Pandemic wreaks havoc on school food service, transportation budgets

Jun. 13—As school leaders across the region debated the best way to keep students safe during the covid-19 pandemic, budgets for food and transportation services largely went bust as both districts and outside companies were left with fewer bodies queuing through cafeteria lines or riding buses.

With schools bringing students back to the classroom at different rates — some welcomed them all back at the start of the year, while others followed a hybrid model of learning or went fully remote — impacts to food and transportation budgets varied by district. Several lost money on food service, and some saved on transportation.

"Overall, it really varied district to district, and my guess is we won't have a full accounting of that until sometime this fall or early winter (when they can look) back over what each district did," said Mark DiRocco, executive director of the Pennsylvania Association of School Administrators.

However, a March report from the School Nutrition Association suggested that schools across the country served 1.7 billion fewer meals between March and November 2020 compared to the same period in 2019. That equated to a $2.1 billion loss in federal revenue for school meal programs.

According to the Virginia-based nonprofit, school meal programs in a typical year are funded by cafeteria sales and federal reimbursements for meals served. Programs often receive around $3.50 per meal, so to break even, organizations rely on a la carte sales and catering programs. School closures, however, largely slashed that revenue.

"We saw a huge financial impact for school nutrition programs," said Diane Pratt-Heavner, spokeswoman for the School Nutrition Association. "It did vary from one community to the next a bit based on the extent to which they were able to make sure kids continued to receive their meals."

Efforts were made by the U.S. Department of Agriculture to extend free meals to all students throughout the pandemic, which allowed districts to provide drive-thru meal services while students learned remotely and, in some cases, permitted districts to deliver food to pickup areas.

The extension also allowed districts to serve food through the summer food service program, which provides a higher reimbursement rate compared to the national school lunch and school breakfast program, Heavner noted. However, while the cost of meals was largely covered, districts still incurred other expenses.

"Consequently, you still have to pay your staff to come in and prepare the meals, you have to pay for the delivery service to get them out into those sites in the community, so my guess is most of those districts lost some money in that regard and hopefully the federal stimulus money will help cover some of those costs going back to March of 2020," DiRocco said.

Peggy Gillespie, assistant to the superintendent for finance and operations at Kiski Area School District, attributed lost revenues to the district keeping on the same number food service workers as in a typical year, even with fewer students in school buildings.

Gillespie noted the district is "in a loss position," but did not yet have an exact number.

"With covid, because there were so many stricter preparations and food delivery measures, the labor was actually a lot more intense than if you could put food on the serving line," she said. "We haven't been able to reduce a lot of the staffing although we haven't been (in school) five days per week."

At Deer Lakes, the pandemic only amplified existing budgetary issues in the district-run food service, said spokesman Shawn Annarelli.

The district's food service was operating at a $40,000 deficit a year prior to the pandemic. He attributed the loss of funds to a collective bargaining agreement — which includes salaries, benefits and retirement costs — as well as to delinquent lunch accounts.

Despite the district working to collect debt incurred from delinquent accounts, the pandemic steadily raised the food service deficit.

"During covid-19, that figure is a $141,000 deficit mainly due to no participation for several months of quarantining while all food service staff member were paid their full wages and benefits," Annarelli said. "There also was no revenue generated from reimbursements of a la carte sales."

By mid-May, Franklin Regional saw a year-to-date loss of about $75,000, said Jon Perry, director of financial services at the school. The district, which utilizes Metz Culinary Management to provide breakfast and lunch to students, typically operates at a surplus ranging between $25,000 and $50,000.

"As for food service, the shutdown has been very detrimental financially," Perry said. "School food service is very much volume-driven, so having less students physically present due to hybrid and online learning has presented a challenge. Our food service management company has done an admirable job in managing labor and food costs."

At Hempfield Area, business Manager Wayne Wismar said the district, which uses The Nutrition Group, is on track to lose about $125,000 this year for food service, a loss he attributed directly to fewer students being in the buildings so "we're not selling as much on the food service side."

In a typical year, the district usually breaks even.

At Pine-Richland, which provided data for the 2019-20 school year, operating and non-operating revenue from food service activities offsets the same expenditures, said Dana Kirk, director of financial and operation services.

