The University of Kentucky raised eyebrows last year when it decided to outsource housing to a private company. Now, it is considering doing the same with food service.
These are tough questions, but, after years of declining state support, UK needs to be asking them. What are the right answers?
By all accounts, UK Dining Services is well-managed. It pays for itself and provides good food and jobs. So why consider outsourcing? It is not about saving money, UK spokesman Jay Blanton said.
As with the decision to outsource housing in a 50-year deal with Memphis-based Education Realty Trust, this possible deal is more about raising capital. Lots of it.
“A business partner potentially could pop tens of millions of dollars into infrastructure improvements,” Blanton said.
UK needs capital because it has a lot of catching up to do on infrastructure. The General Assembly has always been stingy about letting UK borrow money for new and improved buildings, even when it could generate revenues to repay the debt.
But there are other considerations, too, Blanton said. Might a giant food service corporation be able to offer more variety and convenience at less cost?
“The question becomes what are the core competencies we have?” he said. “What are the things we do best as an institution, and then what are the things that need to be done as services to students that might be best facilitated with a partner?
“We’re not going to give up course delivery and instruction; we do that better than anybody else,” he added. “But are we the best entity to build a residence hall? Are we the best entity to provide food service? Or is that better facilitated through a partner? It’s worthwhile to at least ask the question.”
There are other issues, too. Dining Services has become a key player in supporting Kentucky’s budding local food movement. This year it will buy more than $1 million worth of “Kentucky Proud” products.
UK Dining Services is just the kind of partner UK’s College of Agriculture needs to help Kentucky farmers develop more sustainable production methods that in the long run will provide the state with more healthy food and stronger local economies.
As a land-grant university, UK’s mission extends beyond the classroom. The university has a responsibility to help show Kentucky the way forward by supporting innovation that will improve quality of life. That is a big reason some students, faculty and citizens have objected to outsourcing.
UK officials said last week that they will consider proposals from food service corporations, hold public meetings and make a decision by the end of the year about whether or not to outsource.
But, in response to the concerns, UK officials said that if they do outsource, they will protect current employees’ jobs and set criteria for vendors. That would include a mandatory commitment to partner with the Kentucky Proud program to buy locally produced food.
Those assurances are commendable, but are they good enough? That depends on how the criteria are set, and how well UK officials follow through during the decades this contract is likely to last.
Tens of millions of dollars in up-front capital is a powerful incentive. But any company offering that kind of capital to UK will want to find ways to get its money back, plus a healthy profit.
In many ways, UK’s outsourcing of housing made sense. UK will quickly get a more adequate supply of good, on-campus housing. But some critics worry that the housing will be too expensive for students. Others worry about the quality of the new residence halls.
Those critics say UK should have negotiated for more durable and energy-efficient construction, which would then have saved money in the long run through lower operating costs. Plus, at the end of the contract, UK would inherit buildings with more potential for future use.
Whichever way UK decides to go on food service, a real commitment to supporting local, healthy and sustainable food production is critical for Kentucky’s future.
As UK officials consider all of the implications of this long-term decision, they should keep this question in mind: Will a corporation care more about what is best for Kentucky or what is best for its shareholders?