Linn R-2 faced with food-service issue

By Neal A. Johnson, UD Editor
Posted 2/1/23

LINN   — Linn R-2 board members learned at their January meeting that Fresh Ideas wants an increase of $7,187 to cover its interest in the food-service contract for the second semester. …

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Linn R-2 faced with food-service issue

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LINN  — Linn R-2 board members learned at their January meeting that Fresh Ideas wants an increase of $7,187 to cover its interest in the food-service contract for the second semester. The school is in its second year of a five-year contract.

Superintendent Bob James explained that the cost of goods and services has increased significantly.

A discussion of the Consumer Price Index (CPI) was held before the renewal of the contract, but James said no adjustments were made.

“This is a fairly common conversation happening right now across the state,” James added. “We have a couple of options.”

He told board members the contract includes a 60-day termination clause, which means if the matter is not resolved, Fresh Ideas could cancel the agreement for cause.

“While it’s not ideal to renegotiate the contract in the middle of the term, we have a lot going on, and I can’t imagine trying to figure out how to feed our kids from March until the end of June,” said James.

In response to a question from board VP Hannah Swann, James noted the increase would apply only to the second semester.

“So that means next year would be double that,” Swann surmised.

Shannon Fife of Fresh Ideas noted the initial five-year contract included yearly increases of 3%.

Board President Dr. Shawn Strong noted he had not been on the board long when the contract was signed.

“I was opposed to it because it was presented to us as a cost reduction,” he said. “If you look at the math, comparing a four-day week to a five-day week, it was actually an increase. I said the only reason I was voting for it was because the CPI was going to be much higher than three percent.”

He added that it cost about 15% to go from preparing meals in-house to using Fresh Ideas. “It cost us real money,” said Dr. Strong. “If the CPI had been one percent, (Fresh Ideas) would not be giving us money back.”

Fife told the board the company wants to partner with the school, adding that it may be possible to speak with the corporate team and negotiate a lower cost increase.

“I think, given the discussion we had then, we knew the CPI would be much higher,” said Dr. Strong. “Either somebody in your corporation said, ‘we’re going to ignore all the data out there,’ or they said, ‘screw it, we’re going to do what we have to do to get this to work and renegotiate it later.’ I have to believe they said that they would negotiate it later. Given that, I definitely think we shouldn’t be increasing it by the whole CPI.”

Dr. Strong added that a 3% increase annually was okay with him. “I knew we would come out ahead in the end,” he said.

Fife told the board that Fresh Ideas has never gone into a fixed-rate contract and asked for an increase. “It’s not common practice for us,” she added.

As James noted, this is happening more often now, which Dr. Strong said was the risk of doing business.

“With a three percent increase, you’re going to lose some years and win some years, but almost all of us knew we shouldn’t be doing this type of thing,” he added.

“The tough part is, we’re not asking for an increase, so we have a profitability line,” Fife said. “We’re asking for an increase, so we don’t have a negative on the bottom line.”

“Like I said, that’s a risk you take when you enter these types of contracts,” Dr. Strong replied. “If we take a vote, I’m a no. If you want to go back to corporate and tell them (the board) knew they were going to come out ahead on this and we should meet them halfway on this. That’s where I’m at.”

Dr. Strong, who serves as president of State Tech, noted he would not increase tuition midway through the year because costs went up.

James indicated the school would not pass any increase ultimately approved by the board along to families that pay for meals. Instead, he said a surplus in the food-service budget, pointed out by Department of Elementary and Secondary Education (DESE) auditors, would be used.

“I’m troubled by this,” said board member Mark Baker. “I would think the time to increase this would have been last summer. It bothers me we have to discuss this in the middle of the school year and after the second semester started.”

James said that if the CPI had swung the other way and the school wanted to renegotiate, that process would have taken place in the summer, not during the school year.

Each year, the contract renews until the end of the five-year term, after which, James said, the board will have to solicit bids.

As noted previously, a 60-day termination clause is open to both parties, which means Linn is not locked in for the full five years.

Dr. Strong noted that what separates Linn R-2 from other districts is that the school board knew going into the contract that the CPI would be significantly higher than 3%.

“We build CPI increase into our contracts,” said Fife. “This is unprecedented.”

“You got caught in a bad situation,” said Dr. Strong. “I would say, again, we need to negotiate instead of eating $14,000 a year.”

James said the question is whether to wait until summer or renegotiate with Fresh Ideas.

“If we’re going to negotiate something, let’s do it now,” said Dr. Strong. “If we’re not going to negotiate, let’s wait until summer to do it because then we’re going to take it in the pants anyway. We’re going to be stuck with CPI.”

Fife reminded board members they have options, from agreeing to pay the increase to canceling or renegotiating the contract.

Dr. Strong said he highly doubts Fresh Ideas would walk away from a school in March, halfway through the semester, because of the negative impact it would have on the company.

“I’m confident you’ll get us through the end of the semester,” said Dr. Strong.

Board member Brett Phillips said he believes the district should negotiate with the food-service company now.

Board members took no action but agreed to take up the matter again at the next meeting.

Additional business will be presented next week.