Introduction
On behalf of the 1,200 members of CUPE Local 5555, we welcome the opportunity to raise our serious concerns about cafeteria privatization in the Kawartha Pine Ridge District School Board.
As well as being employees of the Board, CUPE members are also part of the community and, as taxpayers, want to see declining education dollars spent wisely. As parents and grandparents, they are also interested in the ability of schools to meet the physical and academic needs of students.
Contracting out is not in the long-term interests of parents, staff or children.
The role of a school cafeteria is to provide nutritious and economical alternatives to fast food chains. As children are going through a period of emotional and physical growth, they need nutritious and appetizing food.
Progressive educators recognize and acknowledge the role nutrition plays in learning. Good nutrition is critical to educational success. That’s why a concerned public funds breakfast and lunch programs for students. Those students who come from single parent families, or families where both parents work outside the home, often miss meals. For them, school cafeterias often provide the only hot meal of the day. Schools in Edmonton found that high quality and affordable food can be a factor in school attendance. When students eat lunch in the cafeteria instead of the mall, they are more likely to be in class that afternoon.
What are the pitfalls of privatizing food services?
Food service companies continue to aggressively pursue contracts to run cafeterias in public institutions like schools and hospitals. Why? Because it is a profitable sector with stable funding and room for growth!
International conglomerates like Marriot, Cara/ Beaver/Compass are looking to get a toe in the door with a view to expanding their market school by school. Compass Group Canada is a member of Granada Compass PLC, based in London, England. Compass is the world’s leading contract food service company, with more than 250,000 “associates” in over 80 countries.
For food service corporations like Compass, the current funding crisis in schools is a prime opportunity to make inroads into our sector. The captive market of school children is a potential gold mine for profit-seeking private operators.
School officials, under pressure to make short-term savings, often overlook the long-term costs of privatization, such as:
Low ball bidding
‘Low balling’ is a standard technique among contractors. In order to win a contract, they bid low (often below their costs) to initially win the contract. Then once they are in, fees rise. Huge corporations like Compass (which had revenues of $3.2 billion last year) can afford to absorb high initial costs and low pricing levels because they know they will get it back in profits later.
Boards who sell off equipment (usually to the contractor) subsequently find themselves dependent on contractors because a return to in-house can represent a large capital investment, not to mention the costs of recruiting qualified staff. Even when contractors’ fees increase or services deteriorate, Boards can become hostage to the contract process. Sure, you can change contractors but then you pay more costs for tendering, legal fees, and the low-ball cycle begins again.
The proposed contract with Compass says that the Board must supply all the equipment, tables and chairs, cutlery, dishes, glassware and trays. School equipment is a long-term investment purchased with taxpayers’ dollars that will be transferred into private hands for the length of the contract. To pass it over without considering the long-term implications is risky at best and irresponsible at worst. It also represents a considerable cost saving to Compass that, if factored in, would increase their costs.
Hidden costs
The legal and administrative costs associated with privatization can run into considerable expense. Costs to prepare and negotiate contracts and price levels represent considerable staff time, which may not be counted as a cost.
Ultimately, it is the Board staff and the trustees who are responsible for the provision of cafeteria services, even if they are privatized. Board personnel will have to continually supervise the contractor to ensure compliance with the terms of the contract. They will also have to monitor (though not control) the quality and pricing of the food served in cafeterias. These costs must be included to evaluate the true costs of privatization.
Privatization usually leads to more bureaucracy not less. Under the current system, if there are problems, the Principal can take direct action with the cafeteria staff to resolve the problem quickly. With a private cafeteria, the principal will have to contact an off-site supervisor, explain the problem, suggest possible solutions, but have no control over how (or if!) the problem is resolved.
The proposed contract stipulates that Compass will do routine cleaning and cleaning of food preparation areas. However, the Board continues to be responsible for cleaning walls, floors, and drapes. The Board is also responsible for the repair and maintenance of equipment. So these costs will continue to be paid by the Board and must be included as a cost of privatization. The Board continues to pay fire insurance on the cafeteria, as well as providing (according to the contract) phone and long distance charges for the contract staff! As well, the Board will have no control over, but will still pay for water and utility costs incurred in running the cafeteria.
The reality is that private contractors are not responsible for the long-term development and maintenance of school facilities. Their perspective is quite different than in-house staff and management. They know that if they economize on materials at the expense of quality, they will not be responsible for the replacement costs—the Board will! They often sacrifice long-term goals for short term ones because they have no stake in how things work out in the long run.
Profit has to come from somewhere!
Compass (Beaver Foods) wants to make a profit from your cafeterias. Is that a bad thing? No, but that profit has to come from somewhere. Economies of scale will provide some costs reductions but there is no magic here. Compass’s cost savings will come from:
Fewer staff,
lower paid staff (which usually means high turnover),
less qualified staff,
lower quality food,
higher prices,
cheaper cleaning products (which we know do an inferior job).
Money can be saved by cutting corners in the preparation of food, such as smaller portions, less variety, cheaper cuts of meat and lower quality vegetables, more prepackaged and frozen food, more carbohydrates, less protein, more processed desserts and snacks and fewer fresh fruits and vegetables.
If vending machines are part of the package the choices plummet. Vending machines are high profit item because they require minimal service, but they seldom offer nutritious alternatives.
Accountability
School board management will no longer be able to control the selection of staff, so careful consideration should be given to the legal liability of the Board in consideration of a situation involving a contractor’s employees or products.
