Morgan County School District RE-3

Transcription

1 Morgan County School District RE-3 Food and Nutrition Services Program Assessment March, PO Box 20708, Boulder CO Beth Collins Ann Cooper Loreen Farrell

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3 Table of Contents TABLE OF FIGURES...5 INTRODUCTION...7 PART I ENROLLMENT, ELIGIBILITY AND PARTICIPATION ENROLLMENT AND ELIGIBILITY SNAPSHOT MEAL PARTICIPATION SNAPSHOT ORGANIZATIONAL STRUCTURE AND STAFFING...8 SITE STAFFING AND PRODUCTIVITY SCHOOL SITE FACILITIES ELEMENTARY SCHOOLS MIDDLE SCHOOL HIGH SCHOOL FOOD AND MENUS BREAKFAST A LA CARTE ADULTS CATERING OTHER PROGRAMS STAFF DEVELOPMENT PROCUREMENT AND WAREHOUSE INVENTORY MANAGEMENT PROCUREMENT WAREHOUSE Order Processing and Inventory Management Stock Organization and Flow BACK OFFICE SOFTWARE EXPANSION CONDITIONS FOR SUPPORT PART II FISCAL ANALYSIS FISCAL MANAGEMENT DATA COLLECTION AND ANALYSIS CASH RECEIPTS CATERING ACCOUNTS PAYABLE NEGATIVE BALANCES DATA ACCURACY LABOR COSTS POSITION CONTROL MEALS PER LABOR HOUR (MPLH) TIME CLOCK SYSTEM EXTRA HOURS ELIGIBILITY P a g e

4 MEAL COUNTS FOOD COSTS BUDGET DEVELOPMENT BUDGET ASSUMPTIONS POSITION CONTROL REVENUE PROJECTIONS FOOD COSTS PROFIT AND LOSS PART III RECOMMENDATIONS AND NEXT STEPS OVERVIEW FISCAL MANAGEMENT FINANCE DEPARTMENT HUMAN RESOURCES TRACKING TOOLS ORGANIZATIONAL STRUCTURE JOB DESCRIPTIONS STAFF DEVELOPMENT TECHNOLOGY BACK-OFFICE SYSTEMS FOOD STANDARDS PROCUREMENT SALAD BARS A FRESH FOOD EXPERIENCE BREAKFAST ACCESS FOR SECONDARY AND GREEN ACRES WELLNESS POLICY AND COMMUNICATION VISION, HEALTH AND ACADEMIC ACHIEVEMENT Table of Figures Figure 1. Average Enrollment and eligibility SY Figure 2. Breakfast and Lunch Average Daily Participation Through January SY Figure 3. SY Meals per Labor Hour Summary (ADP through January) Figure 4. Columbine Elementary Figure 5. Pioneer Dining Room (left); Sherman Kitchen (right) Figure 6. Middle School Kitchen Figure 7. Middle School Service line Figure 8. Fort Morgan High School Kitchen (left and right) Figure 9. Fort Morgan High School Service Set up (left and right) Figure 10. Excerpt from Fort Morgan Cycle Menu Figure 11. Lunch at the Middle School (left); Lunch at Columbine Elementary (right) Figure 12. Fruits and Vegetables at Pioneer Elementary (left); Salad Bar at the Middle School (right) Figure 13. High School Hot Service Line (left); High School Salad Bar Items Near POS (right) P a g e

5 Figure 14. Pioneer s Wagons for BIC (left); Columbine Student Picking up BIC (right) Figure 15. One of the Dry Storage Areas in the Warehouse for FNS Figure 16. SY Through Profit and Loss Statement Figure 17. SY Position Control Worksheet Figure Meal and Revenue Tracking Tool (Summary) Figure 19. SY Average Daily Participation Summary through January Figure 20. Morgan County School District Profit and Loss Statement (Excerpt) Figure 21. Sample Food Cost Projection tool Using SY Meal Count Data Figure 22. Food Cost and Inventory Tracking Tool (cropped) Figure 23. Morgan County School District Multi-Year Profit and Loss Statement Figure 24. Breakfast Expansion Impact Analysis P a g e

6 INTRODUCTION On behalf of LiveWell Colorado, Lunch Lessons LLC, represented by Beth Collins and Loreen Farrell, conducted an assessment of Morgan County School District s Food and Nutrition Services Department in late January of LiveWell Colorado's LiveWell@School Food Initiative which has been working with districts across Colorado since 2009, is providing an intensive evaluation of current Food and Nutrition Services Department operations to support the district s shift to a whole foods based, scratch-cooked production system for its meal program. LiveWell@School Food Initiative encourages school districts to reduce their reliance on highly processed foods and to increase their offerings of fresh, made from scratch student meals to reduce the state's increasing childhood obesity rates and to motivate and educate students about making healthy food choices. In addition to the assessment and its subsequent strategic planning, LiveWell provides training workshops as well as onsite culinary training provided by LiveWell s chef team. The goal of the assessment is to provide objective, unbiased detailed analysis of the current operations and provide recommendations and strategic planning to support the district s desire to develop their capacity for scratch-cooked, whole foods based meals for the district. Lunch Lessons approach to district assessments utilizes a whole system perspective; meaning that food services is a complex inter-dependent network of systems including; finance, procurement, transport, food production, human resources, meal service, marketing and federally mandated recordkeeping; all operating within a highly-regulated environment with very limited financial resources. We look for strengths and challenges to the existing system and relate that to strategies that support changes the client wishes to establish or understand the feasibility of. We will identify what part of the existing systems are working well and can support change versus areas of the operation that may need modification, support, investment (either financial or other resources) to establish viability for accomplishing a different or refreshed vision of the district s goals within food services. PART I ENROLLMENT, ELIGIBILITY AND PARTICIPATION Morgan County School District RE-3 (MCSD) is a small district of approximately 3200 students located in Fort Morgan, Colorado. Fort Morgan is the county seat and the most populous in the county with approximately 11,000 residents. The school district is compact with one Early Childhood Center that houses Kindergarten and Pre-School, four Elementary Schools; one Middle School and two High Schools. The free and reduced eligible enrollment is 67% with the individual sites ranging from 58% to 80% (figs. 1 and 2). Participation is strong except for the Middle School and the main High School breakfasts, at 9 and 5% respectively. Lunch participation is excellent across the district except at the main high school. 7 P a g e

7 1.1 Enrollment and Eligibility Snapshot FIGURE 1. AVERAGE ENROLLMENT AND ELIGIBILITY SY Meal Participation Snapshot FIGURE 2. BREAKFAST AND LUNCH AVERAGE DAILY PARTICIPATION THROUGH JANUARY SY Organizational Structure and Staffing The Food and Nutrition Services Department (FNS) in Morgan County School District is led by Director Carol Tormohlen. Director Tormohlen is in her 30 th year of service in the District. She came to the District in 1987 starting as a substitute and later that year became full-time at Baker Elementary School. By 2000 she took over as Interim Director and later was hired as the Director. Her college years taking accounting courses has served her well as she has a good grasp on the numbers and running her program as a business. The FNS office team consists of Director Tormohlen and Food Service Secretary, Vicki Messinger, with Warehouseperson, Kyle Knaus, in the adjacent District Warehouse. There are 33 site staff and four Lunch Aides. The Lunch Aides do not report to FNS but are paid by FNS for 30 minutes to an hour during lunch to assist in the dining rooms. There are two job titles at the sites, Food Service Manager and Food Service Cook. The hours assigned range from 2 hours to 7.5. No job descriptions on are file for any of the positions except the Warehouseperson that was hired more recently. Though the Food Service Secretary position is also newly created it was created without posting and a new job description was never created. 8 P a g e

