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School Food Service Financial Management

School Food Service Financial Management. MASBO December 4, 2012 Bi-Monthly Meeting Robert Leshin, Assistant Director Office for Nutrition Health and Safety Programs. Objectives. Understand and become familiar with ESE school lunch financial reporting and recordkeeping requirements

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School Food Service Financial Management

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  1. School Food ServiceFinancial Management MASBO December 4, 2012 Bi-Monthly Meeting Robert Leshin, Assistant Director Office for Nutrition Health and Safety Programs

  2. Objectives • Understand and become familiar with ESE school lunch financial reporting and recordkeeping requirements • Understand the ‘why’ behind the requirements • Understand the importance of cash management and become familiar with standardized program controls used to strengthen financial effectiveness • Stay current on recent school lunch financial topics Massachusetts Department of Elementary and Secondary Education

  3. Overview • Allowable Costs • Source Documentation • Accounting Records • Financial Reporting • Internal Controls • Budget Controls • Cash Management • School Lunch Updates Massachusetts Department of Elementary and Secondary Education

  4. Allowable Costs • Program regulation 7 CFR Parts 210.14 and 220.13 (i) require a school food authority to establish a nonprofit school food service account, in which all reimbursements and other revenues from SFA operations are retained and used only for the operation and improvement of the nonprofit school food service Massachusetts Department of Elementary and Secondary Education

  5. Allowable Costs Cont’d • Must be reasonable, allowable and allocable • All costs must be for the operation or improvement of the nonprofit school food service • Types of expenditures- • Purchased foods, commodities • Non-food supplies • Salaries & wages • Employee benefits • Indirect costs (consistent allocation method) Massachusetts Department of Elementary and Secondary Education

  6. Allowable Costs Cont’d • Safeguard assets and ensure they are used only for authorized school food service purposes • Cannot borrow against account for other non-food service purposes (unallowable!) Massachusetts Department of Elementary and Secondary Education

  7. Source Documentation • POS system • General Ledger • Payroll • Paid bills • Time and attendance records • Communication is key: Food Service Director and Business Manager. Massachusetts Department of Elementary and Secondary Education

  8. Accounting Records • How does your program track revenues and expenditures? Who is involved? • Do you maintain consistent methods in doing so? • Do you know how much money you take in and spend out daily/monthly? Massachusetts Department of Elementary and Secondary Education

  9. Why Account for Revenues and Expenditures? • Two Reasons: • Official and, • Sensible! Massachusetts Department of Elementary and Secondary Education

  10. Official Reasons • 7 CFR Part 3016.20 states, “Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially assisted activities.” • Proper record keeping a principle of the Generally Accepted Accounting Principles (GAAP), which is the uniform standard of guidelines for financial accounting used in school districts for compliance with Federal requirements Massachusetts Department of Elementary and Secondary Education

  11. Sensible Reasons • All businesses (nonprofit and for profit) need to account for every penny of their financials in order to be successful • Need to trace all funds coming in and going out to achieve financial accountability • Protect employees (including yourself!) • Be able to answer financial questions easily and accurately from local, state and federal officials Massachusetts Department of Elementary and Secondary Education

  12. What You Need to Track • Revenue • Defined as income received in exchange for goods or services provided by the school food service department (National Food Service Management Institute NFSMI). • Examples: sales to students, prepaid sales, reimbursements, adult sales, interest, catering, vending sales etc. Massachusetts Department of Elementary and Secondary Education

  13. What You Need to Track Cont’d • Expenditures • Defined as costs that can be indentified specifically with the operation of the school foodservice program (NFSMI) • Examples: Food, labor, equipment, sanitation, outreach, promotional, fees, licenses, etc. Massachusetts Department of Elementary and Secondary Education

