UC Davis has reached agreement with Sodexho to provide increased benefits and wages for the company's food service employees on campus — while balancing the need for affordable housing rates and retail food and service costs for students — for the remaining three years of the university's current contract with the dining services company. A memorandum of understanding outlining the agreement was signed Oct 22, thus formalizing earlier conceptual agreements between the two entities. The agreement includes the essence of what will soon become required amendments to the current contract between Sodexho and the University.

"We have listened to a wide range of sometimes-conflicting concerns, and I believe we are responding in a principled way to balance the cost of improved benefits and wages for our food service workers with the need to maintain access and affordability for our students," said UC Davis Chancellor Larry Vanderhoef. "And, very important to me because I believe a contract is one's word, we are doing so without breaking our contract with Sodexho. Sodexho is being responsive to our requests and is committed to strengthening its overall compensation competitiveness and workplace environment."

Sodexho employment wages and benefits will improve

Sodexho has agreed to augment its existing medical benefits plan by increasing the employer contribution level effective January 1. The current 60 percent to 40 percent employer-employee contribution rate will be increased to an approximate 80-to-20 ratio. All career employees will also receive a monthly stipend of $100, which can be used to further offset health care costs for employees. Combining the new employer contribution and the stipend, medical benefits to Sodexho employees will much more closely approximate university-provided medical benefits.

The UC Davis contract with Sodexho will also be adjusted so that the hourly wage scales and wage classifications will be equivalent to the University of California wage and classification scales for all career (non-student) employees. Future wages will also parallel any additional increases that University of California salaries may realize in the next three years.

Student employees of Sodexho are already paid at a rate comparable to or slightly higher than University pay rates. Under this agreement, student employees will continue to receive these wages, while also benefiting from an enhanced employment benefits package that will provide funding for books and tuition for each of the next three years. Eligibility for these benefits is based largely upon longevity of employment, number of hours worked and performance. Agreed-upon increases range from 22 percent to 100 percent, depending on the specific category.

Sodexho has also agreed to use the UC Davis Principles of Community as an expectation of values and respectful conduct for employees, and will use this guiding statement as a part of employee orientation processes and other employment practices. Further, Sodexho has agreed to use an independent third-party review process to resolve employee concerns and to provide the campus with quarterly reports of any grievances or employee complaints.

Financial impacts will be phased-in for students

The changes to the Sodexho contract are expected to add additional annual costs to the campus of approximately $2.4 million — an estimated $1.8 million per year in additional costs to Student Housing and $600,000 per year to the Student Union operating services.

In this first year of the three-year plan, Student Housing cost increases will be absorbed by housing reserves, because residential students have already paid for and committed to dining contracts for 2007-08. In both 2008-09 and 2009-10, there will be a cumulative rate increase of about 3 percent to 4 percent per student resident, roughly $350 per year, specifically for these costs. Annual rate increases for other inflationary costs are also probable in this time frame.

Student Union food service cost increases are expected to be financed through a combination of strategies, potentially including increased food pricing, reduced hours and services, possible corporate sponsorships or franchise opportunities, catering service changes, and redirection of vending machine revenues.

University administrators will review all of these strategies in concert with student governance groups and leaders involved in advising student housing and student unions operations, including the Campus Unions and Recreation Board (CURB), the Residence Hall Advisory Board, the Student Services and Fees Administrative Advisory Committee and the undergraduate student government, ASUCD. Discussions with students from these groups began last spring and have been essential in developing principle-based approaches to managing student costs.

Broad consultation will begin immediately

UC Davis will spend the next six months consulting with student groups, employees, professional non-profit associations in the field, and other food service experts, both within UC and across the country, to evaluate food service delivery systems and best practices for both housing and retail operations, consistent with campus principles. As part of the review, the full range of food service delivery options, including the potential conversion of employees to University employment, will be considered. Preliminary recommendations from this review are anticipated in April 2008.

Background on the UC Davis partnership with Sodexho

Sodexho, a food service contractor located at more than 750 colleges and universities nationwide, has been a campus partner since 1971. Sodexho provides dining services in the campus residence halls, and manages the retail food services at the Silo, the Pub, in the Health Sciences district, the Biological Sciences lab, and at the Activities and Recreation Center. It provides catering services for official campus events and for external customers who rent campus facilities. It also operates concessions at the Pavilion, the Mondavi Center, Aggie Stadium and campus vending operations.

Slightly more than $20 million in food service business is conducted annually at UC Davis through Sodexho, and Sodexho reports a profit margin in recent years of between 0 percent and 2 percent. The campus's current contract with Sodexho began in 1998 and continues through June 2010.