State subsidies prop up contracted busing, report finds

Reading Eagle

Pennsylvania school districts that hire contractors to bus students - as most Berks County districts do - are costing taxpayers millions, a new study finds.

But Berks school officials say it's unlikely that districts with outside transportation providers will make the switch to in-house busing.

The study released by the Keystone Research Center of Harrisburg found that contracting bus services results in higher overall transportation costs. But the state promotes the practice by providing more in subsidies to schools that hire contractors, the study said.

"The bottom line of our study is private bus services cost more, so the state should stop encouraging it," said Dr. Mark Price, Keystone's labor economist.

If every school district in Pennsylvania had in-house transportation services, the study says, taxpayers would save an estimated total of $78 million.

Because of the higher subsidy rate, many school districts find their costs remain level or even decrease when they switch from providing in-house busing to hiring a contractor, even though the total cost is higher, Price said.

"By and large, even though the state basically bears the burden of higher cost, local districts generally break even," he said.

Price added that districts can make money through the higher subsidies or by selling off their bus fleets but he believes that is shortsighted.

Most districts in Berks contract for bus service. Several local school officials said the system the state has in place makes that an attractive option.

"Gov. Mifflin's buses were district-owned until 1993," said Mark R. Naylon, Gov. Mifflin business manager. "At that time we did an analysis and realized the district could save over $300,000 by moving to contracted transportation services because the transportation subsidy system pays more for contracted services than for district-owned transportation. Gov. Mifflin made the switch and has been happy with the relationship."

Dr. Randall A. Grove, Conrad Weiser superintendent, said the extra money the subsidies bring in is too important to pass on it.

"Given the tough economic times and the fact that Conrad Weiser relies on the local taxpayers for nearly 70 percent of our operating budget, this incentive was a tough one to disregard when the alternatives would have been program cuts," he said.

Dr. Beverly A. Martin, Exeter superintendent, said her district still does its own busing but has recently looked into making the change to a contractor.

"We have our own buses, but the study we had done in the fall of 2011 showed that it could be more cost-effective to contract out, due to a higher subsidy formula awarded to districts who contract out as opposed to having their own busing," she said.

Hiring a contractor also trims overhead costs, said Dr. Solomon Lausch, Schuylkill Valley superintendent, eliminating the need for things such as a bus garage, maintenance, drivers and supervisors.

Change coming?

But contracting might soon lose some of its luster. Gov. Tom Corbett's proposed 2012-13 state budget calls for transportation subsidies to be lumped with other funding streams into a block grant.

"If that happens, the transportation subsidy would no longer be driven by a formula that awards more money to districts that contract out," Martin said. "That could erase the advantage of contracting."

That could leave districts in a precarious situation, since starting an in-house busing program might be costly.

"It would also require many initial expenses: buses, storage and maintenance facilities, parts inventory, fueling location as well as the associated personnel functions like training," said Dr. Martin Handler, Brandywine Heights superintendent.

The study authors - Price and Dr. Stephen Herzenberg, executive director of the Keystone Research Center - said they would recommend a three-pronged approach to that problem.

Herzenberg said the state should make low-interest loans available to districts making the switch to in-house busing, form its own nonprofit transportation provider to help create competition and drive down costs for districts that stick with contractors, and offer free technical assistance to districts with in-house busing.