2. Financial Management Course1 Financial Management A Course for School Food Service Directors

3. Financial Management Course2 Pretest

4. Financial Management Course3 Chapter One: Communicating the Importance of Effective Financial Management Objective Recognize the importance of effective communication regarding financial management of the school nutrition program(SNP)

5. Financial Management Course4 Chapter One: Discussion Topics Communicating the importance of FM Effective financial management Lines of communication Financial goals and objectives Good public relations

6. Financial Management Course5 Question for Discussion Why do you think financial integrity is important?

7. Financial Management Course6 Financial Management Overview Program administrator’s responsibility for financial management of the SNP.

8. Financial Management Course7 Question for Discussion Based on your experiences, what is your definition of financial management?

9. Financial Management Course8 Financial Management Financial Management: -the financial goals and program objectives for the school nutrition program, and -attaining those goals through the effective use of resources

10. Financial Management Course9 Question for Discussion What are some ways school food service directors can demonstrate financial accountability?

11. Financial Management Course10 School Environment COMMUNICATIONS between

12. Financial Management Course11 Question for Discussion What do we mean by environment in a school setting?

13. Financial Management Course12 Question for Discussion Why is communication important?

14. Financial Management Course13 Communication Speech Signals Writing Behavior

15. Financial Management Course14 Key Concepts Financial goals of the school board –School nutrition program self-supporting –Efficient accounting system –Accurate, timely financial management –Adherence to submitted food service budget

16. Financial Management Course15 Key Concepts Financial objectives of the school nutrition program Basic financial management practices –Customer satisfaction –Well managed resources for cost containment –Interpreting financial information for decision- making

17. Financial Management Course16 Question for Discussion What are examples of financial goals/objectives for a school nutrition program?

18. Financial Management Course17 Food Service Director to Administrators/Board Financial status of SNP Chain of command Accessibility to school board members Avenues of communication

19. Financial Management Course18 Food Service Director to School Business Officials Business manager Secretaries Bookkeepers Accounting Clerks City/county business officials

20. Financial Management Course19 Food Service Director to Principals School activities affect participation Student increases/decreases in free/reduced price numbers Merchandising activities

21. Financial Management Course20 Food Service Director to Manager Policies and Procedures Menus Price changes Budget Explain yearly projections of revenues and expenditures Reporting forms Maintenance request procedures Special promotions

22. Financial Management Course21 Manager to Food Service Director Market and grocery orders Monthly inventory Meal costs Meals per labor hour Daily meal counts Daily cash reconciliation

23. Financial Management Course22 Manager to Food Service Director Product evaluation Guests to the program Power outages Equipment repair needs Accidents Special events Banking problems Clarification on policies/procedures

24. Financial Management Course23 A Communication Review

25. Financial Management Course24 Chapter Two: Revenue Sources by Category Objective Identify school nutrition program revenue sources by category Local State Federal

26. Financial Management Course25 Chapter Two: Discussion Topics Revenue sources by category Revenue classification Maximizing revenue Revenue loss

27. Financial Management Course26 Question for Discussion What do you consider your main source of revenue in your school nutrition program?

28. Financial Management Course27 Local Sources Local Government Aid Local Grants Contributions

29. Financial Management Course28 Student Meal Sales Full-Paid Meals Reduced-Price Meals Prepaid Meals Meal Charges Afterschool Care Program Snacks

30. Financial Management Course29 Question for Discussion What are other sources of local revenue?

31. Financial Management Course30 Other Local Sources of Revenue Adult payments Contract meal sales A la carte income Catering Interest Miscellaneous

32. Financial Management Course31 State Sources Cash payment from the state Matching funds Special milk reimbursement Grant money

33. Financial Management Course32 Question for Discussion Do any of you receive state funds for other purposes?

34. Financial Management Course33 Federal Sources Payment for breakfast and lunch meals Federal cash reimbursement for snacks Value of donated commodities Grant money awarded to school districts Funds for other federal nutrition programs

35. Financial Management Course34 Revenue Generation Identifying areas where revenue is being lost.

36. Financial Management Course35 Students who choose not to eat school meals result in lost revenue to the program. Discuss how schools should go about setting participation goals and then follow-up with plans to increase participation. Scenario for Discussion

37. Financial Management Course36 Scenario for Discussion Some parents do not complete application forms for their children to receive meal benefits although the children are eligible. Suggest ways that the school districts might approach these parents and their children to encourage them to participate.

