The school bus contractor marks its 20th anniversary while taking the spotlight as the Nasdaq Stock Market closes on Wednesday.
One of the most common laments these days among school transportation operators is that there just isn't enough money to go around. Budget shortfalls and inadequate funding affect every aspect of an operation and, if severe enough, can actually reduce the overall safety of a school bus program.
But why is there such a financial dilemma right now? Simply chalking it up to a weakened economy is not a sufficient answer to this all-important question. A closer look is in line. State associations, national organizations and school district officials have come up with various explanations for these finance issues. Within their analyses, important themes can be found regarding the industry-wide budget crisis. Understanding the depth of the problem will lead the way toward potential solutions.
The problem at a glance
One reason for tighter budgets is that the costs of buses and equipment have increased due to better technology, upgraded safety features and government pressure on improving standards. Also, maintenance costs have skyrocketed in response to districts struggling to keep vehicles in service longer, allowing them to avoid purchasing new, more expensive buses. Fuel prices have become erratic, and insurance premiums are up dramatically, especially in the wake of September 11.
According to a report by the Ontario School Bus Association, all this is occurring while the demand for school bus transportation is rapidly increasing. For example, in 1995, the province spent $599 million (Canadian) on school bus transportation for a 185-day school year. Last year, it spent $581 million for a 190-day school year and a larger enrollment.
The amount of money trickling down from school districts to transportation departments is another major concern. One common misconception is that transportation operations should only receive a very small portion of school district budgets. But that is not necessarily true, says Jerry Helms, transportation director for Union County Public Schools in Monroe, N.C. "Transportation is always the first place cuts are made because of the fact that, at first glance to an administrator, it appears that busing receives enough money to spare." With such forces affecting operations, every dollar must be justified.
An operation with a high cost awareness can provide reliable transportation during a budget shortfall more capably than one with a poor understanding of costs. For private companies, fiscal accountability is critical to running a profitable operation. Now more than ever, public school districts can benefit from using private sector business tactics.
Says Alex Robinson, director of transportation for San Diego Unified School District, "Run your operation like a business and no one will be surprised when you are successful."
The most popular ways to gain cost awareness are by breaking down finances to cost per student transported and cost per running mile. Mike Starzinski, author of a series of articles on school transportation budgets and cost control, says that cost per running mile is the better way to go because cost per student only represents the product of expenditures subtracted from income divided by the number of students. It says nothing at all about spending decisions made by management.
For an optimum cost analysis, says Starzinski, "costs relative to all areas of a transportation operation must be compiled and categorized so that expenditures can be analyzed and inefficiencies can be identified." This is accomplished by categorizing both income and outgo into capital, administrative, operational and maintenance transactions. The resulting figures are then weighed with every mile run by the bus fleet.
Once this basic accounting technique is performed, managers can eliminate charges that don't belong in the transportation budget. For instance, your transportation budget may be getting charged for fuel costs of district vehicles not used by your department. Check your with state association or the department of education for tools to help with this process. The New Mexico DOE, for instance, has downloadable forms on its Website that facilitate a full cost analysis.
Cutting your costs
The importance of operational thrift cannot be overstated. Cutting expenses without jeopardizing the safety and reliability of transportation is the easiest way to save money, and the dollars add up after a while. While making budget cuts is nothing new, school districts are becoming increasingly more aggressive in pursuing this option.
"A survey by our association this past spring showed that the majority of the state's school boards were at least considering cutting back on their transportation budget," says Shelley Tougas, a spokesperson for the Minnesota School Boards Association. Many states, in fact, have started to actively take measures to address the transportation funding shortages. In Massachusetts, the state education commission released guidelines for all school districts on identifying the best areas to make transportation cuts. A few other states have followed suit.
The following is a list of the most popular and potentially beneficial cost-cutting strategies to battle shrinking budgets.
