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Chapter 6
Operations

This chapter reviews the food service, transportation, facilities and security of operations Venus Independent School District (VISD) in the following sections:

  1. Food Service
  2. Transportation
  3. Facilities Use and Maintenance
  4. Safety and Security


A. FOOD SERVICE

School food service operations provide students and staff with appealing and nutritionally sound breakfasts and lunches at a reasonable cost in a clean, safe and easily accessible environment. School districts use several factors to evaluate the efficiency and effectiveness of their food service operations, including staffing, productivity, food cost, nutritional value, amount of waste, participation rates in breakfast and lunch programs, variety of meals served, wait time per student served and financial self-sufficiency.

A well-managed Food Service Department is important to the health and academic success of all students. Inefficient management of Food Service operations can negatively impact student performance by inhibiting concentration and achievement due to inadequate nutrition. In order to ensure that the food service operations effectively provide students with appealing and nutritious breakfasts and lunches as economically as possible, school officials must plan and monitor the operation regularly.

Studies support teacher observations that students are more alert and perform better in class if they eat breakfast. A Minnesota breakfast study found that students who ate breakfast before starting school had a general increase in math grades and reading scores, increased student attention, reduced nurse visits and improved student behavior. Researchers at Harvard Medical/Massachusetts General Hospital in Boston found that hungry students are more likely to have behavioral and academic problems than children who get enough to eat. Hungry children are more likely to be irritable, anxious and aggressive and have higher rates of absences and tardiness. These reports affirm the 1998 Tufts University study, The Link Between Nutrition and Cognitive Development in Children, which states that, “children who participated in the School Breakfast Program were shown to have significantly higher standardized achievement test scores than eligible non-participants.”

The National School Lunch Act, enacted in 1946, established the National School Lunch Program (NSLP). The NSLP provides nutritionally balanced, low-cost or free lunches to nearly 27 million children every school day. School districts that take part in the lunch program receive cash subsidies and donated commodities from the United States Department of Agriculture (USDA) for each meal they serve. In return, schools must serve lunches that meet federal requirements and they must offer free or reduced-price lunches to children of eligible families. The Texas Education Agency’s (TEA) Child Nutrition Programs Division oversees the NSLP and a similar federal allotment, the School Breakfast Program (SBP), in Texas public schools.

The Texas School Food Service Association (TSFSA), a professional organization for school food service employees, has identified nine Standards of Excellence for evaluating school food service programs. Exhibit 6-1 lists these guidelines.

Exhibit 6-1
TSFSA Standards of Excellence

Standard Description
1 School food service administration identifies and meets current and future needs through organization, planning, direction and control.
2 School food service maintains financial accountability through established procedures.
3 School food service meets the nutritional needs of students and promotes the development of sound nutritional practices.
4 School food service maintains a safe and sanitary environment.
5 School food service provides appetizing, nutritious meals through effective, efficient systems management.
6 School food service encourages student participation in food service programs.
7 School food service provides an environment that enhances employee productivity, growth, development and morale.
8 School food service promotes a positive image to the public.
9 School food service measures success in fulfilling regulatory requirements.

Source: TSFSA Web site, www.tsfsa.org.

VISD participates in both NSLP and SBP. As a participant, the district receives federal reimbursement for each meal it serves that meets federal requirements. A large part of the district’s student population, 62.3 percent, qualifies for free and reduced-price lunches. The district meets federal definitions of a severe need district: more than 40 percent of the lunches it served for the past two years have been free or reduced-price. This qualifies the district for an additional reimbursement of $0.22 per meal served.

The meals served to students must meet the federal government’s Dietary Guidelines for Americans. These guidelines recommend that no more than 30 percent of the meals’ calories come from fat, with less than 10 percent from saturated fat. The district receives USDA food commodities to be used in the preparation of meals for students. The child nutrition specialist from TEA’s Regional Education Service Center XI (Region 11) is working with the district to train managers on the use of standardized recipes and meal requirements at no cost to the district. The district also participates in TEA’s Regional Education Service Center X (Region 10) multi-Regional Child Nutrition Purchasing Program for a fee of $310.

