If you’re using E-rate funds, prepare to be reviewed or audited.
“Don’t take this lightly,” Cruzan warned. “Most people don’t know what E-rate is until something goes wrong.”
Last year, E-rate applicants were asked to repay more than $60 million because of audit findings and other disputes, Cruzan said.
Cruzan was joined by LaShona Dickerson, technology director for Lafayette Parish School System in Louisiana, to give CoSN attendees tips on how to better plan for E-rate funding and avoid unnecessary audits.
Dickerson said E-rate has benefitted her district of 30,500 students and 3,500 employees on 43 campuses across the Lafayette Parish School System in the Bayou State.
“E-rate allowed for a lot of growth in connectivity,” she said. “It also brought about more equity — not equity in terms of access for students, I’m talking about equity among my school buildings. Before, not all of my schools received E-rate. Now every school has access. I’m able to close that gap in my buildings. Because of that, we were able to deploy a one-to-one initiative.”
E-rate Audits Come in Many Forms
In E-rate, there are several types of reviews and audits. Some of them can happen to a district simultaneously.
“All of them are targeted at making sure you’re following the rules and using these funds effectively and using them in the manner that you requested them,” Cruzan said. “Did you determine the correct eligibility? Did you correctly calculate your discount percentage? You’d be surprised how much time is spent on this area.”
The larger the school or library system, the more likely the system will face a review, Cruzan said.
Here are the types of reviews or audits a district may face:
- Beneficiary and Contributor Audit (BCAP) Program — This is a full-blown audit by a third party. “It can go as far back as 10 to 15 years,” Cruzan said.
- Program Integrity Assurance — Almost every application goes through this review. “It would be like submitting a tax return and getting a call from the IRS,” Cruzan said. “It’s fairly random, so you can experience very different reviews on the same two applications.”
- Selective Review Information Requests — Cruzan said she calls these pre-commitment reviews. They are full reviews up to the funding commitment. “They will ask for information such as bidding documents,” she said. “Did you have correspondence with vendors? Did you have addendums? Here, you need to verify that you have the funds and resources to make use of the E-rate equipment or services that you’re purchasing.”
- Payment Quality Assurance — These reviews occur when a school submits its invoicing for reimbursement. “Don’t underestimate these reviews,” Cruzan said. “They’re triggering a lot of these right now. It can open you up to a much bigger review if pieces don’t line up correctly.”
- Special Compliance Review — This is generally a targeted review. They usually are triggered by a complaint by a vendor or another review peculiarity. “They might even be doing a review of a vendor and asking you for information as the applicant,” Cruzan said.
Filtered Networks Make Audits Go Smoothly
In January, the Universal Service Administrative Co. (USAC), which manages E-rate funding, released audits at its board meeting, and the most significant request for a return of funds was due to competitive bidding, Cruzan said. “It was almost a million dollars they were collecting back. When they find a competitive bid violation, it’s everything tied to that contract. This is really where you have to get it right.” The second biggest request-back came from invoicing, she said.
USAC reviewers also look for Children's Internet Protection Act compliance, Dickerson said.
“Make sure when students get on the network, either in school or at home, that it’s filtered,” she said.
“You’d be surprised that this comes up in audits,” Cruzan added. “It’s not that schools are not compliant, it’s that they don’t have the documentation to show they’re compliant.”
Cruzan suggested keeping a copy of the filtering invoice on hand.
In fact, Dickerson and Cruzan said documentation with E-rate is vital. When Dickerson was audited, she had to show files that were from 2008 and 2009, way before she started with the district. It was difficult to find the paperwork, which wasn’t stored properly. Today, she keeps her records arranged neatly in a separate room. Her secretary, who is very organized, helps her keep all her paperwork in order in case another reviewer or auditor comes calling.
“When I leave, someone who comes next will not have to experience what I had to experience,” Dickerson said.
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