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Transcript: Buying Access
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MOYERS: These days, it's pretty tough to find a place where someone isn't asking you to buy something that's bigger, better, bolder; a place that's hasn't been invaded by market values.

And now, you can scratch one more refuge off the list: our public schools, K-12. There is a booming market for private enterprise inside public schools. Everything from companies that actually run schools for profit to hard-sell advertising on classroom TVs and computers.

In South Carolina, some parents are up in arms over what this teaches the Pepsi Generation. And NPR's Emily Harris and NOW'S Greg Henry went there to find out why.

EMILY HARRIS: It's class changing time at West Ashley Public High School in Charleston County, South Carolina.

For a lot of students here, that means it's Pepsi time.

STUDENT: I just bought a Pepsi. Because I'm thirsty.

STUDENT: I just bought a Mountain Dew. I like it - it's chock full of caffeine and sugar.

STUDENT: It tastes good. I like Pepsi products.

STUDENT: Pepsi Rules the School You won't find a Coke for sale anywhere at West Ashley High School. You can't - it would be a breach of contract.

EMILY HARRIS: That's right. The entire Charleston school district, signed an exclusive deal with Pepsi, through a local bottler this past August. It stipulates that every drink vending machine in every school sells only products made by Pepsi, or distributed by Pepsi Bottling Group.

Pepsi diet Pepsi Mt. Dew. . . There is water for sale, but --- Pepsi owns that too.

Why would a public school sign a contract like this? Because it brings in a lot of money. Charleston county schools could get up to eight million dollars over five years. The actual amount depends significantly on how many drinks students buy. In return, Pepsi gets a leg up in the ongoing cola wars.

STUDENT: It really does help Pepsi, I guess because you know, I don't regularly drink Pepsi. And if I need sugar, I'm gonna go buy a Pepsi.

STUDENT: Pepsi gave the school a lot for them to advertise here. And I think because they did that, they should have the right to market to us.

EMILY HARRIS: All across America, school budgets keep getting tighter. So school districts have been looking elsewhere to make up the difference.

Increasingly, they have been cutting sweet deals with corporations. And not just for soda pop.

In Colorado, advertisements now line hallways and lunch rooms. Some school busses carry ads too.

Corporations give away millions of free textbook covers to market everything from snacks to skin care products to teen magazines.

And over 12-thousand public schools across the country use a free news program as part of the curriculum. Students are required to watch two minutes of commercials.

Here in Charleston County, the school board cut millions from its budget last year after a state funding shortfall. Board members voted nine to nothing to sign on the dotted line with Pepsi. To them it was easy money.

BRIAN MOODY: CHARLESTON COUNTRY SCHOOL DISTRICT: We already had the drink machines in there. We already had the snack machines in there. So we take half of them and-- and change them to the company of the other half. And make eight million bucks over five years. So I mean it-- it really at the time seemed like a fairly-- innocuous and easy vote.

EMILY HARRIS: It didn't seem innocuous to Archie McRee, head of a local food bank.

ARCHIE MCREE, EXECUTIVE DIRECTOR, LOWCOUNTRY FOOD BANK: The response of the school committee has been almost one of saying well, God put drink machines in school at the beginning of creation and therefore since we have drink machines in school we ought to cut the best deal with the best company we can. No one it seems to me asked the question of whether they should be there at all.

EMILY HARRIS: McRee has joined a small but active group of concerned parents known as Parents for Public Schools. The organization has formed a task force to fight the soft drink contract.

Members say drink deals like these are one of the most ominous forms of school commercialization. Because, they say, the contract is designed so Charleston schools end up pushing soft drinks on their kids.

KATE YOUNG, PARENTS FOR PUBLIC SCHOOLS: There is a very sophisticated and aggressive marketing plan targeted to children and I just don't see any place for it in the schools.

EMILY HARRIS: Kate Young is a registered nurse with two children in the school district.

KATE YOUNG: I stood in opposition to any kind of contract that would have incentives that would in any way increase consumption, that was based on consumption targets. And that's precisely what this contract is.

EMILY HARRIS: It is true that the more kids drink, the more the schools make. But there are a lot of goodies that the district gets up front.

In their sales presentation to the Charleston School district, Pepsi Bottling Group showed how it works.

The district gets an annual fifty thousand dollars cash, after year one of the five year contract.

There's also scholarship money, free drinks for some events, and as if the district were a pro-sports superstar, it gets a signing bonus - one million dollars cash just for closing the deal.

But for all the up front money, the real pop to the contract is the commissions. More than half that potential 8 million dollars depends on the success of soda sales.

