With many school districts facing deficits, some may look to private contractors for transportation services as the state gives a higher reimbursement for those who do. But one study says that decision may end up costing districts in the long run.
The Keystone Research Center in Harrisburg conducted the study that was released this week and looks at the price comparison between self-transporting school districts and those who use private contractors. The authors said that in order to save taxpayers money, districts should move away from contractors and use their own busing services - if all state schools would go from contracted to non-contracted transportation, taxpayers would save about $78 million.
"There's a rapid jump up in spending because of private contracting," said Dr. Mark Price, Keystone's labor economist and co-author of the study.
Price explained the study, which looks at data from 1986 to 2008, looks to answer the question, "Does the use of private contractors drive up the total spending?" From the findings of the study, he said the answer is yes.
As Price explained, schools are given reimbursements "to offset some of the costs of transportation."
And although there is a higher cost, districts rarely see an initial cost increase because the state offers a higher reimbursement rate for contracted transportation, the study said. But in reality if going from non-contracted services to fully contracted, districts paid an extra $224,000 in 2008. The state also sees an increase of about $232,000 in costs when a district changes from self-transported to contracted transportation services.
"(Private contractors) cost more so the state should stop encouraging it," said Dr. Stephen Herzenberg, economist and executive director of Keystone.
The study found that 72 percent of state school districts used contracted transportation in 2008, up from 62 percent in 1986.
Herzenberg, who also co-authored the study, said in most cases districts "break even" after they receive the higher reimbursement from the state. The only attractive aspect of contracting services is the initial revenue the district receives by selling its buses.
But the study says contractors usually are "low-balling" their bids, which see an increase after the contract is signed.
"Once in place, contractors have leverage," Herzenberg said.
He went on to explain that once a district sells its fleet of buses, it must repurchase them if it wishes to go back to a self-transporting system - a cost many districts don't want. School districts also see increased costs because of contractor profits, increased rates and the cost for districts to monitor the drivers.
He also said that a lack of competition allows contractors to ask for higher rates.
The study offered a few suggested actions in order to help the state and school districts.
"We did recommend new technical assistance," Herzenberg said.
The technical assistance would be a non-profit organization set up by the state and would give districts advice on transportation and offer loans for them to purchase buses.
Herzenberg said the study will help to inform schools before making a choice on transportation.
"Some of them aren't knowledgeable and don't know they're being taken to the cleaners," Herzenberg said.
The authors conclude that with the state being in a financial time where it is looking to save wherever possible, it should consider having districts use their own buses.
"We think there should be an even playing field," Herzenberg said, "and the state should be efficient with taxpayers' money."
