Commercial Activities in Schools: Use of Student Data is Limited and Additional Dissemination of Guidance Could Help Districts Develop Policies
Released: 2004-09-20T00:00:00

Letter

Background

As we reported in 2000, commercial activities in school can generally be classified in four categories—product sales, direct advertising, indirect advertising, and market research—although each category encompasses a wide range of activities. For example, advertising activities could range from selling advertisements for a high school football game to selling naming rights to a school. Although this report synthesizes statutes, regulations, and proposed legislation addressing all four categories, our discussions of school district policies and Education’s activities focus on the fourth category, market research, because of the amendments made by NCLBA that place requirements on districts that deal with the collection, disclosure, and use of student data for marketing and selling. (See table 1.)

In recent years, the growth of the Internet has had a large impact on commercial activities, particularly market research, by enabling marketers to elicit aggregated and personally identifiable information directly from large numbers of students. For example, some Web filtering systems used in schools that block student access to certain Web sites also allow the company that maintains that software to measure and analyze how children use the Internet by tracking which Web sites they visit and how long they stay there. Although this information is aggregated and does not identify particular children, this information, especially when used with demographic data, can help businesses develop advertising plans that target particular audiences if districts allow the installation of the software. Also, Web sites directly elicit the participation of students in market research panels by offering them cash or prizes in exchange for information about themselves and their preferences. This makes it possible for companies to engage large-scale customized panels of students to test out marketing strategies and provide data to develop product lines and product loyalty without relying on schools.

NCLBA Amends Statutory Safeguards on the Use of Student Data for Marketing and Selling Purposes

NCLBA addresses some concerns about commercial activities and student data by amending and expanding certain student data safeguards that were established in PPRA. Prior to NCLBA, PPRA generally prohibited requiring students to submit to a survey concerning certain personal issues without prior written parental consent. As amended, PPRA for the first time requires districts to develop and adopt new policies, in consultation with parents, for collecting, disclosing, and using student data for marketing or selling purposes. Districts are also required to directly notify parents of these policies and provide parents an opportunity to opt their child out of participation in such activities. Furthermore, districts are required to notify parents of specific activities involving the collection, disclosure, and use of student information for marketing or selling purposes and to provide parents with an opportunity to review the collection instruments. PPRA did not contain deadlines for districts to develop policies. Also, PPRA requires Education to annually inform each state education agency and local school districts of their new obligations under PPRA. Finally, PPRA continues to require Education to investigate, process, and adjudicate violations of the section.

FERPA and PPRA Safeguards Address Different Student Privacy Issues

For the past 30 years, student and parent privacy rights related to students’ education records have been protected primarily under the Family Educational Rights and Privacy Act (FERPA), which was passed in 1974. FERPA protects the privacy of students’ education records by generally requiring written permission from parents before records are released. FERPA also allows districts to classify categories of information as publicly releasable directory information so long as the district has provided public notice of what will constitute directory information items and has allowed parents a reasonable period of time to advise the district that directory information pertaining to their child cannot be released without consent. Under FERPA, directory information may include a student’s name, telephone number, place and date of birth, honors and awards, and athletic statistics. Unlike PPRA, FERPA does not address the participation of students in surveys or the collection, disclosure, or use of student data for marketing or selling purposes. (See table 2.) As a result of the NCLBA amendments, Education is required to annually inform each state and local education agency of the educational agency’s obligations on PPRA and FERPA.

School District Policies Are Set at the Local Level under State Laws

State education laws are enacted by state legislatures and administered by each state’s department of education, which is led by the state’s chief state school officer. The Council of Chief State School Officers represents states’ education interests in Washington, D.C., and acts as a conduit of information between the federal government and the states regarding federal education laws. Each state department of education provides guidance and regulations on state education laws to each school district.

School district policies are generally set by local school boards according to the authority granted to them by state legislatures. The policies are then administered by the school district’s superintendent and other school district staff. Local school boards in each state have come together to form a state school boards association. They provide a variety of services to their members including help on keeping their local school board policies current. For example, a partial list of services offered by one school board association includes policy development services, advocacy, legislative updates, legal services, executive search services, conferences and training, and business and risk management services.