Sound management practices that achieve the goals of an efficiently run operation must include the use of many tools: a budget, forecasting, cash flow analysis and profit and loss statements. In addition, food service departments must used performance measures to evaluate menu costs and staffing levels.

Exhibit 6-2 shows that the VISD Food Service Department has operated at a loss for the past three years and expects to have a deficit for 2002-03. The department has a negative fund balance.

Exhibit 6-2
VISD Food Service Department Operating Results
1998-99 through 2002-03

Description 1998-99 Actual 1999-2000 Actual 2000-01 Actual 2001-02 Actual 2002-03 Budget Percentage Change from 1998-99
Revenues $536,716 $636,596 $687,660 $781,089 $711,600 32.6%
Expenditures $467,849 $734,790 $727,153 $914,568 $768,028 64.2%
Income (Loss) $68,867 ($98,194) ($39,493) ($133,479) ($56,428) (81%)
Fund Balance (Deficit) - Beginning $70,629 $139,496 $41,302 $1,809 $0.00 (100%)
Fund Balance (Deficit) - End $139,496 $41,302 $1,809 ($131,670) ($56,428) (140.5%)

Source: VISD, Audited Annual Financial Reports, 1998-99 through 2001-02 and VISD 2002-03 Annual Budget.

VISD budgeted 6.6 percent of its 2002-03 funds on the food service operation. Exhibit 6-3 shows that this exceeds the state average of 1.7 percent for 2002-03.

Exhibit 6-3
Comparison of Budgeted Functional Expenditures
VISD and State Averages
2002-03

Function Venus State
Instruction 52.7% 50.8%
Instructional related services 1.7% 2.7%
Instructional leadership 0% 1.2%
School leadership 5.2% 5.3%
Support services--student 2.7% 4.0%
Student transportation 5.5% 2.6%
Food Service 6.6% 4.9%
Co-curricular/extracurricular activities 3.4% 2.3%
Central administration 3% 3.6%
Plant maintenance and operations 9.9% 10.0%
Security and monitoring services 0.1% 0.6%
Data processing services 1.8% 1.2%
Other* 7.4% 10.9%

Source: TEA, PEIMS, 2002-03.
*Includes any operating expenditures not listed above and all non-operational expenditures such as debt service, capital outlay and community and parental involvement services.

VISD Food Service Department prepares breakfast and lunch at each of its schools daily. Between September 2001 and August 2002, the food service operations served an average of 1,301 lunches and 1,669 breakfasts to students per day. These figures include snacks. The Food Service Department employs 25 people and operates a conventional kitchen system that prepares meals from scratch each day. The district has chosen to serve free breakfast to all primary and elementary school students to enhance the students’ ability to learn.

Each cafeteria has a manager, a cashier, cooks and a dishwasher. The director of Operations, Maintenance and Transportation supervises the Food Service Department. In March 2003, the board approved an updated organizational chart that will move oversight of the food service budget to the business manager. The district will implement the new organizational chart by 2003-04.

Exhibit 6-4 shows the food service organization.

Exhibit 6-4
VISD Food Service Department Organization
2002-03


Source: VISD, director of Maintenance, Operations and Transportation.

Financial management has been a major emphasis for school districts nationwide. A successful Food Service operation requires: knowledge of the financial goals and objectives of the school board; sound planning and budget development to meet board goals and objectives; and a financial accounting system that provides accurate and timely financial information to assist in managing revenues and expenditures.

Controlling Costs in the Food Service Industry, 1998, identifies several reports that are critical to the financial management of a school food service operation. Exhibit 6-5 lists these reports.

Exhibit 6-5
Critical Food Service Operations
Financial Management Reports

Report

Report Description/Use

Budget

  • Financial management plan that helps manager estimate revenue and expenses based on prior year data, estimates and planned changes.

Balance Sheet

  • Report that provides a “snapshot” of the financial worth of the operation at the end of a reporting period. It shows assets, liabilities and the net worth or fund balance of the operation.

Profit and Loss Statement

  • Report that shows how the operation has been doing both at the end of a period and over a period of time in terms of the revenue or income generated versus expenditures.

Cash Flow Statement

  • Report that shows the cash inflow (revenues) and outflow (expenditures) for a period of time.