38. Financial Management Course37 Scenario for Discussion More and more school districts are reporting student theft of food displayed on the serving line. Suggest ways the school district can eliminate theft of food items.

39. Financial Management Course38 Scenarios for Discussion Have program costs been analyzed according to categories of expenditure? How do program costs in the school’s food service operation compare to other school programs or to industry standards? Have school food service staffs been included in the financial management of the operation?

40. Financial Management Course39 Scenarios for Discussion Do staff have an understanding of the importance of cost controls to the success of the operation? If there is a need to reduce costs, are the reductions being made in activities that have less value to the customers?

41. Financial Management Course40 Chapter Three: Expenditure Sources by Category Objective Identify SNP expenditure sources by category Labor (Salaries and Wages) Employee Benefits Purchased Professional Services Purchased Property Services Purchased Food & Donated Commodities Other Purchased Services Supplies Property Miscellaneous Fund Transfers Out

42. Financial Management Course41 Chapter Three: Discussion Topics Expenditure Sources by Category Types of expenditures Recording and reporting Indirect costs

43. Financial Management Course42 Labor Expenditure Salaries and Wages Fringe Benefits Unemployment Insurance

44. Financial Management Course43 Food Expenditure Food cost Purchased Donated Food Production Supplies

45. Financial Management Course44 Supply Costs General Supplies

46. Financial Management Course45 OVERHEAD

47. Financial Management Course46 Question for Discussion What are other overhead costs that the school nutrition program pays for in your school district?

48. Financial Management Course47 Capital Equipment and Furniture

49. Financial Management Course48 Indirect Costs

50. Financial Management Course49 Chapter Four: Accountability in Financial Reporting Objectives Define the essential financial reports used in the school nutrition program. Recognize the importance of ethical standards in developing school nutrition program financial reports.

51. Financial Management Course50 Chapter Four: Discussion Topics Accountability In Financial Reporting Balance Sheet Accounts Statement of Revenue and Expenditures (P & L) Ethical Standards

52. Financial Management Course51 Financial Reports Balance Sheet Statement of Revenues and Expenditures

53. Financial Management Course52 The Balance Sheet The Statement of Financial Position

54. Financial Management Course53 Question for Discussion How many of you use your balance sheet to monitor your financial status each month?

55. Financial Management Course54 The Balance Sheet Assets include: cash on deposit; sales tax collected; investments; accounts receivable; funds from other sources; inventories; and other assets. Liabilities include: accounts payable; accrued salaries; wages, and benefits; amounts due to other school district funds; deferred income; and taxes.

56. Financial Management Course55 The Balance Sheet Fund Balance: Funds reserved for encumbrances, inventory, capital equipment, undesignated or unreserved funds.

57. Financial Management Course56 Statement of Revenues and Expenditures

58. Financial Management Course57 Statement of Revenues and Expenditures Total revenue available to the program by source Total expenditure by category Net profit (gain) or loss (deficit) to the program

59. Financial Management Course58 Who is responsible for acting ethically?

60. Financial Management Course59 Question for Discussion Do any of you have examples of unethical procedures or practices related to preparation of school nutrition program finance reports?

61. Financial Management Course60 Three “R’s” of Business Ethics Respect Responsibility Result

62. Financial Management Course61 Chapter Five: Using Financial Reports to Analyze Program Efficiency Objectives Interpret basic financial management reports Analyze financial data based on performance measures Recognize methods to increase revenue and decrease expenditures

63. Financial Management Course62 Chapter Five: Discussion Topics Session 1 Analyze program efficiency Financial Management report analysis Evaluation of revenue and expenditures Pricing meals and a la carte foods Calculating the cost of purchased food Single inventory Food and labor cost percentages

64. Financial Management Course63 Chapter Five: Discussion Topics Session 2 Analyze program efficiency Meal Equivalents (ME) Average revenue earned per ME Cost of producing a meal Meals per labor hour Assigning labor hours Calculating ADP