Since 2000, Most States Have Enacted Laws and Proposed Legislation That Affect Commercial Activities in Schools

Since 2000, 13 states have established statutes, regulations, or both that address one or several categories of commercial activities in schools. Six of these states established provisions addressing market research by restricting the use of student data for commercial activities and for surveys. Other states passed statutes or issued regulations addressing product sales and advertising. In addition, as of February 2004, at least 25 states are considering proposed legislation that would affect commercial activities. Most of these proposals would affect product sales, particularly the sale of food and beverages. Prior to 2000, 28 states had passed provisions addressing commercial activities. At that time, most provisions addressed direct advertising and product sales. The seven districts we visited in 2000 continued to conduct a variety of commercial activities, particularly product sales, and three districts reported that they have increased the level of activities with local businesses. However, the types of activities in these districts have not substantially changed since our visit.

State Statutes and Regulations Vary Widely in Purpose and Scope

Since our previous report in 2000, 13 states have enacted 15 statutory provisions and issued 3 regulatory provisions addressing one or more types of commercial activities in schools. Six states passed legislation affecting marketing research. Three of these 6 passed laws restricting the disclosure or use of student data for commercial purposes, and another 3 placed restrictions on students’ participation in surveys. For example, an Illinois statute prohibited the disclosure of student data to businesses issuing credit or debit cards, and a New Mexico regulation prohibited the sale of student data for commercial reasons without the consent of the student’s parent. Laws in Arizona, Arkansas, and Colorado prohibited student participation in surveys without the consent of their parents. Five states passed new provisions affecting product sales. In most cases, these laws targeted the sale of soft drinks and snack food. Other new provisions addressed direct and indirect advertising.

Prior to 2000, 28 states had established one or more statutes or regulations that affected commercial activities in schools. Twenty-five states established provisions addressing advertising—in 19 states, measures affected direct advertising and in 6, indirect advertising. Sixteen states established provisions addressing product sales. Only 1 state established a measure that addressed market research. See appendix II for a state-by- state listing of provisions addressing commercial activities.

Most Proposed Legislation Affecting Commercial Activities Regards Food and Nutrition

Legislatures in 25 states have recently considered one or more bills that affect commercial activities in schools, with most having a particular focus on child nutrition. These bills are intended to improve child nutrition and reduce obesity, and to achieve this intention, place limitations, restrictions, or disincentives on the sale of beverages and food of limited nutritional value. Legislatures in 24 of the 25 states recently considered bills that restrict or ban the sale of beverages and food of limited nutritional value in schools. For example, a bill in New York would prohibit vending machines from selling food and drinks of minimal nutritional value. Additionally, legislatures in several states have considered bills that restrict the hours when students can buy products of limited nutritional value. For example, bills in Alaska and Ohio would restrict the sale of soft drinks during certain hours. Finally, pending legislation in Maryland would require schools to sell food of limited nutritional value at higher prices than nutritious food.

Legislatures in seven states have recently proposed bills that focus on other aspects of commercial activities in schools. In three states— Connecticut, Minnesota, and North Carolina—bills would restrict the ability of schools to enter into exclusive contracts with beverage and food venders. In two statesNew Jersey and North Carolinabills would place limits on the ability of schools to release or collect personal information about students, such as prohibiting the release of data from the student- testing program to any marketing organization without the written permission of the parent or guardian. Other proposed bills addressed a variety of issues, such as allowing schools to sell advertising and accept supplies bearing logos or other corporate images or requiring school boards to disclose the portion of proceeds from fundraising activities that is contributed to the school activity fund. See appendix III for a state-by- state listing of legislative proposals.

Commercial Activities in the Seven Districts We Visited in 2000 Have Not Generally Changed

In updating the site visit information we collected in 2000, we found only slight changes in commercial activities in all seven school districts. All districts reported they continued to engage in product sales and display advertising. As we found earlier, most commercial activities, particularly product sales and advertising, occurred in high schools. All the high schools we visited in 2000 still sold soft drinks, and most sold snack or fast food. To varying degrees, all displayed corporate advertising. High schools continued to report the receipt of unsolicited samples, such as toiletries, gum, razors, and candy, that they did not distribute to students. In contrast, the elementary schools we contacted did not sell carbonated soft drinks to students or display corporate advertising. Grocery and department store rebate programs continued to operate in almost all schools, but coupon redemption programs were largely an elementary school enterprise. As we found before, none of the districts reported using corporate-sponsored educational materials or engaging in market research for commercial purposes.

