Part I: Haredi Schools Reap Millions In Federal Tech Funds

Part I: Haredi Schools Reap Millions In Federal Tech Funds

How does a community that rails against the Web pull in $30 million in one year for its schools from the E-rate program?

Students at a chasidic yeshiva in Brooklyn. Michael Datikash/JW
Students at a chasidic yeshiva in Brooklyn. Michael Datikash/JW

Editor’s Note: This article is the first of three parts. Click for part 2. Click for part 3.

At Yeshivat Avir Yakov, an all-boys school in the chasidic enclave of New Square in New York’s Rockland County, students spend the vast majority of their long school days studying religious texts in spartan classrooms furnished only with battered wooden benches and desks. Unlike their counterparts in public or private schools outside the chasidic community, the boys at Avir Yakov do not have access to the Internet or computers in their school because chasidic leaders view the Internet as a corrupting force capable of undermining their way of life.

Indeed, recent graduates report never having seen — let alone used — a computer in their classrooms, and video of the inside of the Avir Yakov building shot within the past two weeks and obtained by The Jewish Week seems to support their accounts: not one of the yeshiva’s classrooms, public areas or designated resource rooms seen on the video contains a computer, or even a telephone.

So it comes as a surprise that the approximately 3,000-student school has, since 1998, been allotted more than $3.3 million in government funds earmarked for Internet and other telecommunications technology.

In 2011 alone, the yeshiva collected $817,065 through E-rate, a 15-year-old federal program that subsidizes telecommunications services and infrastructure for schools and libraries, giving larger discounts to those serving low-income populations.

In 2012, Avir Yakov got $209,423 the vast majority of that money for telecommunications service provided by a Brooklyn company called Discount Cellular Plus.

Avir Yakov is just one of many fervently Orthodox Jewish schools in New York State that, despite publicly eschewing Internet use and despite offering their students minimal, if any, access to computers, have spent large sums of E-rate money.

Disbursed to service providers — often small businesses, like Discount Cellular Plus, which appear to serve an exclusively Orthodox clientele — E-rate funds distributed to 285 New York State Jewish schools totaled more than $30 million in 2011, although not all that money ended up being disbursed.

This means that while Jewish schools enrolled approximately 4 percent of the state’s K-12 students, they were awarded 22 percent of the state’s total E-rate allocations to schools and libraries that year. In addition, in recent years, a number of fervently Orthodox organizations — including and Torah Umesorah (The National Association for Hebrew Day Schools) — have classified themselves as libraries in E-rate applications and collectively received millions of dollars, a trend first reported in the Forward.

E-rate, which disbursed $2.2 billion in 2011 and is designed to directly benefit students, is one of several programs operated by the Universal Service Administrative Company (USAC) for the Federal Communications Commission with money collected from fees on long-distance phone service.

While many have lauded E-rate for helping to give large numbers of schools and libraries access to the Internet, the program has also been criticized for its inadequate safeguards against fraud and waste.

In a four-month investigation, The Jewish Week reviewed E-rate data along with numerous filings submitted by Jewish schools and their service providers. The newspaper conducted an extensive analysis of 2011 E-rate awards, reviewed the funding history of the Jewish schools and service providers receiving the largest sums of money, examined “470” forms detailing schools’ technology requests, and looked at various audit reports and FCC rulings. With the exception of the 470s, all of this information is publicly available on the website of E-rate Central, a Long Island-based E-rate consulting firm.

The Jewish Week also made repeated attempts to interview administrators at several of the Jewish schools receiving the largest sums of money, as well as officials at companies that have billed E-rate for services reportedly provided to these schools. With the exception of an E-rate consultant, whom one school suggested The Jewish Week contact, none of these people returned calls or agreed to be interviewed.

What The Investigation Found

Perhaps not surprisingly, the investigation revealed that of the almost 300 Jewish schools benefiting from E-rate, large ones serving predominantly low-income populations got the lion’s share of the money: 10 schools — all but one chasidic — collectively were approved for nearly $9 million in E-rate-funded services in 2011, almost one-third of the Jewish total.

While E-rate does cover certain non-Internet-related expenses, such as PBX business phone systems and wiring for internal networks, and while most fervently Orthodox schools do have at least basic Internet service for office administrators, it is unclear why schools like Avir Yakov that offer their students minimal, if any, access to computers and the Internet are consistently among the program’s largest beneficiaries.

