Garden State Coalition of Schools/GSCS         11-23-09

Testimony on S2850/A4151: GSCS Opposes

  The Senate Labor and The Assembly Appropriations Committees

Good afternoon, Chairman and members of the Committee. Today the GSCS represents a range of school districts throughout the state—from lower to middle to upper income districts—that share a common denominator interest in and support for quality public education. Together our member districts serve approximately 375,000 children through its statewide membership of more than 100 school districts (www.gscschools.org).

In the midst of economic crisis and trying to balance school budgets, as well as stabilize property taxes, timing becomes extremely important. The bill up for discussion today (S2850/A4151) will incur costs to local school districts in an unstable economic environment. The state budget is stressed beyond the tipping point. Local districts are facing with revenue shortages as well in their 2009-2010 budgets. For example, we are told that health benefits may rise as much as 25% in the State Health Plan for teachers and that this cost adjustment will be imposed this coming January. This is a fixed cost that will invade budgets already in place and will cut into on-going programs, as well as hiking local property taxes.

As you know, fixed costs are those items that are required by law but are beyond local control; yet these costs can eat up most -sometimes all - of the allowable 4% increase in school budgets. Too often, at the same time fixed costs are rising, bills come along that will add to the fixed cost burden, such as S2850/A4151 (requiring prevailing wages for, among other things, private food service providers in local government agencies, including school districts).

It would add reality to the discussion if a fiscal note were required that would demonstrate cost to local districts, thus local taxpayers re S2850/A4151; but no fiscal note is attached to this legislation.  If this legislation were to pass, it would certainly be considered an unfunded mandate in addition to being a prime reason for schools to confront the probability of having to run school cafeteria programs at a deficit (which is against DOE regulations).

GSCS  *research shows that:

Food services providers charge school districts on a ‘fee for services’ basis.  If a prevailing wage were imposed via S2850, the cost increase would be passed on to the local district. A typical cafeteria generates about $750,000 in revenue per year.  About 30% of the revenue comes from Federal and State reimbursements. 

·             The balance comes from the sales of meals and a la carte offerings.  State sets maximum meal prices for districts participating in the National School Lunch Program. 

The typical cafeteria employs approximately 22 people. 

·             The average employee works 170 days per year and approximately 5 hours per day. 

The Department of Education’s fiscal accountability, efficiency and budgeting procedures require that a food service fund is self sufficient and does not require a contribution from the general fund budget. 

 A well run cafeteria may produce about a 4% return on the cafeteria sales. 

·             This return is before district expenditures to operate the cafeteria including but not limited to capital investment, custodial services, utilities, maintenance, etc.

·             As a participant in the NSLP, the districts must reinvest these returns back into the cafeteria program.  

 Every $0.50 an hour raise equates to over $12,000 in expense for a typical cafeteria. 

·             This represents about 1% of the operating budget or 25% of the typical return.

·             Since a well run cafeteria may produce about a 4% return on the cafeteria sales an approximate increase of $1.50 per hour could not only put a district into a deficit situation, but also put such district out of compliance with the Department of Education’s fiscal accountability, efficiency and budgeting procedures.

*Research provided to GSCS by Pomptonian Food Services (Pomptonian currently operates about 12% of New Jersey food service operations). Note:  Of the 70 districts Pomptonian serves [about 35 in Bergen], the well run district makes about 5% profit.  We understand that A2850/A4151 proponents are looking to increase wages to approximately $14.00. Currently, food service workers are being paid around $10.00 per hour for part time work (4-5 hours per day). The Pomptonian study was based on the average district. Increments of +50 cents per hour were added to the pay made to the average worker.   At only about $1.50 per hour districts would not make profit. At this time, there is no posted prevailing wage posted by the Commissioner of Labor for food service workers.