GAO

United States General Accounting Office

Report to Congressional Requesters

September 2000 PUBLIC EDUCATION

Commercial Activities 

in Schools

GAO/HEHS-00-156

Page 1 GAO/HEHS-00-156 Commercial Activities in Schools

Contents

Letter 3

Appendixes Appendix I: Scope and Methodology 36

Appendix II: Summary of Site Visit Information 38

Tables Table 1: Categories of Commercial Activities 8

Table 2: State Statutes and Regulations Targeting Commercial

Activities in Schools 12

Table 3: Sites Visited 36

Table 4: Summary of Key District Policies and Procedures Covering 

Product Sales, by School District 38

Table 5: Summary of Key District Policies and Procedures Covering

Direct Advertising, by School District 40

Table 6: Summary of Key District Policies and Procedures Covering 

Indirect Advertising, by School District 42

Table 7: Summary of Key District Policies and Procedures Covering

Market Research, by School District 43

Table 8: Comparison of Soft Drink Agreements at the High Schools

We Visited 44

Figures Figure 1: Advertisements Can Be Found in and Around Schools 7

Figure 2: Ads on Scoreboards 20

Figure 3: Ads on Calendars 21

Figure 4: Ads on Book Covers 24
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United States General Accounting Office

Washington, D.C. 20548

Health, Education,

and Human Services Division

B-284190 Letr

September 8, 2000

The Honorable Christopher J. Dodd

United States Senate

The Honorable George Miller

House of Representatives 

Commercial activities in U.S. public elementary and secondary schools 

have been growing in visibility throughout the last decade, a period 

characterized by tightened school budgets. As visibility has increased, so 

have concerns about commercial activities that generate cash, equipment, 

or other types of assistance and their potential effects on students’ learning 

and purchasing behavior. Commercial activities include (1) the sale of 

products, (2) direct advertising—for example, advertisements in school 

corridors or on school buildings, (3) indirect advertising—for example, 

corporate-sponsored educational materials or teacher training, and (4) 

market research. Despite the increasing concerns, little is known about the 

laws and policies that govern commercial activities and the nature of these 

activities in schools throughout the United States. In this context, you 

asked us to (1) identify laws, regulations, and policies that regulate 

commercial activities in schools and (2) describe the nature and extent of 

these activities. To do this work, we reviewed state laws and regulations, 

gathered detailed information during site visits to 19 elementary and 

secondary schools in seven school districts in three states, reviewed 

reports about commercial activities, and interviewed representatives of 

national education and business organizations. (See app. I for details on 

our methodology.) We performed our work from November 1999 through 

August 2000 in accordance with generally accepted government auditing 

standards.

Results in Brief State laws and regulations governing commercial activities in public 

schools are not comprehensive. Nationwide, only general laws and 

regulations that apply to all businesses or that govern school finance 

usually cover school-based commercial activities. However, 19 states 

currently have statutes or regulations that address school-related 

commercial activities, but in 14 of these states, statutes and regulations are 

not comprehensive and permit or restrict only specific types of activities. 

For example, New Mexico law permits advertising on and in school buses, 
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while Virginia regulations prohibit school bus advertising. Of the five states 

with comprehensive laws, two have laws that permit local officials to set 

policies covering various types of activities and three have laws that 

prohibit or limit various types of commercial activities. Therefore, in most 

states, local school officials are responsible for making decisions about 

commercial activities. 

No single source of information about local school board policies exists, 

and policies varied greatly in the districts we visited. Although policies on 

product sales in the districts we visited varied, most pertained to 

traditional fundraising activities, such as short-term candy or gift-wrap 

sales, that are sponsored by parent-teacher organizations, booster clubs, or 

student groups rather than to the sales covered by exclusive contracts that 

prohibit schools from selling products of competitors, such as soft drink 

contracts. Policies on direct advertising also differed, with some school 

boards delegating responsibilities for these activities to the superintendent 

or building principal. While some of the districts we visited had policies 

regarding indirect advertising in curricula or contests, others lacked formal 

guidance. We found no policies that specifically addressed market research 

activities. However, in some of the districts we visited, more general 

policies, such as those requiring the superintendent to approve student 

surveys and questionnaires, may serve to regulate at least some of these 

activities.

The visibility, profitability, and type of commercial activities varied widely, 

and the high schools we visited had more commercial activities than 

middle or elementary schools. Overall, we found the following:

• Product sales—primarily the sale of soft drinks by schools or districts 

under exclusive contracts and short-term fundraising saleswere the 

most common and lucrative type of commercial activity at the schools 

we visited, although they represented a very small percentage of the 

districts’ budgets.1

• The most visible examples of direct advertising appeared on soft drink 

vending machines and high school scoreboards. Although some high 

school sports facilities displayed banners and signs with the names of 

businesses that had contributed to sports programs, several placed 

these signs to acknowledge donations rather than in exchange for them. 

1

In Grand Rapids, Mich., for example, the soft drink contract guaranteed the district a 

minimum of $30 per student, or about .4 percent of the district’s budget of $206 million.
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Advertisements were delivered through the media in some schools. For 

example, schools in two districts had contracts with Channel One, a 

company that provides free televisions and videocassette recorders to 

schools that agree to air its news show and commercials, and two 

schools had signed up with ZapMe!, a company that provides free 

computer equipment and delivers ads through the Internet. Officials 

from participating schools said the benefits of having free technology 

outweighed any negative aspects of the advertisements that were 

shown. Officials from other districts, however, had decided not to 

participate in such programs. 

• We observed indirect advertising in all the schools, yet its presence was 

usually limited and subtle. For example, the teachers we spoke with 

either used corporate-sponsored curricula only for specific purposes 

and for limited periods of time, such as for teaching a unit on dental 

hygiene, or did not use them at all. 

• None of the schools we visited reported engaging students in market 

research, although one principal said he had been approached about 

doing research.

Often the values of school board members, district officials, and parents 

determine whether an activity is controversial or not, rather than the 

nature of the activity. Because most of the decisions are made at the local 

level, varying preferences of local officials result in different levels of 

commercial activities across districts and across schools in the same 

districts. 

Background Spurred by limited budgets, an increased demand for educational services, 

and the growing purchasing power of American youth, schools and 

businesses have entered into a wide variety of commercial arrangements. 

Although the types of arrangements vary, their purposes are similar. In 

general, schools want cash, equipment, or other assistance in providing 

services and technology during a period when revenues from traditional 

tax sources are, for many school districts, essentially flat. Businesses want 

to increase their sales, generate product loyalty, and develop climates 

favorable to their products, although some businesses are involved with 

schools primarily to help local communities. 

Although American schools have historically engaged in product sales and 

advertising, commercial activities in today’s schools are more noticeable 

and are moving in new directions. The use of corporate-sponsored 

instructional materials can be traced back to at least 1890, when a paint 
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company developed a handout on primary and secondary colors for 

schools to distribute in their art classes. In-school marketing has become a 

growing industry. Some marketing professionals are increasingly targeting 

children in school, companies are becoming known for their success in 

negotiating contracts between school districts and beverage companies, 

and both educators and corporate managers are attending conferences to 

learn how to increase revenue from in-school marketing for their schools 

and companies. Advertisements in schools—once found largely only in 

print and at sports facilities—are now on electronic message boards, 

televisions, and computers (see fig. 1). Commercial activities can be 

classified into four categories, as shown in table 1.
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Figure 1: Advertisements Can Be Found in and Around Schools 
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Table 1: Categories of Commercial Activities

Source: GAO analysis.