This is a segment of the Jewish community deeply concerned about the perceived social threat posed by the Internet. Indeed, last May, 60,000 fervently Orthodox Jews filled the Citi Field and Arthur Ashe stadiums in Queens for a rally about the dangers of the Internet, and the community’s schools routinely require parents to sign documents at the beginning of each school year committing to not having Web access in their homes as a precondition for enrollment.

Setting aside questions of how these schools are using technology, it is also unclear why, given the financial constraints of E-rate, which had $2.3 billion to allocate last year yet received over $5 billion in requests, the program continues to dole out disproportionately large sums to a small sector of the population.

Among The Jewish Week’s Findings:

Yeshivat Avir Yakov submitted requests in 2012 seeking, among other things: 65 direct connections to the Internet, wiring that would provide 25 classrooms, as well as 40 computers or other devices, with Internet access; phone service for 95 classrooms; more than 260 cell phone lines with data plans; various PBX (phone) equipment and wire and cable upgrades.

One recent Avir Yakov graduate told The Jewish Week that during the time he was a student there, the school installed “phone systems and data cables in each classroom, but no computer or Internet connection was ever installed.”

“There were phone jacks and data jacks, but nothing more,” the graduate continued.

The Jewish Week was unable to confirm this with Avir Yakov, as the school did not return three detailed voice-mail messages, including one notifying the school that it would be a subject of this story.

Notably, Avir Yakov’s primary service provider, Williamsburg-based Discount Cellular Plus, is being sued in federal court by Sprint/Nextel. The suit alleges that Discount Cellular Plus, along with its owner Yoel Stossel and two other men, targeted yeshivas to steal their special discounts and rate plans and that the defendants then fraudulently acquired large quantities of “new high-end Sprint phones,” including iPhones, which they illegally unlocked and resold for a substantial profit overseas. (Avir Yakov is not mentioned in the suit).

Bais Ruchel D’Satmar, an all-girls Satmar school in Williamsburg with over 3,000 students, received more than $1.5 million in 2011, the largest E-rate haul by any Jewish school that year. The following year, it requested, among other things: high-speed T1 lines with dedicated Internet access for eight locations; 250 cell phones; local and long-distance service for more than 100 lines in eight buildings; 100 pagers and eight locations for a video conferencing system. Over the years, the school — which, former students and employees told The Jewish Week, offers students some training on office software like QuickBooks but no Internet access — has spent more than $4 million in E-rate money. In 2012 it spent $45,000 just on Internet access provided by one supplier, Jet Wave.

Bais Ruchel D’Satmar, also known as Beth Rachel, has been involved in fraud in the past. In 1999, Rabbi Hertz Frankel, then principal of Bais Ruchel D’Satmar’s elementary school, pleaded guilty to felony charges of conspiring for nearly two decades with Brooklyn Community School District 14 to place dozens of chasidic women on the district payroll in no-show teaching jobs as a part of a plot to funnel more than $6 million to the school and its parent organization, United Talmudical Academy.

According to the April 1999 report submitted by the special commissioner for investigation of the New York City School District, the women typically turned over their paychecks to Frankel — who in turn handed the money over to the school — but, through the scheme, were able to get heath benefits for their families. Investigators were unable to fully account for how all the funds were used, but Frankel was sentenced to three years’ probation and ordered to pay $1 million in restitution (the school was allowed to pay the money on his behalf as the 6 year investigation had found no evidence that Frankel, who currently serves as Bais Ruchel’s English division principal, had benefitted personally from the scheme.

United Talmudical Academy (UTA), a Satmar boys’ school in Williamsburg that has approximately 2,800 students (there are also UTA’s in Borough Park and Rockland County that apply separately for E-rate), spent $831,603 in 2011, and has spent almost $8.2 million in E-rate funds since 1998. In 2012 it requested, among other things: wireless Internet and e-mail on 100 cellular lines, 160 cell phones, 100 landlines, Internet access on two dedicated lines and 75 pagers. In 2012, Dynalink Communications received $81,600 just to supply Internet access to UTA.

Dynalink, Birns Telecommunications, Hashomer and First Class Computers, Inc. have received the lion’s share of UTA’s E-rate business, and UTA has consistently been approved for E-rate reimbursements, even though a 2004 audit by the FCC’s inspector general concluded that in 1999, the focus of the audit, UTA was “not compliant with the program regulations.” (The FCC later overruled the resulting recommendation that the Satmar school return $934,300.)

