Municipal Financing Can Help School Districts Stretch Their Budgets While Expanding Their School Bus Fleets

Staff Writer - Daimler Truck Financial
Posted on February 1, 2020

With tightening budgets, the harsh reality is that most districts across the United States have an older fleet than they’d like and they aren’t able to fully spec their buses with the latest in state-of-the-art safety features and technologies. While the average age of most school bus fleets today is around nine years, many school districts are reporting retirement of their Type C and D buses after 16 years or more.

“Unfortunately, many districts are using a large portion of their already constrained budgets just to maintain older buses in their fleets,” said Caley Edgerly, president and CEO of Thomas Built Buses. “With limited funds to replace all of their older models, fleets are spending too much on maintenance and fuel costs on older buses. It’s a vicious cycle of trying to work within a fixed budget, which ends up costing them more.”

Luckily, instead of feeling trapped, many school districts across the country are now finding success through tax-exempt municipal financing. In the short-term, financing options like tax-exempt municipal financing are allowing school districts to immediately stretch their budgets to afford more new school buses with the specifications that matter most to them.

Here are a few success stories:

Buying New School Buses Saved School District $300,000 Annually

In 2016, a school district in Ohio was operating an aging fleet of more than 350 school buses. On average, the district budgeted to replace 10 buses per year, but the fleet was aging faster than the district could afford. With limited options, the district required a solution to revitalize their aging fleet. They hoped to increase their average annual acquisition rate from 10 buses per year to 15.

“The customer needed a unique solution, so we worked with them to develop a solution that not only met their needs but far surpassed them,” said says Keith Courtney, national sales manager at Daimler Truck Financial.

After meeting one-on-one, Daimler Truck Financial created for the district a specialized tax-exempt municipal financing program with a flexible payment structure, allowing the school district to purchase 115 new buses with a plan to finance an additional 40 to 75 buses in the coming years. Instead of chipping away at the problem year after year, the district completely revitalized their fleet and saved money along the way. How much money? In total, they were able to save approximately $300,000 annually in maintenance and fuel costs as a result of having an overall newer fleet.

Financing Actually Saved Them Money

In a recent interview, Patrick O’Malley, administrator of ancillary services at St. Charles Parish Public Schools, talked about how tax-exempt financing through a lease-purchase agreement bolstered the district’s fleet replacement plan by allowing them to acquire more buses more quickly while saving the district money. How many more buses were they able to acquire? Double the number of buses with the same annual budget.

“We’ve found that after 12 years, a school bus costs between one-and-a-half to two times more to maintain than a new bus,” O’Malley said. “In many cases, people think that financing means it will cost more money. What we have found is that it actually SAVES us money.”

Through tax-exempt financing, St. Charles Parish was able to reduce the average age of their fleet, increase their fuel mileage, decrease their parts inventory, decrease their maintenance costs and actually save money year over year. Watch this video for his complete story.

From an Aging Fleet to More Than 50 Brand New Buses on a Limited Budget
A school district in New York had a similar problem. Their fleet of 110 buses was aging and aging fast. The average age of their buses was 15 years, and the district was burdened with many school buses that were beyond their useful life and wouldn’t even pass emissions inspections.

The district didn’t know where to turn. They knew they had to replace their aging fleet quickly, but with a limited annual budget, their options were limited. Year after year, the school district had been using their annual budget to purchase as many new buses as they could afford. But at the rate that the fleet was aging, the district could not replace the school buses fast enough.

By working with their local Thomas Built Buses dealership and a representative from Daimler Truck Financial, the school district was able to replace 50 percent of their fleet in one year with brand new buses under warranty. Their budget didn’t increase, and in fact, they ended up SAVING money. How did they do it?

With a tailored federal tax-exempt lease-purchase agreement through Daimler Truck Financial, the school district refreshed their fleet with new school buses without increasing their annual budget. With low, manageable monthly payments, the solution alleviated the burden of aging school buses and even allowed the district to achieve some savings in annual fuel and maintenance costs.

“These are a few examples of how school districts are maximizing their budgets through financing,” says Keith Courtney, national sales manager at Daimler Truck Financial. “Too often we hear from customers who aren’t able to afford the latest in safety or maintenance equipment for their buses. By working collaboratively, our customers get more buses and technology with lower budgets, without having to make sacrifices on safety features or the latest innovations. Personalized, one-on-one service is key to creating a unique financing program for each customer. It’s something that helps set us apart from the competition.”

To learn more about financing for upcoming school bus purchases, contact your nearest Thomas Built dealer or visit Daimler Truck Financial.

Daimler Truck Financial is dedicated to the school bus market and has regional experts located throughout the United States to personally serve customers. Their bus financing experts work in a consultative and collaborative manner with customers and Thomas Built dealers to provide competitive, cost-effective finance programs like tax-exempt municipal financing¹.

¹ Actual rates, terms, down payment, advance, and program eligibility will be determined by Daimler Truck Financial’s credit team based on the creditworthiness of the customer. Daimler Truck Financial does not offer or endorse any tax advice, accounting advice or tax strategy to its dealers, customers or potential customers. Please consult with your tax or financial adviser for tax and accounting treatment. Subject to IRS rules.

Related Topics: cutting costs, Daimler Truck Financial, school bus replacement, school transportation, Thomas Built Buses

Be the First to Know

Get the latest news and most popular articles from SBF delivered straight to your inbox. Stay on top of the school bus industry and don't miss a thing!

We respect your data and privacy.
By clicking the submit button below, you are agreeing with Bobit Business Media’s Privacy Policy and this outlined level of consent.