School savings possible with new vendor
Schools will have a new food service vendor when classes resume after the summer vacation in August and, if everything works out, schools could end up with saving $250,000.
During a special meeting held Thursday, June 27, the School Committee approved Aramark as the new vendor.
Chief Budget Officer Anthony Ferrucci presented the recommendation to the committee, along with two alternative options, after the district was informed by Sodexo it would be unable to carry out the final year of its contract and would not renew with Warwick.
Ferrucci explained that when Sodexo prepared its operating budget to account for hiring staff and purchasing food, a management fee was built in that would be charged to the district, but if the program lost more money than the cost of the management fee, the fee would be waived. The management fee totaled $60,000, or six-tenths of 1 percent of the sale.
Historically, Ferrucci said, Warwick has been running a $200,000 deficit in the food service program for the past 10 years, which means it has had to pay $140,000 to Sodexo.
Since the money for the program comes from students purchasing meals as well as funds from the United States Department of Agriculture (USDA) through the free and reduced lunch program, Ferrucci said it doesn’t cost anything in the budget to approve Aramark as the new vendor.
If, however, the program continued to run a deficit at the end of the year, Ferrucci said that money would have to come out of the budget.
“Aramark has told us they can get us to a balanced budget, so I’m hoping we can save $250,000 [amount budgeted] with the food program this year,” Ferrucci said, adding he expects Aramark to present its operating budget in August.
Before recommending Aramark, Ferrucci said three options were considered to replace Sodexo: bring the program in-house and have Warwick Public Schools staff run it; conduct an RFP [Request for Proposals], as has been done in the past; or work with the state recommended vendor [Aramark] that was selected by an RFP process administered by the Rhode Island Department of Education (RIDE).
Ferrucci ran through each option with the committee during his presentation, starting with moving the program in house.
“With regards to brining the program in house, we reviewed Cranston and North Kingstown’s experience. We have concluded that an attempt to run an in-house school lunch program would not be beneficial to our students,” he said.
Ferrucci said one of the major drawbacks to an in-house program is the lack of purchasing power an individual district has compared to national organizations.
“In addition, there are economies of scale in menu planning, nutritional analysis and quality of leadership staff within larger organizations that an in-house program cannot match,” he said.
In looking at Cranston, Ferrucci said it had an in-house program until three years ago, when it outsourced the program in 2010 by selecting Sodexo as the management company and had Cranston employees apply for positions with Sodexo.
“Approximately 95 percent of Cranston’s employees were hired at the time of transition. That employee group has chosen not to unionize based on the salary and fringe benefits offered by Sodexo to these employees,” he said. “Cranston’s food program has experienced annual surpluses for the past three years attributed to this decision to outsource.”
Addressing the option to prepare an RFP, Ferrucci said there were three major issues.
“First, over the past 12 years, Warwick Public Schools had all three major school lunch management companies, Aramark, Chartwells and Sodexo, manage the program with varying degrees of success. The probability of securing a new vendor other than one of these is remote at best,” he said.
The second issue, Ferrucci said, is that RIDE has mandated a standard RFP for all school departments to use when conducting a search for a school lunch vendor and any deviation from that RFP will require RIDE review and approval.
“This undertaking will take a considerable amount of time,” he said.
Ferrucci said the last issue is time. With approximately two months before school opens in the fall, he said it would be difficult to conduct a search process and have a food service company in place in time.
Ferrucci said the state RFP is the same RFP that Warwick used the last time it went out to bid for a vendor.
“The state RFP does include flexibility, which was designed to meet specific local issues,” he said. “Based on this flexibility within the standard RFP that the state used, it is my recommendation that we move forward with Aramark since they were awarded the state contract.”
Ferrucci said there was only one major local issue Warwick needed to address, should Aramark be approved, which is how to instruct the vendor how to deal with current Sodexo employees.
“This issue, in my opinion, is major since many of these employees, while currently employed by Sodexo, have been in our school system for many years working with each management company that has been brought into our district,” he said.
Ferrucci said the Sodexo employees requested that the school administration inform any new vendor coming into the school district that their current labor contract with Sodexo be honored.
“Although I can understand their request, it is our recommendation that Aramark not be instructed that they have to be committed to a labor contract that may or may not be comparable to other food service groups throughout the state,” he said. “We believe it is in the best interest of our students that any food service management company should be able to use their knowledge of industry contracts to properly negotiate a labor contract that makes sense both to the employees and the program they serve.”
If approved, Ferrucci said based on discussions he had with Aramark, the vendor would host a job recruiting fair for current Sodexo employees between June 28 and July 3; recruit additional staff, if needed, and negotiate a contract with employees if the employee group elects to organize between July 8 and July 31; health insurance would be effective for new employees hired in July starting Aug. 1; and organization preparation for school opening would take place Aug. 5 through Aug. 16.
Although the committee voted 4-0 (with Terri Medeiros abstaining) to approve Ferrucci’s recommendation of Aramark and a job fair for current employees, there was some disagreement among committee members.
“These workers have been dedicated to our students and our community. Collectively, they’ve devoted hundreds of years [to our district],” said committee member Karen Bachus. “They should get first right of refusal and shouldn’t have to apply at a job fair.”
Medeiros said she was uneasy with Ferrucci’s recommendation, and suggested a temporary 90-day trial with current Sodexo employees working for Aramark.
“I would defer to Aramark’s expertise to get the right people with the right skill set in the right place,” Ferrucci said.
Committee chairwoman Bethany Furtado said she was upset with Sodexo for “leaving us in the lurch.”
“My concern is the clock is ticking on the employees’ health insurance,” she said.
Committee member Jennifer Ahearn said she wanted to get the matter settled.
“We would have funds coming into the budget, our kids will be fed and the employees will have health insurance; I don’t see how this is bad,” she said.
Ferrucci said based on his talks with Aramark, “they would expect to hire most, if not all, of the staff that applied, given their history in Warwick and their connection to our students.”