A national organization that equips schools with computerized fitness gear and data-collection software to promote better student health is drawing fire for how it does business.

The fitness-equipment contracts that schools have signed with the National School Fitness Foundation are financially risky, needlessly expensive, and run afoul of bidding laws, the Minnesota attorney general’s office and state auditor say.

At issue are contracts 13 Minnesota school districts have signed with the Utah nonprofit to purchase or lease-to-buy equipment–including weight machines and computers that measure body fat and heart rates–through a for-profit company, School Fitness Systems, also based in American Fork, Utah.

The 13 districts have signed contracts totaling nearly $5 million, State Auditor Patricia Anderson said March 1 in a letter to State Attorney General Mike Hatch. The contracts also include data collection, curricula, and training to promote fitness and fight obesity.

The idea behind the program is that the foundation uses private contributions and federal and state grants–which are not guaranteed–to reimburse the schools for their monthly payments, so the schools end up paying practically nothing.

The foundation “is not providing a ‘grant’ to the school district; instead, it appears to be promising that the school district might receive a return of its money,” Anderson said in her letter to Hatch.

However, the foundation says it has never missed a payment in four years.

Minneapolis, which signed $1.4 million in contracts for fitness equipment in six schools before the contracts were approved by the school board, could have bought the equipment for less through competitive bidding, the auditor said.

In Delano, Minn., the district made a questionable application for a federal grant it apparently did not need and used improper procedures to pay for equipment, Anderson said in the letter.

In February, Hatch warned that there could be “a serious financial risk to school districts…. Districts need to adhere to the old adage that ‘if it sounds too good to be true, it probably is.'”

Several districts said they had relied on their own attorneys’ opinions that bidding laws don’t apply to the contracts, partly because the foundation contracts include educational programs as well as equipment.

“We’ve had a great deal so far,” said Susan Brott, spokeswoman for White Bear Lake Area Schools. “It’s a great benefit for our kids.”

The National School Fitness Foundation said its program is aimed at getting $180,000 to $300,000 worth of equipment and training per school, without cost to participants, and it has contracted with more than 550 schools nationwide.

The foundation is in line to get a multimillion-dollar federal fitness grant, a spokesman said.

The Robbinsdale, Minn., school district opted against the plan last year.

“The cost of it was pretty high compared to the value of the actual equipment in the gym,” said Tom Walerius, executive director of administrative services.

In Brainerd, Minn., the district rejected an equipment-only bid of $53,376 and opted for a $218,901 contract with the foundation. That suggests an “inflated cost,” Anderson said.

But Stephen Dickinson, Brainerd’s director of business services, said the district felt the program was worth it, especially because it promised to come at no cost because of the grant reimbursements.

The foundation’s references checked out and it has been making its grant payments to the district, Dickinson said: “From a curriculum side, it’s absolutely an amazing program.”

At Fergus Falls, Minn., Mark Masten, the district’s business manager, said: “We went into this knowing we needed to have an updated health center, and if [the foundation] was going to help pay for it, so be it. We’re getting a discount if they don’t come through [with payments] or free equipment if they do.”

The foundation has not missed a lease reimbursement payment in four years, said Cris Rees, a spokesman for the foundation. Nevertheless, he acknowledged, “there is some risk involved for schools” that the foundation won’t be able to raise the money.

“This is something that we tell schools before they sign up,” he said.

Rees said there is no connection between the nonprofit foundation and the for-profit equipment company, although they have shared the same address in the past.

Hatch urged school districts to “exercise extreme caution,” because the foundation already needs more than $100 million to pay off existing contracts and because the program has grown rapidly.

See these related links:

National School Fitness Foundation

Office of the Minnesota Attorney General