A report commissioned by the Amalgamated Transit Union Local 1181, one of six area school-bus driver unions, claims there is no evidence behind more than $310 million in total savings purported by Mayor Michael Bloomberg that is tied to new contracts that do not include previous protections for thousands of employees.
Instead, the report claims the new plan will increase costs and will shift them to other governmental agencies, a move that could actually cost the city hundreds of millions more than under the previous contract.
The New York City Department of Education put new school bus contracts minus Employee Protection Plans, or EPPs, out to bid earlier this year for the first time in more than three decades as it attempted to rein in what it considered to be runaway costs that are among the highest in the nation. It said $100 million alone would be saved over the past year while continuing to guarantee drivers eight hours a day.
But the union said that the EPP-less contracts, which are absent provisions the likes of medical insurance, bonuses and seniority, leaves incoming Mayor Bill de Blasio with several challenges, namely: lost efficiencies from replacing the existing workforce with inexperienced, less efficient workers; escalating overhead costs with accelerated turnover in the work force; and the costs of supporting displaced workers shifted onto city and other governmental agencies.
The new contract for the 2014-2015 school year, while promising $42 million in annual savings based on efficiencies and fewer employee provisions, resulted in the bankruptcy and year-end closing of national contractor Atlantic Express after a union no-vote.
The new report, prepared by San Francisco-based PBI Associates, says Bloomberg’s proposals do not take into account losses in bus service and the quality of skilled, experienced workers. It recommends that City Comptroller John C. Liu “scrutinize all costs and harmful consequences” for all student riders, including increased driver turnover and resulting increases in liability, small claims and insurance premiums tied to a less experienced and skilled driver pool.
Economist Peter Donohue of PBI, who wrote the report for the Local 1181, said his own peer review found an average annual labor turnover of 26 percent for low-paying education jobs, such as school bus drivers and attendants. He also cited a Bureau of National Affairs statistic that the costs of laying off an employee and replacing him or her with a less experienced worker can cost between 1.5 and 2.5 times the annual salary. Under the new contracts, Donohue estimated that the number of workers displaced would rise in 2014 to 2,800 from 2,000 this past year and to 6,000 by 2015. During that span, he said the city faces nearly $200 million in total turnover costs tied to recruitment, pre-employment screening and interviews, training costs, and more.
Donohue’s analysis also claims that EPP-less contracts could also shift costs exceeding $370.5 million onto other governmental programs such as Medicaid for laid-off workers who don’t have medical insurance, worker’s compensation, food stamps, and unemployment benefits.
The NYC DOE responded that the report distorts the reality of the claimed cost savings.
“The last time bus routes were bid out was around the time the Walkman was invented in the 1970s — and the resulting monopolies over those routes drove city busing costs to the highest of any city in the nation,” said district spokesman Devon Puglia in a statement. “Contrary to the erroneous conclusions made in this commissioned report, by bidding out work we have been able to put hundreds of millions of dollars back into classrooms. The budget with these savings has been validated by the Independent Budget Office, and this is nothing more than an attempt to distort reality.”