The Business of Support Services

Martin Oestreicher is the chief executive, Office of School Support Services, at the New York City Department of Education. In that capacity, he oversees the Office of School Food and Nutrition Services, the Office of Pupil Transportation, the Division of School Facilities and the Public Schools Athletic League. They serve more than 800,000 meals per day, transport 180,000 students, maintain 1,200 school buildings and engage 35,000 student-athletes. The Office of School Support Services has about 12,000 employees and a $2 billion budget. The Office of School Support Services was created in 2003, when three non-facilities units were combined with the facilities unit. Oestreicher’s background is largely in government administration; he has worked for New York City for approximately 25 years. He holds a Masters in Public Administration from New York University.

School Construction News: Tell us about your new food purchasing system. How do you coordinate the service of more than 800,000 meals per day?

Martin Oestreicher: We have 1,500 kitchens serving currently about 860,000 meals a day. That is more than than any other U.S. institution and the military. So we’ve been told; I can’t swear to it.

We’ve overhauled our food program. It was running OK, a basic food service. We feed more than 800,000 meals a day and we felt that we could raise it to another level with a more business-like approach. We have several components to our strategy. One is to enhance nutritional standards. You have to meet the Department of Agriculture standards, which are sort of a minimum level. We put together a task force of nutritionists, not only from our department but also from the health department and food advocacy groups and we developed a three- to five-year plan to upgrade our standards.

For example, the USDA requires that no more than 30 percent of the caloric intake can be fat, averaged over a five-day period. We’re going to do that consistently every day. That’s our goal. We’ve reformulated our products and work with the manufacturers to reduce the fat content without cutting out the taste. We’ve moved to serve more fresh fruit and fresh or frozen vegetables every day. We’d been doing canned vegetables, which are a little higher in sodium.

We brought in a chef. Our nutritionists prepare the menu, and they are very dedicated, but they’re not really chefs. We wanted to put together recipes and make the food appealing to kids and still keep it nutritional. That’s what the chef was brought on to do; new recipes, presentation, the look of the cafeterias and the appearance of the food.

We wanted to run our department as a business, which is a misused expression in the public sector. We wanted to take a budget that was in the high $300 million range and get better control over it. The federal government, the U.S. Department of Agriculture, funds most of the program. What we have done is try to develop a system that includes a budget for every kitchen. We will be able to track the cost down to the kitchen level, and the revenues. The revenues are the reimbursements we get for every meal served. We also overhauled our procurement system. We consolidated it to save several million dollars a year.

We’ve put together a comprehensive approach to increase participation, get the nutritional value up, and work on the backend, budget and financial side, as well as the procurement side.

SCN: How do you manage the transport of 180,000 students across five boroughs?

MO: Not easily. That is something we contract out. We have about 50 contractors who operate the buses. In the simplest form, you have your general education and your special education; about 120,000 general education and 60,000 special education students. The special education has about three-to-one the number of buses. That’s about 4,000 special ed buses and about 2,000 general ed. The special ed kids are fewer kids to a bus and get door-to-door service. They not only have a driver but also an escort on the bus with them, so it’s much more expensive. We have many different types of vehicles. Some kids need a ramp wagon for wheelchairs, hydraulic lifts. There was a bid process and we have contracts. We monitor the contractors relative to accidents, the age of the fleet, if they are showing up on time. We’re working on that currently. We are vigilant about any complaints.

It’s a huge, complex operation. It’s a little hectic at the beginning of the year and then settles down as the year progresses.

SCN: What are your biggest challenges when maintaining 1,200 school buildings?

MO: It’s the age of our buildings. The average age is about 60 to 65 years old. In tight budget circumstances, we are not flush with money so we have to maintain a very old inventory with a limited amount of funding. That’s our main challenge.

We are doing a good job. The schools really look great, considering their age. They are usually the nicest buildings in the neighborhood.

SCN: Do you outsource maintenance? Custodial?

