A Microcosm of Common Problems

STN surveys the nation’s school bus contractors
on the state of the industry

No matter how you cut it, money is tied to every one of the problems facing school bus contractors, as shown in the results of STN’s 2008 Contractor’s Survey. Whether it be a result of state budget cuts, the ever-rising/always problematic fuel prices or the impending costs tied to installing seat belts, many contractors are feeling the associated pinch.

State Budget Trickle-Down Effect
Already known by many and highlighted at a recent conference of school administration officials, school budget cuts are affecting every step of the educational process. For some states, reducing or eliminating pupil transportation altogether is a more favorable option to cutting money from the classroom. Contractors have seen a number of negative effects associated with this state-level rationing.

Most companies reported that they have seen reductions in extra-curricular trips and the re-arranging of routes. Others complained of the loss of pay increases, an overall shrinkage of contracts (which sometimes means stretching the life of the vehicles), and confusing consultants.

“The school district hired a consultant and cut two routes from our fleet. Then two routes were added back because of the number of students. Now the district is saying they are over budget for transportation and want us to cut miles,” explained a contractor from Minnesota.

In a number of states, school districts are trying to be as conservative as possible when it come to student transport. Schools are lumping together their sport teams when driving them to competitions in the same area, cutting transport to after-school and summer programs, and sometimes making parents pony up a few dollars for they kids to ride the bus. One respondent wrote that the school district was taking longer to pay its tab. While many are currently experiencing similar changes to their contracts with school districts, others are readying themselves for modifications to upcoming bids.

“No concrete plans have developed thus far. [There is] more of a concern now prompting discussions on how to consolidate runs, etc.,” answered a contractor from Idaho.

Inflated Fuel Costs
Everyone has the same “not again” reaction every time they pull into the gas station and see that the per gallon price has jumped another five or 10 cents. Imagine owning a fleet of 50, 500 or even 5,000 vehicles with fuel tanks that need to be filled every day — that nickel or dime per gallon turns into a daily shock to the system.

Fred DiGiovanni, president of Island Charter, Inc., in Staten Island, N.Y., believes that if the price of diesel continues to rise, it could mean the end of some businesses.

“Fuel costs are going to be the reason for companies to go out of business, and you will see the larger companies get bigger by taking over the smaller companies,” wrote DiGiovanni.

“Finally something has overtaken driver retention as the number one issue that being fuel cost,” responded a business owner from central Pennsylvania. “The rising cost of fuel is becoming unbearable to the contractors and has to be addressed ether at the local or state level. With our company being in the transportation business for the past 60 years, this is truly one of the most stressful with trying to balance the budget.”

Some companies include escalation clauses within their contract as a way to cover fuel price jumps during the school year. Thirty-seven percent of the contractors reported they pay a set amount for fuel, with districts covering overages, while 15 percent use the opposite tactic. The remaining half of responses were closely divided between either the district or contractor covering all fuel costs.

“In New Jersey, the contractor absorbs any fuel increases during the school year. During the summer, we can either accept the state set contract renewal increase for the following year (2.89 percent for 2008-2009) or have the district rebid their work and gamble on getting it back,” replied Jim Hager Jr. , president of James Hager Jr. Inc., out of Flemington, N.J.

Fuel Alternatives
To combat fuel prices, regular preventative maintenance of buses was the number one strategy employed by our respondents, 88 percent to be exact. Reduced idle times came in very close second with 87 percent, while driver training and consolidation of routes finished off the top four spots. Last place was held by what many hope is the future of transportation in every industry, alternative fuels.

Of the 20 percent who answered that they were either researching or currently using alternative fuels, for the majority (80 percent) biodiesel was both the quickest and least expensive answer. Plug-in hybrid-electrics made up 12 percent of the responses, while electric and propane only elicited 6 percent of the vote. Compressed Natural Gas (CNG), which has become popular in western states such as California due to air quality district subsidies, came in last place with a whopping zero percent.

Some Things Never Change...
When asked for some forecasts of the major issues of the upcoming school year, two answers was almost universal — driver retention and wages. With business either stalling or dropping for some companies, wage increases sometimes follow suit. State legislation, including possible mandatory seat belt usage, was closely followed by some companies, while others are dealing with “sky-rocketing equipment costs,” some related to new equipment being installed on vehicles like GPS or the cost of “environmental engines.”

Business in every sector are seeing daily changes to their bottom line that are related to issues shared across the board. For contractors and many of the other industries, the current economic status has had a visible affect on the way they are running their companies and bidding future contracts.