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A Virtual District in the Santa Clarita Valley

E Pluribus Unum

At a Glance

CAO: Pavel N. Matustik, SFNS
Annual budget: $7.3 million
Meals per day: 12,000
No. of districts: 5
No. of schools: 41 (37 elementary, 3 middle, 1 high school)
No. of employees: 172
Percent free & reduced: 10%

Twenty years ago last June, Pavel Matustik had just made his way across the Mexican border into California. He was a defector—from the former Communist-controlled Czechoslovakia—and had made his escape during a carefully-planned trip to Cuba. Matustik knew no English and certainly had never heard of the U.S. National School Lunch Program.

But within a decade, he's worked his way up through the industry to become Chief Administrative Officer of California's Santa Clarita Valley School Food Service Agency. Today, he presides over what has grown into a unique five-district school foodservice joint venture and has just established an equally innovative commodity processing co-op that is leveraging the commodity re-processing of 159 school districts across the state (see "Commodity Smarts" sidebar).

Commodity Smarts

How often do you hear this statement from a school foodservice director: "

Commodities are one of my passions"? For Pavel Matustik, however, it's the gospel truth. And he's got the credentials to prove it.

Last fall, Matustik's organization became the lead agency in a new and innovative commodity purchasing and processing venture dubbed SUPER Commodity Cooperative.

The group joins seven different, preexisting school commodity co-ops in California (most of them use DJ Co-Ops, a third party organization) to leverage their combined volumes and increase the commodity-specific purchasing and distribution options to members. In all, it encompasses 159 districts within the state that provide a total of over a million school lunches per day.

In 2004, Matustik estimates the state-wide SUPER Co-Op will be eligible for $27 million in commodity entitlements, and that as much as 80 percent of that product will go into re-processing. That makes for some very good deals from vendors. Matustik expects to see $300,000 in savings over the next five years for his Santa Clarita Valley agency alone.

"This co-op allows members an opportunity to process commodities, save money and not have to worry about commodity storage," he notes. "Now, every member gets what kind of commodities they want and is able to have them sent whereever they want to be processed."Here's a typical scenario, as Matustik explains it: "Schools are eligible-to receive large bonus quantities of commodity nonfat dry milk that doesn't count against entitlement money allocated in the regular commodity program. With combined volumes of that dry milk, we can have significant amounts of it re-processed into shredded cheddar cheese, which can then be sent to a participating burrito-manufacturing company. Our ingredient cheese thus costs 50 percent less than the openmarket price, because the school is just paying for the processing, which results in a huge savings on the price charged for the finished burritos. As a result, the school is able to spend its entitlement money elsewhere, perhaps on produce through the DOD ( Department of Defense) produce purchasing program. If you're a single commodityrecipient district, it's almost impossible to get this level of savings in commodity processing."

In an effort to "spread the faith," Matustik, along with consultant Rick DeBurgh (former director at Los Angeles and Glendale Unified School districts and now president of DJ Co Ops) and Les Johnson-(consultant and former director of USDA commodity programs), began holding seminars last fall to help other foodservice directors better understand these and other complex ins and outs of the agricultural commodity program.

"I'd say about 90 percent of school directors don't know how to play the commodity 'game' well; it's too complicated," Matustik says. "A lot of them think it's free and take anything that's offered to them, or let vendors convince them to take the items. But to take commodities and process them is not always cheaper. You need to know when and when not to store or process them.

"For example—you'll save more processing protein items than you will taking frozen strawberries and making strawberry cups. You have to consider issues like how much a vendor may charge you to store reprocessed products. A deal may seem terrific at first, but storage fees can make a re-processed product more expensive than if it had been purchased at street prices."

Matustik and his partners plan to continue to hold commodity training workshops for their peers, including one at the ASFSA LAC conference in late February. He's so committed to helping directors understand how to handle commodities that he's "willing to hold the seminars for free, with just travel and expenses covered," he declares. Now that's a passion.

From Protestor to Director
Four days after entering the U.S., Matustik landed a job as banquet cook-helper at a Sheraton hotel in South Pasadena (he still expresses thanks to the chef "for his willingness to take a chance on me.")

