Restructuring Food Service Operations

As a result of the recent economic downturn, reduced district budgets, and many districts’ use of general fund dollars to subsidize food service operations, School Food Authorities (SFAs) have requested information on how they can reduce school food service costs. Given that SFAs can collaborate with other SFAs to reduce the administrative and operational responsibilities and costs associated with operating the National School Lunch Program (NSLP), this Management Bulletin (MB) outlines alternative ways to structure food service operations in order to streamline operations and improve purchasing power, while ensuring compliance with State and federal regulations.

Streamline Operations and Improve Purchasing Power

There are significant administrative costs and operational responsibilities associated with operating the NSLP. SFAs that provide school meals have an opportunity to explore the amount of responsibility they want to assume in the administration of the school nutrition programs. The following potential options illustrate how SFAs can decrease administrative costs and improve purchasing power by modifying how the SFAs purchase goods/services, prepare meals, and/or increase revenue for providing school meals.

1. Become Site(s) Under Another SFA

• By entering into an interagency agreement with a nearby SFA, that SFA accepts administrative responsibility of the NSLP for your site(s).

• You can cancel your NSLP agreement.

• Administrative responsibility for distributing, collecting, and certifying eligibility applications falls to the sponsoring SFA.

• The sponsoring SFA will provide meals to your site(s), further decreasing administrative and purchasing costs.

• The sponsoring agency benefits by increasing the number of meals it prepares and serves, which increases their meal reimbursement and overall purchasing power.

• This approach can be a win-win situation for all schools involved.

NOTE: Be sure to check with your agency’s financial office to understand all impacts this option may have on all district revenues relating to meal service (e.g., Meals for Needy Pupils Program revenue limit adjustment).

2. Joint Powers Authority

• A joint powers authority (JPA) is defined as two or more public entities that are able to operate collectively.

• California Education Code (EC) Section 41980 allows public school districts and county offices of education (COEs) to form a JPA where the sole function of the JPA is to provide school food services.

• Under this provision, a JPA would allow one or more separate school districts to combine the operation, management, and purchasing power of the individual food services into one, streamline daily operations, and appoint one management team to oversee the entire operation.

• Any formation of a JPA within California is subject to prior approval by the State Superintendent of Public Instruction (SSPI). A resolution approving the JPA must be adopted by the SFA’s governing board on or before June 30 preceding the fiscal year in which the JPA will operate. Requests for approval for a JPA to the SSPI can be sent directly to the NSD at:

School Nutrition Programs Unit
Nutrition Services Division
California Department of Education
1430 N Street, Suite 4503
Sacramento, CA 95814

Note: Under current law, only public schools and COEs (i.e., not charter schools or Residential Child Care Institutions) can form JPAs. JPAs must be registered with the California Secretary of State’s office.

3. Two or More SFAs Share Staff

• Just as some smaller districts share Superintendents, SFAs may elect to hire a Food Service Director and other key food service staff to oversee the food service operation of several districts, and share the labor costs.
• The individual districts save in administrative and personnel costs.
• Sharing staff streamlines ordering food and supplies, as well as improving purchasing power because food and supplies can be ordered in larger quantities.

4. Receiving Prepared Meals from a Nearby SFA

• Some SFAs (e.g., small school districts, charter schools, and residential child care institutions [e.g., group homes or juvenile halls]), especially those that have inadequate facilities to prepare school meals, may be able to decrease administrative and operating costs associated with the NSLP by receiving vended meals from a nearby school district.
• SFAs that choose to purchase meals from a nearby district may do so while continuing to operate as their own SFA and remain responsible for the administration of their school meal program(s).
• Another option to further decrease the cost and administrative responsibility is to become a site under the school district from which they receive meals (see Streamlining Operations option 1 above).

5. Preparing/Catering Meals for Nearby Schools

• SFAs who prepare school meals in their own self-operating kitchen may have the ability to generate revenue by selling school meals that they prepare and distribute to other schools within their communities.
• Providing vended meals may increase the total number of meals served and can increase revenue.

6. U.S. Department of Agriculture Foods
   
   SFAs that participate in the NSLP are eligible to receive the U.S. Department of Agriculture (USDA) foods. SFAs earn entitlement dollars to order food items based on the number of reimbursable lunches served in the previous school year (e.g., all reimbursable lunches served between July 1, 2021 and June 30, 2022 will earn $0.365 per reimbursable lunch to order USDA Foods for the 2022-23 school year.) About 10 percent of food served in the child nutrition programs can come from USDA Foods, thus improving purchasing power and decreasing overall food costs. SFAs can receive their USDA Foods in one of three ways.
   

1. As a State Distribution Center Allocation Agency
2. As a State cooperative (Co-op) member
3. As a private Co-op member

Members of the State and private Co-ops may improve purchasing power within their USDA Foods programs.

• State Co-op
  SFAs receiving USDA Foods may choose to enroll as a State Co-op member. SFAs belonging to the State Co-op may operate independently or as part of a collective group. There is no minimum average daily participation (ADP) required and the CDE’s staff oversees the program for the SFA. As a cost saving benefit, State Co-op members utilize the State Distribution Centers; however, they must pre-order USDA Foods for the entire school year.
  
  
• Private Co-op
  SFAs receiving USDA Foods may choose to enroll as a private Co-op member. In a private Co-op, one SFA must act as a lead agency for the group. All USDA Foods received must be delivered to a designated warehouse, distributor, or processor. Private Co-ops do not utilize the State Distribution Centers.

The chart on the last page of this MB provides an at-a-glance view of the options outlined above.

This MB does not provide every available option for structuring school food service operations; rather, it offers some alternatives to consider when researching options to reduce administrative burdens.

If you have any questions regarding this MB, please contact the Food Distribution Program by phone at 916-323-0685 or by email at fooddistribution@cde.ca.gov.

At-A-Glance
Restructuring Food Service Options
SFA Alternatives