A Problem Solvers investigation found that poor school children -- some real, some imaginary -- helped the Brevard County School District win federal money to purchase $5 million in computer equipment and connections since 2001.

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Schools' Use of Federal Funds Under Scrutiny

Schools Superintendent Richard DiPatri conceded district officials overstated the poverty rate at one elementary school by 33 percent, buying equipment with more than $500,000 in federal funds it should not have received.

The Problem Solvers examination found up to $1.5 million in questionable purchases by the district, some of it through means described by other districts as unethical or a violation of federal rules.

The questions center on activities at two schools in the Cocoa area:

The acquisition of a $1 million Web server for Endeavour Elementary School -- a server the district intends to use for all 81 Brevard schools.

About $531,000 spent at Saturn Elementary School, federal money obtained only because the district overstated the poverty rate for that campus.

DiPatri last month hired a consultant who will begin auditing the district's use of the federal E-Rate program, a $2.25 billion-a-year federal operation. Money for the programs comes from the universal services fees or taxes on residents' local, long distance and wireless telephone bills.

Last week, DiPatri told the school board he ordered an $8,500 audit "just to make sure everything is being done appropriately and properly in terms of guidelines and regulations."

Now, the federal government is investigating, and the district has been told it should refund any overpayments to the Universal Services Administrative Company. That's the agency set up by the Federal Communications Commission to administer the E-Rate program.

DiPatri said budgeted reserves would cover any necessary refunds, and that money raised from the sales tax increase being voted on today would not be used.

Focus on two schools

The E-Rate program distributes up to $2.25 billion to schools and libraries seeking equipment for and connections to the Internet. It pays up to 90 percent of the cost of eligible equipment and services, with the schools or district paying as little as 10 percent.

Because money is limited, the kinds of services sought for Saturn go first to the poorest schools in the nation.

The investigation found the district obtained about $531,000 for fiber optic and high-quality cables, computer switches, phone equipment and other improvements at Saturn. It received the money after falsely stating on 18 applications in 2001 that 85 percent of the children at Saturn were receiving free or reduced school lunches. In fact, only 64 percent of the students were in the federal school lunch program at that time.

Had the accurate numbers been reported on the applications, Saturn would not have received any money from the E-Rate program. Only schools with 75 percent or more of their students in the federal school lunch program were eligible for the kind of computer connections paid for through USAC's schools and libraries division in 2001.

DiPatri called the misreporting an "honest mistake" caused by the unintentional transposition of digits -- one not detected by the district even when questioned by federal officials about the Saturn numbers in 2001 and 2002. The district revealed the error last week, after WKMG requested documents that showed Brevard schools provided incorrect figures to the federal government.

The Brevard School Board last week voted to postpone authorizing up to $1.8 million more through the E-Rate program until an audit of its prior purchases is completed by Funds for Learning, a Virginia-based E-Rate consultant. The window to apply for next year's money opens this month.

"I just want to make sure there are no other questions about exactly what we're doing and we did follow the letter of the law when we did buy this equipment," said board member Robert Jordan, who pulled the E-Rate proposal from the board's consent agenda.

Web server for Endeavour

The WKMG investigation also questioned how the district obtained a $1 million IBM iSeries 820 web server by claiming it was only for Endeavour Elementary School, the poorest in the district and, therefore, the best candidate for which to seek computer equipment under the E-Rate program.

The server was to be used for publishing and housing staff and student web sites, keeping track of student grades, attendance and FCAT score analysis which would be available to any student, teacher or parent from the school or from an off-site computer.

The server is actually more suitable for running a $500-million-a-year corporation or the entire district, according to Mark Roberts, a retired 31-year IBM employee and now president of RMI Midrange Computers in Orlando.

Why would a 670-student school like Endeavour would need such a massive, powerful web server?

Said Roberts, "Well, my gut feel is it was presented for a different purpose . . . maybe to run a whole bunch of schools ... or a district."

And that's exactly what Superintendent Richard DiPatri told board members the Web server will be used for -- to serve all 81 Brevard schools -- after it is dedicated to Endeavour's Web site for one year.

School board vice-chairman Bea Fowler was not confident in the way Brevard handled Endeavour's server.

"I don't think they were completely up front," she said of the district's handling and explanations of the E-Rate purchase. "For what other reason would we have such a high-powered system for a little elementary school?"

Experts say Brevard Erred

USAC Vice President Mel Blackwell told WKMG that, had the district revealed in its application that it really wanted the server to power all schools in the district after one year, it "was not going to get approved."

"You have to depend on people telling you the truth," Blackwell said. "We would look into it as a potential fraud case."

Melinda Crowley, educational technology chief for the Florida Department of Education, said she would advise districts seeking powerful web servers suitable for the whole district not to claim in an E-Rate application it was for only the poorest school in the district.

And Sara Fitzgerald, vice president of Funds for Learning, the consultant hired by DiPatri to audit the district's program, told Local 6 prior to being hired by Brevard that the district's actions were "certainly not in the spirit of the program" and she "wouldn't do it that way."

While saying it falls short of fraud, Fitzgerald cautioned that districts that do what Brevard did face risk of a federal audit and the demand they return the money to USAC. E-rate coordinators from Orange, Osceola, Seminole and Lake counties all said Brevard did would not be allowed under E-Rate rules.

"First of all, that's not the intent of the program," said Ann Atherton, a senior manager who oversees E-Rate for Orange County schools. "It's unethical. We wouldn't do it."

"No, we would not either," said Gary Becker, Seminole County's E-Rate coordinator. "If you're going to go the single-school concept, it is for services and equipment that are going to be used at that school."

Excess capacity

In fact, the Web server was never installed at Endeavour, but was connected in January at district headquarters in Viera. Security and environmental concerns made it unfit to be housed at Endeavour, said assistant superintendent Richard Struense.

The Florida Department of Education advised Brevard that placing the server in Viera and, after one year, using it for locations not mentioned on the E-Rate application does not violate E-rate rules. In fact, there are no written rules outlawing the hand-me down approach Brevard and other districts, such as Pinellas County, have adopted with E-rate purchased items.

But USAC warns applicants it can be found in violation of rules if they obtain equipment "far in excess of what would be considered appropriate" for the school named in the application.

DiPatri last week admitted such was the case with the $1 million server ostensibly purchased for Endeavor, but envisioned for use by all schools in the district. He conceded the cost and capability of the server is far in excess of what was appropriate for Endeavour, but continues to defend the purchase as proper.

DiPatri said that the final fate of the Endeavour server has not been determined, although he told the school board in an Oct. 2 memo "This server will host all our schools' web services." However, using it for all schools would save the district about $1.6 million over the years. That's because the district would not have to purchase individual servers for each school, according to a report to the School Board presented last month.

"The district followed every rule, guideline and procedure set down," schools spokeswoman Sara Stern said.

Florida Today staff writer Zenaida A. Gonzalez contributed to this report.