Congressional investigators visiting Chicago as part of a probe into how billions of dollars were spent to connect schools and libraries to the Internet said they discovered Chicago Public Schools allowed $5 million of computer equipment to languish in a warehouse for years.
The discovery by House Commerce and Energy Committee investigators, combined with findings of waste in other cities, was likely to add to long-standing criticisms of the $2.25 billion E-rate program that was launched by the Clinton administration.
Critics, particularly Republicans, have disliked the initiative from its start, warning that it would be a magnet for waste, fraud and abuse. It also has been viewed as an unnecessary burden on consumers who pay for the program through fees added to their phone bills.
“It is troublesome to us that $5 million of equipment is sitting unused in a warehouse gathering dust,” said Ken Johnson, a committee spokesman. “I’m sure ratepayers would like to have that money back.
“We are knee-deep in our investigation,” which started last year, Johnson said. “It is clear to us that consumers around America have been ripped off to the tune of tens of millions of dollars.”
On Thursday, Republican leaders of the committee sent a letter to Arne Duncan, Chicago Public Schools’ chief executive officer, requesting audit records and other documents related to the district’s participation in the E-rate, for education-rate, program.
The letter specifically asked the district to “describe in detail the circumstances surrounding the warehousing of approximately $5 million worth of E-rate equipment that was purchased by SBC [Corp.] for CPS” with money from the federal program. The letter was signed by Reps. Billy Tauzin (R-La.), the committee’s chairman, and Jim Greenwood, (R-Pa.), chairman of the committee’s Oversights and Investigations Subcommittee.
Celeste Garrett, press secretary for Chicago Public Schools, said, “We just got it [the letter] today and we are looking into it. We plan to comply with all the government’s requests. My understanding is that they are looking at urban districts across the country.”
Peter Cunningham, the schools’ communications director, said, “The focus of the investigation is SBC, the contractor brought in to manage the E-rate program in 1999. As the letter said, we have been cooperative.”
The school system opened up for rebidding the contract to manage the E-rate program and a new company, Blackwell Consulting Services of Chicago, will take over the job from SBC in the fall, Cunningham said.
He said the $5 million in computers and related equipment found by federal investigators is not in the school system’s possession and never left the distributor from which it was purchased with E-rate funds.
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“A lot of the equipment ordered in the early days of the program was not being installed in the schools in a timely manner. It became out of date and there was no point in installing it,” said Cunningham.”
He said the Chicago school system has received $300 million in E-rate funds since 1998. “All our schools are wired now,” he said. “It did what it was supposed to do.”
Duncan fired his chief technology officer, Elaine Williams, a year ago as a result of dissatisfaction with management of the school system’s technology program. Williams, an attorney with no technology background who had worked in the district’s law office, was replaced in May by Robert Runcie, former president of Advanced Data Concepts, a technology company in Chicago.
A study released in 2002 by the Consortium on Chicago School Research, based at the University of Chicago, reported the city’s students had less access to computers than the national average. The study also said Chicago students often used their computers as little more than expensive typewriters.
CPS officials likely to testify
Johnson, the spokesman for the Commerce and Energy Committee, said this was the first such letter sent to a school district. Other letters have been sent to vendors and phone companies.
The committee plans to hold hearings on the E-rate program and he said it was virtually certain Chicago school officials would be summoned to testify.
The E-rate program was an extension of the Universal Service Fund, initially created to help underwrite the cost of providing telephone service to rural areas.
While the Federal Communications Commission oversees it, the program is run by a non-profit corporation, Universal Service Administration Co., whose board of directors is drawn from the telecommunications industry.
The Center for Public Integrity, a non-profit watchdog group, said in a report last year that 10 percent or more of consumers’ monthly telephone bills went toward the program. Cell phone customers paid about $1 per bill, the report said.
Referring to the congressional probe, FCC spokesman Michael Balmoris said the commission “supports any law-enforcement and congressional investigatory efforts to ferret out waste, fraud and abuse in the program.” He added that the FCC has issued two orders intended to tighten up the operation of the program.
Aimed at `digital divide’
The program, whose primary supporter was former Vice President Al Gore, was one of the Clinton administration’s proudest achievements. President Bill Clinton often touted it as one of the main supports of his rhetorical “bridge to the 21st Century.”
The E-rate initiative was aimed at closing what the Clinton administration officials called the “digital divide,” the lack of computer equipment and Internet access in economically stressed urban and rural school districts. The goal was to have every classroom in the nation connected to the Internet.
The program was designed to enable schools and libraries to obtain computers and wire their buildings with networks.
But it has been laced with errors and worse. Audits found many problems, including purchased equipment that couldn’t be located and overcharges by service providers.
The initiative also attracted criminal activity. A Staten Island, N.Y., businessman pleaded guilty to federal charges last May. John Angelides admitted to defrauding the program.