In a development that surprised and angered some legislative budget-writers, the Otter administration is seeking $14.45 million to keep a statewide school broadband system online.

At issue are federal funds that have not been received by Education Networks of America, the state’s contractor on the Idaho Education Network project. And the federal funding delay ties back to a protracted lawsuit over the IEN contract.

The Joint Finance-Appropriations Committee took no action Thursday on the $14.45 million request — “supplemental” funding that would be carved out of the 2013-14 state budget. But that doesn’t mean lawmakers were at a loss for words Thursday morning.

• “I don’t see this as our problem,” said Rep. George Eskridge, R-Dover, who urged state Department of Administration Director Teresa Luna to sue the federal government for failure to pay.
• Sen. Shawn Keough, R-Sandpoint, said she was struggling with a request to resolve a budget mess months in the making.  But she also said she was worried about jeopardizing state plans to expand broadband into elementary and middle schools.
• Sen. Dean Mortimer, R-Idaho Falls, stopped short of pushing for a lawsuit — but urged a candid conversation between the state and federal officials. “I think it’s time for a sitdown, even if you have to sit on their desk.”

  

The size of the supplemental budget request illustrates the importance of federal funding to the IEN rollout. About 75 percent of IEN funding comes from the federal government; that breakdown varies from state to state, but hinges on a state’s free and reduced lunch rate. In 2013-14, Idaho spent $1,028,400 in state general fund dollars on the IEN.

The federal dollars — known as “e-rate” funds — come from monthly fees on landline and cell phone bills. A Federal Communications Commission contractor, the Universal Service Administrative Company, administers the program and distributes the money.

But in March, ENA stopped getting the payments.

At first, Luna said, the state thought it was a minor delay. The money goes directly to ENA, which first alerted the state to the problem on July 31.

USAC sent the state emails in August and September, asking the state whether the broadband contract was valid. Those questions surrounded an ongoing lawsuit filed by Syringa Networks, a subcontractor that believes it should have received a greater share of the broadband contract. But USAC’s questions were routine, Luna said, and the state expected the funding problems to be resolved by Dec. 23.

But Dec. 23 came and went without a resolution — which the state attributed to the holiday season and the October federal government shutdown. “We weren’t that concerned about it,” Luna said.

But on Jan. 12, she said, the state received word through a third party that the funding was on hold, pending the resolution of the lawsuit.

The Administration Department has given ENA its 2013-14 state funding ahead of time, instead of disbursing it monthly — in an effort to keep the broadband project afloat. And while Luna described the $14.45 million supplemental request as “bridge funding,” which could be returned to state coffers when the federal money comes in, she also warned of dire circumstances. If the project isn’t funded somehow, she said, ENA may have to pull equipment from the schools. “They’re business people, there not going to do this for free.”

In 2012-13, the IEN provided broadband to 170,809 students at 218 Idaho schools — and through IEN, students enrolled in close to 5,000 dual-credit courses. Nearly 60 percent of the state’s school districts rely exclusively on IEN for broadband.

“If the obligation to the vendors is not fulfilled, the districts that rely on the IEN for broadband will have no service until they are able to arrange for access independently,” Jani Revier, administrator of the state’s Division of Financial Management, said in a memo to JFAC members. “There will be at least an 18-month gap before districts could begin receiving e-rate funds, severely disrupting broadband access for schools.”

Otter is recommending the $14.45 million supplemental appropriation.

So does Superintendent of Public Instruction Tom Luna — Teresa Luna’s brother.

“We have to keep (IEN),” he said Thursday. “If it takes as supplemental and some bridge funding to keep it going, then I support that.”

More quotes — and more reading

• “At the end of the day, we have to do the right thing, and I don’t think the right thing is to shut off the Idaho Education Network … But I think the department needs to do a better job in its due diligence.” JFAC co-chairman Dean Cameron, R-Rupert, from Betsy Russell, and the Spokane Spokesman-Review’s Eye on Boise blog.
• “The next step forward would be to file a complaint or something with the FCC.” Teresa Luna, from John Miller of the Associated Press.