8 Site Staffing and Productivity Director Tormohlen explained that the current staffing model has not been adjusted for many years. She feels that some of the sites are over-staffed. The reality of a high free and reduced district with good participation and relatively low labor costs is that the FNS fund has generated quite a large fund balance over the years. This allows for a lot of leeway in areas like staffing that not many districts enjoy. Despite that, Director Tormohlen does track productivity using a Meals per Labor Hour worksheet (Appendix 01) 1 which evaluates productivity by site by month. Director Tormohlen s worksheet uses meal equivalents (MEQs) to generate the productivity value of each meal; breakfast is 3 breakfasts = 1 meal; lunch is 1 to 1 and a la carte is divided by the free meal reimbursement rate. Director Tormohlen does not include snack in her calculation which is credited at 4 snacks = 1 meal. In the MPLH analysis that Lunch Lessons uses, we give more meal credit for a breakfast in the classroom model (.66 = 1) than Director Tormohlen does and depending on the type of a la carte (made from scratch versus packaged snack items) we may or may not give productivity credit for a la carte. Meals per Labor Hour (MPLH) is the most common measurement in school food service to evaluate staffing levels. Typically, the formula considers job descriptions and specific duties associated with those positions, the production model (on-site production, satellite, hybrid), the type of foods and typical menu complexity (readyto-heat versus scratch-cooked), the facility and its ease of use and efficiency, the number of meal periods and gaps in serving times and the number of service lines and points of sale. The MPLH analysis allows Directors to compare similar sites and determine that the hours are assigned equitably and for the highest possible efficiency in the system. Because of the variables between sites and districts it is often difficult to determine optimum productivity levels. Despite that, the generally accepted benchmark standards were published in and are still in use by many districts. They are an acceptable starting point to evaluate productivity as well as plan a staffing model. Given that MCSD is in the process of shifting their production model to more scratch production we evaluate their staffing from the perspective of managing some complex change. The illustration below reflects our analysis of the current model (fig. 3, Appendix 02) 3. In reviewing the elementary sites, which are all staffed with 19.5 hours, they range in meals per labor hour productivity from 23.2 at Baker to 15.9 at Green Acres. The lack of Breakfast in the Classroom (BIC) at Green Acres drives down their productivity and Columbine is a smaller school so despite serving BIC, it s productivity is only at 16.9 meals per labor hour. Given the similarities in these sites facilities we would want to adjust staffing or raise meal counts and bring all of them into the 20 MPLH minimum. The secondary sites are also contrasting with the Middle School hitting 18.1 MPLH while the High School is at Despite the low breakfast counts, the Middle School serves many more lunches so it s factored total meals are 27% higher than the High School. The High School has two meal periods while the Middle School has three, and in our observation the High School was working at a more subdued pace prior to service. 1 Appendix 01: CT_MPLH worksheet SY School Foodservice for the 21 st Century, D. Pannell-Martin pages Appendix 02: LL 2017 Meals per Labor Hour worksheet 9 P a g e

9 FIGURE 3. SY MEALS PER LABOR HOUR SUMMARY (ADP THROUGH JANUARY) 1.4 School Site Facilities The production model in MCSD is a site based model with a central warehouse facility. All sites produce their own meals and receive most of their deliveries from the warehouse. The kitchens are generally well equipped for the meal count. Most sites have been improved at some point in the last 20 years with additional or updated refrigeration (walk-ins), cooking equipment and service lines. All sites have at minimum a double stack convection, a walk-in freezer and walk-in refrigerator, a tilt skillet and steamer. Elementary Schools The elementary sites, though small, are functional and because of the expanded walk-ins and generally large dry storage areas are managing production. Sherman Early Childhood Center is the most challenged site, primarily because the variety of programs operating in the space and the classroom based dining of the Head Start students. The elementary sites could be reconfigured for service with salad bars with some repositioning of the tables (figs. 4 and 5). FIGURE 4. COLUMBINE ELEMENTARY 10 P a g e

10 FIGURE 5. PIONEER DINING ROOM (LEFT); SHERMAN KITCHEN (RIGHT) Middle School The Middle School was opened this year and has a very nice full featured kitchen with all new equipment serving a large open dining room space with two side by side POS stations (figs. 6 and 7). The site is still working through developing efficiencies for production and service but is doing well serving 75% of the students daily. FIGURE 6. MIDDLE SCHOOL KITCHEN FIGURE 7. MIDDLE SCHOOL SERVICE LINE 11 P a g e

11 High School The Fort Morgan High School appears to be the least improved site and has original equipment in the kitchen and a service line that has been organized to try to address adding a salad bar to the menu model but it is less than ideal from a flow and efficiency standpoint, sitting away from the main line. Sometimes during service, it was fully unattended (figs. 8 and 9). The set up with its own point of sale is supposed to encourage students to purchase a reimbursable salad bar meal as well as allow students who have purchased a reimbursable meal from the hot line to serve themselves at the salad bar. However, the concept does not operate as planned. Students were accessing the salad bar who had not purchased a meal and the self-serve hot line is set up to complete the meal sale before the students can go to the free-standing salad bar. The Fort Morgan High School also has a separate room, that used to be a teacher dining room, that is used to sell a la carte snacks. This usually opens a little bit after the main lunch lines have slowed. One of the key efficiencies in the High School is the Pre-Funding rule. There is no cash handled in the cafeteria which is a huge benefit for the FNS. Students must fund their accounts at the Fort Morgan High School office. At Lincoln High School meals are delivered from Baker Elementary. FIGURE 8. FORT MORGAN HIGH SCHOOL KITCHEN (LEFT AND RIGHT) FIGURE 9. FORT MORGAN HIGH SCHOOL SERVICE SET UP (LEFT AND RIGHT) In districts that want to transition to scratch-cooking, consolidation of production is often considered, when possible, to increase the consistency of the meal production and create further efficiency. In MCSD, it would be possible to consider using the Middle School to produce meals for, at minimum, the elementary sites. The 12 P a g e

12 kitchen is large enough, but it would require a full reorganization of the approach to labor and the ability to hire the skill sets required to achieve such a transition. The benefits include more consistency of the meals, lower food costs and a higher degree of food safety and accountability. Challenges are meal transportation and finishing (which requires retraining), hiring and retention, reconfiguration of labor at what would be considered satellites, implementation of software to fully track the new system, and the challenge of producing in a location that is already busy. Production kitchens are most efficient when they are attached to the warehouse location without the congestion of operating at a school site. 1.5 Food and Menus Director Tormohlen uses NutriKids Menu and Recipe module to create the cycle menus and analyze them per the USDA guidelines. The menu cycles for the Elementary consist of one entrée choice with the required components of grain, fruit, vegetable and milk (fig. 10). FIGURE 10. EXCERPT FROM FORT MORGAN CYCLE MENU Director Tormohlen s goal is to reduce the processed ingredients throughout the menu and to implement more scratch-cooked options. MCSD does not have salad bars at the elementary sites and their meals are reliant on a combination of canned, frozen and fresh fruits and vegetables. There are many familiar choices that are the cornerstone of many school food programs around the country like corn dogs, chicken patties, pizza and hamburgers. The challenge of site-based production, under any type of menu model, is consistency. Processed food items have been around in some form for over 20 years and the reliance on them is tied to labor costs and prevalence of unskilled labor in school kitchens. When introducing scratch-cooked foods, the system shift is significant and ensuring that the menus are produced in the same way in every site is a challenge that requires planning and training. The District s participation in the LiveWell@School Food Initiative will help to teach consistent production techniques. The other challenge that Director Tormohlen must contend with is student 13 P a g e

13 tastes. The familiar processed items are difficult to replace with scratch-cooked items and item counts produced versus items served must be carefully tracked to ensure that over-production is not happening (fig.11). FIGURE 11. LUNCH AT THE MIDDLE SCHOOL (LEFT); LUNCH AT COLUMBINE ELEMENTARY (RIGHT) FIGURE 12. FRUITS AND VEGETABLES AT PIONEER ELEMENTARY (LEFT); SALAD BAR AT THE MIDDLE SCHOOL (RIGHT) The Middle School menu differs from the Elementary because of the addition of the salad bar as a daily choice in the service. Though the elementary sites are offering several fruits and vegetables, the Middle School s salad bar offers an attractive array of choice that really brightens the overall menu (fig. 12). Salad bars provide an immediate improvement to the freshness and choice for students. Salad bars are an excellent learning opportunity for the students and the FNS can use the salad bar to introduce new flavors. Key to the process is control and consistency just like any component of the menus. With site based production, it is easy for salad bars to become inconsistent and costly without proper management. Resources for assessing and operating an effective salad bar program can be found at The Lunch Box. 4 The High School offers the most daily choices, which is a very common practice in open campus environments, where food service is trying to compete with students leaving campus. The High School also has a salad bar, P a g e

