The Philadelphia School District in 2005 hired Aramark to help it erase a long-standing deficit in its full-service cafeterias.
But the Philadelphia-based company hasn't closed that deficit, and school officials, none too happy, are now prepared to end the contract with the company if new terms can't be reached.
Tom Brady, the district's interim chief executive, said yesterday that he might recommend that the district jettison Aramark when the contract expires at the end of September.
"There are a number of options, one of which is for us to take it back," Brady said in an interview yesterday afternoon.
Negotiations with Aramark, which had an $18.5 million contract last school year, continue.
Officials from Aramark, which runs the full-service cafeterias in 115 of the district's 270 schools, declined to comment. Aramark is finishing the second year of a five-year contract with an option to renew each year.
The district's struggles with its cafeteria budget come as officials are trying to cut $20 million to close a deficit in the $2.18 billion operating budget.
When the district hired Aramark, food-service officials announced that the company had guaranteed it would erase a $3.5 million annual operating deficit.
But that guarantee apparently wasn't ironclad in the contract, and now the company is asking the district to shoulder more of the financial burden.
District officials have declined to say how far in the red the Aramark-run cafeterias ended the school year, saying that final receipts were still being reconciled and a one-year contract renewal was under negotiation.
"It appears as though the district will lose money where it expected to either break even or make money," Fred Farlino, the district's interim chief operating officer, said.
Farlino said the ongoing negotiations would not hinder the opening of cafeteria operations when school resumes for students on Monday.
"We're going to get schools open. Everybody is going to be fed. How the deal is structured is still up in the air," he said.
Martin Bednarek, a member of the Philadelphia School Reform Commission, said commissioners were told earlier this year that the cafeteria program was running $4 million in the red, but another district official said the estimate was now closer to $2.7 million. Farlino declined to comment on either figure.
"They didn't sell the meals they thought they were going to sell," Bednarek said.
Farlino also declined to say the number of meals sold. Under its contract, the company must sell about 20.8 million meals or the contract can be renegotiated.
The situation has left a bad taste in the mouths of some members of the School Reform Commission.
One district source said the commissioners were so displeased that they had wanted to end the contract with Aramark, but were advised that making a change so close to the start of the new school year could be disruptive.
The issue has come to the attention of district advocates, including Parents United for Public Education, who are concerned that the contract is costing the district precious dollars. They point out that the district appeared to have budgeted more money for the company in 2007-08.
But Brady said no decisions had been made on what the company would receive.
With one week "to go before school starts, Aramark knows it has the district in a tough spot," said Helen Gym, a Parents United member who will have a daughter at Masterman this year. "We are discussing whether parents need to raise our concerns with Aramark directly since they seem to be the ones insisting on their profits over our classroom concerns."
Gerald Wright, another Parents United member whose children attend John S. Jenks School, said the district should try to make changes in the contract, not fork over more money to the company.
"It's the time to really question the contract, the work that's being done, the services, especially in the time that the budget is very tight," he said.
Farlino said the district for years had lost money in its full-service cafeteria operations and had hired Aramark specifically to correct that problem.
"Whether the school district runs it or Aramark runs it, we're still not where we want to be," Farlino said. "We believe there's more revenue that we can find, and we may have to move folks around to better run these more efficiently."
He expects a short-term fix to be ready in a few weeks with a longer-term plan to come later.
The district's other 150 or so schools will continue to get prepackaged meals through an existing contract with another company.
Aramark manages food service in 420 school districts across the country, including those in Cherry Hill, Upper Darby, Downingtown and West Chester.