State, FCC reach $3.5 million Idaho Education Network settlement

The state has reached one more settlement in the Idaho Education Network contract debacle — a $3.5 million agreement with the Federal Communications Commission.

With the latest settlement, announced Wednesday morning, the state’s costs stemming from the botched broadband contract climb to $21.8 million. Nearly a decade ago, the project was billed as a way to bring online courses to the state’s most remote schools, at no taxpayer cost.

But at the same time, the FCC settlement could finally close the books on the costly and convoluted Idaho Education Network dispute.

“I appreciate the willingness of all parties involved to work toward a resolution of these issues so that we can move forward with a clean slate,” Gov. Butch Otter said in a news release Wednesday.

The dispute between the state and the FCC centered on “e-Rate” dollars. This money, collected from monthly telephone surcharges, was supposed to cover about three-fourths of the costs for the Idaho Education Network, a broadband system to link the state’s high schools.

From 2009 to 2012, the feds forwarded the state $14.1 million in e-Rate dollars. In 2013 and 2014, 63 school districts and education providers sought an additional $13.8 million in e-Rate dollars to cover local projects.

But as a dispute over the Idaho Education Network contract played in court — with the contract declared void at the District Court and state Supreme Court level — the e-Rate dollars dried up. The feds denied the $13.8 million in requests from local schools, and later demanded the state return the original $14.1 million.

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The $3.5 million settlement resolves both of these disputes.

“I believe the months of work that went into crafting this agreement resulted in a settlement that’s in the best interest of everyone involved,” Senate President Pro Tem Brent Hill said. “The Legislature and local districts throughout Idaho are more than ready to move on.”

The bottom line

But the cost of moving on now totals $21.8 million.

Here’s the breakdown of the state’s other costs — all stemming from the Idaho Education Network legal dispute and the collapse of the contract.

  • In 2014 and 2015, with the state in court and e-Rate dollars on hold, the Legislature agreed to a series of bailouts to keep the cash-starved project online. These bailouts totaled $12.7 million.
  • In March, the state agreed to pay nearly $3.5 million to Education Networks of America and CenturyLink, the state’s broadband vendors. This money, like the $3.5 million now headed to the FCC, comes from an $8 million settlement fund bankrolled by the 2016 Legislature.
  • 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 project contract.
  • The 2016 Legislature also agreed to cover $971,000 in legal bills for Syringa Networks, the vendor that successfully sued the state over the project contract.

When the 2008 Legislature voted to create the Idaho Education Network — without a single dissenting vote — lawmakers were told the project would have no impact on the state’s general fund budget.