Some of the Reason College Costs Go Up

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It may be just cheating.

According to an Associated Press article in the Buffalo News:

Food services giant Sodexo has agreed to pay $20 million to settle claims that it overcharged 21 New York school districts and the State University of New York over a five-year span.

This comes after New York State’s attorney general, Andrew Cuomo, launched an investigation into the French-based multibillion dollar company.

Under the agreement Sodexo signed with the state in 2004 the company agreed to provide goods and services to various state agencies at cost. In fact, however, between 2004 and 2009 the company received huge rebates (an average of 14 percent) from its suppliers, discounts it neglected to pass on to the state.

Former employees of Sodexo brought this practice to the attention of Cuomo’s office. The state will receive $15 million from the settlement. The rest of the money goes to the whistleblowers and local school districts.

As of 2007, Sodexo had dining contracts with some 900 American colleges, serving almost a quarter of American higher education institutions. [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer