News and Tribune

Education/Schools

December 3, 2012

Sodexo pressured by NA-FC for funding solution

NA-FC custodial company apologizes for missed projections

NEW ALBANY — Without a solid solution to present, the New Albany-Floyd County Consolidated School Corp.’s board of trustees urged the district’s custodial outsourcing company to have a presentation ready for its Dec. 17 meeting.

A presentation by Bill Wiseheart, director of facilities, at the board’s November meeting showed Sodexo, the custodial outsourcer, planned on backing out of its contract with the district after suffering twice the losses it expected in one year.

Instead of losing about $500,000 in two years with the district, Sodexo said it lost that amount in one year and exercised their contractual right to give 90-day notice to get out of the agreement with the district.

During a work session Nov. 27, Bill Yaglou, a representative with Sodexo, told the board what happened. Brad Snyder, deputy superintendent, said Yaglou offered an apology and “fell on the sword” for making several erroneous financial mistakes with projections when they negotiated the contract last year.

Mark Boone, board president, said it was Sodexo’s own fault that they didn’t properly project their own losses and isn’t happy about their attempt to exit the agreement.

“If you go back to the minutes from October of last year before we approved this contract, myself, Neal Smith and D.J. Hines [board members] are all on record as saying, ‘Hey guys, it looks like you’re going to lose money on this,’” Boone said in an interview the day after the meeting. “And the response was ‘yes, we understand that. We want to be a partner. This is a market that’s important to us, we understand that there’s some short-term losses.’

“And now they’re coming back to us a year later going ‘Yeah, we had some short-term losses and we don’t like it.’ That shouldn’t have been a surprise to anyone.”

Snyder said some of the reasons Yaglou gave for Sodexo’s losses included greater-than-expected startup costs. He said interviewing, background checks and other initial costs were more expensive than the company had anticipated. He said they also underestimated the amount of temporary labor needed as well as the number of employees selecting family insurance plans over single plans.

But the board still has to figure out if it’s going to renegotiate a contract with Sodexo or take another route to staff custodians in the district.

Snyder said the administration for the district offered three ideas on where to go.

“They can choose to negotiate with Sodexo and try to partner and salvage and move forward with the same process, but with a different financial arrangement,” Snyder said. “Secondly, we told the board that we could rebid, draw up specs and try this again. And third, we could bring the operation back in-house and get back into the custodial employment business.”

But he said none of those choices will come cheaply.

“All three of those options are going to require the school corporation spending more money,” Snyder said. “We may cut to not spend as much, but they’re all going to cost a significant amount more. Any way that we go, we are going to pay more for the same or less services in 2013 than we did in 2012. In 2012, we hit the ball out of the park.

“The amount of the contract in 2012 was unbelievably good, so much that Sodexo could not sustain it. So if it could not be sustained, we’re going to have to pay more.”

But the options get a little more tricky. He said if the district decides to hire an outside company to handle custodial operations, the squeeze will be felt on the capital projects fund — which handles building projects and other physical needs of the district. However, if they bring the services in-house, the already tight general fund will bear the brunt of the costs.

“On any level, certainly, this is clearly a lose-lose situation,” Snyder said. “It’s not in Sodexo’s long-term best interests to be in this position, but likewise … change is difficult and turnover is costly. I think that’s important for everyone to understand. When this drama does come to an end — and I don’t know what that’s going to look like — the things that’s important is that our buildings are clean, our buildings are maintained, our buildings are loved.”

Sodexo and the district remain in negotiations. Several calls to Yaglou were not returned by press time, but Greg Yost, Sodexo spokesman, offered comment by email.

“Sodexo continues to have productive conversations with New Albany-Floyd County Schools with the hopes of reaching a mutually beneficial agreement,” Yost’s email said.

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