Activities Examples

Product sales

Product sales benefiting a 

district, school, or student 

activity 

• Exclusionary contracts or other arrangements between district consortia, school districts, or schools and 

bottlers to sell soft drinks in schools or on school grounds

• Contracts or other arrangements between districts or schools and fast food companies to sell food in 

schools or on school grounds

• Contracts or other arrangements between districts or schools and companies providing school pictures, 

yearbooks, class rings, caps and gowns, or gym uniforms

Cash or credit rebate 

programs 

• Programs that award cash or equipment to schools in proportion to the value of store receipts or 

coupons collected by the schools

• Credit or shopping card programs that award a percentage of the amount of customer charges to a 

school designated by the customer

• Internet shopping programs that donate a percentage of a customer’s charges to a designated school 

Fundraising activities • Short-term sales of candy, magazines, gift wrap, cookie dough, concession items, and the like by 

parents, students, or both to benefit a specific student population or club

Direct advertising 

Advertising in schools, in 

school facilities, and on 

school buses

• Billboards and signs in school corridors, sports facilities, or buses

• Product displays 

• Corporate logos or brand names on school equipment, such as marquees, message boards, 

scoreboards, and backboards 

• Ads, corporate logos, or brand names on posters, book covers, and student assignment books

Advertisements in school 

publications

• Ads in sports programs, yearbooks, school newspapers, and school calendars

Media-based advertising • Televised ads aired by Channel One or commercial stations

• Computer-delivered advertisements by ZapMe! and commercial search engines

• Ads in commercial newspapers or magazines

Samples • Free snack food or personal hygiene products

Indirect advertising

Corporate-sponsored 

educational materials

• Dental hygiene units that provide toothpaste and toothbrush samples and display brand names 

• Materials on issues associated with particular industries that are developed by those industries, such as 

ecology units produced by oil and plastic companies and safety units produced by insurance companies

• Materials that promote industrial goals, such as energy conservation materials produced by power 

companies and nutritional information produced by dairy or meat associations

Corporate-sponsored 

teacher training

• Training by computer or software companies on the use of hardware or software systems that they sell

• Training by companies on general subjects, such as management techniques or creativity

Corporate-sponsored 

contests and incentives 

• McDonald’s poster contests, Pizza Hut’s Book-It program, Duracell Battery Company’s invention contest

Corporate grants or gifts • Corporate gifts to schools that generate commercial benefits to the donor

Market research

Surveys or polls • Student questionnaires or taste tests

Internet panels • Use of the Internet to poll students’ responses to computer-delivered questions 

Internet tracking • Tracking students’ Internet behavior and responses to questions at one or more Web sites 
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Distinguishing between commercial and noncommercial activities can be 

difficult because commercial activities are an intrinsic part of U.S. society. 

Not all ventures between schools and businesses are totally commercial: 

Many businesses donate cash or assistance to schools for philanthropic 

purposes, yet these donations may have commercial payoffs. For example, 

a business may donate cash or equipment to schools for altruistic purposes 

but may also mention this support in its advertising and use this donation 

as a tax deduction. Local school officials, parents, and others, including the 

U.S. Department of Education, applaud businesses that support schools, 

often without commercial motivation, by donating free or low-cost goods 

and services. However, many individuals are concerned about the potential 

effects of lost instructional time and biased materials on students when 

companies provide goods, services, or money to schools in return for 

access to students for sales, advertising, or market research purposes.

Because advertising is ubiquitous in America, it is difficult—if not 

impossible—to distinguish between the effects of advertising to which 

students are exposed inside and outside of school. Many displays of 

corporate logos and brand names in schoolssuch as those emblazoned 

on students’ clothing, sports uniforms, crayons, and milk cartonsyield no 

tangible commercial benefit to the schools, although they do yield benefit 

to the advertiser. Advertisements are also pervasive on the Internet. Not 

only are ads a part of many products, but they are often seen as status 

symbols, decorations, and even art. Because of this, students and teachers 

often display advertisements, such as posters, on walls for stylish or 

aesthetic purposes, rather than commercial purposes. 
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Certain commercial activitieslarge soft drink contracts, electronic 

advertising in classrooms through Channel One or ZapMe!, sports uniforms 

emblazoned with corporate logos, and market research conducted by 

tracking students’ Internet behavior—have received extensive media 

coverage, and several groups organized to limit commercial activities in 

schools have received national attention. Furthermore, some Members of 

the Congress have raised concerns about commercial activities in schools 

and possible infringements of students’ rights to privacy. Congressional 

hearings have been held2

 and legislation has been drafted3 to explore and 

deal with these issues.

State and Local Laws 

and Policies Vary 

Although commercial activities in schools are covered by general federal 

and state laws that apply to all businesses or that govern school finance, we 

identified 19 states that currently have statutes or regulations targeting 

specific commercial activities in schools. In 14 of these states, laws are not 

comprehensive and pertain only to some types of activities; in some states, 

laws prohibit or restrict activities, while in other states, laws authorize 

activities. For example, of the states we visited, California laws restrict 

many commercial activities, Michigan laws do not address commercial 

activities, and New Mexico laws allow advertising in and on school buses. 

As a result of this piecemeal approach to regulation, in most states, local 

school boards have the authority to make policy decisions about 

commercial activities or to delegate these decisions to district officials. In 

the districts we visited, local school board policies differed in terms of the 

number and types of activities they addressed, but most delegated 

responsibility to superintendents and principals, who often make decisions 

on a case-by-case basis. 

2

The Senate Committee on Health, Education, Labor, and Pensions heard testimony about 

Channel One on May 20, 1999.

3

H.R. 2915, introduced in the House of Representatives on Sept. 22, 1999, and S. 1908, 

introduced in the Senate on Nov. 10, 1999, seek to protect children from commercial 

exploitation by protecting student privacy. Both bills (1) prohibit programs from using funds 

authorized under the Elementary and Secondary School Act to allow a third party to 

monitor, receive, or gather information intended for commercial purposes from any student 

under 18 years of age without parental consent and (2) require schools, local educational 

agencies, or state agencies to inquire if an individual or organization intends to gather or 

store information on students and to determine the nature of the information to be gathered; 

how the information will be used; whether the information will be sold, distributed, or 

transferred to others; and how much class time, if any, will be consumed by such activities 

before entering into a contract with the individual or organization.
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States’ Statutes and 

Regulations Differ in 

Purpose and 

Comprehensiveness 

Nationally, 19 states have statutes or regulations targeting commercial 

activities in schools, but the specifics of the statutes vary.

• Laws and regulations in seven states cover product sales. For example, 

Florida law permits school boards to establish policies about 

fundraising, while New York law prohibits commercial activities on 

school grounds. 

• Laws and regulations in 18 states address direct advertising. In eight of 

these states, laws pertain to advertisements on or in school buses and 

on bus shelters: laws in seven states permit school bus advertising, with 

restrictions, but laws in one state prohibit it.

• Laws in only two states address indirect advertising in schools. 

California law prohibits schools from using instructional materials 

containing commercial advertisements unless local school boards 

comply with state-mandated procedures, while North Carolina law 

allows the use of such materials. 

• State educational codes do not target school-based market research, but 

student privacy laws prohibit many activities, such as selling students’

names and addresses, that fall under this category. 

The level at which decision-making about commercial activities takes place 

also varies by state. For example, Florida, Illinois, and Maine laws place 

responsibility for decision-making at the local level, but California and New 

York laws prohibit or restrict districts from engaging in many types of 

commercial activities. However, in most of the states that have them, such 

laws pertain to specific categories of activities (see table 2).
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Table 2: State Statutes and Regulations Targeting Commercial Activities in Schools

State

Statute/

regulation Product sales

 Advertising

Direct Indirect Market research

Arizona Statute Permits advertising on 

school buses under 

certain restrictions

California Statute Allows school boards to 

negotiate contracts 

granting exclusive rights 

to sell carbonated 

beverages under certain 

restrictions

Allows school boards to 

negotiate contracts 

granting exclusive 

advertising rights and 

the dissemination of ads 

electronically under 

certain restrictions

Prohibits state and 

local school boards 

from adopting 

instructional materials 

that provide 

unnecessary exposure 

to brand names, 

products, or company 

logos

Regulation Allows minors under 16 

to engage in door-todoor sales under certain 

restrictions

Florida Statute Permits school boards to 

set policies regarding 

fundraising

Permits school boards 

to set policies regarding 

advertising

Permits school boards 

to set policies 

regarding advertising

Illinois Statute Requires all solicitations 

to be approved by the 

superintendent 

Requires advertising to 

be approved by the 

superintendent

Requires advertising to 

be approved by the 

superintendent

Kansas Statute Permits student editors 

to determine advertising 

content in student 

publications

Louisiana Statute Permits donor decals on 

school buses to 

acknowledge donations 

of cellular telephone 

service

Maine Statute Permits school districts 

to raise money for their 

benefit

Permits school districts 

to raise money for their 

benefit

Permits school districts 

to raise money for their 

benefit

Permits school 

districts to raise 

money for their 

benefit

Maryland Statute Permits advertising on 

school bus shelters 

under certain 

restrictions

Minnesota Statute Permits advertising on 

school buses under 

certain restrictions
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Source: GAO analysis.

