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Luna to House Ed: State may have to repay $13.5M even if it wins IEN lawsuit

Here's a news item from the Associated Press: BOISE, Idaho (AP) — Idaho may have to repay $13.3 million if federal officials determine the state broke contracting rules on a $60 million education broadband project mired in a lawsuit for nearly as long as it's existed. Department of Administration director Teresa Luna told the House Education Committee this morning that even should Idaho prevail in the legal case, it still could be forced to repay the money that's gone to the Idaho Education Network. The project is already growing far more expensive than Idaho intended. Gov. C.L. "Butch" Otter now is asking for an additional $14.5 million, to cover funding he'd expected to come from the Federal Communication Commission. The ongoing lawsuit, filed by Idaho-based telecom provider Syringa Networks in 2009, contends then-Department of Administration director Mike Gwartney inappropriately awarded work to Syringa's rivals.

Click below for a full report from AP reporter John Miller.

Luna: Idaho may have to repay $13.3M in IEN cash
By JOHN MILLER, Associated Press

BOISE, Idaho (AP) — Idaho may be forced to repay $13.3 million to the federal government and might never recover another $14.5 million that Gov. C.L. "Butch" Otter is now recommending the state inject into a $60 million education broadband project mired in a bitter lawsuit for nearly as long as it's existed.

Department of Administration director Teresa Luna told the House Education Committee Monday that even should Idaho prevail in the five-year-old lawsuit, it still could be forced to shoulder the burden of financing the Idaho Education Network.

"We do expect to recover it," Luna said. "There's a chance we won't ... Time will tell."

If things go badly for the state, she added, Idaho could be forced to come up with additional millions come July 1, 2015, that it wasn't expecting to pay in order to keep afloat the network afloat that now connects 218 Idaho high schools, allowing for videoconferencing and distance-learning opportunities.

Currently, Federal Communication Commission officials are trying to determine if state officials broke their own contracting rules in early 2009 when they awarded work on the IEN system to partners CenturyLink and Education Networks of America.

The FCC hasn't made payments since March. That's when Idaho Supreme Court breathed new life into the lawsuit filed by telecommunication company Syringa Networks alleging then-Department of Administration director Mike Gwartney illegally steered the work toward CenturyLink and ENA.

"Gwartney appears to have been the architect of the state's effort to bend the contracting rules to Qwest's advantage," Jones wrote then.

Gwartney, who resigned from the state in 2010, has denied wrongdoing.

But with the outstanding federal payments now creating a funding crisis, the matter has quickly risen to a priority affair among Idaho's federal delegation. An aide to U.S. Rep. Mike Simpson, John Revier, met with FCC officials last week.

Revier's conclusion: Idaho officials should steel themselves for bad news — the prospect the FCC will demand its money back.

"Their comments indicated that they were taking a pretty negative view in light of what they have seen in court documents," Revier told Otter's education adviser, Roger Brown, last Wednesday, according to a letter obtained by The Associated Press.

Revier added "the outcome of the court case is not necessarily binding" — meaning the FCC could conclude Idaho's contract with CenturyLink and Education Networks of America was illegal, regardless of whether Idaho prevails in court.

The last hearing in Syringa's fight with Gwartney and the state was in January in 4th District Court in Boise.

The FCC, which has given no timeline for it to reach a decision, is merely being cautious about giving Idaho more cash until its concerns have been addressed, its officials have told the AP. It's "holding funding while it determines whether... rules were violated," spokesman Mark Wigfield wrote.

In the meantime, Otter is scrambling to shore up the project — including a $3.5 million plan to expand the broadband network to all public elementary schools this year — by calling for the injection of additional state dollars.

The alternative to lawmakers not shifting $14.5 million to the program now is to shut it down, Otter spokesman Jon Hanian said.

That's not acceptable, he said.

"Eighty-nine of the state's public and charter school districts rely on the IEN in whole for their broadband service to their schools," Hanian said. "It is the right thing to do to continue funding its operation without disruption to our students while these issues ... are resolved."

And if Idaho loses the lawsuit — and all federal funding for the IEN?

"Hypothetical," Hanian said. "We can't provide comment."


Copyright 2014 The Associated Press

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Betsy Z. Russell
Betsy Z. Russell joined The Spokesman-Review in 1991. She currently is a reporter in the Boise Bureau covering Idaho state government and politics, and other news from Idaho's state capital.

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