  14. Required Financial Reporting Profit & Loss • Displays the results of operations for a certain time period, showing the income received and expenses paid for a particular month • Shows financial performance for one month • No beginning cash balance (starts at $0 everyone month) • Must be tracked and recorded separate from supplemental financial report • Why? You want to know your performance for a particular month separate from your overall balance sheet. Massachusetts Department of Elementary and Secondary Education

  15. Financial Reporting Cont’d Supplemental Financial Report • Balance sheet- end of month cash flow statement and status of assets and liabilities • Pulls all of your record keeping (revenues, expenditures, inventory, payroll, liabilities etc. together) • Should be filled out monthly via the ESE security portal • Why? You want to know your financial status for a period of time (throughout the whole year) not just a particular month. Massachusetts Department of Elementary and Secondary Education

  16. Resource Management • Budget Controls • Internal Controls • Cash Management Massachusetts Department of Elementary and Secondary Education

  17. Why resource management? • Lunch aide steals more than $13,000 running a la carte line- Louisiana 2012. • FSD pleads guilty to embezzling more than $100,000- Oklahoma 2012. • Lots of smaller thefts, but all have lack of basic management controls in common • Keeps your food service operation from reaching its financial potential and from increasing its financial independence from the District • Protects employees Massachusetts Department of Elementary and Secondary Education

  18. How does your food service control theft or loss? Massachusetts Department of Elementary and Secondary Education

  19. Budget Control • Compare actual vs. budget • Who is reviewing this?(FSD, Business Manager, both?) • How often do you compare expenditures? • Cost of food & supplies used • Cost of labor • Food & labor percentages (of total revenue) • Meals Per Labor Hour (MPLH) • Cost of producing a meal Massachusetts Department of Elementary and Secondary Education

  20. Internal Control • Effective control and accountability for all cash, property and other assets. • Do you have written policies/procedures with employee sign off? • Inventories- monthly (stay on top) • Purchased food, commodities & non-food supplies • Equipment (mark equipment) • Revenue • Average Daily Participation (ADP) • Meal count trends • Pricing- student & adult meals, a la carte • Cash handling procedures Massachusetts Department of Elementary and Secondary Education

  21. Cash Cash is a liquid, portable and desirable asset. Therefore, districts must have adequate controls to prevent theft or other misuses of cash. Massachusetts Department of Elementary and Secondary Education

  22. New Meaning to “Cold Hard Cash” Massachusetts Department of Elementary and Secondary Education

  23. Cash Management • Written policies • How cash is handled and deposits are made • Training • Ensure staff understands policies and sign off • Cash Controls • Segregation of duties • Proper authorization and designation of cash handlers • Adequate documents & records • Physical controls • Independent checks on performance Massachusetts Department of Elementary and Secondary Education

  24. Cash Management Cont’d Cash Controls at the Register • Minimize Time and Confusion • 25 cent increments in pricing • Encourage families to pay online or times other than lunch service • Count out cash drawers after each shift • Reduce suspicion • Reconcile daily cash register readings to cash deposits • What is the process for discrepancies? Massachusetts Department of Elementary and Secondary Education

  25. Cash Management Cont’d Cash Controls at the Register • Set Overage and Shortage Limits • Decide on a reasonable tolerance • Document transfers between drawers • Account for inter-register exchanges in order to properly reconcile Massachusetts Department of Elementary and Secondary Education

  26. Resources NFSMI Financial Management Information System http://www.olemiss.edu/depts/nfsmi/Information/fmis/fmis_booklet.htm 7 CFR Part 3016-- Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments 7 CFR 210.14 7 CFR 220.13.(i) Massachusetts Department of Elementary and Secondary Education

  27. ESE School Lunch Updates • New lunch meal pattern • Additional 6 cents per lunch now available • Can get 1 month retro • Participation did not go down in schools that implemented earlier • Still have outstanding renewals • Claims- 60/90 days • Commodities- Check for discounts/rebates • Holiday season- watch allowable costs Massachusetts Department of Elementary and Secondary Education

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