Post on 20-Feb-2016
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Financial Management: A Course for School Nutrition Directors (4 Hour)
National Food Service Management Institute
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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 source?
Expenditure categories?
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More questions Cost to produce a meal?
Percent of revenue spent for labor or food?
Labor productivity index (meals per labor hour)?
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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?
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Defining Financial ManagementFinancial 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
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Role of the School Nutrition Director in Managing Finances Management of financial resources Maintain financial accountability Involve administrators, board members,
cafeteria managers, and nutrition staff to identify goals
Promote team approach Assess, monitor, and evaluate program
funds Maintain on-going training
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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.
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Financial Management Information System Provides a uniform and consistent
financial reporting structure Provides meaningful and timely financial
management information Supports federal reporting requirements
Financial Management Information System (cont.) Adheres to Generally Accepted
Accounting Principles (known as GAAP)
Provides a basis for determining accountability
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NFSMI Financial Management Information System
Available at:www.nfsmi.org
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Classification of Expenditures Labor Employee Benefits Professional and
Technical Services Property Services Food and USDA
Foods
Supplies Capital Equipment Miscellaneous Indirect Costs Fund Transfer-Out
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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.
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Types of Financial Reports Statement of Revenue and Expenditures
(Net Gain/Loss Statement)
Statement of Net Assets (Balance Sheet)
Budget
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Statement of Revenue and Expenditures Revenue by source
Expenditures by category
Net gain/loss for the statement period
Comparison of current month with previous month’s information and year-to-date information.
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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
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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
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The Budget as a Management Tool
forecasting revenue
identifying how revenue will be allocated for expenditures
predicting how much money will be in the fund balance at year’s end
The budget assists in managing theschool nutrition program by
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Methods of Budgeting1. Incremental(baseline) – Previous
year’s budget is starting point. Adjustments made to each line item to reflect expected changes.
2. Zero – Start with zero for each line item and build according to expectations.
3. Combination – Uses zero for some items and incremental for other items.
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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.
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Using Meal Equivalents in Program Analysis to Measure Performance
By converting food sales to meal equivalents, the school nutrition director can determine meal cost, labor productivity ratios, and the average revenue earned per
meal/meal equivalent
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Meal Equivalent Conversion Formulas1. 1 lunch = 1 lunch2. 3 breakfasts = 2 lunches (2/3 = .67)3. 3 snacks = 1 lunch (1/3 = .33) 4. other food sales revenue from other food sales current free lunch reimbursement + current USDA Foods value
per lunch
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Managing Revenue in School Nutrition Programs
Objective: Know how to analyze, interpret, and use revenue data for program evaluation and improvement.
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Why it’s important to compare revenue earned 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.
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Setting Meal Prices Average Lunch Cost ($2.56) minus Section 4 reimbursement ($0.24) minus USDA Foods Value ($0.2/75) yields Lunch Base Price = $2.1125
The projected average lunch cost of $2.56 is a hypothetical figure for illustrative purposes only. Many school districts project meal costs for the new school year based on anticipated increases in food, labor, and other considerations, and then use the formula to determine a base price for each meal served.
*Rates shown in this slide are for school year 2008-2009
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Types of Nonreimbursable School Day Food Sales1. Adult meals2. Sale of a second meal to a student3. Individual components of the
reimbursable meal such as milk4. Other food items not on the menu (a
la carte)
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Nonreimbursable Foods Sold Away from Campus or Outside School Day
1. Catered meals 2. 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
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Managing Expenditures in the School Nutrition Program
Objective: Know how to analyze, interpret, and use expenditure data for program evaluation and improvement.
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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, and transaction errors
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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
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Meal Costs Deviations Higher food costs at the beginning of
the year due to larger than normal food purchases
Purchase of a large ticket item Unplanned large repair bills
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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 cents from each dollar generated was used to purchase food.
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What do Cost Percentages Mean?If total of all cost percentages is Less than 100%-operating balance
increases Equal to 100%-program breaks-even More than 100%-operating balance
decreases
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Comparing Revenue to Expenditures
1. Total net gain/loss to the school nutrition program expressed in dollars
2. Percent of gain/loss expressed in percentage of revenue
3. Net gain/loss per meal or meal equivalent
Comparing revenue to expenditures tells us
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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.
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Meals Per Labor Hour Number Meals/Meal Equivalents
Number of Paid Productive Labor Hours
Example:338 total meals/meal equivalents
24 paid productive labor hours
= 14.08 or 14 meals per labor hour
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Using Participation as a Financial Management ToolUsed 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.
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Developing and Analyzing a School Nutrition Budget
Objective: School nutrition directors should understand the importance of using the budget as an analysis tool and control document.