Contracting SC bus operations could be costly

COLUMBIA - For months on the campaign trail, Nikki Haley touted privatizing South Carolina's school bus fleet as one possibility for saving money. But some experts say the switch could end up costing more and invite something the Republican governor says she wants to keep out: unions.


Privatizing the school bus fleet is an idea that was idled after scrutiny by a legislative study committee in 2004-2005 under then-Gov. Mark Sanford. Haley revived the idea last year as an example of how she would trim the budget as the state confronts an $830 million budget shortfall. She now pushes it as about something more - and she has the ear of new state schools chief Mick Zais.

Even if it doesn't save a penny, South Carolina's schoolchildren deserve newer buses while the education agency focuses on the core task of education, Haley said.

"Government just doesn't need to be in the school bus maintenance business," she argued. "Every other state in the country privatizes their school bus system."

In fact, South Carolina is an anomaly, the only U.S. state to own and maintain a statewide school bus fleet. All told, it keeps 5,100 buses on the road daily, wracking up 80 million miles a year.

But no state has a statewide contract for school bus service. Elsewhere, states leave school bus operations up to their districts, and most run their fleets in-house, said Michael Martin, executive director of New York-based National Association for Pupil Transportation.

North Carolina, the most similar to South Carolina, pays to replace old buses but delivers them to districts to own, operate and maintain, though the state provides their funding, officials say.

Across South Carolina, local property taxes foot most of the fleet's operating costs.

On average, only 40 percent of the cost of transporting students to and from schools comes from the state. The state supplies the buses and fuel for state-approved routes, but each district's responsibilities include employing bus drivers and routing buses.

Districts are already free to outsource their responsibilities. Only two of 85 do so - Beaufort and Charleston counties - and officials there tout it as successfully improving service. Both contract with Illinois-based Durham School Services, their third company since 1996.

"We're happy with the service," said Katie McClure, Charleston County transportation director. "They have a monthly report card. Principals rate them."

The state's largest school district, Greenville County, considered outsourcing but decided against it determining it would cost more in the end, said spokeswoman Susan Clarke.

Beaufort County's operations director insists the district saves money though he can't say how much. Terry Dingle adds that the district can also leave matters like driver training and certification and monitoring the regulations up to the experts. However, a consultant for the district found in 2007 that it would spend up to $820,000 less by bringing the operations back in-house.

Charleston County privatized because of difficulty in hiring and keeping bus drivers, mainly over low pay. Drivers earn more now, but savings come from not paying for drivers' health care and retirement benefits, or for lawsuit liability, McClure said.

Officials there say they don't know whether they ultimately save or spend more. But a 2005 report by the privatization study committee said Charleston County was then spending nearly $8 million on transportation, compared to less than $4 million before outsourcing.

Part of the added cost is paying for someone else to handle payroll and other tasks once handled in-house.

Several years ago, bus drivers in both districts opted to join the Teamsters union. State law doesn't allow government workers to unionize but drivers for a private company can.

"We upped their wages. Turnover's not nearly as great now," said L.D. Fletcher, president of Teamsters local 509. "When you have turnover, you have chaos. Kids might be late."

While drivers in neither district have struck, the threat loomed in Beaufort County in 2007 during contract talks.

Under their contracts, drivers earn between $10.50 and $19.25 per hour in Beaufort County, and $12 to $19 in Charleston County. Statewide, wages vary, based on competition and what districts can afford. In some rural districts, pay averages $9 an hour.

Fletcher expects drivers in more districts will unionize under privatization. Drivers are already calling him, he said.

The state also has some experience with privatizing its part.

In response to Sanford's push, the state launched a pilot program in 2008 at a school bus shop in Mount Pleasant. The winning contractor underestimated the cost of maintaining the area's buses, and the state had to renegotiate the contract last year to keep the company from going under, Don Tudor, state's transportation director, said last month.

The state spent about $780,000 on the 90 buses last fiscal year, or about $200,000 more then the state would've spent in-house, he said. He noted the company's mechanics earn nearly double the hourly rate of state workers.

So far Haley has given no details of how she might privatize on a wider scale.

Meanwhile, Sen. Greg Ryberg, R-Aiken, who was on the 2004-05 study committee, insists there will be long-term savings by bringing in new buses that cost less to keep running.

South Carolina's bus fleet is among the nation's oldest, averaging 13 years per vehicle compared with seven years nationally. Officials say the average South Carolina bus odometer reading is 195,000 miles, and 26 buses top 500,000 miles.

Denis Gallager, CEO of New Jersey-based Student Transportation, said South Carolina stands to benefit by letting private contractors provide newer, safer buses the state lacks capital to purchase.

His is the nation's third-largest student busing company and set up an office in the state last year and has been meeting with Haley.

Under South Carolina's own "cash for clunkers" program, he said, the state would get a one-time infusion of cash by selling its fleet and bus shop properties to contractors who want the business.

He does not recommend a statewide contract. He suggests the state let companies deal directly with districts. The cost of replacing old buses the state had allotted to each would be figured into their contracts' price long-term.

"The state can't continue to put the lives of kids in jeopardy here all the time with such an old fleet," he insisted.




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