Report Finds Private Food Companies Including Sodexo And Chartwells May Be Overcharging New Jersey School Districts $12 Million

Long Branch, Piscataway, West Orange and Seven Other Districts Included in the Report

TRENTON, N.J., April 7 /PRNewswire-USNewswire/ -- A new report finds private food service companies operating thousands of New Jersey public school cafeterias may be overcharging the state's school districts by $12 million.  

(Logo: http://www.newscom.com/cgi-bin/prnh/20020918/SEIULOGO)

The Clarion Group's report entitled "Hard to Swallow: Do Private Food Service Companies Shortchange New Jersey's Schools?" analyzes contracts and financial data in ten school districts that use Sodexo and Chartwells to manage their cafeterias.  

"In a time of tightened budgets, New Jersey's schools need every tax dollar owed to them," said Marcelo Narvaez, father of a teenage son and member of 32BJ SEIU.  "This money should be going to my son's education and providing nutritious food, not into the pockets of multi-billion dollar companies."

The report found significant problems in the districts studied, including:

• Potential Overcharges for Workers Compensation and Liability Insurance.  The report raises serious questions about the amounts that Sodexo and Chartwells charge school districts for insurance costs.  The report estimates that for the ten school districts studied, Chartwells and Sodexo overcharged a total of $320,000. If the approximately 378 New Jersey school districts using private food service companies are also overcharged at the same rate, the total amount of taxpayer money being misappropriated would come to $12 million, enough to purchase more than 5 million full-price grade school lunches.
• Withholding Rebates and Other Discounts Due to Districts.  Federal law requires that food service management companies credit school districts any discounts or rebates they receive from wholesalers, but Sodexo's contracts with two districts—Piscataway and Long Branch—allow it to pocket a portion of these discounts.
• Questionable Bidding Processes. Despite these potential overcharges and problematic business practices, the studied school districts did not change food service providers when their contracts where out to bid—raising questions of whether the process is truly competitive. Additionally, in some cases, the food service companies made the terms of their final contracts more profitable than the school district's original request for proposals.

The report calls for greater transparency for food service companies' finances. It also recommends districts to not allow food service management companies to write the terms of their contracts or perform their own audits.  

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