Officials did report some changes in commercial activities. Three of these districts reported stronger ties with local businesses, and three schools in two districts reported they now sell healthier soft drinks. One district reported a new relationship with a computer firm headquartered in its area that provided tutors as well as cash donations to schools in the district. Under this relationship, company employees tutored students who were at risk of failing, and the company donated $20 to schools for each 10 hours of tutoring that its employees provided. A principal in this district reported that many students in her school benefit substantially from this relationship and her school earned between $6,000 and $9,000 per year in donations. Another district reported it had entered into a new contract with a local advertising agency to raise revenue to renovate sport concession stands, and a third had organized a new effort to sell advertisements to fund construction on the district’s baseball field. Three principals told us that vending machines in their schools now offer a different mix of beverages—for example, more juice, milk, and water and fewer carbonated beverages—than they did when we visited in 2000.

Districts Are Beginning to Implement Provisions on Student Data, and Few Use Student Data for Commercial Purposes

We estimate that about two-thirds of the districts in the nation were either developing or had developed policies addressing the new provisions on the use of student data for commercial purposes. However, only 19 of the 61 districts that provided us copies of their policies specifically addressed these provisions. Very few school districts reported releasing student data for marketing and selling, and all these releases were for student-related purposes. Of the seven districts we visited in 2000, three adopted new policies on the use of student data since our visit, and only one released data and that was for graduation pictures.

Although districts reported they had developed policies, many of the policies they sent us did not fully address PPRA requirements. On the basis of the results of our surveys, we estimate about a third of districts were developing policies regarding the use of student data for commercial purposes; another third had developed policies; and about another third had not yet developed policies. However, when we analyzed policies that 61 districts sent to us, we found only 19 had policies that specifically addressed marketing and selling of student information. Of these, 11 policies addressed the collection, release, and use of student information for commercial purposes. Eight policies partially addressed the provisions by prohibiting the release of student data for these purposes. Policies in the 42 remaining districts did not address the new PPRA provisions. Many of these districts provided us policies concerning FERPA requirements.

We telephoned all districts in our sample that reported they release data for commercial purposes and a subsample of districts that reported they had not. Of the 17 districts that released data for commercial purposes, all reported that they released data only for school-related purposes. For example, all 17 released students’ names to photographers for graduation or class pictures. Two of these districts also released student data to vendors who supplied graduation announcements, class rings, and other graduation-related products, and another two districts released student information to parent-teacher organization officials who produced school directories that they sold to students’ parents. Of the 16 districts that reported they did not release student data, one actually did release student data. As in the other cases, that district released it to a school photographer.

Of the seven districts we visited in 2000, three adopted new policies on the use of student data. One of the districts we visited adopted new policies that incorporated PPRA provisions on the use of student data for commercial purposes. Two adopted policies with blanket prohibitions against some uses of student data for marketing and selling. In one of these districts, policies prohibited the release of students’ data for any survey, marketing activity, or solicitation, and policies in the other banned the use of students to support any commercial activity. Officials in all seven districts reported that their district did not collect student data for marketing or selling purposes, and several expressed surprise or disbelief that this practice did in fact occur. However, a high school in one district reported that it disclosed information on seniors to vendors selected by the district to sell senior pictures, school rings, and graduation announcements.

Education Developed and Disseminated Guidance, but Many Districts’ Policies Did Not Address Requirements

As required by NCLBA, Education has developed guidance and notified every school district superintendent and chief state school officer in the country of the new required student information protections and policies, and has charged the Family Policy Compliance Office to hear complaints on PPRA. Education issued guidance about the collection, disclosure, and use of student data for commercial purposes as part of its general guidance on FERPA and PPRA in 2003 and 2004. In addition, although not required by statute to do so, Education provided superintendents with model notification information that districts could use to inform parents of their rights, included information about PPRA in some of its training activities, and posted its guidance and other PPRA-related material prominently on its Web site. Education has charged its Family Policy Compliance Office to hear complaints and otherwise help districts implement the new student data requirements. Although the office has received some complaints about other provisions related to student privacy, as of June 2004, officials from that office reported they have received no complaints regarding the commercial uses of student data.

