FIRST TAKE Contractual Obligations WRITTEN BY RYAN GRAY I


t’s been nearly five years since the Great Recession struck. Officially it spanned the period of late 2007 through the early summer of 2009, but, as we now know, the economic reality is things started going south years earlier, and the effects are still being felt. From late 2006 to early 2007 is when many, including school districts, nervously eyed the collapse


of the housing market and wondered when the other shoe would drop. Next came the credit crisis and collapse of the subprime mortgage industry, and school budgets along with the rest of the economy came to a grinding halt. Many other facets of the economy fell under great scrutiny, some for the first time ever. Tis gave birth to


pension reform, among other things, as well as general belt tightening for organizations large and small. Tere was a feeling among most contractors I spoke to during the recession that districts would soon be- gin to outsource out of necessity, but it never really materialized as projected. Now, all signs are pointing to renewed interest in outsourcing transportation. An industry consultant told me earlier this year that while the economy is still putt-putt-putting up the hill of recovery, many are at least feeling confident enough to “stick their head up above the wall” of the economic onslaught to test the winds of outsourcing. Tere are many reasons school districts eye the possibility of contracting out transportation services, such


as the aforementioned pensions. Ten there is the desire to reduce confusion surrounding employment liability, especially in terms of the Affordable Care Act mandate on any employer of 50 or more workers. Check out an Eric Woolson's article starting on page 46 for more on this topic. Hiring and retaining drivers can also be a concern for districts that they’d rather not have. Te McKin-


ney-Vento Homeless Assistance Act is also driving more transportation needs that districts are unable or unwilling to provide. Te list goes on. But one of the most often cited reasons I have heard is that many districts have fallen so far behind on fleet replacements that private bus companies offer the only realistic option to decrease the overall age of school buses. Tese replacements also offer districts the ability to intro- duce the latest safety, emissions and technological improvements into their communities. Still, all is not rosy for the contractors. With the slow economic recovery ongoing, districts are still watch- ing their budgets closely, and this extends to how much they’re willing to spend on transportation, whether they provide it or someone else does. It’s increasingly growing harder for private bus companies to deliver on the contract specifications because districts are demanding more. Te result is a prevailing environment of the lowest bidder winning all. But all of what, exactly? While seemingly good for the district and taxpayer, is it realistic that the growing number of expectations can be met? What’s the effect on the student riders and their parents or the bus employees who are trying to provide a safe service? Meanwhile, the ability for these companies to remain profitable is also suffering. Take into account what’s happening in Ontario, Canada. See an article on page 34 about Stock Transportation, a National Express Corporation company, walking away from a contract extension in Eastern Ottawa after negotiations with a local school board broke down. Contractors there have brought lawsuits against school boards in response to the Ministry of Education’s new “Competitive Procurement” program, and the provincial government is now also a defendant. Some say how the Ministry now funds school boards results in RFPs that restrict the ability of bus companies to charge a fair market price. What is undeniable is that increased service expecta- tions directly result in increased costs. Similar things are happening all across North America. Tose costs and causes abound for various rea-


sons, from fuel to driver wages to new bus purchases. Certainly contracted services aren’t the solution to all things, but neither is an all-or-nothing approach from districts. Both sides of the public-private partnership need to meet in the middle to determine how to smartly proceed for the benefit of all. l


10 School Transportation News June 2014


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