Financial Trends and Ratios

  • Provides information on various types of performance trends. Examples include: food costs as a percent of total sales; labor costs as a percent of total sales; and value of inventory and inventory turnover.

Source: Controlling Costs in the Food Service Industry, 1998.

Exhibit 6-6 compares VISD’s NSLP and SBP participation rates to those of its peer districts.

Exhibit 6-6
NSLP and SBP Participation Rates
VISD and Peer Districts
September 2001 through August 2002

District Average Breakfast Participation Average Lunch Participation
Dublin 17% 67%
Godley 21% 55%
Grandview 17% 61%
Rio Vista 15% 40%
Venus 56% 71%

Source: TEA, Child Nutrition Programs, September 2001 through August 2002.

VISD has higher NSLP and SBP participation rates than its peer districts. The director of Operations, Maintenance and Transportation processes all free and reduced-price applications. The director stated that he monitors the applications his office receives. If a family submitted an application one year and does not reapply the next year, the director contacts the family to remind them to send the application.

Of the VISD students in average daily attendance in 2002-03, 56 percent participated in the breakfast program and 71 percent participated in the lunch program. VISD has a closed campus; all students must either eat lunch in the cafeteria or bring their lunch. The primary and elementary schools serve free breakfast to all students.


FINDING

The VISD Food Service Department does not have written policies and procedures that address daily operations.

The lack of written procedures makes employee training difficult. In districts that have multiple kitchens, documented policies and procedures assist in standardizing operations among kitchens. Exhibit 6-7 shows useful policies and procedures that other districts use in their daily operations.

Exhibit 6-7
Food Service Policies and Procedures

Area Description
Financial Management
  • Preparation of the budget.
  • Cash management.
  • Maintenance of participation and tracking of related revenue while safeguarding cashier banks and the preparation of deposits.
  • Labor standards.
  • Free and reduced-price application processing and the identification of children eligible for free and reduced-price meals.
  • Handling of credit sales and advance payments.
  • Monitoring and reporting of revenues and expenditures.
  • Tracking of prepaid meals.
Pricing
  • Designation of an optimal price-setting methodology and procedures for evaluating and updating meal and a la carte prices.
  • Specific guidelines for notifying staff and students about changing prices.
  • Guidelines for the number of days and/or total dollar amount of charges that a student or staff member can accrue and what to do when students forget their lunch and have no money to pay for a meal.
  • Guidelines addressing free meals.
Inventory Controls
  • Guidelines addressing physical inventories, inventory rotation and the disposal of obsolete, spoiled, damaged or slow moving inventory.
  • Placing food orders.
Safety and Sanitation
  • Guidelines addressing who to contact when a worker is injured and what to do in case of an emergency in the kitchen.
  • In-service training requirements for safety and sanitation.
Facilities Management
  • Guidelines addressing the extracurricular use of food service facilities, equipment replacement and preventive maintenance schedules on equipment.
  • Work-order processing.

Source: Texas Public School Consulting, Inc.

Nearly all of these policies and procedures have a direct impact on the profitability and efficiency of Food Service operations. Formal policies and procedures and the communication of standards to all relevant personnel will enhance overall efficiency and consistent management of Food Service operations.

The district does not have a perpetual inventory system, meal pricing policies, facilities management policies or a food service handbook that addresses safety and sanitation.

San Marcos Consolidated ISD (SMCISD) has a comprehensive procedures manual that provides Food Service staff with detailed procedures regarding all aspects of departmental operations such as finance, pricing and sanitation. Although SMCISD is a larger district, formal and properly communicated procedures can help districts of any size with the overall efficiency of their food service operations.

Recommendation 40:

Develop and implement written policies and procedures for all food service operations.

A policy and procedures manual for the Food Service Department would promote consistency while providing guidance to employees. This manual will facilitate employee training as the district grows or experiences personnel changes.


