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School computer funds may be cut

The federal government disputes the method of selecting a private firm to run a state system.

By STEVE BOUSQUET, Times Staff Writer
© St. Petersburg Times
published August 22, 2003

TALLAHASSEE - The federal government is threatening to cut off millions of dollars needed to run Florida's educational computer system because the state did not follow federal rules in hiring a private company to run it.

The state Department of Education, which awarded a vendor a $9-million contract last spring, is appealing the federal ruling. It penalizes Florida for not making price the major factor in choosing the company to take over the network.

The state calls the disagreement a "misunderstanding" and defends using competitive negotiations, in which factors other than cost are taken into account, such as a firm's technical skill or whether it is minority-owned.

But if the appeal is denied, the state's ambitious privatization efforts would suffer a major blow, and schools and colleges could be forced to help pay for a program they now get free of charge.

At issue is the Florida Information Resource Network, or FIRN, which is how students, teachers, principals and education bureaucrats communicate electronically. When a high school senior's grade transcripts are sent to the Bright Futures scholarship program, chances are the data was transmitted over FIRN. Many teachers' personal e-mail accounts originally were set up through FIRN.

As the Internet has grown in popularity and more and more Florida classrooms are wired to the Internet, FIRN has faced mounting demands on its system without additional money.

Last March, the Department of Education transferred FIRN to Hayes E-Government Resources, which beat out three rivals for the contract. Hayes is the same firm that was hired several years ago to operate the House of Representatives computer system.

Hayes soon ended free dialup Internet access for school employees while at home. But the state said the privatization deal would expand capacity and reduce downtime, leading to improved overall service. It would be paid for largely by higher discounts under a federal program financed mainly by telecommunications companies.

The program, known as e-rate, is run by a nonprofit agency set up by the Federal Communications Commission. After studying the Hayes deal, the agency sent the state a letter in June, tersely denying $7.6-million in e-rate discounts to run the system for the coming year.

"Documentation provided demonstrated that price was not the primary factor in selecting this service provider's proposal," said the agency, the Universal Service Administrative Co.

The rejection of funding has caused concern in Gov. Jeb Bush's office.

A Bush policy aide, Patricia Levesque, last week sent an e-mail to Larry Wood, a top state education official, voicing concern that the system might run out of money. The e-mail was obtained by the St. Petersburg Times.

"We need to have a contingency plan in case the feds deny our e-rate appeal," Levesque wrote. "So much of our educational delivery systems rely on FIRN that I don't want us to be caught flat-footed should we find out we will only have state funds to support the system this year."

If the appeal is rejected, Education Commissioner Jim Horne may have to turn to a cash-strapped Legislature for millions to pay for a privatization venture. Horne does not expect that will occur. His spokeswoman said Thursday the state expects to prevail.

"We believe they misunderstand how the ITN (invitation to negotiate) process works in Florida, and we hope for a favorable decision," spokeswoman Frances Marine said. "We are pretty confident that the appeal is going to be successful."

FCC rules generally require schools to use competitive bidding when seeking a discount. Florida did not. But Horne writes in his appeal that the goal was the "best value" to the taxpayer, which meant "the most cost-effective provider."

The denial of FIRN funding could be troublesome for another reason.

According to the state auditor general, which reviewed FIRN's operations in May, the state can legally terminate Hayes' contract if it does not get the anticipated funding to operate the system.

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