65. Financial Management Course64 Financial Management Analysis Analysis is important to ensure that the school district: –Manages expenditures within the revenues received –Operates without a need for transfers from the general fund –Has sufficient funds to reimburse the school district for costs

66. Financial Management Course65 Question for Discussion Why is analysis of financial data useful?

67. Financial Management Course66 Financial Management Analysis Financial data –Helps to determine the efficiency of a school food service operation –Provides information about program profitability –Promotes basic financial management decisions –Generates performance benchmarks –Identifies areas for improvement –Staffing decisions

68. Financial Management Course67 Financial Management Analysis Evaluating and maximizing revenue Evaluating and controlling costs Evaluating program efficiency

69. Financial Management Course68 Financial Management Analysis: Tools Financial Reports –Revenue Detail –Expenditure Detail –Financial Analysis Report Performance Measures –Meal Equivalents –Per Meal Costs –Percentage Ratios –Productivity Rates –Meal Participation Reports

70. Financial Management Course69 Evaluating Revenue Identify revenue sources by category Calculate average revenue per meal Identify sources for increasing revenue Establish appropriate prices for meals and non-reimbursable food items

71. Financial Management Course70 Setting Meal Prices Revenue from meals served to students and adults provide the bulk of revenue to the school nutrition program. –Paid student meal prices – program costs less federal reimbursement and value of USDA commodities (lunch only) –Adult meal prices - total program costs

72. Financial Management Course71 Questions to ask when considering a meal price change 1)How long has it been since lunch prices have increased in your school district? 2)What are some of the reasons for the increase this year?

73. Financial Management Course72 Questions to ask when considering a meal price change 3)How do school meal prices in your school district compare with other nearby school districts? 4)Is my child receiving the nutrient he/she needs from school meals?

74. Financial Management Course73 Meal Price Calculation $2.32 Cost of Lunch -.21 Paid Reimbursement -.1725 Value of USDA Commodities= $1.9375 ($1.94 Rounded)

75. Financial Management Course74 Revenue Generation Increasing meal prices Determining non-reimbursable meal prices

76. Financial Management Course75 Responses for Discussion If meal prices are increased, will the benefits offset the possible decrease in participation? Can catering activities be added to the school nutrition program operation in lieu of raising prices?

77. Financial Management Course76 Responses for Discussion What about implementing a marketing plan to increase participation? If the school does not have a breakfast program, would it be feasible to start one?

78. Financial Management Course77 Responses for Discussion How about surveying the customers? Are they satisfied with the program? What changes would they make?

79. Financial Management Course78 Revenue Generation Determining nonreimbursable food prices or a la carte

80. Financial Management Course79 Influencing Factors Demand Perception of value Prices charged in nearby school districts Prices charged in vending machines Relationship between sales prices and volume Total costs to prepare item Nutrition value

81. Financial Management Course80 Establishing the Base Price 1.Determine the raw food cost of the item offered for sale. 2.Identify the desired food cost percentage for the operation. 3.Calculate a base selling price by dividing the item’s raw food cost by the desired food cost percent.

82. Financial Management Course81 Nonreimbursable Meal Price Calculation Raw Food Cost $0.52 Desired Food Cost % 0.38 = $1.37 (Base Selling Price)

83. Financial Management Course82 Evaluating Expenditures Identify sources for expenditures by category Analyze Program Costs –Cost of food used –Cost per meal/meal equivalent served

84. Financial Management Course83 Performance Measures Cost of food used Cost percentages to total revenue Total meal cost Meal cost per category Productivity ratios

85. Financial Management Course84 Cost of Purchased Food Used –Determine whether costs are within guidelines. –Ascertain if there is sufficient money to cover expenditures. –Establish the plate cost for each meal served. –Prevent waste and theft of food items through careful monitoring of food used.

