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In the Superintendent’s 2009-10 Budget Message, we advised that our School Nutrition Services (SNS) Fund experienced a net loss of $2.47M in 2007-08, of which $2.M was attributable to the assessment of indirect cost. In 2008-09, the net loss in the SNS Fund is anticipated to be approximately $600K. The $600K excludes an estimated $2.1M in indirect cost and $503K in unpaid meal charges ($502,841 as of 6/19/09). The impact to the local fund is $2.6M ($2.1M in waived indirect cost and $503K in unpaid meal charges (the local fund must cover as SNS fund cannot write-off debt). A significant contributing factor in the anticipated $600K loss in the SNS fund is the potential shortfall we could incur in recovering our $1M initial investment in the SECURE (Southeast Cooperative Utilizing Resources Efficiently) Food Purchasing Cooperative (“SECURE”). Guilford County Schools (GCS) joined SECURE July 1, 2001 and withdrew from SECURE effective June 30, 2006. SECURE’s Board of Directors met and voted to dissolve SECURE as a food purchasing cooperative on June 26, 2007. Board attorney Jill Wilson and another member of her firm are leading the ongoing recovery efforts on our behalf. We believe mediation may be the next step toward resolution of the SECURE issue.
Staff recommends taking the following actions in order for the 2009-10 SNS Fund operation to generate sufficient revenues to cover expenses including the assessment of indirect cost:
- reduce menu/food choices (i.e., offer two versus four entrees, use 25% less whole grain products)
- reduce amount of processing supplies purchased (i.e., reduce use of cups for serving individual portions)
- reduce or eliminate breaks in serving time schedules where appropriate/possible
- reduce number of serving lines where appropriate/possible (determine number of lines based on participation)
- defer computer equipment replacement at elementary schools
- limit other computer equipment replacement to that deemed mission critical/emergency
- allow replacement only of small wares (i.e., serving utensils, food thermometers, pans)
- purchase uniforms for new employees only (i.e., postpone purchasing additional set of uniforms for existing employees)
- reduce number of van rentals (schedule meal delivery for early/middle colleges and academies based on existing Child Nutrition schedules for traditional/satellite sites)
- discontinue printing/distributing menus (menus will be available on-line or in newspapers)
- increase lunch prices by fifty cents at elementary and by thirty cents at middle and high school (places GCS at five cents below Winston-Salem/Forsyth County Schools’ lunch prices).
Given the feedback received from Board members, current staff recommendations do not include moving all SNS positions to 4, 6 or 8 hour positions as implementing this recommendation would result in decreases in pay for some SNS employees.
INDIRECT COST:
In the Superintendent’s 2009-10 Budget Message, we also advised that school districts in North Carolina are required to execute an Agreement to Administer the Federally-Funded Child Nutrition Program(s) in order to operate a federally funded Child Nutrition program for school year 2008-09. The agreement specifies that school districts “shall … waive indirect cost fully or partially when the assessment of this cost contributes to a financial loss in the Child Nutrition Program.” Executing this agreement is significant given that (a) federal funds comprise approximately 50% of total SNS revenues and (b) indirect cost from SNS is budgeted as a $2.1M revenue source in the Local Current Expense Fund.
LUNCH PRICES:
Dr. Lynn Hoggard, Section Chief, Child Nutrition Services, North Carolina Department of Public Instruction made a presentation entitled “Can your LEA’s Child Nutrition Program survive the Perfect Storm” to the North Carolina Association of School Business Officials in February of 2009. Dr. Hoggard’s presentation included the following information regarding 2008-09 school lunch prices:
- total increase in food cost is projected to range from 8% to 15%
- average cost to produce a school lunch rose from $2.80 to $3.20
- average price for a paying student is $2.00
- free reimbursement falls short by $0.63 ($3.20 - $2.57 = $0.63)
- reduced reimbursement falls short by $1.07 ($3.20 - $2.13 = $1.07)
- paid rate falls short by $2.97 ($3.20 - $0.23 = $2.97)
- paid rate + paid meal price falls short by $0.97 [$3.20 – ($0.23 + $2.00) = $0.97]
ATTACHMENT A provides a comparison of 2008-09 lunch prices and proposed 2009-10 lunch prices for GCS and several other select districts – with many of these districts being those with which we are frequently compared.
For information/reference purposes:
- GCS has raised student lunch prices twice since merger (July 1993)
- lunch prices increased five cents at elementary and ten cents at middle and high school in 2004-05
- lunch prices increased twenty cents across the board in 2007-08;
- lunch price increases recommended for 2009-10 will not impact GCS students eligible for free or reduced meals (=approximately 50% of our student population);
- based on current year participation data, approximately 15,050 students or 42% of our remaining student population will be impacted by the proposed lunch price increases;
- the recommended 2009-10 elementary school lunch price increase equates to +$2.50 per week per paying student ($0.50 x 5);
- the recommended 2009-10 middle/high school lunch price increase equates to +$1.50 per week per paying student ($0.30 x 5); and
- GCS raised adult lunch meal prices from $2.40 to a la carte pricing for food items instead of setting a fixed adult meal price effective with the 2007-08 school year (no price increase is anticipated for adult meals in 2009-10).
RECOMMENDATION: The administration requests board approval to increase 2009-10 lunch prices by fifty cents at elementary and by thirty cents at middle and high school.
Attachment - A
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