Wednesday, December 20, 2017

The Case against Fixed Cost Contract for NJ School Food Service

Image result for nj dept of agricultureNJ Division of Food and Nutrition has announced that they are dramatically changing the way school districts contract with Food Management companies. The new method emphasizes cost over quality. For years, the NJ Business Administrators lobbied against a USDA initiative that would have imposed this type of contracting and prevailed but NJDA is now unilaterally requiring we abandon our current system. NJ Schools are leaders in quality nutrition programs. A vast majority of the state uses Food Service Management Companies and enjoy food service programs that operate at no cost. The Business Administrator community was not consulted, so the Division of Food and Nutrition could learn of our objectives for our schools and concerns about the Fixed Cost method of contracting.

The Fixed Cost contracting method has management companies being awarded contracts based on a cost per meal. The current method has management companies reimbursed for actual costs plus a fee for their service.
The concerns are:
The Loss of Flexibility
·       Any change a district requires could result in the need to seek new proposals. This is costly, time consuming, and delays implementation of projects the district wants.
For example
-        Change in lunch schedule
-        Addition of new services
-        Increasing number of cashiers, etc.
·       Food quality could suffer. Higher quality ingredients result in a higher cost per meal.
·       Participation in lunch program can suffer. If cost is the emphasis, and quality drops, the number of students dining in school will decline.
·       Nutrition Initiatives that encourage students to make healthy choices increase costs and may not be feasible due to the Fixed Cost.
Unintended Consequences
The Fixed Cost method rewards management companies when:
-        They work short staff
-        They use lower cost ingredients
-        They negotiate vendor rebates that they can retain
Inflation in costs such as food and labor may force the management company to compromise on quality to keep within the proposed Fixed Cost.
NJ Schools want:
·       To choose a company that best addresses the objectives of their community
·       To retain the flexibility we currently enjoy
·       Preserve our Quality Nutrition programs

Please pass the resolution to support quality nutrition programs for New Jersey students.

Thursday, June 15, 2017

How Would Changes to ESSA's Block Grant Work?

How Would Changes to ESSA's Block Grant Work?: Lawmakers are allowing states to distribute funds for the Student Support and Academic Enrichment grants competitively, instead of by formula.

Sunday, June 11, 2017

USDA - Elimination of Cost Reimbursement Contracts: A Bad Move

In response to proposed rule changes for Child Nutrition Program Integrity School Business Administrators from New Jersey are saying, "NO!"  This measure as reported by this BA with unanimous support from my colleagues is a BAD MOVE!  As stated, the move to a cost per meal contract § 210.16 Food service management companies. (Page 40 of 65) emphasizes Price over Quality.  As Quality goes down > Sales go down as students pull out, instead opting to bag it... thus Sales goes down therefore reducing Profit.  This promotes an inferior program resulting in lower food quality.

The inescapable conclusion is district's will again be forced to subsidize programs through Fund 10 General Operating Funds; thus redirecting dollars from the classroom to the cafeteria, taking resources away from delivery of instruction.

As stated in the law:
§ 210.1 General purpose and scope.
(a) Purpose of the program. Section 2 of the National School Lunch Act (42 U.S.C. 1751), states: ‘‘It is declared to be the policy of Congress, as a measure of national security, to safeguard the health and well-being of the Nation’s children and to encourage the domestic consumption of nutritious agricultural commodities and other food, by assisting the States …
Yet this move is contra to this mandate as it will push more children to drop out of a program whose function is to promote "lowest price per meal" which encourages Food Service Management Companies (FSMC's) to cut corners and eliminate quality in order to make their margins.

Accordingly, these bid structure changes eliminate flexibility and input from districts as we loose the ability to handle changes to wellness policy and items we decide not to sell, new price points for menu items and variable pricing.

Likewise district's will loose their ability to ensure effective management and quality of workforce as we will have NO control over wages paid aimed at attracting and retaining highly qualified staff similar to any restaurant or commercial food service operation who looses business as lower wages mean lesser skilled workers.