86. Financial Management Course85 Cost of Purchased Food Used Beginning Purchased Food Inventory + Food Purchases = Total Purchased Food Available – Ending Purchased Food Inventory = Cost of Purchased Food Used

87. Financial Management Course86 Cost of Purchased Food Used ExampleAnnuallyMonthly Beginning food inventory$ 8,000 Food purchases300,00025,000 Food available308,00033,000 Less: Ending food inventory 7,000 7,000 Cost of purchased food used $301,000$26,000

88. Financial Management Course87 Streamlined Commodity Inventory USDA Single Inventory Guidance Inventories of donated foods are no longer separate from inventories of other foods Most commodities are packed with commercial labels instead of USDA labels. Procedures differ from state to state.

89. Financial Management Course88 Cost Percentages: Performance Measures Cost percentages relate expenses to revenues. Two of the most critical percentages are: –Food cost percentage –Labor cost percentage

90. Financial Management Course89 Food Cost Percentage Food Cost Percentage = Cost of Food Total Revenue $16,500 (Food Cost) $30,000 (Total Revenue) =.55 or 55%

91. Financial Management Course90 Question for Discussion Can you think of examples that would result in higher food costs than normal for a given month?

92. Financial Management Course91 Labor Costs Salaries and wages Benefits Professional development Educational hours

93. Financial Management Course92 Labor Cost Percentage Labor Cost Percentage = Total Labor (Salaries and Benefits) Total Revenue $400,000 (Total Annual Labor) $800,000 (Total Revenue) =.50 or 50%

94. Financial Management Course93 Question for Discussion What does the 50% labor cost percentage tell the school food service directors?

95. Financial Management Course94 Case Study #1: Part I

96. Financial Management Course95 Chapter Five: Discussion Topics Session 2 Analyze program efficiency Meal Equivalents (ME) Average revenue earned per ME Cost of producing a meal Meals per labor hour Assigning labor hours Calculating ADP

97. Financial Management Course96 Meal Equivalents: Analysis Tool Meal equivalents - a statistical tool used to allocate costs based on a unit of production Meal Units –Lunch –Breakfast –Afterschool snacks –Nonreimbursable food sales

98. Financial Management Course97 Calculating Meal Equivalents The NFSMI Financial Management Information System uses the following ratio to determine a meal equivalent. –3 breakfast = 2 lunches –3 snacks = 1 lunch –Dollar amount in sales of nonreimbursable food Free lunch reimbursement + Commodity Value

99. Financial Management Course98 Converting nonreimburseable food sales into meal equivalents formula. Calculation 300 2.24+.1725(2.4125) = 124 meal equivalents

100. Financial Management Course99 Determining the Average Revenue Earned Per Meal Equivalent Forecast revenue from all sources. Total the forecasted revenue amounts. Determine meal equivalents. Divide revenue generated by total meal equivalents.

101. Financial Management Course100 Per Meal Cost Calculation Example Costs of purchased food used Total lunches + meal equivalents Per meal cost = Total expenditures Total lunches + meal equivalents

102. Financial Management Course101 Questions for Discussion Why is it important to calculate the food cost and labor cost percentages? Why is the cost of producing a meal a critical piece of information for school food service directors?

103. Financial Management Course102 Measuring Productivity Meals per labor hour Participation rates –Average daily participation –Participation rate per category of meal eligibility

104. Financial Management Course103 Meals Per Labor Hour Meals per labor hour = Number meals/meal equivalents Number of paid labor hours 338 meals/meal equivalents 24 paid labor hours = 14.08 or 14 meals per labor hour

105. Financial Management Course104 Meals Per Labor Hour: Staffing Guideline in Policies and Procedures Meals Per Labor Hour Table

106. Financial Management Course105 Participation Lunch –Actual (# lunches/# days) –Percent of attendance (ADP/Enrollment or ADA) Breakfast –Actual –Percent of attendance

107. Financial Management Course106 Participation is determined separately for breakfast and lunch. The formula for calculating ADP: Number of meals served (month) Number of operating days (month)

108. Financial Management Course107 Case Study #1: Part II

109. Financial Management Course108 Chapter Six: Monitoring Operational Revenue and Expenditures; studying trends that will impact both Objectives Recognize the importance of developing a budget based on forecasted operational revenues and expenditures. Recall the value of identifying industry trends in developing a budget.

