Soda and Water

Call them the Pepsi Generation. Just under five years ago, Denver Public Schools gave PepsiCo the exclusive right to install up to ten vending machines in each of the district's 134 schools in exchange for more than $1 million a year. Since then, DPS's middle and high school students have been doing their part to be true to their schools by pounding Pepsi products.

That contract is now set to expire, and administration officials are already discussing re-upping for another term starting in August. School officials say they hope the new contract will result in an even bigger payday for district coffers.

As was the case before, however, the idea of raising spending money from students' thirst isn't appealing to everyone. "My concern is about the commercialization of our kids based on bad nutrition," says Lucia Guzman, who represents northwest Denver on the Board of Education. "Even the so-called juices they sell aren't real juice. I know the schools make extra money and spend it on good things. But is that the way the schools should earn money?" Indeed, a review of the district's own figures suggests that many students who can least afford it are the ones supporting the deal.

The current arrangement has paid DPS about $6.5 million since 1998. Part of that money, $1.5 million, was paid up front -- a sort of soda-signing bonus. Over the past five years, it has been divvied up so that everyone got something. In each of the past five years, every high school has received $5,000 in cola cash. Middle schools got $1,000 apiece, and elementary schools got $500.

The big payoff, however, has come from on-site sales -- a guaranteed $4 million over the life of the contract. Before the Pepsi deal, many individual schools had soda machines, but the agreements were struck separately, so there was a wide variation in income. "Some schools were getting 10 cents a can, others were getting 50 cents," says Christine Smith, DPS's director of enterprise activities.

As part of the current deal, each school has the same arrangement: It keeps 57 cents out of every dollar spent on soda, water or juice sold on the premises. Thanks to a thirsty student body, each of Denver's main nine high schools has ended the year with an average of $50,000 in extra spending money. Middle schools have averaged about $30,000 each over the past five years.

That money has been spent on a wide variety of projects over the years, according to a recently completed in-house survey. Schools bought classroom materials, supported debate teams and academic camps, organized student- and teacher-recognition assemblies, paid registration fees, subsidized bus passes and purchased letter jackets for underprivileged students.

Smith says that when the original contract was hammered out, DPS tried to make it as palatable as possible. For example, the district tried to limit pushing cola to its youngest students. According to the deal, while high schools could install up to ten machines, middle schools were allowed fewer, and they were not to be available to students until after 3 p.m. Elementary schools were permitted only a single machine per building, and it had to be located in the teachers' lounge.

School officials also wanted to make sure that students who wanted a drink had a choice besides sugar-and-caffeine-packed soft drinks. And over the course of the contract, students' tastes have changed. Today, Smith says, bottled water is the fastest-growing product out of the vending machines. John F. Kennedy High School, for instance, has six machines that sell only water.

Still, district spokesman Mark Stevens acknowledges that selling Pepsi products to a young and captive audience is sure to be vigorously debated all over again, both by the public and the current Board of Education, the majority of whose members were not around in 1998.

The concerns raised then are the same as today's: subjecting students to commercialization during the one time of their day when they might be free from advertising pressure, and giving kids easy access to sugar water and caffeine in an age of swelling obesity rates and declining physical fitness. Critics say that while a wall sign encourages students to seek out a certain product, a vending machine makes actual purchases as simple as reaching into your pocket.

If anything, the debate this time around is likely to be even sharper. With the economy slumping, school districts are increasingly being forced to look beyond traditional income sources of state and local taxes. Ten years ago, after nearly two decades of failed bond measures and scuttled tax hikes, Colorado Springs District No. 11 entered uncharted educational territory by becoming the first public school district in the country to sell advertising space on hallway walls and the sides of buses.

Other districts scoffed -- until they saw the checks rolling in. Between 1995 and 2000, DPS collected more than $12 million in enterprise income from a range of sources, including the sale of advertising space on the district's Web site and money donated by various Colorado Rockies players for new athletic fields. The largest contract, however, remains the 1998 Pepsi deal.

Despite the boon, the economics of school-sponsored soda sales are worrisome. Hawking $1 soda pops to inner-city kids is a lot like the state lottery. Studies have shown that those who gamble on lotteries are often the people who can least afford it, making it one of the more regressive taxes devised, despite the fact that Colorado's proceeds are spent primarily on education and open-space programs. Denver's high schools may get to spend $50,000 they wouldn't have without the Pepsi pact. But the money still comes from a student body in which nearly one out of two kids receives a free or reduced-price lunch.

Figures generated by the district show that most schools sell approximately the same amount of Pepsi stuff: about one drink per student per week, give or take a cola or two. If there's any variation, Smith says, it's that those students most able to afford the drinks -- i.e., the most affluent student bodies -- buy them.

That's true -- sort of. The district's numbers show that Kennedy is DPS's thirstiest high school: On average, each of its 1,660 students quaff 1.8 drinks per week, totaling just under $3,000 spent weekly on Pepsi products. While the one-third of the Kennedy students receiving a free or reduced lunch is under the district average of 45 percent, it's not exactly DPS's most affluent high school, either. Using the 57-cents-from-each-dollar profit rule, Kennedy students contribute just over $1,700 per week to their school.

The district's least-poverty-stricken student population goes to East High School, where fewer than a quarter receive free or reducedprice lunches. Yet an East student is the least likely among Denver's high schoolers to purchase Pepsi from a school vending machine, buying on average .8 bottles per week. That works out to about $1,443 of pocket change spent each week -- $822 of which East keeps.

Statistically speaking, DPS's poorest student body is at Manual High School, in Park Hill. Yet Manual students are the second-biggest consumer of school-based Pepsi drinks, snapping up a weekly average of 1.4 drinks per student. That comes out to weekly spending of about $1,560 -- a lot of quarters for a student body in which nearly eight out of ten kids require a reduced or free lunch. Manual keeps $890 of its kids' money.

Also unusually parched are students at Washington Park's South High School, who keep pace with Manual's 1.4 average weekly buy. Because of the greater number of students, however, South earns more money from its students: Out of the approximately $2,100 South High kids spend on Pepsi each week, the school gets to keep about $1,200. Although the school's population needs fewer free and reduced lunches than the district average, four out of ten kids still qualify.

Of course, the numbers are not perfectly precise. It could be that most of the Pepsi is being drained by DPS students who aren't on a free-lunch program. Teachers desperate for a mid-afternoon caffeine buzz could be hogging more than their fair share of cola, too.

It's also true that many of the kids buying soda inside a Denver public school might still spend their quarters on Pepsi outside of school. (DPS officials point out that the machines keeps kids on campus instead of having them wander off for a cold one.) But as any marketing firm can tell you, putting the product in the consumer's face does make a difference -- or else what's the point of advertising?

And some schools may be pushing their Pepsi a little too aggressively. This past November, Guzman and a concerned constituent took a tour of a couple of local schools to view their vending machines. Bryant-Webster Elementary had its vending machine not in the teacher's lounge, where it was supposed to be, but in the hallway, available for its young students. Later in the day, Guzman also was able to buy a soda at Horace-Mann Middle School just after lunch -- two hours before the machine was supposed to be dispensing Pepsi.

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Eric Dexheimer
Contact: Eric Dexheimer