N.J. school districts overpaid food service management firms by more than $320K, study says

For those who might tell you that outsourcing is more efficient...

By Bob Considine/The Star-Ledger
April 06, 2010, 2:50PM

A report says that school districts are overpaying food service management firms, suggesting that the charges Sodexo and Chartwells levy on schools for workers compensation and liability insurance exceed the actual cost of obtaining insurance.

Ten New Jersey school districts overpaid more than $320,000 to private food service management companies, according to a study by a consulting firm obtained by The Star-Ledger.

If the 378 New Jersey school districts using these food service management companies were being overcharged for insurance at the same rate, some $12 million could be misappropriated during a time when schools are feeling the crunch of cutbacks, according to the author of the study.

“We found the (food service) companies were using the same tactics they used in other markets,” said Tom MacDermott, who researched and wrote the report for the Clarion Group from last November to March. “They were charging more for certain overhead items than they actually incurred.”

Read the full story at http://www.nj.com/news/index.ssf/2010/04/ten_nj_school_districts_overpa.html