From the Daily News:

A series of management blunders has turned the once-lucrative Los Angeles Unified School District's food services division into an operation that's lost $72 million in three years and may need a bailout from the cash-strapped general fund, which pays for teachers and other classroom costs...

Mistakes included excessive hiring, administrative errors that led to huge shortfalls in federal aid and adding too many menu items.

The hidden story here is not the probable graft and patronage. It's that past profits seem to have come about partly because they were federally subsidized; current shortfall is partly because they failed to take full advantage of federal subsidies.