Haste Makes Waste: The Central Dauphin School Board’s decision to privatize its bus transportation service. The flawed process to save money.
The Central Dauphin School Board’s decision to outsource its bus transportation services was touted as a way to save money.
However, the decision has generated multiple legal conflicts that have delayed the start-up of the private transportation service and has created ill-will among the drivers who must transport the CD students to school.
The district pursued bus transportation privatization services while the bus drivers were in the middle of a contract that doesn’t expire until June 2011. The district also hastily decided to pursue privatization under the cloak of darkness.
This decision to break a contract has led to unfair labor practice charges and litigation that the district has decided to file against the bus drivers. The district’s lawsuit will, no doubt, force the union to counter-sue. Just recently, the district finalized a contract with Durham that goes into effect on Nov. 9. The union will seek an injunction, adding to the legal costs and the overall turmoil in the district. It is unlikely that this dispute will have a happy ending.
The district could have avoided this problem by adhering to guidelines that other districts have followed: Wait until a union contract is ready to expire before pursuing privatization; and seek contractor proposals well in advance before making a decision. In order words, get your ducks in order.
The district says outsourcing would save the district approximately $775,000 a year with the preferred bidder. It also would allow the district to update its bus fleet.
As of now, the whole process is mired in legal proceedings – something that could have been avoided by restraint, transparency and respect for the taxpayers and bus drivers.
What follows is an analysis of the flawed process.
The bus drivers are represented by the Central Dauphin Bus Drivers Association.
For years, the union had long-standing informal agreements with the district, but in 2007 members voted 113 to 11 to certify the association as its official bargaining unit under rules of the Pennsylvania Labor Relations Board. The union is not affiliated with any other organization such as AFSCME, PSEA or other larger entities that offer more financial and support services. Just this summer, the union hired your company, EFMR Monitoring Group Inc., to serve as its business agent.
Donna Ricupero, the union president, said the union operates on a budget of approximately $10,000 a year. She said yearly union dues were recently increased to $100 per member, and the union uses fundraisers such as car washes, bake sales and other events to raise money for the organization. Despite this austere budget, the school district apparently felt the union had the wherewithal to submit a proposal for the outsourced transportation services.
The union represents approximately 130 drivers. Of those, 106 are dues-paying members. Drivers can start their day as early as 5:30 a.m. and some work in the evening hours due to late bus runs and extracurricular activities. According to Ricupero, 88 drivers get benefits, meaning they work a minimum of 30 hours a week.
Ricupero has nearly 22 years as a CD bus driver. She says she is 11th on the seniority list. She could not say what the average tenure is for a bus driver, but she noted that the turnover rate “has been huge” over the last three years. She estimates that about 65 drivers, about half the workforce, have more than five years of experience. She added that an “unusual number” of drivers either resigned, retired or were terminated at the start of the current school year. In information provided by the district, 14 drivers resigned or were terminated in the first quarter of the school year that started July 1. Ricupero said the older bus drivers generally have retired from their previous jobs, while younger ones may work at second jobs. More than 80 percent of the drivers are older than 40, with 31.3 percent older than 60.
She said union members (and the school board) approved a three-year contract in September 2008. The contract expires on June 30, 2011. The contract calls for wage increases of 45 cents an hour for each of the three years. The base rate is set at $14.60 for the 2008-09 school year, $15.05 for the current school year, and $15.50 for the 2010-11 school year. However, the starting wage of employees hired after Sept. 1, 2008 is set at $2 below the base rate for the year they are hired. The contract also requires members to pay more for their benefits, Ricupero added. She said negotiations focused on grievance procedures, safety committee issues and vehicles. She said the issue of outsourcing bus transportation was never discussed or brought up by district representatives at the bargaining table.
