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Partial payment for IEN shortfall OK’d, after contractors threaten to make school network ‘go black’

The Joint Finance-Appropriations Committee has voted 20-0 to funnel $6.6 million in state funds right away to Education Networks of America, the contractor running the state’s Idaho Education Network that provides broadband service to Idaho high schools – but no more, for now. The state Department of Administration had requested $14.45 million to fill a giant, unexpected hole in the state budget due to the lack of federal e-rate funds, which were supposed to cover three-fourths of the cost of the IEN, but haven’t arrived since last March.

When state Administration Director Teresa Luna told JFAC about the $14.45 million budget hole on Jan. 30, the lawmakers were thunderstruck. Luna said ENA hasn’t been paid any federal e-rate funds since March of 2013; she reacted by using $550,000 in funds from her own department to “front” the money to the contractor in the meantime. Luna said then that she didn’t know why the federal funds were being held up, but the FCC said it was because the award of the IEN contract was being challenged in court and FCC was looking into whether the contract award violated federal procurement rules.

Luna asked for the $6.6 million for the current year, payback for the $550,000 she’d already spent, and $7.3 million for next year, and said she expected that at some point, the issue would be resolved and the feds would pay up.

“We’re almost a year into when this issue happened, but we’re two months into when we knew about it,” said JFAC Co-Chair Rep. Maxine Bell, R-Jerome, “and at this point, it’s of the essence that we continue with the year we’re in. This is a vital service, it’s a valuable service to the schools.” Her motion would cover the $6.6 million for this year’s services – most of which already have been rendered. But it doesn’t pay back the Department of Administration for the $550,000, and it leaves the issue of next year’s funding for later consideration.

Sen. Dean Cameron, R-Rupert, the Senate co-chair of JFAC, said, “There was significant pressure that we have something passed for 2014 by this week.” Cameron said the contractors, which include ENA and CenturyLink, have threatened to cut off the service to Idaho schools if payment isn’t forthcoming. “The contractors have said if there’s not some payment or indication of a payment, that they would terminate or force the IEN to go black,” he said. “Although we wonder at the legitimacy of that threat,” he said JFAC members want to “take that worry off of school districts.”

As for the $550,000 that the department already spent, Cameron said, “We have essentially said, ‘Look, you made that decision, you have to live with it.’”

The $6.6 million has significant strings tied to it – the state’s contract with ENA must be amended to require immediate notification from ENA to the state if the missing e-rate funds come in, and repayment of the $6.6 million. “We’re essentially doing the minimum step that we have to do right now,” Cameron said.

Asked if the state might want to re-bid the disputed contract before the coming year, he said, “That’s something that’s being discussed,” though he said he doubted a full re-bid could be completed by July 1. “There may be some contingencies for 2015. … This language is pretty tough. I’d expect tough language for 2015.”


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Betsy Z. Russell covers Idaho news from The Spokesman-Review's bureau in Boise.

Named best state-based political blog in Idaho for 2013 by The Fix

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