University of Virginia Library

Non-Profit Food Services Plans
$70,000 Budgetary 'Surplus'

By TIM WHEELER

— Ed.)

With a gross yearly income of $2.4
million, Food Services ranks as one of the
larger business enterprises of the
University. Yet it is officially classified as
a non-profit enterprise.

Each year the managers of Food
Services accumulate a "surplus," as they
call it, of $70,000, or 3 per cent of their
income before expenses. Normally, they
aim for a surplus of 2 per cent.

A business is classed as non-profit only
if the employees are prevented from
collecting any of the profits ("surplus").

Though Food Services operates much
like a modern corporation, all of the
surplus remains within the business. Part
of it is diverted to a sinking fund for new
buildings; the rest is channeled back into
the following year's operation to cut
costs and provide a reserve against any
yearly deficits.

One common view of the division
pictures it as an independent
organization, responsible only to itself for
its business. This is not exactly true.
Actually Food Services is legally and
financially tied to the University.

Yearly Budget

It must submit a yearly budget and
any plans for new buildings (such as the
proposed cafeteria in the Alderman Road
area) to the University's business office
for approval. It is also bound to pay the
standard University (Virginia state) wage
scale.

As for the internal operations, such as
hiring and purchasing, Food Services has
its own personnel director and a separate
purchasing department. Internal
functions like these are outside any direct
control in the University, virtually
autonomous.

In the words of Richard F. Shutts,
business manager of the University, the
organization is a "local funds auxiliary
enterprise," as opposed to a "state
auxiliary enterprise" like the Department
of Housing or Newcomb Hall. Food
Services is the only auxiliary enterprise
on the Grounds that is not directly linked
with the state. It has not however,
always held this unique status.

Until about twenty years ago, the
division was state funded and subject to
state control over hiring and food
purchasing. The University administration
thought the organization could better
meet the needs of the University—provide
superior service and food—if independent
from state influence.

So Food Services received a loan from,
reportedly, the University's Endowment
Fund, to set up operations. Since then,
the loan has been repaid, and today the
division is financially self-sufficient.

Disadvantages

Self-sufficiency has its disadvantages,
though. Since Food Services is considered
separate from the state, it must provide
its own facilities and equipment.

The organizational changes that made
Food Services an auxiliary enterprise of
the University freed the division from the
problems of state control, as well as the
uncertainty of state funding, according to
Bernard C. Fontana, director of Food
Services. At the same time, the increased