Schools get 40 cents every time someone spends a dollar on a drink from a vending machine. That jumps to 43 cents if the school installs one machine for every 125 students.

West Ashley High School has far surpassed that. It has one machine for every fifty students - 44 machines in all.

But, says the school board's Brian Moody, no one is forcing kids to drink.

BRIAN MOODY: I wouldn't say that it was a-- a direct incentive. I think it's a-- you know, there if-- if kids buy drinks, the school gets a result. Teachers aren't getting promoted to higher teaching positions and administrators aren't being graded higher based on their commission of Pepsi sales. I think it's a question of the things were already available. And the school will benefit from them. If, if the stuff is in fact is purchased.

EMILY HARRIS: To Parents for Public Schools, though, the set up sounds like a direct incentive. In fact, Pepsi Bottling Group's pitch to the district promised to help boost revenues with "powerful marketing programs." Including contests that will "generate excitement" and "drive increased purchase frequency"

KATE YOUNG: It's teaching excess. Drink it now. Drink it anytime. Drink it in the morning. Drink it in your classes.

EMILY HARRIS: This push to consume has brought some local physicians to the parents' cause. Dr. Steven Willi is the head of Pediatric Endocrinology at the Medical University of South Carolina.

DR. STEVEN WILLI, PEDIATRICIAN: There's a link that's clearly tied between soda consumption and excessive weight gain. There's a link between excessive weight gain and Type 2 diabetes.

EMILY HARRIS: Over the past ten years, Willi has seen a tripling in the number of his patients that are suffering from diseases often tied to obesity. He says sugared drinks are an easy way to take in extra calories - and without enough exercise, those calories can turn into extra weight.

DR. WILLI: If you consumed an excess of 120 calories per-- per day, everyday, for one year, that would be an extra 12 pounds of weight gain. So you don't have to consume a great deal of excess calories for there to be a problem.

EMILY HARRIS: That 120 calories is just over one serving of sugared soda. A "serving" though, is only 8 ounces, not the 20 ounces found in the bottles that drop daily from most of the machines at West Ashley High School. Those larger bottles have as many as 275 calories apiece.

In Charleston schools, there are some beverages for sale beside sugared soda. Including diet drinks, and Pepsi's Aquafina brand of water. For Pepsi Bottling Group's Bob Marshall, this variety means kids can buy Pepsi products and still avoid excess calories.

BOB MARSHALL, PEPSI BOTTLING GROUP: We sell drinks that contain sugar. We also sell drinks that have no sugar. And we also sell Aquafina which, if you're familiar with our advertising, promises nothing. And we are expanding the variety and we are expanding the opportunity for healthy drinks. We are involved with the cafeteria program where we supply no carbonated soft drinks and all of the drinks that we sell are within the federal guidelines for meal programs.

EMILY HARRIS: That's true. US law requires that anything sold by the school food service exceed federal standards of minimal nutritional value. Pepsi's Fruitworks drink, with about 5% real juice and plenty of Vitamin C, does exceed that standard. But it is loaded with sugar.

Federal law also says that carbonated beverages cannot be sold during meals. So in Charleston County, drink machines located in school cafeterias are turned off at lunch. But students who want to can just stop by a machine on the way to eat.

Students stopping by soda machines is just what West Ashley High Principal Bob Olson had in mind when the school was designed.

BOB OLSON, PRINCIPAL, WEST ASHLEY HIGH SCHOOL: We went ahead and met with the architects and also met with our vendors to determine where good locations would be in the school. And if you look on just the first floor, we've got vending machines in all four corners. We don't want to have one machine with 30 kids lined up. We'd rather have four machines with seven kids lined up.

EMILY HARRIS:Spreading out the machines helps control hall traffic, Olson says. And plenty of students like having soft drinks easily available at school.

STUDENT: It gives you like a-- an energy to go on for the rest of the day

STUDENT: If students going to class say they couldn't afford the lunch in the cafeteria, at least they can afford a drink, you know, out of the soda machine, you know, and drink it in class. You know, keep them satisfied until they can get something.

EMILY HARRIS: Nationwide, about 200 public school districts have signed exclusive soft drink contracts. Some have had problems that reflect Charleston parents' concerns.

Four years ago in Colorado, a district administrator wrote a letter urging principals to push Coca-Cola sales. His district had signed a contract that promised yearly bonus payments, but only if schools met sales targets set by Coke.

He signed the letter, the Coke Dude.

