School & District Management

Late Arrivals, Steep Costs: Why Some Districts Ditch Third-Party Bus Companies

By Mark Lieberman — November 30, 2023 6 min read
School buses parked in Helena, Mont., ahead of the beginning of the school year on Aug. 20, 2021.
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In the late 2010s, the school buses in Worcester, Mass., were becoming a major headache for district administrators.

Parents called to complain that their children were late getting to school and returning home. But administrators themselves didn’t know why, because they couldn’t get a straight answer from the third-party vendor that was running transportation for the 23,000-student district.

Meanwhile, the costs of contracting with the vendor were getting out of hand: up 6.1 percent for the contract term between 2005 and 2010, up another 15.6 percent for the period from 2010 to 2015, and up yet another 11 percent for the 2015-to-2020 term.

A natural next step would be to consider switching vendors. But a lack of competition among potential contractors in the Worcester area meant that there were hardly any other options.

School board members and top district leaders spent years fighting over what to do. In the end, six of seven board members voted in 2021 to bring the district’s transportation operations in house—over the strong objections of the district’s then-superintendent.

The move was fraught with logistical difficulties, from acquiring a fleet of buses to adding drivers to the district payroll to finding a place to park them. But it’s led to improved bus service and saved the district $3.5 million a year, said Brian Allen, deputy superintendent of finance and operations for the Worcester district.

“In our urban community, it’s hard to walk away from that level of savings,” Allen said during a panel discussion in October at the Association of School Business Officials International conference in National Harbor, Md.

Districts nationwide are currently navigating a host of transportation-related challenges, including a shortage of workers willing to drive buses; rising costs for buses, fuel, and other transportation essentials; and fiscal pressures from the coming expiration of federal COVID relief aid.

Outside firms that manage routes and drivers for districts can prove helpful in light of these challenges. However, some districts are discovering that it’s sometimes more advantageous to bring school bus transportation that they long ago outsourced back under district management.

One reason is that, while districts often decide to contract out school bus transportation in hopes of spending less money, third-party transportation services aren’t always cheaper.

The Wales school district in Maine recently tapped a contractor to fill a gap left by a district-employed bus driver who’s out on medical leave, said Katy Grondin, superintendent of the 1,300-student district that covers three rural towns.

The school system is paying $100,000 a day to keep that bus route running, Grondin said.

“There’s no way I could hire this company to do this run for longer than maybe a month,” she said.

Those aren’t the only pitfalls districts face when working with third-party bus vendors.

Turning over district-wide bus operations to an outside company that promises to provide cheaper and more efficient services could be appealing to districts.

But service from outside providers isn’t always reliable. The Madison school board in Wisconsin recently discussed the possibility of altering its contract with a third-party provider after a slew of late buses derailed the early weeks of the school year.

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Randal Lutz, superintendent of Baldwin-Whitehall school district near Pittsburgh and a soon-to-be certified school bus driver, climbs aboard a bus prior to dismissal.
Randal Lutz, superintendent of Baldwin-Whitehall School District in Pittsburgh and soon-to-be certified school bus driver, climbs aboard a bus prior to dismissal.
Photo courtesy of Randal Lutz

At the ASBO session, Allen advised district leaders against assuming that sticking with a contractor is the only solution.

“Some school committee members said schools shouldn’t be in the transportation business,” Allen said. “But what about nutrition, custodians, maintenance—why is transportation any different?”

Districts have to do a lot of work to become transportation providers on their own

Hundreds of districts employ contractors for bus service, including in major cities like Los Angeles.

Several companies—namely, First Student, Durham, and National Express—operate school buses nationwide. Many states and regions have local companies that serve area schools.

But in some places, a dearth of options leaves districts with little room to negotiate with vendors aiming to enter contracts with districts.

That’s what happened in Worcester, Allen said. The district’s provider became increasingly unpopular among parents and district staff.

Still, the prospect of bringing transportation in house came with a fair share of skepticism. Some school board members doubted that the district would be more efficient than a private company. Others wondered whether hiring drivers directly could limit the district’s ability to tap substitute drivers from the vendor’s depots in other communities.

But the biggest challenges that arose came once the school committee approved the transition. The district signed a two-year contract with its third-party vendor in 2020. The decision to part ways with the contractor came down on Aug. 26, 2021, leaving the district slightly less than 300 days before the end of the contract to buy 165 buses, hire drivers and aides, find space to park vehicles, and seek advice from other districts.

“If that sounds like a lot of time, I can assure you that is not enough time,” Allen said.

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Photograph of a school bus driving down a road surrounded by fall foliage
E+/Getty

Allen’s team scoured the city for areas that could house a bus yard—junkyards, old factories, abandoned lots. The district eventually settled on leasing the site of a vacant manufacturing plant.

Locking in a location didn’t eliminate obstacles, though. The cost of asphalt for the new parking lot skyrocketed during the project. Supply chain issues left the district scrambling to partner with the city’s emergency management office to furnish the buses with working radios. A process to ensure that construction on the property didn’t tamper with a neighboring town’s drinking water took months to resolve with a local conservation commission.

Plus, the district had to convince drivers loyal to the private vendor that they should instead work for the district. The district partnered with a state-run hiring firm to expand the pipeline for driver candidates.

Why some districts struggle to move away from bus providers

When the concept of privatizing school bus operations was taking hold in the 1980s and 1990s, many districts sold the buses they owned to their vendors, said Roland Zullo, director of the Center for Labor and Community Studies at the University of Michigan-Dearborn.

Having dispensed with the infrastructure needed to run a fleet of buses, it meant restoring bus service under the district’s umbrella would be prohibitively expensive, said Zullo, who studies privatization of public education services.

That might have been the case in Worcester, but the district used $16.5 million in federal COVID relief aid to buy the buses it needed.

“Of all the things that came out of COVID, supply chain issues and so forth, the one thing that did help us was the use of ESSER funds,” Allen said.

The Auburn district in Maine, which Grondin led before assuming her current role in nearby Wales, proactively avoided the eventual challenge of buying back its bus fleet by retaining ownership of the fleet even when it initially outsourced transportation operations to outside vendors.

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Illustration of a bus and cars on the road, and a stop symbol.
F. Sheehan for Education Week / Getty

The district cycled through two vendors in roughly four years before returning to managing its own transportation. But Grondin believes privatization isn’t inherently an inferior option.

“It’s really the relationship you build with the company that’s working for you,” she said.

Cost savings from cutting a contractor helped one district make the switch

All told, the Worcester district is spending roughly $3.5 million a year less on transportation than it did when the contractor operated buses, Allen said.

The number of complaints the district received about bus service also dropped by 76 percent between the last year with the contractor and the first year without it, Allen said.

Some of the cost savings have gone toward raising drivers’ wages from $22 an hour to $30 an hour.

The district has also invested in new safety features and technology for buses; reduced fees charged to individual school buildings for athletic and field trips; and redistributed some of the savings to cover other district costs, including instructional materials and supplies.

Running transportation may not work for every district. But in Worcester, it’s been rewarding.

“We don’t need to make a profit,” Allen said. “We put students ahead of stakeholders.”

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