Where does the surplus come from?
At the New Hanover County Board of Education’s March meeting, Aaron Beaulieau of School Operations Specialists, LLC, said from his audit of the district’s finances that Child Nutrition is in “strong financial standing.” Last year, they had a surplus of $3.7 million. The year before, it was $2.6 million, as highlighted by the district’s prior auditor, Anderson, Smith, & Wike PLLC.
Amy Stanley, the district’s Child Nutrition Director, said their revenues come from reimbursement rates from several federal U.S. Department of Agriculture programs: National School Lunch, School Breakfast, After School Snack, and Summer Food Service. They also come from students who pay for breakfast and lunch.
The surplus has been generated because, essentially, the district is spending less on providing food than it brings in from government reimbursements and student meal costs. In other words, Child Nutrition is operating at a profit – which doesn’t go back into the overall district budget but stays in a special fund, as the department must pay its own salaries, benefits, food, equipment, supplies, and maintenance.
During the pandemic, that profit was increased as federal reimbursement rates were higher; 2022-2023 was the last year for those higher rates – which accounts for how the Child Nutrition fund was able to bank over $2 million in profits compared to just over $1 million the following year.
Stanley added that they were working on replacing equipment with over $1 million in surplus funds, although she didn’t name specific projects. She said that information would be released after the procurement process. The district declined the opportunity for an interview and instead sent a series of emailed statements.
Child Nutrition as a business
According to Stanley, Child Nutrition operates not unlike a for-profit business — namely, a restaurant — but added that profit is not the goal.
One place Child Nutrition does not make money is through paid lunch convenience fees charged by the district’s third-party online payment provider. The MySchoolBucks website and app charges a $3.50 fee for each transaction – and a family can only add $120 at a time, meaning families will often have to make multiple payments per school year.
Stanley said those fees go directly to the company, adding that the district has no negotiating power over fees. Stanley noted that these fees align with what other companies charge but reminded the public they are not required to use the system, as they can send cash or check to put in their students’ accounts without using MySchoolsBucks.
However, not all students pay for meals; some qualify for Free and Reduced Lunch, which means government funding covers the cost. For the last school year, Stanley reports that 11,441 students (44%) were approved for free lunches, and 13,899 (54%) were full-paying.
Unfortunately, some students who pay full or reduced rates for lunch fall behind and owe lunch debt.
Like other school districts around the state, NHCS allows the public to donate towards student lunch debt. And the district does have a rule that prevents students from being penalized – by barring them from events and activities, for example – if they’re unable to pay for lunch.
Stanley said last school year, they had 11 donors contributing up to $7,806 — and so far this year, there have been three donations worth $668.
Future cuts to come?
A recent federal decision from USDA has ended the Local Food for Schools program, which funded the purchase of fruits and vegetables from local farmers. The decision impacted schools and food banks, which received about $30 million annually across North Carolina through the program.
New Hanover County Schools did receive $95,756 in the first round of funding, but the second round was canceled. Stanley said they would continue to purchase those foods from North Carolina’s agricultural program, but the amount they could buy would now be limited with those diminished funds.
Related: How the USDA makes free school meals possible for New Hanover County students
Stanley said the Local Food for Schools program allowed cafeterias to “add more high quality, fresh foods from North Carolina farmers” – and she is concerned about the future of federal financial support for Child Nutrition.
Staff compensation shake-up?
One of the observations from Beaulieu’s report was that “most schools are reaching the required meals per labor hour, but some schools are very low and need to pay attention to participation and employee labor at the schools.”
Beaulieu recommended that the district review the compensation system for the 40 managers in the district. He said NHCS should switch compensation from being based on the size of the school to participation rates instead. This, he said, would “create equitable pay based on participation. Participation is also the tool used to determine the number of staff assigned to each school.”
Stanley said she supports the proposed change to compensation: “Child Nutrition staffs the school based on average number of meals served to students, not by student enrollment. The difference between the number of enrolled students versus meals served can be very different. The recommendation is what is best for our hard-working managers.”
