updated 3/16/2005 4:37:54 PM ET 2005-03-16T21:37:54

Federal oversight of the popular "E-rate" program that helps link schools and libraries to the Internet is flawed on several levels, congressional auditors have found.

The $2.25 billion-a-year program provides discounted Internet access and connection gear to help expand Internet availability, particularly for people in poor and remote areas. Yet cases of fraud and abuse, both by schools and libraries that get the money and by companies that provide the services, have surfaced nationwide and drawn the ire of Congress.

In a report being presented Wednesday to a congressional panel, the Government Accountability Office takes the Federal Communications Commission to task for weak oversight. The GAO, which is Congress' investigative arm, identified problems that appear fundamental.

The FCC, for example, does not have useful performance goals to measure the program's success, the report found. As one consequence, it is not possible to tell how much of the increasing connectivity to the Internet can be accurately credited to E-rate, the GAO said.

The FCC delegates day-to-day management of E-rate to the nonprofit Universal Service Administrative Company. But the FCC has never done a comprehensive evaluation to figure out which federal requirements or policies apply to this arrangement, the GAO says.

The review also says that the FCC has been slow to respond to audits of E-rate participants, and that there is a substantial backlog of appeals involving erroneous funding.

Overall, the GAO found, the FCC's problems "create barriers to enforcement, uncertainty about what the program's requirements really are, and questions about the soundness of the program's structure and accountability amid recent cases of fraud, waste and abuse."

In a written response, the FCC acknowledged that the E-rate program "continues to experience operational and management challenges." But the agency said it has taken a series of steps during the past year to improve oversight and that it has other measures planned.

The GAO report was being presented Wednesday to the House Energy and Commerce Subcommittee on Oversight and Investigations. Last year, the inspector general of the FCC told the same subcommittee that E-rate has an unacceptably high risk of abuse and waste.

Financed through phone charges, the E-Rate program has committed more than $13 billion to schools and libraries since 1998. The program considers about 40,000 requests for money each year, and many of the applicants depend on the funding for their telecommunications.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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