14 though it is not integrated to the whole flow of the service lines as it is at the Middle School. The High School lines are set up for self-service and include daily choices of sandwiches and pizza in addition to the regular menu items. The layout of the service lines in the dining room are challenging to optimize the flow as they are not central to the dining area (fig. 13). The salad bar set up extended beyond the sneeze guard with some pasta salad and croutons. Overall, the activity at the salad bar was light during the meal period observed and this does appear to be attributed to the salad bar acting as a second line. FIGURE 13. HIGH SCHOOL HOT SERVICE LINE (LEFT); HIGH SCHOOL SALAD BAR ITEMS NEAR POS (RIGHT) Breakfast In SY Director Tormohlen started implementing Universal Breakfast in the Classroom (BIC) which provides an opportunity for every child to eat breakfast in the classroom regardless of eligibility. This proven method of nutrition access has been very successful in MCSD and responds to Colorado Breakfast After the Bell Program HB that was passed in 2013 requiring schools with more than 70% free and reduced eligible enrollment to offer breakfast after the bell. BIC goes one step further because it does ensure reasonable access to breakfast by bringing it to the students. Breakfast After the Bell programs that are operating out of the cafeterias are much more difficult to time so that all children truly have access to the free meal. Though 70% free and reduced eligibility is the threshold that Colorado chose to legislate, it is very common for districts to implement BIC in schools with lower percentages, even down to 40% if the revenue is balanced districtwide. From the perspective of creating universal access with high participation, BIC is unparalleled. MCSD uses a variety of methods to transport the BIC food to the classroom, including wagons and collapsible rolling bins (fig. 14) at Pioneer and Columbine and Baker respectively. In MCSD, students participate in the process through picking up the meals and rolling them to the classroom. This is a common practice in elementary schools. Sherman, the Early Childhood Center, does part of its population in a BIC model and the staff wheel carts and bins, while others come through the cafeteria. That is a common approach for younger children who often need more assistance. Green Acres is offering universal breakfast in the cafeteria but in observation was not offering it after the tardy bell. With 67% of the students as free and reduced eligible, Green Acres is an outlier in not offering BIC. The more accepted approach when a district offers BIC is to implement it as a standard of service to the elementary students at minimum. Many districts have gone further and are even offering rolling BIC breakfast carts at the high school level. 15 P a g e

15 FIGURE 14. PIONEER S WAGONS FOR BIC (LEFT); COLUMBINE STUDENT PICKING UP BIC (RIGHT). Compared to the elementary sites, the secondary sites in MCSD (with the exception of Lincoln) are barely eating breakfast. With participation rates of 5% at the High School and 10% at the Middle School it s clear offering breakfast before the bell, at the very early hour that these sites start school, is unsuccessful. With the High School at 58% and Middle School at 69% there is opportunity to reach more students. Creating a passing period Grab and Go option is a common solution without going as far as rolling breakfast to the classrooms. Another option is offering breakfast twice before school and at later time that still allows enough of a gap between breakfast and lunch. For example, with a 10:40 a.m. lunch at the Middle School, the latest that would be reasonable to serve breakfast would be around 8:30 a.m. Considering the Middle School is so close to hitting the 70% threshold, which would deem it necessary to offer breakfast after the bell, looking at solutions for the SY school year would be advised. Ideally, we like to see lunches starting no earlier than 11:00 a.m. The High School has two half hour lunch periods starting at 11:30 a.m. or 11:45 a.m., depending on the day, so there is more flexibility in finding some additional options to offer breakfast. A la Carte Adults Catering MCSD enjoys some steady participation in the adult category. This is usually a good sign of engagement meaning the cafeterias aren t avoided by teachers unless they have duty time. A la carte is in the form of second meals, second entrees, the usual milk, and then at the High School, a snack sales area that is adjacent to the dining room. Director Tormohlen wants to reduce reliance on a la carte in the fund. We were not able to completely isolate what the number is because of the account coding. That is an area that Director Tormohlen needs to have a better view of, from the fiscal side, because she is trying to impact the student behavior. Other Programs Sherman Early Childhood Center is a blend of full-day, half-day preschool programming through Head Start, a snack program called Learning Express and traditional Kindergarten grades. The site is sprawling in its layout and in the coming year, the pre-school wing will be expanded. Currently the Head Start students walk to the cafeteria, receive their trays and carry them back to their classroom. The Kindergarten students eat in the cafeteria. When the pre-school wing is expanded there may be an opportunity to at minimum, plan a serving area so that FNS could bulk serve the students closer to their classrooms. There is a great opportunity to introduce preschool students to unfamiliar foods and it can provide a base for strong participation throughout their school tenure. 16 P a g e

16 1.6 Staff Development One of the primary areas that is affected when Districts are focused on shifting their programs from using readyto-heat items to more scratch are the skills sets of the teams they have. Food Service workers are typically the lowest paid hourly workers in a school district and the presumption is too often that it s a part-time entry level job while regardless of what type of meal is offered, the regulatory environment in the National School Lunch Program requires significant accountability from FNS teams. In MCSD, Director Tormohlen is reliant on the management skills of the Kitchen Managers to maintain the standards she has developed. She meets with them monthly and communicates with them often, but as mentioned earlier, in the site based production model, rolling out new programs means every site requires attention and training and Director Tormohlen is running the program without an Assistant Director or Culinary Manager to assist with on-site management. The USDA provided a framework to ensure that School Food Authorities incorporate annual training plans into their programs through the implementation of the Professional Standards 5 which requires annual training hours by position type; 12 hours for Directors, 10 hours for managers, 6 hours for site staff, and 4 hours for employees working less than 20 hours a week. Specific tracking rules apply and almost all areas of food services operations have a correlating code from point of sale to culinary training to accountability trainings, for example, identifying a complete meal in Offer versus Serve. Director Tormohlen does not have a budget line for training. It is coded to extra hours. She said that 8 hours is always planned and often additional half days. She is tracking the trainings per the USDA. We ll recommend breaking out the USDA required hours in the Position Control so it s very clearly accounted for. In a system that is shifting away from processed foods it is especially important to ensure that food safety training is a requirement of all hires. Director Tormohlen has used Serve Safe training which is the recognized standard for training Hazard Analysis and Critical Control Point 6 (HACCP) in food service. Director Tormohlen would like to revise new hire requirements. Currently, the system is too reliant on Kitchen Managers training new staff. Developing goals in this area by developing and adopting job descriptions, aligning evaluation tied to the job descriptions, planning trainings and adopting standards for food safety training are all achievable and necessary for the program to continue to invest and grow. 1.7 Procurement and Warehouse Inventory Management Procurement The FNS is a member of the Colorado BOCES Food Cooperative purchasing group, and Cash-Wa Distributing operating out of Kearney, Nebraska is the Co-op s distributing vendor. Director Tormohlen also purchases from Thompson/Braunger Company, also out of Nebraska. As a very busy small district, MCSD spends over $700,000 in food purchases and receives over $100,000 in USDA commodity allocation. A majority of the allocation is split between Department of Defense Fresh Fruit and Vegetables (DoD) and USDA Foods (formerly known as Brown Box ) as well as allocating some value for further processing, primarily in chicken products, individually packaged HACCP is a management system in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and consumption of the finished product. 17 P a g e

17 fruit items and tomato products like ketchup. Dairy is purchased from Meadow Gold and is delivered directly to the sites as is the bread. Director Tormohlen has used Thompson as the prime vendor in the past and used a line item bid system (where each item is evaluated for price) she felt she received better pricing on some stock. With the BOCES Co-op, MCSD and RE-1 Valley School District are two of the largest districts and their volume assists the pricing. The advantages of cooperative purchasing are generally that it provides accountability with the USDA regulations and provides pricing advantages by combining districts volume. It s especially helpful for small districts that don t have enough volume on their own to receive good pricing. It s possible that MCSD and RE-1 Valley School District could combine menu product needs and issue a Request for Proposal (RFP) that would be more customized to their needs, but they would have to invest time into that process and see the results to determine if it was beneficial from a cost standpoint. The fact that Director Tormohlen does write cycle menus and does forecast volume needs is excellent and will always put the District in a better position to receive good pricing because the volume needs are accurate. As Director Tormohlen shifts the program away from processed foods, she can continue to work on finding the best vendor solutions to meet her needs. Warehouse MCSD is fortunate to have a central warehouse that is connected to the District Office. It is shared with the District s warehouse and there is extensive dry storage space allocated to the FNS as well as a recent new freezer that is 17' 6" X 15' 6" and an older freezer that is 19' 5" X 11' 4" as well as small walk-in refrigerator (fig. 15). The FNS has a full-time Warehouseperson for managing the stock as well as the services of another District warehouse employee who performs the warehouse deliveries, except for produce. The FNS Warehouseperson delivers the produce. Director Tormohlen is training a new Warehouseperson, Kyle Knaus, after the retirement of the prior employee in that position. Mr. Knaus has a 196-day contract which is generous and allows for training time as well as assignment for other tasks in the department as needed. The shift in personnel also led Director Tormohlen to purchase NutriKids Perpetual Inventory Module to assist in tracking the receipt of inventory as well as the transfer out to the school sites. FIGURE 15. ONE OF THE DRY STORAGE AREAS IN THE WAREHOUSE FOR FNS 18 P a g e

