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.