LAUSD audit finds mismanagement, ethical violations in food services operation

An audit of Los Angeles Unified’s food services division found that a major overhaul in 2010 led to some cost reductions and more kids eating school food, but administrators ran large deficits and mismanaged the $341 million program.

The audit released Wednesday by the school district's inspector general provided more details about operations under former division director David Binkle, who was placed on paid leave from his job earlier this year after allegations that some of the money set aside for marketing was used instead for trips and food at political events. The accusations were first reported by the Los Angeles Times

According to audit, the division ran a cumulative operating deficit of $177.4 million between fiscal years 2010 and 2013. While federal requirements increased costs, the division also engaged in “inefficient and ineffective” use of food from federal programs, didn’t control menu development, and failed to adequately review and approve new products and prices, the report said.

Binkle could not be reached for comment on the audit.

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LAUSD’s food division provides meals for half a million students every school day. It runs the largest breakfast program in the country and the second largest school lunch program.

In a statement, LAUSD Superintendent Ramon Cortines and Thelma Melendez de Santa Ana, CEO of the Office of Educational Services, said the district has tightened fiscal controls and oversight of the division's spending.

Five years ago, the school district overhauled its food program to cut costs and make meals more appetizing. The changes drew national attention and Brinkle won praise for his work.

To get more students to eat school meals, Binkle ran a marketing program that the audit said totaled $1.5 million using funds from the food companies that contracted with the school district to provide food.

“On close review, we found that the marketing funds were being mismanaged and have been used for expenditures unrelated to marketing” for the school district, the audit said. 

The audit said Binkle indicated he knew nothing about some of the expenditures from the marketing program although he had managed it.

Auditors also said Binkle violated ethics rules when he asked a food contractor to pay for airfare and hotel during a trip for school district employees. They further found he failed to disclose that he owns a food service consulting business, which listed as its general phone number Binkle's district-assigned number. 

The audit states that Binkle said his business had no connection with LAUSD, but adds the former director did not explain why he did not disclose it.

"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.

The officials say the district has stopped the marketing program and is now keeping a close eye on spending. Among the steps the district is taking is a "return to the use of competitive bidding process to ensure the lowest price."

"The district takes these findings very seriously. We have alerted the Board of Education of these reforms, and will continue to provide updates," the officials said.