IMPLEMENTATION STRATEGIES AND TIMELINE
1. The superintendent directs the director of Operations, Maintenance and Transportation to draft Food Service Department policies. October 2003
2. The director of Operations, Maintenance and Transportation drafts policies on meal pricing and submits them to the superintendent for review. November-December 2003
3. The superintendent reviews the policies and presents them to the board for approval. January 2004
4. The board reviews and adopts the policies. February 2004
5. The superintendent directs the director of Operations, Maintenance and Transportation to develop a comprehensive Food Service Department Procedures Manual. March 2004
6. The director of Operations, Maintenance and Transportation develops and documents the procedures and submits them to the superintendent for approval. March-April 2004
7. The superintendent approves the procedures. April 2004
8. The director of Operations, Maintenance and Transportation distributes policies and procedures to Food Service Department staff. April 2004
9. The director of Operations, Maintenance and Transportation updates policies and the procedures manual annually. May 2004 and Ongoing


FISCAL IMPACT

This recommendation can be implemented with existing resources.


FINDING

The Food Service Department operated at a deficit for the past three years and is projected to operate at a deficit for 2002-03.The district’s meals per labor hour (MPLH) is below exceed industry standards. This indicates that VISD has a larger staff than it needs or the staff is working too many hours for the number of meals served. VISD does not have its own staffing standard and does not use industry standard calculations to staff its cafeterias. Managing Child Nutrition Programs, Leadership for Excellence quotes an industry standard that food service labor costs should not exceed 40 percent of revenue. Labor costs at VISD were 44 percent of revenue for 1999-2000, 46 percent for 2000-01 and 53 percent for 2001-02.

MPLH is a standard performance measure of efficiency for school districts, hospitals, restaurants and other Food Service operations. MPLH is the number of meal equivalents that a kitchen serves in a given period divided by the total man-hours worked during that period. Meal equivalents are lunches plus an equivalent number of breakfast and a la carte sales. The following are the conversion rates for meal equivalents used in the MPLH calculation:

Breakfast Meal Equivalents:

  • Total meals served divided by three.
  • $3 in a la carte sales equals one meal equivalent.

Lunch Meal Equivalents:

  • Total meals served.
  • $3 in a la carte sales equals one meal equivalent.

Exhibit 6-8 compares VISD’s MPLH for each school cafeteria to the industry standard for a conventional system. A conventional kitchen system prepares meals on the premises from raw ingredients (using some bakery bread and prepared pizza) to washing dishes. In contrast, a convenience kitchen system heats and serves meals that were largely prepared offsite. Convenience kitchen systems operate with less labor but have higher food costs.

Exhibit 6-8
VISD Daily Meals Per Labor Hour
2002-03

Schools Actual Meal Equivalents Actual Labor Hours Actual MPLH Recommended MPLH* MPLH Variance above/(below)
Primary 434 43 10.1 14 (3.9)
Elementary 608 49.8 12.2 16 (3.8)
Middle 344 42.3 8.1 14 (5.9)
High 399 42.3 9.4 14 (4.6)

Sources: VISD Food Service and Managing Child Nutrition Programs, Leadership for Excellence.
*The recommended MPLH is based on the MPLH for the conventional system.

The number of hours worked is a function of two variables: the number of staff employed and the hours worked per employee. Kitchens can control the size of both variables. Hourly wages paid to VISD food service employees range from $6.50 per hour to $14.43 per hour plus 15 percent in benefits. The average hourly wage is $9.46.

Exhibit 6-9 outlines the MPLH standards that the review team used to evaluate VISD’s staffing structure.

Exhibit 6-9
Recommended Meals per Labor Hour

Number of Equivalents Served Conventional System MPLH Convenience System MPLH
Up to 100 8 9
101 - 150 9 10
151 - 200 10-11 12
201 - 250 12 14
251 - 300 13 15
301 - 400 14 16
401 - 500 14 18
501 - 600 15 18
601 - 700 16 19
701 - 800 17 20
801 - 900 18 21
900+ 19+ 22+

Source: Managing Child Nutrition Programs, Leadership for Excellence, 1999.

Exhibit 6-10 compares the number of hours worked at each VISD cafeteria to the industry standard. VISD employs 7.9 more full-time equivalents (FTEs) than industry standards recommend for the number of meals it serves, and its employees work 55.2 hours per day more than the standard.

