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See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974). 
 
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FOR IMMEDIATE RELEASE:         CONTACT: Kent.Nilsson@fcc.gov                            
December 12, 2008       
 
OFFICE OF INSPECTOR GENERAL  
RELEASES STATISTICAL ANALYSIS  
OF AUDITS OF  
UNIVERSAL SERVICE SCHOOLS & LIBRARIES FUND 
 
Washington DC – The Federal Communications Commission's Office of Inspector General ("FCC-OIG") 
released its initial analysis of  the most recent audits of distributions to schools and libraries from the 
Universal Service Fund "(USF"). The USF is administered by the Universal Service Administrative 
Company ("USAC") on the Commission’s behalf.  The FCC-OIG report contains statistical analyses of 260 
audits of USF schools and libraries program beneficiaries. The Schools and Libraries Program of the 
Universal Service Fund, commonly known as "E-rate," provides discounts to assist schools and libraries in 
obtaining affordable telecommunications and Internet access services.  The audits were performed to 
determine whether distributions to Schools and Libraries Program beneficiaries were being made in 
accordance with the Commission's directives and to provide data for statistical estimates of erroneous 
payments as required by the Improper Payments Information Act of 2002 ("IPIA").    
An "erroneous payment" is defined by the Office of Management and Budget under the IPIA as "any 
payment that should not have been made or that was made in an incorrect amount under statutory, 
contractual, administrative, or other legally applicable requirements.  Incorrect amounts are overpayments 
and underpayments (including inappropriate denial of payment or service).  An improper payment includes 
any payment that was made to an ineligible recipient or for an ineligible service, duplicate payments, 
payments for services not received, and payments that are for the incorrect amount.  In addition, when an 
agency's review is unable to discern whether a payment was proper as a result of insufficient or lack of 
documentation, this payment must also be considered an “error."  The audits were performed by commercial 
audit firms contracted and managed by USAC with FCC-OIG oversight.   
Under IPIA standards, a program is at risk if the erroneous payment rate exceeds 2.5 % and the amount of 
erroneous payments is greater than $10 million.  The erroneous payment rate is estimated to be  13.8% for 
the Schools & Libraries Program which exceeds the erroneous payment rate from the 2007 audits which was 
12.9%.  Total estimated erroneous payments for the Schools and Libraries Program is $232.7 million as 
compared with $210 million for the 2007 audits.  Accordingly, the FCC-OIG has concluded that the Schools 
& Libraries Fund is ‘at risk’ under the IPIA criteria.