Ricupero said working conditions between the drivers and the district have worsened over the past few years, especially with the hiring of James Omslaer as the transportation director in August 2006. From the time of last year’s contract approval, Omslaer has “just about broken everything in the contract book,” she said. She accused Omslaer of pitting bus drivers against each other. She said about 18 grievances have been filed over the past 18 months, but none has gone to arbitration. An unfair labor practices charge was filed in January regarding issues such as discrimination, intimidation and retaliation for union activities. This filing has nothing to do – at least directly – with the current dispute over the outsourcing agreement with Durham School Services. But it does display the poisoned environment existing between the union and the district.
Omslaer replaced David Licht, the previous transportation director who resigned in July 2006 after serving about a year. Licht was sued by one employee in federal court in 2007 over sexual assault allegations. The district, which would not tell me the status of that litigation, has said the lawsuit is without merit.
Ricupero has served as the union president for four of the last five years. She has been involved with other union activities as well.
I believe it’s safe to say that current relations between the bus drivers and the district are tense, and were that way before the decision to outsource.
Recently, Ricupero said the district has been altering bus routes and hours to reduce its exposure to benefits that are required for drivers who work at least 30 hours a week. She expects more grievances to be filed over issues involving the drivers.
The school district
Central Dauphin is one of the larger school districts in the state. The district says on its Web site that it is the 13th largest in the state in student population. It has about 10,715 students at its two high schools, four middle schools and 13 elementary schools. This figure does not include students who attend the Dauphin County Technical School and charter schools. The district says it transported 10,674 public and charter school students in 2008-09, and 1,815 students to non-public schools. Over a school year, the school buses travel 2.1 million miles (regular daily runs plus extracurricular activities and field trips). About 128 bus runs are made in the morning and afternoon, and 34 more runs are mid-day for kindergarten.
The district has a fleet of 151 buses. The average age is 11 years. The district has 23 buses, or 15.2 percent of its fleet, over 20 years of age, and 52 buses, or 34.4.percent of its fleet, over 15 years, according to an analysis of data provided by the district.
CD is a suburban district with a mix of developed boroughs (Paxtang, Penbrook and Dauphin) and still-growing townships (Lower Paxton, Swatara, West Hanover and Middle Paxton.) Some of the townships, West Hanover, for instance, are growing faster than others. The district projects relatively slow growth in its student population over the next five years. It projects an enrollment of 11,183 students by 2014-15.
The district is operating on a budget of $149 million for the current school year. Of that amount, $6.9 million was allocated for transportation in the 2009-10 budget approved in June. As part of the budget approval process, the school board decided to cut bus purchases. Under normal conditions, the district’s transportation budget would be about $7.4-$7.5 million, or 5 percent of the overall budget.
According to a newsletter sent to district residents after the decision to outsource, the projected new 2009-10 transportation budget would be $6.8 million. With an additional subsidy from the state of nearly $150,000, the transportation budget impact will amount to approximately $6.65 million for 2009-10, according to the newsletter. Compared with normalized expenditures for transportation, the district says an outsourcing agreement with Durham will save it approximately $775,000 a year. This does not include the $2.2 million to be received from the purchase of its bus fleet
On June 11, 2009, Donna Ricupero, the union president, said she received a phone call from the district while on vacation in New Jersey. The substance of the call was the district’s plan to seek requests for proposals (RFPs) for its bus transportation services. The district first advertised the RFP on June 13.
Ricupero said the union met with the district on June 18 to receive a draft copy of the RFP. Another meeting was held on June 25, a day after a walk-through with prospective bidders for the bus transportation contract. Two more sessions were held in late July. She said the union asked for information, but never received sufficient data to make any type of counterproposal to privatization. At no time, she said, did the district ever demand any concessions from the union in order to keep the transportation in house.
Ricupero said four companies participated in the June 24 walk-through. They were Durham School Services (the eventual winner), First Student, Student Transportation of America, and Krapf Bus Companies. All but Krapf submitted bids
It appears the school board never publicly discussed the bids until the day of the vote. Karen McConnell, the district’s business manager, said at an unfair labor practice hearing that the board authorized the advertising of the RFP on June 8. There is no indication of such an action in the board’s minutes.
