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School Officials Scramble To Blunt Impact of Surge in Gasoline Prices

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Surging gasoline prices are forcing school administrators across the nation to recalculate transportation budgets and dust off conservation measures last used during the oil crises of the 1970s, as unrest in the Middle East threatens to take its toll on school spending plans.

The upset in the world oil market touched off by Iraq's invasion of Kuwait and the ensuing threat of war in the Persian Gulf region quickly hit home. State and local school-transportation officials in many areas report 50 percent increases in fuel prices between summer, when they last filled their bulk tanks, and today's rate.

The rising gasoline prices--which some states estimate will cost more than $100,000 over the course of the school year for every penny increase in the average price of gas--are leading top school officials to develop requests for supplemental funding when state legislatures convene this winter.

While some fuel costs, such as heating oil for buildings, can be postponed until cold weather arrives and current supplies are exhausted, the higher price of running school buses, which often burn a gallon of fuel every five miles, is cause for immediate concern.

"We know it's going to have an impact, and we're already putting our proposal together," said Don M. Carnahan, director of pupil transportation for Washington State. School officials there already plan to request an additional $148,000 from the state for every penny rise in the average price of diesel fuel and gasoline.

School officials across the country report that gasoline is already about 20 cents to 35 cents higher than the price they had budgeted.

In South Carolina, officials estimate the price increase will cost an extra $114,000 for every penny gas prices rise, with total unbudgeted costs now estimated at $2.2 million, according to state education officials.

In Arkansas, the Pulaski County Special School District, which surrounds Little Rock, last week increased its projected transportation- fuel budget from $475,000 to $600,000. The district plans to tap its reserves for the additional $125,000.

New York State's school-transportation director said distress calls have yet to be heard from many districts, about half of which operate bus services through outside contractors. But education officials have contacted the state controller's office about reviving the fuel-price- escalation clauses used during the 1970s oil crises, according to George Davis, supervisor of New York's pupil-transportation unit.

Such arrangements require districts to pay higher prices if contractors' gas prices go beyond a predetermined ceiling.

While some transportation officials brace for the future impact of fuel-price increases, others are already planning cutbacks in services.

"Certainly, with the prices going up--and we already have a tight budget--it is just going to take more and more money away from improvements to the fleet and have a negative impact," said Steve Williams, director of the Mississippi education department's pupil-transportation branch.

In Mississippi, the price of propane, which fuels some of the state's buses, is up 40 cents since earlier this summer. Gasoline increases have been about half that, but Mr. Williams said a 15-cent increase alone translates to an extra $1.2 million in statewide operating expenses.

North Carolina's education department contracts with gas suppliers and pays the fuel bill for district school buses, which log 115,000 miles per day.

Price increases have already led the state superintendent to order conservation measures. Gasoline, which was budgeted at 64 cents per gallon, rose to 95 cents by last week, according to Norfleet Gardner, the department of public instruction's chief transportation consultant. Diesel fuel, which started the budget year at 50 cents per gallon, had risen to 87 cents.

"We're looking at about [a] $4-million [shortfall]," said Mr. Gardner, adding that at the current price, the transportation budget would fund bus service for 126 of the state's 180 school days. "We're trying to make every cut we can, but it's gotten to the point now where we just about have to park them," he said.

In a late August memorandum, North Carolina officials urged district transportation administrators to review all bus routes and stops, tune up all bus engines, and make sure parked buses were protected against gasoline theft.

Ed Carroll, transportation chief for the Guilford County School District in Greensboro, N.C., said that drivers in his district had also been told to eliminate engine warm-up, which had lasted five minutes each morning.

In Clinton, N.C., initial conservation plans have led officials to remap a handful of bus routes. Clete Sumner, transportation director for the Sampson County Board of Education, said a 5 percent cutback would have a slight effect on all aspects of the operation, from parts and maintenance to drivers' time on the job.

Fuel conservation has quickly become the main topic of driver meetings in the Rochester, N.Y., city school district, said Ward Jenkins, pupil-transportation director and president of the New York Association of Pupil Transportation.

