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End of the line for bus drivers?


District seeks bids for transportation services



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May 05, 2010 - Now that custodial services have been privatized, Oxford Schools is looking to outsource its busing as well.

On April 30, Requests for Proposals (RFPs) were sent to five companies, headquartered both in and out of state, that provide student transportation services, according to Tim Loock, assistant superintendent of business and operations.

"Districts all over the state are doing RFPs for these services because of the budget difficulties we're having," he said. "Like every company that's trying to stay in business, we're trying to look for ways to reduce costs and still provide service. This is one way to do that."

The district is still facing a potential $1.7 million deficit for the 2010-11 school year. That's down from the original $4.8 million deficit projection.

Potential bidders for busing include Durham School Services (Warrenville, Illinois), First Student (Cincinnati, Ohio), Dean Transportation (Lansing), One Button Services (Cincinnati, Ohio) and ServiCar of Michigan (Royal Oak).

"There's not many companies that do full-service transportation," Loock said.

He noted that the union representing 45 of the district's 48 transportation employees was also given an RFP.

"We need to treat them (the union) like a vendor now in those situations," Loock said.

Four of the five companies attended a non-mandatory pre-bid meeting on May 5.

The bids are due back Wednesday, May 19. Interviews are expected to be conducted the week of May 24. Results and analysis of the bids would be presented to the school board for discussion at its Monday, June 7 meeting. The board is expected to make a decision at its Monday, June 14 meeting.

"Whether we can get everything done and still make that deadline remains to be seen," Loock said. "That's what we're shooting for right now."

Because there are so many variables involved with student busing, it's difficult to calculate the estimated savings of privatization prior to receiving actual bids.

"The number we're using right now for projected savings is based on other school districts that I've talked to or gotten information from," Loock said. "The typical reduction in costs, once they contract transportation, is usually in the 15-18 percent range."

Given Oxford's annual transportation budget is approximately $2 million, a 15 percent reduction would equal about $300,000.

"That's (the figure) we're using as a potential savings in transportation," Loock said. "(Once) we get bids back and see what the numbers are, then we'll have either some support for $300,000 or whatever it turns out to be . . . Without the bids, we don't have something to point to."

The district budgeted $2.257 million for transportation in the current school year and spent $2.063 million on busing in 2008-09.

One of the benefits of privatization is that the district would no longer be required to pay benefits for transportation employees.

Right now, 25 bus drivers who work at least 26 hours a week receive health insurance. Of those, 15 drivers pay 15 percent of their premiums.

Twenty-six drivers receive dental benefits, of which 23 pay 15 percent of the premiums. Twenty-eight drivers receive vision benefits, of which 25 pay 15 percent of the premiums.

"The benefit package (with a private company) is not going to be as rich as the benefit package they typically have with a school district, particularly as it pertains to the retirement system," Loock said. "It's just the way it is. Schools are starting to catch up to the rest of the world in that respect."

Regardless of how many hours they work, all district transportation employees receive retirement benefits. The district currently pays 16.94 percent into a state retirement system for every dollar the employees earn.

"Those (private) companies don't have an almost 17 percent retirement rate burden that they have to pay on every dollar of payroll," Loock said. "Right off the bat, there's a savings there."

With regard to the 15-18 percent savings privatization yielded for other districts, Loock noted "ironically, that's just about the same rate as the retirement rate."

In terms of wages, Loock indicated there's not much difference between public and private school bus drivers.

"It's not uncommon for the drivers to make the same and in some cases, a little bit more per hour with the (private) company," he said.

Besides benefits, privatizing transportation services could save the district money in terms of having to purchase new buses.

"We haven't bought a bus in five years, at least," Loock said. "Our fleet is getting older. We might be able to freshen the fleet up by having a contractor come in with new buses as opposed to us having to replace buses to bring the fleet average up."

Currently, the average age of a school bus in Oxford is 10 years old. The oldest bus was purchased in 1995 and the newest in 2005.

"That's an awfully expensive proposition, to buy buses or lease buses," he noted. "A new bus is probably $80,000 for a typical, (general education) bus. You don't have to buy too many of those to start talking some real money."

How the district addresses bus replacement is a "big factor in considering working with a contractor." Options include having the private contractor either use district buses or provide its own vehicles.