At a recent presentation by NJ Department of Agriculture spokespersons in Atlantic City at the New Jersey School Business Officials conference (6/8/17):  There were more questions than answers and many problems pointed out that went unaddressed.  Chiefly, How does the new contract model deal with a la carte sales, vending sales, Lea to Lea, and promotional events?

One main benefit of the current cost reimbursable contract is the ability to tailor a program to meet the changing needs of the community.  When a SFA decides to add a breakfast program, switch to sustainable paper products, offer enhanced quality foods, utilize local vendors or incorporate Jersey Fresh produce, or increase the wages of the food service staff they are able to make those decisions and it has not impact on the FSMC agreement.  This is called management and the rights of management will in fact be lost, but the children will be the biggest losers.

Saturday, October 22, 2016

NJ Schools Accountability Regs - The Need for Revisions

As November approaches with the sun setting of the "Accountability Regulations" all NJ districts wait to see what if any changes or modifications are in store for the operational management of their schools. Over the past year many of New Jersey School based professional organizations such as the New Jersey School Boards Organization (NJSBA), The Association of School Business Administrators (NJASBO) and the Association of School Administrators (NJASA) have spent numerous hours reviewing and commenting on the need for change to the regulations laid out in New Jersey Administrative Code [N.J.A.C. 6A:23]. The work of these separate groups has produced one common theme: "The regulations need to revised!" As with any legislation, many of the key points are relevant and have provided for clear accountability, guidance and practicality in the operation of our activities related to governance, operational efficiency and overall accountability; however, in many cases they far too restrictive and in some cases actually do more harm than good for the long term sustainability and health of public education in New Jersey.
This is truly an important work that highlights legitimate concerns and thoughtful deliberation from practitioners and stakeholders at the heart of education in New Jersey! My hope is the time, effort and expert advice will not go unheeded as the legislature has the opportunity to restore and repair critical aspects involving dignity, respect and executive management to attract and retain quality leadership at the top spot in all districts given the enormous degree of responsibility of that position.

Likewise, many of the suggestions prove to be simply a "common sense" approach to governance and operational integrity rather than "unnecessary compromise" in areas like the travel regulations.

Getting on the road at 5:45 a.m. to beat the traffic on a 2.5 hour drive to Atlantic City for a 8:30 registration is counter productive to starting fresh on-time and ready to tackle a days long training!" - but hey at least we get .31cent per mile

Many of the definitions, (i.e., "net budget") have not value as they are no longer relevant or consistent with our current funding laws [N.J.A.C. 6A:23A 1-2] and should be eliminated.

Another reality of the 2% capped environment is the fact that many educational programs are being jepordized, eliminated or passed up as they two percent levy caps often translate to less than one percent budget caps.  This penalizes the less wealthy school districts and erodes opportunities due to competing operational costs such as health care, salary increases and rising special education tuitions and services that are often mandated due to legal requirements of Individual Educational Plans or I.E.P(s) - N.J.A.C. 6A:23A-10.3.  The conclusion of all groups is that the "Banked Cap" be extended to a period of five years for future increased taxing authority vs. the current three year expiration date.

It is our hope that legislative members consider the advice, recommendations and counsel of those on the front lines in administering and working within the framework of public education in New Jersey.

Wednesday, September 28, 2016

Lead Sampling in NJ Schools - Effect over Cause

Lead Sampling in School Facilities
After attending a recent training on Lead Sampling in School Facilities provided by the NJ Department of Education, I am left as many are wondering if we are not taking a 'backwards' approach to the process given the amount of front end work expected before we even no if a problem exists.  While sampling makes sense and should be done at every building where students have access to drinking water - the process as outlined by the state remains questionable while it seems like we are doing a considerable amount of work, investigation, plan development and surveying for something that may NOT even be a problem.

In a letter released from the State DOE Division of Field Services, the regulations require testing for lead in all drinking water outlets within 365 days of the effective date of the regulations, which was July 13, 2016. According to the EPA, If lead concentrations exceed an action level of 15 ppb it is considered to be actionable or "Action Stage."