18 Order Processing and Inventory Management To manage the school site orders, Director Tormohlen created two spreadsheet order guides for the sites to provide their weekly needs for food, supplies and produce. The order guides consolidate the volumes needed which are reviewed by the Director, Warehouseperson or the Secretary to evaluate the need for orders to fill the requests. The accuracy of the warehouse inventory appeared to be an issue. With Perpetual Inventory software, the ideal situation would be for all sites and the warehouse to be connected via the software. The sites would have licenses so they could place orders in the software which would then be managed by the central office administrator (the Director or designee). This process would also be performed for planned vendor orders. The benefits of using K-12 Back Office software are many if a District sets it up for full use and accountability. In the current model, the District office team is manually manipulating the data in the system which allows more opportunity for error. The sites send their orders in, inventory levels are evaluated (both in the software and visually), order needs from the vendors are established and called in to the vendors, transfers are input into the system to create a pull ticket for each location s delivery, and then deliveries are set up per the planned schedule. If the sites were using the software, the process is optimized and orders are not created by the sites in one document and then keyed again at the warehouse into the software. The current model is also not utilizing par stock 7 levels to manage inventory availability, so except for products that are delivered in volume, like the USDA Foods commodities, inventory items are often ordered in and moved out based on weekly orders which is counter to the warehouse management best practices. Given the space availability, the FNS could move to a par stock level model and keep the warehouse stock ahead of the site orders which provides much more flexibility at the FNS office level and allows for better organization in the warehouse. Stock Organization and Flow In reviewing the warehouse organization in the freezer, it appeared that Mr. Knaus was not following any organization rule for incoming product. In the large freezer, the prior deliveries were mostly left unpacked and it appeared that he would have to move product around to pull product to set up the deliveries. He was pulling orders from a current delivery to set up a pallet of site deliveries, which given the amount of storage available, is not necessary. Mr. Knaus has no prior experience handling food service warehouse needs so despite his obvious effort to follow a system, the overall FNS warehouse is not planned to optimize the storage and reduce the number of times that some product may need to be rotated. Using par stock management, will reduce the rotation labor. These issues contribute to Director Tormohlen s feeling that the perpetual inventory is not accurate. The freezers are the main issue because they are crowded and it s difficult to see what is there and find everything which compromises the integrity of the perpetual inventory. Was the starting inventory for the year accurate? And has every transaction that has happened since been correctly recorded? With the combination of paper methods with manual inputting it s likely the perpetual inventory will be wrong. This can be corrected by a. determine how many pallet slots are available in each space (big freezer, medium freezer, dry storage areas); b. determine whether there are certain areas allocated for shelving in the freezer versus pallets; c. determine which products prioritize the most space (items that are on the menu weekly high volume); d. determine par levels for the high volume items that is compatible with the space available and what level of inventory is the trigger for refilling the stock; e. reserve areas for the flow in and out of the one-time items; e. assign pallets; f. store like with like, date pallets, date non-palletized boxes and follow FIFO (first in, 7 Par stock levels means a specific volume of an inventory item is determined as the standard for a specific time frame; for example; one pallet of peaches is the par and one layer of cans left on the pallet determines a re-order for that item. 19 P a g e

19 first out); g. maintain a warehouse map of all storage areas and stick with the organization always. The more SKUs a department is trying to carry, the more difficult it is to manage limited space without excessive stock rotation. Scratch-cooked menus tend to require fewer SKUs which is a further asset of the system. The dry storage area is large for the size of the program and frequent items should be set up as pars and ordered in full pallets, where appropriate. Pallet slots could also be set up for site deliveries for each week and these orders picked ahead. Currently, Mr. Knaus receives product, off loads it, organizes it in the dry storage area and then pulls it for delivery within a very short timeframe so short a time that it hardly makes sense to do anything except pull the product from the delivery and set it up for the next site shipment which is causing some of the current disorganization. Back Office Software Expansion Taking MCSD to the next level of digital accountability will help correct the current issues and set the program up for continued efficiencies. To update the current process, the manual order guide process should be abandoned and replaced by providing NutriKids software site licenses to all the sites. They need a site version of the menu and recipe module that will allow them view and scale recipes onsite, as well as plan their order needs according to planned servings through use of a digital production record. And to complete full accountability, they will take physical inventory counts monthly and input them into the software. Whether the FNS includes the site s monthly inventory value in the Food Cost and Inventory Tracking Tool (to be discussed later) or not, physical inventory counts provide real time data for the Director to evaluate efficiency at the site level. Most important to the process of a shift to scratch cooking, is the ability to audit digital production records so that the Director can see if the sites are over producing. Use of site orders in the software, allow a seamless consolidation of site orders in the system that can be vetted against the warehouse inventory. With better processes in the warehouse, the digital perpetual inventory will become more reliable. The advantages of software expansion for this program cannot be understated. The District has benefitted from Director Tormohlen s system but for the long term, modernizing, and bringing all sites into the software is recommended. 1.8 Conditions for Support When we come to a district to assess the school meal program we are observing and analyzing more than the meals or the finances. We are looking for signs that the district, as a community, is also engaged and interested in the state of their school meal program. For districts that are contemplating or implementing complex change in the meal quality through scratch-cooking models, stakeholder engagement becomes a critical task to lasting and sustainable transition. Shifting the food model is very difficult, but doing it without the interest and support of the administration, school site leadership, community members, parents and students will usually lead to lower levels of achievement than intended. Identifying a vision of the food program and garnering support for that vision through meal participation, support for capital improvements, marketing the program and overall district commitment for food service is very important. Food and Nutrition Services is a service to all. Food service workers in school districts usually touch more students than any other employee in a school district. Food and Nutrition Services supports Title I funding through the student eligibility processing that consumes the FNS each August and September. When school districts recognize that the students academic achievement is directly supported through nutrition and wellness, Food and Nutrition Services then becomes an active part of the educational community in a school 20 P a g e

20 district. Director Tormohlen presents regularly to the School Board and feels she has appreciation for the contributions of the FNS. She maintains an active FNS page on the district website that assists the community in having up to date information about the FNS Department. The one area that could serve as a platform to bring more stakeholders together is working on the Local Wellness Policy. We will discuss this further in Part 3. PART II FISCAL ANALYSIS 2.1 Fiscal Management One component of the assessment is to review the fiscal side of the Food and Nutrition Service Department (FNS). The fiscal systems in place at Morgan County School District RE-3 (MCSD) were reviewed to determine what tools are currently being used and what additional tools or modifications to existing tools are needed to provide the Food Service Director the resources necessary to ensure the continued financial success of the program in preparation for transitioning toward a whole food, scratch-cooked model. The tools used by the department are also compared to best practices required to support programmatic changes. For new initiatives and program changes to be successful in any organization, fiscal accountability and transparency are essential. These provide a strong foundation for change and establish the organization as a viable partner in the successful education of students. Having solid number crunching systems in place to tie the statistics together and make accurate projections allows the department to react to events or changes in the organization. These events or changes can be internal to the department or to the entire district. The ability to respond in a timely and well-informed fashion greatly increases the chances of successfully providing quality meals for the students in a manner that is economically sound. During our assessment, we found Director Tormohlen to be extremely organized and her paperwork impeccable. She could locate and provide copies of all requested information in a timely manner. Director Tormohlen exhibited an acute awareness of the financial and statistical details of her FNS Department which is reflective in her financially self-supportive budget and program participation levels. Rather than rely on the Finance Department to supply necessary data and reports for accountability purposes, we would recommend Director Tormohlen be granted on-line view and/or report extraction permissions from the District Financial software so she can expedite her review and monitoring practices that she currently has in place. 2.2 Data Collection and Analysis Typical school accounting systems have a lag time that impairs a FNS s timely response to changes or issues that may impact the fiscal stability of the program. To remedy this lag time, we recommend using a combination of the accounting system, a point of sale system, inventory tracking derived with use of K-12 back-office software, along with supporting worksheets to capture adequate data to make informed decisions about food service programs. Historical records retained in a digital format are key to analysis. Modern K-12 food service systems use detailed digital data collection as the basis of fiscal accountability and transparency. The following are key areas of data collection that need to be reviewed on a regular and real time basis to gauge the progress of program change and innovation in relationship to the budget: 21 P a g e