1. Staggered bell times. Use fewer buses to transport more students, resulting in lower labor and equipment costs.
2. Increased walking distances. Reduce overall operational spending while also providing the opportunity to offer pay-to-ride services for those left without free bus service. This measure is controversial as it subjects students to potentially more dangerous forms of school transportation.
3. Streamlined routing. Routing software will help in the long run, but the basic object is to optimize route mileage and to ensure that bus pick-ups and drop-offs are placed efficiently.
4. Teaming up with other school districts. This can come in the form of joint use agreements between districts or simply exchanging favors. Says Joe Reed, assistant director of transportation for the School District of Palm Beach County (Fla.), "Pooling resources together will take advantage of the economy of a larger operation." This would cut down on the number of necessary supervisory positions and save money on equipment and maintenance costs.
5. Improved driver training. Although it may take a little more spending up front, better drivers will generate savings from fewer accidents and reduced liability. Insurance companies offer discounted premiums for safe operations.
6. Enhanced maintenance efficiency. Neal Abramson, director of transportation for Santa Monica-Malibu (Calif.) Unified School District, saves money by stretching the life span of tires, filters and other equipment without jeopardizing safety. "We change fluids, filters and other equipment every 6,000 miles, so extending it a little is not harmful to our fleet."
7. Recruiting parent volunteers. Through PTA conferences, board meetings and transportation recruiting efforts, recruit additional help from parents at limited or no cost. Parents can be especially helpful with office positions. Says Ken Wells, an inventor of school bus safety equipment in Milwaukie, Ore., "Parents shouldn't expect their children's safety to be the sole responsibility of the school district."
8. Contracting bus services. Privatizing one or more problematic areas of your program may result in big savings. Launi Schmutz, transportation supervisor for Washington County (Utah) Schools, says "putting at-risk kids on a contracted fleet can be worth it, rather than training staff in managing violent or other troubled behavior."
Getting state or local money
In a speech at the Southeastern States Pupil Transportation Conference in July, NASDPTS President Pete Baxter summed up the issue with the following statement: "They say money canÕt buy happiness, but I believe more money will make our industry happier and safer."
Though ultimately rewarding, the hardest action to take in the transportation budget struggle is to increase your operation's revenue through available government funding. Whether through state or local funding, earning more education dollars is the closest thing to a cure-all any operation is likely to find. Unfortunately, funding decisions are often made far from the bus yard so it takes some strong convincing to make a difference.
The first step in procuring more state and local aid is finding out who you need to contact and who needs to be involved in the request. Growing school district bureaucracies can make this more of a chore than you might expect.
Reed says that at his district the chief operating officer is the "go-to guy." Most districts also have purchasing directors, finance officers or entire budget departments. You also need the help of directors of maintenance, support services or any other related departments to put together information on where funding is lacking and why.
It doesn't hurt to be in touch with your local area chamber of commerce, the school board, superintendent and any community or state taxpayers associations. Every city, state and county operates differently, so the more people you talk to, the more you will learn about how funding is controlled in your area, and you will be better prepared in your request.
The next step is putting together a presentation. Says Tom Taylor, transportation director at Williamson County Schools in Franklin, Tenn., "To make a successful budget presentation, you must make sure to present the problem at hand, all available options and a recommended solution." Your audience must be made aware of the consequences of not approving your suggestion, he adds. But even more importantly, says Jim Moen, director of transportation for Guilford County (N.C.) Schools, you need to show them that you are fiscally responsible when doing your job, that you are efficient and effective on a daily basis. "Then, if you need to justify adding funds, you are doing so from an integrity base," he says.
Finally, an organized, informative and professionally designed presentation can be very persuasive. Says Reed, "You can be successful if you prepare necessary statistics, cite state and district reports that support your position and outline reasons based on the activity and growth of your district." A Microsoft PowerPoint format or other computerized layout is highly recommended.
Grants and other sources
An additional way to get more money for your department is to look into federal and private grants. Grants can take care of any specific budget items such as special-needs training or equipment, but they may be difficult to find.
