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Key e-rate executive resigns

The embattled e-rate initiative to wire the nation's public schools suffers another blow as a key executive announces his resignation.

The embattled e-rate initiative to wire the nation's public schools suffered another blow today as a key executive announced that he will be stepping down later this month.

Ira Fishman, the founding chief executive of the Schools and Libraries Corporation, cited family and personal reasons for his resignation, effective August 28. The SLC is one of two nonprofit organizations set up by the Federal Communications Commission to administer the e-rate, which is expected to dole out up to $1.275 billion this year to pay for Net connections and internal wiring for schools, libraries, and rural health care facilities.

Congress directed the FCC to establish the e-rate as part of the Telecommunications Act of 1996. See related story:
Net subsidy fight reaches Congress It accounts for an estimated 19 cents of every dollar paid into the so-called universal service fund, which is used to ensure phone service for all members of the public. Universal service fees are paid by long distance carriers to phone companies, but the bulk of the cost for those fees is passed along to consumers.

The e-rate has come under tremendous political fire by members of Congress, who have argued that the FCC had no constitutional authority to set up the SLC and the Rural Health Care Corporation (RHCC), which were charged with handling applications for e-rate discounts and other administrative tasks. Some critics said the bureaucracy established with the two nonprofit entities will hinder congressional oversight of the e-rate. Others say the e-rate is an illegal tax and have been fighting to eliminate it altogether.

Last month, Sen. Conrad Burns (R-Montana) and Rep. Billy Tauzin (R-Louisiana) introduced a bill designed to eliminate the e-rate and replace it with funds raised by an existing federal excise tax on telephones.

In response to criticism over the program, the FCC in June cut funding for the e-rate by 43 percent--making the total funding for the program $1.275 billion this year instead of the $2.25 billion the agency originally planned.

The FCC also proposed a See related Q&A:
Education official: E-rate must survive plan to fold the two nonprofits into the Universal Service Administrative Company, which has managed phone service subsidies for low-income and rural residents for more than 50 years. Under that plan, the SLC and the RHCC would become divisions of the Universal Service Administrative Company.

If the plan went forward, it could have eliminated the position held by Fishman, who has already seen his annual salary cut from $200,000 to $151,000. SLC spokesperson Jodie Buenning said Fishman would have stayed on in a position within the Universal Service Administrative Company, whose board members would then oversee the e-rate.

Buenning said Fishman's decision was based on family concerns, not the overhaul of the e-rate's administration.

"He feels that he needs to strike a balance in his life and give his family the time they need," Buenning said, adding that "the restructuring proposal was fully supported by Ira and the rest of [the SLC's] board members."

Still, the resignation comes at an inopportune moment, as e-rate funding commitment letters are due to be sent this fall and the SLC is still developing procedures for processing e-rate invoices and mitigating fraud. Roughly 32,000 institutions have applied for the funding.

The SLC's chief operating officer, Kate Moore, will take over as acting chief executive, Buenning said. In her position as chief operating officer, Moore has overseen the development of the organization's Web site, the application review process, and its operating budget.

News.com's Courtney Macavinta contributed to this report.