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  • 1. Orientation to School Nutrition Management Seminar Financial Management
  • 2. Can you answer these financial management questions about the school nutrition program in your district?
    • Main sources of revenue
    • Percentage of total revenue attributed to each sources
    • Expenditure categories
  • 3. More questions?
    • Cost to produce a meal
    • Percent of revenue spent for labor or food
    • Labor productivity index (meals per labor hour)
  • 4. More questions?
    • Net gain or loss over the past 3 years
    • How many employees understand the importance of cost controls to the success of the program
  • 5. Defining Financial Management
    • Financial Management can be defined as:
    • The process of defining the financial goals and program objectives for the school nutrition programs, and
    • Implementing activities to attain those goals through the effective use of resources
  • 6. Activities for More Effective Financial Management
    • School nutrition programs should
      • use the budget process to plan,
      • apply more efficient cost control measures,
      • increase productivity , and
      • identify ways to increase resources .
  • 7. Role of the School Nutrition Director in Managing Finances
    • Management of financial resources
    • Accountability
    • Involve administrators, board members, managers, and staff to identify goals
    • Promote team approach
    • Assess, monitor, and evaluate program funds
    • Training
  • 8. Development of a Financial Management Information System
    • Objective:
    • Know the basic financial recording and reporting processes and procedures for directing the operation of a school nutrition program.
  • 9. Financial Management Information System:
    • Uniform and consistent financial reporting structure
    • Meaningful and timely financial management information
    • Tool to assist in decision-making
    • Support federal reporting requirements and adhere to generally accepted accounting principles (known as GAAP).
    • Basis for determining accountability
  • 10. NFSMI Financial Management Information System
    • Available at:
    • http://www.nfsmi.org
  • 11. Classification of Expenditures
    • Labor
    • Employee Benefits
    • Professional and Technical Services
    • Property Services
    • Food and Commodities
    • Supplies
    • Capital Equipment
    • Miscellaneous
    • Indirect Costs
    • Fund Transfer-Out
  • 12. Financial Reporting of Revenue and Expenditure Transactions
    • Objective:
    • Know how to use financial reports that are consistent with federal and state guidelines to achieve a financial management system that provides a cost effective program with high integrity.
  • 13. Types of Financial Reports
      • Statement of Revenue and Expenditures (Net Gain/Loss Statement)
      • Statement of Net Assets (Balance Sheet)
      • Budget
  • 14. Statement of Revenue and Expenditures
    • Revenue by source
    • Expenditures by category
    • Net/gain loss for the statement period
    • Comparison with previous month’s information and year-to-date information.
  • 15. Statement of Net Assets
    • Assets
      • Cash balance, receivables due, and value of inventories
    • Liabilities
      • Outstanding payables
      • Deferred revenue
      • Sales tax owed (when appropriate)
    • Fund Balance
  • 16. The Fund Balance
    • The school nutrition director can use the Fund Balance reported on the Statement of Net Assets to:
      • Verify how much of the fund balance is reserved for encumbrances
      • Determine how much money is available for expenditures
      • Gauge how the program is performing financially
  • 17. The budget assists in managing the school nutrition program by:
    • forecasting revenue
    • identifying how revenue will be allocated for expenditures
    • predicting how much money will be in the fund balance at year’s end
  • 18. Methods of Budgeting
    • Incremental (baseline) – Previous year’s budget is starting point. Adjustments made to each line item to reflect expected changes.
    • Zero – Start with zero for each line item and build according to expectations.
    • Combination – Uses zero for some items and incremental for other items.
  • 19. Setting a Meal Standard for Financial Management and Analysis
    • Objective:
    • Know how to use financial management tools and standards to operate a financially and nutritionally accountable school nutrition program consistent with federal and state guidelines.
  • 20. Using Meal Equivalents in Program Analysis
    • By converting food sales to meal equivalents, the school nutrition director can determine:
      • Meal cost
      • Labor productivity ratios
      • The average revenue earned per meal/meal equivalent
  • 21. Meal Equivalent Conversion Formulas
    • 1 lunch = 1 lunch
    • 3 breakfasts = 2 lunches (2/3 = .66)
    • 3 snacks = 1 lunch
    • other food sales
    • revenue from other food sales
    • current free lunch reimbursement + current commodity value per meal
  • 22. Managing Revenue in School Nutrition Programs
    • Objective:
    • Know how to analyze, interpret, and use revenue data for program evaluation and improvement.
