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Years after scandal, Atlanta Public Schools gets millions in E-rate dollars

A federal funding program that a decade ago led to a three-year prison term for an Atlanta Public Schools administrator for taking bribes is once again contributing millions to the APS budget.

For years, the aftermath of the scandal meant that the district didn’t collect tens of millions of dollars in E-rate money — funds to help schools and libraries pay for Internet access systems and maintain their telecommunications infrastructure.

The results of a 2011 audit restarted the flow of funds. In the last year, APS has been reimbursed $16.7 million by the program. It has submitted expenses for another $46 million, of which it expects to collect about $16 million, said APS chief financial officer Chuck Burbridge. Much of the reimbursement is for equipment long since replaced, but it will allow the district to balance its budget without dipping too far into its reserves.

The E-rate program was established by the federal government in 1996. The program is administered through the Universal Service Administrative Co. There was a time when the funds flowed freely into the APS coffers.

Between 1996 and 2001, APS collected almost $82 million of E-rate reimbursement dollars. But the federal pipeline went dry after a 2004 investigation by The Atlanta Journal-Constitution found APS misspent nearly $73 million in E-rate dollars building one of the most lavish computer networks of any school district in the country.

The district was giving contracts to vendors without requiring they go to the lowest bidder, and there was little oversight by the school board, the newspaper found. In 2007, Arthur Scott, the former APS technical director who ran the district’s E-rate program, was sentenced to 37 months in federal prison for accepting nearly $300,000 in bribes from vendors.

But the punishment for the district went on, stretching into 2011 and frustrating school administrators. “The people accused of the crime have gone to jail and done time and now APS can’t get funding and that is grossly unfair,” APS chief information officer Dave Williamson told The Atlanta Journal-Constitution in 2011.

More than $50 million in expenses submitted to the Universal Service Administrative Co. had gone without reimbursement from 2001 to 2012. Meantime, in 2011 alone, $26 million in E-rate reimbursements went to other Georgia school districts. An agency audit of APS in 2011 cleared the way for the district to finally start collecting reimbursements, starting at the most recent years and working backward, Burbridge said.

Because the reimbursements are for technical investments the district has already made, the district can spend the money any way it wants, Burbridge said. The more than $16 million has had a dramatic impact, school board chairman Reuben McDaniel said.

“It significantly relieves budget pressure for 2013-2014 because we were almost at the lowest end of our reserves if we took down the full $24 million we planned to withdraw this year,” McDaniel said. The district will likely have to withdraw only $9 million from its approximately $80 million fund balance — the savings it has in the bank — to balance the budget, as a result of E-rate reimbursement, McDaniel said.

The district has asked for $63 million in reimbursements, but expects to collect only about half of that, Burbridge said, because there are two categories of reimbursements, and one is based on the poverty level of the district, which is determined by the number of students who get free and reduced lunches.

“We’re about 76 percent poverty, and the threshold is around 85,” Burbridge said.

Williamson said the district decided a few months ago to quit pursuing the funds for hardware that are contingent on the poverty level: “It isn’t worth the effort to try to get.”

Many of the reimbursements being collected by the district now are for telephone and data circuits, routers and switches installed more than a decade ago that have since been replaced. That’s launched another round of requests for reimbursements for the new technology, Williamson said.

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