the House version approved over the summer.

Even with overall education funding increases, education technology programs continue to fight an uphill battle for survival, let alone for increases. Both the House and the Senate bills provide $696 million for the education technology block grant program, which is equal to the level of funding after the across-the-board cut in the FY03 Omnibus bill. Although the block grant program appears to be in no jeopardy in conference, many of the smaller education tech programs face great difficulty. For example, although the Senate funds the Star Schools and the Community Technology Centers (CTC) programs at levels significantly lower than last year—Star Schools loses $6.8 million and CTC loses $12.3 million—the House opts to eliminate both programs entirely. The Preparing Tomorrow’s Teachers to Use Technology (PT3) program is in even more dire straits, with neither the House nor the Senate providing any funding. With PT3’s strong bipartisan support, though, there is still some hope that some funds will be allocated for the PT3 program during the Conference.

One major development in FY04 appropriations is the emergence of new funding for collecting and analyzing data. During Senate floor consideration of the appropriations bill, the Senate approved an amendment authored by Sen. John Ensign (R-NV) and Sen. Patty Murray (D-WA) to provide $80 million to fund a new state longitudinal database grant program that was authorized through and would operate under the new Institute of Education Sciences (IES). However, with no support from the House’s bill and given the controversy surrounding the plan to pay for this new money through a corresponding decrease in Department of Education administration funds, funding for the data program is not a sure bet.

The House and Senate are now negotiating the difference between the two bills in Conference. Although it is possible that the conferees will complete action in the next couple of weeks, their work is being slowed over a Senate-approved amendment that would block a proposed change in overtime pay rules. The House defeated the same amendment during its consideration of the Labor, HHS, and Education bill, but supported a motion to instruct House Conferees to support the Senate’s provision on overtime pay rules. The Administration is opposed to inclusion of this provision and has threatened to veto the bill if the language is included in the final bill.

Here are some key funding numbers:

E-Rate Update

Although many of the bad tidings that E-Rate supporters expected this season have not yet arrived, namely Congressional hearings on waste, fraud, and abuse in the program and potentially major changes to the program’s rules, there continue to be insistent rumblings that these and other events may come to pass before the year’s end. The House Commerce Committee has still not provided public notice of expected E-Rate hearings, which are expected to spotlight abuses in the program. Two factors militating against such hearings are the Committee’s focus on producing an energy bill and completing work on legislation necessary to finalize implementation of the “Do Not Call” Registry. Nonetheless, given the vast amount of labor expended on the investigation of the program by Committee investigators, at least one hearing is still possible before this session ends.

Meanwhile, the FCC continues to grapple with its decision on the appeal of several Year 5 application rejections involving major city school districts and IBM. Once the Commission completes work on these appeals in a decision likely to clarify the ground rules for the competitive bidding process, the FCC is expected to turn its attention to either proposing or simply ordering new rules to prevent waste, fraud, and abuse in the program. Although observers believe that the Commission is likely to empower USAC or the FCC to sanction applicants and vendors for repeated and willful violations of program rules, the Commission may also approve new measures that would impact how internal connections funding is distributed.

An unreleased report from the School and Library Division’s (SLD) Waste, Fraud, and Abuse Task Force may have some impact on how the FCC ultimately decides to act. Based on information from public reports, the Task Force report will likely advocate for two major rule changes: 1) revising the discount matrix so that the top-tier for internal connections discounts would now be 80% rather than 90%, thereby forcing those applicants who have consistently received internal connections discounts to pay more for their discounts and receive the same priority as those occupying the current 80% bracket; and 2) imposing a ceiling on the amount of funding that an applicant can request, thereby deterring applicants from gold-plating their applications. This last proposal, though, lacks specifics in terms of what formula would be used to compute the appropriate ceiling.

