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August 2011

School Budget Woes Challenge Coach Operators with Student Transport Contracts

Fewer school days. No more field trips. Senior class parties canceled. School budgets across the U.S. are being squeezed more than ever, impacting motorcoach operators with school buses in their fleets and contracts with schools. However, some carriers have been able to hang on to their contracts through payment arrangements for fuel and using multiple buses on some runs. One operator has even seen its school service thrive over the past year.

Small role for motorcoaches
School service comprises about 80 percent of Lockport, N.Y.-based Grand Tours, Ridge Road Express and management company Scholastic Transportation Management Services Inc.'s (STMS) business, and the companies have seen their share of ups and downs with the market.

In early January, the companies were purchased by Student Transportation Inc. (STI) and became wholly-owned subsidiaries of STI.

STI's Ridge Road runs transportation services for the Lockport, Star point, Newfane, Barker and Royalton-Hartland districts. The carrier provides home-to-school service and out-of-district special education transportation for four additional districts. Three of those districts run their own buses, but hire the carrier for out-of-district transportation.

"It's a nice operation for them," R. Thomas Weeks, president, Ridge Road Express Inc., Grand Tours and STMS, says. "It's halfway between district-owned and a total contract. Maybe the district feels like they've got a little more control as long as they own the buses, versus a contractor, where a district turns everything over to them."

The operator only uses school buses for school service, as required by New York State law. "New York State is specific with their specs for school buses: they have to have yellow warning lights, red stoplights, stop arms, seat belts and roof hatches to mention a few things," Weeks explains.

However, Grand Tours does use motorcoaches for over-the-road middle and high school field trips to cities ranging from Washington, D.C., to Boston to Orlando, Fla.

School buses can be more lucrative than motorcoaches, which tend to operate like a retail program: on an if-come basis, Weeks says.
"Not that school buses aren't competitive, but if you know you're going to have a contractor run a school bus for a 180-day school year, that's pretty solid for borrowing money," he explains.             

However, with motorcoaches, during the recession, and when SARS hit years ago, once-popular transportation to Canada decreased tremendously.
"Matter of fact it still hasn't [rebounded], not necessarily [because of] SARS, but mostly because of passports and identification requirements," Weeks says. "In a lot of cases, Canadian work has never come back."

School budget challenges
The downside of school business, Weeks says, is that some districts are questioning the viability of their sports programs, which Ridge Road services. "How much longer will they be able to [transport] a football team, pay for uniforms and everything that goes with having athletic teams?" Weeks asks. Some districts, he adds, also are seeing declining enrollments, usually caused by people having fewer children or moving away to follow jobs.

"We used to take fourth graders to the zoo. [Now], some of those trips, if they're not funded by parents, don't [happen] anymore," Weeks says.
Additionally, many schools no longer offer summer classes. "We don't do much in large buses for summer school like we used to," Weeks says.
Some districts also are looking at bringing some special needs students in-house instead of sending them to specialty schools. That may be more likely attributed to tuition expenses than the cost of transportation, Weeks admits.

Like STI, Clearfield, Pa.-based Fullington Tours has been significantly affected by declining demand for motorcoaches for sporting events and field trips. Schools are increasingly turning to school buses instead because they are less expensive.

When Fullington was in the process of renewing school contracts, one, which they had for 20 years, put the business out for RFP, because they were notified by the state they were going to have their budget subsidy cut by $2 milion. "It came at a horrible time," Aerial Fullington Weisman, president, says. "We did shave some off [the price], so they benefited from that."
Increasingly, Fullington says, school districts are putting out RFPs to get the lowest pricing. Some schools Fullington works with have canceled their end of the year and senior class trips.

"There have been a lot of cuts. Some school districts will [have] the PTO or the Boosters will pay for it, but in a lot of cases, it's the school that's still maintaining it and they're just cutting it," Fullington says. She adds that schools also are cutting some sports programs and freezing wages.

One strategy Fullington has implemented is utilizing a "flip-flop" policy. The term refers to operators using two different buses on the same run each day — one bus in the morning and another in the afternoon, which maximizes the ridership and miles for all the school runs.

Fullington confirmed with the Pennsylvania Department of Education that the practice is legal. The carrier will begin the process this upcoming school year.

The practice will particularly benefit schools working with state formulas, but also those reporting mileage on a per diem basis.

"It drives up the amount of passengers and possibly the amount of miles for that run," Fullington explains. "You can't do it with every run, but it will increase the school's reimbursement from the state."

Fullington plans to use the "flip-flops" process with all its school contracts. "We're on a per diem with two of them, so we won't get any benefit, but we're going to do the right thing because the school will get a higher reimbursement," she says.


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