Search This Blog

Thursday, June 04, 2009

Forgotten GAO report

I managed to finish the recent GAO Report on the E-Rate while my umbilical cord to the Internet was cut off during airplane flights some weeks back, but never got around to posting.

I posted my thoughts on the first twenty pages, so I'll be looking at the rest of the report. (I can't really call it an "analysis" since it's off-the-cuff).

The GAO is all worked up about the amount of undisbursed funding. The opening salvo is that one quarter of the funding committed in funding years 1998 to 2006 was not disbursed. A more correct statement would be that one quarter of the funding committed has not yet been disbursed in the funding year in which is was committed. The differences are:

  1. Much of the $5 billion not disbursed has been rolled into future funding years.
  2. Disbursements are not yet complete for any funding year (I'm sure there are still some appeals from 1998 languishing at the FCC), and nowhere near complete for 2006.

A few pages later, the GAO says that carryover funding will only increase Priority 2 funding if Priority 1 requests don't increase, and "some applicants for Priority 2 services, who would receive funding if aggregate requests and commitments were more consistent with actual disbursements, do not receive funding in the current environment."

Nope, that's just a shell game. If funding remains capped, and Priority 1 requests continue to increase, there will be less funding for Priority 2, period.

It is true that if USAC and the FCC take steps to decrease undisbursed funds (like increasing commitments once they're free of ADA), and continue to carryover undisbursed funds from previous years, it will create a bump in funding, but only temporarily. Eventually, the decrease in undisbursed funds will result in less carryover, and we’ll be back in a situation similar to today.

Next, the GAO looks at participation. I’ve already stated my opinion of their estimates of percentage of participation. They also listed some reasons for the low participation by private schools and libraries, but they missed a reason that I often see: the technology plan. The tech plan requirement is a major disincentive for private schools and libraries.

For most private schools and libraries, E-Rate is the only reason to have a tech plan. Generally, public schools are required to have a tech plan, so for them it’s not an issue. In my experience, libraries don’t have to have a tech plan, though I think this may vary from state to state. And for a small school or library, with a simple voice and data infrastructure, a tech plan is not necessary from a management perspective.

And the tech plan is the most onerous of the E-Rate forms. I know it’s not technically an E-Rate form, but whenever I give a presentation on the application process, I always list it as the first form, because it’s the first piece of paperwork you have to have. It would be better if it were a form, so that it would be more obvious when an applicant had missed a required element. In any case, it is by far longer and more difficult to complete than any of the forms.

I have spoken, for example, with the director of a library with a 90% discount who said that she only made up tech plans when she was planning to install internal connections equipment. It just wasn’t worth the work to cover their phones (like most small organizations, they use Centrex phone lines, so they needed a tech plan until recently) and connection to the state library’s Internet. So they just didn't apply for E-Rate. With a 90% discount.

And I know private schools that only apply for phone service so they don’t have to do a tech plan. Those schools count as “participating,” but they are not fully utilizing the program.

My favorite part of the report: 79% of applicants surveyed said that paid consultants were very or extremely useful. We consultants outscored every other resource. The same survey indicated that only about 25% of applicants use a consultant. That means that about 54% of applicants found consultants very useful even though they weren’t using one. That surprised me, but then I thought about it.

Most consultants I know got into the business because they wanted applicants to get funded. A lot of us provide free training and free advice. I don’t keep track of how many people come to my presentations or Webinars or call me with a simple question, but it's in the hundreds.

Another pair of numbers jumped out at me: 67% of applicants said state E-Rate coordinators were very or extremely helpful, but 31% said “do not know/do not use.” That only leaves 2% of people who used a state E-Rate coordinator and found her or him less than very helpful. That tells me that if we could put active coordinators in every state, it would help those 31% who don’t know their state E-Rate coordinators. What if USAC hired a state E-Rate coordinator for each state? Let’s say it would cost $100,000 per state. I’d say it’s $5 million well spent. If states want to continue to fund someone, great; a second coordinator wouldn’t hurt.

