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School Bus Contractors Stuck in Traffic on Road to COVID-19 Recovery

Private school bus contractors cannot wait until the day the COVID-19 pandemic is in their rearview mirrors. Fallout from COVID-19 has tested their resilience like nothing before, revealing a systemic weakness in the industry resulting in a seismic shift that has rattle the financial dominos of everyone plugged into transportation.

What was supposed to be a two-week pause has rolled over into a 12-month hiatus at least, filled with uncertainty and financial crises for the contractors, who also predict a recovery period that may take a while, even with last month’s signing of the American Rescue Plan.

The National School Transportation Association (NSTA) calculated that school bus contractors lost $4 billion in revenue last year, and estimated that if schools don’t fully re-open they could lose another $3.75 billion this year. That financial strain has caused some drivers to lose faith in what was a stable, predictable industry they could depend on steady work every fall.

“We allowed two weeks to flatten the COVID-19 curve and two weeks turned into [12] months,” said NSTA Executive Director Curt Macysyn. “That was challenging for contractors because nothing could be done at the federal level to require school districts to pay their contractors. From our standpoint, bus payments had to be made, buses had to be houses and hypothetically, bus drivers have to be ready to drive, those that haven’t found other work or decided to remain on unemployment for the money. The system believes these continuity payments are necessary and appropriate to maintain the student transportation system.”

NTSA President John Benish, who is also the chief operating officer for Cook-Illinois Corporation in Chicago, said the driver situation worsened the longer schools remained closed. “A lot of people went on unemployment and that helped, but a lot of people got burned,” he said. “We rode it out, but it was difficult because it was so unexpected.”

NTSA and the likes of the United Motorcoach Association and the Maerican Bus Association had hoped the monetary relief was on the way with the Coronavirus Emergency Relief for Transportation Services (CERTS) Act that made its way into the $989 billion Consolidated Appropriations Act of 2021, signed into effect in late December. But instead of the original $8 billion requested, school bus contractors and affiliate commercial bus companies must divvy up the $2 billion with the passenger vessel industry. As of mid-March, the operators were still waiting details on the application program being administered by the U.S. Treasury Department.

Even with President Joe Biden’s suggestion that normalcy will return by the summer, most contractors are scrambling to continue operating in the face of plummeting revenues. They are implementing internal cost-cutting measures while working with school districts and lawmakers to gain some type of immediate financial relief and future safeguards against situations that might wreak similar havoc.

Funding formulas and contractual provisions are of paramount importance going forward, experts said, adding that settling for the status quo while waiting for something positive to happen is out of the question. State and national transportation associations have taken efforts to seek assistance for their members, even while their members struggle to pay dues back to the organizations.

“No one predicted this pandemic, but it gives us the opportunity to stand back and review the student transportation funding formulas,” said Curt Macysyn, NSTA’s executive director, suggesting that private contractors now represent up to 40 percent of the student transportation industry. “We said early on that standing pat was not an option here, so wherever you’re at or whatever you’re doing, you’ve got to be moving forward. You got to be engaging with school districts and other stakeholders to plan and take a deep dive into your own organizations.”

What they have found, however, is that some school districts will not pay for services not rendered and that many lawmakers lack the awareness to fully understand the vital role private school bus contractors play in a key subplot to what has become a nationwide education drama.

Contractors have been hit particularly hard in New York. State Sen. Mike Martucci, a former president of the New York School Bus Contractors Association, conceded that there is limited understanding of the importance of private contractors among lawmakers there, but said he hopes his unique perspective and the efforts of industry representatives will change this.

“Private bus contractors play a key role in New York’s education system,” said Martucci, who was elected to a first term in November. “Private bus companies transport more than half of New York’s 2.3 million children to and from school each day. The pandemic has significantly impacted the private school transportation industry and I believe the State of New York will have to take steps to protect and preserve the industry and the essential service it provides.”

Martucci added that a key issue is guaranteed contracts, because the pandemic has shown that a contract with a school district may not be enforceable during a state of emergency

“That means a company [could] lose all revenue for that year,” he explained “I’m sure there will be some discussion about whether or not there should be some daily guarantee even if it is not at the full rate. It’s very difficult to keep people employed when you are only anle to tell them you need them on short notice.”

Martucci said any relief efforts being considered by lawmakers would be impacted by the amount of federal aid that is approved. His suggestions for recovery include guaranteed service levels in contracts, compensation for non-student transportation services (delivering meals and laptops), and funding for personal protective equipment and vehicle accommodations for health and safety.