School starts this week in the district, so gas consumption has not yet become a problem, but Mr. Jenkins said district officials were looking at a shortfall of 43,000 gallons if fuel prices remain about 30 cents above budget.

In other areas, school administrators have not yet had to adjust to rising prices. Ron Kinney, school- transportation director for California, where buses log more than 282 million miles a year--the most of any state--said the silence may be attributed to the fact that most districts are just returning to school.

"We just don't have a handle on it yet," added R.A. Bynum, Virginia's associate director for pupil transportation. Because transportation is a district function, he said, it will probably be December before the state launches an impact survey. "We all know it's fluctuating daily, so we'll see what happens and try to take a reading at midyear," he said.

Many school administrators say they are unsure how to approach the increased prices because they have no idea of what will happen next in the Middle East.

Fuel prices have stabilized slightly since the invasion of Kuwait and word that the Organization of Petroleum Exporting Countries would increase exports to make up for the loss of Kuwaiti and Iraqi oil. But the looming possibility of military action that accompanies the U.S. buildup in neighboring Saudi Arabia makes oil-price projections practically useless, according to industry observers.

"If you isolate this for the specific aspects of the Gulf crisis, over the next several weeks the vulnerability is still there and the possibility for increased prices is still there because Gulf tensions could easily come back up," said Vahan Zanoyan, senior director of the Petroleum Finance Company, an international oil and gas consulting firm.

"It's not even possible to say 'Assume the crisis is over,' because it also depends on how it ends," Mr. Zanoyan said, adding that each scenario of a resolution carries with it a different outlook for oil prices.

But even with the most favorable outcome, signs point toward fuel prices remaining higher than this summer's levels, according to David Morehead, communications vice president for the Petroleum Marketers Association of America.

"It's clear that if everything stays all right over there, prices are proboing to stay the same or drop off a little, but everyone would be very surprised if it gets back to where it was," Mr. Morehead said. "All the indicators are that the pressure on prices is going to remain fairly strong."

Even before Iraq's invasion of Kuwait, OPEC had agreed to raise the barrel-price of crude oil, he said, and new environmental regulations and the need for more U.S. refineries will contribute to increased costs for oil companies.

Unlike in the 1970s, oil supplies should remain ample, but Mr. Morehead said prices were due for an increase. "It's hard to say exactly what's going to happen, but in fact all the indicators are pointing upward rather than downward."

While the inital impact on school budgets has been on transportation, Bob Bryan, the North Carolina education department's plant-operations section chief, said that the tendency for all energy costs to rise when the price of a single source goes up should lead districts to consider the long-term implications of fuel-price increases. "There's a lot of incentive for them to save," Mr. Bryan said.

While most parts of the country will see conservation and cutbacks because of higher energy costs, oil-producing states may benefit as higher prices and increased domestic production generate increased revenue in mineral and oil taxes.

Mineral taxes contributed $26 million to Oklahoma's $1.6-billion education budget last year, according to Tom Pickens, assitant director for state aid in the Oklahoma education department's finance division. If the Gulf crisis pushes prices higher over the course of the year, Oklahoma should profit, although Mr. Pickens predicted the increased revenue "would not be a significant amount of money."

But in Wyoming, state Representative Alan Stauffer, a member of the House Revenue Committee, figures that every $1 increase in the price of a barrel of oil over the course of a year would produce $1.7 million for the state's education-foundation fund, which guarantees base funding for all districts.

In addition, Mr. Stauffer said, higher oil prices should raise local valuations on mineral and oil lands, requiring a smaller state contribution to school districts.

Officials in the Wyoming education department were unable to confirm how much the education-foundation program would profit from a specific increase in the price of a barrel of oil. But Barry Nimmo, an administrative assistant in the department's administrative-services division, said it would take at least a year for any such increase to show up in the state school budget.

Mr. Stauffer said that determining how much funding Wyoming would gain was only a matter of how long oil prices remain high. "If this is a short-term thing that lasts for a month or two, it won't make a lot of difference," he said. "But I think Wyoming will do very well."

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