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Food Services JPA

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. Are you scared? You should be….

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Food Services JPA

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  1. 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

  2. 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;

  3. 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;

  4. 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;

  5. 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%);

  6. “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?

  7. Procurementstill 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;

  8. 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;

  9. School Food Services JPA • February 1989 SB 678 (Davis) to amend section 41980 of the Education Code: • 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…

  10. 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.

  11. Why School Food Services JPA? • Joint financial resources of several school districts: • Central production facility; • Central warehouse and transportation; • Central processing of applications; • ALL FS employees are employees of the JPA; • Purchasing and commodity processing; • Administrative resources: • Quality professionals; • Training; • Supervision; • Services;

  12. 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; • HeadStartand childcare programs;

  13. Advantages • From several small sardines to a big whale… • Program administration: • Much better control over the child nutrition programs; • Training and professional development resources; • Labor negotiations independent from the member districts; • Purchasing; • Commodities allocation;

  14. Advantages (cont.) • “Single purpose” organization: • 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…

  15. Disadvantages • Sometimes out of the loop from the individual member districts’ issues; • Can be seen as an outsider;

  16. 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; • Good relationship between the districts; • Good planning and preparation; • Plan for 12 to 18 months of preparations; • Count on some resistance;

  17. 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 of 9,000; • ADP: 3,400 lunches; • Budget: $1,350,000;

  18. 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 • Financial reserves: over $2,000,000

  19. SCVSFSA partner with the member districts • Since 1995 contributed over $7,000,000 to the members’ general fund; • Last year it was $1,400,000; • Developed Nutritional Policies for all four members; • Implemented Nutritional Education;

  20. Organizational structure

  21. Questions

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