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Public Schools, Private Profits

For most of the day at Egg Harbor Township High School in New Jersey, students are camped in front of the 15 computer screens in one of the school's technology labs. Some use word-processing programs to prepare term papers or other assignments, while others use the machines' high-speed Internet links for research.

The computers look similar to those in the school's other labs, but there is a difference. The students using these machines to surf the World Wide Web see a small advertisement in the lower left portion of their screens.

The computers, as well as the ads, are courtesy of ZapMe! The company provides free computers and other technology to schools in return for the opportunity to display advertisements over its Internet connections.

"We had a very limited amount of computers," says Michael Sweeder, distance-learning coordinator for Egg Harbor Township School District. "We were hurting in that area. We need as many computers as we can get. Why would I not take 15 free computers?"

ZapMe! is just one of countless businesses who have set their sights on the nation's schoolhouses and see opportunities to make money.

Whether it's free computers, free televisions, exclusive sales deals with soft-drink companies, educational materials and incentive programs created by private businesses, or businesses who want to operate schools for a profit, private corporations have set their sights on the nation's millions of students as potential customers and schools as the best place to reach them.

A long history Schools have sought products and services from private businesses for a long time. They routinely hire private companies to build and renovate facilities, and districts frequently contract with business for such things as transportation, food services, maintenance and cleaning.

In Chicago, school officials say their decision to privatize cleaning services at some of the district's 591 schools is part of the reason that 84 percent of the buildings meet the district's standards for cleanliness, compared with only 10 percent in 1995.

About one-fourth of the schools have privatized their custodial services, one-fourth have school-employed custodians, and the remaining half have mixed staffs.

Many view such relationships with businesses as sensible-districts made up mostly of educators hire companies with expertise to handle tasks not central to a school's primary focus: educating children.

But when private companies begin to set their sights on parts of the school system directly related to education-advertising-supported news shows or computer images presented to students during a school day; or private, for-profit management of an entire school-critics begin to question whether the goals of private business and public education are compatible.

Those who support private management of public schools contend that schools are inefficient bureaucracies that produce mediocre results. If such schools were forced to compete in a free market, they would have to improve or lose business-i.e., students-to schools that achieved better results.

Those who oppose private management argue that the public school system shouldn't be compared to a business that is trying to make a profit. Focusing on economic efficiency and competition could improve some schools at the expense of others, and widen the gap between successful and struggling schools.

Supporters of commercially steeped programs such as ZapMe! and Channel One argue that the private companies provide valuable information and equipment to schools that might not have the financial means to acquire them elsewhere. They maintain that the requirement of exposing students to advertising is worth the tradeoff, that the amount of advertising is minimal and that students are savvy enough to judge the validity of marketing claims.

"Kids don't even pay attention to it," says Sweeder.

Critics of such programs contend that schools should be a safe harbor from any advertising pitches and that the worthwhile elements of programs such as Channel

One could be provided to students without the commercial requirements. Opponents also contend that advertisers who reach students in the school environment are capitalizing on the good will schools have built up. Some may interpret the appearance of an advertisement in a school as an endorsement of the product.

"In too many cases, advertisers are interested in nothing more than the opportunity to market to students in a new setting," says the Center for Commercial-Free Public Education in San Francisco. "Profit, not education, is their priority."

The decade of commercialized classrooms A study by Alex Molnar, a professor of education and director of the Center for the Analysis of Commercialism in Education at the University of Wisconsin-Milwaukee, found that private businesses are focusing more and more on the 54 million budding consumers in America's classrooms.

By searching databases of general news sources, as well as the educational, business and advertising press, Molnar, a critic of commercial activity in schools, found that references to commercial activity in schools increased 303 percent from 1990 to 1999. The commercial activity included sponsorship of programs and activities, exclusive agreements, electronic marketing, incentive programs, sponsored educational materials, for-profit management of schools and appropriation of space.

Schools are appealing to advertisers because they can reach potential customers who aren't as accessible through other advertising means-teenagers typically watch less television than older age groups.

"Schools are one of advertising's last frontiers," Molnar says in his study, "Cashing in on Kids."

"Apart from places of worship, schools are perhaps the most uncluttered ad environment in our society. And, since children are required to attend, school-based ad campaigns play to a captive audience."

