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A Fact ‘Funding’ Mission

Student transporters nationwide are doing what they can to reverse the trend of their operations being chronically short-changed for years by their school districts and by their state lawmakers when it comes to funding their departments, but it’s still a daunting task.

Some student transportation directors and consultants appear to be fighting an uphill battle in their efforts to secure the financial respect student transportation deserves in the educational process. Transportation directors are caught in a Catch-22 of trying to demonstrate that their operations are cost effective while crusading for more dollars to cover operational costs, maintenance, facilities and salaries.

Funding formulas for either state aid or reimbursement vary from state to state and can be based on variables such as average daily ridership, student population density, and overall enrollment. Some states fund school districts based on a percentage of their demonstrated transportation costs, and some states base the reimbursement on a dollar amount established by set criteria. In addition to the varying funding models, there is a potpourri of different state requirements bus manufacturers must adhere to, based on individual orders, which drives up the cost of buses. No state covers a district’s total cost, and percentages and dollar amounts are capped.

For example, West Virginia reimburses its county school districts at a range of 87.5 percent up to 95 percent. But this is deceptive because transportation operations are still struggling. Arizona, meanwhile, caps its funding at $2.3 million per district, while Texas offers no state funding because school districts there are independent, operating as their own governmental agencies and relying heavily on voter support for funding. In Ohio, the minimum transportation state share percentage increases from 33.33 percent in fiscal year 2023 to 37.5 percent the following year and 41.67 percent after that. Districts there still need to raise local funds or identify other ways to pay the bills.

Last year, California, whose support for school districts hovered around 33 percent or less since the 1980s, gave student transporters some relief when a new law raised the maximum reimbursements to 60 percent. However, school districts must demonstrate the need for the funding by submitting annual reports of their expenditures by April 1 of each year. The reports must have community input and be approved by the school board in a public meeting.

Tim Purvis, principal consultant for Pupil Transportation Information (PTI), said California has been near the bottom in funding pupil transportation across the country since 1983.

“There have been several attempts to increase funding, but most of them failed,” Purvis said. “Last year, Assembly Bill 181 passed and brought in some of the heaviest funding for education in California that the state has ever seen. Buried within that was funding specifically tagged for pupil transportation in the state. It resulted in giving school districts the ability in this 2022-2023 fiscal cycle to get funded up to 60 percent of their operational expense. I’ve been involved with about 250 of the state’s 1,021 school districts and I’ve never seen a school district get more than 60 percent.”

Purvis said school districts should make sure they include all transportation-related expenses in their report, including those that may be listed under special education or other areas to keep operation costs down.

“The reason we have cautioned client school districts is that when the auditors come out to validate your 60 percent reimbursement, they will only be looking at the 3600-function code because that’s where transportation operation expenses should fall,” Purvis explained. “Maybe you have special ed students that need program access that fall outside regular district transportation. Maybe you’re hiring a school shuttle or van service to transport a child, or maybe you have a school bus aide, but you track their cost under special ed expenses and you do that to keep your transportation costs down. Now all of a sudden, we have this adrenalin shot in the arm of all this cash coming in, to the tune of 60 percent and you want to make sure you get your fair share.”

Tim Ammon, vice president of the Center for Effective School Operations consulting and management firm, added that school districts nationwide must remember that funding is a value-driven process.

“One of the things I think is lost is that people forget that the funding process is inherently value-based and a value judgment,” Ammon said. “And one of the things transportation folks need to be able to do is to communicate and demonstrate the value of transportation to the district if they are going to have any chance at all to advocate for the same or more funding.”

Creativity is the Word
Ammon is among those who advise transportation directors to get creative in their searches for solutions and not rely on state legislatures to fix their problems.

“Knowing your state funding is important. It is critical. But also recognizing that there’s other funding sources like Medicaid, title programs and grants, these are things folks have become familiar with now because there are more sources of that across the industry,” he explained. “It is also important that when thinking about the optimization of their transportation system, one of the things they need to be thinking about is how does it optimize relative to all of these different funding sources.”