MO: We mix. Our basic facility work is done by a civil service designation called "custodian." I think it’s unique to New York City. They are hired off the civil service list and work for the city, but they don’t get a salary. They get an allocation. The allocation is based on about 17 factors. The most prominent one being square footage, but it also might include how many cafeterias you have, the type of school. From their allocation they hire a staff. The staff works for the custodian, not for the school system. We have standards that the custodian has to meet; how he does that is his responsibility. He is a businessman. Under the contract there is only a certain amount of the allocation he can keep for himself. Let’s say he gets an allocation of $1 million. The maximum he can retain is, hypothetically, $100,000. Theoretically, he should spend $900,000 on the building; if he only spends $800,000, he can’t keep the extra. He has to return it. It’s called the "indirect system". They sort of work for us, they are unionized, and it has a certain amount of flexibility.

Most of our buildings have custodians. We do contract out the maintenance of about 97 buildings. We have more than 1,200 buildings, but one custodian does two buildings sometimes. If we look at custodial assignments, there are about 1,100 and around 97 are managed by private vendors. We are getting ready to get into a new contract to expand the contractual management. We’ll see how that goes. The contract has not been registered yet. It will give us the option to expand privatization to a certain extent.

The advantage to private management is, in addition to custodial services, they will do maintenance as well. Right now, our custodian does very minor patch-up work and of course makes sure the building is clean and the bathrooms are stocked. If there is maintenance beyond what he can do he fills out a form and sends it to the Division of School Facilities and it will get turned over to either a maintenance contractor or to our skilled trades. Of course it gets triaged; if it’s not a priority, it will take longer to get done. In the contractually managed buildings, the school is its own entity. We are paying the contractor to do all the custodial work as well as all maintenance work up to $2,000 per item. We are trying to reduce the load on our overall maintenance because we have a contract to do both custodial and maintenance. We will see how that works, but it will always be a hybrid. We have 860 custodians and that number isn’t going down much.

SCN: What do you look for in a vendor?

MO: Someone with experience and a strong track record. They need the managerial talent to understand what we’re trying to achieve.

SCN: How do you determine which of your operations to outsource and which to keep in house?

MO: Again, we evaluate to see where it is most advantageous. We’ve found that privatizing the custodial side some more to get a good sample of how it’s working for us is important. I think long term, we’ve got an old inventory in need of numerous repairs and a limited budget. If we can get some of those repairs done at a school level by the company managing the school, and we don’t have to put the repairs into our backlog, that’s a long-term solution we have to evaluate. In the area of food, for example, there was some talk of turning it over to a contractor. We analyzed that and felt that we could bring about those reforms I’ve described with our staff. We had the expertise and the commitment of the staff; we brought in the chief executives. We had dedicated people. With those kinds of changes, there would be no advantages in going to the outside.

SCN: What are the advantages to outsourcing? Disadvantages?

MO: There are advantages in terms of principal autonomy, which is very important. Custodians are hired by civil service list and once they are on the job, if they don’t work out, you have to go through a very long and convoluted process to get rid of them. Often the principal has no say in who is being assigned to his school. With a private contractor, a principle can become involved in the hiring process and also, if they don’t like the person they have, there is no paperwork, they just tell the contractor to assign someone else. We’ve worked the new contract, also, so that if the principle wants to go back to the old system, they can opt out.

SCN: Have you observed any trends in your industry?

MO: The demands and expectations placed on school support services are getting greater and greater. Parents expect more as far as transportation and food; even on the facilities side. We know that the budgets are not going to increase and we have to keep up with the demands.

SCN: What is the most exciting aspect of your work?

MO: To start turning around operations. The changes we’ve made in food haven’t gone as smoothly as we had expected, but overall it’s been very positive.

We’ve taken the whole culture and moved it to customer service and business orientation and enhanced the image of school food. In facilities we are about ready to move forward on the privatization issue, which is exciting because I think it’s the foundation for a long-term solution to keep up with the maintenance issue. I think it will result in a more productive performance.

SCN: Do you have any final comments?

MO: The range of support services never ends and in terms of management it presents all the challenges of a public sector manager.

We meet customer demands, improve service and we do it within very finite resources. It’s a great challenge for any manager.