Tightening budgets have led many school districts to cut transportation costs through such undesirable actions as eliminating school bus routes, increasing student walking distances and curtailing activity trips.

Mike Murray, president and CEO of First- Group America, says that a better way to lower costs is to outsource transportation. In some cases, he says, a school bus contractor can realize savings of as much as 40 percent.

For large firms like FirstGroup America — which operates First Student, First Transit, First Services and Greyhound — economies of scale are a key advantage, allowing them to secure lower fuel and equipment costs.

Murray discussed outsourcing, regulatory changes, driver recruitment and other pupil transportation issues with SBF Executive Editor Thomas McMahon.

SBF: What do you see as the top issues in school transportation in 2009?
MIKE MURRAY: A serious concern for most school administrators, much the same as we all face during difficult economic times, is how to find creative ways to stretch limited resources. However, their unique challenge is to stay in front of economic pressures and deliver a quality education to America’s bright future. For many, this means taking advantage of the cost savings and economies of scale provided by contracted transportation.

According to the Council of Great City Schools, districts can save as much as 18 percent by outsourcing. Even more, our experience is that savings as great as 40 percent can be achieved with the correct transportation model. By contracting transportation services, school districts are able to lower costs without compromising safety and focus their resources on textbooks rather than transportation.

We also believe that it’s not enough to simply lower costs. In addition to safety, delivering world-class customer service is one of our core values. School districts need a contractor that provides expert management and superior service so they can concentrate on what they do best — educating the next generation of children.

With the Obama administration, do you foresee any potential changes that would have a significant impact on school transportation?
Changes in transportation and infrastructure are among the policy proposals the president has signaled he will tackle early in his administration. We also anticipate changes in emissions and labor policies. Obviously, the details of those policy proposals are forthcoming. At First Student, we look forward to closely tracking these and other regulations, including safety policy such as seat belts.

What effects will the EPA’s 2010 emissions standards have on First Student?
The nation’s school bus industry is turning greener as it actively works to reduce emissions through positive environmental initiatives.

The new EPA standards that call for heavy-duty trucks and buses to significantly reduce diesel emissions by the year 2010 include options that ultimately result in a 90-percent reduction in particulate matter. No question, that is a positive step.

The school bus industry has fully embraced these new standards and is working with school districts, manufacturers and government agencies to develop successful emissions reduction strategies.

Are you seeing more or fewer school districts looking into outsourcing transportation these days?
More. As I noted previously, school districts have a number of competing priorities, and transportation is only one of them. With the opportunity to lower costs by as much as 18 percent or more, we believe the school bus contracting model is best suited to help our school district customers.

Fuel prices hit record heights last summer but have plummeted since. Do you see those high prices as more of an anomaly or a glimpse of the future?
While 2008 offered up extremes, fuel prices have a long history of volatility. Our goal is to provide stability and predictability to our customers regardless of the activity in global oil markets. There are several ways we work to accomplish this goal, including purchasing fuel at scale; training our drivers and maintenance personnel in fuel efficiency techniques; and employing a hedging strategy. We are constantly looking for ways to promote sustainability and provide benefits to our customers. Thoughtfully engaging a fuel strategy is one way we can help.

Overall, have First Student branches seen increased ridership on their buses this school year?
Our ridership varied somewhat in 2008. In some cases, ridership went up where in other cases it dropped. Again, school districts are driven by their access to precious resources. For some, financial constraints require that districts reduce the number of routes. We can offer additional value for our customers by providing a sophisticated computerized route optimization program, thus making sure every dollar is stretched to capacity.

We’ve seen in the past that a tough economy can bring more people to become school bus drivers, alleviating shortages. Has First Student found that to be the case now?
Yes. We have noticed an uptick in interest and are seeing better-than-average recruitment and retention. In small pockets of the country, shortages remain. Regardless, we work to make certain that service does not suffer.

Are there any new safety-related initiatives that First Student and other FirstGroup America divisions will take on in 2009?
Safety is our business and continues to permeate every aspect of our culture. In 2009, we will continue to update and train every employee on our Injury Prevention program. Additionally, we will continue to invest in cutting-edge technologies, including installing GPS systems on every bus by 2010.

Do you think that, in general, the public understands how safe school bus transportation is?
We know from decades of research that the yellow school bus is by far the safest mode of transportation for students in getting to and from school each day. Part of our job is to make certain that parents and students get this message loud and clear. I do think we are making progress, but we still have countless opportunities to educate the public about the safety of these vehicles and the important responsibility they have to drive safely, especially around school buses.