"The bid is structured to give us pricing both ways or even a hybrid where they might use some of our buses and bring in a number of new vehicles, so that the average age of the fleet is brought up significantly," Loock said. "That's part of the analysis once the bids come back which makes more sense, selling the fleet to them, or sell half and they bring in half, and over time as buses need to be replaced, they buy the rest."

Loock noted the existing buses, as well as the transportation garage off Lakeville Road, could even be leased to a private contractor.

"There's a lot of ways to approach it and it also makes the analysis that much more complicated," he said.

Traditionally, Loock said most Michigan school districts have owned and operated their own transportation services. But there are exceptions. "Petoskey, for example, they've never operated their own buses," he said. "There's some small contractor up there that's provided their transportation forever."

Others include Grand Rapids Public Schools, which is served by Dean Transportation; the Pontiac school district, a customer of First Student for "many, many years;" and Birmingham Public Schools served by Durham School Services.

"(Private transportation) just hasn't been as prevalent in Michigan, but more and more districts are making that decision," Loock said.

According to a 2009 survey conducted by the Midland-based Mackinac Center for Public Policy, only 38 of the state's 551 school districts use a private contractor for transportation services.

Outside Michigan, private school buses seem to be more common. "I know there are other states where private contracting is the norm for student transportation," Loock said. "Pennsylvania comes to mind as a state where the majority of the transportation is provided through private contractors. There are a lot of states where that's typical." hours a week have 100 percent of their Blue Cross Blue Shield health insurance premiums paid by the school district.

"The benefit package (with a private company) is not going to be as rich as the benefit package they have typically have with a school district, particularly as it pertains to the retirement system," Loock said. "It's just the way it is. Schools are starting to catch up to the rest of the world in that respect."

Regardless of how many hours they work, all district transportation employees receive retirement benefits. The district currently pays 16.94 percent into a state retirement system for every dollar the employees earn.

"Those (private) companies don't have an almost 17 percent retirement rate burden that they have to pay on every dollar of payroll," Loock said. "Right off the bat there's a savings there."

With regard to the 15-18 percent savings privatization yielded for other district, Loock noted "ironically, that's just about the same rate as the retirement rate."

In terms of wages, the assistant superintendent indicated there's much much different between public and private school bus drivers.

"It's not uncommon for the drivers to make the same and in some cases, a little bit more per hour with the company," he said.

Besides benefits, privatizing transportation services could save the district money in terms of having to purchase new buses.

"Our fleet is getting older," Loock said. "We might be able to freshen the fleet up by having a contractor come in with new buses as opposed to us having to replace buses to bring the fleet average up."

"That's an awfully expensive proposition to buy buses or lease buses," he noted. "A new bus is probably $80,000 for a typical, (general eduation) bus. You don't have to buy too many of those to start talking some real money."

How the district addresses bus replacement is a "big factor in considering working with a contractor."

Options include having the private contractor either use district buses or provide its own vehicles.

"The bid is structured to give us pricing both ways or even a hyrbid where they might use some of our buses and bring in a number of new vehicles, so that the average age of the fleet is brought up significantly," Loock said. "That's part of the analysis once the bids come back which makes more sense, selling the fleet to them or sell half and they bring in half, and over time as buses need to be replaced, they buy the rest."

Loock noted the existing buses could even be leased to the private contractor.

"There's a lot of ways to approach it and it also makes the analysis that much more complicated," he said.

Traditionally in Michigan, Loock said most school districts have owned and operated their own transportation services. But there are a exceptions.

"Petoskey, for example, they've never operated their own buses," he said. "There's some small contractor up there that's provided their transportation forever."

Others include Grand Rapids Public Schools, which is served by Dean Transportation; the Pontiac school district, a customer of First Student for "many, many years;" and Birmingham Public Schools served by Durham School Services.

"(Privatized transportation) just hasn't been as prevalent in Michigan, but more and more districts are making that decision," Loock said.

According to a 2009 survey conducted by the Midland-based Mackinac Center for Public Policy, only 38 of the state's 551 school districts use a private contractor for transportation services.

Outside Michigan, private school buses seems to be more common.

"I know there are other states where private contracting is the norm for student transportation," Loock said. "Pennsylvania comes to mind as a state where the majority of the transportation is provided through private contractors. There are a lot of states where that's typical."

CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.
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