Hurricane Adds to Concern Over Rising Fuel Costs

School districts already struggling to meet the high costs of fuel are bracing for a rising tide of red ink in the aftermath of Hurricane Katrina and the yet-untold damage it dealt to oil production along the Gulf of Mexico.

Overnight, fears of $3-per-gallon fuel for school buses has given way to nightmares of having to pay closer to $6 per gallon—as some communities have already seen—if the nation’s fuel supply is severely damaged for a long period of time.

Even worse, the Baldwin County, Ala., school district extended its storm-related closure for at least one day on Sept. 1 because there was no gasoline available for parents or school personnel to fill up their cars.

“The news is going from bad to worse,” said Michael J. Martin, the executive director of the National Association for Pupil Transportation, located in Albany, N.Y. “[The price of fuel] is the number-one issue right now in the industry.”

A survey by the Association of School Business Officials International last month found that 96 percent of more than 500 respondents said that the rising expense of fuel for bus transportation was adversely affecting their districts.

Some district officials said they feared that they would have to resort to cutting school staff positions so that buses could run.

According to the U.S. Department of Energy, diesel fuel costs were averaging $2.59 a gallon, compared with $1.87 a gallon a year ago, and about $1.50 a gallon in September, 2003.

And Hurricane Katrina, which disrupted the production of oil in the Gulf of Mexico, effectively squelched any optimism that districts will soon see relief.

“There are some districts that anticipated some increase, and budgeted for it, … but the vast majority have not,” said Anne W. Miller, the executive director of the Reston, Va.-based ASBO.

Local Impact

Even before schools in Whitley County, Ind., opened their doors last month for the new school year, the district had a big financial problem on its hands: Seventy-four percent of the money it had budgeted for bus fuel in all of 2005 had already been consumed.

And if prices spiral upwards because of Hurricane Katrina, those remaining funds will likely be spent in the first few weeks of the school year.

The 3,400-student district’s quandary is playing out in districts around the country, as officials scramble to pay the rapidly rising costs of fuel for bus transportation. Some districts are cutting routes, canceling field trips, and looking for ways to steal from other parts of their budgets to make up for their projected shortfalls.

Whitley County, a rural district north of Fort Wayne, is operating on a calendar-year budget that was written in June 2004, said its business manager, Anthony G. Zickgraf.

Although officials had factored in a small increase in fuel prices, nobody there had guessed that the cost of one gallon of diesel fuel would rise by about a dollar over the past year. And the district pays less than the average consumer because it entered into a cooperative arrangement with other local government entities to negotiate lower prices.

Prices for diesel fuel in the area averaged about $2.59 a gallon in July, up from about $2.15 a gallon in January, and are still rising.

The district is looking for ways to consolidate bus routes and will require schools to pay for any extracurricular uses, such as for trips to away football games.

“We’ve implemented a policy in which we transport students to and from school, and anything outside of that there is a fee assessed to schools,” Mr. Zickgraf said. “It’s also a cost to the athletic departments.”

Not all school districts are feeling the same pressures from rising fuel costs.

Because districts are government entities, they do not have to pay taxes on the fuel they buy. Further, many districts—especially the larger ones—buy fuel in bulk or secure fixed-rate prices for several months at a time.

But some small, rural districts, in particular, do not have that buying power. Those districts’ buses are also likely to have the most miles to travel, as the students they transport live farther apart.

Most districts are already implementing short-term solutions, such as streamlining bus routes and eliminating field trips or charging students for them, said Ms. Miller of ASBO. If districts have to look at cutting other parts of their budgets, the first places they usually target are facilities maintenance and professional development, she added.

In the ASBO survey, 57 percent of the districts reported taking measures to reduce fuel costs, such as redesigning bus routes, reducing idling time, or teaming up with other districts to buy fuel in larger quantities.

While districts are using “Band-Aid solutions” this year, Ms. Miller added, most will likely have to overhaul their budgets next year if prices continue to rise.