Today, New York Attorney General Andrew Cuomo announced a $20 million settlement with Sodexo for overcharging 21 New York schools districts, the State University of New York (SUNY) system, and state facilities that include a center that provides services to abused, neglected and abandoned children.

The $20 million is the largest-ever monetary settlement under the New York False Claims Act that does not involve Medicaid funds.

Yesterday, we touched on Sodexo's "kickback" system that has been alleged to lead to inflated food costs. Here's how it works:

"Food manufacturers like Kellogg's and Pepperidge Farm offer rebates as an incentive to purchasers to buy certain products over others for school meals. These rebates -- which have been called 'kickbacks' from suppliers -- go to the food service companies; it's not always clear if school districts see the benefit, as documented in the In These Times report. While money changes hands, your child is eating Pop-Tarts and drinking sugary, flavored milk."

This investigation by Attorney General Cuomo's office determined that Sodexo "promised to provide goods at cost" but failed to acknowledge these rebates. This resulted in "illegal overcharges to the schools" that were "in violation of the contracts, as well as state and federal laws."

These facilities included:

• 21 New York school districts
• Institutions within the State University of New York (SUNY) system
• The Children's Village, a New York treatment center for at-risk-youth, with facilities in Westchester County and New York City,
• Abbott House, which provides services to abused, neglected and abandoned children and their families and to developmentally disabled children and adults in the New York City area and surrounding counties.

"This company cut sweetheart deals with suppliers and then denied taxpayer-supported schools the benefits," said Cuomo.

The investigation was prompted when John and Jay Carciero, former general managers for Sodexo in Massachusetts, were "outraged when they discovered Sodexo's practice of pressuring food and beverage vendors to kick back huge rebates and then secretly pocketing the savings," according to a release by the law firm that represented the Carcieros throughout this process.

After John blew the whistle, John says that Sodexo fired him. His brother also was "retaliated against, demoted and later fired for the same reason." These claims were resolved as part of today's settlement.

John Carciero had this to say in light of today's settlement:

"The millions of dollars from the rebates should have gone back to schools and other government clients. Sodexo betrayed the trust of the clients it was supposed to serve and hurt taxpayers at the same time. We went through some tough times because we chose to speak out against what Sodexo was doing."

New York isn't the only state where Sodexo accepts rebates from vendors. Cuomo's investigation revealed that these actions are "common practice" by Sodexo, who seems to have no shame in generating these illegal overcharges at the expense of our schools and of children in need.

At a time when schools are facing unprecedented cuts in teachers, staff, and educational programs, school workers and supporters are protesting excessive profits of more than $1 billion by multinational food and facilities service operator Sodexo, a major sponsor of the National School Board Association Conference being held in downtown Chicago.

"Sodexo had more than a billion dollars in profits last year, including money made from struggling schools" says Laura Garza, Vice President of SEIU Local 1. "That money would have benefited kids a lot more if it had stayed in our local communities."

Protesters are delivering a report, "Profits First, School Kids Last: Exposing the High Cost of Sodexo," to conference officials at the Palmer House Hilton Hotel. The report outlines how Sodexo, which provides food service to more than 2.3 million children nationwide, eats into government budgets by failing to provide livable wages and affordable healthcare.

Report highlights include:

• While schools struggled to make ends meet, Sodexo's 2009 revenues were up 7.9% (to $19.85 billion) and its operating profits were up 8.1% (to $1.009 billion). Sodexo's education segment brought in $4.5 billion in fiscal year 2009.
• Despite Sodexo's sophisticated "anti-hunger" public relations operations, many Sodexo workers, paid as little as $7.50 per hour, qualify for federal food assistance programs, including the Supplemental Nutrition Assistance Program (SNAP, what used to be known as food stamps); the Special Supplemental Nutrition Program for Women, Infants, and Children (commonly known as WIC); and the National School Lunch Program.
• Sodexo does not offer affordable health care options to its service workers. Two-thirds of non-managerial Sodexo employees in the United States are not covered by health insurance offered by the company. Many without coverage are forced to rely on government health programs, local emergency rooms, and private charity care.
• Estimated profits from a Sodexo cleaning contract in Philadelphia could have been used to hire 87 teachers last year.
• In January 2009, Sodexo CEO Michel Landel said of the recession, "This crisis can constitute an opportunity for us." words that now appear prophetic. While schools struggled, Sodexo's North American Education segment grew by 4.5% and is poised to grow further. The France-based company paid between $15,000 and $35,000 to use the school board association meeting as a marketing opportunity.

You can read the full report below:

When school districts contract out services they have a right to expect high standards of service as well as financial accountability and transparency.

School meal programs are largely supported by federal and state funds. The use of government grant money entails financial responsibilities for School District Administrators and Board Members. Responsibility for running school cafeterias doesn't end when a contract is signed.

Take a look at - and download - our guide that highlights a few key oversight areas your School District should be aware of when developing Requests for Proposals for school food services. This overview also includes sample standard form contract amendments you may want to consider using to ensure your school meal program is well-run and financially transparent.

