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III. Summary and Explanation of Findings

This study began with two central goals. One was to simply map out the role that contractors play in the state in providing pupil transportation. A second goal was to assess the hypothesis that using contractors is more cost-effective than carrying out transportation services in-house. Central findings of the study and possible explanations for them are summarized below.

Central Findings

What role do contractors play in Ohio pupil transportation?

The role and interest in private contractors has grown since 1994. Pupils bused by contractors increased 56 percent, and districts that used some type of contracting increased 32 percent between 1994 and 1998. During this period, the number of districts that rely exclusively on contractors jumped over 50 percent. At the same time, however, the overall presence of contracting in the state remains relatively small. The most important finding was that less than 5 percent of pupils are transported by contractors and only 3 percent of districts rely primarily on contractors.

How do contracting districts differ from non-contracting districts?

Since 1994, contracting districts have tended to bus more children than non-contracting districts, and the median contracting districts drive more miles than the median non-contracting district. Moreover, while districts throughout the state use some form of contracting, those that rely exclusively on it are concentrated in the politically conservative southwest region of the state.

How do contracts compare over time and between districts?

This question was not the central focus of the study, and the empirical examination included only a few districts. First, there was not enough evidence to assess whether school districts lose bargaining power when they no longer have the ability to easily provide transportation services. In fact, a more general assessment of cost increases by district type suggests that costs for contracting districts rose at a more gradual rate than for non-contracting districts. In at least one case, a district renegotiated a lower cost with its contractor for part of the services.

A second important finding was that there was significant variation in contracts across school districts for similar services. Two districts located within similar geographic locations even had very different compensation arrangements for regular and non-routine service.

Finally, although school administrators felt at ease with their contracts, they admitted that their district was vulnerable to the market despite clauses in the contract that allowed the district to purchase the contractor’s buses at a later date. They also stressed that there were significant transaction costs associated with relying on markets. Again, since this was not the central focus of the study, a comprehensive analysis of the questions raised by the comparison of contracts was not undertaken.

Is contracting more economical when measured per pupil?

The study found no evidence that contracting districts operate at a lower cost per pupil. In fact, reports filed with the state show that during each of the five years examined, the median per-pupil costs in districts relying exclusively on contracting was significantly higher than the median per-pupil costs for districts that provide services in-house or purchase only a small amount of contracting. In addition, there was little difference in the cost per pupil between non- and partial-contracting districts. Finally, the change in the annual per-pupil cost for the median district between 1994 and 1998 was lower in contracting districts than for non-contracting districts.

Is contracting more economical when measured per mile?

As with the assessment of per pupil costs, the analysis of the cost per mile incurred by all districts that transport students or rely on contractors provided no evidence that contracting is less expensive. Indeed, the median district that relies primarily on contracting reports a significantly higher per-mile cost than the median non-contracting district. During each of the five years, the costs for contracting districts were at least 50 percent more per mile than the costs for in-house districts, ranging in difference from $0.95 to $1.16.

Is there a difference in financial burden born by districts across type?

The study finds significant differences across district types in the costs that local communities are required to pay to cover their school districts’ transportation costs. Based on expense and reimbursement reports over five years, schools that rely exclusively on contractors bear a higher percentage of their transportation operating costs than districts that provide transportation services in-house or rely only partially on contracting.

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