As Tennessee prepares to distribute $61M in broadband grants, an audit questions fairness of the grant application process

Over three years, state officials have awarded more than $45 million in grants to municipalities and private companies to expand broadband internet access in rural Tennessee.  

An audit released Tuesday by the Tennessee Comptroller is now raising questions about how the Department of Economic and Community Development selected who was awarded the highly competitive grants. 

Just two individuals score applications for the grants, which are then awarded to the highest scoring applicants, Crystal Ivey, the state’s broadband director, told lawmakers during a Tuesday hearing of the Joint Government Operations Committee to review the audit’s findings.

And while a separate and larger grant review committee also checks the applications, they do not review whether the scores — based on both subjective and objective factors such as technical capabilities of the broadband provider, its ability to expand and its partnerships in the local community — were accurately calculated. 

Without such oversight of the scoring of applications, “management cannot ensure that the ultimate grant award decisions were appropriate,” Aaron Kisler, an auditor with the Comptroller’s office, told lawmakers. 

The lack of internal controls could also leave the state open to legal challenges, said Doug Garrett, a legislative attorney. 

Bob Rolfe, commissioner of the Department of Economic and Community Development, said he disagreed with the findings. Rolfe, along with the department’s executive leadership and the Center for Economic Research in Tennessee all review applications. An outside consultant monitors performance. And there have been no complaints filed about the process, Rolfe said. 

The broadband program, he said, is “very thorough and very transparent.”

The audit of Tennessee’s Broadband Accessibility Program comes as it is poised to distribute an additional $61 million in federal CARES Act funding to expand internet access. About 500,000 Tennesseans lack internet access entirely — or have access to the internet at slower speeds than broadband. 

The committee, which was tasked only with the formality of voting for the department to continue for four more years, took no action regarding the audit, but several lawmakers hinted they would be proposing new rules.