A 33-page audit published by the Office of the Inspector General reviewed the Los Angeles Unified School District's new food procurement system introduced five years ago to supply the nation's second-largest school food operation. Food contracts adding up to $750 million were awarded to eight major vendors and were spread over five years. But LA Unified's huge food services program had pervasive mismanagement problems, inappropriate spending, and ethical breaches, reports Teresa Watanabe of The Los Angeles Times.
Apparently, the new system was not working smoothly. Auditors discovered increased prices for food, overloaded inventories, computer glitches, a sloppy menu development process, and poor spending oversight. Superintendent Ramon Cortines said tightening of fiscal controls and controls over spending have already been enacted.
"The district takes these findings very seriously," he said in a statement with Thelma Melendez de Santa Ana, head of the educational services office.
In order to take part in the new program, vendors agreed to give more than $1.5 million to support healthful food initiatives and to develop programs to educate students about nutrition. Many other states took notice of the district's cutting-edge efforts to move away from poor nutrition and toward food with lower fat, sodium, and sugar, and even First Lady Michelle Obama showered the program with praise.
However, the audit showed several unusual vendor payments: $117,500 to philanthropist Meg Chernin's Los Angeles Fund for Public Education, $65,000 to place Los Angeles Dodgers photos on school milk cartons, $6,800 for employee travel and conferences, and $581,000 to two Los Angeles public relations firms, RL Public Relations and Tatum Wan Co., among others.
The marketing donations were eliminated this school year and officials have increased supervision of food services staff and have improved the oversight of purchasing and menu additions. And now, vendors are required to participate in competitive bidding, along with other changes.
LAUSD procurement chief George Silva says the money that had been contributed by vendors is now requested to be spent for providing opportunities for class projects based on the food industry, field trips, workplace tours, online exchanges, and other activities that will allow combining academic study with occupational training.
As a result of the poor showing of the program's audit, David Binkle, a nationally known food services director, has been removed from his position. Auditors found possible breaches involving a consulting firm he manages and vendor-paid travel to food conferences which were not reported.
Binkle's annual salary, according to Thomas Hines of The Los Angeles Daily News, was $152,000, even though he was on paid leave for over five months. The audit showed Binkle neglected to disclose his food consulting company, which he created after he began work for the district in 2007 and which made more than $950,000 annually. His company, Gold Star Foods, made 15.5% of every dinner served by the district, according to the audit.
Although Binkle managed the marketing program, he said he knew nothing of the expenditures in question. He also violated rules of ethics when he requested a contractor to pay his airfare and hotel during a trip for LAUSD employees, reports Adolfo Guzman-Lopez of KPCC Radio.
"The IG's report found inappropriate spending, mismanagement, contractual issues and ethical breaches," Cortines and Melendez de Santa Ana said. Especially concerning, they said, was the vendor-funded marketing program.