Food Service Contracting

Nationwide, the most detailed set of school privatization statistics involves food service, primarily because the provision of food in schools is highly regulated by the federal government. As a consequence of this federal involvement, state governments track a number of school food service statistics.

In early 2007, a Mackinac Center colleague and I conducted a telephone survey of the 50 state education departments, which keep records concerning all school districts, private schools, religious dioceses and other "school food authorities"[vi] that participate in the federal government’s National School Lunch Program.[vii] These data include whether these school food authorities contract with a food service management company[viii] for food services provision or management.[ix] Although not every conventional public school district participates in the NSLP, most do, and these NSLP figures thus provide a rough estimate of food service contracting in all conventional public school districts. Our survey asked state officials to tally figures only for conventional public school districts, thereby excluding private, parochial, charter and magnet schools that participate in the NSLP. After the initial survey was complete, we contacted each state a second time to ensure that the initial reports were accurate.

The survey was completed in April 2007 and found that nationwide, approximately 13.2  percent of conventional public school districts participating in the NSLP contract for food services. In Michigan, we found that 28.8 percent of conventional public school districts participating in the National School Lunch Program contracted with a FSMC. This figure ranked Michigan’s food service contracting rate fourth highest in the nation, behind Rhode Island (86.1 percent), New Jersey (64.4 percent) and Pennsylvania (36.7 percent).[x]

Six states — Delaware, Hawaii, Kentucky, North Dakota and West Virginia — reported no FSMC contracts. The survey also revealed that Louisiana and Alabama state laws discourage food service privatization by withholding money.[xi] Nevertheless, there is an exception to the prohibition in Louisiana: the Orleans school district, which is "in the custody of the state" because of the district’s poorly performing schools and the problems caused by Hurricane Katrina in 2005.[19] Thus, section 1990 of Part VII of the Louisiana Education of Children with Exceptionalities Act specifically states, "[The] district may contract with for-profit providers for any needed services for a school operated under its jurisdiction."[20]

The state-by-state results are displayed in Graphic 1.

Graphic 1: Food Service Management Company Use by
Conventional Public School Districts in
National School Lunch Program, 2006-2007

Graphic 1 - click to enlarge

Source: State education departments, author’s calculations
* The California data reflect the number of districts that had official contracts with an FSMC to provide services in conventional public school districts. This figure, however, probably understates the role of FSMCs in California. Districts frequently turn to FSMCs through consulting agreements, rather than official contracts. Such agreements were excluded by the state of California when it responded to the survey, while essentially similar agreements were included by other states participating in the survey.

The results dovetail with the findings from surveys of individual states. For instance, researcher Kenneth P. May, working on a 1997 survey of New Jersey superintendents for his doctoral dissertation, found that 65.3 percent of the superintendents responding reported contracting with an FSMC,[21] a figure similar to the 64.4 percent listed for New Jersey’s NSLP-participating school districts above.[xii] Recent Reason Foundation surveys of conventional public school districts in Florida and Arizona found FSMC contracting rates in 2007 of 10.0 percent and 25.0 percent, respectively,[22] figures similar to the 9.0 percent and 22.2 percent we list for NSLP-participating districts. In addition, a 2002 survey by the Alabama Policy Institute, a Birmingham-based think tank, found that 1.6 percent of the state’s conventional public school districts contracted with an FSMC,[23] compared to the 0.8 percent of NSLP-participating districts we list — a difference of just one district. And finally, the Mackinac Center’s direct survey of all conventional Michigan public school districts in 2006 concluded that 28.8 percent contracted with FSMCs,[24] a rate equal to the 28.8 percent we determined above using state Department of Education figures for NSLP-participating districts in 2007.[xiii]

Our survey’s national figure of 13.2 percent also appears to be in line with other recent national estimates. The U.S. Department of Agriculture, which provides regulatory oversight of the National School Lunch Program, surveyed 2,100 NSLP-participating public school food authorities in the 2003-2004 school year and reached the conclusion that approximately 13 percent were contracting for food services (see Graphic 2).[xiv] In a somewhat different measurement, the national Centers for Disease Control and Prevention in 2000 conducted interviews with food service managers at numerous public, private and parochial schools nationwide and concluded that 16.6 percent were contracting with FSMCs.[xv][25] In response to my request in 2007, the co-author of the CDC study isolated public schools in the study’s 2000 dataset and calculated that 15.2 percent of the schools were contracting for food services[26] — a number that makes our calculation of a 13.2 percent contracting rate for conventional public school districts seem plausible.[xvi]

Graphic 2: Percentage of NSLP-Participating Public School Food Authorities Contracting with FSMCs Nationwide and by Region, 2003-2004

Graphic 2 - click to enlarge

Source: U.S. Department of Agriculture

Privatization surveys also typically show that the primary reason for contracting with FSMCs is cost savings. The Kenneth May study of New Jersey superintendents found that 83 percent of respondents reported that saving money was a "very important" consideration, while 73 percent said that improving operations was.[27] Similarly, a 1995 study by the U.S. General Accounting Office (now the Government Accountability Office) found that around 75 percent of public school food authorities that contracted with FSMCs and that responded to a written questionnaire said reducing costs in their food programs was a "moderate" to "major" reason for contracting.[28]