Molnar found that the most frequent occurrence of commercializing activity in schools appears to be sponsorship of programs and activities-for instance, a bank that sponsors a student art contest.

Exclusive agreements appeared to be one of the fastest growing categories of commercial activity in the 1990s. The most common examples are soft-drink contracts, but schools also have negotiated agreements with athletic-wear companies.

Privatization of schools is another aspect of commercialism that barely was discussed at the beginning of the decade, but became more common-and widely debated-at the end of the decade.

"The evidence presented in this report suggests that the 1990s have become the decade of sponsored schools and commercialized classrooms," concludes Molnar.

"Channel One for computers" Neither Channel One nor ZapMe! likes the comparison, but when Michael Sweeder approached the Egg Harbor Township School Board with ZapMe!'s free computer offer, the easiest way for him to describe it was "Channel One for computers."

A typical school who signs up with ZapMe! receives at no charge a computer lab setup equipped with a network server, satellite dish, laser printer and 15 personal computer workstations, each with a 17-inch monitor, and software such as Microsoft Office. The company also handles installation, training, maintenance and technical support.

ZapMe! users also receive access to the company's "netspace," where more than 10,000 education-related websites have been organized for students and educators.

In return, schools must use the lab an average of four hours per PC per day. ZapMe! sells advertising directed at students that appears on its customized web browser in the left-hand corner of the computer screen.

Since its inception in 1998, ZapMe! has provided its technology package to about 1,300 middle and high schools. The remainder of the 6,000 schools that have signed up are awaiting installation, according to a company spokesperson.

Installation has been accelerated since the company issued a public stock offering in October and raised millions of dollars.

Egg Harbor's high school, as well as the district's middle school, each received 15 computers in April.

"This allows us to have an open computer lab," says Sweeder. "Joe Teacher can sign up his class for an hour or two to get on the Internet for research or to word process, and it doesn't affect the regular labs."

Sweeder says the collection of websites in ZapMe!'s Netspace is very useful to students and teachers.

"I'd say that's the strongest part of what they offer-the quality of their websites," he says. "The training they provided us was excellent. When there has been a problem with the equipment, they send out a replacement right away."

ZapMe! also keeps track of which sites a user visits in cyberspace, so they can have more specific demographic information to match users with potential advertisers. The company doesn't track student activity by name, but by age, sex and zip code.

That practice is one of the reasons people like consumer advocate Ralph Nader have labeled ZapMe! a "corporate predator" that spies on children.

"Schools do not exist to conduct surveillance on behalf of the corporate marketers of the world," Nader said shortly after ZapMe! was introduced in 1998.

Such criticism doesn't hold any weight with Sweeder. He notes that even without ZapMe!, websites routinely use "cookies"-computer mechanisms that gather information about students or anyone who visits their sites.

"What's the difference between that and what ZapMe! gathers?" asks Sweeder.

Private management The most extreme example of private business's growing involvement with schools is the rise of for-profit management companies seeking to take over the operation of public schools.

After prominent failures in Hartford, Conn., and Baltimore, private management companies have begun to focus more on charter schools, which usually are freed from many of the regulatory restraints that most public schools have to follow.

One of the most well-known education management companies is the Edison Schools. The company was founded by Christopher Whittle, who also created Channel One. In 1999-2000, Edison operated 79 schools. Four of those are in Wichita, Kan.

"Our relationship with Chris Whittle and Edison is very good," says Robert Hammond, an associate superintendent in Wichita. "In some cases, we've had problems with the way they want to do things, but we're able to work it out. It's very collaborative."

Edison manages three elementary schools and one middle school.

"It has everything to do with providing choice for students and parents," says Hammond. "We are a large district with a lot of choices."

In addition to the Edison schools, Wichita offers many magnet programs. It also has adopted some of Edison's strategies-longer school day and longer school year-at some of the district-run elementary schools.

In theory, Edison can provide education more efficiently and turn a profit. But at least in Wichita, it turns out the district can be just as efficient. As part of its management deal, Edison contracts for services such as security, building maintenance and HVAC system repair.

Edison put those jobs out for bid, and the winning proposal came from the Wichita School District.

