Grand Rapids Public Schools Contracts Transportation to Save

David Wegbreit | Assistant Editor

In October, Michigan school districts were still waiting.

The state had yet to finalize its 2007-2008 budget and still had a $1.75 billion deficit at the time of publication. The temporary budget passed to keep the government running did not include the monthly district payments, on which some schools relied. Some were confident that districts would be paid eventually. They might even get an expected per pupil spending instruct. But those who ran districts knew they had to look at how they spent money in anticipation of the next budgetary crisis.

As districts battened down the hatches, they might have considered the example of Grand Rapids Public Schools.

The district, 70 miles west of Lansing, saved an estimated $18 million over five years by contracting its pupil transportation services to Dean Transportation, including approximately $5 million from selling its 162-bus fleet, according to district Chief Financial Officer Lisa Freiburger.

Compared to the school’s overall budget, the savings are small. Last year, the district spent $12.35 million, or around 5.45 percent of its $216 million budget, on transporting 7,294 students to and from school each day.

But with the majority of Grand Rapids’ revenue coming from the state, contracting resources like school transportation makes financial sense.

“It’s something we’ve been forced to look at in order to keep scarce resources going into the classroom,” Freiburger said.

This year, Grand Rapids Public Schools entered its third year working with Dean Transportation, a contractor with a 50-year history in Michigan. Of its 800 school buses, nearly 330 operate in the western part of the state.

From an operational standpoint, a contractor-run system isn’t too different from a district-run system, according to Don Sinke, the director of transportation for Dean in Grand Rapids. Before he ran the Grand Rapids operation, Sinke spent 32 years working in the Kenowa Hills Public Schools transportation department, also in Grand Rapids.

“We all have a budget we have to work under. The laws and regulations are all the same,” he said.

Just like district-run operations in the state, Dean Transportation must contend with higher fuel prices and increased vehicle costs. This year, Dean cut the number of new vehicles it purchased to 50 from an average of 75 to 100. Dean Transportation CEO Kellie Dean said he, too, feels the pinch of Michigan’s tightening purse strings.

“The state of Michigan is the biggest challenge we’re facing right now,” he added.
Grand Rapids is by far the exception rather than the rule. The vast majority the 798 school districts in Michigan own their bus fleets. According to Dean, only around 10 percent of Michigan’s 15,000 school buses are currently contractor-owned. Of these, nearly half are owned by Dean Transportation,

According to Bill Tousley, National Association for Pupil Transportation president-elect, while Dean has grown, the total number of districts with contracted services has not changed significantly.

Tousley, who is also the director of transportation for Farmington Public Schools, 25 miles northwest of Detroit, said districts are more likely to look at consolidating services or sharing resources with neighboring districts as required by a subsection of the stalled state aid package for schools.

The only impediments to this are school districts tendencies for territorialism, he noted.

To take advantage of the efficiencies of scale, small districts could hand more of their services to these intermediate districts, which could in turn contract these services. Dean provides 150 special needs buses to Kent Intermediate District, the regional educational service agency that provides services to 20 public and non-public school districts, including Grand Rapids. According to Dean, this accounts for about half of the intermediate district’s special needs services.

Paring down services in Michigan can be generally difficult. State law requires that, if schools offer transportation, they must offer transportation to all students that live more than a 1.5 miles from school. This means that districts looking to save money cannot independently decide to increase the maximum walking distance to 1.75 miles.

Tousley, who worked for Dean Transportation for a number of years, appreciates the work the company has done, especially for the special needs community. Still, he and the Michigan Association for Pupil Transportation, for which he is the treasurer, encourage districts to look at their finances before requesting bids.

“In some instances, contracting out bus services might be the best fit, in others it might not.”

For his part, Tousley was unphased by Michigan’s economic troubles. This will be the fourth state fiscal storm he’s weathered during a 30-year career in pupil transportation in Michigan and he’s confident that the state pupil transportation community — contracted and district-run — will pull through once again.

“We always seem to survive somehow.”