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Published in Print: September 29, 2004, as Cash Machines Find Revenue Niche in High Schools

Cash Machines Find Revenue Niche in High Schools

But Some Say Students Not Responsible Enough to Use ATMs Wisely

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Need lunch money? Want tickets to a dance? Need to pay an activity fee? Just visit the school’s automated teller machine.

That’s what administrators at Grossmont High School in El Cajon, Calif., tell students and parents who need quick cash.

“It’s a great convenience for them,” said Jeff Meredith, the director of student activities at the 2,300-student high school, which installed an ATM last year after administrators, frustrated by problems with bounced checks, decided to accept only cash or money orders for school transactions. “There’s a line all the time to use it,” he said.

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In fact, Grossmont is one of a small but growing number of high schools that are buying into the idea of putting ATMs on their campuses.

An estimated 2 percent of 16- to 17-year-olds have seen ATMs in their schools, according to a nationwide survey of 2,000 students by Teen Research Unlimited, a Northbrook, Ill.-based market-research group. Some experts predict that proportion will increase to 20 percent to 30 percent over the next 10 years.

The machines, which cost from $3,000 to more than $20,000, are catching the eye of more school districts, in large part because of their power as revenue producers.

Teaching Tool

Last spring, Brent Leong, a business and computer science teacher at the 2,300-student Oregon City High School in Oregon, used a $7,000 federal grant to purchase his school’s ATM. The machine serves as an important teaching tool, he says, for an accounting program in which students learn about financial transactions and the finance industry.

Students who take accounting classes monitor the machine to plan how much money to stock, and they balance its costs and revenues. The school charges a $1.25 fee for each transaction and has made nearly $1,500 in the six months since the machine was installed.

The transaction-fee revenues are used to replenish the machine and to pay for phone fees and maintenance. Mr. Leong said that if the machine continues to generate revenue, the school will use the money to offset $35 or $45 workbook fees charged to accounting students, and possibly to pay for a college scholarship for accounting students.

“We’re running this like a business,” said Mr. Leong. “For students here, it’s a big eye-opener to see how ATMs work. Most people use an ATM, but they don’t know what goes on behind the scenes.”

Students learn how their peers make financial decisions, he said, based on the number of people who use the machine, what days they use it the most, and how school activities or events, such as football games, increase or decrease the number of transactions. The ATM is in the cafeteria.

Meanwhile, at California’s Grossmont High, the decision to install an ATM was purely financial. The school “had a tremendous problem with people writing bad checks,” Mr. Meredith said.

The loss of revenue from bad checks spurred school officials to institute a cash-only policy, but the school needed a way to provide parents with a means of paying without having to send their children to school carrying wads of cash. On the first day the machine was used, parents and students withdrew nearly $4,000.

The school charges a $1.25 transaction fee. Once the $12,000 ATM machine is paid for, the revenues will be used to help finance activities such as sports teams and school improvement programs.

Assessing the Risks

Critics worry that ATMs could add to campus security problems. Many parents fear that the machines could increase bullying, theft, and vandalism.

Others argue that some students are not responsible enough to handle ATM transactions. Still others say putting such machines in schools is another step toward the commercialization of schools.

But Jim Sork, the director of the Vancouver School District Foundation, a public-private partnership that helped the 22,500-student Vancouver, Wash., school system install ATMs in four of its high schools, said that the district has not encountered any safety problems.

“It’s more of a risk to start those dollars out from home as cash or a check,” he said. “There’s a greater risk that something negative will happen outside than inside a school, where the transaction is under the protection of the school.”

All the school officials interviewed for this story said that their ATMs are located in areas accessible only to students, staff members, and parents permitted in school buildings. Some also have 24-hour security surveillance on the machines.

To prevent theft or excessive cash withdrawals, some of the schools have set withdrawal limits, restricted the number of transactions per day, and stocked their machines with small-denomination bills.

Charles Iacovou, an assistant professor of information technology at Wake Forest University, said that schools need to ensure that the machines don’t simply become marketing tools for banks.

Regardless of that concern, he believes the trend of putting ATMs in schools will continue to grow.

“I can see the risks and benefits,” he said. “Because they’re everywhere, one could make the argument that they don’t need to be in schools. But others could say that we need to teach students about the technology that’s out in the world.”

Coverage of technology is supported in part by the William and Flora Hewlett Foundation.

PHOTO: An ATM located in a courtyard at Grossmont High School in El Cajon, Calif., is monitored by a camera 24 hours a day.
—File photo by Geraldine Wilkins/Los Angeles Times

Vol. 24, Issue 04, Page 8

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