1. Hempfield Area School District
Transportation Outsource

2. Success!
On October 1, 2010, the Hempfield Area SD for the first time in its history, outsourced bus transportation services
71 full-time union employees were released from the Districts payroll
The majority had been offered employment with the new contractor.
The process was attempted 10 years prior and was unsuccessful.

3. Hempfield Area Background
$80m annual expenditure budget
6 elementary, 3 middle and 1 high school spread out over 80 square miles
Average enrollment ~ 6,200 students
70 dedicated routes + additional special Ed
Dedicated routes and activity/field and athletic trips handled in-house
Special Ed previously contracted as needed

4. Hempfield Area Background
Transportation part of “Support Union”
Support union included custodians and food service
Union contract expired June 2009/talks began Jan 2009
Started process September 2008
70 dedicated routes + additional special Ed
RFP’s for all three groups
Special Ed previously contracted as needed

5. Financial Analysis
Started by showing a side by side comparison of transportation department prior 3 yrs actual
Showed also current yr budget and YTD vs. budget
Then forecasted out the next 4 years

6. Financial Analysis
Also showed the future cost of bus leases to refresh a fleet of 8 years old on average
Broke down our current financials into a “Price per route” value.
Discussed per route rates at other Districts and compared them to our rate X #routes
Showed the results to the School Board

7. Hempfield Area increased by 1%
Example of Comparison
HASD Comparison at 1 %
First Student
Hempfield Budget
Adjusted based on reduced routes
Conventional
Mini
Other activity
Total
Bus Operations
4YR Contract
Based on 61 routes daily
Based on 9 routes daily
Based on 650 per
Driver Wages
1,243,313.62
Yr1 -Initial year
$2,662,650.00
$399,600.00
$143,000.00
$3,205,250.00
Driver Benefits
921,296.77
Yr2 1% increase
$2,689,276.50
$403,596.00
$144,430.00
$3,237,302.50
Medical benefits co-pays
(21,704.07)
Yr3 1% increase
$2,716,169.27
$407,632.00
$145,874.50
$3,269,675.77
Vehicle Insurance
68,000.00
Yr4 1% increase
$2,743,330.96
$411,708.28
$147,333.04
$3,302,372.28
General bus supplies
210,000.00
Total 4 yr cost
$10,811,426.72
$1,622,536.28
$580,637.54
$13,014,600.54
Engine/Trans/Tire repairs
140,000.00
Fuel
400,000.00
Radio Lease payments
15,000.00
Four Year Contract Price
$ ,014,601
Bus Lease payments
267,565.69
Discount in Lieu of rental
$ (480,000)
Equipment Purchases
13,500.00
Savings before sale of fleet
$ ,534,601
Other Miscellaneous
15,050.00
Sale of Fleet
$ (1,885,000)
Subtotal Bus Operations
3,272,022.01
Total Cost 4 yrs Contract
$ ,649,601 A.
Mechanical Repairs
Mechanic Wages
173,870.46
Hempfield Area increased by 1%
Mechanic Benefits
66,105.25
$ ,710,771
(2,175.57)
$ ,747,879
Mechanics uniform service
3,700.00
$ ,785,358
Subtotal Mechanics
241,500.14
$ ,823,212
Admin and Management
$ ,067,220 B.
Admin/Mgmt wages
126,480.00
Admin Benefits
52,939.64
Savings First Student vs. HASD
4,417,619.48
B-A
(1,620.36)
Copier Lease
1,000.00
Postage
Administrative other
17,450.00
197,249.28
TOTAL EXPENDITURES
3,710,771.43

8. Additional Info Needs # routes Min-busses vs. conventional
Inventory of busses/supplies/tools
Identify costs to maintain facility
If you can –Performance statistics
Number of complaints
Number of accidents
Number of call-offs
Number of WC cases
Number of grievances

9. Hidden Costs to Consider (not complete list)
Hidden costs (as listed in the Outsourcing Tool Kit)
Copier lease/depreciation costs
Office supplies
Drug testing
Opportunity costs of land/facility
Impact on WC modifier
Impact on Med insurance (higher risk group)

10. An Exceptional Reference and Tool

11. A Summary of the Manual Convincing Analysis Board Advocacy
Community Support
Driver Cooperation
Media Relations
Proposal Development

12. Important Considerations before Finalizing your RFP Spec
Fuel costs
Employee treatment
Grading the submissions

13. Grading the Submissions
CATEGORY POINTS
Board's direct experience with Proposer
Proposer's direct experience in school transportation
Proposer's staff experience
Proposer's references
Proposer's maintenance program
Proposer's hiring and retention programs
Proposer's driver safety and training programs
Proposer's student safety programs
Proposer's routing plan and process
Proposer's proactivity in offering counsel, new ideas
Proposer's financial standing
Proposer's ability to handle additional work
Proposer's insurance coverage and bonding
Proposer's price
Total

14. Summary of Responses We had 17 companies request the specification.
We had 11 companies visit us for the pre-bid meeting.
We had 6 eligible responses.
First Student
STA
AJ Meyers
Matthews
DMJ
PA Coach Lines

15. Decision Making Process
Financial Analysis laid groundwork
Decision to be handled as part of contract negotiations
Initially union dragged feet
We agreed to drag feet—part of strategy
Eventually majority of group grew tired of no contract/no raises/too much uncertainty
Union voted to allow outsource without appeal
Award to First Student based on grades above

16. Pricing

17. Savings vs. In-House (SAVINGS) / COST First Student STA AJ Meyers
Conventional Rate
$ (51)
$ (24)
$ (33)
Mini-Rate
$ (108)
$ (39)
$ (93)
Athletic , Field and Activity Rate
$ (73)
$ (53)
1st Year Cost (Savings include WC/Gas/Legal/Facility Rental)
$ (956,990)
$ (477,751)
$ (690,690)
4 Yr Total Cost Savings (over contract life)
$ (4,473,878)
$ (1,948,427)
$ (2,706,057)
Add in: Sale of the Fleet
$ (1,885,000)
$ (1,800,000)
$ (1,500,000)
Total 4 year value to district of outsourcing Transportation
$ (6,358,878)
$ (3,748,427)
$ (4,206,057)

18. Final Outcome
Accomplished the outsource but had complications due to August vote by board
Contractor had to bring in reinforcements because District driver call-offs caused disruptions
Much of contractor due diligence compacted into part of August and September for Oct 1 hand-off date

19. Critical factors to consider
Sick and vacation day accumulations – impact on services just prior to outsource
Try to make official at the conclusion of school year –if not consider some time other than official first week.
Make sure contractor has the ability to on- board employees quickly
Make sure contractor can provide reinforcements

20. Pros / Cons Save Money More Control Updated Fleet
Improved insurance ratings (Med/WC)
Delay in seeing FULL savings due to unemployment claims
Be careful of route time studies before preparing bid spec. Be sure to understand overage charges