Many districts did not appear to understand the new requirements, as shown by our analysis of the 61 policies sent to us by districts in our sample. Although we asked districts to send us their policies that addressed these new provisions, only 11 districts sent policies that addressed these new provisions comprehensively, and 8 sent policies that covered these provisions partially. The 42 remaining districts sent policies that did not contain specific language addressing the collection, release, or use of student data for commercial purposes, although districts sent them to us as documentation that the districts had developed such policies. Most of these policies contained only general prohibitions about the release of student records and concerned FERPA.

Although Education is not required to issue its guidance to state school boards associations, four districts in two states in our survey offered unsolicited information that they relied on state school boards associations to develop policies for their consideration and adoption. Two districts in a third state that sent us policies used policies developed by their state school boards association to address commercial activities in schools. However, Education did not distribute its guidance to these associations.

Conclusions

Although state laws both limit and support commercial activities in schools, many state legislatures have chosen to pass laws addressing only specific activities such as permitting or restricting advertising on school buses. In addition, many states have not enacted legislation concerning commercial activities or have passed the authority to regulate these activities to local districts, thus allowing district school boards, superintendents, or principals to determine the nature and extent of commercial activities at the local level. Not only do commercial activitiesproduct sales, direct advertising, indirect advertising, and market researchencompass a broad spectrum of activities, but also the levels of these activities and the levels of controversy attached to them vary substantially. For example, few would equate selling advertisements for a high school football program with selling the naming rights to a school, although both are examples of direct advertising. Because of these differences, as well as philosophical differences among districts and communities, it is probably not surprising that states legislatures have taken various approaches toward the regulation of commercial activities.

Perhaps because providing student information for commercial purposes may have serious implications, few districts do so. In fact, some school officials said they were skeptical that schools would allow the use of student data for this purpose. In the past, marketers may have approached schools to survey students about commercial products or services. Today, however, technology, particularly the proliferation and availability of the Internet, provides marketers with quick and inexpensive access to very large numbers of children without involving the cooperation of schools. As Internet users, children often submit information about themselves and their personal product preferences in exchange for cash or prizes. Because of the disinclination of school officials to sell student data and the ability of marketers to get data directly from students without involving schools, it may be understandable that relatively few districts as yet have actually adopted policies that specifically address the selling and marketing provisions of PPRA. On the other hand, few would argue against the need to protect students’ personal information. Many businesses, particularly local businesses catering to youth markets, might still profit from acquiring student information from schools. Although we found districts did not use student data for purposes generally viewed as offensive, this does not mean such use would not happen in the future in the absence of safeguards.

It appears that some superintendents may not be aware of the new PPRA requirements or have not understood Education’s guidance because many thought their district’s policies reflected the latest federal requirements on use of student data when, in fact, they did not. Also, several districts told us that they relied on state school boards associations to develop policies. Unlike models or guidance that reflect only federal law, policies developed by these groups may be most useful to districts because they correspond to both federal and state requirements. These associations are not on Education’s guidance dissemination list.

Recommendation for Executive Action

We recommend that the Secretary of Education take additional action to assist districts in understanding that they are required to have specific policies in place for the collection, disclosure, and use of student information for marketing and selling purposes by disseminating its guidance to state school boards associations.

Agency Comments

We provided a draft of this report to the Department of Education for review and comment. Education concurred with our recommendation. Education’s comments are reproduced in appendix V. Education also provided technical comments, which were incorporated as appropriate.

Unless you publicly announce its contents earlier, we plan no further distribution until 30 days after the date of this letter. At that time, we will send copies of this report to the Secretary of Education, appropriate congressional committees, and others who are interested. We will also make copies available to others upon request. In addition, the report will be available at no charge on GAO’s Web site at http://www.gao.gov. If you or your staff have any questions, or wish to discuss this material further, please call me on (202) 512-7215. Other contacts and staff acknowledgments are listed in appendix VI.