21 Labor Costs as they relate to the salaries and benefits budget (Position Control), Extra Hours and meals per labor hour (MPLH). Meals Counts as they relate to average daily participation (ADP), food costs and revenue projections. Food Costs as they relate to commodities, inventory and costs per meal type. These same areas, when tracked on a regular basis make budget development a simple and seamless process. They become the foundational documents to support the budget and provide a way to evaluate the validity of the budget assumptions. Dollars are not just rolled from one year to the next. The budget dollars are based on solid data that supports the programmatic aspects and needs of the department as well as the integration of the program in the larger educational framework. The District is utilizing InfiniteCampus as their Student Information Software (SIS), to determine program eligibility and as well as their Point of Sale (POS) software. The MCSD is also using NutriKids software for warehouse perpetual inventory and recipe and menu analysis. Cash Receipts In MCSD, sites record the daily cash receipts through InfiniteCampus. Daily cash receipt reports are compared to the actual cash received. All discrepancies of $5.00 or more are investigated by the Kitchen Managers. All cash is counted and recorded onto tally sheets which break the cash deposit out by denomination. Daily cash receipts are placed in the school office safe, when available, or placed in locked file drawers in the FNS Kitchen Managers office which is located behind a locked office door. Deposits are delivered to the bank by the Kitchen Manager or by Director Tormohlen depending on the school location. Cash receipts are deposited weekly, every Friday. At some school sites cash is collected in the school office, however, the receipt of cash is recorded into the POS by the Kitchen Manager. At the High School, no money is received on the food service line. Students can fund their accounts in the main school office where there are a couple of High School office employees that have access to the InfiniteCampus system and perform the transaction. Students can add money or check their available balance at any time. Staff at the High School double count the daily cash receipts. Deposits are taken inside the bank for processing, rather than utilizing the night drop box. The employee making the deposit is provided a Wells Fargo Bank Receipt of Deposit form which verifies the amount of cash received. These forms are returned to Director Tormohlen via the District Courier. The Director then matches the Wells Fargo Bank receipt to the NutriKids generated weekly sales reports and turns both forms into the Finance Office for recording. Ms. Young, in the District Finance Office, posts the cash deposits into the District financial software (SAGE). All State and Federal reimbursement checks are received and processed directly through the Finance Office. Copies of the checks received are provided to Director Tormohlen. Catering All in-house payments for FNS catering are handled through inter-district transfers rather than the issuance of accounts payable warrants. Director Tormohlen prepares each of the invoices for individual catering event which is then forwarded to the Finance Office who then processes the inter-district transfer. 22 P a g e

22 For all outside catering, invoices are issued and checks are remitted to Director Tormohlen who records the payment against the invoice. All invoices are forwarded to Ms. Young in the Finance office who tracks all receivable payment records and follows up on all outstanding invoices. Director Tormohlen retains a copy of all catering payments which are kept with a copy of the original invoice for her records. Accounts Payable Warehouseperson, Kyle Knaus, receives all food and supply deliveries which are entered into the NutriKids perpetual inventory through the receiving module. He marks the invoice as posted and delivers the invoices to Director Tormohlen at the end of the day. The Director then reviews each invoice for accuracy, then forwards them to Vicki Messinger, FNS Secretary, to be input into the District financial software for payment. Ms. Messinger processes the invoice payment as a requisition, breaking the expenditure out by the appropriate budget account numbers. Ms. Messinger then sends the information to the Finance Office to complete the payment process which includes mailing the warrants to the appropriate vendor. The payment process takes approximately two weeks. Director Tormohlen shared with us that she would like to have access to monthly financial trial balance reports to ensure all payments are being posted to the appropriate accounts. However, as of our assessment, these reports were not being provided. Negative Balances The previous Food and Nutrition Services Point of Sale system had the ability to deny additional student charges after the student has accumulated five charges. InfiniteCampus doesn t have the same ability. In addition, site staff members aren t enforcing the District charge policy. At the K-5 level, students may charge up to five meals. Parents are called and alternate meals are served for up to three days. Parents are called again after the third meal, and students are offered a peanut butter and jelly sandwich as an alternate meal and their account is charged as a regular meal. InfiniteCampus has an autodial low and negative balance component which is currently being used. However, parents can log into the Parent Portal and disable this feature. At the Middle and High School level students are not allowed to charge. The District has opted to take parents to small claims court to recoup outstanding food service balances. Adult charges are not allowed. Data Accuracy Director Tormohlen files all CDE monthly claims for reimbursement. Prior to the submission of all CDE claims, edit checks are run to verify the accuracy of the data. This edit check is completed in addition to the daily checks which are performed by each Kitchen Manager. The Director also routinely compares meal counts to those reported in prior years to track any increase or decreases in participation. Labor Costs Labor costs represent one of the largest expense categories in the budget and they usually run between 45-50% of earned revenue. We found in MCSD Food Service Department labor costs (including salary and benefits) ranged from 37%-42% (fig. 16). Employees who work a minimum of six (6) hours per day receive 100% employer paid health benefits for single coverage. However, the summer premiums for employees who work less than a full year are the employee s financial responsibility. For example, an employee whose work year is from August through May, is responsible to pay the full premium amount for their June and July health benefits. This financial obligation could deter potential applicants from applying for and/or accepting employment within the District. 23 P a g e

23 In addition to the summer health benefit premium obligation creating a potential hiring obstacle, the Morgan County School District Master Agreement between the School District and the Fort Morgan Association of Classified Personnel, Article XI, Section C. Prior Experience states previous related experience will be allowed for placement up to Step II (2) for new employees to the District on the current salary scale, as determined by the Superintendent or designee. The next sentence allows for specific classifications of positions to have placement up to Step XI (11), however, Food Service positions are not included within that classification. During our assessment, it was shared that the inability to place highly qualified and experienced food service applicants above Step 2 on the salary schedule has hindered hiring the most qualified candidate for FNS positions. Because of the narrow language included in the Agreement language, it is possible for a highlyexperienced candidate to take a reduction in pay while accepting a FNS position within the District. We recommend the Administrative team review this portion of the Employee Master Agreement and consider including the FNS positions within the specific classifications who may receive initial placement at Step XI. We believe this would assist the FNS Director to fully staff the Food and Nutrition Department with more skilled candidates. FIGURE 16. SY THROUGH PROFIT AND LOSS STATEMENT Position Control A position control worksheet should be set up to list each employee by site, contracted hours, and position type. Additional information would include duty days, paid holidays, mandatory professional development hours as well as any other types of compensation. The rate of pay would be included as well as any vacancies that were 24 P a g e

24 expected to be filled. Any additional personnel costs such as substitutes wages should be listed separately. The gross wages should be calculated along with employer paid benefits that include retirement (PERA), Medicare, as well as health insurance and/or life insurance, when applicable. In MCSD, the Human Resources Department is not currently utilizing the Position Control component to their financial system, but rather the Human Resources Department has created an Excel worksheet which is used for budgeting purposes. During our visit, the HR Director and Personnel Assistant expressed an interest in the implementation the Position Control component to decrease staff time and improve accuracy in the near future. With the assistance of the Human Resource Department, we developed a position control worksheet which was updated based on current staffing (fig. 17). By using the position control worksheet provided, the FNS Director can run through what-if scenarios to determine the impact that staffing reconfigurations, addition or reduction of duty days, addition of staff development hours, and changes in employee benefits that could have on the FNS Department. Under the current USDA regulations for Professional Standards FNS Directors must provide specific annual training hours by position type and prove through records what has been provided. These often fall outside of regularly scheduled hours and should be budgeted for. The Position Control Worksheet we have provided for future use includes these categories (Appendix 03) 8 as well as breaks out hours specifically for site opening, and extends the staffing costs to reflect these changes. FIGURE 17. SY POSITION CONTROL WORKSHEET (EXCERPT) Meals Per Labor Hour (MPLH) As discussed earlier, Meals per Labor Hour (MPLH) is one of the most common measurements of productivity that food service departments use when evaluating their sites. MPLH can be calculated to: 1) compare the parity of labor between similar sites; 2) assess the ability of the department to sustain current labor hours; and 3) analyze what-if scenarios when evaluating the potential efficiency of shifts in the production model. This is a useful metric to provide the logic for balancing staffing between sites. It also provides an indicator of a site s ability to take on new programs and increased student participation without adding labor costs. The calculation can also be used as a tangible illustration for administrators when approval for additional labor is needed due to significant increases in participation or for labor reduction when meal counts are insufficient to support costs. 8 Appendix 03: Position Control with Opening and Training Hrs. 25 P a g e

