Halt Government Waste? Take a Bus

November 14, 1994

For a preview of how difficult it will be to reduce waste in government spending, consider a consultant's proposal calling for competitive bidding of Carroll County's school bus routes.

Even though the current political mantra is that government should be run more like a business, non-economic considerations often prevent government agencies from realizing business-like efficiencies that would reduce costs.

As part of a performance audit of Carroll's education system, KPMG Peat Marwick, the national accounting firm, recommended awarding school bus contracts through competitive bidding. The report said that if the school system granted bus routes to the lowest bidders, it could save an estimated $1.5 million a year -- almost a 20 percent reduction in its annual transportation costs.

But even though putting bus routes out to bid would ensure the system pays a fair-market price for student transportation, bus companies, drivers and even parents have mobilized against the idea. They assert service would deteriorate and the health and safety of children would be jeopardized if bus routes were awarded to the lowest bidders.

While some sincere concerns may exist about student welfare, the real dispute is over the welfare of the 86 bus contractors who handle the system's 200 school bus routes. The current system of reimbursement is quite favorable to these bus companies. They receive a depreciation allowance from the county that equals 150 percent of the cost of their buses and their fuel and labor cost increases are passed through to the school system. As a result, the per-pupil cost of transportation jumped 5 percent last year, to $382 from $364 the year before.

If KPMG Peat Marwick is correct in its calculations, Carroll is spending about $60 more per pupil on transportation than it would in a competitive environment. That money could pay for dozens of computers or thousands of extra books in school libraries or new gym equipment. Over a 10-year period, the savings could finance the construction of an entire high school.

As with most economic decisions, there are trade-offs. Is the current system worth the extra cost? If the school board truly was bottom-line oriented, there wouldn't be any second thoughts about putting Carroll's bus routes out to bid.

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