Appendix I: Scope and Methodology

To conduct our work, we reviewed state statutes, regulations, and proposed legislation; received mail questionnaires from 219 school districts selected on the basis of a national stratified probability sample design; conducted additional brief telephone interviews with 36 of these districts; analyzed policies voluntarily provided by 61 districts; interviewed officials at Education; and examined guidance issued by the department. In addition, we conducted telephone interviews with district and school officials in the 7 districts that we visited in 2000 for our previous study on commercial activities in schools to update our previous findings.

Review of State Legislation

To update our compilation of state statutes and regulation contained in our 2000 report, we researched legal databases, including Westlaw and Lexis, to identify laws passed between January 2000 and May 2004. To identify pending laws, we researched information available on databases maintained by state legislatures or followed links provided by these databases to identify bills introduced between January 2003 and February 2004. However, there are inherent limitations in any global legal search, particularly when—as is the case here—different states use different terms or classifications to refer to commercial activities in schools.

Survey of School Districts

Sample

We selected a national probability sample of districts, taken from school districts contained in the Department of Education’s Common Core of Data (CCD) Local Education Agency (LEA) file for the 2000-2001 school year. After removing districts from this list that were administered by state or federal authorities, we identified a population of 14,553 school districts. In the course of our study, we learned that some special education and other units in this list do not have legal authority to establish formal policies. As a result, we estimate that our study population consists of 13,866 districts in the 50 states and the District of Columbia. The sample design for the survey consisted of a stratified random probability sample design: 271 districts were drawn from the three strata shown in table 3. The strata were designed to draw relatively large numbers of districts from states likely to include districts that had engaged in or planned to engage in one or more specific activities involving the collection, disclosure, or use of student information for the purposes of marketing or selling or providing information to others for these purposes. Because we thought the activities of interest were low incidence activities, we wanted to maximize our ability to examine situations involving the use of student data for commercial purposes. The expected high-activity strata were defined as states that we identified as having laws that permitted commercial activities when we performed our work in 2000. As shown in table 4, the response rates were 76 percent, 83 percent, and 88 percent in the three sampling strata. The overall estimated response rate was 87 percent.

Because we followed a probability procedure based on random selections, our sample is only one of a large number of samples that we might have drawn. Since each sample might have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 95 percent confidence interval (for example, plus or minus 9 percentage points). This is the interval that would contain the actual population value for 95 percent of the samples we could have drawn. As a result, we are 95 percent confident that each of the confidence intervals in this report will include the true values in the study population.

Survey Errors Procedures

The practical difficulties of conducting any survey introduce nonsampling errors. For example, errors could be made in keying questionnaire data, some people may be more likely than others to respond, or questions may be misinterpreted. To minimize data-handling errors, data entry and programs were independently verified. To reduce the possibility of misinterpreting questions, we pretested the questionnaire in four districts. The full questionnaire is reproduced in appendix IV. We took additional steps to check answers for a subsample of respondents because of concerns about misinterpretation. We were concerned about possible misinterpretation of a question about implementing the law (question 1) because we discovered during our pretest that there was confusion between a narrow and (probably) little used portion of a student privacy law (PPRA) regarding selling and marketing of student data and a more familiar older law (FERPA) concerning student records. We were also concerned that there could be an underreporting of commercial activities because our question did not specify the activities (“During school year 2003-2004, did your LEA, or any school in your LEA, engage or plan to engage in one or more activity regarding the collection, disclosure, or use of student information for the purposes of marketing or selling or providing the information to others for these purposes?”) and because very few schools reported using student information for commercial purposes. Further, our pretesting indicated a potential problem with respondents suggesting they would be hesitant to report commercial activities. Moreover, because 86 percent of our respondents answered “no” to question 2, a higher rate than expected, there was some question in our minds whether our respondents who answered no had really considered all the possible ways in which student information could be used for commercial purposes when formulating their answers.

