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March 14, 2013  |   Comments (3)   |   Post a comment

Contractors on school busing now, and what lies ahead

In this roundtable, executives from several school bus companies discuss driver shortage, the potential for growth in the contractor market this year, and what impact legislative issues — at the national and state levels — will have on their business, and on the industry as a whole.

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Do you anticipate seeing more school districts contracting out their bus service this year?   
BENISH: Yes, I do anticipate more districts contracting out their bus service this year. We have already seen many districts all over the country take a look at this possibility. I want to make myself clear that outsourcing is not for every school district, but if a school district’s transportation budget is in the red, it makes sense for someone from the outside to take a look. Most of the time, the drivers and staff stay in place and the districts can still save a significant amount of money. Specific factors that have made outsourcing more popular are the shortage of states’ reimbursements to the individual school districts. Also, districts have not been able to purchase new equipment, and this has snowballed into a real problem in which some districts are operating very old equipment, therefore doubling and tripling their costs.
John Corrado is president of Suffolk Transportation Service Inc. in Bay Shore, N.Y.
<p>John Corrado is president of Suffolk Transportation Service Inc. in Bay Shore, N.Y.</p>

CORRADO: I do not see a big push to contract services out, but the New York School Bus Contractors Association is supporting legislation that would allow districts that save money through outsourcing to keep those savings in their budgets for up to five years. This could help if it passes. I truly hope that districts begin to consider using the private industry when they see fit. There are safety resources that we bring to the table and certain operating efficiencies that they could take advantage of.  

DEAN: We continue to see interest in contracting for student transportation for both equipment and labor needs. Throughout the Midwest, schools continue to struggle with the need for new equipment. As a contractor, we are supplementing the needs of districts by providing extra trips and routes that cannot be covered due to labor or fleet shortages. We expect these types of hybrid relationships to continue to rise in the coming years.

The decline in school finances has also increased interest in evaluating contracted transportation services. In Michigan, Gov. Rick Snyder has appropriated money for school districts that meet certain “best practices,” including investigating contracted school transportation services. School districts in Michigan have used this tool to evaluate their current transportation department and establish market benchmarks against a third-party service. In this analysis process, many schools have chosen to contract for transportation services in Michigan, while others have used these bids to reshape their district-run department.

DUKE: We’ve seen an ongoing increase in the number of districts going out to bid for transportation services. Over a three-year period, the number of bids our organization engaged grew 16%, and the number of states with conversion activity grew within a two-year period from 14 to 21 states. The triggers to motivate districts have been consistent: financial, operational and the desire for administrators to spend less time on transportation issues.

How has the Patient Protection and Affordable Health Care Act (aka “Obama Care”) impacted your operation, or how do you expect it will impact your operation?
CORRADO: Most operators offer some type of health insurance coverage. However, due to the part-time nature of the job and the part-time wage levels, many drivers who need insurance do not take it if they have to make a weekly contribution. My guess is that this amounts to approximately 30% of our drivers. Once we are paying for health insurance for this group in 2014, we will need a 4% to 5% increase in our pricing to cover this cost increase.  

  • Patrick Dean is director of development at Dean Transportation Inc. in Lansing, Mich.
    <p>Patrick Dean is director of development at Dean Transportation Inc. in Lansing, Mich.</p>
    DEAN: Since we currently offer health insurance options, the current structure of the Patient Protection and Affordable Health Care Act may not have a major impact on our operations, and we expect our current healthcare coverage options to continue. However, we recognize that for our industry as a whole, the biggest challenge will be not only interpreting how the act will be implemented in 2014 as currently devised, but continuing to stay abreast of ongoing changes in the act’s definitions and final rules. There are many significant unknowns with regard to the federal reporting requirements, full-time employee tracking and standards of coverage, which make it challenging to forecast future expenses. … There is certainly the possibility that the industry will see significant increases in transportation employment costs in 2014.

GATTO: “Obama Care” will increase our costs. We have contracts that have prices locked in for several years, such that we are starting to request reopeners on most of our school district contracts and driver union contracts to address the impact of [the] costs of Obama Care. In the long run, the costs will be passed along to taxpayers through higher bus prices.

Patrick Vaughan is chief operating officer of Student Transportation Inc. in Wall, N.J.
<p>Patrick Vaughan is chief operating officer of Student Transportation Inc. in Wall, N.J.</p>

VAUGHAN: Alongside new regulations and initiatives in the healthcare industry, Student Transportation of America is in the process of rolling out several health and wellness initiatives across the company. While we cannot control what regulations go in effect, we can help our staff with access to more health resources on and off the job. We anticipate the benefits to our company and employees being reduced absenteeism, reduced healthcare costs, and it promotes healthier lifestyles.

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Its amazing how almost all of these contractor think in some part that driver retention is important, as well as benefits. The school district that I have worked for for 21 years, is just the opposite. You get punished the longer you stay there. Wages...the longer you are there, the less raise you get. I recieved a $0.07 raise, while the driver below me recieved $0.34. I have missed only 3 days of work in 21 years and 0 days in the past 11. there is no incentive pay for doing a good job...and, they now are in the process of taking away the incentive not to use our sick days. Before we could accumulate 54 days. When we accumulated the 54, any days beyond that (9 pre year)get paid back to you at 1/2 pay. So basically I would get paid for 4.5 days. But under their new plan, you can still accumulater the 54 days, but anything over that you will only get $25/day reimbusemnet. Well there have been many days that i have driven sick, becasue the incentive to get the extra pay for the unused sick days, but only $25/day, i cant afford to not take them...I guess so much for perfect attendance... There really is no ryme or reason for the way they pay us, and it doesent really make sense. Going back to the pay raise. I dont have any problem with them giving me a $0.07 raise...if they said...."im sorry, this is all you get this year becasue we dont have any money." but when they give a drive $0.07 and another one $0.34, that I have a problem with. It has been that way for years, and no one will listen. So clearly, in the district I drive for, they are not concernecd with driver retention.

Andre Waichulaitis    |    Mar 22, 2013 04:28 AM

We can not keep drivers because our district treats them with no respect. The administrators do not seem to care that they cannot find people to replace us. This week they had two routes with no drivers and had to try to piece together routes. Their ads in the paper bring applicants in, but most all of them do not pass the background or license checks. Oh well, I hope to retire in a few years and could care less if there's no driver to replace me!

KabinKitty    |    Mar 21, 2013 08:00 AM

Thats because some contractors don't want to pay enough to drive

John    |    Mar 14, 2013 04:58 PM

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