Exhibit 6-10
VISD Food Service Daily MPLH
Compared to Industry Standards

School Meal Equivalents Served Hours Worked Allowed Hours at Standard MPLH Hours Above (Below) Standard Equivalent FTEs at 7 Hours*
Primary 434 43.00 31.00 12.00 1.7
Elementary 608 49.75 38.00 11.75 1.7
Middle 334 42.25 23.86 18.39 2.6
High 399 42.25 28.50 13.75 2.0
Total 1,775 177.25 121.36 55.89 8.0

Sources: VISD Food Service and Managing Child Nutrition Programs, Leadership for Excellence.
*Standard industry workday is 7 hours.

Elgin ISD uses an industry productivity standard, meals per labor hour (MPLH), to determine and measure food service productivity. MPLH is calculated by comparing the number of meals served in a given period with the labor hours used to generate those meals in the same time period. According to industry analysts, 16 to 20 meals per labor hour is a reasonable level of productivity given the large variation in food preparation systems and type of foods served. In 1999-2000 Elgin ISD maintained an overall average of 16.82 meals per hour.

Recommendation 41:

Implement industry meals per labor hour (MPLH) standards and adjust staffing levels accordingly.

VISD’s kitchens operate at a lower MPLH than industry standards. VISD can raise its MPLH by increasing the number of meals it serves, reducing the size of the kitchen staff or limiting the hours worked by each employee.

Projected meals served, divided by the industry standard MPLH, equals the number of labor hours required for each school. The number of labor hours, times the hourly rate for each cafeteria employee, plus benefits, times the number of days worked per year, equals the annual projected payroll cost for each employee. The sum of payroll costs for all employees should be the maximum payroll costs for the year.


IMPLEMENTATION STRATEGIES AND TIMELINE
1. The cafeteria managers and the director of Operations, Maintenance and Transportation create a plan for raising MPLH that increases productivity and/or decreases labor costs. September 2003
2. The director of Operations, Maintenance and Transportation presents the plan to the superintendent for approval. October 2003
3. The cafeteria managers and the director of Operations, Maintenance and Transportation implement the plans for improving each cafeteria's MPLH. November 2003 and Ongoing
4. The director of Operations, Maintenance and Transportation and cafeteria managers review monthly management reports detailing each cafeteria's MPLH. December 2003 and Ongoing


FISCAL IMPACT

If all schools used the recommended meals per labor hours standard, VISD would conservatively reduce its labor by 55 hours per day. Applying the cafeteria worker’s average hourly wage of $9.46 results in $520 per work day savings from reduced wage expense ($9.46 per hour wage x 55 hours less worked per day = $520) and $78 per work day savings from reduced benefits expense ($520 wages per day x 0.15 benefit rate = $78). Total daily cafeteria labor savings would be $598 ($520 wages per day + $78 benefits per day).

On average there are 185 cafeteria work days in a school year. Assuming the reduced labor hours plan begins in November 2003, there would be 141 cafeteria work days instead of 185 by removing September (21 work days) and October (23 work days) from the count (185 – 21 – 23 = 141). Annual savings for 2003-04 would be $84,318 ($598 daily labor savings x 141 work days). Annual savings for 2004-05 through 2007-08 would be $110,630 ($598 daily labor savings x 185 average work days per year).

Recommendation 2003-04 2004-05 2005-06 2006-07 2007-08
Implement industry meals per labor (MPLH) hour standards and adjust staffing levels accordingly. $84,318 $110,630 $110,630 $110,630 $110,630


FINDING

VISD does not produce or use reports critical to sound business management and does not effectively monitor the Food Service Department’s financial condition. The department does not generate and review profit and loss statements and budget variance reports on a monthly basis. The district does report that it began using a profit and loss statement in February 2003. VISD Food Service Department staffing levels are above the industry standard; its average hourly rates are higher than most of the peer districts and the recommended 40 percent of revenue; and the department does not determine if the total cost of menus and food costs exceed the recommended 40 percent of revenue. In addition, the district does not use an inventory system to ensure proper inventory levels. VISD participates in a purchasing cooperative.

The Managing Child Nutrition Programs, Leadership for Excellence manual recommends that districts keep food costs at 40 percent or less of revenue to allow sufficient revenue for payroll and other expenses. VISD’s food costs in 2001-02 were 43.8 percent of revenue. Over the three year period from 1999-2000 to 2001-02, the district expended $105,258 more than the recommended food cost standard. Exhibit 6-11 shows the variance of VISD food costs from the standard over the three-year period.