Take Control of Your Contract

Today, the Associated Press published an interesting profile on the Philadelphia, PA school district and its pilot program for feeding its hungry children through school meals.

In the Philadelphia model, the school district provides free school meals for all children in schools "with a high percentage of low-income students." These "universal" meals are served in schools where at least 75 percent of the student body meets the low-income threshold. In Philly, more than 85 percent of students qualify.

But there's another interesting component of the Philly program: there are no forms necessary to enroll in the program.

By ridding of the forms, food service directors claim it "eliminates the costly bureaucracy that both deters needy families from applying for subsidized meals and stigmatizes those who do complete the forms." According to the AP, experts say many children who are eligible and would benefit from the program do not participate because of language barriers, literacy issues and humiliation when completing the necessary forms.

The district maintains that there's another benefit to the Philly model: the money saved on the administrative costs allows the school to absorb the costs of the free meals not already covered by government reimbursements.

According to the AP, the program "benefits students and especially working parents, who save time and money knowing their children will have a meal waiting for them at school."

The article quotes Janet Hernandez, a mother of three, who says that "sometimes, we need that extra help as far as food goes. That's one thing that we have to worry about as parents."

While Bush Administration officials threatened to close the program by 2010, President Obama's new Agriculture Secretary, Tom Vilsack, pledges to continue the program.

Key to the program - and replicating the model elsewhere, like in New York City and Los Angeles, where there is interest - is the reauthorization of the Child Nutrition Act later this year. An improved Child Nutrition Act is a top priority for the thousands of school food service workers that SEIU represents.

Read the full article here and everything you need to know about the reauthorization of the Child Nutrition Act here.

Thousands of school food service workers in New Jersey are living at or near poverty, according to a new study from Rutgers University's Center for Women and Work. The study, authored by Dr. Mary McCain, addresses the scope of the problem in general, and then offers recommendations to fix these problems.

School lunches offer many children the only assurance that children of low-income families receive at least one well-balanced and healthy meal a day.

Despite their important work, New Jersey's public school food service workers are "struggling to support their own families," since their "pay is low, benefits are rare, and opportunities for advancement are limited."

The report found that the average hourly wage for food preparation workers in educational services was only $8.15, and revealed that many of these jobs pay no more than the NJ state minimum wage of $7.15. Many times, sick days are not provided, raising "concerns for both the health and safety of the students and the workers" when there is an "economic incentive" to "go to work while ill."

McCain's report offers specific policy recommendations, including:

1. Increase wages and benefits to a level to sustain families and to reduce reliance on state-funded safety net programs. This is key to raising workers out of poverty. Benefits, such as sick days "should be required," as "a food service worker should never have an economic incentive to go to work when ill."
2. Establish a state system for requiring and providing a "food handler permit" for food service workers: A permit, much like the ones provided by California, Oregon, and Arizona, would provide " a validation of necessary knowledge" by "ensuring that current and potential employees have certified their knowledge of food safety and nutrition."
3. Require that contracted food service workers receive training from qualified training programs: Training could include "information about regulations governing school meal programs, menu planning, and other issues in addition to food handling."

Lynsey Kryzwick: 212.388.3696; 917.683.4474
Matt Nerzig: 212.539.2882

Hundreds of Appeals for School Food Safety Delivered to Governor's Office

Trenton, NJ - With support from community groups and state legislators, school cafeteria workers delivered appeals from hundreds of parents and workers to the Governor today asking him to raise standards in food service contracts, including better wages, benefits and training.

"School children and parents depend on the commitment and dedication of the food service workers who make them lunch everyday," said Senate Majority Leader Steve Sweeney. "We must work together to ensure these workers are able to support their families."

More than 200 million tax dollars a year are spent on food service contracts for New Jersey school cafeterias where workers typically earn poverty-level wages with few, if any, benefits. Without jobs that allow them to support their families, many of these workers are indirectly adding costs to the State budget by depending on publicly-funded programs to subsidize their health care, food or housing.

"I love working with school children," said Karen Preston, a food service worker from Plumstead and mother of four. "But I'm working three jobs to put food on the table for my own children."

"New Jersey school cafeteria workers make sure all our school children, regardless of income, receive healthy lunches and breakfasts," said Kevin Brown, 32BJ New Jersey Director. "But the same publicly-funded program that makes sure school children are fed is forcing these caring workers and their families into the poverty they're working against."

The group is also advocating for comprehensive training for food service workers that will build upon the State's eight-hour session set to begin in January 2010. Currently, the State has limited training mandates, which allow food service management companies to determine what, if any, training new school cafeteria workers receive.

"The peanut-butter scare reminds us how important food safety is, and New Jersey must do more to ensure our school food service workers are getting the training they need to protect our children," said Brown.

With more than 100,000 members, including 7,800 in New Jersey, 32BJ is the largest property services union in the country.