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Thursday, September 06, 2007

The PayPAMS Scam

Is anyone else as bothered as I am by the new lunch payment system, PayPAMS?

The first day of school packet included a slick full-color flyer for PayPAMS with a statement about a "nominal service fee" for using the service.

On the lunch menu, it says:

"Seattle School District is pleased to offer PayPams as a meal payment service for students and families. Parents/guardians now have the convenience of paying using the internet or by phone using either a credit card/debit card anytime day or night. A service fee of 5.6% per payment is charged to the parent/guardian account at the time of the transaction. Pre-pay for school meals 24-7. Learn more about this service by visiting www.PayPams.com."

I don't consider 5.6% a "nominal" fee. In fact, if you buy lunch for a middle school child for every day of the school year, that would mean PAMS would make over $20 from that child ($2.00 per lunch, 180 days per year.) Multiply that by the over 45,000 students in the district and you can see that PAMS is making real money from the parents in the district through this service.

What does the Seattle School District get from this? Why is a for-profit like PayPams allowed to promote this service using the school district kid-mail? The district seems to be promoting this as a service to parents, positioning it as more convenient and easier then sending money into school with a child. But I don't buy that. Maybe it's easier for the district and for individual schools. But I don't think it's any great benefit for families. And I really resent the Seattle School District promoting a for-profit company.

26 comments:

Anonymous said...

I'm actually not bothered by it.

When I look at something like PayPAMS I think about what my time is worth -

> trying to divine what my 3 elementary-age children's remaining balances are (through cryptic notes and messages that come from the cafeteria and may or may not get to me on a timely basis)

> writing a check

> following up when said check doesn't get to its destination (which I only know when previously-mentioned cryptic notes and messages eventually arrive).

Not to mention that any follow-up can only happen when the "lunch lady" is there - not terribly convenient for me who works full-time.

For me, assuming they're in school about 10 months and buy lunch every day, it's $1.76/month/child. I say count me in and thank you!

Note - it also doesn't bother me if whoever is running PayPAMS is generating revenue - they have costs (VISA/MC processing fees, personnel cost including benefits, etc) that they should be able to recover (and profit from, for investments in assets and R&D).

Also to note - approx 40% of the 45,000 students are eligible free or reduced lunch, so the revenue upside isn't as much as you'd imagine.

The district will also presumably experience some savings from not having to handle, account for, and deposit as many paper checks as they do now - which they'll be able to spend on their core mission, I hope.

I don't have a beef with the district promoting it as a service, because it absolutely is for me. If I could pay my pay-for-K like this I'd be even happier.

Jet City mom said...

Im bothered by it but I am bothered by a lot of thing connected with food services in the district
( *the selection/appeal/choices of food
* militant vigilance against students ( for example student store) selling anything that might be competitive with the cafeteria

The way that at least in the past- kids on FRL were in a different line/seperated out from everyone else.
How humiliating.
But mostly I don't think the food is worth buying- and it is a shame that for kids who really need the nutrition- it is mostly dairy & high sugar- low fiber & taste.

But thinking about Charlies comment that his daughter thought the food looked good, don't all schools have the same thing?


I do note however- that when you pay for groceries- you are charged same fee whether you pay cash/write a check/charge card.
Im also thinking of all the opportunities for screwups.
I have to closely monitor my bank account as #s are sometimes inputted incorrectly & I have been charged for things I didn't order.

WenG said...

classof75: FRL kids had a separate line? I never knew that. That's horrible. The lunch is paid for either way; why on earth would food services isolate them like that?

Anonymous said...

Re putting FRL-eligible children in separate lines - can't speak for anyone else's school, but at mine, all kids have a number they punch in to pay and the system doesn't care who funded the account the number draws against (parents or US gov't) - so no - no separate lines. Is this a recent experience you've had?

Also, classof75, grocery stores et al are in the business of selling products and collecting money from customers - and bear the costs of processing checks, credit cards, etc and/or build it into their product costs. SPS is not in the business of selling or collecting money from students - so I wouldn't expect them to bear the differential cost of a third-party service. They could build it into the cost of the lunch (i.e., increase it), though that doesn't seem fair to those who don't use the service.

Alternatively, SPS could charge people a processing fee for taking anything other than cash - which doesn't seem really practical either.

And as mentioned before - SPS is not forcing people to use this, are they?

Anonymous said...

Not all elementary schools have the same food (dunno about middle and high). Some have kitchens and do something resembling cooking: some just heat up heavily prepackaged stuff (think airplane food -- back when airplanes had food -- but much, much worse). Middle schoolers are also allowed to buy more separate items, so middle school cafeterias often look more exciting than elementary school ones.

Anonymous said...

The fee is probably too high, but as ultimate fan said, a time-saving convenience for busy parents is worth something.

It's a bit naive to get all upset about for-profit companies being involved in schools. They're already everywhere. Sally Foster gift wrap, "Boxtops for Education," yearbooks, WaMoola for schools, grocery store rebate programs. The list is different at every school, but virtually every school has several. They're all for-profit programs that make use of the schools, PTAs, and our kids backpack mail as marketing vehicles.