The state’s Sunshine Act does not exactly encourage open discussions. The board can meet in executive sessions to consult on issues related to the negotiation or arbitration of a bargaining agreement, or to consult with attorneys or other professionals regarding information or strategy connected with litigation or with issues where identifiable complaints are expected to be filed. The board went into executive session for 30 minutes before voting on the outsourcing matter at its Aug. 10 meeting.
Melissa Melewsky of the Pennsylvania Newspaper Association said the Sunshine Act requires public action on matters such as creation of policy and contracts, and hirings and firings.
At its Aug 10 meeting, with three members absent, the school board voted 5-1 to hire Durham to provide bus transportation services for a period of five years. Under terms of the agreement, the district will pay Durham $30,314,442. As part of the agreement, Durham will buy the existing bus fleet for $2,261,340.
A day after the board’s vote, the union amended an unfair labor practice charge initially filed against the school district on Aug. 4. The union says that district decided to privatize the bus transportation services before an impasse was reached with the union. In fact, the union said it proposed dates for negotiations after Aug. 10 when the privatization decision was made. In its unfair labor practice filing, the union also asked that the decision to hire Durham be rescinded, and employees be made whole as a result of the district not honoring the contract.
Hearings on the charges were held Aug. 27 and Sept 1. Another hearing was set for Sept. 25, but that was postponed due to a request for mediation. Two mediation sessions were held. But on Oct. 15, union representatives received a call from the Bureau of Mediation informing the union that the district wanted to declare an impasse.
The day before that call, on Oct. 14, the district filed a lawsuit in Dauphin County Court against the bus drivers association. In that suit, the district wants the court to declare that the collective bargaining timeline and impasse procedures of Act 88 do not apply with the current dispute.
Chris Rupnow, assistant director of research for the PSEA, said her union typically confronts the outsourcing issue at the end of a contract. “I’m not too sure that we’ve ever had any in mid-contract term,” she said.
Thomas Kohn, a labor attorney with Markowitz & Richman of Philadelphia, said doing outsourcing mid-contract “certainly increases the exposure and risk of having the decision overturned.”
Currently, the district’s bus drivers remain employees of the district. They are honoring their agreement.
On Oct. 21, the district signed a contract with Durham effective Nov. 9. This was not publicly announced until Oct. 26.
Other school districts:
Williamsport Area School District recently decided to outsource its bus transportation services with Student Transportation of America, one of the bidders for the CD contract.
The Williamsport decision came in June 2009 after the expiration of a contract covering bus drivers, mechanics and aides. That contract had expired in the summer of 2008, and union members were working under terms of the old contract since that time. The district had sought bids for its RFP around the spring of 2008.
The union and school district began negotiations at the start of 2008 for a new agreement, and almost immediately, the district began talking about the possibility of outsourcing, according to Cary Kurtz, Uniserve representative for the union. By the spring of 2008, the RFPs were advertised, he said.
With the RFPs submitted, the union and school district continued to negotiate, although Kurtz said the union took the stand that it needed information to provide an alternative proposal to keep the transportation service in house. He said the union “could not get accurate data” from the district for a long time. The union and district continued to meet about once a month for nearly a year.
In May of 2009, the union made a proposal that it estimated would result in $750,000 in savings over the life of a four-year contract. Kurtz said the union’s proposal included a one-year wage freeze and healthcare concessions.
Kurtz said the board rejected that proposal and then declared an impasse and went ahead with awarding the contract to STA. The board approved the STA contract at its June 2, 2009, board meeting. The contract with STA is for seven years, with a cost of $2,036,426 in the first year of the agreement, according to the board agenda for that meeting. The contractor agreed to pay $1 million for the 46-bus fleet. STA began providing bus transportation service for Williamsport with the start of the school year on Sept. 1.
