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Eye on Boise: Schools’ Internet provider caught up in funding tangle

Sun., March 16, 2014, midnight

BOISE – The troubled Idaho Education Network – the broadband network that links every Idaho high school and also provides video-conferencing – faces an uncertain future, though lawmakers have ensured it’ll keep running until they’re back in Boise next year.

The Otter administration stunned legislators in January by urgently requesting $14.45 million more in state funds for Education Networks of America, which holds the multimillion-dollar contract, because federal e-rate money that was supposed to cover three-quarters of the cost of the network stopped arriving last March.

The state Department of Administration didn’t inform lawmakers until January. By then, it had, on its own, fronted $550,000 in state taxpayer funds to ENA.

The feds are conducting their own “independent verification of the validity” of the contract, lawmakers were informed last week. Idaho signed a multiyear, multimillion-dollar contract with ENA and CenturyLink, then called Qwest, in 2009 to provide the network, but the contract award is being challenged in court by another bidder, Syringa Networks. After the Idaho Supreme Court issued a ruling last March that raised serious questions about whether the contract award was legal, the feds cut off the e-rate funds.

If they find the contract is OK, they’ll release the funds. If they find it’s invalid, Idaho may also be ordered to repay the $13.3 million in e-rate funds already paid to ENA under the contract. And when the Senate Education Committee grilled officials and lawyers last week about the situation, they found there’s an even worse possible outcome: The state could be denied any new e-rate funds in the future, even with a rebid contract.

“They have the ability to debar the state,” Merlyn Clark, attorney for the state in the case, told the Senate committee.

Pushed hard by the Otter administration – which said the education network could “go dark” if the contractor wasn’t paid right away – the Legislature’s joint budget committee approved a $6.6 million payment to ENA to cover missing funds for the current fiscal year. Gov. Butch Otter signed that budget bill into law Thursday. Lawmakers opted not to reimburse the department for the $550,000 it fronted; that money will have to come from within the department’s budget.

“This stinks, but it is something we have to do,” Senate Education Chairman John Goedde, R-Coeur d’Alene, said when the Senate debated the $6.6 million payment.

The Joint Finance-Appropriations Committee waited on the request for $7.3 million to cover missing e-rate funds for fiscal year 2015, which starts July 1. Finally, after all agency budgets had been set, JFAC last week approved $4.8 million to make up for the missing e-rate funds for the first eight months of the coming year.

The committee’s co-chair, Sen. Dean Cameron, R-Rupert, said the idea is to “go a step at a time, ease into it, and see where we’re at the next legislative session.” The funds will be appropriated month by month. Strict reporting requirements on the state Department of Administration are tied to the money, and if federal e-rate funds are released, the state funding would stop and the state would be paid back.

Lawmakers also required a “service audit” of the education network to determine what services are being provided where, what they cost and how satisfied school districts are with them. Several weeks ago, news surfaced that the state Department of Administration last year extended the contract through 2019, renewing it a year early without informing lawmakers.

As a result, lawmakers tied strings to the department’s budget for next year requiring it to notify the Legislature in writing 90 days in advance of any early contract renewal. In addition, they required the department to re-examine its contract management practices and report to the Legislature on that next year.

Lawmakers also nixed the Otter administration’s request to expand the Idaho Education Network to the state’s elementary and middle schools next year.

Said Rep. Darrell Bolz, R-Caldwell, “Until we figure out what’s going on with e-rate, I don’t think we need to go and expand it.”

$36 million goes to savings

On a party-line vote, lawmakers have agreed to deposit $36 million into the state’s rainy-day savings accounts at the end of the current fiscal year, just under half the $72.3 million Gov. Butch Otter recommended. “You never know when it will be needed,” said Rep. Maxine Bell, R-Jerome, co-chair of the joint budget committee.

All four Democrats on the panel dissented. Rep. Shirley Ringo, D-Moscow, said, “I fully understand the need for being prudent. But I just have heard from folks in my district who would much prefer putting at least some of these dollars to work on issues like salary in K-12 and higher education.”

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