Anonymous said...

I think it's interesting that a for profit can include their services with kid mail. I work for a tutoring service that provides the district mandated (free to students) tutoring to schools that qualify through NCLB. Though the company is a for profit company, they provide a much needed tutoring service, which is free to students. We are not allowed to send anything via kid mail, post fliers in school offices or notify parents in any way. Consequently only about 12% of Seattle students who qualify for the free tutoring actually receive it. This is very interesting to me.

Beth Bakeman said...

Anonymous at 2:32 pm,

The difference with Sally Foster, Boxtops for Education, and the other for-profit companies you mentioned is that the individual school benefits directly financially from the fundraisers with those companies. I would argue that there are too many fundraisers and too much corporate profit from involvement in public schools (whether or not that position is naive), but the PayPAMS situation seems quite different to me.

Unless the School District is getting a percentage cut for this, I want to know how the district is benefitting and why they are pushing this. And if the district is getting a percentage of the fees, I want that to be clearly stated. Individual schools are definitely not benefitting.

Also, while the district is not requiring parents to use this, when the only instructions included in the first-day packet on how to pay for school lunches is the PayPAMS flier, it certainly encourages participation in the online system and discourages parents from using the traditional cash/check methods of payment.

Anonymous said...

I think $20 a year is an entirely reasonable fee for being able to manage the lunch account online. Actually, I'd say it's pretty darn cheap. The service is optional. If you don't think it's worth that, don't use it.

Beth Bakeman said...

That's $20 per kid, of course.

And I don't plan on using the service.

The point is not whether or not you or I use the service, however. The point is that some company is making a good deal of money from parents in the Seattle School District and I would like to know if the district is benefitting at all from this. And if not, why is it promoting the service.

Anonymous said...

I would debate the notion that people will assume PayPAMS is their only option for paying for lunch. When there was no flyer (in the pre-PayPAMS era), did people assume lunch was free? Would they assume that if they have no computer or telephone to sign up, then they are not allowed to buy lunch?

I think we need to give people a little more credit - and again, to factor in the 40% of children whose families don't need to pay any attention to this at all because they're FRL-eligible.

I would also debate (again) whether PayPAMS is getting "a good deal of money" from this - though the question to ask is if the district is paying for this in addition to the fee charged to participating families (though even if it is, you'd still have to look at the total cost-benefit of outsourcing this service.)

Re the district's "promotion" of for-profit entities: First Student and Durham are for-profit transportation providers that the district engages to bus students, presumably because it's more cost-efective, provides better service, and/or lets the district focus its dollars and attention on its core mission (which isn't food service or transportation).

Granted, the district is absorbing the cost of transportation and not transferring any of it to parents (yet) - but what constitutes "promotion"? When the district provides yellow bus transportation, is that promotion of a for-profit service? It might not be advertised through kid-mail, but it's certainly clear to families that it's available.

As a last comment, I think it's great to raise the questions and open the dialogue, but I think it's wrong to label it a "scam" before the dialogue has a chance to happen.

Anonymous said...

Annoyingly, PayPAMS doesn't take VISA, either.

Anonymous said...

anon @ 6:14 - interestingly, if in the sign-up process you choose Bellevue School District (instead of Seattle, where it says MC and Discover only), the terms say MC, Visa and Discover are accepted - so this must be a district constraint?

Also interesting with Bellevue - you have to pay a $10 per year per child set-up fee but there doesn't seem to be the 5.6% transaction fee...

Anonymous said...

looking at the form itself (which is probably generic for all schools?) its says they regret they can no longer take Visa deibt or credit cards for student accounts because of "Visa's regulations".

whatever that means.

Anonymous said...

This superintendent has a reputation for doing a lot of outsourcing. Broad Foundation graduates seem to lean in that direction. Follow the money.

Anonymous said...

@6:40 - can we dispense with the cloak and dagger intrigue and just say whatever it is - what, is the superintendent (a Broad graduate) a PayPAMS shareholder? Are you implying that whoever it is is getting a kickback or something?

I recall seeing this PayPAMS thing at the end of last year, so if so, it can't have been the new sup's doing.

actually, this sounds like someone from charleston with a beef - if so, thanks, your work here is done and can we move on?

It would be great if this blog kept to the substantive issues and left the sophomoric, conspiracy-theory, shoot-from-the-hip allegations (beth on this one) to the trolls in the PI sound-offs and elsewhere - or at least encouraged a discussion of the (known and proven) facts.

Beth Bakeman said...

Oh please,

I think you misunderstood me. I am not making allegations about conspiracy theory or wrong doings by the district. When I ask if the district is benefitting from the PayPAMS program, that is because I would prefer to hear that the district benefits financially.

I believe that it is wrong for private companies to make money from public school parents without some tangible benefit returning to the district or the schools.

I also did a little research and found that some districts have chosen to pay the PayPAMS fee as part of their food service operating costs (for example, Flagler County schools) because they want to make the option available to all parents, regardless of income and whether or not they have a non-Visa credit card.

