If school districts are losing money in the school lunch business, then how can outside companies turn a profit?
That’s one of the core issues in a series of stories by reporter Joseph Cress that was published in Sunday’s edition of The Sentinel.
The Carlisle Area School District is the most recent in Cumberland County to outsource its service, signing an agreement to start next school year. The district expects to turn a $500,000 annual operating deficit in food services into $200,000 surplus in the first year of the contract. In fact, the agreement with Chartwells guarantees the district a profit of $200,000 from operations for 2014-15.
Not paying into the Public School Employees’ Retirement System (or PSERS), as well as the efficiencies large companies such as Aramark or Chartwells provide, seem to be the key money savers. The companies also market their products better, which they say will get more students back to buying school lunches. In some districts, that number is tailing off.
The five school districts in Cumberland County that have gone this route — Carlisle, Big Spring, East Pennsboro, South Middleton and West Shore — have agreements with food service companies that vary in details. While Carlisle is just starting its endeavor, we were surprised to learn that East Pennsboro started outsourcing all the way back in the 1970s.
In most cases, the companies retain local employees and they are required to meet certain nutritional requirements.
But there is a loss of local control for school districts. Aramark is based in Philadelphia. Chartwells is a division of Compass Group North America, based in Charlotte, North Carolina.
The money saved sounds like it comes on the backs of the employees. Their benefits will be affected significantly. They will get less out of this deal.
At the end of the day, these are businesses, and businesses need to make money. When push comes to shove, how will pricing be affected? How will quality and nutritional value be affected? Will corners be cut to make a profit?
But we also need to keep in mind that if these companies don’t do a good job, there is a danger that they won’t keep the contract. That won’t help their business, either.
That’s why we urge school districts to keep a close eye on the contracts. Are they saving money? Is the quality of food still there? Are there hidden costs that weren’t clear when the contract was signed?
Review the contract and the savings at each opportunity. Don’t pencil-whip extensions through each time a contract expires.
There is great potential for savings here as long as each district is vigilant about cost and quality.