Many districts in the state have already tested in the wake of Flint, Michigan and reported lead problems in Newark prior to the regulations and found their results to be far below the standard with many drinking stations reporting <1ppb. As such common sense would say these districts should not be required to spend additional time, money and resources on further investigation of a problem that is non-existent in those districts.
The measures called for by the state in development of the plan and protocols call for continued outlay of funds to cover measures such as: Sampling, Certified Lab Analysis and assistance from consultants in order to complete the process and carry out the measures.
Even if in-house staff are used to comply with the measures you still loose significant time on task, therefore reallocating manpower from other critical mission tasks that require the same level of attention and focus. Consider every dollar allocated to this effort is a dollar not available for the classroom or other district needs - "Opportunity Costs."

We should be applying the principle of Cause and Effect - Concerning ourselves with why things happen (causes) and what happens as a result (effect).  If results from sampling produce levels near or above action stage (15ppb) [cause] then most definitely implement the required Quality Assurance Project Plan (QAAP) [effect]; however, to do so without knowing the results seems to be counter productive and unnecessary not to mention a waste of valuable funds that are most definitely needed elsewhere.

Wednesday, May 25, 2016

Stop the USDA Rule Change for Selecting FSMCs

The USDA has proposed another new rule change for those participating in the National School Lunch Program.   This is separate from the whole grain waivers that are set to expire.This new rule falls under the “Child Nutrition Program Integrity” rule.  It has two main focuses:
1)      It will change how Food Service Management Companies (FSMC) are selected.
The rule change would eliminate the cost reimbursable contract, which is the only type currently permitted in New Jersey. The proposed change is that the FSMC would be selected on a cost per meal.  This would emphasize price over quality.  It would inhibit district flexibility since all program changes would require a district to re-bid.  This change could include, changes of lunch schedules, increased cafeteria personnel, district requested menu changes, just to name a few.Choosing a FSMC based on the lowest meal cost does not promote quality or healthy nutrition for the students we serve.The USDA’s motivation for this change is based on an audit indicating that some management companies did not properly credit their client school districts with rebates.  This would already be a violation of the current regulations.  The USDA should focus on punishing those that do not adhere to this requirement; they should not punish students with an inferior program and lower food quality.

2)     The USDA will assess more penalties for violations.
The USDA wants more power to fine schools for violation of the Healthy, Hunger-Free Kids Act (HHFKA).  The Washington Beacon reported that a pre-school teacher in West Virginia was targeted to be fined for using candy as a reward for good behavior. The HHFKA has already had a detrimental effect on the number of students participating in the lunch programs.  These fines will make the relationship with our state regulators more adversarial. 

CALL TO ACTION:Let your voice be heard.  The USDA is accepting comments about the proposed rule change through May 31st.  I have included a sample letter you can use as reference.  Let the USDA know how you feel as a Business Administrator.  We have always been and will continue to be the professionals hired by our communities to secure the best service, best quality, and the best financial results for our schools.

Wednesday, March 30, 2016

HHFKA Alert: Relax Whole Grain standard to the 50% currently permitted in New Jersey.

The Healthy, Hunger-Free Kids Act (HHFKA) has had a major impact on participation in the National School Lunch Program.  The new requirements phased in since the 2010 enactment have resulted in a decreased number of students choosing reimbursable meals, increased food waste and an increased paperwork burden.  These changes have adversely affected the economic efficiency of school cafeterias.

