2005-2007 SCHOOL YEARS SCHOOL

YEAR TOTAL LABOR COSTS TOTAL REVENUE PERCENTAGE OF LABOR COSTS TO REVENUE 2003-04 $2,351,283 $4,737,624 49.63% 2004-05 _{$2,466,737 $5,146,212 47.93%} 2005-06 _{$2,480,615 $5,268,592 47.08%}

The higher than best practice labor cost in RCPS is contributing to the lack of a three- month food service fund balance, which is the appropriate reserve level for school divisions.

By keeping labor costs below 40 percent of total revenue, the division would be better aligned with best practices, as is the case in Renton School District of Washington. RECOMMENDATION 6-2:

Reduce labor costs to best practice levels of 40 percent of revenue.

By reducing labor costs, Roanoke City Public Schools should gain a healthier fund balance and have a stronger financial statement. The division should meet with impacted staff immediately to prepare for the reduction in hours if meal counts are not improved to the best practice levels shown in Exhibit 6-2.

FISCAL IMPACT

By reducing labor costs to 40 percent of revenue, RCPS should see a cost savings of $373,178 per year. This estimate was derived as follows: 47% of total labor costs or $2,480,615 − 40% of total labor costs or $2,107,437 = $373,178/yr. − $30,852 (from Recommendation 6-1) = $342,326/yr. The estimated 5-year cost savings would thus be $1,711,630.

Recommendation 2007-08 2008-09 2009-10 2010-11 2011-12 Reduce Labor Costs $342,326 $342,326 $342,326 $342,326 $342,326

6.2 Procedures

Food service procedures manuals provide important information to drive internal operations. An absence of formal procedures creates the potential for misinterpretations and omissions within food service operations.

Procedures also provide the basis for staff to understand the necessity of compliance with federal, state, and local regulations and are essential to efficient food service operations.

FINDING

The division is not in possession of a current point-of-sale procedures manual.

RCPS recently upgraded its point-of-sale system, Café Enterprise, through Data Business Systems, Inc., of Virginia Beach. The agreement signed by the division includes hardware, software, and software maintenance; however, the division has not yet received a procedures manual for the latest version, which features significant upgrades.

According to staff interviews, RCPS has repeatedly requested this information and has been told by the vendor that the manual has not been created yet. As a result, the division does not know how to create and run reports that are needed to properly manage the division cafeterias.

A lack of procedures manuals for a finance-driven data system is unacceptable, and the division should seek monetary reimbursement for maintenance until such a manual has been provided by the vendor.

RECOMMENDATION 6-3:

Schedule a meeting between the superintendent, the associate superintendent of business management, and the vendor to determine when a point-of-sale procedures manual will be provided and the consequences of not having one following the implementation of the upgrade.

The senior management of the division should meet with the vendor to determine when the manual will be delivered. Furthermore, the division should verify that the vendor will properly test the manual as a quality control step. Both parties should agree on a financial reimbursement as manuals are typically part of the deliverable for all software and updates should be provided automatically. The lack of a procedures manual prevents the division from adequately monitoring food service operations.

FISCAL IMPACT

This recommendation can be implemented using existing staff and should produce a cost savings through either a reduction in the annual fee or a rebate for a portion of the upgrade; however, this amount should be determined through vendor negotiations.

FINDING

The school division has a few frozen food items that have passed their expiration date. The review team found three boxes of oatmeal cookies in the freezer at Breckinridge Middle School that had expired one month prior to the on-site visit. Staff indicated that they “knew there were some older items and had been meaning to clean out the freezer and refrigeration units.”

While visiting Lincoln Terrace Elementary, the team also found cinnamon rolls that were four months past their expiration date as well as blueberry muffins that were two months past their expiration date. Again, staff were aware of the items and indicated that they had not been able to clean out the units lately.

If routine checks are not performed for expired products, staff may accidentally prepare the items and sell them to students. This scenario could lead to sickness among students. Furthermore, by failing to keep track of expiration dates, the district ends up wasting food that it has either purchased or procured through commodities.

It is common practice among school divisions to use the first-in-first-out (FIFO) method of food usage. The division should implement and mandate this approach and discard expired foods immediately.

RECOMMENDATION 6-4:

Ensure that all kitchen managers discard all foods that are currently past their expiration dates and implement the first-in, first-out method for preparing meals to use food before it expires.

The implementation of this recommendation will allow for the use of all food paid for by the division as well as items provided through USDA commodities. This recommended practice will also eliminate the possibility of expired foods being prepared and sold. Additionally, the division should immediately discard all foods that are past their expiration date.

FISCAL IMPACT

This recommendation can be implemented using existing staff resources and should provide cost savings by preventing purchased food from going to waste.

6.3 Financial Performance

Financial performance is important to any school business operation. School divisions must adhere to proper financial practices related to food service operations, since there are implications from a local, state, and federal perspective due to funding sources associated with food services.

School divisions should strive to have the equivalent of three months’ worth of expenditures in their fund balances for food service operations. This amount allows for capital and other equipment replacement without having to use general funding.

FINDING

RCPS is not using USDA commodities effectively.

Commodities have only been supplementing the food service operations to a limited extent, as shown in Exhibit 6-4. As can also be seen in the exhibit, only 1.2 percent of the 2005-06 food budget was from USDA commodities, following a 1.4 percent use during the previous year.

EXHIBIT 6-4

COST OF FOOD SERVICES SUPPLIES BY VENDOR