Mississippi Statute Authorizes school 

boards to offer 

protective textbook 

covers to commercial 

entities for advertising

Nevada Statute Permits advertising on 

and in school buses

New 

Mexico 

Statute and 

regulation

Permit advertising on 

and in school buses

New York Regulation Prohibits commercial 

activities on school 

premises but permits 

commercial 

sponsorships of school 

activities

Prohibits commercial 

activities on school 

premises but permits 

commercial 

sponsorships of school 

activities

Prohibits commercial 

activities on school 

premises but permits 

commercial 

sponsorships of school 

activities

Prohibits 

commercial 

activities on 

school premises 

but permits 

commercial 

sponsorships of 

school activities

North 

Carolina

Statute Requires that materials 

presented during the 

school day relate to the 

curricula

Permits school boards 

to adopt books 

containing commercial 

advertising

North 

Dakota

Statute Requires school boards 

to approve fundraising 

involving students

Rhode 

Island

Statute Prohibits teachers from 

engaging in commercial 

activity unless activity is 

authorized by the state 

department of education 

Prohibits teachers from 

engaging in commercial 

activity unless activity is 

authorized by the state 

department of education

Prohibits teachers from 

engaging in 

commercial activity 

unless activity is 

authorized by the state 

department of 

education

Prohibits teachers 

from engaging in 

commercial 

activity unless 

activity is 

authorized by the 

state department 

of education

Tennessee Statute and 

regulation

Require schools to 

adopt policies regulating 

school bus advertising 

and restrict the size, 

location, and 

appearance of school 

bus advertisements

Texas Regulation Permits commercially 

sponsored high school 

athletic programs

Virginia Regulation Prohibits advertising on 

and in school buses

(Continued From Previous Page)

State

Statute/

regulation Product sales

 Advertising

Direct Indirect Market research
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Policies of School 

Governing Boards Vary 

Because most states do not regulate commercial activities in schools or 

have laws that govern many of these activities, applicable policies and 

practices are usually locally based. Although no central source of 

information on school policies exists, discussions with representatives of 

national education associations and other experts indicate that policies 

across districts are not consistent and that many school boards place 

responsibility for decisions about commercial activities with school 

officials.4

In the school districts we visited, both written and unwritten policies are 

used in making decisions about commercial activities. For example, 

written policies in these districts do not prohibit market research activities 

such as taste tests or product preference polls. However, none of the 

schools we visited participate in them because district and school officials 

and school board members believe these activities are inappropriate. In 

these districts, school boards’ written policies vary considerably, do not 

address all types of commercial activities, and generally delegate 

responsibility for many decisions to superintendents and principals. 

(Written policies are summarized in tables 4 through 7, app. II.)

Product Sales Policies in six districts assign responsibility for approving fundraising 

activities to the superintendent or his or her designee, a principal, or both 

and in three districts place limits on these activities by restricting door-todoor sales and limiting the number or length of fundraisers. However, most 

policies leave decisions to the discretion of school officials.

Direct Advertising Policies in five districts identify the school official responsible for 

approving some types of direct advertising. Four delegate this 

responsibility to the superintendent, and one delegates it to the 

superintendent and, in some cases, the principal. Although several policies 

address coupon distribution and ticket sales, none are targeted toward 

newer forms of media-based advertising, such as those delivered by 

Channel One and ZapMe!

4

The associations we spoke with include the National School Boards Association, the 

Association of School Business Officials International, and various centers and 

organizations concerned with commercial activities in schools.
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Indirect Advertising Policies in five districts restrict advertising in commercial instructional 

materials, and policies in two restrict contests or exhibits. 

Market Research None of the districts have policies that specifically address market 

research, taste tests, or product trials. Two districts have policies requiring 

all surveys and questionnaires that address students and families to be 

approved by the superintendent, and two districts require the same for 

surveys and questionnaires that address students and staff. However, we 

found no policies that apply to activities such as Internet shopping games 

or contests, which require the disclosure of personal information. 

Commercial Activities 

Are Widespread, but 

Nature and Intensity 

Vary

Commercial activities in the 19 schools we visited have been increasing in 

visibility, but their type, frequency, and monetary value vary widely. We 

found examples of commercial activities in all the schools we visited, 

although high schools had more commercial activity than elementary or 

middle schools. Also, in many schools, returns from longer-term contracts 

have outpaced returns from short-term product sales. At all the schools, 

product sales were very lucrative and the most prevalent activities. The 

most visible forms of direct advertising we observed were soft drink 

advertisements on beverage vending machines and high school 

scoreboards. In middle and high schools in two districts, advertisements 

were shown in classrooms on Channel One’s televised news program, and a 

middle school and a high school in two districts were awaiting the 

installation of ZapMe! computers that will carry advertisements over the 

Internet. We identified examples of indirect advertising in all the schools, 

yet its presence was usually limited and subtle. None of the schools we 

visited reported engaging students in market research, but one principal 

reported being approached by a market research firm. Although no 

national data describing the prevalence of these activities are available, our 

findings are consistent with findings of research studies and articles in the 

popular press that have reported that commercial activities in U.S. schools 

have increased over the last decade. 

Product Sales Are 

Pervasive; Use of Soft Drink 

Contracts Is Growing 

Product salesprimarily exclusive soft drink contracts in secondary 

schools and fundraising sales in elementary schoolswere the most 

prevalent form of commercial activity at all the schools we visited, but the 

extent of activity varied. For example, a beverage contract in one district 

has the potential to generate up to $1.5 million per year to help fund 

projects and activities, but in another district, the 10-year contract calls for 
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one payment of $12,000 plus a commission of about $4,800 per year. (See 

table 8, app. II, for comparisons of the soft drink agreements at the high 

schools that we visited.) On the national level, exclusive soft drink 

contracts were the fastest growing activity of all product sales, but 

traditional fundraisers remained popular. 

Soft drinks were sold in all the districts we visited, but the arrangements 

under which the sales were conducted differed. Except for sales in several 

elementary schools and one high school, sales were conducted under 

contracts. Some of the contracts covered sales within a school, a district, 

or consortium of districts; generated both monetary and in-kind donations; 

and varied in length up to 10 years. For example, in one district in 

California where state law restricted exclusionary contracts on a 

districtwide basis, the business officer negotiated contracts ranging in 

length from 3 years to 10 years for each high school, with each school 

receiving different amounts of up-front and commission payments. But in 

Michigan, where exclusionary contracts were not restricted, a multidistrict, 

exclusive 10-year contract with one payment schedule covered sales in all 

schools, and both the district and the schools received payments. Although 

all contracts covered the sale of carbonated beverages, most included 

sports drinks, juice, iced tea, or fruit drinks produced by the beverage 

company. Although most soft drinks were sold in high schools, elementary 

and middle schools also sold them, but machines there were less available 

and the level of sales was much lower. Despite the revenue these contracts 

could generate, soft drink contracts remained controversial in some of the 

districts we visited. Some objections concerned the effects of carbonated 

beverages on students’ nutrition or the perception that the school was 

endorsing a particular corporate brand. In some districts, however, 

contracts were not controversial. For example, one school board member 

told us that exclusive soft drink agreements had been in his district since 

the 1950s and the only difference between then and now was that schools 

have learned to make money from them. 