Surveys also indicate generally positive results from the contracted services. A New Jersey School Board Association survey found that 88 percent of responding superintendents whose districts contracted with FSMCs reported that the resulting food service was either "excellent" or "good," although a relatively low response rate may have skewed this number somewhat.[29] The GAO survey cited earlier reported that districts that contracted with FSMCs experienced an increase in the number of lunches sold.[30]

[vi] A “school food authority” is defined by the National School Lunch Program as “the governing body which is responsible for the administration of one or more schools; and has the legal authority to operate the Program therein or be otherwise approved by Food Nutrition Service to operate the Program. See “Child Nutrition Programs, Part 210, National School Lunch Program, Sub-Chapter A,” (accessed April 19, 2007).

[vii] The NSLP was created in 1946 as part of the National School Lunch Act. The program is designed to assist children from low-income families (as well as other individuals) obtain low-cost or no-cost meals in public and private schools, as well as various “residential care” institutions for young people.

[viii] Food service management companies are frequently referred to by the acronym “FSMCs.” I use this acronym throughout the primer.

[ix] Researchers have often gathered data concerning NSLP districts through state education departments. For instance, the U.S. General Accounting Office (now the U.S. Government Accountability Office) used this procedure to determine how many NSLP-participating public and private school food authorities were employing FSMCs in fiscal 1995. See “School Lunch Program: Role and Impacts of Private Food Service Companies,” (U.S. General Accounting Office, 1996),, (accessed April 17, 2007). Similarly, Price Waterhouse LLP (now Price Waterhouse Coopers LLP), working under a contract with the U.S. Department of Agriculture, contacted state departments of education to determine the number of NSLP-participating public and private school food authorities that were contracting with FSMCs in fiscal 1991. See “Study of Food Service Management Companies in School Nutrition Programs,” ed. Food Nutrition Service U.S. Department of Agriculture, Office of Analysis and Education (U.S. Department of Agriculture, 1994).

[x] As measured by student population, the largest food management contracts are located in Illinois, Texas and Georgia. The Chicago Public Schools has more than 400,000 students, and Chartwells School Dining manages the district’s citywide food service program. Likewise, Houston and Atlanta school districts contract with private vendors for food service management. The two districts combined have about 259,000 students.

[xi] See La. Rev. Stat. Ann. § 17:194(B), which states, “[N]o state funds shall be disbursed for the support of any school lunch program which shall be used by any private person, enterprise, concern or other entity for profit, regardless of any authority in federal or state law for contracting with such a private supplier or provider of school lunch programs.” Legislative language discouraging privatization of school support services has also been passed in Alabama, reducing the amount of contracting there in recent years (Craig Pouncey, assistant state superintendent for financial and administrative services, phone conversation with Michael LaFaive, June 15, 2007).

[xii] Our survey figure is not as close to that of a 2002 New Jersey School Board Association survey, which found that about 54.1 percent of responding New Jersey superintendents reported contracting with an FSMC. See New Jersey School Boards Association, “Subcontracting in the Public Schools Update 2002,” (New Jersey: 2002). The NJSBA survey, however, had only a 22.9 percent response rate, compared, for instance, to a 50.9 percent response rate in the May survey described above. Thus, the NJSBA survey, which included districts that do not necessarily participate in the NSLP, involved just 135 respondents, compared to the 542 districts included in the figures in our survey above. In any case, it is clear that New Jersey districts contract with FSMCs far more frequently than those in almost any other state; even a 54.1 percent FSMC contracting rate would rank the state second in the nation.

[xiii] The 2006 Mackinac Center survey results referred to in this primer differ slightly from the results originally announced in September 2006. Following the initial announcement, additional data were received for three districts, providing figures for all 552 Michigan school districts and leading to small changes in the results. These revised data are the source for the findings reported here.

[xiv] This finding was not published as part of a formal USDA school nutrition study, but was rather part of a public presentation given by USDA in 2006. See Alberta Frost and Patricia McKinney, “FNS School Meals ... Do They Measure Up?,” in School Nutrition Association Annual National Conference (Los Angeles: United States Department of Agriculture Food and Nutrition Service, 2006).

[xv] Note that this survey dealt with schools, as opposed to school districts or school food authorities.

[xvi] In contrast, a 2005 School Nutrition Association survey of association members in decision-making capacities in public school districts, public schools and private schools found that only 4.5 percent of the responding members said that their school or district contracted with an FSMC for cafeteria services. (“Operations Survey: Final Report,” ed. School Nutrition Association (School Nutrition Association, 2005).) This is by far the lowest percentage of food service privatization I have found in any nationwide research, but this may be due to skewing in the composition of the SNA’s membership. According to Erik Peterson, director of public awareness for the SNA’s Child Nutrition and Policy Center, the low rate at which SNA members report competitive contracting is likely a function of membership characteristics. Peterson notes that SNA members “tend to be self-operated districts and do not contract with management companies.” (Erik Peterson, e-mail correspondence with Michael LaFaive, May 2, 2007.)