  • 23. Revenue Management Accountability
    • USDA mandates that the school food authority must maintain a high level of accountability
    • for all revenue received,
    • how that revenue is dispersed, and
    • whether the revenue is sufficient to sustain a nutrition program that serves food high in quality and nutritional value.
  • 24. Comparing Revenue Earned per Meal with Meal Cost
    • This comparison is useful because
      • It helps determine if and where revenue needs to be increased.
      • It allows you to analyze revenue by source.
      • It identifies areas in which revenue should be monitored for revenue loss.
  • 25. Pricing School Meals
    • Formula:
    • Average Lunch Cost minus
    • Section 4 reimbursement minus
    • USDA Commodity Value
    • = Meal Base Price
    • Example: $2.40 - $0.23 - $0.17 = $ 2.00
    • * Rates shown are for school year 2006-2007
  • 26. Considering State Funds When Setting Meal Prices
    • Consider:
    • Is the state subsidy provided as
      • a guaranteed reimbursement per meal,
      • lump sum that is subject to annual change,
      • supplement funds to cover specific costs?
    • Is the school district nutrition program financially viable?
  • 27. Focus of School Nutrition Programs
    • The main focus of the school nutrition program is to provide good nutrition that promotes the health and wellness of students so they can be more productive in the classroom.
  • 28. Types of Nonreimbursable School Day Food Sales
    • Adult meals
    • Sale of a second meal to a student
    • Individual components of the reimbursable meal such as milk
    • Other food items not on the menu (a la carte)
  • 29. Nonreimbursable Foods Sold Away from Campus or Outside School Day
    • Catered meals
    • Contract meals that do not qualify for reimbursement (some meals such as day care might qualify for reimbursement)
    • 3. Special school function meals such as athletic banquets
  • 30. Managing Expenditures in the School Nutrition Program
    • Objective:
    • Know how to analyze, interpret, and use expenditure data for program evaluation and improvement.
  • 31. Expenditure Analysis
    • Analyzing financial reports can provide information about:
      • Patterns or trends
      • Significant changes in costs categories
      • Deviations from financial goals
      • Possible abuse or theft
      • Transaction errors
  • 32. Types of Expenditure Analysis
    • Total costs to produce a meal
    • Meal costs per expenditure category
    • Percentages of operational costs to total revenue
    • Costs to produce a meal compared with the average revenue generated per meal
  • 33. Meal Costs Deviations
    • Higher food costs at the beginning of the year due to larger than normal purchases
    • Purchase of a big ticket item
    • Unplanned large repair bills
  • 34. Food Cost Percentage to Total Revenue
    • Formula: Costs of Purchased Food
    • Total Revenue
    • Example: $16,500 (food costs)
    • $30,000 (revenue)
    • = .55 x 100 or 55%
    • 55% of all revenue generated was used to purchase food
  • 35. What do Cost Percentages Mean?
    • If total of all costs percentages is:
    • Less than 100%- operating balance increases
    • Equal to 100%- program breaks-even
    • More than 100%- operating balance decreases
  • 36. Comparing Revenue to Expenditures
    • Comparing revenue to expenditures tells us
    • Total net gain/loss to the school nutrition program expressed in dollars.
    • Percent of gain/loss expressed in percentage of revenue
    • Net gain/loss per meal or meal equivalent
  • 37. Controlling Food and Labor Costs in School Nutrition Programs
    • Objective:
    • Know how to apply cost control measures to operate a financially sound program with nutritional integrity.
  • 38. Meals Per Labor Hour
    • Number Meals/Meal Equivalents
    • Number of Paid Labor Hours
    • Example:
    • 338 total meals/meal equivalents
    • 24 paid labor hours
    • = 14.08 or 14 meals per labor hour
  • 39. Using Participation as a Financial Management Tool
    • Used as a forecasting tool to:
    • Prevent waste in excess labor hours and overproduction of food
    • Reduce customer dissatisfaction because of inadequate staff and too little food prepared for the number served
  • 40. Planning and Budgeting
    • Objective:
    • Understand the importance of the budget as a control document.
  • 41. Budget Planning
    • Establish long-term goals 5 to 10 years
    • Project revenue based on
      • Amount of revenue expected from various sources
      • Increases or decreases in enrollment
    • Estimate expenditures based on:
      • Historical trends
      • Participation
      • Reimbursement rates
    • Budget for entire year.

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