25 Additionally, with a complete picture of the overall operation in hand, discussions regarding future staffing can begin as the program moves toward reorganization for accomplishing more complex production of fresh whole foods. MPLH can be a communication tool to help employees understand the reasoning behind staffing decisions. It should be noted that there is not a perfect MPLH number. Consideration must be given to factors such as the location of the kitchen in relationship to the serving area, the bell schedule, kitchen equipment and the production model which can all influence the MPLH calculation. For this to be a valuable tool, current and accurate staffing must be recorded consistently, along with current average daily participation numbers by site by meal and program type. Based on the analysis we provided (Appendix 02) Director Tormohlen has some opportunity to raise productivity in some sites and we recommend that she update this worksheet when planning for the next school year. Time Clock System The MCSD does not utilize an electronic time clock system for Food Service employees. The Human Resources Personnel Assistant, Ms. Debbie Rose, prints up monthly timesheets for all FNS employees. These forms include the budget account code, name of the employee, hours scheduled to work, pay rate, position title, and signature lines for authorization by the employee, Kitchen Manager and Principal. All FNS timesheets are turned into payroll by the 10 th of each month to receive payment on the 22 nd of the month. All District employees are paid on the same payroll cycle. During our assessment, it was noted that depending on how the dates of the calendar month fall, timesheets have been completed, authorized and submitted for processing prior to the work being performed to meet the payroll established deadline. In essence, approval is being given prior to the hours being served, and potentially overpaying an employee who may ultimately be absent from work on a day which was pre-determined to have been worked. We would recommend investigating alternative cutoff date options for timecards to eliminate this from occurring and ensure that time is only compensated for actual time worked. All hourly and substitute employees are paid for the actual hours worked. The FNS Director is the only FNS employee who is on a salary contract which excludes overtime. All other employee extra time is reported on a separate timesheet. Catering hours are also recorded separately from all other hours worked. Kitchen Managers collect and sign off on all timesheets. Once signed by the Kitchen Manager, they are forwarded to the school site Secretaries for their review to ensure all absences are recorded properly. The timesheets are then forwarded to the site Principals for approval. Each site Secretary includes the FNS timesheets with their site payroll documentation which is then submitted to Ms. Diana Legler in the District Payroll Department. Ms. Legler provides the FNS timesheets to Director Tormohlen for review and approval. During the review process Director Tormohlen records the catering hours worked to prepare the catering invoices as well as time recorded for the Fresh Fruits and Vegetables Grant (if the FFVP is active). Director Tormohlen expressed concern that she does not have authorization to make changes to the time recorded on timesheets even though there have been occasions when she has noted time has been incorrectly reported. Within the District Financial software (SAGE) is an absence tracking component which is currently being used by the MCSD. The software will alert the FNS Director by sending an either requesting approval for a future leave or an absence. The employee can include comments regarding the leave, which is used when necessary. Once the employee leave is finalized, the school site Secretary s Record of Absence form is compared to the software data to ensure the accuracy of the leave documentation. Site Kitchen Managers are responsible to call substitutes for their respective sites, when necessary. If employees are sick they are required to notify their Kitchen Manager directly. The Kitchen Manager then 26 P a g e

26 notifies the site School Secretary so they can properly document the absence. The FNS Director isn t notified of daily absences unless it causes a shift in operation. At the time of our assessment, it was shared by the FNS Director, that if staff leave early because of lack of work, it may not always be documented. Staff are granted permission to leave early if there is a lack of work. On days when there is deemed to be a lack of work staff members are given the choice of working on a special project to retain their hours or leave early and document the lesser hours worked. To assist the District in accurately monitoring the actual employee time worked, we would recommend the implementation of a time clock system. Such a system would not only improve accuracy of reporting, by reducing the potential for compensating staff time which hasn t been worked, but would also reduce HR Department labor hours which are currently used to manually create monthly FNS timesheets. If a digital timeclock system is not implemented, we would recommend that the FNS be fully responsible for their department time sheets and eliminate the school based steps of review and approval by the Secretaries and Principals. This is highly unusual and does not allow the Director to fully control the hours for her team. Since the Principals do not have fiscal responsibility for the FNS employees, they should not be involved in the time sheets process. Extra Hours Extra hours for employees asked to substitute for an absent employee are authorized by the Kitchen Manager which doesn t require preapproval by the FNS Director. However, if extra hours are requested beyond the scheduled hours due to an emergency or are project driven, those hours do require pre-approval by the FNS Director. When an employee substitutes for another employee who is absent from their job, the subbing employee must indicate on their timecard the name of the employee they are subbing for to assist the FNS Director in auditing the timecards for absences. Eligibility Program eligibility applications are included as part of the new student enrollment packet. To accurately capture the district-wide eligible students, the FNS participates in the school site registration by manning a booth where program eligibility applications are provided. If the applications are not returned, applications are then sent to those individual families via their child s Friday folder. If a newly enrolled student is known to be eligible, the school site Secretary will send Director Tormohlen an notifying her of the new student so the eligibility can be indicated as soon as possible within the District SIS. Otherwise, all other application paperwork is sent via the District courier to the FNS Director for processing. During the eligibility recertification process, which must be completed at the beginning of each school year, paper applications are mailed to every home who had not returned their application for resubmission. This year only 25 families failed to submit renewal eligibility paperwork Which is an excellent rate of application completion that we rarely see. Currently, the District cannot scan eligibility applications. Rather, Director Tormohlen and/or Ms. Messinger, the FNS Secretary, review and manually input all program eligibility data into the InfiniteCampus software for processing. Based on the information input, the software makes the eligibility determination. This process is not only time consuming but can cause errors in determination because the data is being transferred manually from a written document to the software. We would recommend the Director work with the Administration to eliminate as many paper applications as possible. InfiniteCampus apparently has the functionality to provide online student registration including the free and reduced eligibility application. The district should research this option for digitizing the process. 27 P a g e

27 Approximately 25 to 30% of the MCSD free eligible students receive their eligibility determination through the direct certification process. SNAPfiles s are sent directly to the FNS Director. As the notifications are received the Director uploads the information into the SIS software for processing. This process begins in early September. Timely communication to the kitchen staff regarding eligibility is an area that is being reviewed for improvement. Another area of focus is providing language translators to families who may find the eligibility paperwork challenging to complete. If the district moves to a digital platform translated information can be provided. Meal Counts Meal counts determine the amount of revenue that a program will receive to cover the costs of labor, food and general operations. Meal counts are the key data set that should be tracked in school food programs; they should drive the hours of labor needed to produce and serve meals properly and provide the basis for estimating the amount of food that needs to be purchased and prepared to support the menu. Complete and accurate monitoring of meal counts is the foundation of every school food service program. In assessing school food programs, we use meal counts as the basis for our analysis and recommendations. The District is currently using InfiniteCampus as their Point of Sale (POS) software. Infinite Campus provides a variety of reports for requested date ranges to submit claims to the state for reimbursable meals. In our work, we provided the Director a Meal Count and Revenue Tracking tool (Appendix 04 9, fig. 18) because most point of sale software systems, while doing a fine job of counting in-house meals and calculating revenue earned to date, don t do a prediction of annual earned revenue compared to budgeted revenue. This tool will be very helpful in predicting that revenue stream and Director Tormohlen will have a way to measure the impact of program changes. Based on meal counts through January 2017 the worksheet summary projects the following: FIGURE MEAL AND REVENUE TRACKING TOOL (SUMMARY) 9 Appendix 04: Meal Count and Revenue Tracking Tool 28 P a g e

28 Reviewing this Meal Count Tracking Tool data on a regular basis will assist the FNS in projecting the school year revenue and ultimately forecasting the Food and Nutrition Services fund balance at year end. This will also provide the FNS Director with the ability to anticipate and execute timely capital outlay purchases which could enhance and improve the program. When looking at participation by eligibility, we would hope to see participation by free and reduced eligible students exceed 70% for lunch. As noted in figure 19 (Appendix 05) 10, MCSD participation levels are well above the expected threshold which speaks to successful student engagement in the Food and Nutrition Program. FIGURE 19. SY AVERAGE DAILY PARTICIPATION SUMMARY THROUGH JANUARY 2017 Even though the participation percentages are exceptional, the FNS Director, shared with us that she has focused her attention on reducing the number of non-reimbursable meals being served at the High School. She attributes a steady portion of the daily High School sales to non-reimbursable lunches. In December and January, the Meal Equivalent for the daily a la carte at the High School was 56 meals. Although this number has greatly reduced from previous years, Director Tormohlen believes there is still room for improvement. One strategy which has been implemented to increase reimbursable sales has been to divert students through the hot food line and encourage them to get a full reimbursable hot meal after which, they are provided the opportunity to purchase a second entree. She has also limited the days when a la carte items are sold to boost reimbursable meals being purchased. All second entrées are recorded in the POS by using a separate key. All students can receive seconds of canned fruit and canned vegetables free of charge. At the High School, two meals can be purchased while going through the service line. The first meal is recorded as a reimbursable meal while the second is recorded as an a la carte sale. At Middle School, students are required to finish their first meal before they can return to the service line to purchase a second meal. Food Costs Food costs are the other large expense area for the FNS budgets. In most cases, they are approximately 45% of the earned revenue. In MCSD the percentage ranged from 40% to 46% over the past three years (fig. 20). 10 Appendix 05: Meal Count Summary SY15 thru SY17 29 P a g e