Benjamin Pratt, an attorney for the Williamsport district, said the district “made sure we bargained to impasse” before entering into the contract with STA. He said the union and district met regularly before the impasse was declared. During the course of these talks, the approximately 45 bus drivers, mechanics and aides worked under terms of the expired union contract.
Kurtz said the union filed a lawsuit in Lycoming County Court seeking an injunction over the district’s decision to hire STA and outsource its bus service. Pratt said the district filed preliminary objections and the court dismissed the lawsuit around Sept. 1.
Kurtz said an unfair labor charge also was filed against the school district. A hearing was to be held on Oct. 22.
Speaking about the outsourcing decision, Kurtz observed that “these things don’t happen overnight. They are done well in advance.” He said he believes the school board “made the decision several years ago.” He noted that the district had purchased very few buses since 2004, the year the district last reached a contract agreement with the union. He said he felt the board “made a decision to run it into the ground.” He added that the transportation department came in under budget in all but six of the last 19 years. He said the workers had to work about 25 hours a week to qualify for benefits, and about 12-14 of the drivers met that minimum hourly requirement.
Pratt said the district and STA have hired all but one of the bus drivers, mechanics and aides affected by the outsourcing decision. Kurtz said he believes a couple bus drivers were not offered positions, and he knew of two mechanics that were laid off and bumped other workers to move into custodial positions as district employees. He said the aides bumped others to take district positions.
Two other districts also considered outsourcing bus transportation in the last 18 months. . Unlike CD and like Williamsport, they were nearing the end of the union contracts when the exploration process began.
At the Pleasant Valley School District in Brodheadsville, the contract with bus drivers and other support personnel (secretaries, food service, custodial staff, maintenance) expired in the summer of 2008. Negotiations commenced at the start of that year, according to Paul Shemansky of the communications division for the PSEA unit that serves that district.
He said the district decided in the spring of 2008 to explore subcontracting its bus transportation services. The district – according to board meeting minutes – had an RFP by the start of the year before negotiations commenced. (Repeated calls to the Pleasant Valley business office to confirm the RFP timetable were not returned.) The district awarded a five-year contact to First Student on June 26, 2008. The board vote was 6-3. First Student began providing bus services for the district by the start of the 2008-09 school year. The decision affected about 135 bus drivers, aides and mechanics.
The union filed an unfair labor practice charge, saying negotiations had not reached an impasse as required under Act 88. Before a hearing was held, the union and district reached a settlement costing the district approximately $180,000, according to published reports. Scott Carpenter, a PSEA Uniserve representative for the union, said workers received awards ranging from the upper three digits to the upper $2,000s, depending on years of service. A worker with 15 year of service or more, for instance, probably received an award in the high-end range of $2,000 to $3,000, he said.
Before the end of 2008, First Student employees for the Pleasant Valley School District decided to affiliate with Teamsters Local 773 of Allentown. Shemansky said First Student had increased hourly wages for the drivers, but there were cuts in benefits.
Joe Wieder, business agent with the Teamsters local, said the workers who transitioned to First Student “recognized immediately that they weren’t going to be treated as well as they were when they were school district employees.” Benefits weren’t nearly as good, and seniority played little role in decisions, he said.
He said the union vote was overwhelming, about 121-7. The union represents about 140 employees who work for First Student’s contract with Pleasant Valley. Members recently ratified a five-year contract with First Student.
Wieder estimated that 75-80 percent of the union members are former employees of the Pleasant Valley district.
Carpenter questioned how the CD district could decide to outsource during the middle of a contract. “For us and our set of rules, that’s not viable at all,” he said.
In the Southern Columbia Area School District in Catawissa, a contract affecting bus drivers, secretaries, cafeteria staff and custodians expired on June 30 of this year. They are represented by AFSCME Council 86.
Michelle Rider, a union rep from Council 86, said the school board began talking about outsourcing bus transportation before negotiations started. The district said it “might save them money,” she said. The district has about 30 drivers, she said.