If the Seattle School District paid the service fee (after an analysis that proves a tangible benefit to the district for doing so --- not just that it's more convenient and easier), then I would have less of a problem with it.

And no, this is not a weighty and important issue. It's just something that bugs me. And that's why I posted about it --- to share my views and see what others' views are.

Anonymous said...

"I believe that it is wrong for private companies to make money from public school parents without some tangible benefit returning to the district or the schools."

Made me wonder. Can someone explain how school pictures work, financially?

Clearly, the company makes money when parents buy photos. What benefit does the district derive from the relationship?

Anonymous said...

Oh please,
Don't get overly defensive. Beth said it correctly. Follow the money to see who gets what. Then determine for yourself if it's a fair arrangement or not. Ideally there should be an equal benefit for all parties that can be measured in monetary terms. Outsourcing can be a good alternative, but too often the how and why aren't fully explained. This leaves a lot of room for speculation. Some Broad graduates do tend to rely on outsourcing. Some don't.

Anonymous said...

I think anytime a service is voluntary, it is OK.

Nobody HAS to use Paypams.

There are alternatives. You can write a check or pay with cash, and your school will happily accept it.

This is a service of convenience that costs a few bucks. You have a choice in whether or not you use it. Some people clearly think it's well worth their money. My school happens to be very efficient in regards to lunch money tabs/payments, so I will continue to send in a check with my child when his account is low.

It's all about choice. Let it be.

Dan Dempsey said...

It was said:
"I believe that it is wrong for private companies to make money from public school parents without some tangible benefit returning to the district or the schools."

"Follow the money"

Why did Ms. Santorno have so much time to spend with McGraw Hill representatives while ignoring the many individuals and all the relevant data submitted in the recent fraudulent Everyday Math adoption?

Should it be any different whether it is food service or textbooks?
Should not $2.5 million for books produce a tangible benefit?

SPS is now not only in direct opposition to Project Follow Through but also now using books that deviate substantially from the best practices recommended by the SBE $150,000 consultant Linda Plattner.

Is there anyway to hold SPS leadership accountable?

Dan

Anonymous said...

beth - yes, I did mistakenly assume you thought it would be even more of a scam if SPS were getting a benefit or profit from it. sorry.

But I don't understand a couple things: what good would it do lower income or VISA-paying families for the district to pay the fee?

1. Lower income families are likely not paying for lunch at all (esp now that there is no "reduced" lunch, only "free"), so the issue is moot (and in fact better because the district isn't paying for something the lower income families would receive no benefit from).

2. If you have only a VISA card, does it matter who's paying the fee if you can't use PayPAMS?

I don't understand this either: what if the district is basically neutral (no monetary benefit or cost) but parents who want the service benefit?

It sounds like that is a bad thing for you ("it is wrong for private companies to make money from public school parents without some tangible benefit returning to the district or schools")

Note many sources (CACIEE, LEV, etc) have found there are many parents who have both the means and the willingness to pay more for public school-related items (transportation, higher property tax levies, etc) - in part to preserve things the district has or might otherwise cut, in part to help the district balance its budget, etc.

If some families are getting a service they want, and are willing to pay the freight themselves (rather than have the district pay the fee), and it isn't costing the district anything because both being service-oriented AND passing the cost along to the users, AND children and families in poverty are not adversely affected at all, I don't see how this isn't win (users) win (district) win (low income families).

And win (PayPAMS) too - though no one ever wants to see corporations win...that's gross.

Anonymous said...

I recall last year when PayPAM began. I read the handout from SPS and thought it sounded like a great idea. Then the PayPAM flyer came home and I saw the fee. I felt apalled by it and immediately dismissed participation in PayPams as an option for my family based on principle alone. I guess I was most miffed by SPS touting the service with no mention of the fee at the time.
I see some advantages like being able to keep track of your balance and of the days your kids actually get lunch (as opposed to those days that they say they buy lunch, but don't).
I believe that if a public institutionis going to offer a service for a population of folks of diverse economic situations, then they need to fund that service or at least highlight IN BIG BOLD LETTERS the cost of the service up front.
I feel like it's a scam, too.

M. Smith said...

It would seem, that after some years to observe and reflect, that Beth sniffed this out pretty well. If not a 'scam', per se, it sure has become an accounting nightmare (especially with pay for K). Kudos, Beth.

Anonymous said...

I work for a different school district and we are working through payment options for parents right now. Bottom line, accepting credit and debit cards brings the joys of Payment Card Industry Data Security Standards (PCI-DSS). In a nutshell, I feel schools should focus on education not payment card processing. Leave the Payment card stuff to companies like RevTrak and PayPams, that is their wheelhouse so to speak. Is there a service charge, of course. You get the same charge anywhere you pay with plastic but the merchant either absorbs that cost or passes it on to you. Not sure the district can legally absorb the cost so they could hide it by increasing cost of goods, or they can be transparent and state the cost to users. I assume you can still pay with cash or check for lunch? If so then this is a convenience and as such you can choose to have convenience at a cost, or not.

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