29 FIGURE 20. MORGAN COUNTY SCHOOL DISTRICT PROFIT AND LOSS STATEMENT (EXCERPT) Director Tormohlen plans six-week cycle menus which help sustain a fiscally viable program. With the NutriKids Software modules for Perpetual Inventory and Menu Planning that MCSD owns the modules can be linked which will support an integrated ingredient costing of the inventory which then flows through to the menu costing attributes of the software. With the ability to cost the average meal cost by type it enables Director Tormohlen to project food costs for budget purposes. By inserting an average cost by meal type into the provided Food Cost Projection Tool (Appendix 06 11, fig. 21) the costs will be multiplied by the average daily participation by site. This produces a daily food cost which can be extended to an annual projection by multiplying it by the number of serving days. The food cost represents the highest possible cost as the calculation is based on each child taking every component of the meal, which does not usually happen in the offer versus serve environment. This process is much more strategic and accurate than the common practice in budget development of rolling over the prior year s food cost and increasing it by one or two percent. 11 Appendix 06: Sample Food Cost Projection Tool 30 P a g e

30 FIGURE 21. SAMPLE FOOD COST PROJECTION TOOL USING SY MEAL COUNT DATA We have provided a Food Cost and Inventory Tracking worksheet (Appendix 07 12, fig. 22) that can be used to further detail the monthly food costs by Vendor, presuming that the district is taking an accurate monthly inventory. The NutriKids Perpetual Inventory Software may have some similar report capability in this area, but all food order and receiving activities would need to be accurate and recorded in the software to make it fully functional at this level. During our visit, it was clear that the Warehouseperson was still learning the NutriKids software and Director Tormohlen also indicated that she did not have enough training in it. Also, in MCSD, since they do not currently have inventory software at the site level the tool would only be reflecting the warehouse transactions, which essentially presumes that food and supplies are expensed at the point they are shipped to the site. We recommend that the District obtain site licenses because the sites are producing at each site and they are carrying inventory. The typical school district practice of taking inventory annually simply does not support the best practices of a business environment that K-12 food service is expected to operate. As a district transitions to more complex meal production, food cost tracking and inventory management become even more important. The Food Cost and Inventory Worksheet we have provided uses the basic formula for cost of goods. Beginning Inventory + Food Purchases - Ending Inventory Servings Days = Daily Food Costs 12 Appendix 07: Food Cost and Inventory Tracking Tool 31 P a g e

31 A monthly review of the food costs projection and comparing the average daily food costs to the budget is all the information necessary to track and control food costs. However, if the district were to explore the NutriKids functionality in this area, which is our primary recommendation, the efficiency and reliability of tracking food costs in total and by program, including catering contracts, could be much simpler and more accurate. FIGURE 22. FOOD COST AND INVENTORY TRACKING TOOL (CROPPED) 2.3 Budget Development Budget development for the FNS should be the responsibility of the Director of Food and Nutrition Services. Complete documentation as outlined below should be included in the presentation for approval. With the use of foundational tracking tools, the Director of Food and Nutrition Services can take a more proactive role in the budget process. 32 P a g e

32 The following list outlines the basic functions of budget development for the FNS: Budget assumptions (with input from the Human Resource Director) about salaries and benefits, as well as district assumptions overall. Position control reports (developed from an analysis of MPLH and planned changes) Revenue projections (based on meal count tracking and ADP) Food cost reports (based on meal counts, projected average meal cost, and consideration for the prior year actual food expenditures) Summarized profit and loss report that compares the prior year s side by side with the proposed budget Budget Assumptions The FNS Director should detail the assumptions used in developing the budget. This provides a historical record of what is being planned for the new budget year, as well as showing the rationale behind the numbers found in the budget. Six months after the fact, it is sometimes hard to remember the exact reason for making a budget decision if documentation isn t available. Recording budget assumptions also provides a base for evaluating the success of program changes over time. Were the assumptions accurate? Were the meal counts overambitious? Was there a marketing budget to promote the increase in meal participation? What were the anticipated changes in employer paid benefits? What are the salary increases being provided district wide? Although we recognize the FNS budget has a history of a positive ending balance, we would recommend the budget be developed using anticipated changes in enrollment, historical average participation levels, and prior year meal counts, rather than simply using prior year revenues and expenditures without regard to potential changes. Utilizing these anticipated changes, could assist with more accurate budgeting as well as providing the opportunity for long-range program planning which may include forecasting capital outlay purchases, staffing adjustments, etc. Any and all modifications which are made to the FNS budget throughout the year (which may include the addition of indirect charges, mid-year budget revisions, etc.) should be clearly communicated in advance with the FNS Director. Position Control The FNS should maintain the position control worksheet to plan and track staffing. The position control worksheet should include all changes in staffing based on MPLH assumptions, classification changes, additions and deletions of positions, daily contract hours as well as daily extra hours and planned professional development broken down between required hours and additional departmental needs. The staffing should be based on MPLH, as well as known conditions and planned activities that affect production at the sites. This worksheet should be updated throughout the year as changes occur. Revenue Projections The FNS should make revenue projections based on the meal count assumptions they will be using for their staffing and food costs. The projections should be detailed by meal type and eligibility revenue. This will be an essential way to measure the accuracy of the revenue budget as the year progresses. It will allow the FNS to compare outcomes and assumptions at a very detailed level, and will help in making programmatic decisions throughout the year. The meal count worksheet used during the year should be the starting basis for these projections. The average daily participation by eligibility and meal type multiplied by the number of serving days multiplied by the individual rates will provide the revenue budget. 33 P a g e

33 To track the revenues more closely, we would recommend creating additional revenue accounts to split the Meal Revenue and Other Revenue out. It is difficult to assess the amount of revenue received for paid breakfast and lunch from a la carte sales as well as differentiate adult meals from student meals sold with the present coding. One of the goals of the FNS Director is to reduce a la carte sales, and under the current account code model it is nearly impossible to do so in reviewing budget reports. Food Costs The FNS also needs to calculate projected food costs based on planned menus. Using the Food Cost Projection Tool, multiplying the ADP by the calculated average meal cost by type will show the maximum food budget, which should be used as the basis for food cost projections along with estimated costs related to grants and outside contracts. Because not all children take every component of the meal offered, the actual expenses should be less than the estimate. With time and experience, using digital tools, using cycle menus and being very strategic about the use of commodities, the amount budgeted for food can be more finely tuned. In the beginning years of any planned program change, it is best to put the maximum food cost in the budget. However, until the department plans menus in advance and makes procurement decisions based on planned menus, true food cost projections for the budget are not possible. Profit and Loss The FNS should develop a multi-year profit and loss statement that has more detail for revenue and expenditures than is currently being used in the district financial system. We have provided a sample with expanded detail categories. These are the minimum that we recommend. The Profit & Loss statement (fig. 23, Appendix 08) 13 provides a way to see if the budget developed for the current year is balanced and to see if prior years provided at least a break-even picture for the program. As profits are realized in the future they should be maintained separately from the General Fund and be used for improvements in the FNS program such as equipment replacement or startup costs for future programmatic changes. 13 Appendix 08: Multi-Year Profit and Loss 34 P a g e

34 FIGURE 23. MORGAN COUNTY SCHOOL DISTRICT MULTI-YEAR PROFIT AND LOSS STATEMENT PART III Recommendations and Next Steps 3.1 Overview Director Tormohlen has skills that we wish we saw more often out in the school food world; strong sense of the numbers, well versed in regulations, seeking continual improvement and opportunities for her team paired with a deep sense of responsibility for the welfare of the students. As Director Tormohlen heads towards retirement she took on the complex project of shifting her system to whole foods and scratch-cooking and finding grant support through applying for the LiveWell@School Food Initiative. Our recommendations primarily focus on technology modernization, organizational structure, policy development and some key processes that will make it easier for Director Tormohlen to pass the baton of school food improvement in Fort Morgan to her predecessor. 35 P a g e