Congregation Machne Shalva, also going by the name Talmud Bnei Zion Bobov, a K-12 boys’ school in Borough Park with 1,675 students, has been approved for over $100,000 each year in E-rate services since it first got involved with the program in 2006. In 2012, Machne Shalva, requested nine T1 lines, 150 cell phones, 20 BlackBerry devices, text-messaging service for 150 users, 75 pagers and nine cable/DSL Internet access points. It received $660,865.43 in 2012 and $709,489.38 in 2011. Its primary service providers are Dynalink and Birns.

Yeshiva Beth Hillel D’Krasna, a 421-student boys’ school in Borough Park, spent more than $1.5 million between 1998 and 2012. One of its recent major service providers is an entity called Mekach Tov Enterprises, Inc., which has done about $850,000 worth of E-rate business in the two years it has participated in the program.

Catholic schools and public schools in New York, even ones serving high-poverty populations, do not seem to reap as much money from E-rate as do their ultra-Orthodox counterparts.

Our Lady of Sorrows in Queens, a pre-K through eighth grade Catholic school serving 235 students and also eligible for a 90-percent discount, spent $6,102 in 2012 and $21,105 in 2011. Since 1998, the school has received approximately $530,000 — averaging about $35,000 per year — spending just under $9,000 on Internet access in 2012.

Catherine McAuley High School, an all-girls Catholic school in East Flatbush serving 250 students and also eligible for a 90-percent discount, spent only $4,137 in 2011. From 1998-2012, the school spent less than $700,00 — averaging less than $50,000 per year. Unlike UTA, Bais Ruchel D’Satmar, Yeshiva Beth Hillel of Krasna, Machne Shalva and Avir Yakov,

McAuley has a website, which enables students and parents to access private content and information about the classes in which students are enrolled.

Meanwhile, the New York City public schools, which enroll close to 1 million students, almost half of them eligible for free/reduced lunches, has spent about $1.3 billion in E-rate funds, or the equivalent of 158 UTA’s. Looked at another way, E-rate has spent approximately $1,300 for each public school student, compared to almost $3,000 for each UTA student, even though the yeshiva is part of a community whose ideology rejects the Internet and discourages computer use except in very limited ways.

Asked in an e-mail why New York’s fervently Orthodox Jewish schools appear to disproportionately benefit from E-rate, Eric Iversen, USAC’s director of external affairs, replied that “program rules do not address diversity or proportionality of enrollments in the way you seem to be asking. They require only that a school be eligible, as per federal laws. … The amount of funding that goes to certain kinds of school — public, private, religious, etc. — is a function of how individual applications from schools in these categories add up. It’s just an accident of addition, not anything that is part of [how] our funding decisions are made.”

In an e-mail interview, Tehyuan Wan, coordinator of education and technology programs and initiatives at the New York State Department of Education, speculated about disproportionate representation of Jewish schools in E-rate, noting that, “Some schools have been more aggressive in maximizing the opportunity while others calculate their actual usage and needs and budget accordingly.”

He also noted that because of USAC’s “Two In Five” rule whereby schools can only be reimbursed for certain expenses twice every five years, “Eligible schools may choose to deploy their technology upgrades or expansion in a particular year or two within the five-year funding cycle. So the total spending and reimbursement for each of the schools may vary from one to another, depending on when they use Priority II funding resources. Therefore, it is important to take the five-year funding usage cycle into consideration in your computation and comparison.”

Responses From Schools

The Jewish Week phoned representatives of seven of the Jewish schools that have received some of the largest E-rate awards in the program’s history, leaving two voicemail messages at each school: UTA Williamsburg, Yeshivat Avir Yakov, Bais Ruchel d’Satmar, Congregation Machne Shalva, Yeshiva Beth Hillel d’Krasna, Bobover Yeshiva B’nai Zion and Talmud Torah Tzoin Yosef Pupa. The messages requested information on what technology the school makes available to students and how it has spent its E-rate dollars. The reporter noted that an article would appear this week. None of these calls was returned. A third call, placed to Avir Yakov and its E-rate consultant Robert Sniecinski and detailing some of the allegations against it, also was not returned.

Indeed, the only fervently Orthodox leader contacted who agreed to speak was Rabbi David Niederman, executive director and president of the United Jewish Organizations of Williamsburg.

He emphasized that he has “no oversight over any schools whatsoever” and said that he has “no idea of E-rate, what that means, I don’t know the details of the program.”

“Let the schools talk about it themselves, let me not go into it,” he added.

Officials at Yeshiva Beis Chaya Mushka, a Chabad girls’ school in Crown Heights approved for $878,506 in 2011, referred interview requests to Richard Bernstein, the school’s E-rate consultant.