Most of the school and district officials we interviewed appeared to be less 

concerned about earning profits and more concerned with obtaining 

reasonable prices and covering up-front expenses when contracting for 

school-related services for students, although some arrangements were 

used to make money for schools. For example, schools had contracts with 

photographers; yearbook companies; gym uniform suppliers; fast food 

providers; student planner distributors; and, at the high school level, 

companies providing caps and gowns, graduation invitations, and class 

rings. These contracts were not controversial in the districts we visited. 
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The benefits schools received from the agreements varied, and most 

generated only modest funds. 

Every school we visited participated in some traditional fundraising 

activities and sold merchandise in schools and communities to make 

moneyfrom the sale of pickles to popcorn to pizzas—whether sales were 

run by parent-teacher organizations, booster clubs, or student groups, 

although the extent of activity varied. Parent-teacher organizations usually 

raised funds to benefit all students in the elementary and middle schools by 

funding such activities as assembly programs, field trips, and teacher 

training. In one school, the parent-teacher association raised the funds to 

pay the salary for a part-time teacher. Booster clubs and student 

organizations in the middle and high schools ran sales whose proceeds 

usually went to a particular sport or activity. 

In addition to the more common types of sales, some fundraising efforts 

took advantage of special aspects of a school’s location. For example, one 

large district in an area with a competitive local radio station market sold 

broadcasting rights to high school football games. In another district, a 

school rented its softball field to a production company shooting an 

episode of “Melrose Place.”

All of the elementary schools and some middle and high schools 

participated in cash or credit rebate programs. Some of these programs 

give schools cash or equipment in proportion to the value of store receipts 

or proof-of-purchase coupons the school collects. Other programs give 

credit to a school designated by a customer on the basis of a proportion of 

that customer’s credit, charge, or shopping card or long distance charges, 

with the corporate sponsor electronically tracking the award. Although 

Internet shopping programs that provide cash rebates to schools are 

growing, none of the schools we visited participated in them. Some of the 

school officials and parents we interviewed were not aware of their 

existence and, consequently, had not encouraged people to register.

Although national data are limited, available information indicates that 

exclusive agreements between soft drink vendors and schools or school 

districts have become one of the fastest growing types of commercial
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activities in U.S. schools, particularly in the last 2 years.5 Although high 

schools have had vending machines for decades, the terms and coverage—

for example, districts or consortia of districts—are new, and contracts 

granting exclusive sales and advertising rights appear to be replacing 

informal arrangements between vendors and school officials, a finding that 

is consistent with information from our site visits. Also, the results of a 

survey of nearly 700 administrators suggest traditional fundraisers have 

increased over the last decade.6

 Moreover, the survey found that 8 percent 

of elementary schools receive funds from Internet shopping programs.

Direct Advertising Takes 

Many Forms, and MediaBased Advertising Is 

Growing

At the schools we visited, we saw many types of direct advertisingfor 

example, corporate logos on athletic scoreboards, sponsorship banners in 

a gymnasium, and ads in high school publications. The most visible and 

prevalent advertisements we saw were soft drink advertisements and 

corporate names and logos on scoreboards. However, many of the product 

promotions and ads we saw in school facilities were displayed in exchange 

for free equipment, shown on educational posters, or initiated by schools to 

thank corporate donors. Schools in two districts aired Channel One, and 

two schools had recently signed contracts with ZapMe! agreeing to show 

advertising in exchange for equipment.

Traditional Forms of Advertising 

Predominate

Most of the advertising we saw was in high schools. Several high schools 

had traditional forms of advertisements, such as ads purchased by local 

businesses and printed in high school sports programs and schedules. Also, 

many high school yearbooks and newspapers sold advertisements to offset 

production costs. One high school replaced its newspaper with an Internet 

Web page and then sold ads on its Web page to help support the journalism 

program. None of the elementary or middle schools we visited sold ads in 

their publications. Ads on beverage vending machines were present in all 

the schools we visited, and soft drink or corporate logos appeared on 

scoreboards in athletic facilities used by all the high schools (see fig. 2). 

None of the schools sold advertising space in or around their facilities, 

5

Alex Molnar, Cashing in on Kids: The Second Annual Report on Trends in Schoolhouse 

Commercialism (Milwaukee, Wisc.: University of Wisconsin—Milwaukee, Center for the 

Analysis of Commercialism in Education, Sept. 1999).

6

A survey conducted by the National Association of Elementary School Principals in 2000 

found that 76 percent of respondents saw an increase in fundraisers in the past 10 years, but 

because the survey was not nationally representative, results cannot be generalized to 

schools nationwide. 
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except for advertising rights that were included in exclusive beverage 

contracts, and none sold advertising space in or on school buses. Several 

schools showed ads on electronic message boards, sports schedules, and 

schedules of school events (see fig. 3). 
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Figure 2: Ads on Scoreboards
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Figure 3: Ads on Calendars
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Many of the schools distributed promotional materials, including book 

covers, free samples, and coupons, to students. For example, most of the 

middle and high schools received cartons of unsolicited book covers with 

colorful ads for a wide range of products, including milk, toiletries, 

television shows, sports drinks and clothing, and snack food (see fig. 4). 

Schools made the book covers available to teachers and students in such 

places as school libraries, textbook distribution rooms, and faculty lounges 

unless a school official felt the content was inappropriate. For example, 

one district did not distribute book covers sponsored by a tobacco 

company. In addition, the schools reported receiving, and in some cases 

distributing, unsolicited free product samplessuch as shaving cream, 

feminine hygiene products, and snack food—and coupons, usually for local 

sports events and fast food restaurants. One district refused to accept free 

gym uniforms that contained the manufacturer’s brand name and logo, and 

one reported receiving offers of free shoes for sports teams.
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Page 24 GAO/HEHS-00-156 Commercial Activities in Schools

Figure 4: Ads on Book Covers
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According to numerous accounts, the amount and types of direct 

advertising in schools nationwide have increased and changed over the last 

decade. For example, schools and districts have become more aggressive 

in selling advertising space on school grounds and school buses to generate 

money. After one state instituted a new school funding formula under 

which some schools received more money per student and others less, a 

school near a major airport covered its funding decrease by selling space 

on its roof to a soft drink bottler for an advertisement that would be visible 

to airplane passengers. The same school district sold ads on school buses 

and at arenas, generating a few hundred thousand dollars. According to one 

media report, 45 of the nation’s approximately 16,000 school districts have 

sold advertisements on their buses.7

In 1995, a study by Consumers Union, which publishes Consumer Reports, 

identified a number of firms that specialize in conducting promotional 

activities in schools.8

 One company reported it distributed its book covers 

carrying paid advertisements to 30,000 schools and 25 million students, but 

no data exist on the number of students who actually used the book covers. 

Also, sportswear manufacturers are reported to be providing free uniforms 

and athletic shoes decorated with brand names and logos to some high 

school sports teams and cheerleading squads, particularly those with 

winning records. 

Channel One Channel One has provided free audiovisual equipment and news 

programming to middle and high schools since 1990. Participating schools 

must sign a contract agreeing that they will show Channel One’s news 

program—10 minutes of news and 2 minutes of commercials—90 percent 

of all school days in 80 percent of all classrooms. In exchange, Channel One 

installs a free satellite dish, internal wiring at the school, two videocassette 

recorders, and a 19-inch television set for each classroom. Channel One 

owns, operates, and maintains the equipment. 

7

Jerry Schwartz, “Are We Selling Our Students?” Associated Press (Aug. 2, 1998).

8

Captive Kids: A Report on Commercial Pressures on Kids at School (Yonkers, N.Y.: 

Consumers Union, 1995) reviewed examples of educational materials sponsored by Fortune 

500 companies, smaller companies, trade associations, and corporate foundations and 

institutes. Often the companies and commercial organizations had their own in-house 

operations for producing materials for schools, but just as often they used the services of 

school-marketing specialists. 
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Schools in two districts we visited had Channel One, but members of other 

school boards or district officials said their boards had rejected it, feeling 

that advertisements were inappropriate for the classroom. The schools that 

had Channel One felt the benefits of having the technology outweighed any 

concerns about the commercials. The schools incorporated Channel One 

into the school day in different ways—for example, by extending 

homeroom time or first period. According to some of the school officials 

we interviewed, classes were required only to have the television on, and 

some teachers let students talk quietly during the program. One teacher 

said he was more concerned about the quality of the news program than 

the commercials, saying that the program had changed and had less hard 

news and more feature stories. 

