Driving School Districts Forward

Comparing Student Transportation Service Alternatives: What’s Best For My District? In-house vs. Contracted

Cost Analysis

Comparing Costs Between In-House and Contracted Student Transportation Services

Contracted student transportation has become an increasingly attractive strategy for maximizing scarce district resources. As a proven path to cost reduction and service enhancement, a growing number of districts have chosen to partner with transportation professionals for some or all of their school transportation needs.

To fully understand the benefits of using contracted services, it is necessary to recognize and consider all costs associated with student transportation. Student transportation costs are oftentimes scattered across different budget categories or line items making them difficult to estimate. Identifying all your transportation expenses will help you realize how much you are truly spending, which may be more than you realize.

Part 1: Salaries & Wages

Salaries and wages are your largest expense. To accurately assess your wage expenditures, include all transportation related wages (supervisors/managers, full and part-time drivers, full and part time monitors/attendants, technicians, office staff, and substitutes). Add any overtime, vacation and sick/personal time. Make sure you include any shared staff; in many districts, office staff also support transportation functions. To aid this process, include an employee roster with current rates of pay and length of service.

It is also important to anticipate wage increases necessary to retain and recruit drivers. This will help you extrapolate your future wage costs, which will be useful when evaluating in-house vs. contracted transportation costs.

Part 2: Benefits

Now that you have wages, it’s time to add benefits. Research and account for health, dental, retirement, pension, 401K, tool or car allowance and other employee benefits. Incorporate participation per employee along with company and employee-paid portions.

Health and other benefit costs often continue into retirement. These may be gradually eliminated through outsourcing. Reviewing benefits is an important but onerous process. Make sure you check existing or pending labor agreements to capture all expenses. Working with your human resources department will expedite the process.

Listing individual benefits on your employee roster provides an easily referenced overview into annual costs for each existing and retired employee.

Cost savings

Districts who contract can realize up to 20% in annual cost savings.

Part 3: Training & Testing

Costs related to onboarding new employees include drug and alcohol testing, DOT records check, background check and fingerprinting. Since training and testing extends beyond the initial onboarding, ongoing training, physical exams and certification expenses also need to be included. Account for both your dedicated trainers and outsourced training personnel and materials. Indicate your current driver turnover rate and account for unfilled positions. Driver turnover elevates training and testing costs and unfilled positions mean significant future onboarding and training expenses to your district.

Part 4: Facilities And Transportation Office

Add the costs of your transportation office, bus garage and bus parking facilities/lot. In this category, you also need to include utilities, insurance, security, equipment/tools, facility lease, repairs and upkeep expenses. Any computer systems and maintenance software used for diagnostic purposes should be marked as a facility cost. Lastly, environmental disposal and testing costs should also be captured.

It’s important to include transportation office needs including the cost of replacement equipment and furniture, cell phones, internet, computer software systems - such as routing programs, and time and attendance tools.

If you choose to contract, you can sell your existing fleet for an influx of cash.

Part 5: Vehicles And Technology

Estimating equipment expenses requires a comprehensive review of the current fleet, its associated equipment and your projected needs. In this category you will include your costs for: vehicles, equipment, GPS technology, parts, fuel, insurance, maintenance, repairs, registration/title fees and other vehicle-specific expenses.

Make a list of all your current vehicles. Include the model year, number of miles and any special equipment such as air conditioning and wheelchair lifts. Review your fleet replacement cycle (i.e.: you maintain a 10- or 12-year bus age replacement cycle) and factor this into your estimated number of buses and budget you will need for the next 5 years. Note that it helps to pull a 5- year history of your parts, fuel and insurance spending to extrapolate trending costs.

Now consider your current school bus technologies and onboard equipment and identify your district/community future technology needs. These needs can include enhanced and/or additional video cameras, onboard tracking equipment, driver tablets and high-efficiency, greener vehicles. The school bus industry continues to evolve with new technologies that enhance the ride, improve safety and provide peace of mind to parents and students.

Part 6: Administrative Costs

Many departments contribute their time and services to support student transportation. Make a list of departments or personnel involved in student transportation. These will likely include payroll, labor relations and negotiations, benefits administration, legal support, and school board and state reporting. Next, estimate the amount of time each of these departments spends on student transportation. Depending on the size of your district, some of these departments may be spending a substantial amount of time and resources towards transportation which may be better spent elsewhere.

Districts that privatize their transportation save money in their budget and add time/resource efficiences in their school district operations.

Many districts benefit from controlled costs from fixed price agreements with limits to annual increases. This provides additional control since there are no surprises or hidden expenses. This is one of many reasons school districts across North America are choosing to contract their student transportation services to studenttransportation professionals. Ultimately, contracting allows the district to devote their resources, time and money to education - not transportation.

Part 7: Calculation Of District Costs

Now tally all of your calculated expenses together. This final figure gives you an understanding of your total transportation costs. You’ll find your average cost per route by dividing your total expenses into the number of routes your district operates. This number will provide you with a base for comparison to contractor costs.

Finally, check your latest transportation budget to ensure you have included all the associated cost categories. This is a final check to ensure you have captured all the related costs.

Part 8: Projection Of Next Year Expenses

Using historical data and CPI information, project your transportation expenses for the next year. Consider fluctuating fuel prices, increased fleet costs, wage increases to acquire and retain drives, and increased production time for equipment and parts.

School bus contractors are accountable to a district for a variety of key metrics, including safety, service and cost-effectiveness.

Part 9: Calculation Of Outsourcing Cost

This step is not as simple as reviewing pricing. Keep in mind each contractor’s proposal may have significant variances for items such as fleet age, number of staff, etc. While cost is a critical factor, dive deeper into each using an analysis that includes service considerations.

Service Considerations

Now that you’ve identified your true cost, consider the level of service your department is striving to provide both parents and students.

What operating challenges are you facing that prevent you from successfully delivering student transportation each day? Safety performance issues, late pick-ups and drop-offs and bus driver shortage are only a few ways that transportation issues can disrupt a student’s day. Service value is just as important to the district and community as cost.
Which Key Performance Indicators (KPIs) are most important to you and how they are measured? By comparing KPIs from your most current year to five years ago, you can prioritize the most important KPIs for your district. Think about what is working well and where there could be improvements. What are the weaknesses and risks within your current transportation system?
Which services or technologies could your district benefit from? How new is the contractor’s fleets compared to yours? What is their driver-to-administrative staff ratio, and how does it compare to yours?
How is the contractor’s safety, on-time performance, bus maintenance and state inspection and how does it compare to yours. These are just a few questions to ask when looking at contractors.
Do you have transportation leaders retiring or leaving? Many districts find this is a good time to review a contracted solution.