- A. Organization and Management
- B. Student Meal Participation
- C. Cost Reporting and Control
CURRENT SITUATION
The Food Service Department uses the SNAP point-of-sale and reporting system in its cafeterias. This system has been approved by the USDA for use in conjunction with the National School Lunch and Breakfast programs to capture information needed to file for federal reimbursements. The SNAP system records sales, verifies the status of students who qualify for free and reduced-price meals, and tracks a variety of performance information such as food costs as a percentage of revenue and meals served per labor hour.
Food Service uses SNAP to track its costs, revenue, inventory, and other indicators of its effectiveness. The department uses this information to keep its costs in line and determine whether additional savings measures are needed. The department already has taken several steps to control costs, including participating in purchasing and food preprocessing cooperatives and using disposable meal ware at its middle and high schools.
FINDING
A review of data gathered by the SNAP system shows that the ratio of meals served to labor hours (MPLH), a standard measure of food service efficiency, is low at some district schools, particularly the high schools. The department attributes the low MPLH in its high schools partly to the fact that service in its a la carte lines is even slower than in more basic lunch lines. The district's overall MPLH was 14.5 for the 1997-98 school year. High school cafeterias averaged 13.8 meals per labor hour in 1997-98; middle schools averaged 15.3 meals per labor hour, and elementary schools averaged 14.4. By contrast, common efficiency standards cited in Dorothy V. Pannell's Cost Control Manual for School Food Service Directors range from 14 to 18 MPLH, depending on the number of meals served.
The district uses a system based on Pannell's measures to staff its cafeterias. But as Exhibit 11-11 shows, some of its schools, particularly its high schools, do not fall within Pannell's standards.
Exhibit 11-11 Source: EPISD, and Dorothy V. Pannell, Cost Control Manual for School Food Service Directors, Tactics.
Current and Recommended Meals Per Labor Hour and Comparison
of Staffing Hours to Episd Staffing Chart
1997-98 School Year
School Meals Hours Meals Per Labor Hour Pannell Rec. MPLH EPISD Recommended Staff Hours Per Day MPLH Variance Staffing Variance High Schools Andress High 745.3 59.8 12.5 17 52 -4.5 7.8 Austin High 1035.6 74.2 14.0 18 64 -4.0 10.2 Bowie High 1222.3 73.9 16.5 18 72 -1.5 1.9 Burges High 758.6 64.3 11.8 17 52 -5.2 12.3 Coronado High 563.7 50.0 11.3 15 44 -3.7 6.0 El Paso High 764.7 56.4 13.6 17 52 -3.4 4.4 Franklin High 637.7 55.3 11.5 16 48 -4.5 7.3 Irvin High 1152.8 65.2 17.7 18 68 -0.3 -2.8 Jefferson High 755.2 52.8 14.3 17 52 -2.7 0.8 Avg. High Schools 848.4 61.3 13.7 17 56 -3.3 5.3 Middle Schools Bassett Intermediate 954.7 52.5 18.2 18 60 0.2 -7.5 Canyon Hills 762.9 51.5 14.8 17 52 -2.2 -0.5 Charles Intermediate 831.2 55.5 15.0 18 56 -3.0 -0.5 Guillen Intermediate 712.8 51.5 13.8 17 52 -3.2 -0.5 Henderson Intermediate 1032.0 59.2 17.4 18 64 -0.6 -4.8 Hornedo Intermediate 839.8 55.9 15.0 18 56 -3.0 -0.1 Lincoln Intermediate 749.6 52.5 14.3 17 52 -2.7 0.5 Magoffin Middle School 759.2 52.7 14.4 17 52 -2.6 0.7 Morehead Intermediate 573.4 43.9 13.1 15 44 -1.9 -0.1 Ross Middle School 684.5 51.3 13.4 16 48 -2.6 3.3 Terrace Hills M.S. 1266.7 69.3 18.3 18 72 0.3 -2.7 Wiggs Intermediate 725.8 50.3 14.4 17 52 -2.6 -1.7 Avg. Middle Schools 824.4 53.8 15.2 17.2 55 -2.0 -1.2 Elementary Schools Alamo Elementary 371.9 30.9 12.0 14 28 -2.0 2.9 Alta Vista Elementary 603.9 39.2 15.4 16 40 -0.6 -0.8 Aoy Elementary 607.8 38.4 15.8 16 40 -0.2 -1.6 Beall Elementary 664.4 42.0 15.8 16 40 -0.2 2.0 Bliss Elementary 701.1 47.9 14.6 17 44 -2.4 3.9 Bonham Elementary 273.4 20.2 13.5 13 24 0.5 -3.8 Bradley Elementary 555.3 36.4 15.3 15 36 0.3 0.4 Burleson Elementary 482.2 33.6 14.4 14 32 0.4 1.6 Burnet Elementary 514.8 36.4 14.1 15 36 -0.9 0.4 Cielo Vista Elementary 222.6 21.7 10.2 12 21 -1.8 0.7 Clardy Elementary 779.1 45.9 17.0 17 44 0.0 1.9 Clendenin Elementary 453.3 30.2 15.0 14 32 1.0 -1.8 Coldwell Elementary 617.2 41.5 14.9 16 40 -1.1 1.5 Crockett Elementary 922.1 54.7 16.9 18 52 -1.1 2.7 Cooley Elementary 802.3 51.7 15.5 18 48 -2.5 3.7 Crosby Elementary 589.8 38.0 15.5 15 36 0.5 2.0 Douglass Elementary 755.2 42.3 17.9 17 44 0.9 -1.7 Dowell Elementary 441.6 33.4 13.2 14 32 -0.8 1.4 Fannin Elementary 596.0 41.4 14.4 15 36 -0.6 5.4 Green Elementary 394.4 31.7 12.5 14 28 -1.5 3.7 Guerrero Elementary 522.4 36.4 14.3 15 36 -0.7 0.4 Hart Elementary 607.3 38.1 15.9 16 40 -0.1 -1.9 Hawkins Elementary 468.5 32.9 14.2 14 32 0.2 0.9 Highland Elementary 164.5 33.3 4.9 10 18 -5.1 15.3 Hillside Elementary 628.5 34.1 18.4 16 40 2.4 -5.9 Houston Elementary 741.3 49.8 14.9 17 44 -2.1 5.8 Hughey Elementary 638.3 37.3 17.1 16 40 1.1 -2.7 Johnson Elementary 690.4 41.5 16.6 16 40 0.6 1.5 Kohlberg Elementary 432.7 32.3 13.4 14 32 -0.6 0.3 Lamar Elementary 906.8 51.8 17.5 18 52 -0.5 -0.2 Lee Elementary 834.7 50.0 16.7 18 48 -1.3 2.0 Lindbergh Elementary 447.4 34.7 12.9 14 32 -1.1 2.7 Logan Elementary 750.7 49.6 15.1 17 44 -1.9 5.6 MacArthur Elementary 666.6 47.7 14.0 16 40 -2.0 7.7 Mesita Elementary 437.2 38.5 11.4 14 32 -2.6 6.5 Milam Elementary 241.5 25.6 9.4 12 21 -2.6 4.6 Newman Elementary 621.1 42.8 14.5 16 40 -1.5 2.8 Nixon Elementary 452.4 33.8 13.4 14 32 -0.6 1.8 Park Elementary 424.3 36.4 11.6 14 32 -2.4 4.4 Polk Elementary 361.5 32.6 11.1 14 28 -2.9 4.6 Putnam Elementary 451.5 36.0 12.5 14 32 -1.5 4.0 Rivera Elementary 417.4 34.4 12.1 14 32 -1.9 2.4 Roberts Elementary 729.5 49.0 14.9 17 44 -2.1 5.0 Roosevelt Elementary 411.7 31.8 12.9 14 32 -1.1 -0.2 Rusk Elementary 775.8 48.5 16.0 17 44 -1.0 4.5 Schuster Elementary
325.1
29.3
11.1
14
28
-2.9
1.3
Stanton Elementary
652.5
46.7
14.0
16
40
-2.0
6.7
Travis Elementary
414.0
31.1
13.3
14
32
-0.7
-0.9
Vilas Elementary
512.3
36.3
14.1
15
36
-0.9
0.3
Wainwright Elementary
609.6
41.4
14.7
16
40
-1.3
1.4
Western Hills Elem.
314.5
28.5
11.0
14
28
-3.0
0.5
Whitaker Elementary
493.8
33.7
14.6
14
32
0.6
1.7
White Elementary
533.7
35.7
15.0
15
36
0.0
-0.3
Zavala Elementary
471.0
35.1
13.4
14
32
-0.6
3.1
Avg. Elementary Schools
546.3
38.0
14.1
15.1
36
-1.0
2.0Although labor costs have been reduced significantly in the last few years, as Exhibit 11-12 shows, they remain slightly higher than the industry standard of 40 percent.
Exhibit 11-12 Source: Texas School Performance Review.
Episd Food Service Labor Costs As A Percentage of Revenue
1992-93 through 1997-98 School Years
1992-93 1994-1995 1994-1995 1995-1996 1996-1997 1997-1998 Labor Costs $10,172,635 $7,716,477 $6,986,016 $7,021,234 $7,190,533 $7,025,043 Revenue $15,429,788 $15,647,246 $15,170,782 $16,690,840 $17,217,188 $16,260,013 Percentage of Revenue
65.9%
49%
46%
45%
42%
43%Recommendation 133:
Review food service labor costs regularly to determine if individual campuses' MPLH figures are within industry standards.