I do think there should be some movement toward looking at bus contracts with school districts and the impact of the pandemic, remote learning, and other things that strongly impact the ability of a bus company to have predictability in terms of revenue,” he said

Martucci’s comments were subsequently reinforced by the New York Association for Pupil Transportation’s recent call for the state legislature and Gov. Andrew Cuomo to amend the executive budget proposal to maintain the current funding formula for school districts and cover the unexpected stand-by costs incurred by student transporters during the pandemic

In a new release, NYAPT said the state’s student transporters were in limbo for much of 2020, standing by awaiting a call from the governor to resume service at a moment’s notice The result, according to the NYAPT, was that school districts and their contractor partners “experienced a number of unforeseen short and long-tern costs associated with COVID-19 that have not been fully addressed in the executive budget proposal” As both NYAPT and Martucci pointed out, these expenses include additional labor costs to clean and disinfect school buses and costs to purchase the cleaning and disinfecting solutions and equipment as well as personal protective equipment

NYAPT Executive Director David Christopher said in the news release that school transportation departments and school bus contractors did not cease operation during the COVID-19 stand-by “Instead they were busy delivering meals and instructional materials and maintaining their fleet and operations while schools were closed.”

Dan Kobussen, vice president of Kobussen Buses in Wisconsin, said his company took a double hit with the drop in revenue from his charter business as well as student transportation services Kobussen said his contract fulfillment varied from getting paid noting by some school districts to 100 percent by others.

“That was depending on the contract, depending on the school district, and depending on the individuals we were dealing with,” Kobussen said. “Wisconsin is a very district-centric state with strong local control, so the state didn’t intervene”

On the other hand, Benish said the state of Illinois and the school districts there have been relatively good to the contractors “The schools have been cooperating,” he said. “We charged them the bare minimum and they understood that if they didn’t support us, we wouldn’t be around when they went back to school.”

Benish said most school districts nationwide allowed contractors to bill services while others refused. School districts that owned their own buses paid their drivers the entire time because they are school employees, but a contractor is not a school employee.

“A lot of vendors have been hurt and it’s difficult for the associations to keep going. It will take years to climb out of this,” Benish continued. “Everybody I’ve talked to in all kinds of businesses related to yellow buses have been on the edge. The domino effect kicks in.”
Macysyn said a major challenge to implementing a financial solution is that funding formulas for school transportation vary from state to state “The educational system in this country is a checkerboard of different operations and funding mechanisms and that’s where it emanates from,” Macynsyn said.

Rolling with the Punches

Meanwhile, First Student seems to be ahead of the curve in weathering the storm created by the pandemic and appears to be poised and ready to hit the ground running when things return to normal

The largest contractor in North America has suffered similar adversity created by the pandemic alone, including driver layoffs and dealing with contractual concerns But recent initiatives such as Start Safe, a comprehensive effort to prevent the transmission of COVID-19, has helped the student transportation company maintain its readiness in anticipation of the start of school.

Claire Miller, First Student’s senior vice president, said the company’s strong market position has enable it to retain 96 percent of its 1,100 school district contracts and increase its fleet to 43,000 buses.

“Everybody in our industry has seen challenging times and we are not exception,” Miller said. “A year ago, we never envisioned we would be working in this environment and we know that’s true for all of the student transportation providers, so it’s no secret this has been a challenging time. We are fortunate enough we are continuing to weather this storm. We’re focused on growing our strong market position and as a result we’re continuing to invest in new vehicles, innovation, opportunities and technologies You could argue there is no more important time or need for this investment than now.”

Benish observed that things are looking up, however, with some relief in sight, as President Joe Biden has promised that most public schools would be reopened by this month.

“The good news is that the pendulum is swinging the other way,” Benish said. “More and more school districts are going back. A lot of districts have done all they possibly can with remote learning, but remote learning is not a long-term solution. Face-to-face instruction is needed. No interaction has been tough on kids. A lot of special needs students are regressing without the daily interaction and you can imagine how hard it is on parents who have to work. It is very frustrating for everybody and has caused a lot of mental anguish, but it’s getting better.”

“The worst is over, and it will get better, but it will take longer than I thought. Contractors will survive but it will be tough.”

Editor’s Note: As reprinted in the April 2021 issue of School Transportation News. 

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