Friday, June 24, 2011

The problem with Privatization using Taxpayer Money; Greed.

Maybe mixing the private sector with taxpayer money isn’t such a great idea. Over time, even the best private company can discover ways to maximize their profits by “cheating” a little bit. The story below, about food service companies hired by public schools, is another in long list of red flags Republican legislators and privateers pretend don’t exist.

Edweek: The U.S. Department of Agriculture's watchdog arm plans to look closely at whether the food-service-management companies running many school cafeterias are passing along all the discounts and rebates they receive from their suppliers to the districts that hire them. Last July, Sodexo, a French company with its U.S. headquarters in Gaithersburg, Md., agreed to pay $20 million to resolve allegations that it had over charged 21 school districts and the State University of New York system for some of the food provided to students. 
In 2005, the office reviewed 106 contracts from 22 states and found companies did not pass on at least $1.3 million in savings they had received although the agreements with school districts specifically required crediting of those funds. 
"I am concerned that these practices are prevalent in many more school districts around the country, potentially resulting in the misuse of tens of millions of dollars of taxpayer funds intended to provide schoolchildren with access to healthy school meals," U.S. Rep. Rosa DeLauro wrote.

Districts may choose to outsource meal programs because they believe they can save money by doing so, both on operations and labor, or because they have a philosophy of outsourcing … In a twist on the same issue, a previous USDA inspector general audit found that food-service-management companies didn't always reimburse districts for the value of commodity foods they received at no charge from the USDA.

That 2002 audit found that five of eight companies improperly kept the value of those communities—worth a total of about $6 million—from 53 districts in seven states. 

This amounts to a huge loss of taxpayer money to simple greed. The almighty dollar made them do it.

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