In some ways, it was an opportunity the Communists had inadvertently prepared him for. Long before fleeing Czechoslovakia he'd been labeled a "troublemaker" for some earlier student protest activities; and when that was used to bar him from pursuing an advanced college degree in the Communistcontrolleduniversity system, he'd signed up to take hotel/restaurant management courses as a way of preparing to make a living.

He's been off and running in the field ever since. After a short time with the hotel, Matustik joined the school foodservice community with a job as production supervisor working for Rick DeBurgh at the Los Angeles Unified School District. (DeBurgh, former director at Los Angeles and Glendale Unified School districts, is now president of DJ Co Ops.) Over the years he held positions in several other Southern California districts, including the director's position in Santa Monica, before assuming his present role in Santa Clarita Valley in 1993.

"Even the best-run foodservice departments are still part of the school district, and are at the bottom of the pecking order. Here, our core business is school lunch, not education."

"I liked Santa Monica very much," he says. "It's a beautiful community, and some of the schools look right out to the beach.

"But the position at Santa Clarita's JPA (the 'Joint Power Authority' that combines foodservice operations for the districts there) promised a real challenge as well as better pay. Most of my friends said, 'you're nuts, it's not worth it,' but I wanted to give it a try."

A white knight for the white elephant
Matustik's friends' worries were real enough: with the agency bleeding $200,000 annually, Matustik was stepping in to manage a oneofa-kind, four-year-old organization that even its creators were deeming a "white elephant."

It had been established as a joint powers agreement among three small, neighboring school districts four years earlier, in 1989.

Unable to make their foodservice operations break even independently, the districts had sought to achieve economies of scale by creating a central agency to serve them all, with capital investments initially funded by a bond issue. It was a novel approach and had required the passage of new state legislation to permit the change.

"The agency operates as if it were one larger district—but a district that exists for foodservice production and operations only," says Matustik. "To the state, the JPA appears as a district without students and without teachers; it exists only for the administration of foodservices, mostly in the elementary and middle schools. Other activities in the districts are still managed independently by individual districts. It is a pretty unusual approach."

The agency was supposed to be self-sustaining, dependent on its own cash flow to succeed and not eligible for additional reimbursement from member districts. But, it hadn't been able to meet that goal, despite the districts' major investments in a new central cook-chill and production facility.

That presented some immediate problems when Matustik assumed his new responsibilities.

"In a typical school district, if money runs low between the end of school in June and the beginning in September, general funds within the district can be used to cover foodservice employees' pay and vendor invoices," Matustik explains. But as an independent entity, completely separate from the school district, this foodservice agency had no such recourse.

"I ended up borrowing money to pay salaries and bills during the gap," Matustik says. "But even though the agency continued to lose money my first year, it wasn't as much as before, and we began making immediate progress."

Two Years of Change
That progress continued, thanks to changes Matustik began to implement. "I'd committed to turning the agency around in three years, so the first thing I did was to build my management team," he says. "Then we changed about 80 percent of the way things had been done." Among them:

  • Whittling down the central kitchen staff from 25 employees to 12 through attrition, and beginning a program to rotate them through various school kitchens for cross training and efficiency.
  • Halting onsite production of burgers, buns and pizza, and conducting extensive product testing with students to determine their pre-prepared replacement picks.
  • Increasing menu choices from one per day in the elementary schools to three and eventually five daily options.
  • Limiting cook-chill production to five days per month. ("The foods kids really want —pizza, burgers, chicken, nachos—can't be made in the cook-chill. It was a losing battle for us financially," he declares.)
  • Introducing speed lines at cafeterias— where foods are held at a constant temperature, with only two employees needed to run the lines.
  • Moving to produce and distribute many prepackedfoods from the central kitchen.
  • Debuting after-school snack programs, expanding breakfast to include all schools and introducing a "second chance" breakfast program (at recess).
  • Starting a la carte options in elementary schools and planning menus with student input.
  • Attracting new participation through "traveling barbecue" days and theme events.
  • Initiating Nutrition Advisory Councils and setting up common nutritional policies for all member districts.
  • Implementing staff training to lower food costs, better analyze profit and loss statements and encourage more efficient performance.

