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.

"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."

During the next several years, UC Davis will continue to evaluate all options for providing campus food service programs and their potential financial impacts. Any future decisions will be guided by university principles to provide students with affordable on-campus housing rates and student union services while maintaining the highest level of workplace practices for employees.

According to the agreement, Sodexho will augment its existing medical benefits plan by increasing the employer contribution level, effective January 1. The specific employer contribution will be determined by Sodexho prior to its employee health plan open-enrollment period in October.

The UC Davis contract with Sodexho will also be adjusted so that the hourly wage scales will be comparable to the University of California wage scale 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 greater financial assistance for books and tuition costs.

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 UC Davis with quarterly reports of any grievances or employee complaints.

The changes to the Sodexho contract are expected to add additional annual costs of approximately $2 million -- an estimated $1.5 million per year in additional costs to Student Housing and $500,000 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. For both 2008-09 and 2009-10, there will be a cumulative rate increase of about 3 percent per student resident, or roughly $330 per year, specifically for these costs. Normal 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 higher food prices, 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.

UC Davis will spend the next 18 months consulting with student groups, employees 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.

Prior to July 2009, or at least one year before the current Sodexho contract expires in June 2010, UC Davis will identify the optimal way to deliver campus food services and will initiate any required financial planning, public bidding and operations changes consistent with that direction.

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.

Each year, Sodexho conducts slightly more than $20 million in food service business at UC Davis, and Sodexho reports a profit margin in recent years of between 0 and 2 percent. The current Sodexho contract began in 1998 and continues through June 30, 2010.