110. Financial Management Course109 Chapter Six: Discussion Topics Budgeting: Monitoring revenue and expenditures Forecasting revenue and expenditure needs Methods used for budget planning Factors influencing the budget Budget building: A case study Mind Mapping?

111. Financial Management Course110 Forecasting the Future Customer satisfaction Internal organization Financial aspects Innovation

112. Financial Management Course111 Forecasting the Future Customer Satisfaction Environment Sensory Interpersonal Procedural Deliverable Informational Financial

113. Financial Management Course112 Forecasting the Future Internal organization –People –Machinery –Systems

114. Financial Management Course113 Questions for Discussion How well does the SNP serve the internal customers, specifically other departments in the school/school district? How well does the SNP director listen to or understand their concerns?

115. Financial Management Course114 Questions for Discussion How well is the SNP director solving problems/supporting other entities to help the organization succeed? How well does SNP value not only its own employees but also employees in other departments? For example, how well does the catering department work with custodial staff in a school or school district?

116. Financial Management Course115 Forecasting the Future Financial aspects –Revenue –Expenditures

117. Financial Management Course116 Forecasting the Future Innovation –Future trends

118. Financial Management Course117 Budget Planners Food Service Administrator Superintendent Manager and Food Service Assistant Business Official Student (Customers)School Board

119. Financial Management Course118 Question for Discussion Who is involved in the budget planning process in your school nutrition program operation?

120. Financial Management Course119 Methods Used in Budget Planning Baseline budgeting Zero-based budgeting Combination baseline and zero-based budgeting

121. Financial Management Course120 Methods Used in Budget Planning Baseline or incremental budgeting

122. Financial Management Course121 Advantages of Baseline Budgeting Less time consuming Best method for budgeting basic cost items.

123. Financial Management Course122 Disadvantages of Baseline Budgeting Existing budget errors may not be corrected Less planning may go into the budget process May not take into account changing program needs

124. Financial Management Course123 Methods Used in Budget Planning Zero-based budgeting

125. Financial Management Course124 Advantages of Zero-based Budgeting Better equips management to make decisions Gives a better estimate of revenue projections Creates a model for spending by breaking the habit of budgeting nonessential costs

126. Financial Management Course125 Disadvantages of Zero-based Budgeting Time consuming Some categories in budget are difficult to calculate from zero

127. Financial Management Course126 Methods Used in Budget Planning Combination baseline and zero-based budgeting

128. Financial Management Course127 Some items in the budget should be based on need without preconceived estimates based on the previous year. For other items, the budget need only be adjusted to accommodate price changes.

129. Financial Management Course128 Bonus of a Budget Establish specific future goals Forecast revenue Predict expenditures Compare actual over-projected revenues and expenditures Identify potential problems Calculate what is available at the end of a budget period

130. Financial Management Course129 Factors to Consider Historical trends Participation rates Federal and state reimbursements Operational and/or program changes Increased or decreased program costs Changes in meal prices

131. Financial Management Course130 Discuss Historical Trends Look at the number of reimbursable meals sold over the past two to three years. Is there a trend emerging? Apply that same process to the percentage of a la carte sales or extra sales to total sales. Is there and increase/decrease in that percentage? Consider the status of catering services and special functions in your school district. Is there a tendency for those services to increase/decrease or remain the same?

132. Financial Management Course131 Discuss Participation Rates Look at changes in the economy of the area. Have there been layoffs/plants shut down? Have the demographics changed from young families with children to retirees? Are new school openings on an upward spiral?

133. Financial Management Course132 Discuss Federal and State Reimbursements Speculate what the Federal reimbursement rates will be for the upcoming school year. Will there be an increase or decrease in those figures? If there is a state reimbursement, will it continue and how much will it be? Question whether the commodity delivery charge will increase or remain the same.

134. Financial Management Course133 Discuss Operational and/or Program Changes Since Federal program regulations frequently are being revised, consider that implementation of the final changes may be at an additional cost to the SNP.

135. Financial Management Course134 Discuss Increased or Decreased Program Costs Examples of increased costs to the SNP are: Salary raises and a more costly health insurance plan. Flood and storm damage to citrus crops in Florida could substantially increase the price of oranges to the SNP. Other examples

136. Financial Management Course135 Discuss Changes in Meal Prices Consider the possibility that student/adult participation in SNP will decrease if meal prices are raised.