Exhibit 6-11
VISD Food Service Department Food Costs as a Percentage of Revenue
1999-2000 through 2001-02

Fiscal Year Food Costs Total Revenue Percent Expended on Food Recommended Percentage Variance +/(-) from Standard Dollar Variance
1999-2000 $280,388 $636,596 44.0% 40% (4.0%) ($25,750)
2000-01 $324,782 $687,660 47.23% 40% (7.23%) ($49,718)
2001-02 $342,226 $781,089 43.81% 40% (3.81%) ($29,790)
Total Three Year Variance ($105,258)

Sources: TEA, PEIMS, 1999-2000 through 2001-02 and Managing Child Nutrition Programs, Leadership for Excellence.

The Managing Child Nutrition Programs, Leadership for Excellence manual also recommends that districts keep payroll and payroll-related costs at 40 percent or less of revenue to allow sufficient revenue for food and other expenses. Payroll and payroll related costs in 2001-02 were 53 percent of VISD’s revenue. Over the three-year period from 1999-2000 through 2001-02 the district expended $163,724 more than the recommended standard on payroll and payroll related costs. Exhibit 6-12 shows the variance of VISD’s payroll and payroll related costs from the standard over the three-year period.

Exhibit 6-12
VISD Food Service Department Labor Costs
As a Percentage of Revenue
1999-2000 through 2001-02

Fiscal Year Payroll Costs Total Revenue Percent Expended on Labor Recommended Percentage Variance +/(-) from Standard Dollar Variance
1999-2000 $282,577 $636,596 44.39% 40% (4.39%) ($27,939)
2000-01 $313,208 $687,660 45.55% 40% (5.55%) ($38,144)
2001-02 $410,077 $781,089 52.50% 40% (12.50%) ($97,641)
Total Three Year Variance ($163,724)

Sources: TEA, PEIMS, 1999-2000 through 2001-02 and Managing Child Nutrition Programs, Leadership for Excellence.

Exhibit 6-13 compares the average hourly wage paid to VISD Food Service Department employees to those paid in peer districts. VISD’s average hourly wage is higher than three of the four peer districts.

Exhibit 6-13
Average Hourly Wages for Cafeteria Employees
VISD and Peer Districts
2002-03

District Average Food Service Hourly Wages
Dublin $9.95
Grandview $5.71
Godley $7.45
Rio Vista $6.89
Venus $9.46

Sources: Peer districts and VISD, Food Service Department.

Exhibit 6-14 shows VISD’s Food Service Department’s losses from 1999-2000 to 2001-02. It describes the department’s revenue by source and details expenditures by major categorical budget items.

Exhibit 6-14
VISD Food Service Losses
1999-2000 through 2001-02

Revenue Source 1999-2000 Actual Percent of Actual 2000-01 Actual Percent of Actual 2001-02 Actual Percent of Actual
Local and Intermediate $171,363 26.9% $186,749 27.2% $199,975 25.6%
State $6,480 1.0% $7,608 1.1% $20,802 2.7%
Federal $458,753 72.1% $493,303 71.7% $560,312 71.7%
Total Revenue $636,596 100% $687,660 100% $781,089 100%
Expenditure Category  
Salaries/Benefits $282,577 38.5% $313,208 43.1% $410,077 44.8%
Contracted Services $9,226 1.3% $1,804 0.2% $3,773 0.4%
Supplies and Materials $389,894 53.1% $407,706 56.1% $483,275 52.8%
Other Misc. Expenses $4,550 0.6% $4,435 0.6% $17,443 1.9%
Capital Outlay $48,543 6.6% $0 0.0% $0 0.0%
Total Expenditures $734,790 100.0% $727,153 100.0% $914,568 100.0%
Net Profit or (Loss) ($98,194)   ($39,493)   ($133,479)  

Sources: TEA, PEIMS, 1999-2000 through 2001-02 and VISD Annual Financial Reports, 1999-2000 through 2001-02.

Exhibit 6-15 shows the percent increase in the Food Service Department’s actual revenues and expenditures from 2000-01 through 2001-02 and budgeted figures for 2002-03. The overall revenue increase from 2000-01 to 2001-02 was 13.6 percent; the overall expenditure increase from 2000-01 to 2001-02 was 25.8 percent. The 2002-03 budget reflects percentage decreases.

