Study Claims $200M Can be Cut from N.J. School Transportation Budget

March 1, 2019

A provocative new study claims New Jersey could cut $200 million in its annual school transportation costs. “The percentage of special needs students proved to be the strongest predictor” of costs per student, the study found.

Improvements are possible, according to the 9,500-word Garden State Initiative study released this week, by implementing several programs that have been used successfully by other states. Among these are staggering bell times, standardizing ride times, packaging bids with tier routes, combining school calendars, and implementing joint municipal-school district procurement.

The Garden State Initiative is a 501(c)3 nonprofit organization that promotes new investment, innovation, more jobs and economic opportunities in New Jersey. The study was the second in a five-part series on how the New Jersey state government can operate more efficiently and cost-effectively.

The authors said they attempted to accurately assess if substantial budget cuts or better efficiencies can be made in New Jersey’s annual transportation budget, in order to slash the transportation costs per student. The study concluded that routing policies are not remarkably different among the several states that were examined.

The study reviewed disparities across districts, and possible technology solutions that its Garden State Initiative suggests could reduce the current taxpayer burden. It also discussed key policies in several states that New Jersey could emulate in its attempts to reduce spending, especially Washington and North Carolina.

New Jersey school districts or private bus companies contract with transport nearly 750,000 students daily at an annual cost of $1.2 billion, the report found. While there was a wide range of per-pupil transportation costs, the study arrived at an average of $1,508 per bus rider, with the middle 50 percent of school districts spending between $1,160 and $3,361 per student.

But over three-dozen districts spend over $10,000 per student, with many of these variations linked to transporting students with disabilities.

The authors said the analysis shows that there is far more variation among districts that share socioeconomic characteristics, than between each socioeconomically distinct group. For example, the study found that poorer, urban districts are generally not overspending “remarkably more” than wealthier suburban districts.

“This data-driven model shows that districts with otherwise similar fundamental characteristics spend vastly different amounts on school transportation,” the authors wrote.

The report found that if every district were able to make meaningful improvement relative to where they’re starting from, they could save almost $200 million on transportation costs. “But, if every school district just spent at the expected amount predicted by their fundamental characteristics, taxpayers would save $146 million.”

REPORT FINDINGS

Student Transportation Trends Across the States

The proportion of students transported to school (nationwide) reached its height in the 1980s, when approximately six out of every 10 students were transported at public expense. This figure has slowly fallen to just under 55 percent in 2007-08 (the last year for which data was available). Federal data projects that per-pupil costs in constant 2016 dollars rose until this time but flat-lined thereafter.

Some states have achieved benefits through consolidation and leveraging economies of scale. The authors wrote that a natural example of this can be found in Maryland, where school districts collectively spent $672.5 million to transport 623,204 students.

The study found that this ridership translates to a cost of $1,079 per pupil, or $429 less per student than in New Jersey. The study determined that Prince George’s County School District outside of Washington, D.C., exhibited the highest per-pupil cost in Maryland, at $1,492 per student, roughly equivalent to the average New Jersey district.

North Carolina districts, meanwhile, collectively spent $613 million to transport over 753,000 pupils during the 2017-2018 school year, which the study authors said is equivalent to $814 per student, or just 54 percent of the per-pupil cost in New Jersey. The median North Carolina district spent $876 per student, while only two districts spent more than the New Jersey state per-pupil cost.

Transportation Expenditures & Potential Savings

With 768,953 students provided transportation or aid in lieu of transportation services, this equates to approximately $1,508 per pupil transported, or about 9 percent of the statewide median per student budgetary spend.

Other Key Findings:

Even for districts that share many of the same foundational qualities, how much they spend per student on transportation varies significantly.
The middle 50 percent of school districts spend between $1,160 and $3,361 per student transported or provided aid-in-lieu.
Unified K-12 districts spend more per student when compared to regional elementary and secondary districts.
The poorest districts spend more to transport students than wealthier ones.
Urban districts spend more per student than suburban and rural districts.
The percentage of special needs students proved to be the strongest predictor among student classifications, while the percentage of students transported out-of-district was shown to have to smallest impact among student-type variables.

“If all districts spending more than (our) model were to make policy and operational changes to meet predicted spending levels, the statewide savings would be $147 million. However, no one model is perfect,” said the Garden State Initiative study. “Naturally, smaller savings are realized by districts with (a) larger share of special needs and nonpublic students transported.”