The draft contract with Compass states that the Board will provide the cleaning detergents and Compass will supply the mops and pails. This kind of fragmentation of responsibilities is a recipe for confusion and friction.
Consistency of food quality is also a concern. Because contractors depend on suppliers and more pre-packaged food, consistent quality can be undermined. We have attached a letter from an occasional teacher that documents this. Many of us can also personally vouch for the difference in quality.
The Board is accountable for ensuring that students’ dietary needs are met. Right now, cafeteria staff offer ‘no dairy’, ‘no wheat’ and ‘allergy free’ options. However, Beaver says in its information package that it cannot guarantee allergy protection! Because it buys processed food from other suppliers it:
- cannot provide a listing to parents of ingredients or specific allergens;
- cannot control the substitution of ingredients by suppliers; and
- cannot “guarantee that our procedures eliminate the risk of cross contamination.” (quote from the draft contract)
Do parents know they will sacrifice this protection to save money?
Another element of accountability, of course, is security. Current cafeteria staff are familiar to staff and students. New contract employees will not be. (The contract even suggests that more part time employees will be used.)
Granted, familiarity may build over time, but it is also true that low wage jobs experience a higher turnover, so contract staff may change more frequently and not be able to build a strong rapport with students. High turnover makes it hard to tell who should and shouldn’t be on school property and provides more opportunities for keys to be lost or fall into the wrong hands. At a time when violence and vandalism are on the rise, can the Board afford to lower security a notch?
Another element of accountability is that contractors may use policies and practices not approved of by the Board. For example, the Beaver cafeteria in Peterborough uses workfare as a way to get cheap labour. This would conflict with the collective agreement signed by CUPE and the Board that prohibits use of workfare employees.
Strengths of in-house cafeterias
The Staff
Our members are well qualified for the work they do. Many members bring years of experience and formal training to the job. Together, they represent over 96 years of service to this Board. They have a long-term commitment to the school, the students and the staff.
Cafeteria staff watch out for students and can step in, or call appropriate people to stop bullying or help resolve disputes. They get to know the students over the years and learn their special needs and preferences. Don’t we all enjoy walking into a restaurant where we are recognized and someone remembers we like gravy on our fries! Familiarity with students is also a security issue – our members can tell when strangers are on school property.
Our staff are trained in fire procedures and can assist staff in making sure students evacuate the building in an emergency.
The Food
The staff offer varied and nutritious options in portion sizes designed to satisfy most adolescent appetites. New items are introduced to provide variety, and some menu items are included to reflect the cultural diversity in the school. Our staff prepare meals to meet a wide range of dietary requirements of students. Parents can rest assured that their children’s special dietary needs are being adhered to.
Contractors know there’s a funding crisis, so they increase their appeal by offering special incentives like the Principal’s package to be applied to various bursaries and awards. It may seem like a bonus, but the reality is that the Board pays for these extras one way or another.
The Community
We are seeing more and more control over education being taken away from the community and nestled in Queen’s Park. Surely the Board is concerned about the effect on school-community links. Well, cafeterias are one way to foster those links.
Clarke and PHHS cafeterias have long-term relationships with local suppliers – in some cases those relationships go back 40 years! Using local suppliers means stable jobs in the community, and reliable, consistent quality of products and services.
Clarke High School has sponsored fund-raisers where the community can come and feel part of the school. Last year the fund-raiser made $1,200-$1,500 that went directly to the Phys. Ed. department to buy equipment and uniforms – to make up for cuts provoked by the Harris government funding formula.
Contracting out the cafeterias will close another door to community relationships.
The Funding Formula
We all know the restrictions imposed by the Harris government funding formula are designed to facilitate contracting out. The policy to make cafeterias pay for themselves is a perfect example of this. Workers and their unions have negotiated decent wages and benefits, often at a cost. We make no apologies for the adequate wages, pay equity adjustments, workers’ compensation costs and pensions we have negotiated. Yes, these items increase employment costs, but they also offer:
- a stable workforce (which reduces recruitment and hiring costs);
- the ability to attract qualified, experienced employees;
- and improved labour relations (which reduces legal and administrative costs).
Can the same be said for contractors?
Revenue
Board statistics show that in-house cafeterias generate more revenue than contract cafeterias.
Why is revenue lower in contract cafeterias?
Is it volume – fewer students buy food because of lower quality?
Is it because of lower prices, which accompany lower quality?
Also on the subject of revenue, have opportunities to increase revenue been examined? For example, next year PHHS will have the senior elementary school students using the cafeteria. Have the effects been calculated? Courtice High School is considering moving to 2 lunch periods to accommodate demand. More space will likely mean more students using the cafeteria and increased revenues.
As well, we urge the Board to review its cafeteria prices, which have not been updated in some time. Charging similar prices to contractors may help to increase revenues substantially.
The answers to these questions should be found before any decisions to contract out are finalized.
Conclusion
Our presentation shows the hidden and long term costs of privatization are often overlooked when calculating costs. When factored in, these substantially boost the costs of privatization. In order to consider the real costs of privatization, we urge the Board to calculate the costs of cleaning, maintenance, utilities etc. and add them to the cost of contracting out the cafeterias to get a more accurate accounting, as well as explore more revenue generating opportunities to keep operations in-house. Until that happens, a realistic assessment of savings is not possible, and the true cost of privatization will be unpredictable.
We urge the Board to consider other options than contracting out. Economies of scale, retrofitting to save energy costs and consulting with staff to develop cost efficiencies should be evaluated before any contracting out proposal is considered.
CUPE Research
May 2001
