Cost-cutting overhaul won’t be quick or easy

To rein in school bus costs, Hawaii should improve its procurement process, increase oversight and beef up staff training, says a consultant’s report that warns such a major overhaul won’t be easy, fast or pain-free.

In a 69-page report released Friday, Maryland-based consultant Management Partnership Services also said Hawaii’s per-student expense for school bus services far exceeds national norms — and that skyrocketing costs cannot be explained by inflation alone.

Not including administrative or other ancillary costs, the state spends about $86,500 per active bus route annually — or about $1,750 for every student rider — which is "substantially higher than most operations with a traditional route structure similar to Hawaii," the study said.

Bringing down costs, MPS concluded, will require a "large and complex" redesign of the Department of Education’s student transportation services branch.

"The first required step is one of commitment to a long-term program of change," the report said. "No stakeholder in this process should be under any illusion that this will be a short or simple process."

Ray L’Heureux, assistant superintendent of the DOE Office of School Facilities and Support Services, said the report provides a "blueprint" for the state as it looks to tackle the high costs of providing school bus service.

"It’s not going to be easy, and it’s not going to be overnight, but there’s also a clear path forward," he said, adding that within two years he wants to have improved operations and decreased costs.

"My first challenge is to arrest the escalating costs," he said. "The entire system needs to be brought to its knees and then built back up."

To bring down spending on school bus services, the report recommends:

» Streamlining and improving procurement rules, processes and contracting practices, which the consultant said are "not aligned to the distinctiveness of the operating environment, best industry practices or the competitive market in Hawaii."

MPS said by improving how it bids and awards contracts, the DOE can encourage competition, clarify expectations and improve contract management.

» Improving how the student transportation services branch is organized, in part to incorporate increased monitoring and oversight of services.

» Offering training for DOE student transportation services staff on such issues as contract management and oversight.

» Modernizing student transportation operations, with new software and other technological tools to provide continually updated and easily accessible information on route and ridership trends.

Notably, the consultant said the state should continue to contract for bus services, rather than own and operate a fleet of buses.

Some 35,000 students statewide ride school buses. The state contracts with 12 bus companies, which operate about 700 buses total, the study said.

The price tag for student bus service in the 2011-12 school year was $77 million, according to an earlier report by the state auditor — up from $29 million in the 2005-06 school year.

Lawmakers have for years raised concerns about the ballooning costs of student transportation, and the issue generated increased scrutiny this summer after the state cut school bus services to about 2,300 students to address a budget shortfall.

State Sen. Jill Tokuda, chairwoman of the Senate Education Committee, said the MPS report pre­sents concrete solutions for reining in spending on student transportation while also tackling a host of operational issues.

MPS and department officials will discuss the report’s findings at a Board of Education meeting on Tuesday, followed by a legislative briefing Wednesday.

"This really puts in place a good path forward in terms of some real solid recommendations for short- and long-term strategies on how we revamp and overhaul our student transportation system," Tokuda said. "I wish we had this a few years (ago), but I’m happy that we have it now."

John Radcliffe, lobbyist for the Hawaii School Bus Association, pointed out that the report makes clear the state must engage contractors as school bus operations are revamped, and explain why changes are needed.

"The bus operators are motivated to provide good service," Radcliffe said in an email. "They have been doing their best to provide quality service throughout this period of time — and the result has been, and continues to be, the safest and best way to get to and from school."

The findings in the consultant’s report were similar to those in a state audit of student transportation services, released in August, that concluded poor state planning and oversight allowed the cost of school bus services to skyrocket.

The audit also raised questions about "highly suspicious anti-competitive practices" among bus contract bidders, and pointed out the DOE does not systematically review services for potential cost efficiencies or have readily available even basic information on its school bus system — such as daily ridership statistics — that would lead to informed decisions.

In its report, MPS noted that over a seven-year period there were 30 instances where the average price per day doubled when a contract for a route or region was rebid or renewed.

The consultant’s report also compared Hawaii’s student transportation operations and costs with seven mainland school districts, all of which had lower per-student costs than Hawaii.

The Spokane, Wash., public school district, for example, which serves about 6,800 riders, has an annual cost of $1,395 per student, $355 less than Hawaii.

Chesterfield County in Virginia, which serves about 41,000 student riders, has an annual cost per student of $679.

The state paid MPS $109,000 to conduct the study over a two-month period.

DOE student transportation report