June 11, 2009

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.

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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.

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Prismatic identified five possible scenarios:1. essentially status quo, with an improved FSMC contract.2. continue with an FSMC contract for secondary schools, but the

district would directly manage the existing bulk frozen operation at the elementary schools.

3. continue with an FSMC contract for secondary schools, but the district would directly manage satellite meals to the elementary schools (from secondary ones).

4. continue with an FSMC contract for the secondary schools, but the district would directly manage satelliting or self-cooking at the elementary schools.

5. move to an all in-house operation. Many variations are possible, but these cover main cost

categories.

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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.

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Comparing scenario-based staffing and management elements to FSMC costs indicates savings is possible

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1 2 3 4 5

Total, Additional District Staff $137,500 $387,500 $328,125 $398,438 $514,063

Total, Management Elements $0 $3,873 $185,873 $145,873 $193,864

FSMC Administrative Fee $700,000 $233,333 $273,333 $253,333 $0

FSMC Management Fee $160,000 $60,000 $80,000 $70,000 $0

Total $997,500 $684,707 $867,332 $867,644 $707,926

Current Cost $860,000 $860,000 $860,000 $860,000 $860,000

Difference $137,500 -$175,668 $7,332 $7,644 -$152,074

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Of the 20 global recommendations, all can begin to be implemented in 2009-10 and 10 should begin this summer:1. Create a Director of Food Service position. ($93,750 salary and benefits)

2. Improve overall accounting for cash and meal counts.

3. Develop detailed monthly financial reports.

4. Ensure school support for the program.

5. Adopt and fund an equipment replacement plan. ($640,000 first year, $128,000 annually)

6. Improve F&R Application processing. ($43,750 salary and benefits, but estimated revenue gain of $250,000 annually)

7. Annually review meal prices and adjust as necessary. (estimated revenue gain of $450,000 annually)

8. Improve POS installations. (already begun)

9. Improve cafeteria appearance. (set aside $200,000 per year)

10. Develop work order maintenance system and equipment replacement criteria.

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Preparations for and implementation of these five recommendations should begin later this summer:11. Adopt cafeteria productivity guidelines.

12. Require meal pre-costing.

13. Monitor purchasing practices.

14. Develop a loss prevention plan for injuries and work-related accidents.

15. 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 2009-10:16. Establish collaborative model of budget development.

17. Compile and use long-term trend data to develop a realistic food service budget.

18. Develop a fund balance policy.

19. Incorporate food service considerations into future district planning.

20. Manage vending machines with district resources under one contract.◦ None of these recommendations has a direct fiscal impact.

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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.

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