. . and  libraries. Funding requests for telecommunications services do not  require certification of CIPA compliance. Requests for E-rate Funding Consistently Exceed the Cap, and Increased Commitments for Priority 1 Services, Combined with Significant Undisbursed Funds, Limit Funding for Priority 2 Services

Each year from 1998 through 2007, the amount of funding applicants  requested exceeded the amount available, but the amounts requested have  generally declined since 2002, with most of the decline driven by fewer  requests for Priority 2 services—the wiring and components needed for  data transmission. Funding that is not disbursed in the year for which it  was committed is carried over to the next funding year and made available  for new commitments, but undisbursed funding is still problematic  because it prevents some applicants from receiving funding in a given  year. Underuse of committed funding is widespread among participants, but the  proportion of participants using a higher percentage of the funds  committed to them is rising. The E-rate Application Process Poses Difficulties for Some Entities, Which FCC and USAC Are Taking Steps to Address

The overall participation rate among E-rate-eligible entities is about 63  percent, with public schools participating at a substantially higher rate  than private schools and libraries, based on 2005 data. We found that a key  circumstance influencing nonparticipation was the burdensome nature of  program participation. Moreover, we found that a substantial amount of funding is  denied because applicants do not correctly carry out application  procedures. Internet filtering requirements. FCC and USAC Have Taken Steps to Ease the Process for E-rate Applicants and Continue to Consider Program Improvements

In recent years, FCC and USAC have made changes intended to ease the  process of participation for eligible schools and libraries, including the  following:  In response to FCC’s finding that a significant number of applications  for E-rate funding were being denied for administrative, clerical, or  procedural errors, FCC adopted the Bishop Perry order in May 2006,  which stated that USAC must provide all E-rate applicants with an  opportunity to cure clerical errors and errors related to FCC rules and  orders in their applications. FCC Lacks Performance Goals for E-rate Program, and Recently Adopted Performance Measures Are Inadequate

		FCC Has Made Efforts to ce Develop Performan s for Goals and Measure the E-rate Program, but Has Not Been Su essful cc

Since our first recom mendation in 1998 that,cordance with the  Government Perform in ac (GPRA), FCC esta ance and Results Act of 1993 performance goals and measures for the  E-rate program, FCC has taken  steps in this direction but still has not successfully met this fundamental  requirement of resu on  lts-o our past findings related omme measures, our rec riented managemen t. Tabl  to the E-rate program’s p o ndations, and FCC’s resp e 2 provides details  erformance goals and  nses. Without  a strategic vision for the program, and accompanying performance goals  and measures, it is difficult for FCC to make informed decisions about the  future of the program and more effectively target available funding. Recommendations for Executive Action

To better provide a foundation for effective management of the E-rate  program and to ensure that program funds are used efficiently and in a  manner to support desired program outcomes, we recommend that the  Federal Communications Commission take the following two actions:    Review the purpose and structure of the E-rate program and prepare a  report to the appropriate congressional committees identifying FCC’s  strategic vision for the program; this report should include the  program’s long-term goals, whether the vision can be achieved using  the existing program structure (e.g., the priority rules and discount  matrix), and whether legislative or regulatory changes are necessary. Appendix I: Objectives, Scope, and Methodology

Our objectives were to address the following questions: (1) What are key  trends in the demand for and use of E-rate funding and what are the  implications of these trends? (3) What are FCC’s  performance goals and measures for the E-rate program, and how do they  compare to key characteristics of successful goals and measures? Private School Universe Survey (PSS). Document Review and Interviews with FCC and USAC on Performance Goals and Measures

We reviewed the Telecommunications Act of 1996 to determine what the  performance goals and measures for the E-rate program are and how the  measures compare to key characteristics of successful performance  measures. Schools and Libraries Program: Update on E-rate Funding. Telecommunications and Information Technology: Federal Programs  That Can Be Used to Fund Technology for Schools and Libraries.
Why GAO Did This Study

The Federal Communications Commission's (FCC) Schools and Libraries Universal Service Support Mechanism--also known as the E-rate program--is a significant source of federal funding for information technology for schools and libraries, providing about $2 billion a year. As requested, GAO assessed issues related to the E-rate program's long-term goals, including (1) key trends in the demand for and use of E-rate funding and the implications of these trends; (2) the rate of program participation, participants' views on requirements, and FCC's actions to facilitate participation; and (3) FCC's performance goals and measures for the program and how they compare to key characteristics of successful goals and measures. To perform this work, GAO analyzed data going back to the first year of the program, surveyed a sample of participating schools and libraries, reviewed agency documents, and interviewed agency officials and program stakeholders.

What GAO Found

Requests for E-rate funding consistently exceed the annual funding cap, and increased commitments for telecommunications and Internet services, combined with significant undisbursed funds, limit funding for wiring and components needed for data transmission. Although still exceeding available funds, total amounts requested have generally declined since 2002, largely due to declining requests for wiring and components. Funding commitments in recent years reflect this trend, with the amount of funding for wiring and components outweighed by funding for telecommunications services and Internet access. In addition, a significant amount of committed funds are not disbursed to program participants; for commitments made in 1998 through 2006, about one-quarter of the funds have not been disbursed. Unused funds are reallocated for use in future years but are still problematic because they preclude other applicants from being funded. Participation rates and participants' views on program requirements indicate difficulties in the E-rate application process, which FCC and the Universal Service Administrative Company (USAC)--the program's administrator--are taking steps to address. The participation rate among the more than 150,000 eligible schools and libraries is about 63 percent, but participation rates among groups vary, from 83 percent among public schools to 13 percent among private schools. According to nonparticipants, a key circumstance influencing nonparticipation is the complexity of program requirements, even though participants reported that participation is becoming easier. Still, E-rate program data show that some funding is denied because applicants do not correctly carry out application procedures. In recent years, FCC and USAC have made changes intended to ease the process of participation for schools and libraries, such as giving applicants an opportunity to correct clerical errors in their applications. FCC officials said they will consider further changes to facilitate participation, but their primary interest is in protecting funds from improper use. FCC does not have performance goals for the E-rate program, and its performance measures are inadequate. In 1998, GAO first recommended that FCC develop specific performance goals and measures for the E-rate program in accordance with the Government Performance and Results Act of 1993. FCC set forth specific goals and measures for some of the intervening years, but it does not currently have performance goals in place. Further, the performance measures it adopted in 2007 lack key characteristics of successful performance measures, such as being tied to program goals. Performance goals and measures are particularly important for the E-rate program, as they could help FCC make well-informed decisions about how to address trends in request for and use of funds. Without them, FCC is limited in its ability to efficiently identify and address problems with the E-rate program and better target funding to highest-priority uses. FCC's piecemeal approach to performance goals and measures indicates a lack of a strategic vision for the program.