Within two years, the agency was making money and participation had increased by seven percent. Since then, another two neighboring districts turned their foodservices over to the Santa Clarita agency, which has grown from serving 14 schools to 40. Matustik's original budget—$1.3 million annually— mushroomed to $7.3 million, and he has been able to accelerate by several years the plan for reimbursing the districts' original $5 million investment to build the central kitchen.

Training and Incentives

"I'm a big believer in training. The money you spend always comes back to the system," Matustik emphasizes. After convincing his board that a better-educated employee is an all-around better employee, he established a program that awards all ASFSA-certified workers a five percent salary stipend, renewable annually if they maintain their certification.("They all keep it up, and we add between two and three new employees a year," he says.)

Matustik also initiated a performance incentive program that encourages employees to closely watch food costs and efficiency. In the plan, any "profit" revenues above $20,000 per year are split between the agency and the employees. "If we made $100,000 one year, $80,000 of that is divided, with employees getting $40,000 spread among them. In the past, the program has funded year-end employee bonuses equal to two-to-three percent of their salaries each year," he explains.

An employee newsletter keeps all workers foodservice issues, and three supervisors whose sole job it is to travel among the schools each day provide a sounding board for employees with concerns or problems. All employees receive cross-training when they first arrive, and can rotate among the different sites. "Training is a constant; it can never stop. No matter how much you do, there are still more benefits to be obtained," Matustik believes.

Unique Position
Santa Clarita's organization as a joint powers agreement is believed to be the only one of its kind in the country, and it has come with some distinct advantages. For example, most school foodservice directors can only fantasize about not having to fight for attention at school board meetings.

"Even the best-run foodservice departments are still part of the school district, and are at the bottom of the pecking order," says Matustik. "Here, our core business is providing school lunch. We have no competing interests; we've all got the same goals."

Each member district has a representative on the agency's board of directors ( usually business managers), and Matustik reports to them. "There are five people on the board who agree on policy, and it is my job to implement that policy," he explains. "Few political issues come up at our board meetings. We basically take the position of 'let's feed kids efficiently, provide as many meal choices as we can, and ensure that our financial picture remains healthy.' Our monthly meetings are like business meetings, not at all like school board meetings."

Beyond the multiple duties inherent in a director's job, as CAO, Matustik also must handle such general business matters as negotiating with unions and dealing with workman's compensation claims and liability insurance.

"We often learn information at the last minute. But I can live with that. We do work on trying to get the districts to see us as part of their team, not just as 'that company."

For all the freedoms the joint powers agreement provides, it comes with some downsides as well, Matustik acknowledges. Five different districts with their own particular calendars (from year 'round schedules to staggered start dates) pose an ongoing challenge. And since the agency is not bureaucratically part of any district, "we're out of the loop regarding what's going on sometimes," he says.

"We often learn about new issues in the member districts at the last minute. That's something we are always working on—our goal is to get the districts to see us as part of their team, not just as 'the company that runs our foodservice programs.'"

Working With the Schools
To that end, Matustik initiated an eightmember principals' advisory committee that meets quarterly to enhance the flow of information. "The members take back suggestions and information to the principals, who tend to more readily accept it from them than from my memos," he notes. "It's been a very successful way to communicate."

Ten-minute presentations conducted in every classroom help acquaint students with the foodservice offerings and staff; and school garden projects let students plant and harvest some of the vegetables they eat at lunch.

Through an annual Kids' Cooking Campaign, six different fourth-grade classes (about 180 students in all) descend upon the central kitchen in groups to create menus, prepare a full meal and send out invitations for family, teachers and administrators to join them in tasting the results of their culinary adventures. (A local mayor and congressman are typically among the guests.)

"This is always a real eye-opener for parents, and we win them over with this program; they appreciate the opportunity it presents to their kids," Matustik says.

Spending the past two decades in school foodservice has been eye-opening for Matustik as well.

"Being around kids is fun; it's great to see them enjoying food," he says. "I felt it was important for me to give back to society, to do something for my new country. And being able to feed kids is very satisfying."

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