Dan Rodgers, business manager for the district, said an analysis of outsourcing was initiated in early 2008. He said RFPs were sought in September 2008, and were due in November. He said the district estimated it would save $150,000 to $200,000 a year through outsourcing, a significant amount in a district with a $15 million-plus budget. During negotiations, he said, the union could not match the savings proposed by outsourcing.
Nonetheless, the school board decided in early July to stick with its in-house bus transportation service. Rodgers said the vote was 5-4. Charles Porter, the board vice president, was one of the five who voted against privatization with the best bidder, Fishing Creek Transportation of Orangeville. He said the bidder had offered a substantial premium for the bus fleet, to the tune of $950,000 or so He said he wanted this money set aside until the end of the contract so the money could be used to buy back buses if needed, or to provide some leverage for another contract. He said he did not receive board support for this sentiment. The district was seeking a five-year contract for private bus services.
Rodgers said the district did not make a recommendation. “We were kind of neutral in the process, we just presented the facts.”
Porter said the decision “was probably the hardest vote I took” during his 12 years as a board member.
Rider said in September that AFSCME is still negotiating a new contract for the bus drivers and other personnel.
The Altoona Area School District decided to outsource its bus transportation services in 2006. It entered into a contract with STA.
The decision came at the expiration of a contract that covered the bus drivers as well as other support personnel. The bus contract was awarded on July 17, 2006, about four months after bids were received for the district’s RFP. Around the same time, the bus drivers, represented by AFSCME Council 83, reached an agreement with STA for a five-year contract
Ted Manna, from AFSCME Council 83, said the bus drivers were prepared to file an unfair labor practice charge against the district. However, he met with STA and the company agreed to negotiate. He said he reached an agreement with STA before the board voted to contract with the company.
He said the contract covers about 90-100 bus and van drivers, as well as casual employees. He said all the district employees who wanted to go to STA and who could qualify were hired by the company.
CD transportation budget
CD’s transportation budget has risen from $6 million in the mid-2000s to more than $7 million in recent years. The district budgeted $5 million for transportation services in the 2004-05 school year, but according to the audit actually spent $6.2 million because of seven bus purchases ($450,000) that were not budgeted, as well as higher fuel and repair costs. In 2005-06, about $6.1 million was budgeted for transportation services, and $5.95 million was actually spent. In 2006-07, $6.3 million was budgeted for transportation, but the audit for that year showed actual expenditures of $7.6 million. The 28 percent increase was attributed to purchases of four replacement buses at $307,000, the outsourcing of its IU transportation, and higher diesel fuel and gasoline costs.
By 2007-08, the district spent $7.35 million in transportation ($7.4 million was budgeted), according to the audit. About $7.8 million was budgeted for transportation in 2008-09 when the budget was approved at a time of extremely high fuel costs. An audit for that year is not complete.
For the 2009-10 school year, the school board approved a $149 million total budget that reduced transportation costs to just under $6.9 million. The reduction was due to the board’s decision to “accommodate cuts in bus purchases,” according to the district’s newsletter that was sent to residents to explain the decision to partner with Durham. The district contends that its normal bus transportation budget is $7.4 million to $7.5 million. It used that figure to compare the anticipated cost savings with the Durham contract. With the Durham contract, the district expects annual savings of $775,000 compared with its normalized transportation costs.
The transportation budget makes up about 5 percent of the district’s total budget. The $775,000 in savings cited by the district amounts to one-half of 1 percent of the overall $149 million budget for this year. Over the past five years, the district’s overall budgets have increased an average of 4 percent to 5 percent a year, although the most recent budget increase is less than 1 percent. In 2005-06, the district’s budget totaled $123 million. During that same five-year span, the district’s real estate tax has increased from 11.987 mills to the current rate of 13.86 mills, a more than 15 percent increase over that time.