The study made several recommendations:

Tier school opening and closing times—Staggering opening and closing times to allow transportation vehicles to be used on several routes, requiring fewer vehicles to service the same number of students.
Standardize ride-time policies for all districts participating in consolidated services—Limiting the transportation for all participants to the shortest ride-time policy of its members, could result in the inability of the agency to provide transportation effectively.
Package bids with tiered routes—This practice would prevent contractors from picking and choosing the most profitable routes, compared to those with a lower profit margin, leading to volume discounts from school bus contractors wishing to bid on the entire package.
Coordinate school calendars (Public and Nonpublic)—Consistent and uniform … start and end dates, teacher services days, improves vehicle utilization, and may enable districts to fill a route with both public and nonpublic school students.
Use municipal/school district joint bidding for maintenance, fuel, etc.—Another potential source of volume discounts.

The authors said other recommendations by the New Jersey Department of Education are operational in nature, including:

Optimizing route design—Design routes that service the largest numbers of students with the least amount of stops.
Design routes with multiple destinations—Where feasible, efficient routes that pass multiple school facilities should be leveraged to increase vehicle utilization.
Provide out of district transportation through a coordinated transportation services agency—Regional transportation services can likely further enhance the prior two recommendations, while also driving efficiencies of out-of-district busing, while providing for economies of scale.
Additionally, school districts should consider the use of subscription fees to offset transportation costs for students [who are] not otherwise eligible for transportation services where an established bus route currently exists.

Additional State Case Studies—Massachusetts and Maryland

Maryland Takeaways

Maryland’s school districts are organized regionally, primarily along county lines. Statewide, Maryland’s funding formula, purchasing procedures, and routing policies do not appear remarkably different than New Jersey’s.
One of the largest and richest counties, Montgomery, actually employs over 1,700 employees in its school Department of Transportation, maintains its own fleet of 1,300 buses, and transports 103,000 students daily.
In FY 2019, the State sent $282.6 million in transportation funding to districts. Without additional research, we cannot compare this to the total transportation spend. Though, for Montgomery County, the percentage of State aid covering the transportation budget is 39 percent. New Jersey’s largest District, Newark, by contrast, received $8.5 million in transportation aid versus a spend of $34.8 million, which is 24 percent.

Maryland Student Transportation

Based on a 2014-15 pupil transportation fact book, State funding covers nearly 38 percent of the student transportation costs. Roughly 72 percent of total enrollment was transported in that year.

Looking at a Montgomery County, Maryland, as an Example

Montgomery County Public Schools’ Department of Transportation has over 1,700 employees and over 1,300 buses with a $109 million budget. The county received $43 million in transportation aid revenue from the state.

[R]equirements for bus stops,… should be approx. 1/4 mile apart for general population transportation. For four-lane highways, students must be picked up and discharged on the side of the road in which they reside.
School vehicles may not be used for more than 12 years (some counties listed in code allowed 15 years) unless it is maintained under a state-approved preventive maintenance plan.

Massachusetts Takeaways

If the distance between a child’s residence and school exceed two miles, and the nearest school bus stop is more than one mile from the child’s residence, the Department of Elementary and Secondary Education (DESE) may require the town to provide transportation for children in grades kindergarten through six.
Some students who live below the mileage requirement can pay to access existing buses. One district charges $165 for each student who joins in this manner.
Massachusetts law appears to have a generous transportation funding policy. However, data found on the state’s [DESE] website shows that the vast majority of state funding for transportation goes towards regional school districts.
15 years ago, the Commonwealth provided one-time grants to school districts in an effort to modernize their routing procedures, by funding acquisitions of the Versatrans and/or Transfinder routing software packages.
Most districts contract out for transportation services. There is not a strong marketplace for buses in the Commonwealth, and while districts are often encouraged to procure a fleet, they typically do not have the cash on hand or a ready ability to finance the acquisition.

Massachusetts Student Transportation

The data shows that over 20 percent of transported students [in] low socioeconomic school districts, are special education and special needs students. [That rate is] far higher than [in] wealthier districts.

[N]otable variables to costs are the size of the district, the density of students transported per road mile, the number of schools to which students are transported, and the average mileage transported. Districts are notably similar [in] the typical distance transported, with general students averaging between 4.9 and 5.8 miles, [with] special education students averaging between 8.4 and 8.7 miles.

Districts of low socioeconomic status have a higher density than other districts, which helps to alleviate some cost pressures. However, these districts also average more schools to service, averaging over 6 schools per district compared to under 4 schools at wealthier districts.
Special education and special needs students constitute more than 25 percent of students bused by urban school districts, approximately two times the proportion found in suburban and rural districts. Urban districts also transport more students out-of-district, while suburban districts exhibit a notably higher rate of courtesy busing.
Rural districts are larger and less dense than their suburban and urban counterparts, with fewer schools serviced per rural school districts compared to suburban and urban districts. Surprisingly, the average distance required to transport students in the average rural school district is only minimally longer.
Secondary-only districts, comprised of multiple elementary districts each, average [covering] a much larger area than other district types. K-12 districts average more students per road mile but service more school facilities on average. Elementary districts, meanwhile, exhibit the shortest average distances transported for all student-types.