Wasting E-Tax Dollars 101

Earlier this year, the city of Atlanta launched a campaign to "rebrand" itself. The effort included the search for a slogan. I have a suggestion: "Atlanta: Wasting Your Tax Dollars."

The basis for this slogan rests on an ongoing Justice Department investigation that concluded the city's school system misspent or mismanaged nearly $73 million from a national program designed to help poor children in urban and rural areas get access to the Internet. School officials were supposed to hand over documents about the spending to the feds yesterday, but the Atlanta Journal-Constitution reported that the city received a last-minute extension.

The Journal-Constitution first broke the story a year ago. Here is a quick rundown of what the investigation by reporters Paul Donsky and Ken Foskett turned up: "With virtually no limit on spending, Atlanta since 1998 has built one of the country's most lavish computer networks for schoolchildren. Now, Atlanta says it needs $14 million a year -- three times the district's textbook budget -- just to run and maintain the network. And much of the promised benefit to students has yet to materialize. At one elementary school, equipment powerful enough to operate a small school district runs just 20 computers. At another, Atlanta billed the program for electronics for twice as many classrooms as the school has. Millions of dollars were spent at other schools that were closed or demolished within a few years. Elsewhere, boxes of costly computer components, some still wrapped in plastic, gather dust in storage."

The federal program that financed Atlanta's purported folly is the E-Rate. It's one of the first beats I covered when I began writing about politics and technology nearly a decade ago, and since that time it has taken repeated hits from Republican lawmakers. They say it should be killed not just because it's unnecessary, but because greedy local officials and private consultants could easily abuse it.

The E-Rate provides more than $2 billion every year for public schools and libraries to subsidize as much as a 90 percent of the cost of Internet access. Properly spent, the program provides a valuable service in a nation where half the population still has no reliable way to go online. Unfortunately for the program's future, situations like the one in Atlanta are proving its detractors had a point after all.

Here, for the record, are some of the problems that the Journal-Constitution found:

"*[Atlanta Public Schools] repeatedly ordered equipment and upgrades that it did not need, often choosing the most expensive components on the market.

"* Price played little role when APS chose vendors, so the district routinely paid them too much. Vendors charged widely different prices for similar equipment. Hundreds of invoices indicate full price when education discounts of up to 45 percent are common.

"* APS often is not sure what it bought because invoices are vague, incomplete or inaccurate. In some cases, the newspaper found, the district received lower-grade cable than it had paid for, or did not get equipment that appeared to have been purchased."

So far, the city is cooperating with the Justice Department's investigation, as well as a congressional subcommittee that is investigating E-Rate abuses around the nation, the Journal-Constitution reported. The newspaper also said that school officials acknowledged that they mismanaged the program but denied any illegal activity. "To clean things up, the district has hired an auditing firm to look into past e-rate spending, hired a new technology director and brought in an outside e-rate consultant," Donsky wrote in Tuesday's paper.

In other words, having misspent millions of taxpayer dollars, the school system is spending thousands more to figure out how to take advantage of future feedings at the trough. This is not the kind of activity that makes it easy to justify continued support for this valuable program.

Atlanta is not the only place where local use of the E-Rate is under investigation. The Indianapolis Star last month reported that the Indiana attorney general's office is reviewing the legality of the state's participation in the E-Rate program: "Criminal investigators are scrutinizing past use of federal E-Rate money by the Intelenet Commission, a state agency that's being disbanded but used to help run the state's computer network."