In a phone interview, Bernstein, who is founder of E-Rate Consulting LLC in Woodmere, L.I., and has been involved with E-rate since its inception, came to the defense not only of Beis Chaya Mushka, but also of fervently Orthodox E-rate beneficiaries in general. (While Bernstein has a variety of clients, both Jewish and non, he said that he has not worked with the other schools cited in this article.)

He offered a number of potential explanations why the schools in question benefited disproportionately from E-rate:

New York State as a whole has historically been one of the states receiving the most E-rate dollars (as much as 17.4 percent in 2002), something he attributes to the state’s department of education promoting the program and encouraging schools to apply.

Jewish groups are better organized and better at sharing information among themselves than other groups.

Many fervently Orthodox schools are large and serve large numbers of low-income students, a population given preferential treatment by E-rate.

Because E-rate’s application process is labor-intensive and “difficult to navigate,” many schools that might be eligible do not bother to apply.

Regarding the fact that most fervently Orthodox schools, with the possible exception of Chabad ones like Chaya Mushka (which is using its E-rate money, in part, to wire the two new floors of classrooms it is building), don’t give students access to the Internet, he said, “There are innovations out there and it’s creeping in,” adding that some schools not currently using the Internet may be “positioning themselves for when it’s going to happen.”

“No one knows how long [E-rate] is going to last, because it’s running out of money,” he said. “If you don’t take advantage of it now, you may not be able to later.”

In addition, he said, wiring is required for phone lines and voicemail systems, as well as Internet, and even schools that don’t use Internet still need advanced computer systems to track attendance, grades and other administrative details.

“You can no longer manage a school with paper and pencil, it just doesn’t work,” he emphasized.

Asked why fervently Orthodox schools average dramatically larger E-rate expenditures per pupil than the New York City public schools, which also serve large numbers of low-income students, Bernstein speculated that the public schools “have different resources available to them,” such as funds through its buildings department, and may not need E-rate as much.

So Many Pagers?

Just what are fervently Orthodox schools doing with pagers, Smartphones and expensive Internet connections?

In a December interview with The Jewish Week, Rabbi Martin Schloss and Sara Seligson of the Jewish Education Project’s day schools and yeshivot department, said they were unaware of fervently Orthodox schools, with the possible exception of those affiliated with Chabad, providing their students with access to the Internet.

JEP stopped dealing with the E-rate program several years ago, in larger part because of its reputation for problems related to fraud, Seligson and Schloss said.

Schloss, the department’s director of government relations and general studies, said: “[E-rate] had a lot of problems in past, and the last thing we need to do is get stuck in the middle of that. That would destroy our own credibility and ability to work with schools. We in general try to steer clear of questionable practices or practices that could lead us all into trouble.”

Seligson noted that computers and software are provided by the government for use in Title 1, programs for low-income children, and that the Gruss Foundation also provides Orthodox schools with some equipment and software, such as a program called SuccessMaker that drills basic academic skills.

Asked if they thought such schools would be willing to budget any of their own money for technology, something E-rate requires of even its poorest schools, Seligson and Schloss said no.

“The population you’re talking about is hurting” financially, Schloss said. “So they’d have a tough time justifying that kind of money.”

While the ardent opposition to the Internet is gradually weakening in “yeshivish and Bais Yakov” communities and schools, Schloss observed, it is still strong in chasidic ones, with the exception of Chabad.

Asked if she is aware of non-Chabad chasidic schools providing Internet access to students, or using it for Skype or other video-conferencing, Seligson said, “No. Definitely not.”

As for chasidic boys schools giving students access to computers, other than ones provided through Title 1 specifically for Title 1 programs, Seligson said, “I would be shocked to find out that anyone actually does.”

The two Jewish schools with by far the largest E-rate allocations in 2011 — collectively approved for $2.8 million — are both non-Chabad chasidic.

Told about large numbers of fervently Orthodox schools benefiting from E-rate services they do not make available to their students, Naftuli Moster, founder of Yaffed, an advocacy group that seeks to improve the secular education in ultra-Orthodox schools, said, “This problem is only the tip of the iceberg. … In my quest to make sense of which yeshivas provide what level of education, I ask people [who went through the haredi yeshiva system] if they’ve received computer lessons in yeshiva,” said Moster, himself a graduate of a fervently Orthodox school. “Typically we stare at each other for two seconds and then laugh really hard.”

Julie Wiener is associate editor of The Jewish Week; Hella Winston is special correspondent. This article was made possible by The Jewish Week Investigative Journalism Fund., @Julie_Wiener

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