Lawrence school leaders accused of accepting gifts in violation of federal rules

Allegations that Lawrence school district administrators and school board members accepted $17,000 in free gifts from a private company could cost taxpayers hundreds of thousands of dollars. However, the district is confident it will win a federal appeal to prevent that.

Lawrence Unified School District 497 this month submitted an appeal to the Federal Communications Commission fighting a finding that it violated federal conflict-of-interest rules by receiving free residential internet service from a company that supplies internet access to USD 497.

If the district loses its appeal, its FCC filing indicates it will need to pay back more than half a million dollars in federal subsidies that support internet access in schools, and will lose out on an additional $340,000 in funding not yet received.

“We are confident that once the Commission takes a look at facts in this case, they will agree with us that there’s been no violation and they will grant the appeal,” said Gina Spade, a private practice lawyer who wrote the district’s appeal.

Spade worked for the FCC for 13 years and was manager of the federal internet subsidy program for schools when the FCC added the conflict-of-interest rule that is being cited against USD 497. She left the FCC about a year ago and now represents schools across the country on matters related to the subsidy program.

In its appeal, USD 497 argues its contract with internet service provider Knology of Kansas — which is now owned by Wow! and also is appealing the decision — included 15 free at-home internet accounts that are a typical offer from that company to its business clients.

Spade emphasized that the district abided by open and fair bidding practices in choosing its internet provider, and said violating the FCC rule would need to involve accepting gifts made with intent to sway the bidding process. That’s not the case here, she said.

The Capital-Journal contacted the school district seeking information about who received the 15 free accounts and how the district or school board determined who should receive them.

A district spokeswoman responded with a statement and list of recipients that includes former Superintendent Rick Doll, three former school board members, three current board members and four current or former technology, facilities and operations employees “who were charged with responding to any after-hours disruption of internet or building mechanical, electrical, and plumbing services.”

The USD 497 statement also says the administrators and staff who worked on the Knology contract with free services — and who made the decisions regarding how to use them — no longer work at USD 497.

Above is the list of USD 497 officials and staff who had free residential Internet service made possible by a 2011 contract with Knology.

The newspaper also contacted Wow! seeking comment and requesting to know whether the company offers free residential service accounts to other school districts in Kansas.

“Because this matter is still pending, WOW! does not have any comment at this time,” the company replied in a brief statement.

The district’s appeal indicates school board members and district managers used the free accounts, and the accounts were offered “over the course of many years.”

“They were intended simply to allow the District’s school board members and managers to perform their duties more effectively,” the appeal says.

Spade said the school district, out of “an abundance of caution,” put an end to the free services in the spring of 2015 when there was an indication they might be problematic.

In its emailed statement, USD 497 said a former technology director notified the district in the spring of 2014 that the complimentary accounts might be an issue “in light of federal rule changes about gifts.” The district then “began an investigation into the matter, and as a precaution, took steps to modify the contract.”

Above is Lawrence USD 497's FCC appeal in full.

A Pennsylvania lawyer who specializes in the federal rules related to this situation published a summary of the Lawrence matter last week.

According to the summary by Deborah Krabbendam, of law firm Conrad O’Brien, since 2010, the FCC has barred school districts from accepting items of value from potential service providers or ongoing service providers.

“The gift rule applies all year round, not just during the competitive bidding process,” she wrote in her bulletin, adding that the recent decision against Lawrence, as well as a school district in North Carolina, indicated the Universal Service Administrative Company “continues to be alert” for potential violations.

The Universal Service Administrative Company is a nonprofit tasked by the FCC with administering funds and programs designed to promote universal broadband connectivity. It is the body that decided Lawrence violated rules and should pay back more than $500,000 and be denied another $340,000.

The $500,000 to be paid back concerns funding years 2011 through 2013. The $340,000 concerns years 2014 and 2015, when the USAC denied further subsidies to the district. The appeal documents indicate the value of the free at-home services for the funding years at issue was an estimated $17,000.

According to USD 497’s appeal, free services “were not intended to and could not have influenced the competitive bidding process.”

“Contrary to USAC’s allegation, the District conducted a fair and open competitive bidding process,” the appeal says. “Knology was the only service provider that bid on the services in 2011, and was the lowest-cost bidder in funding year 2013. In fact, when the District sought an additional high-bandwidth connection in funding year 2014, it awarded the contract to a different service provider.”

If the school district wins its appeal, it may not need to pay back the $500,000. It also is seeking to receive the $340,000 in withheld funding.

Spade said it is common for the USAC to issue decisions withholding funding from schools, and she helps schools appeal such decisions regularly.

“That happens all the time,” she said. “It’s not something that’s rare.”

Knology’s appeal says the at-home services were not a gift but part of a package and were “consistent with complimentary services provided by Knology to the District for over thirty years.”

Knology argues these complimentary accounts are “a normal, reasonable pricing and promotion strategy regularly used by Knology (and most other providers for that matter) for large- and medium-sized commercial customers.”

The company also argues it is obligated not to discriminate against the school district in terms of pricing and service level. Doing so, its appeal says, would be unlawful.

Shawnee County school districts

Contacted Friday, superintendents and spokespeople for the five school districts based in Shawnee County — Auburn-Washburn, Shawnee Heights, Seaman, Silver Lake and Topeka — said their employees and board members do not and have not had free residential Internet service from private companies they contract with.

“Century Link is the internet service provider for the district,” Silver Lake Superintendent Tim Hallacy said. “There are no perks or free anythings as part of that service agreement.”