An Issue of School Funding: A Business Case Study
(adapted from JA Economics)
Fizzell Corporation, with its Southwest headquarters in
Peyton, has been in business since 1951. Its hottest-selling
product is a soft drink, Fizzie, which has pushed it to
the top five beverage companies in the world. In addition to
soft drinks, Fizzell produces candies and snack foods.
Yolanda Gomez has worked for Fizzell since 1982 and has
been its Executive Vice President for the past five years. She
has lived in Peyton most of her life. Fizzell held a senior
management meeting to discuss advertising and selling its
products in the Peyton school district with its 30,000
students.
The school district hasn’t passed a bond issue in 15 years
and depends on funds from the state government for its
increasing revenue needs. During this time, it added
instructional programs for an increasing number of students
who come to school with learning problems. In addition, the
district’s school buildings are aging and need substantial
repairs.
In order to keep up with the times, the
district purchased computers and software for all its schools’
classrooms along with up-to-date technology for the central
office. This expense has been controversial in the community.
The district is strapped for cash and in danger of having to
reduce popular programs and even close a few schools.
The Peyton City School District
enrollment has gradually declined during the past decade. Its
locale has little room for further development; new businesses
tend to locate outside the district. Likewise, many people
have been leaving to find newer, more affordable, suburban
homes. All this has reduced tax revenues to support the
schools.
Fizzell’s senior management team has
prepared a proposal that would give the school district
much-needed funds in exchange for exclusive rights to sell
their beverages and snacks in the school vending machines.
This deal also includes the opportunity to advertise products
on the district school buses and athletic scoreboards.
Yolanda’s colleagues on the senior
management team all favor the proposal. For a modest
investment in the school district, the potential profit on the
advertising and sale of their products could be substantial.
But Yolanda has doubts about the integrity of this deal.
Yolanda has a keen interest in education
and knows how important more funds are to the school district.
However, she is troubled with the ethical consequences of
selling to students who are a captive audience. Likewise, she
heard from a parent group who argued persuasively that schools
compromise their educational mission when they encourage
students to be consumers.
The conflict between Yolanda’s job as an
officer with Fizzell and her responsibility as a citizen of
the community leaves her in a quandary.
1. Define the Problem. What is the
ethical dilemma that Yolanda Gomez confronts?
-
Are commercial sales a justifiable way
for schools to gain revenue?
-
Should schools be involved in the
merchandising of products to students?
- Is the Fizzell Corporation taking
financial advantage of the situation, or is it helping the
school district to solve a difficult financial problem?
- What message does a school district
send to its constituents or voters when it raises revenue
through commercial arrangements?
2. Gather the Necessary Data.
- What is the size of the Peyton School
District, and how would you describe its demographics?
- What are Yolanda’s responsibilities to
the Fizzell Corporation? Her relationship to the school
district?
- What are the major reasons for the
school district’s financial problems?
- What kind of partnership does Fizzell
Corporation want to create with the school district?
3. List Possible Alternative Solutions.
List as many as possible.
4. Analyze the Consequences of Each
Alternative. Does Yolanda’s responsibility to Fizzell override
her concern as a Peyton citizen? Should Fizzell worry about
the negative backlash the school district may receive from the
community?
5. Recommend a Plan of Action. What would
you do if you were Yolanda?