It goes without saying that Boards of Education care about the health and well-being of students in their communities.  Concerns about the regulation’s focus on the burdens created by the Act that have little to no benefit in the effort to promote good nutrition.  These raised concerns, resulted in Congress directing the USDA to relax requirements to make meals more appealing to students.  The NJDA responded by granting waivers for the 100% whole grain rich requirements for the 2015-2016 school year. At the same time, they implemented additional paperwork burdens, further increasing the cost for feeding children, with no nutritional benefit.
A Call to Action
Congress is considering actions that will affect these regulations as they prepare for Child Nutrition Reauthorization.  The Senate Agriculture, Nutrition and Forestry Committee unanimously approved a compromise providing more flexibility in the standards and elimination of a portion of the onerous paperwork.  Unfortunately, the relaxed requirement to 80% whole grain rich is tougher than the 50% permitted in the waivers for 2015-2016.  (Many other states did not grant waivers and maintained the 100%).  Simply stated, 100% of grains/breads offered with the whole grain rich requirement must be whole grain rich.  Students did not respond well to this requirement, with all sandwiches, pasta, and pizza served being whole grain rich.  This contributed to the “mystery food” reputation of cafeteria food.
Congress should…
·        Relax Whole Grain standard to the 50% currently permitted in New Jersey.
·        Omit the new Non-Program Revenue Tool that changes the audit and requires all costs to be separated.  This is expensive and produces no benefit.  It is designed to prove that a district is not subsidizing a la carte sales with surpluses generated by the sale of reimbursable meals (no one does this)!

Sunday, January 31, 2016

Dealing with the "CAPs" in Today's Changing Environment

It's no secret the 2% CAP(s) were put into place to provide tax levy relief under the assumption that Public Schools in New Jersey were running inefficiently and without proper oversight or restrictions on spending.  While this may have been the case for a select few, by in large districts have and continue to manage their annual budgets with clear and precise operating procedures that existed long before the Accountability Regulation promulgated in Chapter 23 of Title 6A of the NJ Administrative Code.

What the Accountability Reg's did accomplish in many cases was to provide a strong degree of authority and strength for the School Business Administrators when dealing with enforcement of compliance.  Absent the regulations, BA's were left to rely on their influence and reasoning surrounding sound business decisions and fiscal management skills.

That withstanding, the problem of the 2% CAP or any cap structure is the inability to freeze costs "expenditures" such as wages and benefits for an extended period.   Add to this the complications of containing Special Education costs related to out of district private school tuition and I.E.P (Individual Education Plan) related services including 1 to 1 aides and the task is all but impossible.

Chapter 23 introduced districts to OFAC (Office of Fiscal Accountability), SEMI (Special Education Medicaid Initiative) in Chapter 5 and the Executive County Superintendent Budget Review in Chapter 9.  These measures were designed to enhance oversight and in SEMI's case push more funding away from the state and onto another source, in this case the Federal government.

It is Chapters 10 and 11 that deal with "Spending Growth Limitation" and Tax Levy Growth Limitation."
(c) The Commissioner shall complete by the end of the 2010-11 school year a study of the tax levy growth limitation enacted pursuant to N.J.S.A. 18A:7F-37 through 40, for the purpose of analyzing any effects that the tax levy growth limitation has had on disparities in spending among the school districts. The study shall include a recommendation by the Commissioner on whether the tax levy growth limitation should be continued after the 2011-12 school year, or whether the spending growth limitation under N.J.S.A. 18A:7F- 5, and N.J.A.C. 6A:23A-10.2 and 10.3 (banked cap) would be more effective in 153 addressing any identified disparities in school district spending, or whether a revised growth limitation method might be warranted.       
Since inception of the CAPs which include Superintendent Salaries, I could not help compare the attempt to artificially halt or contain budgetary price and salary increases with the failed attempts throughout history such as the "wage & price controls" of the Nixon administration in the early 70's or the "Law of Maximum" in revolutionary France in the 1790's.  Neither of which proved effective nor where they sustainable.

Bottom line is we are in the "Business of Education" and like any business the laws of supply and demand ring true.  Giving an effective wage and annual increase allows schools to attract and retain high quality administrators, teachers and clerical staff that do and will compete for higher wages and benefits in other sectors of the market.

The chief reason most district's have been able to manage within 2% environment over the past four years has been in large part due to the additional revenues captured under Chapter 78 through employee contributions; however, this has only exacerbated the already strenuous employee dissatisfaction of declining (take home) net pay.  The unrest has morphed into disgruntled feelings of oppression for the unions that is making its way into collective bargaining.

Although the CAPs are with us for the 2016-17 budget, we should consider the potential damage and long term effects of erosion in our programs that come from forced choice to make extreme cuts by eliminating program and staff in order to adjust to those CAPs.