The report lists 7 changes to the E-Rate program that were favored by most applicants surveyed. Here’s what I think of the changes:
  1. Put Form 500, service substitutions, SPIN changes online: Yes, yes and yes. I know you can do service subs and SPIN changes through the “Submit a Question” system on USAC’s Web site, but that system is so lame I avoid it whenever possible.
  2. Streamline Priority 1 application: Yes. Here’s what the Priority 1 application process should be: send us your service providers and account numbers. Done. Rely on state laws to ensure competition. Get Block 4 info from the USDA. If applicants want to upgrade service or start a new service, then they can file Block 5.
  3. Multi-year Priority 1 applications: Yup. If you’re not changing service in any way, you shouldn’t have to file anything.
  4. Set dates for application: Yeah, let’s make it May 1 every year. Then we’d see a streamlined application review process.
  5. Reimburse applicants directly: Who doesn’t want this? Well, besides USAC, which would have to send out checks to thousands of applicants instead of hundreds of service providers.
  6. Advisory panel of practitioners: Yes, and the panel is ready: E-mpa®, the association of E-Rate consultants. No one does as many applications as we do. And we’re really nice to boot.
  7. Increase PIA training: I don’t know how much training they get over at PIA, and I don’t often feel that they can’t do their job. My frustration with PIA is with the process, not the people.
I laughed when I read the statement that “agencies that are successful in measuring performance strive to establish measures that demonstrate results, address important aspects of program performance, and provide useful information for decision making.” What are the criteria for success in measuring performance? I’m betting the GAO defined success using the three objectives above, so they’re saying that saying in essence that successful agencies are those that strive for success. Those agencies which strive for other objectives do not meet the GAO's objectives as often.
The GAO also mentioned that “performance measures should cover key governmentwide priorities—such as quality, timeliness and satisfaction.” OK, here are some:

  1. Increase the approval rate. The approval rate has been climbing steadily. Let’s keep it going.
  2. Decrease waste, fraud and abuse (WFA). It just seems like this has to be a goal. And making this a goal would provide incentive for the FCC to make clear that most improper payments are the result of applicants misunderstanding E-Rate arcana, not WFA.
  3. Decrease audit findings. This objective would create an incentive for the FCC to develop an audit process that did not create findings for inconsequential problems, or for problems that do not impact the E-Rate.
  4. Increase the number of classrooms/public areas connected to the Internet. We’ve already got most buildings connected to the Internet; now let’s make sure it’s available in every room in those buildings.
  5. Increase the bandwidth of connections. Applicants are generally increasing the need for bandwidth, and innovative technologies will continue to demand more bandwidth.
  6. Decrease maxed-out BEARs and SPIs. It often happens that an applicant’s actual expenditures exceed the pre-discount amount on the Form 471, which limits the amount of funding that applicant will receive. The GAO is putting great emphasis on undisbursed funds, which pressures USAC to decrease commitments; this measure would provide counterpressure to increase commitments.

  1. Decrease time between Form 471 and start of funding year. It would create more flexibility for applicants, put pressure on PIA to streamline application review, and end the requirement that applicants illegally sign contracts before budgets are approved.
  2. Require that all Priority 1 applications be approved within 90 days of submittal. Increase the time frame to 180 days for all applications filed in the last two weeks of the window. It would be a real incentive for applicants to apply early, and another incentive for PIA to streamline the application process.
Customer satisfaction
  1. Simplify the application process. Reduce the paperwork, create forms that collect all the information needed. And if you can’t collect all the information needed on a simple form, then simplify the rules to reduce the information needed.
  2. Increase applicant satisfaction. Every time an applicant hits “Submit” on one of the online forms, they get one of those annoying popups that offer a $25 discount on a magazine subscription if they’ll fill out a customer satisfaction survey.
  3. Increase public satisfaction. Every year, survey the public to see what they think of the program. The public is, after all, paying the piper. USAC’s outreach now mostly preaches to the choir; they should expand to include the public at large. Get positive news stories out there. I want to see E-Rate billboards on the NJ Turnpike. Provide incentive for applicants to publicize the amount of E-Rate funding they get.

No comments:

Post a Comment