State reaches $3.5 million Idaho Education Network settlement

After eight years — and with state-issued checks totaling $3,461,213 — the state has closed the costly and convoluted case of the Idaho Education Network broadband project.

Gov. Butch Otter announced and hailed the settlement Thursday. “I’m hopeful that this will help clear the way toward continuing expanded utilization of technology for improving student outcomes and the range of learning opportunities provided by our schools,” Otter said in a statement.

The settlement is just the latest bill stemming from the Idaho Education Network debacle. And it means the state’s direct costs from the case will come in at at least $18.2 million, according to an Idaho Education News analysis.

Nashville, Tenn.-based Education Networks of America will receive the bulk of Thursday’s settlement. The prime contractor on the defunct project will receive close to $2.5 million. CenturyLink — the multistage telecommunications company, based in Monroe, La. — will receive the remaining $973,000.

A big promise, a checkered history

The companies were Idaho’s lead vendors on a project designed to bring high-speed Internet into every high school, and set up a system that would allow schools to share classes remotely. When the 2008 Legislature passed a law to establish the network — without a single dissenting vote — lawmakers were told the system would have no impact on the state’s general fund.

But almost from the beginning, legal questions overshadowed the project.

Syringa Networks filed a lawsuit over the contracts the state awarded to ENA and CenturyLink, contracts orchestrated by Mike Gwartney, a longtime Otter friend and confidante who headed Idaho’s Department of Administration. Syringa argued the contracts unfairly cut the company out of the project.

The protracted legal battle left lawmakers with a project that turned into a perennial crisis.

Case closed?

The state never spent that $8 million, earmarked nearly a year ago. And that’s where the state will get its money to cover the settlement announced Thursday.

The deal lays to rest the unresolved legal issues stemming from the Idaho Education Network debacle. Vendors had claimed the state owed millions in unpaid project costs. Under Idaho law, the state was obligated to seek $29.7 million in back payments from ENA and CenturyLink — money paid under an illegal contract.

With the settlement, these claims and counterclaims are expected to go away.

The settlement is also designed to keep school districts whole. In separate tort claims, ENA and CenturyLink claimed they were owed about $13 million: $11 million by the state and $1.9 million by school districts.

Reactions

The Idaho Education Network legal battle drove a wedge between Republican state leaders. In the aftermath of the state Supreme Court ruling, Otter and Attorney General Lawrence Wasden sought to assess blame over the fatally flawed contract.

That rift remained evident Thursday. In a news release Thursday, Otter’s office incorporated quotes from Senate President Pro Tem Brent Hill and House Speaker Scott Bedke. Wasden emailed a short and separate statement to reporters.

However, the reactions seemed to hit on some common themes.

“One of my main objectives throughout this process has been to protect Idaho school districts,” Wasden said. “I appreciate that all parties were able to come together to develop a resolution that satisfies these concerns and allows the state to move forward.”

“This is welcome progress toward clearing the way for us to continue providing the best possible educational experience to every public school in Idaho,” Otter said.

“It was very important for the state of Idaho to get this issue taken care of so we can stay focused on our efforts to build and maintain the kind of school system that our students, parents, communities and employers need,” said Bedke, R-Oakley. “We feel like this settlement is in the best interest of the state’s reputation, our school districts and everyone who benefits from the Idaho Education Network.”

The state’s bottom line

When the $3.5 million in settlement checks clear, the state’s direct costs from the broadband fiasco will come in at least $18.2 million.

Idaho Education News reached this rough estimate by tallying up other costs the state has incurred over the past three years.

The 2014 Legislature agreed to spend $11.4 million to keep the Idaho Education Network afloat through June 2015. The 2015 Legislature followed up with another broadband bailout for 2015-16, but Ybarra’s staff eventually pegged the 2015-16 costs at no more than $1.3 million.

The state paid out roughly $1.1 million for outside legal counsel. Most of this money went to Hawley Troxell, a Boise firm that mounted the state’s unsuccessful defense of the contract.

The 2016 Legislature also agreed to cover $971,000 in legal bills for Syringa.

Idaho Education News reporter Clark Corbin contributed to this report.