Robinson of San Diego Unified says that, although it may cost a small fee, having a grant writer on staff or a contracted grant writer is one of the best ways to make money for your district. "It just takes someone with a creative pen to go after the money," she says.
Just as with other methods of procuring funding, winning a grant is easier if you can show that you are fiscally responsible, or better yet, if you can prove what you can return on investments. "Grantors will want to know that the program they are giving money to is going to include things like education and places at least some responsibility on those receiving the benefit," says Steve McCardell, president of McCardellWrite, a provider of grant writing services. This company, as well as others like it, offers its services for about a 5 percent cut of the grant. If you are awarded a million-dollar grant, 5 percent is a small price to pay.
Peter Grandolfo, manager of safety and special programs for Chicago Public Schools, says he receives grant money for training from Easter Seals and funding for field trips from the Regional Transit Authority. How did he come upon these funds? "I just asked," says Grandolfo. Here are some other places to search for grant money:
Many states have their own grant programs that offer funding for school transportation programs. At the federal level, more funding opportunities can be opened up through the efforts of a lobbyist. The National School Transportation Association (NSTA), for example, has its own lobbyist in Washington, D.C., working on behalf of the industry. "If we get our message together and receive enough support from transportation people around the nation, we can really increase funding through our lobbyist," says Terry Thomas, former president of NSTA.
In-house income generation
Believe it or not, transportation operations don't have to be dependent solely on taxpayer money to function efficiently. There are many in-house methods of increasing district income, each met with varying degrees of success.
At San Diego Unified, the district runs a large-scale bus resale/replacement program that has helped offset the cost of purchasing new buses while keeping the average fleet age under five years. Additionally, the program has made the school district the largest marketer of late model school buses in the western United States.
Says Richard Hanson, fleet manager, "We use private-sector practices to provide high-quality transportation at the lowest possible cost."
Selling surplus equipment will also help you up your departmentÕs income. Fuel, tires and maintenance equipment are always strong candidates for resale, while other equipment such as car seats and safety devices are also in demand. If you are unsure how to resell equipment, consider using the Internet as a resource. There are countless auction sites, some of which are specifically designed for school-related products.
For instance, in the state of Utah, many districts have turned to a Website called www.esurplusauction.com to sell their wares. According to Richard Field, director of purchasing at Jordan School District in Sandy, Utah, "The Website allows us to reach more people in more places than a live auction ever could." It also carries with it a cheaper sales commission and lower costs of marketing the equipment, he says.
Other sources of school district income include sponsorship from local businesses and vendor contributions. Bus manufacturers, which usually have more money than school districts, may help out by contributing uniforms or bus signs in exchange for the publicity they receive from use of the items. Special field trips and pay-to-ride services also earn extra income, as does offering maintenance service to other departments or outside agencies.
Constant budget maintenance
In the end, managing your budget and running an efficient program comes down to keeping your eyes open and staying on top of your finances. Meticulous budget management will allow you to spend money where it is needed most and cut it where it can be spared.
"I watch the money we spend closely at all times and even keep a small padding year-to-year to make sure we don't exceed our overall budget," says J.D. Cooper, transportation director for Jackson County Schools in Tuckerman, Ark. Cooper also recommends making sure there are emergency funds available from the school district if necessary.
Another important aspect of budget control is emphasizing a team effort in saving money. If possible, drivers, mechanics, dispatchers and all other staff should be well aware of a department's financial condition and should actively pitch in on the effort to fight any existing funding shortfalls. "We solicit cost-cutting ideas from our staff and anywhere else we can," says Reed. "Many don't work, but we will at least take a look at the idea, no matter where the information comes from."
Offering incentives for successful cost-saving suggestions from staff is one way to encourage economic cooperation. Networking with other department heads and transportation directors from outside operations may also contribute ideas for frugality. Keep up with industry news and stay in touch with business and financial publications to promote creativity and innovation with your available funds. Because smart financial management is a universal concept, cost-saving measures from practically any industry can be applied to your operation.
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