During recent years, some fiscal watchdogs have been elected to the school board. There was no tax increase in the 2008-09 school year, even though the budget was up 4.2 percent from the prior year. There was a 2.3 percent property tax increase for the current school year’s budget. This was a drop from the proposed 2.45 percent increase in the preliminary budget in May. Even with that small adjustment after a year of no tax increases, the 2009-10 budget was approved by a scant 5-4 vote.
There are many reasons why a school district would consider outsourcing its transportation services. According to the National School Transportation Association, an organization that represents contractors, outsourcing is a way to assist a district with updating its bus fleet and to reduce administrative costs that will allow the district to concentrate on its commitment to educate students. However, organizations such as AFSCME have argued that the projected cost savings don’t materialize and the contractor can only maximize its profit by reducing fixed costs, namely benefits to drivers and perhaps the amount of bus runs.
Kohn, the labor attorney with Markowitz & Richman, said there are reasons for the cost savings from outsourcing. “They (bus drivers) don’t get fringe benefits, and if they do, they’re a lot less,” he said. “Pensions,” he added, “are almost non-existent.” He also warned that contractors often come in with lowball bids to secure a deal, then raise the financial stakes after the initial contract expires and the district has little leverage since it has sold off its bus fleet.
Most districts in Pennsylvania (estimates are 85 percent) outsource transportation. Locally, just CD and West Shore School District have their own transportation units.
There are incentives in place in Pennsylvania for districts to outsource. State reimbursement rates for districts are often more favorable for contracted services. For instance, allowance rates for contractors are set by multiplying $20 by the approved rated pupil capacity if the vehicle is 1-3 years of age, $18 if the vehicle is 4-6 years of age, $16 if vehicle is 7-10 years of age, and $12 if vehicle is 11 years and older. In contrast, the rate is $15 for vehicles ages 1-10 years old if owned by school districts, and $12 for vehicles 11 years and older. These rates are in addition to the base reimbursement rates that are the same for contractors and school districts.
In addition, a utilized passenger capacity rate has a factor of $3.50 for contractors, but is $3 for school districts.
A private contractor noted that contractors do have to pay taxes, something districts don’t. In addition, districts with their own vehicle fleet receive a depreciation allowance in addition to their regular reimbursement.
According to the CD newsletter sent out after the Durham vote, the district is budgeting an additional subsidy of $149,100 through the contracted service. Its approved 2009-10 budget listed anticipated state revenues of nearly $3 million for transportation.
In the Central Dauphin RFP, the district was clearly looking to upgrade its bus fleet. A contractor said the district had “let their buses get pretty old.” By the end of year four of the five-year proposed contract, CD wants no route bus to be older than 10 years of age and no spare bus older than 12. By that time, the average age of a route bus is to be five years old, and a spare bus, an average of six years old. As noted above, the district’s fleet has an average age of 11.
Over recent years, the district has purchased buses yearly, perhaps four to eight annually. However, the school board cut bus purchases in the current school year budget. It appears no purchases were approved in the 2008-09 school year.
It’s unclear when the decision was made to outsource at CD (school board members refused my request for interviews while litigation is on-going), but based on records provided by an FOI request, it appears that the district began in May the process to outsource bus transportation services. Billing records from Rhoads & Sinon LLP, the district’s solicitor, show that research was done on May 21 and 22 regarding transportation department privatization. This is about eight months after the district and bus drivers reached a settlement on its current three-year contract.
Karen McConnell, the district’s business manger, said outsourcing has been discussed “off an on” during her 10 years with the district. During the first five months of 2009, according to her testimony during an unfair labor practice hearing, the district had been in contact with Rohrer Bus Service of Duncannon, First Student and STA regarding outsourcing. A Rohrer official said “we had some discussions” with CD, but Rohrer did not participate in the bidding process.