Ammon said the Medicaid funding is done on a reimbursement basis and can be used for operations. “You could also look at grant funding for purchase of assets, the myriad funds around clean diesel and electric buses, that’s certainly an opportunity,” he added. “But there are also other grants available such as Clean Cities and there are Safe Routes to School Grants. Then there are the title programs where available funds often go uncollected. Transportation should go after that funding.”

An alternative funding source is what transportation officials in the Agua Fria Union High School District in Avondale, Arizona pursued after a bond issue that included six new buses failed last November. Agua Fria Transportation Director Peggie Overton led the district’s search efforts. “When the bond failed, we had to look at some alternative ways of purchasing buses to make sure we had enough buses this year,” Overton explained. “Transportation was a very small piece of that bond.”

She said that through the Arizona Bus Center, a dealer that features Thomas Built Buses, the district learned that Daimler Truck North America instituted a financing mechanism to help school districts purchase school buses. “That was the route that we took,” Overton said. “After a lot of meetings and research to determine that it would be advantageous to the school district and compliant with state regulations, the board ultimately approved it.”

Overton noted that a bonus of the transaction was that the dealer already had five of the 84-passenger buses on hand. “So, we were not in a situation where we had to order buses and wait a year for delivery,” she said. “They were already spec’d out well and the price point was amazing. The price for school buses has increased significantly, so if you can get a new 84-passenger bus for under $200,000 that’s pretty unheard of today. We were able to make that happen.”

Meanwhile, David Baber, state director of transportation for the West Virginia Department of Education, said his department is stressing the same point. “We’re telling school districts the same thing, that they have to be creative, and we do everything we can to help them achieve that goal,” he said. “They’re trying to be creative and are trying to do different things. I don’t know that any have canceled runs, but most of them are doubling up runs. Some are using alternative means of transportation such as public transportation. We do have one county that helps their homeless students with public transportation in areas where they can’t offer a typical bus service.”

Baber pointed out that the state’s funding formula of 87.5 percent to 95 percent sounds good, but transportation directors are still struggling to provide for their students and pay the bills.

“I’m not going to say they’re not struggling because they are,” Baber said. “The funding for today’s cost doesn’t cut it. The funding formula and the amount of funding hasn’t really changed for many years, so with costs going up, nothing else has changed.”

He added that school districts are making up the difference with local tax money, which can also be problematic because the tax base in the state’s many counties is often inadequate. “There is no giant industry anymore, so the tax base is not there. They’re strapped and they’re making it up anyway they can, which again has led most of them to look at their bus routes and downsize as they can,” he continued. “They do that through attrition, when somebody retires, they look at the bus routes to see if they can change anything or consolidate.”

Baber said in the past, the state offered a program that rewarded the use of biodiesel fuel blends by returning 100 percent of the money spent by the district. “That went away several years ago,” he noted.

The Endgame

While Ammon encourages school districts to seek alternative funding sources, he also cautions them to know the limits of funding. “I think a higher level of understanding of funding is really going to become critical for transportation folks because I’m of the opinion that all of the largesse that’s come down over the last few years is going to go away and we’ll be back in an era of doing more with less, and so we’re going to have to be better at understanding where all that money comes from,” he warned.

“Understanding not only where the money comes from but how you can use it, I think is really important. School districts cannot depend solely on state funding for transportation. They can’t anymore and it’s going to become increasingly obvious that they can’t because, I’m of the opinion that within the next couple of fiscal cycles we’re [going to] see some notable constraints on school funding in general and transportation funding specifically.

“I think we’re going to see budget cuts across states because of all of the ways the federal money was used,” Ammon continued. “And I think in many instances one-time money was used for ongoing expenses and at some point, we’re going to have to figure how we’re going to pay for all those things and there isn’t going to be enough money to do it so we’re going to have to make cuts.”

Editor’s Note: As reprinted in the April 2023 issue of School Transportation News.

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