Exhibit 6-15
VISD Food Service Revenues and Expenditures
2000-01 through 2002-03

Revenue Source 2000-01 Actual 2001-02 Actual Percent Change from 2000-01 through 2001-02 2002-03 Budget Percent Change from 2001-02 through 2002-03
Local and Intermediate $186,749 $199,975 7.1% $191,600 (4.2%)
State $7,608 $20,802 173.4% $8,000 (61.5%)
Federal $493,303 $560,312 13.6% $512,000 (8.6%)
Total Revenue $687,660 $781,089 13.6% $711,600 (8.9%)
Expenditure Category  
Salaries/Benefits $313,208 $410,077 30.9% $391,378 (4.6%)
Contracted Services $1,804 $3,773 109.1% $3,000 (20.5%)
Supplies and Materials $407,706 $483,275 18.5% $371,500 (23.1%)
Other Misc. Expenses $4,435 $17,443 293.3% $2,150 (87.7%)
Capital Outlay $0 $0 0.0% $0 0.0%
Total Expenditures $727,153 $914,568 25.8% $768,028 (16%)
Net Profit or (Loss) ($39,493) ($133,479)   ($56,428)  

Source: TEA, PEIMS, 2000-01 through 2002-03 and VISD Annual Financial Report, 2000-01 through 2002-03.

The general operating fund transferred $131,671 to the Food Service fund in 2001-02. Subsidizing the Food Service Department reduced the amount of money the district had available to be used in the classroom to fund supplies, technology or other instructional needs.

The lack of financial management in the Food Service Department contributed to the department’s budget deficit as of August 2002. VISD’s 2002-03 budget reflects appropriated Food Service expenditures that are higher than estimated revenues by $56,428. This means that the general operating fund will again need to supplement the Food Service fund in 2002-03.

Many school districts reduce food costs and lower the price paid for food by using less expensive ingredients, maintaining good portion control, reducing plate waste, issuing separate contracts for specific food products where cost-effective and entering into group-purchasing contracts for commodities. Some districts achieve cost savings by contracting with a food management company to run the district’s Food Service operation.

Recommendation 42:

Develop and implement a financial reporting system to use in controlling costs.

The use of financial reports is critical to sound financial management. The Food Service Department can use monthly reports to monitor the status of expenditures, revenues and profits or losses. The reports will help the department identify problems and take corrective action.


IMPLEMENTATION STRATEGIES AND TIMELINE
1. The superintendent directs the director of Operations, Maintenance and Transportation to develop and implement monthly food service reports. September 2003
2. The director of Operations, Maintenance and Transportation begins reviewing the reports and informs the superintendent, the board and the cafeteria managers of profitability and budgetary status. October 2003 and Ongoing
3. The director of Operations, Maintenance and Transportation uses the reports to identify areas where the department can save money or operate more efficiently. October 2003 and Ongoing


FISCAL IMPACT

This recommendation can be implemented with existing resources.


FINDING

VISD’S student meal prices are lower than the average of its peer districts. Despite the Food Service Department’s deficit, meal prices have remained the same for the past three years. Exhibit 6-16 shows that VISD is charging $0.29 less than the peer district average for a full price student lunch and $0.23 less than the average for a full price student breakfast.

Exhibit 6-16
Secondary School Meal Prices
VISD and its Peer Districts
2002-03

School Student Breakfast Adult Breakfast Student Lunch Adult Lunch
Dublin $1.75 $2.25 $2.75 $3.25
Godley $1.25 $1.50 $2.00 $2.50
Grandview $1.10 $1.35 $1.85 $2.25
Rio Vista $0.80 $1.10 $1.75 $2.25
Average $1.23 $1.55 $2.09 $2.56
Venus $1.00 $1.40 $1.80 $2.25
Variance* +/(-) ($0.23) ($0.15) ($0.29) ($0.31)

Source: Peer Districts and VISD.
*Variance compares VISD to the peer district average.

Setting meal prices at a competitive level is an important component in managing revenues; it is essential that food service departments generate sufficient revenue to operate. Texas public school districts receive food service revenue from federal, state and local sources. The district receives federal and state reimbursements from participation in the NSLP and the SBP; districts generate local revenue from the paid student and adult meals and a la carte sales.

