HomeSpecial ReportsThe Evolution of Contracted Transportation Decisions

The Evolution of Contracted Transportation Decisions

One school district embraces the traditional model of using a private bus company while another chooses the increasingly popular electrification-as-a-service model.

The decision to outsource transportation operations isn’t taken lightly. Over half of 120 transportation directors responding to a recent magazine survey stated that they do not contract out any part of their transportation operations. However, amid the driver shortage and ever-increasing costs, some districts have transitioned to a third-party contractor, either in the traditional sense or to meet the new era of today’s specific transportation needs.

Farwell Area Schools in Michigan took the leap in 2019 to contract out with a third-party company, the district was previously running all operations in-house. Debbie Schomisch, transportation director, said the school board decided in the Spring of 2019 that it wanted to privatize. A big deciding factor was that the cost of retirement benefits took a sizable jump, as well as the rising cost of purchasing buses. After an RFP process, the private company, Auxilio Services out of Cincinnati, Ohio, started in July that same year.

Schomisch shared one of her initial concerns was a decline in the level of service. However, she noted that Auxilio Services hired all the district’s bus drivers, so the same faces remained behind the wheel for the students. Plus, the drivers received $2 an hour raises, something they would not have received if the district didn’t go private. Routes were kept the same the first year, but have been cut each subsequent year because of the driver shortage. This was possible due to fuller buses and a decreased student enrollment.

There were other changes, she added. An issue that arose was drivers lost their state retirement benefits. “The district was great because I had three drivers that were within two years of being vested,” she explained, adding that Farwell allowed them to continue working at the district in the kitchen so they could qualify.

Schomisch explained that Auxilio Services employees shadowed the transportation department for the first couple of weeks to see how things were being run. She noted that Farwell started leasing its buses in 2014. There were an initial 12 leased buses in the fleet at the time it outsourced with three remaining buses owned by the district. During the transition, the district covered the costs of their buses and the company covered theirs. As bus leases expired, Auxilio Services either brought in new buses or purchased the remaining leased buses to join the contractor’s fleet.

“To the public, the transition looked seamless,” Schomisch said. Since the switch, she said operations have been good, adding that it helps that she still works for the district and can serve as the liaison between the district and bus company.

“The district knows that I have their best interests in the forefront all the time,” she said. “I think that makes it easier on the school board and the superintendent. I also take good care of my drivers. I want to make sure that they get what they need to make their jobs as smooth as possible. It does not matter that they work for the private company, they are still mine. I have gone to bat for them with the private company to get them pay increases and make sure that we are competitive with surrounding districts.”

Driver wages have risen about $6 since Farwell made the transition to go private in 2019. In 2018, prior to going private, Schomish said the transportation budget was $1.139 million. For the 2022-2023 school year, the budget dropped to $775,000.

Meanwhile, Charlotte-Mecklenburg Schools in North Carolina opted for a non-traditional contract that is becoming more common because of school bus electrification efforts. Adam Johnson the executive director of transportation, said the North Carolina Department of Public Instruction approved Highland Electric Fleet’s request to reach out to districts across the state to gauge interest in electricity and partnering.

Highland and Charlotte-Mecklenburg began talking in April 2021, which started an over a year-long process of contract iterations developed by both legal teams. The contract was nailed down to cover infrastructure, support of the buses, maintenance, charging stations and charging software, to name a few. “It really took that long for everyone to settle on and come to an agreement on how the contract would look,” Johnson explained.

He added that Highland is not purchasing the buses, like it does for other school district customers, so Charlotte-Mecklenburg retains ownership if the contract is not renewed. The first of the district’s three electric buses ordered was delivered last month. But charging infrastructure was not completed, at this report, with a portable charger used for the time being. Two more buses will arrive by June, and the infrastructure is expected to be completed in July. All three buses are expected to run routes on the first day of school in August.

Charlotte-Mecklenburg received grant funding for the first three buses, offset by a district investment. However, the district was also just awarded 27 additional buses by the U.S. Environmental Protection Agency Clean School Bus Program grant, and the state will be making up the cost differences on those buses.

“Highland will still be responsible for maintenance and then there’s a performance contract,” Johnson added, explaining that the contract promises a charged bus to run every day. “So [if a bus does] not run, and we have to use a spare bus, we get reimbursed for the use of one of our spare buses in order to run the route because the electric bus is not available and not working.”

Additionally, Highland covers the electric bill, the charging software, and all infrastructure costs. Johnson added that because of his district size (1,100 school buses), there’s going to be savings going with a third-party for its electric needs, especially up front in terms of the infrastructure.

He noted that the size of the district was one of the reasons for contracting
with Highland. “We have so many moving parts that taking on that level of construction and logistics of getting everything in place to make it successful. As well as the funding you would really need to kind of plan forward to have a large deployment of electric buses,” he shared. “It just really was not something that the district could sustain. So that kind of a solution where Highland is offering essentially a turnkey product, definitely was of interest to us.”

The district is a mixed fleet of propane and diesel, but Johnson said he’s looking forward to seeing how the EVs perform. “I really want to see how these first three work and how Highland supports the buses and certainly how the vendors support the buses,” he said, adding that he’s also looking forward to the next 27 buses arriving next year. “If it is successful, I certainly see that as a benefit to a cleaner bus and hopefully, less maintenance for technicians but certainly a cleaner bus for the drivers and students.”

Editor’s Note: As reprinted in the April 2024 issue of School Transportation News.

Related: Federal Resources Available to Help Fleets Plan for School Bus Electrification
Related: Consulting: Understanding Fleet Electrification Needs
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