Privatizing Busing Carries Benefits Beyond Finances.

Many school districts now facing budget crises are considering contracting with private companies that specialize in non-educational services such as student transportation.

The major issues that superintendents confront when considering contracted services are cost, service, responsiveness, maintenance, and the actual process involved with contracting for services.

In a recent survey commissioned by the Oregon Student Transportation Association and conducted by KPMG/Peat Marwick, school districts that had converted from district-operated to contractor-operated transportation systems in Oregon and Washington were asked about these key issues. The results indicated the following:

* Cost. A majority of the districts (61 percent) found the cost of contractor-operated services somewhat or much lower than district-operated service. Another 15 percent found the costs about the same.

* Service. Most districts indicated their service characteristics did not change significantly after conversion with area served and student walking distances remaining the same. Eighty-six percent maintained the same bell schedule.

* Responsiveness. The vast majority (79 percent) indicated that contracted service generally allows for sufficient oversight and accountability. Most school districts (69 percent) said contractor service was more responsive to district needs and of higher quality than district-operated service.

* Maintenance. Bus maintenance improved significantly with contractor-operated service, according to 69 percent of the districts. Also, 77 percent of the districts found that contractor-operated buses were much newer or slightly newer than district buses.

Reduced time and energy expended on student transportation is one main reason for school districts to seek quality providers for their program needs. The complex requirements of a transportation system, such as hiring and training qualified drivers, bus maintenance, system management, and routing changes, make administering these programs a major commitment for district personnel.

Personnel allocation and time dedicated to transportation were issues not addressed directly by the survey. The responsibility for contract oversight of a pupil transportation provider usually can be incorporated into a position that already exists within the district, reducing the amount of time that superintendents and other personnel spend on transportation issues.

Once a district decides to explore contracting for pupil transportation, how does it select the right contractor? The KPMG/Peat Marwick study collected information regarding the district's experience with the contracting process. Some major findings are:

* Competitive bidding. Eighty-seven percent of the districts used competitive bids to select contractors, and almost all districts received two or three bids for the service.

* Evaluation. Quality, safety, timeliness, and management staff qualifications were the basis for evaluation for all of the districts surveyed.

* Bus ownership. All school districts indicated they owned their pupil transportation equipment before contracting for service, but 94 percent transferred fleet ownership to the contractor or some other entity.

Privatization of public sector services will play a major role in school districts needing to evaluate their systems for cost savings. The portion dedicated to services such as transportation may seem insignificant compared with the scope of the entire district budget, but when the actual full costs and intangible factors are considered, private companies often offer districts benefits that go beyond dollar savings.

Contracting for non-educational services is not a new concept. Many districts have used private contractors for years in maintenance, food service, and pupil transportation. Removing these areas from direct supervision and responsibility allows administrators to concentrate on their main job--educating the district's students.