A Purchasing Perfect Storm

May 11, 2026

Long row of yellow school buses lined up in the parking lot ready to pick up students — File photo.

At this writing, the U.S. Environmental Protection Agency had yet to announce the final award round for the Clean School Bus Program. At the same time, could the school bus industry be bracing for the end of the Diesel Emissions Reduction Act?

Since 2008, DERA has been responsible for replacing over 8,500 older operating school buses with cleaner alternatives. The Trump administration last month released its fiscal year 2027 budget request and asked Congress to cut over 52 percent of EPA’s discretionary funding. Included is a call on Congress to cancel DERA, which for nearly two decades has funneled hundreds of millions of dollars to the school bus industry via national grants, rebates and Tribal government awards.

Any attempt to end DERA at least in the Oval Office is unlikely. Congress still must pass its own budget appropriations. And a bipartisan DERA reauthorization bill has been in the works for the past year, which would extend the program at $100 million a year through fiscal year 2029. But the attempt demonstrates ongoing scrutiny over fiscal spending and, more aptly, funding alternative energy.

The $5 billion Clean School Bus Program was going to sunset one way or another after this year. But placing DERA funding in the crosshairs is the last headwind the industry needs on school bus replacements, a consultant shared with me. Another consultant noted that about a decade ago at an industry conference he asked the audience how willing they would be to continue to buy electric school buses if DERA funding dried up. Not one hand raised.

The question remains a good one today, since the electric school bus cost discrepancy is still two or three times that of diesel school buses. It was never attractive to pay upwards of $475,000 for a large electric school bus, and that’s before factoring in the charging infrastructure. If the Clean School Bus Program and DERA both end, where is the incentive to go green outside of a handful of states?

The cost of everything has gone up. At STN EXPO East in North Carolina earlier this spring, an attendee told me new diesel school bus purchases were running over $150,000 each. That includes a surcharge of $12,000 to $20,000 to pay for the warranties on the 2027-compliant engines. (The EPA continues to re-evaluate and finalize a new proposed Phase 3 GHG rule, but OEMs have already completed all necessary R&D and manufacturing to comply with the low NOx emissions levels.)

The Iran war and blockage on the Strait of Hormuz have also created substantial uncertainty for district budgets. While locking in bulk diesel prices creates insulation from price volatility, a gallon was selling at 30-percent premium after the war began. Meanwhile, April’s national average at-the-pump price exceeded $5.40 per gallon. In California, it’s well over $7 a gallon.

We also learned at STN EXPO East that the price of propane also increased, but by about 20 cents per gallon, when the fuel was already a fraction of the cost of diesel. Despite that silver lining, the question remains, how many propane school buses can and will be made available to the market?

School districts and bus companies cannot take for granted federal funds to help them purchase new school buses. Instead, already-strapped local and state budgets will be relied upon. School transportation professionals and their leaders need to increasingly make the case with voters that new school buses are necessary to keep up with service levels.

At the same time, however, public school enrollments are falling. The Brookings Institute found that U.S. public schools lost 1.2 million students from 2019 to 2023, and they aren’t coming back. Parents are homeschooling their children. They are sending them to charter and private schools. And increasingly they as well as school districts are using non-school bus vehicles to do it.

How willing will voters be to approve millions of more dollars via bond measures and levies for school bus purchases? Student transportation leaders can make no assumptions.

Simply put, funding is not keeping pace with rising costs. In seeking to proactively understand and manage all these intersecting challenges, student transporters will need to lean heavily into optimizing and rethinking service models, routing and resource allocation to maintain service levels with fewer resources.

Editor’s Note: As reprinted from the May 2026 issue of School Transportation News.