"We beat the private sector," says Hammond. "That's something we're proud of. They're reinvesting with us, and we get back some of the money we're paying them."

So far, Edison has been working with Wichita for about four years. Hammond says the district is satisfied with the company's management and recently renewed its contract for another five years.

"They have talked with us about building a high school," says Hammond. "It makes sense to create a full feeder, and they don't have that now. If it happens, they would pay for the whole thing."

The 79 schools Edison manages is a significant boost from the 51 they operated the year before. But not enough schools have been under private management for long enough to determine whether private managers can improve education and turn a profit.

Traditional educators remain skeptical.

"Companies market their management to school boards looking for a quick fix for troubled schools," says the National Education Association. "But there is no silver bullet, no magical solution."

"Be a pepper" To airplane passengers descending into Dallas Fort Worth International Airport, the building whose roof prominently displays the logo of Dr. Pepper is a giant advertisement. To the more than 400 students who attend classes every day in the building and never see the roof, it's just Cannon Elementary School.

For the soft-drink company, it's a somewhat distinctive way to place the name of its lead product out before potential customers. For the Grapevine-Colleyville School District, the ad is one of several ways to supplement tax revenue and generate some badly needed income.

Superintendent Jim Thompson says the district didn't do a lot of soul searching about the consequences of inviting more advertising into the school environment. It was simply a matter of trying to find more funding.

Grapevine-Colleyville decided to become more aggressive about seeking advertising and other corporate involvement because Texas's school funding laws have squeezed its budget and forced it to look for alternative sources of money. The funding formula redistributes money from wealthier districts, such as Grapevine-Colleyville, to poorer districts.

"It really leaves us short of funding, and we have to raise money in other ways," says Thompson.

Grapevine-Colleyville Board President Janice Kane wrote last year in Advertising Age that the district pays between 14 and 20 cents of every tax dollar it generates to support the budgets of poorer districts.

"In a perfect world, all students would receive an exemplary education, with funding for cutting-edge technology and innovative teaching methods," Kane wrote. "But in the real world, education typically is mandated but not fully funded."

So it turned to businesses. The district signed a 10-year, $3.45 million agreement that gives Dr. Pepper and its line of beverages exclusive rights as soft-drink provider for Grapevine-Colleyville. Dr. Pepper also provided the district with message boards and scoreboards at athletic fields and arenas.

Grapevine-Colleyville is hardly unique in selling exclusivity to a soft-drink company. Hundreds of districts have signed similar agreements, usually with one of the two big players in the industry, Coca-Cola and Pepsi.

In some cases, districts have agreed to consumption quotas to earn revenue. This has resulted in instances where school officials have become more aggressive in encouraging students to drink soda. Thompson says Grapevine-Colleyville's soft-drink deal does not have quota requirements.

Grapevine-Colleyville also sought corporate partners, who pay between $1,000 and $10,000 a year and have advertising appear in athletic programs, arenas and buses. Advertising is not allowed in hallways.

The district also allowed cellular-phone companies, for a fee, to place antennae atop light poles at its athletic fields.

None of these steps has dramatically changed Grapevine-Colleyville's financial situation. Thompson says that, at most, the advertising and other efforts have netted a few hundred thousand dollars a year in a district with an operating budget of more than $90 million.

For those who contend that the encroachment of commercialism into education is a product of modern times, Thompson keeps on hand a grade card from the 1940s.

"On the back are local ads," he says. "This is not a new phenomenon."

And for critics who think schools should strive to make sure school environments are safe harbors from the crass pitches of commercialism and advertising, Thompson says it's not possible.

"Those who want to prohibit any form of advertising are not being realistic," says Thompson. "There is so much of it all around us. It's impossible to avoid."

Ten years ago, Christopher Whittle offered U.S. schools a deal.

He would give them free televisions and video equipment for each classroom if they promised to have their students watch a daily 10-minutes news program-and two minutes of commercials.

Thus was born the controversial service known as Channel One. Schools, traditionally strapped for resources, embraced the idea by the thousands. Whittle sold the company in 1994 to Primedia (which also is the corporate owner of American School & University), and Channel One continues to disseminate its 12-minute program each day to some 8 million students in 12,000 schools.