Even with these major changes pending, the SLD continues to distribute E-Rate discounts. As of October 1, a little more than half of annual funding available had been disbursed. Additionally, SLD announced late in the summer that applicants with discounts at least as low as 85% will receive all of their internal connections funding this year. It remains unclear, however, whether applicants between 70% and 85% will see any internal connections funding at all. The Commission also announced opening and closing dates for the 2004 program application process. The window will open at noon on Wednesday, November 5, 2003, and close at 11:59 PM EST on Wednesday, February 4, 2004. Finally, late last week, the Commission posted a new eligible services list, a must read for all applicants, particularly since there have been many changes. It can be found at: http://www.sl.universalservice.org/data/pdf/EligibleServicesList101003.pdf . (PDF, 36 pages, 206 KB, 15 seconds, PDF Instructions)

ITFS Proceeding Continues at FCC

Earlier this year, the Federal Communications Commission began a proceeding to examine how to best facilitate the provision of fixed and mobile broadband access, and educational and other advanced wireless services in the Instructional Television Fixed Service (ITFS) bands. ITFS spectrum is an important resource for educators because it is used to deliver educational programming to students and communities across the nation. Under the current ITFS regulations, a portion of ITFS band must be devoted to educational services. In addition, only educational licensees are eligible to own ITFS licensees which may not be resold to commercial entities.

Although the main purpose of the proceeding was to reconsider the technical rules in order to encourage a transition to digital services, the FCC also questioned the continued viability and relevance of the ITFS service. Specifically, the Commission asked if the requirement that ITFS licensees provide educational services should be eliminated, and if ITFS ownership rules should be changed so that commercial entities could hold licenses.

In response to this threat, twenty national educational organizations, including ISTE joined to file comments to defend the ITFS service and to set out the benefits that ITFS continues to provide students and communities. They argued that if ITFS licensees are able to sell their licenses to commercial interests, educational institutions would quickly lose any stake they have in the public spectrum, and eventually find themselves shut out of the new and increasingly valuable digital spectrum and the wealth of innovative digital services that will be available. The comments can be found at: http://gullfoss2.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6515183094. (PDF, 13 pages, 112 KB, 7 seconds, PDF Instructions)

This is the second time in three years that the FCC has put the future of ITFS at risk. In 2001, the Commission threatened to move ITFS licensees out of the 2.5GHz band to make way for third generation cellular services. Ultimately, the FCC backed down after facing stiff resistance from the educational community. This time the outcome is less clear. With spectrum scarce and in high demand, many commercial entities filed comments seeking to eliminate the educational character of the service in favor of a band for commercial digital services. For this reason, it is important that educators let the FCC know why ITFS is still a valuable resource for the educational community. Reply comments are due October 23, 2003.

Microsoft Settling Class Actions on State-by-State Basis; Schools May Benefit

After a federal district court judge in Baltimore declined to approve a nationwide settlement of an antitrust case brought against Microsoft in early 2002 that would have sent millions of dollars in cash and refurbished computers to high-need schools, Microsoft adopted a new tactic: settling one state at a time. With five state settlements completed or pending, the benefits for education from this antitrust case appear to be dwindling as most schools in settling states are unlikely to see any money or equipment from these agreements.

To date, California, Florida, Montana, and West Virginia have reached agreement with Microsoft and West Virginia’s settlement agreement awaits court approval. Although the numbers vary widely—from a high of $1.1 billion for California to a mere $12.2 million for Montana—the general settlement terms are fairly uniform. Under the agreements, any consumer that purchased Microsoft products during a set period when Microsoft allegedly engaged in anticompetitive behavior is entitled to a voucher on a certain portion of that product. The vouchers can be used for both Microsoft and non-Microsoft products.

Unlike in the 2002 agreement, the benefits for schools under the state agreements are indirect and perhaps nonexistent. First, owing to a quirk in class action law, schools cannot receive the vouchers directly but only through donations by other parties. Second, non-plaintiff schools are entitled at most to a percentage of what money is left over after the actual plaintiffs have received their vouchers. Thus, if $600 million remains unclaimed in California, schools are entitled to access only two-thirds of that amount, or $400 million, assuming that someone donates it to them. This brings up the third limitation in some of the agreements (e.g. California and West Virginia): an individual can donate up to only $650 to any school and any school can receive a maximum of only $10,000 from donations. Finally, to be eligible to receive any vouchers through the settlements, schools must have at least 40% of their students eligible for free-and-reduced lunches or serve students from elementary and middle schools with that same lunch program level. At this point, the amount of vouchers unclaimed in these settlements will not be known until March 15, 2004. The leftover vouchers will not begin to flow to schools until next summer.