Re: Does this sound Honest/legal to you?
Honest - No... Legal - Yes...
Even small private colleges such as mine do this. We are in a weird contract with the company Aramark. Not only do they provide food, they also hire our house keeping and various other positions. From looking at the prices associated with the company and the services they provide to our school (they basically grab anyone from the immediate area and pay them minimum wage with poor benefits and rude demeanor), they are over priced when compared to other services, even ones that are much better in quality.
So why wouldnt we just dump them and move on? Turns out Aramark made some financial incentives for our school, by funding one or more of our very lovely buildings. This was a while ago and it turns out that recently the Aramark contract was finally up for a renewal. Many students at my college protested for at the very least, additional food services or options... But you guessed it, we kept the same service after being told that students "didnt mind the food and overall liked it", this being contrary to the overall wide consensus that our schools food ranked a letter "C-" for both quality and cost compared to similar schools... (up to 14 bucks a meal depending on your plan)... Smells fishy to you? me too...
Magically however, (after builiding ALOT of new homes/apartments, which was supported by an independent investor), we have a very nice multi million dollar science building being constructed... Is it linked? Who knows... but are there some very obvious under the table deals going on? Oh I think so.... Especially when you have to pay 10-14 dollars a meal with a REQUIRED meal plan (atleast 3 years) and yet if you pay by CASH it only costs 4-6 dollars a meal. In the words of the a top school official at a meeting i attended when this was vrought up he said "I know where every dime goes, but thats not something I can tell you."
Just for an overcast of the figures... @ an average of 12 dollars a meal via meal plan and 5 dollars avg for cash prices... The student population at my college overspends about 2.5million dollars a year on food versus cash price... Tell me that doesnt make you sick to your stomach...