Guide to Outsourcing

 

Outsourcing school transportation has been successful in almost all cases where schools have partnered with private companies to provide student transportation. While maintaining control over transportation through contract stipulations, school administrators who convert to contracted transportation are able to redirect both energies and resources to their core function, education. 

The reasons that districts consider contracted transportation vary, but often fall into one of the following categories:

• The district fleet is aged, and funding is not available to upgrade it;

• New equipment regulations and safety or environmental innovations make new buses desirable, but the district replacement schedule does not allow for rapid turnover of the fleet;

• Transportation cost increases have outpaced funding;

• Economies of scale are not always available and costs are out of line with similar districts;

• System inefficiencies have resulted in overextended resources and scheduling difficulties;

• Federal, state, or administrative changes and additional responsibilities (redistricting, addition of interdistrict magnet schools, parental choice prerogatives) challenge the system;

• Administrative headaches (dealing with parents, employee absenteeism, drug and alcohol testing, mandated paperwork) require an inordinate share of administrators’ time and attention.

Outsourcing can solve any and all of these problems. Private contractors whose primary business is pupil transportation have a single focus: to provide school bus service in the most efficient and cost-effective way possible while maintaining the highest levels of safety and reliable service. Just as school districts are experts at providing education, private school bus companies are experts at providing transportation.

Through contracting, a school district can upgrade or completely replace an aging fleet with new buses equipped as the district chooses (within the boundaries of state law) without making a capital investment. It can control transportation costs and accurately predict those costs through the life of the contract. It can protect current employees’ wages and benefits through contract specifications or reduce inflated employee costs by allowing the contractor to use market standards. 

Contractors have expertise in planning, routing and scheduling that often results in more efficient service and lower costs. In many cases, they can take advantage of economies of scale, coordinated services, shared facilities, and dedicated personnel to improve both efficiency and the bottom line.

Facts about Contracting

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• All drivers, public or private, are equally qualified and must meet the same state and federal licensing standards to drive a school bus in their state.

• Private contractors meet or exceed state wide training standards as they operate using the highest standards required. Many school districts do the minimum ‘required only’ training due to limited resources.

• Private contractors hire local residents and existing local district school bus drivers, who pay taxes and often have children attending local schools.  Both district and contractor drivers have but one goal to transport the children of the district safely each day. More times than not, they are the same drivers!

• Private contractor and district school buses must meet the same maintenance standards set by their respective states. Private contractors set the highest preventative maintenance standards for their fleets.

• Private contractor fleets are newer, on average, than district fleets due to the utilization of industry lifecycle replacement schedules for their vehicles, whereas, district fleet replacement is usually subject to budget constraints, BOE approval and or voter approval. As such, districts have difficulty in maintaining a replacement schedule when economic times become difficult.

• Private contracting eliminates the districts’ labor management issues.

  • Private contractors must provide services based on the standards set by the district in the contract agreement. District operations have to deal with grievances and employee contract negotiations, whereas that is not an issue for the district when they contract for services. Districts can have a contracted driver removed from their district at any time for any justifiable reason.  Many Superintendents have stated they have ‘fewer headaches’ with contracted transportation services and can spend their time on educational issues

  • Contractors make a profit through economies of scale, opportunity costs and operational efficiencies, while still operating less expensively than a district operation.

    • Districts throughout the United States that have privatized their transportation operations have saved millions of dollars that compound year after year. These saved dollars have been used to enhance educational programs and help to avoid teacher layoffs. Annual increases are usually significantly less than district employee contracts as they are defined by contract agreements in the district’s RFP or bid.

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Added Advantages

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• Private contractors usually own and maintain facilities in the districts in which they operate and pay significant property and school taxes or rent the districts existing facility providing added revenue to the district.

• Private contractors hire local residents and often district drivers when a district privatizes.

• Private contractors usually support local district programs through scholarships and other worthwhile educational programs.

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Cost Analysis Tool

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This analysis was designed as a tool to assist school district officials in determining the actual annual cost of operation of their transportation fleet, in order to provide accurate figures for comparison to outsourced transportation services.  Because of varying state regulations and regional practices, some districts may have costs not represented below; be sure to figure those costs in as well.  Also remember to deduct from the line items any costs that would remain under contracted service.  (For example, if you would continue to employ a mechanic to work on vehicles not used for student transportation, deduct that person’s pay and benefits from the appropriate lines.)   Use figures for the most recent complete school or fiscal year.

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                                                                                            Download the Cost Analysis Tool

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Resources

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The Yellow School Bus Industry White Paper provides readers with a full scope of information detailing how the yellow school bus industry is structured and gives a “behind the scenes” look at making the most of school transportation.  Topics include: Industry Structure; Drivers and Support Personnel; Buses and Other Equipment; Transportation and the Education System; Economic Issues; Outsourcing; and Public Policy Issues.