We attempted to verify the answers to our question about commercial practices by telephoning 36 districts, the 20 districts that reported using student data for commercial purposes, and the 16 randomly selected districts from among the districts that reported not using student data for commercial purposes. Three of the 20 districts originally reporting the use of student data were found not to be using the data for commercial purposes because they were supplying the data to military organizations or for scholarships, allowed uses. For the 16 sampled districts reporting not using students’ data for commercial purposes, we asked the superintendent or other knowledgeable person in the district detailed questions about 20 possible commercial activities. We asked whether the school provides student addresses or phone numbers for specific activities (student pictures, letter jackets, any types of school uniforms, yearbooks, class rings, tuxedo rentals for prom, corsages for prom, musical instrument rentals, caps and gowns for commencement, preparation for Scholastic Aptitude Test or other tests, any other type of tutoring, transportation for school field trips, or travel for other trips such as spring break or ski trips), or to outside organizations for students to serve on an Internet or study panel, answer questionnaires, test or try out a product, or receive mailings from or talk with representatives of outside organizations who are selling services or products. One of these 16 districts was found to be using the data for commercial purposes in connection with photographers for school pictures. As a result of these telephone calls, we corrected the three incorrect records but did not make further adjustments for districts that were not contacted.

Analysis of District Policies

We attempted to verify the answers about the development of policies by examining policies that were voluntarily submitted by districts in our sample. Sixty-one districts complied with our request to submit a copy of their policy. We analyzed these policies to determine if they specifically referred to marketing or commercial activities. We found 11 districts submitted policies that addressed these provisions and an additional 8 submitted policies that partially addressed the provisions in that they prohibited the release of student data for commercial purposes but did not address the collection or use of such data. Therefore, our questionnaire gathered relevant data about districts’ perceptions of the extent to which they thought they were implementing the provision, rather than the extent to which these policies actually did so. This probably reflects confusion in interpreting the provision or lack of awareness of its existence.

Contacts at Education

We interviewed officials at Education’s Family Policy Compliance Office and the Office of the General Counsel. We examined in detail the guidance issued by the department to assist schools in implementing PPRA provisions on use of student data for marketing and selling purposes.

Follow-up Telephone Interviews with the Seven Districts We Visited in 2000

We conducted telephone interviews with district and school officials in the seven districts we visited to collect information for Public Education: Commercial Activities in Schools (GAO-00-156), a report we issued in 2000, to discern changes in commercial activities in these districts. (See table 5.) We selected these districts because they engaged in a variety of commercial activities, served diverse populations—ranging from large numbers of poor students to children from affluent families—and varied in terms of geography and urbanicity. In updating that information for this report, we interviewed district-level officials, including superintendents and business managers, and elementary, middle school, and high school principals.

Appendix II: State Statutes and Regulations Addressing Commercial Activities in Schools

This appendix lists state statutory and regulatory provisions relating to commercial activities as of May 2004. Shaded entries were enacted since 2000. This updated table identifies 15 new statutes and 3 new regulations and also includes state laws pertaining to the sale of competitive food in schools. In addition, the table includes several laws that were not identified in our previous report.

Requires school committee to establish a travel policy that addresses expectations for fundraising by students .

Appendix III: Legislative Proposals Addressing Commercial Activities in Schools, February 2004

This appendix lists proposals addressing commercial activities in schools that have been introduced by some state legislatures between January 2003 and February 2004. The data are taken from the Web sites maintained by state legislatures. Many of these sites are revised only periodically, and information on some is limited to the current legislative session. Therefore this information should be viewed as a rough snapshot, rather than a comprehensive analysis.

Would establish nutrition standards for beverages sold to students in public schools Would require food and drink items in public school vending machines to comply with board of education standards standards for vending machine food and drink items vending machines that are not within the cafeteria to be used exclusively for physical education and nutrition education and candy from being dispensed to students by school vending machines.

Appendix IV: Questionnaire: GAO Study on the Marketing and Selling of Student Data

Appendix V: Comments from the Department of Education

Appendix VI: GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff Acknowledgments

In addition to those names above, the following people made significant contributions to this report: Susan Bernstein, Carolyn Blocker, Richard Burkard, Jim Fields, Behn Kelly, James Rebbe, and Jay Smale.