Just as it looked like things might actually be improving for Idaho schools, they could lose up to $28 million.
High schools in Idaho are connected through the Idaho Education Network (IEN). The IEN’s creation was funded in 2010 by the Idaho Legislature, through a contract administered through the Department of Administration. The intention was that most of the cost of the IEN would be funded through E-rate, a federal program paid for by a small charge on everyone’s phone line.
Heading up the Department of Administration at the time was Mike Gwartney, a friend of Governor C.L. “Butch” Otter’s who was actually working for free as a favor to the Governor. IEN came under some criticism at the time because some schools already had Internet connectivity, and it was felt that it was duplicating efforts.
In addition, when the Department of Administration sent out the contract for the IEN, it was jointly awarded to Education Networks of America and Qwest. Another company, Syringa Networks, had originally been awarded part of the contract, but later was removed from the contract.
Syringa sued, and at first the company lost the suit, with the judge saying that it hadn’t tried all of the other possible courses of action before filing suit. However, on appeal, another judge agreed with Syringa and said last year that the company did have the right to sue.
At that point, the federal government stopped paying Idaho the E-rate funds. Assuming that it was a glitch, the state government paid the schools back, figuring it would get the E-rate money from the federal government at some point. But during this year’s budget hearing, the members of the Joint Finance-Appropriations Committee found out about the problem for the first time. heresa Luna – Superintendent of Public Instruction Tom Luna’s sister, who took over for Gwartney when he retired – told JFAC that the federal government was more than $14 million behind in its E-rate payments.
Upon asking the federal government what was up, it was learned that the problem was the lawsuit. Because of it, the federal government wasn’t sure the contract was valid, and without a valid contract, it couldn’t pay the E-rate money that the schools needed to pay for the IEN. And if the state government didn’t pay the more than $14 million, the IEN could be shut down.
It gets worse. If the federal government decides the ENA contract was fraudulent, the state could have to pay the federal government back the E-rate money it had already paid into the IEN – more than $13 million, for a total of almost $28 million.
Even if the federal government does decide the contract is valid – and the lawsuit is still underway – the investigation could take as much as two years. That’s not only two years where the state won’t get the money, but up to two more years of IEN funding the state might have to pay.
Where’s the money going to come from? In his budget, Governor Otter had earmarked up to $29 million for the public education budget stabilization fund, one of the “rainy day” funds that had been drawn down during the recent recession. For the moment, people are talking about paying for the IEN out of that money – but that would mean it couldn’t go into savings.
Incidentally, ENA is the same company that last summer Tom Luna awarded a five-year $2 million contract to give Idaho schools wireless, even though last year’s Legislature funded only $2.25 million for a single year pilot project.
It will be interesting to see how it all turns out.