Outsourcing is a successful strategy for solving a variety of transportation problems. This article offers ideas that program managers and transportation coordinators can use to evaluate their cost of transportation. For example, the article suggests that partnering with a private school bus company whose expertise is pupil transportation allows the program staff to concentrate on their primary function of educating children.
Conversion and Outsourcing
Outsourcing has proved successful in almost all cases where schools have partnered with private companies to provide transportation. While maintaining control over transportation through contract stipulations, school administrators who convert to contracted transportation are able to redirect both energies and resources to their core function, education.
The reasons that districts consider contracted transportation vary, but often fall into one of the following categories:
- The district fleet is aged, and funding is not available to upgrade it
- New equipment regulations and safety or environmental innovations make new buses desirable, but the district replacement schedule does not allow for rapid turnover of the fleet
- Transportation cost increases have outpaced funding
- Economies of scale are not always available and costs are out of line with similar districts
- System inefficiencies have resulted in overextended resources and scheduling difficulties
- Federal, state, or administrative changes and additional responsibilities (redistricting, addition of interdistrict magnet schools, parental choice prerogatives) challenge the system
- Administrative headaches (dealing with parents, employee absenteeism, drug and alcohol testing, mandated paperwork) require an inordinate share of administrators' time and attention
Outsourcing can solve any and all of these problems. Private contractors whose primary business is pupil transportation have a single focus: to provide school bus service in the most efficient and cost-effective way possible while maintaining the highest levels of safety and reliable service. Just as school districts are experts at providing education, private school bus companies are experts at providing transportation.
Through contracting, a school district can upgrade or completely replace an aging fleet with new buses equipped as the district chooses (within the boundaries of state law) without making a capital investment. It can control transportation costs and accurately predict those costs through the life of the contract. It can protect current employees' wages and benefits through contract specifications or reduce inflated employee costs by allowing the contractor to use market standards.
Contractors have expertise in planning, routing, and scheduling that often results in more efficient service and lower costs. In many cases, they can take advantage of economies of scale, coordinated services, shared facilities, and dedicated personnel to improve both efficiency and the bottom line.
When a district compares its current costs to the cost of contracted transportation, it is important to recognize all expenses. In addition to the obvious direct costs of driver and mechanic wages and benefits, vehicles and parts, maintenance, fuel, insurance, garage and parking facilities, there are indirect or hidden costs that also must be considered. Many times, expenses that are related to transportation are included in another department's budget or in general administration, or are simply overlooked. These might include payroll taxes, clerical and support services, utilities, legal fees, fuel tank testing and repair, workers' compensation premiums and losses, depreciation, office supplies, or hazardous materials disposal. In addition, outsourcing frees up capital for investment in other areas, and may provide revenue from leasing land or buildings for bus parking, maintenance, and terminal offices.
A change as significant as outsourcing transportation does not always occur easily. It requires advance preparation, diplomacy, and sensitivity to those who will be affected by the change—drivers and other personnel, parents, members of the board of education, and taxpayers. Pupil transportation contractors are aware of the concerns of the stakeholders and know that a full understanding of the process is imperative.
Boards of education are most concerned with maintaining control over transportation. This is easily accomplished through contract specifications, including detailed requirements for equipment, personnel and service, and enforcement provisions. Furthermore, a district that is dissatisfied with a contractor can change service providers. This competition aspect encourages high levels of service and efficiency among contractors.
Driver resistance is probably the most difficult barrier to overcome. Drivers mistakenly worry that outsourcing means their jobs are at risk. In fact, contractors view the district's drivers as their most valuable asset. Drivers' experience and goodwill in the community are invaluable to the contractor, who will hope to capitalize on those assets. A district can assure that drivers maintain current levels of wages and benefits by writing those specifications into the contract. In addition, drivers often benefit from the opportunity to pick up extra work driving charters or other coordinated transportation for the contractor, and in some states from the ability to collect unemployment compensation during school vacation periods. In many cases, drivers benefit in more subtle ways as well, through more professional training and more direct influence on operations.
Once the parties fully understand the advantages of outsourcing, they rarely reverse course. It is highly unusual for a district that has contracted transportation to take that function back in house.
Outsourcing is a successful strategy for solving a variety of transportation problems. Partnering with a private school bus company whose expertise is pupil transportation allows the school administration to concentrate on their primary function, educating students, and at the same time provides service which is safe, efficient, and cost-effective.
© 2005 National School Transportation Association
Resource Type: Article
Audience: Directors and Managers
Last Updated: March 6, 2020