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A Times Editorial

Maximized profits at students' expense

For years, St. Petersburg College has allowed its students to be overcharged for textbooks and profited from it. When the bookseller was tacking on shipping fees on top of a generous profit margin for each textbook sold, the school refused to challenge the practice. In more recent contracts, SPC has explicitly allowed the seller to add freight charges and increase profit margins on some books well beyond what students at several other Florida colleges pay — further lining the college's coffers. SPC should be striking the best deal it can for its students, not maximizing profits for the bookseller and itself.

The St. Petersburg Times' Meg Laughlin reported last Sunday that between 1995 and 2004, students at SPC were overcharged $800,000 for textbooks by Follett Higher Education Group, the largest textbook seller in North America. Some $80,000 of those overcharges went straight to the college in commissions. For students obtaining a two-year degree between 2001 and 2004, the cost was an extra $60. SPC first betrayed students by negotiating a more expensive contract than other Florida colleges that use Follett. The betrayal was compounded when administrators ignored a credible whistle-blower, who brought the overcharges to their attention.

Follett exploited an ambiguity in its contract that capped textbook profits at a "25 percent gross profit margin." The company then tacked on freight charges to each book sale, claiming the contract allowed it.

In fact, the contract read, "All books are sold at a price no higher than the publisher's list price, or a 25 percent gross profit margin." And: "The company agrees that the selling price of all new textbooks and used books will include all transportation and handling costs."

Whistle-blower Bob Stubblefield, a former award-winning manager of SPC's Clearwater bookstore for Follett, contends the language means the profit margin should include any freight charges, otherwise SPC students are being gouged. That appears to be a reasonable conclusion.

But SPC never appeared to give Stubblefield's complaint much weight. SPC ultimately signed another lucrative contract with Follett — even as other colleges and universities around the state such as the University of Florida, Florida State University, the University of Miami and Tallahassee Community College were keeping profit margins at 25 percent including freight charges.

Maybe that college commission money proved too attractive. It was used to underwrite a variety of programs, including to help send SPC president Carl Kuttler, international studies director Violetta Sweet and board of trustees chairman Deveron Gibbons to Russia, Italy and Puerto Rico.

SPC's new contract with Follett, which was extended in July to 2011, added explicit terms allowing Follett to collect freight charges of an additional 2.5 percent. It also granted Follett a profit margin of 30 percent on certain categories of textbooks, such as e-books and books that include audio CDs or other extras. The company says this constitutes nearly a third of new products. (On other books Follett would continue to collect the 25 percent profit margin, plus the shipping charges.)

With the prices of textbooks so high that some cost hundreds of dollars, SPC should seek every opportunity to cut expenses for its students, many of whom are struggling to pay for college. Instead, SPC joined with its bookseller to exploit students and pad its own commissions. The college is searching for its next president, and correcting this unfairness ought to be at the top of the agenda for its new leader.

Maximized profits at students' expense 12/05/09 Maximized profits at students' expense 12/05/09 [Last modified: Saturday, December 5, 2009 8:42pm]

    

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A Times Editorial

Maximized profits at students' expense

For years, St. Petersburg College has allowed its students to be overcharged for textbooks and profited from it. When the bookseller was tacking on shipping fees on top of a generous profit margin for each textbook sold, the school refused to challenge the practice. In more recent contracts, SPC has explicitly allowed the seller to add freight charges and increase profit margins on some books well beyond what students at several other Florida colleges pay — further lining the college's coffers. SPC should be striking the best deal it can for its students, not maximizing profits for the bookseller and itself.

The St. Petersburg Times' Meg Laughlin reported last Sunday that between 1995 and 2004, students at SPC were overcharged $800,000 for textbooks by Follett Higher Education Group, the largest textbook seller in North America. Some $80,000 of those overcharges went straight to the college in commissions. For students obtaining a two-year degree between 2001 and 2004, the cost was an extra $60. SPC first betrayed students by negotiating a more expensive contract than other Florida colleges that use Follett. The betrayal was compounded when administrators ignored a credible whistle-blower, who brought the overcharges to their attention.

Follett exploited an ambiguity in its contract that capped textbook profits at a "25 percent gross profit margin." The company then tacked on freight charges to each book sale, claiming the contract allowed it.

In fact, the contract read, "All books are sold at a price no higher than the publisher's list price, or a 25 percent gross profit margin." And: "The company agrees that the selling price of all new textbooks and used books will include all transportation and handling costs."

Whistle-blower Bob Stubblefield, a former award-winning manager of SPC's Clearwater bookstore for Follett, contends the language means the profit margin should include any freight charges, otherwise SPC students are being gouged. That appears to be a reasonable conclusion.

But SPC never appeared to give Stubblefield's complaint much weight. SPC ultimately signed another lucrative contract with Follett — even as other colleges and universities around the state such as the University of Florida, Florida State University, the University of Miami and Tallahassee Community College were keeping profit margins at 25 percent including freight charges.

Maybe that college commission money proved too attractive. It was used to underwrite a variety of programs, including to help send SPC president Carl Kuttler, international studies director Violetta Sweet and board of trustees chairman Deveron Gibbons to Russia, Italy and Puerto Rico.

SPC's new contract with Follett, which was extended in July to 2011, added explicit terms allowing Follett to collect freight charges of an additional 2.5 percent. It also granted Follett a profit margin of 30 percent on certain categories of textbooks, such as e-books and books that include audio CDs or other extras. The company says this constitutes nearly a third of new products. (On other books Follett would continue to collect the 25 percent profit margin, plus the shipping charges.)

With the prices of textbooks so high that some cost hundreds of dollars, SPC should seek every opportunity to cut expenses for its students, many of whom are struggling to pay for college. Instead, SPC joined with its bookseller to exploit students and pad its own commissions. The college is searching for its next president, and correcting this unfairness ought to be at the top of the agenda for its new leader.

Maximized profits at students' expense 12/05/09 Maximized profits at students' expense 12/05/09 [Last modified: Saturday, December 5, 2009 8:42pm]

    

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