Section 12: Management Issues 1

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Food Purchasing for Child Care Centers

• Section 12
• Management Issues

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Lesson Objectives
The learner will be able to

• list management issues related to food
  purchasing,
• explain the two types of methods acceptable for
  handling inventory and decide which one is best
  for the center,

3
Lesson Objectives
The learner will be able to

• identify policies that the board of
  directors/owners of the center should make,
• write a purchase plan for the center,

4
Lesson Objectives
The learner will be able to

• develop an internal control plan, and
• explain how to develop a budget and use it as a
  working tool.

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Management Issues

• Inventory
• Board/owner policies
• Purchase plan
• Internal controls
• Budgeting

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Inventory

• Two acceptable methods
• Food usage
• Purchases equal to food usage

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Food Usage

• Monthly
• Formula

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Food Usage

• Best for high-dollar-value inventory (more than
  7 calendar days)

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Purchases Equal to Food Usage

• Annually
• Philosophy

• If inventory is well-controlled, purchases
  food used

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General Inventory Rule

• Once a container (box, bag, case) is opened, it
  is not counted as part of the inventory.

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Board/Owner Policies

• Represent good business practice
• Reviewed annually

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Board/Owner Policies

• Employees authorized to make purchases

• Standard of conduct
• Purchasing documents needing approval
• Type of inventory

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Board/Owner Policies

• Employees who will
• sign invoices
• write checks
• prepare the Federal claim for reimbursement
• keep accounting records

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Purchase Plan

• Results of
• Market analysis
• Market baskets
• IFBs/RFPs
• Presented to board/owners for approval

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Internal Control

• Multiple staff members responsible for performing
  duties related to a certain task

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Internal Control . . .

• . . . safeguards the financial resources of a
  center.

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Internal Control Plan
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Internal Control Plan
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Budgeting

• Center director must present a budget to the
  board of directors/owners.

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Purchasing Process . . .

• . . . includes planning and managing a food
  budget that allows the center to
• meet CACFP meal pattern requirements and
• serve a quality food product to children.

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Budget

• Normally for 1 year
• A financial guide for that year

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Planning the Budget
Projected number of meals served in the year

• You will need
• calendar for the year
• schedule of days the center operates
• meal count records for previous year

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Planning the Budget
Why not use actual meal counts for the past year?

• Number of days in a month you serve varies
• Enrollment could increase/decrease

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Operating Years

• Calendar year January to December
• Federal fiscal year October to September
• State fiscal year
• Varies by State
• Often July to June
• Center fiscal year varies by center
• School year varies by State

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Activity 15 Answers
X
X
X
X
X
X
X
X
X
X
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Activity 15 Answers
X
X
X
X
X
X
X
X
X
X
X
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Activity 15 Answers

• May
• 20 x 39 780
• 20 x 47 940
• 20 x 51 1,020

• November
• 18 X 39 702
• 18 x 49 882
• 18 x 52 936

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Activity 15 Answers
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Planning the Budget
How much money will be spent for each meal?

• Sophisticated accounting records
• Past years costs
• Total expenditures for preparing the budget
• Monthly expenditures for managing the budget

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Planning the Budget
How much money will be spent for each meal?

• New centers
• Federal reimbursement rate for free meals
• X
• for food costs

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New Center Budget

• Contact State Agency to get percentage to use
  in estimating food budget

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New Center Budget
Federal Reimbursement Rate X Percentage (from
State Agency)
Example 2.32 (2005/06 Federal rate for
lunch) X 65 ( from State Agency) 1.51
(budgeted for each lunch)
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Activity 16 Answers
Snack rate (2005/06 Federal rate) 0.63 _at_ 50
0.32 0.63 _at_ 60 0.38 0.63 _at_ 65 0.41
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Budget Amount

• Budget amount for 1 month

number of meals X
amount per meal spent on food
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Budget Amount

• Budget amount for October lunch

1,150 X
1.51 1,736.50
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Food Budget
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Managing the Budget

• The budget must provide current information.

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Budget as Working Tool

• Maintain a budget report for each month
• Record amount budgeted for the month at the top
• Subtract each invoice or grocery receipt

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Budget as Working Tool
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Budget Report

• Only whole dollar amounts
• Speed important

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Important!

• The working budget report should not stop a
  center from making the purchases necessary to
  provide the meals as planned.

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Budgeted Amount
If higher than planned, ask

• Has the enrollment increased?
• Has there been an unusual event such as a freezer
  failing and food spoiling?
• Have there been price increases?

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Budgeted Amount
If lower than planned, ask

• Are the menus meeting meal patterns?
• Are the portion sizes adequate?
• Has enrollment decreased?
• Have there been price decreases?

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Remember!

• A budget is a plan.