Food Service Assessment/Analysis

1. Food Service Assessment/Analysis June 11, 2009

2. Overview • Prismatic Services was retained to assess/analyze the food service program primarily to answer the question, “What will it cost to transition and operate a district-managed food service program?” • It is likely that the district can operate its own food service program at a cost equal to or less than the current cost. If the district chooses to manage its program, Prismatic recommends a phased transition. • Before the district considers a switch to in-house management, a number of ongoing issues should be addressed. • Breakeven is achievable within four (4) years. St. Louis Public Schools

3. Background • The food service program has been outsourced since mid-year of 2003-04 and has not operated at breakeven in the past three years. • A change of FSMC has not improved financial performance. Meal participation is likely comparable to similar districts, but this year is not projected to be at breakeven either: • Students are being served full meals without applications. • Older kitchens have required more maintenance. • Still operating high number of kitchens with fewer students. • The current operation is below benchmark and industry standards in many areas, including MPLH productivity. St. Louis Public Schools

4. In-House Cost Hurdles • Prismatic identified five possible scenarios: • essentially status quo, with an improved FSMC contract. • continue with an FSMC contract for secondary schools, but the district would directly manage the existing bulk frozen operation at the elementary schools. • continue with an FSMC contract for secondary schools, but the district would directly manage satellite meals to the elementary schools (from secondary ones). • continue with an FSMC contract for the secondary schools, but the district would directly manage satelliting or self-cooking at the elementary schools. • move to an all in-house operation. • Many variations are possible, but these cover main cost categories. St. Louis Public Schools

5. In-House Cost Hurdles • Prismatic assumed the current cost of labor and food would be consistent in all scenarios and therefore not a deciding factor. • Prismatic identified key staffing and management elements necessary for each scenario. • Independent of scenario, two new staff positions are recommended: Director of Food Service and Meal Application Specialist. • Depending on scenario, varying levels of these staff would be required: Nutritionist, Supervisors, Procurement Specialists, and HR Specialists. St. Louis Public Schools

6. In-House Cost Hurdles • Comparing scenario-based staffing and management elements to FSMC costs indicates savings is possible St. Louis Public Schools

7. Implementation Timeline – Top 10 • Of the 20 global recommendations, all can begin to be implemented in 2009-10 and 10 should begin this summer: • Create a Director of Food Service position. ($93,750 salary and benefits) • Improve overall accounting for cash and meal counts. • Develop detailed monthly financial reports. • Ensure school support for the program. • Adopt and fund an equipment replacement plan. ($640,000 first year, $128,000 annually) • Improve F&R Application processing. ($43,750 salary and benefits, but estimated revenue gain of $250,000 annually) • Annually review meal prices and adjust as necessary. (estimated revenue gain of $450,000 annually) • Improve POS installations. (already begun) • Improve cafeteria appearance. (set aside $200,000 per year) • Develop work order maintenance system and equipment replacement criteria. St. Louis Public Schools

8. Implementation Timeline – Next 10 • Preparations for and implementation of these five recommendations should begin later this summer: • Adopt cafeteria productivity guidelines. • Require meal pre-costing. • Monitor purchasing practices. • Develop a loss prevention plan for injuries and work-related accidents. • Incorporate food service planning into overall facilities planning. • None of these recommendations has a direct fiscal impact. • Preparations for and implementation of these five recommendations should begin midway through 2009-10: • Establish collaborative model of budget development. • Compile and use long-term trend data to develop a realistic food service budget. • Develop a fund balance policy. • Incorporate food service considerations into future district planning. • Manage vending machines with district resources under one contract. • None of these recommendations has a direct fiscal impact. St. Louis Public Schools

9. Summation • The district can likely operate its food service program internally at a cost equal to or better than its current FSMC contract. • Prismatic recommends retention of an FSMC for 2009-10 with improvements to the FSMC contract. • Prismatic’s 20 recommended actions should be implemented regardless of choice to retain FSMC or return food service program management in-house. • Implementation of Prismatic’s 20 recommended actions should result in significant efficiency and quality improvements. St. Louis Public Schools