Food Services should review labor costs on a monthly and annual basis to determine if efforts to increase overall meal participation also increase the MPLH on each campus and therefore decrease overall labor costs as a percentage of revenue.
IMPLEMENTATION STRATEGIES AND TIMELINE
1. The Food Service director and supervisors create a plan and training program to increase productivity and reduce labor costs. April 1999 2. The Food Service supervisors train all cafeteria managers on new processes and strategies. May 1999 3. The Food Service supervisors tailor the plan to fit the specific needs of each EPISD cafeteria. June 1999 4. The Food Service director, supervisors, and cafeteria managers put the plan into effect. September 1999 5. The Food Service director and supervisors review monthly management reports from SNAP detailing MPLH by school. October 1999 6. The Food Service director and supervisors evaluate progress, adjust specific school plans as needed, and share successful aspects of each plan with all cafeteria managers. October 1999 and Ongoing FISCAL IMPACT
This recommendation could be implemented with existing resources.
FINDING
Vending machines are operated by EPISD's individual schools. Contracts with vending machine companies vary from school to school and placement of the machines and the items sold are determined by the principals on each campus. Revenues vary from school to school; exact amounts were not available for this report.
Other school districts in Texas and elsewhere have found that exclusive contracts for vending services have increased their profit margin. This does not mean that profits from the machines are in any way diverted from their current uses; instead, it means that district management controls the products sold and negotiates for the highest profit possible from group volumes. In return, many vendors are willing to give the district bonuses for exclusive access.
Several Texas school districts have similarly advantageous contracts with soft-drink companies. Tyler ISD signed a 10-year exclusive contract with Pepsi that included a $500,000 bonus earmarked for technology-related projects. Plano ISD made a 10-year exclusive agreement with Dr. Pepper that pays the district $1 million for each year of the agreement. Spring Branch ISD signed an agreement with Coca-Cola that includes a signing bonus of $2.5 million and $10.3 million over the agreement's ten-year period. Spring ISD signed an 11-year Sponsorship Agreement with the Pepsi-Cola Company. This contract allows for commissions and other incentives for Spring ISD schools. Other Texas districts that have signed exclusive vending contracts include Aldine (a $12.8 million agreement for 10 years), Klein ($10.7 million) all districts that signed agreements with the Pepsi-Cola Company; and Galena Park, which made a $1.4 million agreement with Dr. Pepper.
As lucrative as these agreements may appear, districts should be aware of potential objections to such agreements. For example, a school district in Southeast Texas is being sued by a soft drink company after the district signed an agreement with another soft drink company that forced the district to pull out its competitor's vending machines. Concerns also have been expressed concerning the effects of promoting sugary soft drink products, and whether this occurs at the expense of more nutritious food items. Still, some people object to advertising certain products on school campuses.
As long as a district is aware of these concerns and takes steps to mitigate them, exclusive contracts can provide substantial revenue for educational purposes.
Recommendation 134:
Negotiate an exclusive vendor contract for vending machines.
EPISD should negotiate an exclusive contract for vending machines throughout the district and should be earmarked for education programs or other incentives that benefit students. The district also could consider splitting the profits with individual schools.
In addition to providing more revenue for the district, such a contract should enable Food Service to ensure that the placement and content of vending machines comply with state and federal guidelines.
To address concerns about the nutritional needs of EPISD students and the nutritional value of some products provided by soft drink companies, EPISD should make arrangements to provide vending machines with some nutritious items such as juices, fruit, and bottled water.
IMPLEMENTATION STRATEGIES AND TIMELINE
1. The Food Services director meets with the assistant superintendent of Operations to receive approval to negotiate an exclusive vendor contract for vending machines. April 1999 2. The Food Service director and assistant superintendent of Operations seek approval from the superintendent and board to initiate an exclusive contract. April 1999 3. The assistant superintendent of Operations notifies principals of its plans to negotiate a prime vendor contract. April 1999 4. The Food Service director works with the Purchasing Unit to develop a request for proposals (RFP) to be distributed to vendors. The Food Service director specifies items to be included in the RFP, including nutritious food and beverage items. April 1999 5. The Food Service director distributes an RFP to vendors. June 1999 6. The Food Service director and director of Purchasing review responses and recommend a vendor. July 1999 7. The Purchasing director initiates the contract for a prime vendor. August 1999 FISCAL IMPACT
EISD could not provide figures in annual vending machines revenues that would allow TSPR to calculate the fiscal impact of this recommendation. The amounts of bonuses vary from district to district although it is reasonable to assume that EPISD could receive a minimum $1 million in a signing bonus should they pursue an exclusive vending machine contract.
Recommendation 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 Negotiate an exclusive vendor contract for vending machines. $1,000,000 $0 $0 $0 $0
Texas School Performance Review
El Paso Independent School District
Chapter 11
COST REPORTING AND CONTROL
El Paso Independent School District
Chapter 11
COST REPORTING AND CONTROL