Knology's headquarters at 1 Riverfront Plaza are pictured in this file photo from 2012. The cable provider was purchased by WOW Internet, Cable & Phone.

The Lawrence school district has appealed a ruling from the Universal Service Administrative Company that found district officials violated federal conflict-of-interest rules.

As a result of the USAC finding, which accused administrators of improperly accepting more than a dozen free internet accounts, the school district may lose out on approximately $840,000 in funding.

Earlier this year the USAC, which is an independent non-profit organization designated by the Federal Communications Commission, told the district that it believed the company’s gift rule had been violated, according to regulatory documents filed with the FCC.

Essentially, the USAC found the district accepted 15 free residential internet accounts as a part of its contract with the district’s then-internet provider, Knology of Kansas, the documents say. Accepting the free accounts — an estimated value of $17,400 — violates an E-rate program that helps schools afford internet access.

“E-Rate” is the commonly used name for the Schools and Libraries Program of the Universal Service Fund, which is administered by the USAC. The program helps schools in obtaining affordable internet access, among other things.

The USAC argued that the free accounts may have affected the district’s decision to select Knology as its internet provider. The finding means the district may be forced to repay $500,000 in already-received federal funds, and it could prevent the schools from receiving an additional $340,000.

Both the school district and Knology appealed the findings to the FCC, arguing that the free accounts were offered “as a part of Knology’s regular commercial offerings made over the course of many years” and did not influence decision-makers in the district, the documents state.

In addition, Knology’s appeal argued that the company did not unduly influence the bidding process because it was “either the lone bidder or lowest bidder for each bid that it was awarded.”

In a written statement Friday, district spokeswoman Julie Boyle said the district approved a five-year contract with Knology in 2011 and the company was the only bidder for the “fair and open bidding process.”

Not all of the 15 accounts offered were put to use, Boyle said. Only 11 people affiliated with the district were offered the free internet.

In 2014 the district was notified that the free accounts may “be an issue” regarding federal gifting rules, Boyle said. As a precaution the district “took steps to modify the contract, cancel those accounts, and prepare an appeal to USAC.”

Boyle said the internet accounts were not officially cancelled until May 2015.

On Friday Lawrence school board Vice President Shannon Kimball declined to comment specifically on the pending actions, but said she did receive free internet through Knology when she first joined the board in 2011. After some time, however, she switched internet providers.

“This is really unfortunate because when I joined the board I was told ‘hey, this is something the district has that you can use because we expect you to communicate and we do most of our communication through email anyway,'” she said. “I had no knowledge that it was related whatsoever to the E-Rate program, and I stopped using it and only found out later that this question came up.”

“Honestly, I would never do anything in violation of the program or anything like that,” she added.

Kimball said she does not believe any rules were violated, however. She noted the district had a consultant examine the contract before it was approved.

“I do want to be clear that it’s not my position that the district did anything wrong,” she said. “I know the contracts were competitively bid according to the federal rules.”

“It’s pretty frustrating after the fact to find out the consultant set something up in a way it shouldn’t have been set up and now we’re in this situation,” she added.

Kathryn Ford, vice president of legal affairs for WOW!, which purchased Knology in 2012, declined to comment on the pending appeals, noting the topic was something the company would discuss internally.

Ford also could not say if other government agencies have also received free internet accounts.

“Honestly, I don’t know,” she said.

A previous version of this story published in the Journal-World’s Dec. 31 edition erroneously stated the FCC was the organization who ruled the Lawrence School District inappropriately accepted free internet. This story has been corrected to show the USAC, which is an independent non-profit organization designated by the FCC rather than a division of the FCC, was responsible for the ruling. Edits were also made to clarify that Knology was purchased by WOW! in 2012. The Lawrence service’s name was changed to reflect the sale in 2013.