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Idaho pays $3.5M to feds to settle final piece of IEN litigation, on top of $3.4M paid to vendors in March

Idaho has sent $3.5 million to the Federal Communications Commission as part of a settlement over the defunct Idaho Education Network, to settle claims for E-rate payments to 63 Idaho school districts from 2009 to 2014. Gov. Butch Otter announced today that the payment was issued yesterday from funds previously appropriated to the Legislature’s legal defense fund.

“I appreciate the willingness of all parties involved to work toward a resolution of these issues so that we can move forward with a clean slate,” Otter said.

The IEN was championed by Otter and then-state schools Superintendent Tom Luna as a broadband network linking every Idaho high school. But the state’s $60 million contract for the service, issued to two politically connected vendors, was declared illegal in court, shutting the service down. Lawmakers then allocated funds to school districts to purchase their own broadband services, which ended up costing millions less.

“We appreciate Gov. Otter’s leadership in negotiations with the FCC, which resulted in the settlement agreement,” Idaho House Speaker Scott Bedke said in a statement. “This gives us the opportunity to focus on delivering an important educational service to Idaho students rather than pending reimbursement claims.” 

“I believe the months of work that went into crafting this agreement resulted in a settlement that’s in the best interest of everyone involved,” Senate President Pro Tem Brent Hill said. “The Legislature and local districts throughout Idaho are more than ready to move on.”

The governor, legislative leaders and lawyers for the school districts have been negotiating with the FCC since August 2016 to settle the claims, after the Idaho Supreme Court declared the contract void in March of 2016. Those negotiations started after the Universal Service Administrative Company, or USAC, which administers the E-Rate program for the FCC, informed the state and districts of its intent to deny funding requests for 2013 and 2014, totaling approximately $13.8 million; and also to seek repayment of E-Rate funds received in Idaho from 2009-2012, totaling about $14.1 million.

While the settlement and payment resolves those claims, another $3.4 million settlement announced in March settled claims from Education Networks of America and CenturyLink, the two IEN vendors. In return for that state payment, the firms agreed to drop all claims against the state and its agencies, including Idaho school districts; the firms claimed they were owed $11 million by the state and nearly $2 million from school districts for unpaid bills, as they continued to provide IEN services after the state stopped paying because the contract was voided.

“This finishes it up,” Bedke said. “I think that having this issue behind us is a net good thing for education in Idaho. Broadband service to high schools is integral to the delivery of education services, and having this issue behind us is a very positive move.”

Jon Hanian, Otter’s spokesman, said, “With this settlement, everything is resolved.”




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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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