Recommendation 43:

Annually evaluate and set prices for full priced meals to equal the cost of those meals.

VISD can generate additional revenue for its Food Service Department by raising meal prices to the level of other school districts. The extra revenue will reduce the department’s dependence on general fund support. This will leave VISD with additional money in the general fund to use for classroom instruction.


IMPLEMENTATION STRATEGIES AND TIMELINE
1. The superintendent, the director of Operations, Maintenance and Transportation and the cafeteria managers review the prices of meals. September 2003
2. The superintendent, the director of Operations, Maintenance and Transportation and the cafeteria managers determine adequate meal prices for board approval. September 2003
3. The superintendent submits to the board the recommended meal prices for approval. October 2003
4. The director of Operations, Maintenance and Transportation provides to the cafeteria managers the approved meal prices. October 2003
5. The director of Operations, Maintenance and Transportation notifies students and parents of the price increases. October 2003
6. The director of Operations, Maintenance and Transportation implements approved meal prices. November 2003


FISCAL IMPACT

According to the TEA Child Nutrition Programs District Profile, VISD served 65,722 paid lunches and 58,901 paid breakfasts to students between September 2001 and August 2002. Assuming that the new pricing does not begin until November 2003, the lunch count for the 2003-04 fiscal impact would be reduced by the September (6,945 paid lunches) and October (8,887 paid lunches) counts, resulting in a reduced lunch count of 49,890 (65,722 total annual lunch counts – 6,945 paid lunches in September 2001 – 8,887 paid lunches in October 2001).

Correspondingly, the breakfast count for the 2003-04 fiscal impact would be reduced by the September (2,842 paid breakfasts) and October (3,339 paid breakfasts) counts, resulting in a reduced breakfast count of 52,720 (58,901 total annual breakfast counts – 2,842 paid breakfasts in September and 3,339 paid breakfasts in October).

Increase the student breakfast to 1.25 and student lunch to $2.00.

2003-04

  • 49,890 lunches x 20 cents = $9,978
  • 52,720 breakfast x 25 = $13,180
  • Total is $23,158 ($13,180 + $9,978


2004-05 through 2007-08

  • 68,722 lunches x 20 cents = $13,144
  • 58,901 breakfasts x 25 cents = $14,725
  • Total is $27,869 ($14,725 + $13,144)

Recommendation 2003-04 2004-05 2005-06 2006-07 2007-08
Annually evaluate and set prices for full priced meals to equal the cost of those meals. $23,158 $27,869 $27,869 $27,869 $27,869


FINDING

VISD’s Middle School does not turn off the soft drink vending machine during the lunch period. The review team observed students at the middle school purchasing soft drinks to drink with their cafeteria meals. At the high school, school staff locks the vending machines during meal service. The primary and elementary schools do not have vending machines near the cafeterias.

The USDA has launched efforts to foster healthy school nutrition environments that support proper nutrition and the development of healthful eating habits. USDA’s Healthy People 2010 project focuses on school nutrition in an effort to counteract the rising prevalence of obesity in the student population and to improve the quality of student’s dietary intake. Foods of minimal nutritional value (FMNV) are not to be sold to children in the food service area in competition with the lunch and breakfast programs. Soft drinks are considered FMNV.

The USDA’s FMNV policy outlines penalties for improperly used or lost funds to include both corrective action and restoration of the school food service account. USDA recommends that corrective action include disallowing reimbursement for all meals served by a school on the day a violation was observed. The loss of income suffered by the Food Service Department must come from a source other than the school’s Food Service account. Schools that violate the policy must implement a corrective action plan; state and federal authorities will diligently monitor violators to ensure continued compliance.

Recommendation 44:

Discontinue operating vending machines that compete with meal programs during meal service.


IMPLEMENTATION STRATEGIES AND TIMELINE
1. The superintendent directs the middle school principal to disable vending machines during breakfast and lunch periods. September 2003
2. The superintendent checks school adherence to vending machines rules on a periodic basis. October 2003 and Ongoing


FISCAL IMPACT

This recommendation can be implemented with existing resources.