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Study questions savings in outsourcing transportation

This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.

A new study by the Keystone Research Center says that contracting out student transportation has increased costs for Pennsylvania school districts instead of saving them money.

"Handing the reins over to the private sector is not always a good bargain for taxpayers," said Keystone executive director Stephen Herzenberg, a co-author of the study with labor economist Mark Price.

Keystone, which has ties to the labor movement, analyzed state Department of Education data from 1986 to 2008. The study points out that the state more generously subsidizes transportation costs that are contracted out than it does in-house transportation; Keystone recommended that this formula change. Gov. Corbett wants to combine transportation subsidies into one larger education block grant.

"Our basic view is that having a separate line for transportation funding does make sense so you can manage that function effectively," said Herzenberg. "They should fix the formula, not block grant the program."

Keystone took a more in-depth look at 29 districts (not including Philadelphia) that privatized transportation between 1992 and 2001. It showed a 26 percent increase in costs in the five years after the move, compared to a 6 percent increase in the five years before.

Philadelphia is looking to contract out a number of services in an effort to cut costs, and transportation is on the list. Already, about 30 percent of school bus service is contracted out. The District has sent layoff notices, effective between September and January, to all members of Local 1201 of SEIU 32BJ, which includes bus drivers.

Price and Herzenberg could not say with certainty that in a district as large as Philadelphia, their findings would hold true. They did say that changing the reimbursement formula would help Philadelphia, as well as other districts.

"There are a series of different factors that drive costs up or down with contracting," said Price. "At minimum, the implication for Philadelphia is, don’t assume privatization is cheaper. Take a close look at it."

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