Since Channel One was first introduced, critics have argued against it on 

many grounds: (1) its 2 minutes of daily commercials take up class time 

and take advantage of students as a “captive audience,” (2) showing 

commercials in schools gives products extra credence and credibility, (3) 

Channel One commercializes the classroom and education, and (4) schools 

do not have any control over the content of the program or commercials. 

On the other hand, supporters say that (1) Channel One exposes students 

to news that is current and relevant to them, particularly because many 

students are not exposed to news in any other way; (2) students learn 

media literacy; and (3) financially strapped schools receive needed 

technology resources free of charge. According to a Channel One official, 

12,000 schools, or about 38 percent of all middle and high schools in the 

United States, are currently connected to the system, and the company 

plans to add another 1,000 schools during the next several years.

ZapMe! ZapMe! has been in operation since 1998, and its availability is growing, 

raising concerns about advertisements and privacy. Under each contract, 

ZapMe! installs up to 15 multimedia personal computers with 17-inch 

monitors, a high-speed Internet connection, and a printer in a middle 

school’s or high school’s computer lab. Each computer has a custom-built 

Web browser that incorporates word processing and spreadsheet software 

and gives students Internet access to approximately 12,000 selected 

educational sites. The company shows ads on its computer screens, and 

schools are required to use ZapMe! computers an average of 4 hours each 

school day in order to receive the computer equipment.

None of the schools we visited had ZapMe! installed, but two—a middle 

school and a high schoolexpected to have it installed within a couple of 

weeks of our visits. Because ZapMe! has only existed for 2 years, some 
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school officials we interviewed were not familiar with how it worked or 

had never seen it used. Several school board members and district officials, 

however, said they would be reluctant to have ZapMe! installed because of 

the advertisements it displays and its ability to track students’ Internet 

usage. Officials in two districts said they have adequate funds to buy 

computers for their schools and, therefore, do not need ZapMe!

Many critics have raised similar concerns about ZapMe! as have been 

raised about Channel One—primarily, that students are shown 

advertisements during school, using time that could be spent on 

instruction. Moreover, critics also have raised the concern that ZapMe! has 

the ability to track and report students’ Internet usage by age, gender, and 

school ZIP code. According to a ZapMe! official, however, the company 

does not track individual usage, although it does collect data in the 

aggregate. As of April 2000, ZapMe! was installed in almost 1,800 schools, 

or about 8.6 percent of U.S. secondary schools.

Other Internet companies are entering the arena. For example, a new 

service called HiFusion,9

 introduced in April 2000, offers families free 

Internet service and allows parents and schools to “chat” on-line. This 

software, which is distributed free to schools, contains advertisements and 

can gather personal information on students, such as their names, 

addresses, and buying preferences. 

Indirect Advertising 

Materials Are Widely 

Available, but Their Use Is 

Often Limited 

Although we found examples of indirect advertising in all the schools we 

visited, teachers and principals limited the prevalence of most of these 

activities. Types of indirect advertising include corporate-sponsored 

educational materials and teacher training, corporate-sponsored contests 

and incentives, and corporate grants and gifts.

Corporate-Sponsored 

Educational Materials and 

Training

Despite the wide availability of corporate-sponsored educational materials, 

teachers we interviewed used few of these materials, and, when they did 

use them, it was primarily for a short or one-time lesson or as a supplement 

to the regular classroom curriculum. For example, in New Mexico, one 

large chain store sent schools free videos on local artists and artisans and 

an oil company sent videos on the state’s history, both of which teachers 

said helped supplement available teaching materials. Also, teachers and 

9

Because the program is so new, we were unable to include it in our review. 
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Page 29 GAO/HEHS-00-156 Commercial Activities in Schools

schools in several districts used materials from local power companies to 

teach students about energy conservation.

According to the 1995 Consumers Union report, over 200 examples of 

educational materials and programs, including teaching kits, software, 

books, and workbooks, had been developed or sponsored by various 

companies, trade organizations, and nonprofit organizationsan amount 

the study deemed “the tip of the iceberg.” More recently, a large amount of 

corporate instructional materials has become available to teachers through 

Internet sites. However, no data are available to determine how widely 

teachers actually use this information. In contrast to the more subtle 

corporate sponsorship we saw during our school tours, many articles and 

studies have described examples of corporate-sponsored materials that are 

overtly commercial and have questionable educational value. For example, 

the Consumers Union study found over half of the 77 examples of 

corporate curricula it evaluated had commercial or highly commercial 

messages. Although the materials rarely contained advertisements, almost 

80 percent contained biased or incomplete information or promoted a 

viewpoint that favored consumption of a sponsor’s product or service or a 

position that favored a company or its economic agenda.

Some businesses in the districts we visited offered free teacher training, 

but opportunities were limited, and most were available in a limited 

geographic area. For example, one local newspaper offered training to 

teachers on how to instruct students to read the newspaper, for which 

teachers could earn education credits. In addition, in three districts, 

computer or technology companies gave a limited number of teachers free 

computer training or help in teaching math and science in the classroom. 

One of these computer companies hired teachers as paid summer interns, 

and another paid all the expenses for a teacher to attend a summer training 

program. Because of its limited availability, few of the teachers we 

interviewed had participated in corporate-sponsored training.

Corporate-Sponsored Incentives 

and Contests

Although many corporate-sponsored incentive programs and contests are 

available nationwide, the teachers we spoke with rarely promoted them 

unless they were aligned with curriculum objectives. Teachers and 

principals in some schools posted information and let students decide 

whether to participate. 

Most of the elementary schools we visited promoted a reading incentive 

program that rewards students with a free pizza for reading a required 

number of books. When students reached their reading goal, they were 
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given a certificate for a free personal pizza, a button, and stickers. 

Proponents of this program say it encourages children to read, while critics 

contend that the program takes the intrinsic value out of reading and 

coerces families to eat at the sponsor’s restaurant. Even in the schools that 

participated in this program, participation varied. Two elementary schools 

incorporated the program as part of their regular reading curriculum, while 

others let individual teachers decide whether to participate.

Two of the teachers we interviewed required students to participate in 

corporate-sponsored contests. At one high school, an art teacher required 

her advanced art students to enter artwork in a contest of their choice to 

add examples of their work to their art portfolios. At another high school, 

students in a technology class participated in a national “solar boat”

contest. The project required the class to raise $25,000 to build the boat, 

and two donors received free publicity by putting their logos on the boat.

On the national level, corporate-sponsored contests range from those that 

put “educating students ahead of selling to them,” according to the 

Consumers Union report, to those that are “flagrantly” commercial—for 

example, those that incorporate brand names or logos in contest titles or 

on entry forms and those for which the sponsor’s products or services are 

offered as prizes. Some contests, such as a national science contest or a 

spelling bee, had a very low commercial content, according to the report, 

while others “were clearly designed to promote their sponsors’ corporate 

images, products, or services.” Although many contests and incentive 

programs are available nationwide, no national data are available on the 

number of schools that participate in particular contests. 

Corporate Grants and Gifts In the schools we visited, corporate gifts ranged from free doughnuts for 

parent-teacher functions to coupons for free fast food to computer labs in 

the schools. These gifts were donated by large and small companies and 

were given to elementary, middle, and high schools; parent-teacher 

organizations; booster clubs; school administrations; and teachers. 

Furthermore, many companies offer grants that teachers or schools can 

apply for. Some examples follow. 

• A national computer company donated 30 computers and related 

equipment to a school computer laboratory.

• An automotive dealership leased three cars to the high school drivers’

education program for $3 a year, and the school returned them after 

3,000 miles.
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• Companies donated extra supplies and materials, such as laboratory 

glassware and supplies, photocopying paper, and computers.

