Broadband service providers, which received millions of dollars in grants to roll out high-speed Internet in Wisconsin, have failed to document what they actually spent on their projects, according to a new report from the state Legislative Audit Bureau.
The bureau said it reviewed grants administered by the Wisconsin Public Service Commission under two federal programs: the Coronavirus Aid, Relief and Economic Security (CARES) Act and the American Rescue Plan Act (ARPA).
The report raised concerns about spending oversight.
For example, almost all of the 384 supporting documents reviewed by the PSC for CARES Act reimbursements did not provide information on what grantees actually paid to build their projects.
In addition, the PSC did not document efforts to verify that grantees had built the high-speed Internet infrastructure for which they had received compensation.
In addition, there was a lack of transparency in the decision-making process regarding the granting of subsidies.
An estimated 650,000 Wisconsin residents do not have access to high-speed Internet, also known as broadband. Hundreds of millions of dollars in state and federal grants have been poured into solving the problem, and much more spending is yet to come.
“However, without written procedures, documented verification efforts, or proper cost accounting, it is still unclear whether these dollars are being used optimally and optimally,” Sen. Robert Cowles, a Green Bay Republican, said in a statement.
“The lack of oversight by PSC and the rewriting of application criteria after applications have been submitted has severely eroded my confidence in the agency’s ability to provide future broadband grants,” Cowles said.
The Public Service Commission has used ARPA funds to award 83 broadband grants totaling nearly $100 million. It has used CARES Act funds on 12 grants totaling $5.4 million.
However, the Legislative Audit Bureau said the PSC failed to establish comprehensive written program guidelines for ARPA spending and did not consistently follow its grant application directions when deciding which projects to fund.
There were issues with the way CARES Act grantees were reimbursed.
“We found that 337 of the 384 documents were invoices and 47 documents were pay slips, receipts and easement contracts. (But) an invoice is not proof that a vendor has paid a fee, since, for example, a vendor may accept payment for less than the full invoice amount,” the report said.
It was also unclear where exactly the service was implemented or improved.
Random sampling, the PSC said, is an attempt to verify that grant recipients have built the broadband networks for which they were paid and that the service has been provided. However, according to the report, the agency has not provided any evidence of the CARES Act grants.
“PSC does not have its contacts with businesses and residents in the areas covered by the projects, its attempts to determine whether it is possible to order broadband service at locations in those areas, nor the information it had received from the Federal Communications Commission , documented,” the report said.
There was a lack of transparency in the ARPA grant decision-making process.
A panel of four, including three PSC staff and one from the Ministry of Public Instruction, evaluated the applications and made recommendations to the PSC’s three politically appointed commissioners.
“We asked PSC to provide us with the scores that the panel members assigned to each grant application because we expected that PSC would have retained evidence of how the applications were evaluated,” the report reads. However, the agency said it did not collect this information because it was believed to be personal notes from the panel members.
The Legislative Audit Bureau recommended that the PSC make several changes in its oversight of broadband spending and report progress to the Joint Legislative Audit Committee by Nov. 15.
The PSC said it disagreed with parts of the reimbursement report.
It’s worth noting that the audit found no errors or improper spending, PSC Chair Rebecca Cameron Valcq said in a letter to the Legislative Audit Bureau.
“Each of the reimbursement requests was supported in accordance with federal guidelines and the grant agreement and was accurate,” she said.
PSC Commissioner Ellen Nowak, a Republican, criticized how the agency managed federal funding for broadband grants.
She said there has been a rush to get the CARES Act grants “out the door” and that has resulted in bad decisions.
“Unlike in the previous granting procedure, the only approval criterion in this procedure was whether the applicant believed he could spend the money by the end of 2020,” she said.
Of the three commissioners, Nowak cast the only vote against these awards.
“Although not required by the CARES Act, requiring applicants to provide equivalent federal dollars would have allowed us to achieve the same level of broadband deployment but at a lower cost to taxpayers,” she said.
Nowak said projects previously rejected by the commission have been approved under CARES.
“All of a sudden they became worthy just because we had money on the table and it had to be spent by the end of the year,” she said.
In June, the PSC awarded $125 million in broadband rollout grants to 71 projects aimed at reaching approximately 83,000 homes and 4,600 businesses.
The projects will impact 45 counties, according to the agency, bringing new or improved Internet access to unserved and underserved areas. In total, there were 194 applications requesting more than $495 million in funding.
The Legislative Audit Bureau did not look at federally funded broadband grants, although its review of PSC-administered CARES and ARPA grants raised questions about the overall grant approval process and oversight.
“I think this just goes to show that the whole program needs to be fundamentally changed,” Nowak said.