E-Rate, Other Universal-Service Funds to Be Transferred to US Treasury

The Universal Service Administrative Company, the nonprofit organization responsible for administering the E-rate program and other federal universal-service funds, announced August 8 that it would transfer more than $9 billion it oversees out of the private banking market and into the US Treasury.

Moving the funds into the Treasury was one of the recommendations in a report on problems with the Lifeline program recently issued by the Government Accountability Office. Among the reasons GAO cited for recommending such a move: lower fees, better management practices and regulatory safeguards, and the opportunity for the federal government to use the funds as an offset for its debts. The Aug 8 announcement prompted some concerns in a K-12 sector already jittery about the direction of the FCC—and especially its plans for the E-rate—under President Donald Trump and the chairman he appointed, Ajit Pai.

"While there might be some efficiencies associated with switching the E-rate program to a Treasury-managed account, we have concerns that program beneficiaries would lose the benefit of the significant interest that universal-service funds accrue in the private market," said Reg Leichty, a lawyer and lobbyist for the Consortium for School Networking, a professional association representing school technology officers. Leichty also expressed concern that the transfer of funds into the Treasury could be a step towards Congress assuming responsibility for universal-service funds, including an annual determination of how much should be allocated for initiatives such as the E-rate. "We would not want this successful program to be subject to the whims of the annual appropriations process, which has not functioned well for a significant period of time," he said.