On the national level, soft drink, manufacturing, computer, fast food, and 

technology companies and their associated foundations, among others, 

give a variety of resources to schools, including grants for hundreds of 

millions of dollars, instructional materials, equipment, and services. Some 

donations are intended to be philanthropic and financially benefit their 

sponsors only indirectly, if at all. Other donations overtly advertise the 

sponsor’s products or services or are connected to purchasing other 

products or services. No central data source tracks the value of corporate 

contributions to pre-college education.

Market Research Is 

Controversial

None of the education officials we interviewed said schools were 

appropriate venues for market research, and none reported that market 

research had been conducted in their schools by either school staff or 

employees of other organizations. Information on the prevalence of market 

research in schools is not available, and relatively few examples have been 

reported in the popular or research literature. However, education, 

corporate, and advocacy groups report market research in schools is a 

growing phenomenon. 

According to market research literature, some schools have earned 

thousands of dollars or computer equipment in exchange for allowing 

companies to conduct market research activities with students, including 

taste tests, focus groups, and surveys. Market research might be conducted 

by employees of market research firms or through students’ school Internet 

use. For example, using computers in schools across the nation, children 

serve on Internet panels and respond to surveys or questions that are 

presented on-line. Students can also participate in virtual shopping games 

in which they indicate their preference for items and participate in 

contests. According to the National School Boards Association, Education 

Market Resources, a firm that specializes in reaching children through 

Internet panels, has conducted market research in over 1,000 schools. 

In addition to delivering advertising, ZapMe! has the capability to track 

individual students by age, gender, and school ZIP code and aggregate 

information describing students’ Internet activities when they use ZapMe! 

computers. Although the company has said that it has never analyzed 

student data or sold them to companies that could use this information to 

customize ads for children, many policymakers and advocacy groups have 
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raised concerns about student privacy, especially if the information is 

gathered without parental consent. 

Many Web sites collect personal data for market research purposes. For 

example, a 1999 survey of randomly selected commercial Web sites for 

children conducted by the Center for Media Education10 found that 95 

percent of commercial sites collected personal data when children visited 

these sites. In addition, some Web sites gather information about students 

without their knowledge by using sophisticated tracking tools.11

Benefits From Commercial 

Activities Vary and Support 

Many Activities

Some commercial activities generate more money for schools than others 

do, and the same type of activity generates different amounts of money for 

different schools or districts. For example, exclusive soft drink sales can 

potentially raise more money than gift-wrap sales, and one school or 

district can earn more from soft drink sales than another school or district. 

Similarly, proceeds from commercial activities generally supported basic 

instructional activities, athletics, and other student activities.

The amount of soft drink revenue generated for a school or district varied. 

For example, one elementary school principal said the beverage contract, 

which covered only one machine that was located in a teachers’ lounge, 

generated only about $12 a year. A middle school principal estimated the 

beverage agreement in his school yielded about $4,000, or about $3.65 per 

student. One high school principal reported the contract in his school 

generated about $67,000 in up-front money and commissions its first year, 

or about $12 per student per year over the life of the contract. One district

10According to the Center for Media Education, its purpose is to create a quality electronic 

media culture for children and youth, their families, and the community.

11According to findings reported in The Internet and the Family 2000: The View from 

Parents, the View from Kids (New York, N.Y: Annenberg Public Policy Center, May 2000), 

nearly half of the parents surveyed were not aware that Web sites can gather information 

about users without their knowledge by aggregating small pieces of information using 

sophisticated tracking tools.
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covered under a consortium contract is guaranteed to make a minimum of 

$30 per student per year, or about $785,000.12

Schools used revenues from beverage sales differently. For example, a 

beverage company gave one high school $80,000 in up-front payments over 

3 years to build an all-weather track. At another high school, revenue 

generated from designated vending machines was dedicated to specific 

athletic programs, such as football and swimming, as well as to other 

student activities, such as student government. In other high schools, and 

most elementary and middle schools, funds helped support a wide variety 

of programs, including field trips, student incentives, musical instrument 

programs, teacher training, and career development activities for students. 

Principals usually decided how funds would be used.

Sales of school-related products were not generally very profitable. For 

example, some schools sold school pictures at a low price, accepting 

modest profits or receiving only free student and staff picture identification 

cards. 

The revenue or rewards from a commercial activity can vary. Although 

selling refreshments at concession stands during sporting events was a 

lucrative activity and often generated thousands of dollars for student 

activities, many other types of fundraising sales were time-consuming and 

raised relatively few dollars given the amount of time and effort involved. 

Often, parent volunteers worked hard selling products for modest returns. 

For example, one parent-teacher organization raised about $7,500 through 

seven product sales that spanned the 1998-99 school year and involved the 

entire student body, a relatively small return for the effort involved. In 

addition, rewards from some cash or credit rebate programs are small. For 

example, a volunteer in one school collected 1,700 proof-of-purchase labels 

in order to obtain a single dictionary for the school library. 

12For comparison purposes, per-student revenue is the best measure available, but 

comparisons can be misleading because each contract reflects a different set of rules and 

conditions. For example, per-student revenue from school-based contracts reflects sales at 

one school, and per-student revenue from district and consortia contracts reflects average 

sales in all schools—elementary, middle, and high schoolsin a district. Also, not all 

schools or districts maximize their commissions. Some charge higher prices for beverages 

or sell beverages in larger quantities, while some negotiate more advantageous contracts 

than others. In addition, demographics and special characteristics—for example, having a 

champion football teamcan greatly affect a school’s or district’s ability to negotiate 

favorable terms. Finally, schools can increase their revenue by stocking machines and 

maintaining sales records instead of giving vendors the responsibility for these activities.
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Although technology has made some rebate and credit programs easy to 

use, returns to some schools remained modest, often because retailers 

offering the programs were not located in the community served by the 

school, some awards were negligible, or customers were required to pay 

fees to participate. For example, 13 of the 19 schools we visited received 

less than $200 for a 6-month period from a cash rebate program. Internet 

shopping programs were not sources of revenue in the schools we visited 

because some officials were unaware of them.

With the exception of exclusive beverage contracts that included 

advertising rights, most advertising in the schools we visited was displayed 

in exchange for free equipment or to reduce the cost of products such as 

student planners or yearbooks. In contrast, the national media have 

reported that some districts and schools have received large earnings from 

advertising. For example, the Grapevine-Colleyville School District in 

Texas generated several hundred thousand dollars a year by selling ads on 

school buses and school buildings.13 Also, the New York City Board of 

Education recently approved a plan to develop its own Internet service and 

Web site that will carry corporate advertising. Proponents of this plan 

believe that the profits could reach $100 million annuallyenough money 

to buy laptop computers for all eighth grade students in New York City’s 

public schools.14

Concluding 

Observations

Commercial activities in schools run the gamut from noncontroversial 

approaches, such as grants and gifts, to highly controversial activities, such 

as market research. Often the values of school board members, district 

officials, and parents determine whether a certain type of activity is 

controversial or not, rather than the nature of the activity itself. For 

example, in various districts soft drink sales are an issue of nutrition, the 

appropriateness of sales during school hours, or brand preference. In some 

cases, these sales raise no value-related issues at all. Because most of the 

decisions are made at the local level, different preferences of local officials 

will result in different levels of commercial activities across districts and 

across schools in the same district. New technologies, particularly those

13Mike Kennedy, “Public Schools, Private Profits,” America School and University (Feb. 

2000).

14Andrew Trotter, “Denver, New York Seek Online Revenue,” Education Week (May 10, 

2000).
Page 35 GAO/HEHS-00-156 Commercial Activities in Schools

involving the Internet, might increase opportunities for schools to earn 

money but raise concerns about student privacy.

Comments From 

Education 

Organizations

Several national education organizations reviewed a draft of this report. 

They generally thought it was informative and should provide school 

districts with valuable information related to commercial activities. An 

official of the National School Boards Association, however, said that 

because we had not encountered any examples of Internet tracking in our 

site visits, we should not highlight the issue by including it in table 1. 