That same year a Georgia high school held something called "Coke In Education Day." Two students wore Pepsi T-shirts. One was suspended - the other disciplined for "inappropriate language or gestures."

STUDENT: Wearing the Pepsi T-shirt on Coke day, that would be the gesture.

EMILY HARRIS: Now many exclusive contracts, including Charleston's, spell out it's OK to wear clothing that carries competing soda labels. But the district label is still Pepsi.

BRIAN MOODY: Clearly I mean it's to sell more of their products. And probably to brand it at a younger age. I don't think what they're doing is rocket science.

EMILY HARRIS: The purveyors of Pepsi claim they don't sell in schools to increase overall sales. At least not in Charleston.

BOB MARSHALL: The school business does not-- from a volume perspective-- does not move the needle on our market share. When they go to school I think their buying habits or their preferences have really been pretty much established. But we've got marketing programs that we-- that we run that we hope will help us build brand loyalty.

EMILY HARRIS: Marshall says Pepsi is sold in the schools to help the community as much as to make a buck.

BOB MARSHALL: It offers us an opportunity, very honestly, to show our consumers in the area, and our employees children - and we have over 100 employees of Pepsi in this area. Their children attend these schools. And they see that we're involved, we're supporting the community, and I think that's ultimately good for everybody involved.

EMILY HARRIS: Parents for public schools does not agree! But they hold elected school board members responsible - not Pepsi.

ARCHIE MCREE, EXECUTIVE DIRECTOR, LOWCOUNTRY FOOD BANK: You can't blame Pepsi for trying to cut a deal with the Charleston --- department of Education, with the Charleston School Board. I don't blame Pepsi. Pepsi only did here what they were allowed to do.

EMILY HARRIS: The school board allowed the Pepsi contract because of the money. At West Ashley High, for example, revenue from vending machines amounts to about 3000 dollars a month. That's money that allows Principal Bob Olson to buy things for his school he otherwise couldn't afford. And best of all, from his perspective, there are no strings attached.

BOB OLSON: Obviously I'm not going to go out and spend it on things that are not good for the kids. But it gives you a little bit more freedom as to what you can spend it on. And also it's quick money that you don't have to go through a lot of channels to get approved and funded.

EMILY HARRIS: Although the district wide contract is just two months old, West Ashley already had its own deal with Pepsi in place. The results are everywhere.

So what are some of the things that Pepsi money has bought for the school?

BOB OLSON: Bought the landscaping, ah, sign board. It comes on and off by itself. It's great. When parents drive up in the morning we could put "Report cards go out today." The flags that your looking at right there.

EMILY HARRIS: The West Ashley one?

BOB OLSON: West Ashley flags, in fact I just bought another one last week I also bought the stand with it and the post. The palm trees around the light here, that was bought with vending money. And a lot of the funding we use to stock the fish in the lakes

EMILY HARRIS: And there's plenty more here that Pepsi money bought. In the chorus room - sound panels. In the gym, scoreboards. Outside, the concrete benches kids hang out on at lunch and after school.

Last year, Pepsi money even paid for paper. This year, it might be spent on college level textbooks.

All that contributes to some Charleston parents being quite comfortable with the Pepsi deal.

PENNY PERALTA, PARENT: I'm fine with the contract. I'm one of those parents that struggle with soft drinks and what we feed the kids at lunch, but if the drinks are going to be in school the school may as well benefit from them.

LYNN CLARK, PARENT: I personally don't care one way or the other because I have teenagers. They drink soft drinks at home, they're gonna drink soft drinks at school. I give them money for lunch, if the eat it they eat it, if not, not. Maybe for elementary school children it's different. For high school, I have no problem at all.

EMILY HARRIS: Still, Parents for Public Schools is calling on the school district to rescind its contract with the Pepsi Bottling Group. For now at least, it's a debate that isn't going away.

ARCHIE MCREE: We've tolerated drink machines in the school system for decades now. But when we start signing specific contracts that are built on consumption. Then I think it's time to draw the line in the sand and say enough's enough.

BOB OLSON: I'd hate to see this contract or any of the other agreements we have with the community taken away from the school, without a plan to replace that, the funds that are lost.

KATE YOUNG: So the alternative is to destroy children's health to educate them? I mean, is that the alternative? Is that what we've come to?

BRIAN MOODY: You know, I gotta keep the district funded. And I've gotta do it at a price that the tax payers-- think is reasonable.

EMILY HARRIS: Say what you will about Charleston's Pepsi contract, it is doing its small part to keep the district funded.

Remember that million dollar signing bonus? It's already gone to make up for last year's budget shortage.

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