Los Angeles school district’s health benefits help push cafeteria fund into the red

The cafeteria fund for the Los Angeles Unified School District has run a multimillion-dollar deficit since 2007, when board members approved a plan to provide health benefits for part-time cafeteria workers, district officials said last week.

The benefits have helped low-paid workers who need healthcare assistance, and the expense isn’t the only one pushing food operations into the red. But the fund’s cash shortfall has exacerbated a systemwide budget crunch caused mainly by the state budget crisis and declining enrollment in the state’s largest school system.

In the 2006-07 school year, the district’s cafeteria fund was close to breaking even and had a reserve approaching $60 million, officials said. Then in August 2007, the Board of Education overrode the advice of its senior staff and approved the extended benefits.

The move was led by a newly installed majority elected with the support of L.A. Mayor Antonio Villaraigosa and Local 99 of the Service Employees International Union, which represents cafeteria workers and many other employees.

Over the next three years, food operations exhausted the reserve and still ran in the red by $8 million, $16.5 million and $12.2 million successively, said Megan Reilly, the district’s chief financial officer. (That first-year deficit was covered by one-year funding under a state program called Meals for Needy; the general fund covered the deficit subsequently). This year, the deficit is estimated at $20 million; the benefits cost more than $20 million per year.

Federal funds pay for most of the food program, which costs about $290 million annually.

Proponents called the extension of benefits a social justice issue, pointing out that district managers had created staggered shifts to keep cafeteria workers at less than four hours a day, the threshold for benefits. The results, they said, were hard-to-fill jobs and poor service, as well as a less healthy workforce.

“Everything we do has a positive and negative side,” said school board President Monica Garcia. “It’s a balancing act. We have to be mindful of every dollar, but we are in the business of needing good schools and good jobs.”

Opponents said the school system shouldn’t add to costs at the price of reducing resources for students. L.A. Unified, they said, was the wrong forum to address a nationwide issue.

Board member Tamar Galatzan, although an ally of the mayor, voted no. “Everyone in this country deserves health benefits,” she said. “But it was a very expensive proposal. And it wasn’t done at the bargaining table, which is where health benefits are usually negotiated. And no one had any idea where the money was going to come from.”

The broader budget crisis has resulted in thousands of layoffs, including those of hundreds of part-time cafeteria workers. About 2,000 remain, earning from $10.65 to $13.24 per hour.

Initially, about 44% of them had other insurance options; now, nearly all use L.A. Unified, which requires no monthly premium, for themselves and family members, including many children who attend district schools. “I used to go to work sick,” said Gamaliel Andrade, 33, a food-service worker at Murchison Street Elementary in Boyle Heights. “Now I go to the doctor.”

“Don’t we all deserve a healthy life?” he asked.

Costs also have risen because of increasing food and fuel prices and declining state support, said food services director Dennis Barrett. In response, the division has simplified menus, prepared more food in a central kitchen, reduced waste and altered food-contracting processes.

L.A. schools served 122 million meals in 2009-10, up from 109 million in 2006-07, despite enrolling about 50,000 fewer students. More meals served means more money for the program. Officials credit faster service and more appealing food for the surge, although critics have recently challenged the school system over food quality and nutrition.

Separately, state auditors said recently that L.A. Unified failed to account properly for $109.8 million in cafeteria funds from 2004-05 through 2007-08. Auditors are working out an estimate for subsequent years.

District officials acknowledged substandard record-keeping but also said the money was not misused. The questioned practices predated the deficits.

Better use of cafeteria funds could have allowed officials to “buy more food or more fresh food and vegetables,” said David Jang, a staff services manager in the nutrition services division of the state Department of Education.

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