Balancing The Books
A Florida school district may be the first in the nation to stretch its limited dollars for instructional materials by leasing new textbooks from a used-book dealer.
Officials of the Duval County schools in Jacksonville approved a deal in August to sell about $9 million worth of new books to Follett Educational Services and lease them back over the next six years. The seemingly convoluted sell-lease arrangement is necessary because state law requires districts to buy books only from publishers. The Chicago-based secondhand dealer will also help manage textbook inventories at each of the district's 150 schools and remove the books when the contract expires.
Follett will earn back the cost of the texts plus almost 6 percent interest and will then have the opportunity to sell the books on the used-textbook market. Company officials hope the deal with Duval County, the 17th-largest district in the nation, will influence other districts seeking ways to finance book purchases when money is tight. "This service program provides a source of alternative funding, which allows schools to develop or continue critically needed programs that play a vital role in a quality education," says Kent Follett, president of the company.
The agreement will actually cost Duval County more in the long run than if it simply bought the books and paid for them as funds became available. But by spreading payment out over six years, the district will be able to buy all of its newly adopted texts at once--and provide enough money for such additional items as computer software and materials for a new reading program. "It's a good public-private partnership," says Duval interim superintendent Donald Van Fleet. "We got a fixed interest rate that is more competitive than what we could have gotten on a conventional loan, and it was an opportunity for us to get dollars that are badly needed."
In the past, the district has phased in new textbooks over three or more years because of insufficient funding. This school year will be the first in recent memory in which all of the district's 126,000 students will get new books at the same time, says Tom Morris, instructional-materials administrator for the system.
Still, some district officials are not convinced that the leasing arrangement is such a good deal. School board chairwoman Gwendolyn Gibson voted against the proposal because she found it vague and confusing. She is also skeptical about whether the district is getting the most for its money. "We're talking about a lot of dollars, and it really wasn't clear exactly how this deal was going to operate," Gibson says. "We are the first district in Florida to try this, so there was no track record and no history."
But Van Fleet says the support services that Follett has promised will save the district thousands of dollars that would normally be spent keeping track of the books and disposing of them at the end of the six-year adoption cycle. The district will also get bonuses if a high proportion of the books are returned in good condition.
Follett Educational Services approached officials in a handful of Florida districts late last year about the leasing arrangement. After the general counsel for the state education department reviewed the proposal and declared it legal, Duval was the first district to sign on.
Broward County school officials felt the deal was nothing more than a credit arrangement that would drive up the cost of the books by as much as 20 percent over the course of the contract. "We looked at it as plain and simple just borrowing money," says Jerry Cookus, instructional-materials consultant for the Broward schools. "We felt it was also going to be hard to justify down the road to the taxpayers that we were going to end up paying much more for the books in the long run."
Cookus acknowledges that the deal could be beneficial in districts that must stretch their annual budgets further. Such an agreement, however, limits the options for extending the use of the books beyond the adoption cycle or using them as supplemental materials when new books are purchased. Broward County often makes money on its old texts by selling them to wholesalers like Follett once schools are finished with them--a practice that the new arrangement would halt.
The companies sell the used texts to districts seeking particular titles or looking to replenish dwindling supplies. The books, which can be up to 15 years old, are sold at as much as 75 percent off the publisher's price. It's a $50-million-a-year market, says Bob Mallo, executive vice president for Follett, one of the nation's largest wholesalers.
One of the reasons the Duval deal appeals to Follett, Mallo says, is that it guarantees that the company will have a large inventory of books for resale at the end of the contract.
Follett will offer the arrangement to districts throughout the country. Academic Book Services in Atlanta, one of Follett's competitors, is also exploring the lease market, a company official says, but it has not struck any deals yet.
--Kathleen Kennedy Manzo