School districts in 20 states are appealing to booster clubs, rearranging their budgets and planning to postpone repairs to pay for exercise equipment they expected a Utah County-based charity to supply at no cost.
Many of the districts owe more than $100,000 in loans and leases for the bikes, weightlifting machines and treadmills. Some larger districts that bought 10 or more sets of equipment for multiple schools are stuck with bills for more than $1 million. At least one owes twice that much.
The National School Fitness Foundation said it would reimburse districts a portion of the cost each month by raising money from private donors and government grants that support fighting obesity.
But last month the charity told the 600 schools with the equipment it was indefinitely postponing the repayments because it hasn't raised enough money.
Officials in several states are scrutinizing the program that one attorney general called a pyramid scheme, saying the company used money from newly enlisted schools — not grants or donations — to make token reimbursements to schools that signed up early.
School officials said they are pleased with the quality of the equipment, and staff and community members use it in many districts.
The officials said the repayments weren't guaranteed in contracts they signed, but the schools did not think the reimbursements would fall through. While some districts remain hopeful the foundation will resume payments, most have started planning to replace the funds. Two dozen schools in the Alpine School District are using equipment from the foundation.
The foundation has done nothing wrong and has suffered from an inability to raise money, which has been exacerbated by recent negative publicity, foundation spokesman Cris Rees said.
The foundation has repaid about $38 million dollars to schools since it was started in 2000, Rees said. But only about $6 million of what it has paid back came from donations, with the rest coming from the money schools paid for the equipment, he said.
The charity's founder, Cameron J. Lewis, has had a string of failed businesses, a history of personal bankruptcy and used the foundation to give himself a $317,358 salary, an investigation by The Associated Press revealed last week.