Benchmarking Standards Improve Large City School Practices

One key component in the dramatic turnaround of Orange County's food & nutrition services department has been membership in the Council of Great City Schools (CGCS), a national organization representing the needs of large urban public school districts (for more, go to www.cgcs.org). The membership's 65 districts includes six in Florida. CGCS conducts research, offers legislative support and provides a forum in which to network and discuss common problems.

CGCS's Performance Measurement & Benchmarking Project identifies and quantifies 50 key performance indicators measuring five support service areas of public school operations, including foodservice.

The value of this project is that it establishes objective standards in what OCPS COO Mike Eugene calls “statistically proven best practices” that can make a real difference in a department's performance. Eugene was closely involved in developing the Performance Measurement & Benchmarking Project while serving as business manager for the Los Angeles USD.

In the foodservice area, the different statistically significant metrics — total cost as a percentage of revenue, food and labor costs each as a percentage of revenue, fund balance as a percentage of revenue — lead to the crucial “power indicator,” a school foodservice operation's self-sufficiency.

“What we found with our work with the Council of Great City Schools is that almost a quarter of major urban food services programs have a negative fund balance, so they're being subsidized by their general programs,” Eugene explains. “What we wanted to do was point those districts to ones that have a healthy fund balance, examine their policies and practices and see what lessons can be derived.”

Easier said than done, of course. Eugene points to escalating food and labor costs, as well as “indirect costs” (fees paid back to districts for “indirect services” such as rent and utilities), as major contributors to fund balance deficits. Indirect costs normally run 3-4 percent but at some districts they can be more than double that, Eugene says.

Meanwhile, the accepted industry standard of 40 percent food and labor costs are also under severe stress. In fact, the national average on labor costs is running over 48 percent at CGCS districts. “Our data is suggesting that districts are compensating for their increased labor costs by decreasing their food costs, and that's a bad business model,” Eugene notes.” It means you are probably decreasing your quality, which then drives away customers, putting you into a downward spiral toward subsidizing.”

CGCS members can measure their performance against benchmarks established by peers. The group also offers members an automated system that makes data entry to get the numbers easier and test the impact of potential operational changes before going through the expense and disruption of implementing them.