35 3.2 Fiscal Management Overall, we found that the FNS Director to be highly organized and extremely eager to remain aware of the financial condition of her budget which is reflective in the on-going self-supportive trend of her program. Director Tormohlen s financial skills position her to be able to strategically plan shifts she wants to make in the program and how to pay for them. The District is very fortunate to have such a skilled director and the recommendations we are suggesting are focused more on the overall FNS system which will strengthen it and position the department for a transition of leadership. The following are recommendations for improving the current program. Finance Department Meet regularly with the Finance Office to ensure the following. Increase timely communications regarding the status of the Food and Nutrition Service Fund Ensure timely discussions regarding the financial needs of the FNS program should surplus funds become available Review monthly trial balance reports to assist the FNS Director with budget monitoring and accuracy of revenue and expenditure posting Discuss modifications to the revenue accounting within the District Financial System to track food sales by type and participant (adult versus student). Explore modifying payroll cutoff date alternatives to ensure timesheets aren t being authorized prior to work being performed and employees not accurately being compensated. Food and Nutrition Services Director should be provided view and/or report extraction access to the District Financial Software for monitoring all FNS Fund transactions. Human Resources Develop and adopt job descriptions by position and consider using practical testing in the hiring process to ensure adequate skills. Adopt use of a Position Control worksheet that breaks out Opening Hours and USDA Training Hours and update throughout the year as any changes are made. Adopt use of side by side Meals per Labor Hour worksheet provided to consider shifts required in budget work. Explore purchasing eligibility software or explore options in InfiniteCampus to reduce labor hours, expedite the approval process, and increase accuracy in determination. Explore employee agreement language regarding new hire placement above step 2 for Food and Nutrition Service employees Shift all approval of time cards to the FNS Director and abandon processing through the Principals Explore utilizing a timeclock system for FNS staff to assist in the accuracy of payment Explore authorization for the FNS Director to adjust time reported on timecards when appropriate Tracking Tools Expand training in NutriKids and link Menu Planning Module to Perpetual Inventory Module for office team to create a more efficient and precise approach to procurement and inventory management. Purchase and implement site licenses for NutriKids to create transparency and accountability at the site level for production records, orders and inventory. 36 P a g e

36 Keep track of revenue against budget in real time by utilizing the Meal Count Tracking tool to track breakfast, lunch, snack, a la carte, and CACFP revenue using the Meal Count Tracking tool. Take monthly inventories district wide once NutriKids is implemented and use Food Cost and Inventory Tool to develop an understating of the daily food costs. Use NutriKids to develop average costs by meal and utilize Food Cost Projection tool in Budget development process. In budget development process create Budget Assumptions that can be shared with CFO and saved and reviewed during development processes each year. 3.3 Organizational Structure For MCSD to move to a more complex food production model the skills of the staff is paramount. As mentioned in Part 2, there is a challenge in hiring for the FNS because of the restriction on step placement. We would recommend that in addition to broadening the ability to place FNS new hires higher up in the steps that HR and the FNS adopt practical testing that can assist the District to identify personnel that will be an asset to the continued evolution of the FNS. We have provided some sample practical tests (Appendix 09) 14 Job Descriptions The department is lacking job descriptions which further complicates the ability to hire to a specific standard and to evaluate the work of the employees. We have provided some sample job descriptions (Appendix 10) 15, including a Director description, as that is also missing. Staff Development Critical to fresh food programs is ongoing staff development. In the provided Position Control workbook, we added the USDA training hour minimums as a matter of regular budget planning, however in this changing system environment and the recommendation of expanding use of technology, the District should plan on additional training hours for implementation. The District s enrollment in the LiveWell@School Food Initiative brings culinary training directly to the District over a two-year span. These hands-on trainings speed engagement and motivate team members to implement the strategies Director Tormohlen is developing. 3.4 Technology Back-Office Systems The current program requires some improvement to provide an efficient flow of information between the FNS office, warehouse and the sites. To support consistency from site to site we recommend that the sites have NutriKids site licenses for viewing and scaling recipes, planning and completing production records, placing orders, receiving orders and managing inventory. The site data will flow to the FNS central administrator view and create accountability and transparency in the system that does not now exist. The benefits of modernizing this busy program cannot be understated. The Director will be able to save time and increase her insight into the daily operations of the sites by linking them all with Back-Office software. Production records, which have been paper records filed at the sites will now be digital with the ability to audit 14 Appendix 09: Sample Practical Tests for Hiring 15 Appendix 10: Sample Job Descriptions 37 P a g e

37 the production activities from the office. Order consolidation that is integrated into the software creates much more precision in inventory management than could ever exist in the current environment. Key to this transition is planning adequate time, scheduling and training across the system. 3.5 Food Standards Procurement Director Tormohlen is very experienced in procurement and her processes are optimized through menu planning and forecasting. Embedding procurement policy in the District policy helps guide the activity of procurement and set clear standards of what is and is not acceptable with regards to products and ingredients. It can be very useful to develop what we refer to as Food Standards or Nutrition Guidelines to help inform vendors of the ingredient guidelines that the District is following. These guidelines, in addition to product specifications, establish standards that will live beyond leadership shifts and ensure that the investment in this work is not lost. The more vendors know about the ingredients and products a District will or will not accept, the easier it is to develop a productive working relationship. Food ingredient standards that prohibit any food with dyes, high-fructose corn syrup, artificial sweeteners, potentially harmful food additives, irradiated foods, and genetically modified foods are all common in scratch-cook programs. Ideally, food standards are discussed and adopted as part of district wellness or procurement policy to ensure that the work invested in transforming the school food system is carried on beyond the current leadership. An example of food standard work can be found in Minneapolis Public Schools Nutrition Parameters. Boulder Valley School District in Colorado also established guiding principles through the Wellness Policy 16 documents. 3.6 Salad Bars A Fresh Food Experience MCSD is operating two salad bars in the District; at the High School and the Middle School. Director Tormohlen expressed a desire to bring salad bars to the elementary level. Salad bars as part of the reimbursable meal are a proven strategy to improve the overall choice, nutrition, and freshness in a school meals. In Districts that desire moving away from processed foods, salad bars are often the first step. They bring immediate, visible change to a program. Choice is a powerful strategy with children. Salad bars provide a platform for communicating about food the FNS can introduce foods on a salad bar and slowly work them into acceptance. They also are a great venue for providing cultural favorites that may appeal to the diverse population that migrates through the area. Labor shifts from hot vegetables to cold. It doesn t mean hot vegetables are never offered but there is a change in emphasis. Labor to implement salad bars is not necessarily increased as it is traded for labor preparing cooked vegetables. Salad bars have become a staple in all age groups across the country and there are resources and implementation strategies 17 available to ensure success at the elementary level. 3.7 Breakfast Access for Secondary and Green Acres 44% of the free and reduced eligible students in MCSD are enrolled in Middle and High School, not including Lincoln High. Of that 44% (977 students) approximately 9% are eating breakfast at school. The current before school system is not adequate and the District as a team needs to come up with a solution to bring breakfast 16 Two documents from Boulder Valley School District; and P a g e

38 meals to them. Mr. Tormohlen s team is fully capable of preparing breakfast service for these students if the School and District Administration can find a solution for meal timing. We suggested Grab and Go as a relatively quick solution that can bring the meals to the students. At Green Acres, Breakfast in the Classroom is the obvious solution and is successful at the other elementary sites. The analysis below (fig. 24, Appendix ) shows the revenue with only a modest increase at the secondary sites of 25% participation and Green Acres at 70%. In MCSD s case lack of revenue has not been a major barrier to the FNS program management. Director Tormohlen is dedicated to providing food access to a high needs population. Secondary students are always more difficult to reach and require engagement of the administration. FIGURE 24. BREAKFAST EXPANSION IMPACT ANALYSIS 3.8 Wellness Policy and Communication Vision, Health and Academic Achievement We are often asked how does school food change happen, where to start? Is it the food? The kids? The parents? For MCSD, Director Tormohlen is the primary driver for program improvement and shifting the production model to fresh, whole foods. Transition of leadership, either by a Director retiring, Superintendent changing districts or turnover in Board positions can have a profound impact on FNS programs that are implementing change. To battle this, we recommend that Districts adopt within their policies very specific language that supports a commitment to real food and programming that creates access to meals for all students, like Breakfast in the Classroom. Under the Healthy Hunger-Free Kids Act (HHFKA), the Local Wellness Policy ruling that was originally established in 2006, was updated and is now included as part of the three-year administrative reviews under the National School Lunch Program (NSLP). The new rule expressly requires that School District s engage community stakeholders when updating their District Wellness Policy. The Wellness Policy is an excellent place to outline goals of the food service program, such as food ingredient standards, local procurement goals, an intentional dining environment, green practices in food service, time for students to eat, and food education/experiential 18 Appendix 11: Breakfast Expansion Impact Analysis 39 P a g e

39 learning. Regular reporting to the board on Wellness Policy goals and progress is not only part of the new regulations, but is an essential part of an active policy. MCSD s Wellness Policy last updated in 2011 needs to be updated to the current regulatory standards. This will provide the opportunity for broader group of stakeholders to address the current state of the FNS and the possibilities for growth. Director Tormohlen sought out participation in the LiveWell@School Food Initiative to take advantage of the services provided, provide training opportunities for her team, receive an independent assessment of her program and engage in strategic planning. Embedding this work into policy and goals for the District will ensure that the investment is not lost. 40 P a g e