updated 11/23/2004 8:00:07 PM ET 2004-11-24T01:00:07

The program that helps link schools and libraries to the Internet has resumed spending after a cash-flow crunch that delayed more than $400 million in projects.

The E-Rate program has ended a four-month-long moratorium on new projects, federal officials said Tuesday, but it will take time to clear a backlog of more than 4,000 requests.

The $2.25 billion-a-year program is credited with getting high-speed Internet access to people in poor and remote locations through discounts on connection gear and phone service.

But in a push to improve financial oversight the program, the Federal Communications Commission has ordered E-Rate to have enough cash to cover any commitments — even if the bills for those projects won’t come due for many months. That accounting change forced E-Rate in August to halt new spending until it could raise enough upfront cash, which it has done.

Some of that money came from the monthly fees charged to phone companies and passed on to customers. The Universal Service Administrative Company, the nonprofit that runs E-Rate for the FCC, also freed cash by shifting investments and reclaiming money from dormant projects.

The first batch of 194 new commitment letters, worth $24.2 million, went to schools and libraries Monday. Those relate to applications dating to 2003 and earlier years. Another group of projects, from 2004 requests, is expected to be approved by the end of the month.

“It will just take a little longer to get things done because we have to wait month by month,” said Mel Blackwell, spokesman for USAC. The more than 4,000 applications for funding that have been delayed since August amount to more than $400 million, Blackwell said.

The impact of the spending freeze has varied by community, but schools nationwide have come to count on the E-Rate subsidies. School districts say that because of the money they save on technology expenses, they have more cash for other critical costs, such as teacher salaries.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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