It is clear that the district hurriedly and secretively proceeded with outsourcing. The district was evaluating a budget for 2009-10, and decisions must have been made to cut its transportation budget to minimize, if not eliminate, any need for a tax increase. The board has a number of fiscal hawks. One of them, Christian D. Malesic, recently sent out a newsletter to some constituents saying that “Liberal Progressives will try to convince us that the only way to educate is with more money – more of the taxpayers’ money. I outright reject that.” As mentioned above, the 2009-10 budget, with a 2.3 tax increase and the cuts in the transportation department, was narrowly approved in a 5-4 vote.
The district sought RFPs for outsourcing in mid-June, with a July 1 submittal date. Most observers agree that this is a very fast timetable. Union representatives said contractors were expressing concerns about the compressed timetable at the June 24 walk-through.
In First Student’s bid for the CD contract, Jim Woods, director of business development, noted that his company’s bid included “one-time start-up expenses that are not typical” due to the “short time frame from the potential award of a contract to the Aug. 31 start of school.”
He noted that First Student would be able to reduce its costs in negotiations with the district should the district delay the start date of the contract.
Robin Leeds, a spokeswoman for the NSTA, said a school board should probably begin exploring outsourcing a year in advance before the start-up of the contracted service. A tighter timeframe, she said, could reduce the number of contractors that might be interested in bidding.
Leeds added that a longer timeframe helps contractors by enabling them to establish a facility, order the buses and doing “whatever they need to do.” For the CD contract, the facility was not an issue because the district was going to lease its existing transportation facility for $99,200 a year.
She said a longer time period also gives the contractor time to meet with the drivers to make sure “they are working together and make sure they are on board.
“The more time you have,” she said, “the better it’s going to be for everybody.”
Still, there are times when contracting is done rather quickly. Blake Knapf, president of the West Chester company, said the CD timetable was “tight but doable.” He added, ”They’re not the first ones I’ve seen do it.”
His firm participated in the walk-through, but did not bid. “We had a couple other start-ups this summer,” he said, and “like any company, we have limited resources.”
Durham submitted the lowest bid for the contract services for CD. Its proposal submitted on July 1 totaled $31,627,846 for the five years, and the purchase of the bus fleet for $2,261,340. The first year of the original proposal was $6,017,104.52, and there were annual 2.5 percent increases for the following four years. Durham also submitted a couple alternative bids that were lower in price.
Durham’s original base bid factored in the purchase of 71 new buses during the first year, 14 buses in the second year, five buses during the third year, and eight buses during the fourth year.
After receiving the bids, the district was allowed to negotiate the prices submitted by the contractors. The district received (and the school board approved) a final negotiated price from Durham totaling $30,314,442 for the five years ($5,681,324 in the first year). In addition, Durham would purchase the existing bus fleet for $2,261,340. Durham now plans to replace the fleet at the rate of 25 new buses in each of the first two years, 12 new buses in years three and four, and six buses in year five, for a total of 80 new buses.
In the unfair labor practice hearing, McConnell noted that the district “found Durham’s proposal to be more creative and had given the district more options.” By the end of July, it was clear through negotiations with the union that the district had settled on Durham as the preferred bidder.
The school board voted 5-1 to hire Durham on Aug. 10, with three members absent. Of the five who approved the bid, three will be leaving the board in December. The union amended an unfair labor practice charge a day later, asking for the privatization decision to be rescinded.
The privatization decision has not been rescinded, and the district recently signed a contract with Durham effective Nov. 9, more than two months after the start of school.
Actions right after the Aug. 10 vote indicated that Durham was preparing to take over the transportation services at the start of the school year. Durham was provided with names, addresses and phone numbers of bus drivers for a meeting that was held on school property on Aug. 12. At that time, according to Ricupero and other union members, the bus drivers were advised that they would be furloughed by the school district on Aug. 23 and they would become Durham employees the following day. In the meantime, the drivers were tested by Durham as part of the transition process. Durham was advertising for bus drivers in the local newspaper.
