Food Services JPA

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Finance is the art of
passing currency
from hand to hand
until it finally
disappears.
Robert W. Sarnoff
Food Services JPA
Public schools management company
Pavel N. Matustik, CEO
Santa Clarita Valley School Food Services Agency
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Are you scared?
You should be…

The economy is probably not going to get better anytime soon;

The funding for schools may decrease even more;

More and more FS programs are encroaching on districts’
general funds;

FS is mandatory and the easy ways of generating funds are
gone for ever;

If you cut the staff, who is going to serve?

The new regulations (7/1/12 lunch; 7/1/13 breakfast) will take
an even bigger bite out of your FS budget;
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Differences Between The School
District Budget and FS

Each of them works with a different set of dynamics; therefore, it is
impractical to try to compare these two completely different operations;

SD budget is driven by enrollment and State allocation as well as a
plethora of mandated costs;

Over 90% is spent on salaries and benefits

The reserves can be as low as 3% (qualified);

FS budget is driven by participation;

Only about 55% is (should be) spent on salaries and benefits;

35% (or more) is spent on food and supplies, which move with the market
macroeconomic trends;
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Differences Between The School
District Budget and FS (cont.)

When times get “bad” the schools look into cutting positions;

It’s harder for FS to cut positions because they still must
provide the services;

FS cannot compromise the quality of food by offering lesser
therefore cheaper fare;

In our opinion the healthy FS reserves should equal three (3)
months of the operating budget;

FS cash flow can be a problem;
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Primary Budget Drivers

Income

Student Lunch Sales (about 40% of total);

Federal Reimbursement (about 38% of total);

Outside sales (almost 9%);

Student A la Carte (about 8%);
These percentages differ based on the socio-economic factors.

Expenses

Direct salaries (about 39%);

Food and supplies (close to 34%);

Fringe Benefits (close to 15%);

Direct and indirect costs (over 7%);
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“Hidden” Drivers

USDA Commodity Program – exceptionally important part of
our financial well being!

Represents (if properly managed) about 15% to 20% of a school
food service “grocery” budget;

90% of directors don’t fully understand the program;

Can affect as much as 65% of your entire food purchasing
budget;

How do you spend your entitlement dollars?
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Procurement
still a little bit of wiggle room…


Co-Ops are a must – strength in numbers:
Forget little bitty purchasing groups:
 If you don’t have at least 100,000 lunch ADP you don’t make a
difference;
 The economy has changed and the suppliers love the
fragmented market so they can play the “margin game”
(cereal companies, paper supplies companies);
 SUPER Co-Op:
 Over 210 CA school districts;
 Over 1,200,000 lunch ADP;
 Over $60 million in commodity entitlements;
 Best pricing for commodity processing in CA;
 Be cautious about the industry buying groups – may be illegal
for the government procurement;
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What is a JPA?
 JPA–Joint
Powers Agency (Authority);
 Two
or more public agencies/school districts
may enter into an agreement providing for
the joint exercise of any power common to
the contracting parties if the public agencies
are so authorized by their legislative or other
governing body:
Workers compensation, Property & Liability or Health
insurance JPA’s;
 Student transportation;
 Food services;
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School Food Services JPA

February 1989 SB 678 (Davis) to amend section 41980 of the
Education Code:
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Authorize any separate joint powers entity that has as its sole
function the provision of school food services to be designated as a
single school district for these purposes…
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Education Code 41980 (b)
(b) Any separate joint powers entity formed pursuant to Chapter 5
(commencing with Section 6500 ) of Division 7 of Title 1 of the
Government Code that has as its sole function the provision of
school food services may, subject to prior approval by the
Superintendent of Public Instruction, be designated a single school
district for purposes of receiving state apportionments or
allowances in support of those services or programs. Those school
food apportionments or allowances shall be allocated to a
separate joint powers entity under this section in any fiscal year
only to the extent that the governing board of the school district or
districts that would otherwise receive those state apportionments
or allowances expressly approves that allocation under a
resolution adopted on or before June 30 preceding that fiscal year.
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Why School Food Services JPA?

Joint financial resources of several school districts:




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Administrative resources:


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Central production facility;
Central warehouse and transportation;
Central processing of applications;
ALL FS employees are employees of the JPA;
Purchasing and commodity processing;
Quality professionals;
Training;
Supervision;
Services;
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Who should think about a food
service JPA?

The BEST business model for school food services operation;

Small and medium size school districts with:




Low free and reduced price ADP;
Relatively high administrative costs;
Food transportation difficulties;
Food service programs losing money;

Rural school districts;
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HeadStart and childcare programs;
Advantages
 From
several small sardines to a big
whale…

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Program administration:

Much better control over the child nutrition
programs;
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Training and professional development resources;

Labor negotiations independent from the member
districts;
Purchasing;
Commodities allocation;
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Advantages (cont.)

“Single purpose” organization:


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All employees have one common goal;
All supporting services (payroll, accounting, HR, maintenance, etc.)
are serving only one customer;
Not a Cinderella anymore;

Away from the individual districts’ politics;

“TOTAL” control…
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Disadvantages

Sometimes out of the loop from the individual member districts’
issues;
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Can be seen as an outsider;
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It takes the vision,
It takes the courage

To establish a new FS JPA you will need:

Districts’ leadership determination;

FS directors/managers/workers may be scared of the unknown;
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Good relationship between the districts;
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Good planning and preparation;

Plan for 12 to 18 months of preparations;

Count on some resistance;
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Santa Clarita Valley School Food Services
Agency - History
 Established
in the Spring of 1989 by three
relatively small school districts with a very
low free and reduced price meal eligibility;
 Founding districts:
 Castaic Union SD (2);
 Newhall Elementary SD (6);
 Sulphur Springs Elementary SD (7);
 Enrollment
 ADP:
of 9,000;
3,400 lunches;
 Budget:
$1,350,000;
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Santa Clarita Valley School Food Services
Agency - Today

Four member districts.

38 schools

Enrollment over 30,000

ADP: 12,000 lunches and 4,000 breakfasts

Budget: $8,500,000
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Financial reserves: over $2,000,000
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SCVSFSA partner with the member districts

Since 1995 contributed over $7,000,000 to the members’
general fund;
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Last year it was $1,400,000;

Developed Nutritional Policies for all four members;

Implemented Nutritional Education;
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Organizational structure
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Questions
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