Control of SFSU Bookstore could be shifted from a nonprofit to a corporation

Having provided the SF State campus community with textbooks, leisure reads and a number of other school-related supplies since its establishment in 1954, Franciscan Shops, which operates as the SFSU Bookstore, might be put under the management of a for-profit corporation in coming months.

If new management of the bookstore does in fact come to fruition, it will mark the first time in 58 years that it is not run by a nonprofit organization. This status change could lead to significant changes for the bookstore’s financial and community influence on staff, faculty and students.

According to SFSU Bookstore Director of Marketing Husam Erciyes, the Bookstore does more than supply students with their required reading.

“We are a major sponsor for welcome days, Sneak Preview Day, commencement and freshmen orientation,” said Erciyes, who received his master’s degree from SF State. “We also work very closely with athletics.”

The bookstore also offers merchant discounts through Gator Rewards gift cards given to students who spend $350 at the bookstore and college departments who have 90 percent of faculty submit textbook request forms by a specified date. This discount helps save the bookstore money by purchasing textbooks from manufacturers earlier, and supplies a $750 gift card per department as well as a $3,750 gift card per college, according to Erciyes.

“Our existence on this campus is solely for the benefits of this campus. Nothing is for-profit, nothing to satisfy shareholders; it’s mainly for the betterment of the campus,” he said.

Erciyes attributes this involvement to the relationship that SFSU Bookstore has been building with the University over the years, along with certain freedoms granted to nonprofits.

“As an auxiliary-owned bookstore, we have more flexibility with what we can do on campus,” he said. “We also have a very open communication with the campus community, and can partner with different entities.”

Ronnie Carrier, recent SF State graduate and current SFSU Bookstore employee, fears that a shift from a nonprofit to a for-profit organization would confine the liberties they currently have in terms of what they can sell.

“The main thing that I worry about with this is that we might lose our bookstore,” said Carrier, who studied English literature.  “You don’t see many independent bookstores anymore, so if we were bought out by Barnes and Noble or another corporation, it would be Wal-Mart, you know? We would lose the books, and I know a lot of students come here just searching for books to read rather than textbooks.”

Franciscan Shops learned about the issuance of Request for Proposals (a form that outside companies use to declare intent to bid on the store)  from UCorp in June 2011, but confirmation of the decision was not given until a Sept. 2011 Academic Senate meeting. Any bidders who submit RFPs are required to make site visits to the bookstore, and so far, Barnes and Noble and Follett Corporation have made stops on campus. Both corporations currently manage a number of CSU and UC bookstores, including San Jose State and UC Berkeley, according to Agnes Wong Nickerson, who serves as both associate vice president of fiscal affairs and chief operating officer and chief financial officer of UCorp.

UCorp’s decision to open the door for RFP submissions is a formality, according to Associate Vice President of Administration and Finance Nancy Hayes.

“No decision has been made. Bookstores have been really challenged these days all over the country due to the inability to make a living,” Hayes said. “We feel we owe it to the students, faculty, the staff to have looked at this. If we decide to make some changes, great. If we decide not to, then we know what the options were.”

This is not the first time that the bookstore’s nonprofit status has been threatened by a corporation. In the late ’80s, Barnes and Noble offered the the administration $1 million to take over management of the bookstore, according to former SFSU Bookstore Operations and Marketing Supervisor Mario Carmona Jr., who worked for the bookstore from 1985 to 1994.

“At that time, these companies were coming in to try and take over stores that were doing badly and offer a corporate solution,” Carmona said. “But as far as SF State goes with Franciscan Shops, SFSU Bookstore has been around since the ’50s and they always ran that store well.”

According to Hayes, in times of rising tuition, the University has had to take another look at past decisions.

However, not all parties involved are in agreement as to the reasons behind the announcement of an RFP.

“The overall objective of the University is to increase centralized funding to be paid to the University Corporation,” said Bookstore General Manager Robert Strong. “This can be accomplished by raising prices, reducing staffing and services, and eliminating benefits currently being provided through Gator Rewards Club, support to student organizations, and incentives to departments and colleges for early book order submissions. The priorities would change with a for-profit corporation owned by private interests or stockholders.”

Although Hayes denied the claim that finances have driven the RFP, an unspecified financial contribution to UCorp is an RFP requirement, although it is not clear how these funds will be allocated throughout the University.

SFSU Bookstore earns between $14 and $18 million annually in sales and spends almost the same amount on staff wages, textbooks and materials. While revenue increased about $1 million between 2007 and 2008, it has decreased steadily since then.

According to Hayes, as a nonprofit entity, Franciscan Shops, is not obligated to contribute any of its profits to the University; it chooses to.

“In our current contract with our current bookstore, the University has no official fiscal arrangement for giving any cash return to the University,” she said. “This is very old; it’s been in place forever. If the board chooses to give a contribution to the University, then they can. Over the years, sometimes they’ve given donations; sometimes they haven’t. It’s their decision.”

In 2007, the SFSU Bookstore made a net profit of $575,000, donating $325,768 of the revenue to SF State. These are unrestricted donations that the University can use in the best way it sees fit, according to SFSU Bookstore Accounting Controller Chris Farmer. Last year, the bookstore contributed $43,018 to SF State, about half of its net operating revenue of $87,380.

Hayes says that the influence of technology on textbooks—most notably eBooks—is an important element in considering new management.

But according to SFSU Bookstore Director of Marketing Husam Erciyes, the SFSU Bookstore has been leading the pack in piloting innovative technologies, including embracing the trend of textbook rentals.

“In Fall 2010 we were part of a nationwide pilot program that included 200 bookstores for rentals,” he said. “Out of those, we were number one nationwide by the number of units rented. In Fall 2011, we had 1,200 in-store rental titles; 8,200 textbooks were rented, saving about $400,000 to students.”

Nickerson maintains that the bookstore contract, if awarded to an outside corporation, should not be seen as new ownership.

“It’s not like they become the bookstore; they are just the management firm,” she said.

The future of the bookstore’s status as a nonprofit organization will be tested shortly after the March 12 proposal deadline.

A selection committee will be comprised of faculty, staff and one student, Kayla Kenton, who was offered by Student Affairs due to her involvement on campus. The panel will read through proposals before meeting with bidders for formal presentations. A campus-wide forum will also be setup for each bidder, along with an online forum where students, staff and faculty can contribute their comments, according to Nickerson.

According to Collection Development Coordinator David Hellman, while a corporation may mean more money for UCorp and more cutting edge technologies for textbooks, big business won’t necessarily equate to a a better funded campus community.

“Just because a lot of our campus bookstores in the CSU have turned corporate doesn’t mean that’s a good thing,” said Hellman, who is a member of the Bookstore board. “The corporatization of higher education is a very scary trend that we are in the midst of, and the fact that we might think that everything is best run by big business really unsettling.”