Used-Text Dealer Provides Novel Lease Plan

By Kathleen Kennedy Manzo — August 06, 1997 5 min read

A Florida 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 last month to sell about $9 million worth of new books to Follett Educational Service 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 official hope that 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,” Kent Follett, the president of Follett Educational Services, said.

New Books for All

The agreement, which is thought to be the first of its kind, will actually cost Duval County more than if it simply bought the books and paid for them with available funds. But it will enable the district to buy all of its newly adopted texts at once and provide enough money for such additional items as computers software and materials for a new reading program, district administrators said.

“It’s a good public-private partnership,” said Donald S. Van Fleet, the district’s interim superintendent. “We got a fixed interest rate that is more competitive than what we could have gotten on a conventional loan,” he said, “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, said Tom Morris, the instructional-materials administrator for the county school system.

Administrators said they were attracted to the deal because of increasing fiscal challenges. Duval County has been struggling during the past two years to find ways to meet a state mandate to redirect nearly $7 million of administrative money back into the classroom. Even after reducing administrative spending and dozens of positions, the district was having trouble meeting the mandate. Despite a 33 percent increase in state textbook funding this year, the district would have been unable to pay for all the new materials it needed out of its $8 million textbook budget, Mr. Morris said.

Regardless of the funding deficiencies, some district officials are not convinced that the leasing arrangement is such a good deal.

Gwendolyn E. Gibson, the school board’s chairwoman, 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,” Ms. Gibson said. “We are the first district in Florida to try this, so there was no track record and no history.”

But Mr. Van Fleet said the support services that Follett has promised will save the district thousands of dollars that would normally be spent keeping track of the book 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.

Buying on Credit

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,” said Jerry Cookus, the instructional-material 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,” he said.

Mr. Cookus acknowledge that the deal could be beneficial in districts that must stretch their 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, for instance, often makes money on its old texts by selling them to wholesalers like Follett once schools are finished with them--a practice that the novel arrangement would halt.

The nation’s used-textbook dealers generate more than $50 million a year in sales, according to Bob Mallo, an executive vice president for Follett, one of the nation’s largest wholesalers.

Academic Book Services in Atlanta, one of Follett’s competitors, is also exploring the market for potential clients to lease textbooks, but hasn’t struck any deals yet, according to Debra Brallier, the company’s marketing manager.

Used and refurbished books are marketed to districts around the country that are seeking certain titles or need to replace 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. Some books are donated overseas, and those that cannot be used again are recycled.

Mr. Mallo said the deal will mean the company can count on having a large inventory of book for resale at the end of the contract. The lease arrangement will be offered to other districts throughout the country.

A version of this article appeared in the August 06, 1997 edition of Education Week