Report 2016-129 Recommendations

To increase transparency in the K12HSN program and help ensure that the State has sufficient information to measure the program's effectiveness, Education should direct ICOE to report annually on specific performance measures. These performance measures should include the following metrics:
- Cost per unit of capacity used.
- Network bandwidth.
- Frequency, duration, cause, and location of network outages or interruptions.
- Latency and packet loss on network circuits.
Education should stipulate that the receipt of grant funds is conditional based on the recipient's agreement to provide these measures and other information deemed necessary by Education, either on request or at regular intervals determined by Education. If Education believes that it does not currently have legal authority to direct ICOE to report on this information, it should seek legislative change to obtain that authority.

To better inform decision makers at the state level about the amount of funding necessary to operate and maintain the network, ICOE should formally amend its annual budget documents by November 2017 to specify multiple potential levels of network expenditures for the coming year, and it should detail the specific network upgrades and project costs included in each scenario. As part of this process, ICOE should also provide information about how these upgrades will affect the network's functionality.

To ensure that its projected program costs are as accurate as possible, ICOE should institute by November 2017 a formal practice for reviewing its budget planning document against its current network design plans and correct any inaccuracies before finalizing and submitting its budget.

To help ensure that the K12HSN program maintains the necessary amount of state funds in reserve, ICOE should prepare a formal methodology for a proposed equipment reserve that is based on the actual likelihood of equipment failure and the costs associated with replacing that equipment.

To ensure that it is able to continue critical network services with reduced operating reserves, ICOE should establish procedures to routinely monitor the K12HSN program's cash balance and to evaluate upcoming costs. If at any point ICOE determines that it will be unable to fund its costs due to delayed subsidy payments, it should notify Education regarding the size and timing of the anticipated shortfall and postpone significant discretionary expenditures, such as upgrading network site equipment, until ICOE collects the subsidies it is owed.

To better guarantee that network upgrades are necessary and are achieved at the lowest possible cost to the State, ICOE should develop a formal methodology for reviewing circuit capacity needs. This methodology should include consideration of multiyear trends in network traffic and the implications prospective upgrades may have for other parts of the network. Doing so would not only assist ICOE when determining the magnitude of circuit upgrades relative to the cost involved, but would also help ICOE determine whether it can delay upgrades until it can establish those upgrades' eligibility for E-Rate subsidies.

To provide as many options for network upgrades as possible and to help ICOE provide the most cost-effective upgrade options without risking its eligibility for subsidies, ICOE should adopt the practice of requesting bids at all feasible levels of capacity upgrades as opposed to only those levels that represent a tenfold increase in circuit capacity.

To help facilitate the review of circuit capacity needs, ICOE should maintain historical data for network traffic as long as technically feasible. It should also ensure that its monitoring software includes all network sites.

To reduce the risk of having to react to large increases in network traffic, ICOE should formalize a process to include input from network site administrators during network upgrade planning.

To better support future reporting efforts for the K12HSN program, ICOE should amend its contract with CENIC to require CENIC to report on specific network performance measures, including the frequency, cause, location, and duration of network outages or interruptions.

To ensure that the K12HSN program receives all of the service credits to which it is entitled, ICOE should amend its contract with CENIC to clarify CENIC's responsibilities in this area, including reporting to ICOE about network outages or interruptions and requests for credits to service providers, along with the outcomes of those requests.

To ensure efficient use of state funds, ICOE should conduct a cost and benefit analysis of its memorandum of understanding with the Butte County Office of Education to determine whether it represents the most cost-effective approach to providing the program activities it covers.

To help ensure continuous network operations while preserving state resources, the Legislature should appropriate to the K12HSN program an amount that does not exceed $10.4 million for fiscal year 2017-18. If the Legislature wishes to appropriate a lower amount for the program, it should direct ICOE to modify one or more of the planned network upgrades we highlight in our report, either by delaying the upgrade to a subsequent fiscal year or by pursuing a less expensive option.