Comparing the 2018-19 school year to 2019-20, "the net difference between the two is minimal," Kirk said, noting that revenue and expenditures were fewer in 2019-20.

Student transportation

Similar to food service, costs for busing across the country was expected to spike 36%, according to a December report from the Centers for Disease Control and Prevention, which cited the American Federation of Teachers.

The cost increase was attributed to the increase in number of buses and drivers, which were needed as fewer students were put on buses to help maintain social distancing. Those buses, however, had to run the same number of routes as in a typical year.

DiRocco noted districts could have combated those costs by choosing not to pay drivers when the service was not used or by renegotiating contracts with transportation companies.

For Mt. Pleasant-based busing company DMJ Transportation, revenues decreased as schools went hybrid or fully virtual, said Jay Kilpatrick, general manager at the company. He noted that several Westmoreland County schools use the service including Mt. Pleasant, Greater Latrobe, Greensburg Salem and Hempfield Area.

According to Kilpatrick, as districts such as Mt. Pleasant and Greensburg Salem began their 2020-21 school year in a hybrid model, meaning there was roughly one day per week where the busing company was not used. DMJ Transportation lost about 20% in revenues, while drivers lost about 80%.

The company also took a hit when a spike in covid cases was reported around the holidays, causing schools to largely shutter.

"They were all shut down for the month of December," Kilpatrick said. "They didn't come back to school until late January, so we lost revenue at that time because there was no language in the contract where we had to be paid so, unfortunately, we weren't paid and then our drivers weren't paid during that time either."

Overall the company lost about $1 million during the school year, he said, noting that busing for after-school activities and summer programs could help recoup some. He said the company worked with banks to freeze payments on buses or to lower interest rates. They also used the Paycheck Protection Program to continue paying employees.

Kilpatrick noted that two districts — Greater Latrobe and Hempfield Area — continued to pay for services even while schools were shuttered to help cover the costs of driver wagers.

At Hempfield, which uses both DMJ Transportation and First Student, busing costs are expected to be about on budget compared to previous years, officials said

"We ran the same routes every day and even when we did shut down for the month of December, we did pay the drivers costs to the transportation provider just to provide some continuity for the service and to just make sure things went smoothly," said Wismar, noting the transportation budget hovered around $4.6 million. "Plus, we had to add a few small routes here and there to account for social distancing and things along those lines."

At Kiski Area, which runs its own transportation service, Gillespie said the "jury's still a little bit out" on how much the district saved on transportation costs, but the maximum amount could be around $800,000. Still, those funds will be used to cover the increased contribution to cyber charter schools, costing Kiski $824,000.

Greensburg Salem reported similar numbers during the 2019-20 school year, according to business Manager J.R. Dzurica, who noted the district saved $814,000 on transportation costs last school year as compared to the 2018-19 school year.

Deer Lakes, which does not use an outside transportation company, also saw savings this year as fewer students needed busing as they followed a hybrid model. Annarelli noted that district leaders anticipate transportation costs to return to normal next year.

In the last three school years, Annarelli said, transportation costs with salaries and benefits averaged $2.7 million per year. This year, transportation costs are at $1.5 million.

"Other transportation expenses will be drawn from the account before the end of the fiscal year," he said.

At Franklin Regional, which uses A.J. Myers and Sons Inc., Perry noted the district stands to save some money on transportation but will not reach the mark of $600,000 in transportation savings it saw during the 2019-20 school year.

Perry suggested that as districts navigate budgetary impacts seen throughout the recent school year, adverse effects could also carry over into next year.

According to Perry, a pupil transportation subsidy — provided by the state education department and which is based on vehicle, mileage and pupil data — could be less than in past years due to the fewer number of students riding the bus.

"The lower ridership will have an adverse impact on the district's transportation subsidy received from the commonwealth next year based on the state's formula," Perry said.

However, expenses related to the pandemic that were incurred throughout the school year can largely be covered by federal stimulus funds sent to districts, DiRocco said.

"They can apply those funds to anything that was running over budget because they overspent their budget," DiRocco said, noting that expenses include transportation, food service or educational services. "Anything they were doing in relation to the pandemic, they could use those federal dollars for that and backdate it."

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