Since its inception and continuing to the present, Channel One has been a lightning rod for critics who feel that the commercial pitches that are part of Channel One are an unwarranted and improper intrusion into the classroom.

"Channel One doesn't belong in schools because it conveys materialism and harmful messages to children, corrupts the integrity of schools and degrades the moral authority of schools and teachers, exploits schools and compulsory attendance laws to coerce schoolchildren to watch ads, and wastes school time and tax money," says Commercial Alert, a Washington D.C.-based watchdog group.

Last May, U.S. Senate Committee on Health, Education, Labor and Pensions held a hearing during which many opponents stated their case against Channel One.

In 1998, Max Sawicky of the Economic Policy Institute and Alex Molnar, an education professor and director of the Center for the Analysis of Commercialism in Education at the University of Wisconsin-Milwaukee, produced a study, "The Hidden Costs of Channel One." They argued that the value of the free equipment schools receive is far outweighed by the cost of using 12 minutes of the school day.

But Channel One officials contend that the true value of their service is not the free equipment they give to schools, but the education and awareness students gain from the daily news show and educational videos Channel One provides.

"The show itself is what sells Channel One," says Jeff Ballabon, Channel One's executive vice president of network affairs. "We are offering free access to the only news program created specifically for teenagers. Teenagers tend not to read the news. Teachers want students to be aware of what is going on."

More than meets the eye Educators wouldn't be staying with Channel One if the content were not worthwhile, says Ballabon.

"If the incentive were a 19-inch television set in 1990, that's not much of an incentive in the year 2000," says Ballabon.

In fact, in 1992, Channel One's series on the AIDS virus won a Peabody Award, which recognizes distinguished achievement and meritorious public service in broadcast and cable programs.

"Through this substantial series on HIV and AIDS, many of those eight million learned firsthand from their peers the hard and often brutal facts of this disease," the Peabody board said in bestowing the award.

The Peabody committee noted the potential that programs such as Channel One have for informing students.

For Channel One detractors, the influence on teenagers is what worries them. In addition to reports on AIDS and other issues, it provides advertisers an audience of 8 million students to whom they can pitch their products.

"The commercials, day after day, month after month, encourage students to solve their problems-from pimples to depression-by buying things," Michael Jacobsen, executive director of the Center for Science in the Public Interest, told the Senate Committee last year. "Cosmetics, junk foods, clothing and other products are offered up as solutions to teens' concerns."

Ballabon says Channel One's advertising guidelines are much stricter than those of broadcast television stations or newspapers. Many commercials must be edited before they can be shown on Channel One.

The opposition to Channel One, from both the conservative and liberal sides of society, is about politics, not education, says Ballabon.

"The bottom line is undeniable," says Ballabon. "We reach 400,000 teachers and 12,000 schools, and we have had a 99 percent renewal rate for 10 years."

The encroachment of advertising and commercial interests into schools has spurred one lawmaker to act.

Concerned about commercial interests violating the privacy of schoolchildren, a California congressman has proposed a bill that would prevent companies from gathering marketing data from students in school without written parental consent.

The "Student Privacy Protection Act," introduced in September 1999 by U.S. Rep. George Miller (D-Calif.), also states that before a school enters into a contract with a third party, it must determine "whether the third party intends to gather, collect or store information on students, the nature of the information to be gathered, how the information will be used, whether the information will be sold, distributed, or transferred to other parties and the amount of class time, if any, that will be consumed by such activity."

If such an act were to become law, it could affect companies such as ZapMe!, which collects demographic data about students using computers that the company provides to schools.

Miller's proposal also calls for the General Accounting Office to conduct a study into the prevalence and effect of commercialism in elementary and secondary education.

State lawmakers in California enacted legislation last year to rein in school advertising. The law prohibits districts from entering into exclusive agreements with soft-drink companies. Another law enacted in the fall bans the use of textbooks that use brand names and logos in their content.

That law was introduced after complaints about a math textbook that contained product references and logos that included Barbie dolls, Cocoa Frosted Flakes, Sony PlayStations, Spalding basketballs, Disney and Warner Bros. characters, Nike shoes and fast-food outlets like Burger King and McDonald's.

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