BY KRISTI REED
While food and fuel prices are having a dramatic impact on the budgets of American consumers, local government agencies are also dealing with increased costs.
Barrow County School transportation director James Cantrell and nutrition director Terri Cato are all too familiar with the effect of rising prices on fixed budgets.
While the Federal Reserve can point to numbers such as the core inflation index to paint a rosy picture of the current economic situation, Cantrell and Cato are not as optimistic.
The most recent reports show that the core inflation index was 2.3 percent in April, down from 2.4 percent in March. That number might be reassuring if you have no fuel or food costs – items which are excluded from the core inflation index.
FUEL COSTS DOUBLE IN BARROW
When budget planners set the fiscal year 2008 budget, diesel was costing the system a little over $2 per gallon. By the time the school year had begun, fuel prices had increased to $2.46 per gallon.
As prices have continued to rise, school administrators were forced to revise the fuel budget from its original $529,000 to $1 million dollars.
With diesel costing the school system $3.64 per gallon in early May and rising, budget planners are concerned that the $1.2 million budgeted for next year may not be enough.
Dr. James Cantrell, director of pupil transportation, said he hopes the prices will stabilize.
“I’ve talked to several distributors and they are afraid to say what it’s going to be next week, much less six months from now,” he said. “If you listen to the news, people think it may get to five, six dollars a gallon. I hope and pray it doesn’t get to that.”
Cantrell hopes once the summer driving season is over, prices will decline.
“I hope it does, but I don’t have any evidence to say that it would,” he said.
As a rule of thumb, the school system’s wholesale fuel cost averages approximately 40 cents less than what the average consumer pays at the pump.
If the wholesale price rises above $4.25 per gallon, the $1.2 million will not be enough. With a projected annual fuel usage of 280,800 gallons, the fuel cost would increase to $1.26 million.
While rising fuel prices have a major impact on individual budgets, the effect on a system that averages 1.5 million miles per year in travel distance is profound.
The Barrow County school system operates 123 buses traveling 204 routes daily at an average of 8,745 miles each day or 43,700 miles per week.
The county’s aging fleet of buses averages six miles per gallon. Of the 123 buses in the Barrow County School fleet, 72 will exceed ten or more years of use within the next four years. Approximately one-third of the fleet is already more than ten years old.
The Barrow County Board of Education recently approved the purchase of fifteen new buses. The new buses will average 7.5 miles per gallon, increasing the average for the fleet to 6.25 miles per gallon.
Even a slight increase will help the transportation department’s bottom line. Cantrell said replacing fifteen aging buses with fifteen newer buses will result in a fuel savings of 500 gallons per new bus or $28,125 for the year.
Though the new buses will help with the fuel budget, other cost saving measures may have to be considered if prices continue to rise.
One option would be to expand the distance between stops. The state allows stops to be .3 miles apart. Barrow County currently sets the stops every tenth of a mile. While the BOE has expressed opposition to expanding the distance between stops, it is one fuel-saving option to be considered.
Another even less popular option would be to combine the elementary school routes with the middle and high school routes. While this would result in shorter routes, it would also increase the number of routes and raises concerns among parents and board members regarding the safety and security of younger students.
Cantrell said his department may begin investigating alternative fuel as another option. Some school systems have begun retrofitting buses to operate on propane, an expensive measure but perhaps cost effective in the long term. Another possibility is the production and use of biodiesel. Some school systems have begun to explore manufacturing biodiesel with by-products from school cafeterias.
While Cantrell did not know how much the school’s cafeterias could produce, he said it would be worth investigating.
“If we could just save from buying 500 gallons a week, it would be a plus,” he said.
FOOD PRICES ON THE RISE
School nutrition director Terri Cato has only begun to feel the pain of rising food prices.
While most consumers have watched prices rise weekly at the grocery store, many of Cato’s purchases are bid on a yearly basis. Cato said she won’t know until later this month how much the school system will have to pay for milk or bread next year. It will be July before she learns what food staples such as canned and frozen food will cost. Cato said a food vendor has warned her that he is seeing increases of nearly 20 percent.
“There is no telling where the prices are going to come in when I bid them out,” she said.
While Cato is expecting bad news regarding the year long contracts, she has already experienced the effects of rising produce prices. Unlike other food items the nutrition department purchases, produce is bid on a weekly basis.
“[Produce] has just skyrocketed,” Cato said. “For example, red pepper is $1.50 for one pepper. I’ve been having to cut things off my ladies’ produce orders because it has just skyrocketed. Romaine lettuce is $5 a bag for a five pound bag. Produce has really gotten high.”
Rice is another item that has increased dramatically. After a school vendor could no longer provide the type of rice bid in the original school contract, a bid for a new brand was obtained. The best price available to the school system: $17 for a 25-lb bag. The school system had been paying $8 for that quantity.
Cato’s budget for fiscal year 2009 is $5.6 million, a $300,000 increase from last year. The money for the nutrition department budget comes from federal and state funding as well as cafeteria income. No local tax dollars are provided.
“We are self supporting,” Cato said.
While Cato hopes the additional $300,000 will be enough to cover rising food prices and increased salaries, she is not sure it will be enough to make ends meet.
“We may eventually have to get some help from the board,” she said.
Despite the board’s recent approval of an increase in school meal prices, Cato said the amount charged does not cover her cost. While it cost between $2.50 and $2.60 to provide each meal, elementary students will only pay $1.25 next year, middle school students $1.50 and high school students $1.75. Adult meal prices will be set at $3.
While the nutrition department receives some reimbursements from the federal government for free and reduced meals, that amount is below actual costs. Currently, the federal government pays $2.47 to reimburse free meals, and only $.23 for paid lunches.
With reimbursement rates below the actual meal costs and food prices rising, Cato has been forced to make some changes.
“We have not had a price increase since 2001, so I had no other choice other than to go up. From talking to other directors, I’m still going to be low compared to surrounding counties. I may have to go up mid-year,” she said.
With low federal reimbursements and below-average meal prices, Cato and her staff have begun to look at ways to trim costs while still providing nutritious meals.
“We’re trying to serve healthier foods,” she said. “We’re trying to serve more fresh fruits and vegetables, but, with the produce prices, it is going up.”
Cato said one of the options she and her managers are considering to help cut costs is reducing the number of meal option offered next year. Instead of offering students in elementary schools up to four choices, Cato said they might have to reduce that to three.
“I think we’re going to have to look at cutting back with produce being so high. I’m going to see what else the managers can come up with,” she said.
While there are no personnel cuts planned at this time, the nutrition department has eliminated the use of substitute workers to cover absent or sick employees and has reduced the use of overtime. Cato has also visited with all her managers to verify that the cafeterias are not over-staffed.
“We’re not laying off anybody. We’re just not calling in any subs or trying to get any overtime. Between food and labor, it just kills you,” Cato said.
So far, Cato has managed to stay within her operating budget but does not know how long that will last if food prices continue to rise.
“I just want the parents to know we are self-supportive,” she said. “If, at mid-year, we do have to go up, I hope that they will understand.”