Idaho lawmakers get surprise $14 million bill for broadband

Amid a long legal battle, the school network contractors haven’t been paid. Now Idaho budget writers need to come up with an extra $14 million, at least temporarily.


The Federal Communications Commission withheld $7 million for the Idaho Education Network, a high-speed system for Idaho high schools.

Idaho legislative budget writers learned Thursday that telecom giant CenturyLink and Education Networks of America haven’t been paid by the federal government since last March.

That’s when the Idaho Supreme Court resurrected a lawsuit in which Idaho-based telecom provider Syringa Networks accused the Department of Administration and its then-director, Mike Gwartney, of inappropriately awarding the contract to its rivals. Last March, justices concluded that Gwartney inappropriately helped CenturyLink win the IEN deal.

With ongoing litigation — the most recent hearing in Idaho’s 4th District Court in Boise was Jan. 14 — the FCC won’t pay any more money until doubts about the contract’s legality have been resolved.

With the FCC funding in limbo, the Legislature’s budget committee must figure out how to make up a total of about $14.4 million — $7 million for money outstanding since March, as well as a similar amount for fiscal year 2015 starting in July — in hopes that the lawsuit is resolved and the FCC eventually makes the payments.

The FCC “is currently reviewing the funding in question in light of the Syringa Idaho Supreme Court case which alleges problems with the procurement process for the Idaho State Education Network,” said spokesman Mark Wigfield.

The Idaho Education Network connects 218 Idaho high schools, allowing for videoconferencing and distance-learning opportunities, in particular in rural areas without access to advanced or college-level courses.


Four years ago, Syringa Networks sued the Department of Administration and Gwartney, a Gov. Butch Otter ally, on grounds that the phone company was improperly rejected in the bidding to lay out the project’s broadband infrastructure linking it to schools.

Syringa initially lost in state court, but the Idaho Supreme Court resurrected the case last March — the same time the FCC payments stopped — saying Gwartney tinkered with bidding to help the state’s biggest phone company win a big share of the deal.

“Gwartney appears to have been the architect of the state’s effort to bend the contracting rules” to CenturyLink’s advantage, Justice Jim Jones wrote. “All contracts made in violation of these statutes are void and any money advanced by the state ... must be repaid.”

Gwartney, who retired from the Department of Administration in 2010, has denied wrongdoing.


On Thursday, Otter’s budget director, Jani Revier, asked the Joint Finance-Appropriations Committee to pay CenturyLink and other contractors on the IEN project out of funds tentatively directed toward a public education rainy day account.

Later in the day, the Republican governor further went on the offensive in an email, saying that this is a “temporarily bridge funding” necessary to “prevent disruption of services to Idaho schools and districts on the network.”

However, lawmakers were upset that it took until now for the person in charge of the contract, Department of Administration Director Teresa Luna, an Otter appointee, to tell them of the outstanding FCC payments.

Lawmakers from both parties said Luna should have been more vigilant, especially with millions at stake.

“Who’s paying attention to who is getting paid when?” said Sen. Dan Schmidt, D-Moscow.

“I’m not satisfied with the answers we’ve gotten,” said Sen. Dean Cameron, R-Rupert, the Senate co-chair of JFAC.


Luna says one problem was that the FCC funding doesn’t come through her office, but goes directly to the private contractors.

“The communication could be better, if we did a monthly reconciliation to ensure that they’re making their payments,” she said.

Cameron fears this funding glitch, at least in the near term, could have broader effects.

For instance, there’s a pending proposal in the Legislature to spend another $3.5 million to expand the broadband network from high schools to middle and elementary schools. But with FCC funding uncertain, that might be put on hold.

“It puts a lot of things in jeopardy,” Cameron said. “That’s a significant chunk of change.”

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