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Clearinghouse on Educational Policy and Management
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| College of Education · University of Oregon |
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Trends and Issues: School Finance
Local Education FoundationsIn today’s tight-money climate, parents and educators are seeking help from private sources, such as local education foundations (LEFs), "the hottest fund-raising trend in public education" (De Luna 1998). Locally funded and operated education foundations emerged during the 1980s--particularly in states like California, Massachusetts, and Oregon, with voter-approved property-tax-limitation measures. LEFs are nonprofit, tax-exempt third parties that foster educational innovation while supplying schools with needed monies, equipment, and services donated by generous businesses and community members. There are about 2,000 LEFs throughout the nation. The average amount raised by most school foundations is only about .3 percent of a typical district’s budget (Merz and Frankel 1997). Groups "employ such fund-raising techniques as direct solicitation letters, dinners, golf tournaments, and auctions" (De Luna). According to Carol Merz and Sheldon Frankel’s national study, LEFs that raise $10,000 or less annually usually provide mini-grants and scholarships; those that collect from $20,000 to $50,000 fund curriculum-enrichment programs; and those that raise $100,000 (particularly in California and Oregon) often underwrite teaching positions (Merz and Frankel, De Luna). LEFs with strong financial bases are rare. Rather than raising monies to replace public dollars, the eighty-four foundations belonging to the Public Education Network stress systemic reform, working in "policy areas, such as school governance, school finance, educational leadership, curriculum and assessment" (De Luna). They also try to reengage citizens and recapture financial support for public education. Network members get special opportunities to apply for grants from large foundations working in certain school-reform areas (De Luna). Other Fundraising StrategiesIn addition to tapping Local Education Foundations, many districts are pursuing a variety of other creative fundraising strategies. They are forming booster clubs and school-business partnerships, soliciting businesses or volunteers for in-kind donations, selling and leasing services and facilities, generating investment income, collecting user fees to fund sports and cocurricular activities, cooperating with social-service providers, pursuing government grants, and sponsoring schoolwide fundraising events (Pijanowski and Monk 1996, Monk and Brent 1997). Some districts are waxing both innovative and entrepreneurial. A San Bernardino district has become the area’s Internet service provider, and Tulsa (Ohio) Schools rent out buses and drivers to community groups (Vail 1998). Other innovations include a Florida middle school’s fish farm, a CD album featuring Nashville grade-school supersongsters, and a retail school store/training program at a Maryland high school (Vail). More Controversial FundraisersFinancial strain has led increasing numbers of school districts to adopt controversial fundraising practices, such as subscribing to Channel One commercial TV news broadcasts to pay for educational technology (Molnar 1996). Another controversial service is ZapMe!--a company that provides schools thousands of dollars worth of computer equipment and high-speed Internet access in exchange for continuous, interactive advertisements in the lower left-hand portion of the screen (Manning 1999). Many schools are sponsoring grocery-script campaigns, using fast-food coupons as reading-contest prizes, and allowing advertisements on school property. Colorado Springs School District 11 was the first to offer advertising opportunities on the sides of school buses (Tracy Cooper 1996). This action was taken after new investment policies, self-insurance, contracting out, and salary freezes proved inadequate to offset voters’ reluctance to increase taxes. In September 1997, the district signed a multimillion-dollar deal allowing Coca Cola to market its products in its vending machines and at special events (Vail 1998). Corporate Sponsorships and Fundraising ProgramsAlex Molnar and Jennifer Morales (2000), directors of the Center for the Analysis of Commercialism in Education at the University of Wisconsin, estimate that between 1990 and 2000, commercial activities in schools have multiplied several times over in the following areas:
Center researchers have found that "commercial activities now shape the structure of the school day, influence the content of the curriculum, and determine whether children have access to a variety of technologies" (Molnar and Morales 2000). In a few districts, parents and students are fighting commercial intrusions. In Berkeley, California, the determined efforts of Sarah Church, a sophomore, squelched exclusive deals with Pepsi Cola and Nike (Manning). She organized a student-led forum to examine the corporations’ proposals and inspired others to testify against the proposals at school board meetings. A Seattle group of concerned parents teamed up with local unions to protest a corporate sponsorship that would raise $1 million yearly. Despite a task force’s policy recommendations restricting commercial activities, the Seattle school board recently signed an exclusive contract with Pepsi-Cola. In June 1999, San Francisco’s school board approved a Commercial Free Schools Act, the first in the nation, that "bars the district from signing exclusive beverage contracts or adopting educational materials that contain brand names" (Manning). In Spring 1999, California Assemblywoman Kerry Mazzoni and the Texas chapter of the National PTA actively lobbied against "the presence of corporate logos and trademarks in a mathematics book approved for use in these states," claiming they could have no legitimate educational purpose (Hoff 1990). Although many critics question the ethics and equity of certain fundraising approaches (Molnar 1996 and 2000, Reese 1996, Aidman 1995), especially those involving business-school partnerships (Greenwood 1995), others view these associations as necessary, inevitable, and mutually beneficial (Cromarty 1997). In an article examining stakeholder guidelines for fundraising activities, Alastair Glegg (1997) observes that partnerships with businesses and other organizations "should not be viewed as shortcuts to financial salvation or to eternal damnation, but should be approached carefully and thoughtfully." State-Generated Revenue Sources: State LotteriesIn 1997, the 37 lottery states and the District of Columbia received "over 412 billion in net lottery income" (Garret 2001). Some states, like Florida, Georgia, and Ohio, earmark all lottery revenues to education (Garret); 20 states dedicate some portion of the proceeds to public education" (Manzo 2000). Supposedly, "lottery revenues will supplement existing state expenditures on education, increasing such expenditures "by an amount equal to net lottery revenues." Garret’s analysis of time-series data on the Ohio lottery, however, showed that lottery revenues earmarked for education had no effect on education expenditures. Ohio, like many other states, diverted tax revenues away from education to other needy programs. A study published by the North Carolina Center for Public Policy Research found that revenues in the 29 states with lotteries in 1989 "have declined as a percentage of state income, from 3.5 percent" in 1989 to 1.9 percent in 1997 (Manzo). Although results were inclusive regarding benefits to public education, the study did find that "in California, Florida, and Michigan, lottery funds have merely substituted for normal levels of appropriations, despite the fact that lotteries had been promoted as boosting spending in education." According to Manzo, these results echo a 1996 study by Money magazine, which found that "states with lotteries spent a lower percentage of their operating budgets on education than those without a lottery." Tobacco Money: A Windfall for Education?Although states are committing most of the $206 billion settlement with top tobacco companies to health programs, many lawmakers are deciding to bestow at least part of the windfall on public schools (Sandham 2000). According to Sandham, "at least 18 states have already enacted legislation ensuring that some money from the 1998 legal settlement will be spent on education, and legislatures in another five states are considering similar measures." Money is being earmarked for college scholarships or tuition support in Michigan, Nevada, Connecticut, and Louisiana. In Ohio, New York, and New Jersey, tobacco funds will go for school construction and repairs. The Kansas legislature "agreed to put nearly all of the state’s $3.5 billion in payments into a trust fund that could be used only for programs that benefit the health and well-being of children." Maine, too, opted for a trust fund and, along with Kentucky and Maryland, earmarked considerable amounts to early childhood education and other K-12 purposes.
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