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Monday, July 04, 2005

Waste, fraud and abuse? Where?

The E-Rate now has a reputation of being rife with waste, fraud and abuse. Everywhere I see complaints about how the program is riddled with abuse. For example, in the latest issue of eSchoolNews, there is an article on SES which uses the E-Rate as the poster boy for impropriety. Certainly the program is not without mistakes and bad actors. But let's look at the numbers.

First, the figures from the FCC's Fifth Report and Order. They said that of the $4.7 billion disbursed in the first 3 years of the program, $1.1 billion had been subject to audit, and recovery was sought on $18 million. Analysis of those numbers give us 3 striking facts:
  1. Over 23% of all the funding disbursed under the program was subject to audit. That seems like plenty of auditing, even before USAC started making 1,000 "site visits" each year.
  2. Of the funds audited, recovery was sought on only 1.6%. That's comfortingly low, especially when you consider that any reports of suspicious activity would have been included in the audited funding.
  3. Only 0.38% of the funding disbursed for the first three years was found to have been disbursed improperly. I would be very happy if I could say the same about the expenditures for my business.

The SLD's first Semi-Annual Audit Report to the FCC, which covers 1998-2002, paints a similar picture.

  1. About 14% of all disbursed funding was audited.
  2. Recovery was sought on 2.8% of audited funding.
  3. Recovery was sought on 0.4% of all disbursements.

Where is all waste, fraud and abuse?

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