Because table 1 provides an overall framework for discussing categories of 

commercial activities, we believe Internet tracking is appropriately 

included.

As agreed with your offices, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after its 

issue date. At that time, we will send copies to the Honorable Richard W. 

Riley, Secretary of Education; appropriate congressional committees; and 

other interested parties. We will also make copies available to others upon 

request. 

If you or your staff have any questions about this report, please call me on 

(202) 512-7215 or Eleanor L. Johnson on (202) 512-7209. Kathleen D. White 

and Carolyn S. Blocker also made major contributions to this report.

Marnie S. Shaul

Associate Director, Education, Workforce,

and Income Security Issues
Page 36 GAO/HEHS-00-156 Commercial Activities in Schools

Appendix I

Scope and Methodology ApApenednxidexiIs

To obtain information for this report, we reviewed reports and articles 

about commercial activities, conducted a Lexis search of state legal codes 

to identify laws governing commercial activities in schools, and gathered 

detailed information on commercial activities in 19 elementary and 

secondary schools in a total of seven school districts in three states. The 

schools visited ranged from those serving large numbers of poor students 

to those serving children from affluent families. In each school, we 

interviewed the principal; representatives of parent-teacher organizations 

and booster clubs; selected teachers; and other key staff, such as athletic 

directors. In each district, we interviewed a district superintendent or 

assistant superintendent, a district business officer, and a school board 

member. (See table 3.)

Table 3: Sites Visited

District School

California

Long Beach Unified School District James R. Lowell Bayside Academy

Hubert H. Bancroft Middle School

Robert A. Millikan High School

Oxnard School District (elementary and middle 

school district)

Emilie Ritchen Elementary School

John C. Fremont Intermediate School

Oxnard Union High School District Hueneme High School

Michigan

Grand Rapids Public Schools Henry Paideia Academy 

Westwood Middle School

Ottawa Hills High School

Ludington Area Schools Pere Marquette School (Grades K-2)

Foster Elementary (Grades 3-6)

O.J. DeJonge Junior High School

Ludington High School

New Mexico

Albuquerque Public Schools Los Padillas Elementary School

Lyndon B. Johnson Middle School

Cibola High School

Los Alamos Public Schools Barranca Mesa Elementary School

Los Alamos Middle School

Los Alamos High School
Appendix I

Scope and Methodology

Page 37 GAO/HEHS-00-156 Commercial Activities in Schools

We spoke with individuals representing the following education 

associations, parent-teacher organizations, businesses, and advocacy 

groups: 

American Association of School Administrators

Association for Supervision and Curriculum Development

Association of School Business Officials International

Center for the Analysis of Commercialism in Education

Center for Commercial-Free Public Education

Channel One (Primedia)

Commercial Alert

National Parent Teacher Association

National School Boards Association

National Soft Drink Association

New Mexico Research and Study Council

Texas Parent Teacher Association

ZapMe!
Page 38 GAO/HEHS-00-156 Commercial Activities in Schools

Appendix II

Summary of Site Visit Information ApendxiI

Tables 4 through 7 summarize written policies and procedures on product 

sales, direct advertising, indirect advertising, and market research in the 

districts we visited. These tables illustrate the variability in policies among 

school districts. Moreover, unwritten district policies and the values of 

school administrators and school board members play critical roles in 

decisions about what commercial activities are allowed. Table 8 describes 

the soft drink arrangements in the six high schools that we visited. 

Table 4: Summary of Key District Policies and Procedures Covering Product Sales, by School District

Albuquerque

Grand 

Rapids

Long 

Beach

Los 

Alamos Ludington

Oxnard 

School 

District

Oxnard 

Union 

High 

School

District

Approval of fundraising activities

Superintendent or designee must approve 

fundraisers, inform parents/guardians of their 

purpose, tell parents/guardians how much money 

was raised, and encourage parents/guardians to 

offer their suggestions for the use of the money 

raised. 

X

Superintendent has the authority to approve 

agreements on behalf of the district.

X X

Superintendent or designee must review the 

contract if the sale or soliciting activities involve a 

contract.

X X

Principal may permit fundraising by organizations 

whose funds are managed by the school district if 

activities are conducted on school grounds; the 

superintendent may permit fundraising if 

conducted off school grounds.

X X

Superintendent may permit fundraising by 

organizations whose funds are not managed by 

the school district. 

X XX X

Superintendent and principal must approve in 

writing all activities involving the community 

extensively. 

X X

All solicitations on campus must be approved 

according to regulations developed by the 

superintendent.

X X

Principal must approve activities. X X X

Principal must approve all activities of parents’

groups. 

X X
Appendix II

Summary of Site Visit Information

Page 39 GAO/HEHS-00-156 Commercial Activities in Schools

Limits on door-to-door canvassing

Door-to-door canvassing is prohibited. X X X

Ability of minors to engage in door-to-door 

fundraising canvassing is limited.

XX X

Limits on number and length of fundraisers

Superintendent must develop guidelines for the 

solicitation of funds that specify the times and 

places in which funds may be collected, describe 

permitted methods of solicitation, limit the kinds 

and amounts of advertising for solicitation, and 

limit the number of fundraising events. 

X X

Superintendent must implement guidelines to 

ensure that parent-teacher organizations and 

other school-related organizations comply with 

school board policies and that funds are used for 

projects approved by the superintendent and 

principal.

X

Student groups are limited to two fundraisers a 

year. 

X

Staff must limit fundraising activities to appropriate 

time periods designated by the principal.

X X

Other policies

Students may not be required to raise a specified 

amount of money in order to participate in an 

activity sponsored by a school-related 

organization.

X XX X

Schools are to coordinate fundraisers so that sales 

will not be negatively affected by competition.

X X

Fundraising involving gambling is prohibited. X X X X

Principal must ensure that letters are sent to all 

parents/guardians regarding fundraising activities.

X X

Awards or incentives identifying donors may not be 

used.

X

(Continued From Previous Page)

Albuquerque

Grand 

Rapids

Long 

Beach

Los 

Alamos Ludington

Oxnard 

School 

District

Oxnard 

Union 

High 

School

District
Appendix II

Summary of Site Visit Information

Page 40 GAO/HEHS-00-156 Commercial Activities in Schools

Table 5: Summary of Key District Policies and Procedures Covering Direct Advertising, by School District

Albuquerque

Grand 

Rapids

Long 

Beach

Los 

Alamos Ludington

Oxnard 

School

District

Oxnard 

Union 

High 

School

District

Approval of direct advertising activities

Superintendent or designee has the authority to 

approve agreements on behalf of district.

X X

Superintendent must review the commercial 

advertising content of all instructional programming 

and other materials and act to protect students from 

any negative aspects of the advertising content. 

X X

Materials generated by nonstudents may be 

distributed or posted only with the prior approval of 

the superintendent or his or her designee.

X X

Superintendent or designee must authorize the 

distribution to students of materials from profitmaking companies.

X X

Ticket sales and promotional announcements in 

schools must be approved by the principal and 

permitted by the appropriate superintendent, with 

the exception of activities relating to school functions 

that are held at the discretion of the principal.

X

Limits on direct advertising

Advertising promoting alcohol, tobacco, gaming, 

firearms, political endorsements, and controversial 

products or services is prohibited.

X

Advertisement of materials that are obscene or 

libelous, incite students to commit illegal acts, violate 

school rules, discriminate against groups, or 

promote one group over others is prohibited. 

X X

Superintendent or designee may not accept 

promotional material of a commercial nature for 

distribution by or to students.

X X

Organizations that provide schools with materials or 

equipment that contains commercial messages 

must submit a request to the director of business.

X X

Superintendent must establish guidelines that limit 

the kind and amount of advertising for fundraisers.

X

Superintendent must develop regulations that 

provide for the acceptance of gifts of uniforms, 

equipment, or money.

X X

Coupons may be distributed through the school, but 

they must relate to or support an instructional 

activity.

X X
Appendix II

Summary of Site Visit Information

Page 41 GAO/HEHS-00-156 Commercial Activities in Schools

Advertisements in school-sponsored publications, 

announcements, and other communications are 

prohibited.

