Food Service Financial MANAGEMENT Lindsey A. Hill, R.D. Director of Nutrition Services South Madison Community School Corporation

Topics to be covered Part 1: Effective Financial Management Monitoring more than the fund balance Budgeting Part 2: Proper Accounting Principles Separation of revenue and expenditures 8400 Prepaid Funds reconciliation

About me Who I am Who I am NOT Director at South Madison Community School Corp (Pendleton, IN) 4600 students / 6 buildings / 30% Free/Reduced Foodservice Administrator @ Hamilton Heights School Corp (Arcadia, IN) Administer/train onsite Director 10 years experience as a FS Director and passionate about the child nutrition industry Registered Dietitian / Business educational background Who I am NOT Accountant School Corp Treasurer / CFO / Business Manager

Part 1: Effective Financial Management Monitoring more than the fund balance Revenue (SMCSC Example) Total = $2,090,000

Part 1: Effective Financial Management Monitoring more than the fund balance Expenses (SMCSC Example) Total = $1,975,000

Profit / Loss Statement Part 1: Effective Financial Management Monitoring more than the fund balance Profit / Loss Statement Revenue $2,090,000 Expenses $1,975,000 Profit $115,000 (5%)

Inventory and Cost of Goods Sold Part 1: Effective Financial Management Monitoring more than the fund balance Profit/Loss by School Inventory and Cost of Goods Sold Each site performs monthly Physical Inventory Starting Physical Inventory + Purchases – Ending Inventory = COGS (Cost of Good Sold) Participation Percentage of students purchasing meals at each school Revenue per student Accounts for ala carte sales Meals per Labor Hour Productivity and labor amounts

Part 1: Effective Financial Management Budgeting Not required by federal or state regulations Should perform annually and follow budget on YTD basis Methods: Revenue Use historical info Use average revenue per day and project out 180 days + other misc Expenses Use actual amounts where possible (i.e. labor, contracts already determined) Include indirect costs and verify as percentage of revenue Include equipment replacement *Budget for a PROFIT (unless you are trying to reduce fund purposefully)*

Separate revenue and expenditures by school Part 2: Proper Accounting Procedures Separation of Expenditures and Revenue Separate revenue and expenditures by school Align categories with Budget and DOE Annual Financial Report – but don’t overcomplicate Good = Separate food, supplies, labor, equipment, technology, travel, etc Bad (overcomplicated) = Separate food, supplies, labor by breakfast, lunch, ala carte. These figures can be found using allocations on AFR Make catering a separate cost center (food, supplies, labor)

Part 2: Proper Accounting Procedures 8400 Prepaid Account Student and adult cafeteria account funds should be held separately in 8400 fund Funds are transferred between 8400 and 0800 as they are spent SBOA recommends “reconciling” once/month and annually to ensure 8400 fund balance matches Point of Sale (POS) balance

Part 2: Proper Accounting Procedures 8400 Prepaid Account STARTING POS Account Balances Deposits Adjustments Refunds Over/Shorts Sales ENDING POS Account Balances Monthly > STARTING/ ENDING POS Balances STARTING / ENDING 8400 Balance Annually >

Part 2: Proper Accounting Procedures 8400 Prepaid Account STARTING POS Account Balances Deposits Adjustments Refunds Ove/Shorts Sales ENDING POS Account Balances Monthly Method FS Director locates the above numbers and ensures that the above is true. If the above does not match, investigate why and adjust as necessary. All deposits go directly into 8400 Transfer sales amounts from 8400 to 0800 monthly by school Ensure Adjustments, refunds, etc accounted for

Part 2: Proper Accounting Procedures 8400 Prepaid Account STARTING/ ENDING POS Balances STARTING / ENDING 8400 Balance Annual Method For June 30, ensure that the Ending POS balance matches the ending 8400 balance This ensures the starting July 1 POS balance matches the ending 8400 POS balance This accounts for any monthly discrepancies related to online payments timing

Part 2: Proper Accounting Procedures 8400 Prepaid Account Tips and Best Practices “Live” information (POS) vs. “Actual” (Bank Records) Online payments Are open 24 hrs/day unlike the bank Deposits into student accounts many times do not “hit the bank” until a day or two later Consider shutting down over part of summer to be able to reconcile annual Must track each month what the difference is, should net zero at end of year POS reports Check what parameters are being set on report (snapshot in time) Ensure you are including ALL balances (negative and positive) Consider rollover processes and how this effects

SMCSC Example Process Cash/Check deposits taken to bank daily by school Manager. Deposit receipts organized and matched to POS reports weekly by FS department. Given to business office to receipt into financial software End of Month FS Director completes this summary spreadsheet and turns into business office YELLOW boxes completed with information from POS reports BLUE boxes communicate to treasurer which fund PINK should match POS GREEN info comes from online payment statements ORANGE should net ZERO at end of year FS Director keeps POS account balance reports on file FS Director tracks down issues if it doesn’t match (with the help of Treasurer as needed)

Part 2: Proper Accounting Procedures 8400 Prepaid Account Tips and Best Practices SET UP PROPER INTERNAL CONTROLS Minimize school level ability to process refunds, adjustments, transfers Consider eliminating prepayments on the cafeteria line (decreases risk of theft and cashier error, speeds line, less issues you have to track down) Ensure that FS administration has processes in place for refunds, adjustments, NSF checks, more You will have cash over/shorts. If you don’t have any cash over/shorts that means the cafeteria staff is doing something to force everything to match. Important for the FS Director and the district business office to work together

Any Questions? Lindsey A. Hill, R.D. lhill@smcsc.com