137. Financial Management Course136 Budget Building Case Study #2 Budget Building Case Study #2

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139. Financial Management Course138 Chapter Seven: Tools to Analyze the Financial Status Objective Identify appropriate tools to analyze the school nutrition program’s financial status.

140. Financial Management Course139 Chapter Seven: Discussion Topics Tools to analyze the financial status of SNPs Microsoft Excel Spreadsheets Pie charts NFSMI FUNDamentals NFSMI educational CD-ROM

141. Financial Management Course140 Analysis of Financial Data Financial management software –Microsoft Excel –NFSMI FUNDamentals –Financial Management for FSDs

142. Financial Management Course141 Analysis of Financial Data Microsoft Excel X

143. Financial Management Course142 Analysis of Financial Data NFSMI FUNDamentals –Financial –Understanding for –Necessary –Decision making

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145. Financial Management Course144 Question for Discussion What categories are included in the “other” category in this pie chart? Answers: Miscellaneous (.25%) Purchased Technical Services (.41%) NFSMI FUNDamentals Budget Pie Chart- Expenditures Sample Elementary

146. Financial Management Course145 Question for Discussion If the user sets the cutoff value at 5%, what category will disappear from the pie chart and be included in the “other” category? Answer: Property Operation, Maintenance, Energy (4.16%) NFSMI FUNDamentals Budget Pie Chart- Expenditures Sample Elementary

147. Financial Management Course146 Question for Discussion What percent of the total will the “other” component represent if the cutoff value is set at 5%? Answer: 4.82% (4.16+.25+.41) NFSMI FUNDamentals Budget Pie Chart- Expenditures Sample Elementary

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149. Financial Management Course148 Question for Discussion What category did the school district anticipate would provide the greatest percent of revenue for Sample Elementary? Answer: Federal NFSMI FUNDamentals Budget Pie Chart-Revenues Sample Elementary

150. Financial Management Course149 Question for Discussion What categories are included in the “other” slice of the pie chart for Sample Elementary? Answers: Fund Transfer-InMiscellaneous Other InterestState Source Revenue NFSMI FUNDamentals Budget Pie Chart-Revenues Sample Elementary

151. Financial Management Course150 Question for Discussion If the cutoff value is set at 5%, what category will disappear from the pie chart and be included in the “other” category? Answer: Other Food Sales (3.54%) NFSMI FUNDamentals Budget Pie Chart-Revenues Sample Elementary

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153. Financial Management Course152 Question for Discussion In which category is the largest number of students served? Answer: Paid NFSMI FUNDamentals Budget Pie Chart-Meals Served-Student Lunch

154. Financial Management Course153 Question for Discussion If the cutoff value was set at 5%, what category would disappear from the pie chart and be included in the “other” category? Answer: Adult (4.20%) NFSMI FUNDamentals Budget Pie Chart-Meals Served-Student Lunch

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157. Financial Management Course156 Questions for Discussion What is the total YTD average cost per meal for this district? Answer: $2.2582 How much revenue has been generated YTD on a per meal basis? Answer: $2.4072 NFSMI FUNDamentals Consolidated NSLP and NSBP Cost Allocation and Analysis Report

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159. Financial Management Course158 Analysis of Financial Data Financial Management for Food Service Directors A Year in the Life of a Food Service Director

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169. Financial Management Course168 Chapter Eight: Evaluation Participants will achieve four objectives.

170. Financial Management Course169 Objective 1 Relate the importance of why the NFSMI Financial Management Information System and this training manual were developed.

171. Financial Management Course170 Objective 2 Relate the importance of accounting procedures that are consistent with the U.S. Department of Education and uniform across the school nutrition profession.

172. Financial Management Course171 Objective 3 Describe ethical and effective financial management practices to use in School Nutrition Programs.

173. Financial Management Course172 Objective 4 Establish implementation goals for using principles from the NFSMI Financial Management Instructor Guide in School Nutrition Programs.

174. Financial Management Course173 Posttest

175. Financial Management Course174 Financial Management Action Plans

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