X

Other policies

Advertising initiatives that enhance district goals are 

supported.

X

(Continued From Previous Page)

Albuquerque

Grand 

Rapids

Long 

Beach

Los 

Alamos Ludington

Oxnard 

School

District

Oxnard 

Union 

High 

School

District
Appendix II

Summary of Site Visit Information

Page 42 GAO/HEHS-00-156 Commercial Activities in Schools

Table 6: Summary of Key District Policies and Procedures Covering Indirect Advertising, by School District

Albuquerque

Grand 

Rapids

Long 

Beach

Los 

Alamos Ludington

Oxnard 

School

District

Oxnard

Union 

High 

School

District

Approval of indirect advertising activities

Organizations must request a letter of authorization 

from the Community Relations Office or from 

Curriculum Support before seeking the approval of 

the principal to distribute course-related materials, 

contest materials, products, or programs.

X X

All materials or activities proposed by commercial 

sources for student or staff use or participation 

must be approved by the principal on the basis of 

their educational contribution.

X X

Superintendent must review the commercial 

advertising content of all instructional programming 

and other materials and act to protect students from 

any negative aspects of the advertising content.

X X

School board acceptance is required for all gifts 

valued at over $100.

X

Limits on indirect advertising

Schools may use films or other educational 

materials if they mention the producing or 

sponsoring company.

X X

Product materials donated by companies may be 

used in classrooms as long as they serve an 

educational purpose and do not unduly promote 

commercial activities or products.

X X

Superintendent or designee may not accept 

promotional materials of a commercial nature for 

distribution by or to students.

X

Materials advertising a product for sale or rent may 

not be used unless activity is authorized and 

approved by the principal.

X

Contests and exhibits may not make unreasonable 

demands upon the time or energy of students, 

teachers, or the district; interrupt the regular school 

program; involve any direct cost to the district; or 

cause the participants to leave the school district.

X X

Other policies

Superintendent must establish regulations 

governing partnerships between private industries 

and schools.

X
Appendix II

Summary of Site Visit Information

Page 43 GAO/HEHS-00-156 Commercial Activities in Schools

Table 7: Summary of Key District Policies and Procedures Covering Market Research, by School District

Albuquerque

Grand 

Rapids

Long 

Beach

Los 

Alamos Ludington

Oxnard 

School

District

Oxnard

Union

High School

District

Approval of market research activities

Organizations may not administer surveys or 

questionnaires to students or staff unless 

instruments are submitted to the 

superintendent for approval; if approved, a copy 

of the survey or questionnaire results and the 

proposed manner of their communication must 

be provided to the superintendent for review 

and approval before they are released.

X X

Unless generated by the school, questionnaires 

to students or parents/guardians must be 

approved by the superintendent or designee 

and must bear the name and location of the 

sponsor.

X X
Appendix II

Summary of Site Visit Information

Page 44 GAO/HEHS-00-156 Commercial Activities in Schools

Table 8: Comparison of Soft Drink Agreements at the High Schools We Visited 

School

Coverage of 

agreement

Type of 

agreement

Year of 

agreement

Length of 

agreement 

Revenue or in-kind 

benefits

Sponsor 

responsibilities

District 

responsibilities

Albuquerque, 

N.M.

Cibola High 

School 

School Informal 

agreement 

1999 None 

specified

• About $3 per student 

• 10 competitive grants of 

$1,000 for district 

teachers

• A baseball scoreboard 

• Cafeteria banners 

Maintain 60% of 

machines

Maintain 40% of 

machines

Grand 

Rapids, Mich.

Ottawa Hills 

High School

18 districts in 

the Kent 

Intermediate 

School District 

Beverage 

Consortium

Exclusive 

contract 

covering all 

public 

schools and 

facilities

1999 10 years • Minimum commission of 

$20 per student per 

year for all students in 

the district and $10 per 

student per year for 

exclusivity rights, for a 

total of $30 per student 

per year

• Promotional 

merchandise and 

student incentive 

programs valued at over 

$600,000

• Guaranteed earnings of 

$785,000 and estimated 

possible earnings of 

$1.5 million for the 

district

Maintain all 

machines

May not sell or 

advertise 

products of 

competing 

companies

Long Beach, 

Calif.

Robert A. 

Millikan High 

School

School Exclusive 

contract, 

but food 

service 

operations, 

including 

cafeteria 

service, are 

excluded

1995 10 years • $29,284 per year, or 

about $6.80 per student 

(based on revenues 

from 1998-99)

• Donation of $11,420 

toward purchase of a 

football scoreboard

• 25 free cases of soft 

drinks a year

Maintain all 

machines

May not sell or 

advertise 

products of 

competing 

companies in 

schools or at 

school events
Appendix II

Summary of Site Visit Information

Page 45 GAO/HEHS-00-156 Commercial Activities in Schools

Los Alamos, 

N.M. 

Los Alamos 

High School

53 school 

districts 

and 11 

institutions of 

higher learning 

in New Mexico

Exclusive 

contract

2000 8 years • Estimated total benefit 

of about $82,500 for the 

district, or $22 per 

student per year

• Guaranteed $24,121 

per year regardless of 

sales, or about $6.50 

per student per year

• In-kind benefits worth 

$4,700 per year for the 

district

Maintain all 

machines 

May not sell or 

advertise 

products of 

competing 

companies; 

schools, 

concessions, 

and food 

services selling 

beverages on 

campus must 

buy cups, 

carbon dioxide, 

and related 

products from 

the vendor 

Ludington, 

Mich.

Ludington 

High School

High 

school/middle 

school 

complex

Exclusive 

contract

1997 10 years • Up-front payment of 

$12,000 toward the cost 

of a scoreboard

• Installation of the 

scoreboard

• Estimated commission 

of about $4,800 per 

year

• Approximately $5 per 

student per year 

Maintain all 

machines

May not sell or 

advertise 

products of 

competing 

companies; 

must place 

advertisements 

on all menu 

boards, 

scoreboards, 

and 

concessions 

and buy cups, 

carbon dioxide, 

and related 

products from 

the vendor 

Oxnard, Calif.

Hueneme 

High School

School Exclusive 

contract, 

but food 

service 

operations, 

including 

cafeteria 

service, are 

excluded

1999 6 years • Up-front payments of 

$50,000, $15,000, and 

$15,000 over first 3 

years of contract

• $17,000 commission 

per year, or about $6.40 

per student 

• Estimated total benefit 

from soft drinks of 

$11.82 per student per 

year

• 50 free cases of soft 

drinks per year

• Promotional services 

not to exceed $1,000 

per year

Maintain all 

machines 

Has exclusive 

sales rights with 

exception of 

products sold in 

cafeteria 

(Continued From Previous Page)

School

Coverage of 

agreement

Type of 

agreement

Year of 

agreement

Length of 

agreement 

Revenue or in-kind 

benefits

Sponsor 

responsibilities

District 

responsibilities

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PAGE 49 GAO/XXXX-98-??? NAME OF DOCUMENT
Page 50 GAO/HEHS-00-156 Commercial Activities in Schools

Contents

Table 1: Categories of Commercial Activities 8

Table 2: State Statutes and Regulations Targeting Commercial

Activities in Schools 12

Table 3: Sites Visited 36

Table 4: Summary of Key District Policies and Procedures Covering 

Product Sales, by School District 38

Table 5: Summary of Key District Policies and Procedures Covering

Direct Advertising, by School District 40

Table 6: Summary of Key District Policies and Procedures Covering 

Indirect Advertising, by School District 42

Table 7: Summary of Key District Policies and Procedures Covering

Market Research, by School District 43

Table 8: Comparison of Soft Drink Agreements at the High Schools

We Visited 44
Contents

Page 51 GAO/HEHS-00-156 Commercial Activities in Schools
Page 52 GAO/XXXX-??-?? Document Name

Contents

Figure 1: Advertisements Can Be Found in and Around Schools 7

Figure 2: Ads on Scoreboards 20

Figure 3: Ads on Calendars 21

Figure 4: Ads on Book Covers 24