The eight mechanics for the transportation department, represented by AFSCME Council 90, received a letter dated Aug. 12 that they would be furloughed as CD employees effective Aug. 21. A week later, they received another letter saying that the furlough date was “incorrectly stated,” according to George Estright, staff representative for Council 90. The letter added that the district has “every intention” of moving to privatization, and the mechanics would be notified about their furloughs at the appropriate time.
Estright said Council 90 has filed an unfair practice charge against the district. A hearing was scheduled for Nov. 13, but he said an attorney for Rhoads & Sinon, the board’s solicitor, requested a continuance. He said the mechanics are part of a 140-member bargaining unit whose members also include custodians and maintenance personnel. Their contract expires on June 30, 2012.
In the week after the Aug. 10 vote, things apparently started to unravel with Durham’s expedited process to begin bus transportation as soon as feasible. An Aug. 19 meeting was held with the bus drivers and they were told that they were still employees of the district. McConnell said at an unfair labor practice hearing that “there was never an agreement made” with Durham. Around this time, district residents were receiving a newsletter explaining the partnership between CD and Durham. CD and Durham “are committed to partnering in providing safe and responsible driving in a caring and positive manner to the students of the CD community,” the newsletter said.
Since the Durham vote, school board members have clammed up about the status of the Durham contract. (They didn’t say anything about outsourcing at meetings before Aug. 10, either.) Requests for interviews with the board members were either not responded to, or some members said they could not comment due to the ongoing litigation with the union. A couple members said they could talk after matters are resolved.
It’s clear that the board explored outsourcing to address budgeting concerns. “We knew that we’re going to have very tough years that would require either cutting costs or substantially increasing taxes,” Solicitor James Ellison said at an unfair labor practice hearing. Ricupero said McConnell advised the union that the district was in economic “hard times” and it had not been able to update its fleet and outsourcing was a way of doing that. As noted above, there are some board members who are very reluctant to raise taxes to address budgetary concerns.
The newsletter trumpeting the Durham partnership observed that the school board started a finance committee in 2008. The committee said it realized the district would face double-digit tax increases in coming years “due to unfunded mandates in the year 2012” and beyond. These costs primarily relate to pension/retirement contributions. The district is projecting a nearly threefold increase in retirement contributions from 2011-12 to 2012-13, going from $8.66 million to $24.3 million
Meanwhile, the anticipated cost savings from outsourcing, I would suspect, are drying up for this year. There are legal costs being incurred with the bus drivers and AFSCME unions, and the eventual outcome is unknown. .
Durham School Services, part of National Express Group PLC of the United Kingdom, is the nation’s second largest school bus transportation company. Durham serves no local school districts, but has a strong presence in York County with Dallastown, York Suburban, West York, Spring Grove and Central York. In its bid, it said its average compensation is $15.20 an hour for drivers and $18.27 an hour for mechanics.
According to testimony in the unfair labor practice hearing, James Ellison, the CD solicitor, and Ira Weinstock, the labor attorney for the bus drivers, had a dinner meeting in mid-July when outsourcing with Durham was on the front burner. At that dinner, Ellison said he advised Weinstock that the drivers would be paid the same salaries, same paid holidays and vacation. He added that the drivers would be eligible for unemployment compensation.
But Ellison said he admitted that health care would be a sticking point. “Durham cannot offer the same health care coverage that CD offers,” he said he told Weinstock. Considering the age of the bus drivers (more than 80 percent over 40, 62 percent over 50 and 31 percent over 60) it stands to reason that health care coverage is a serious concern for those affected by the privatization decision.
A Web site piece promoting outsourcing by the National School Transportation Association notes that outsourcing “does not always occur easily.” Outsourcing “requires advance preparation, diplomacy, and sensitivity to those who will be affected by the change – drivers and other personnel, parents, members of the board of education and taxpayers.”
From my vantage point, it seems that the CD board missed on all counts and ensured that privatization would not occur easily. For me, the issue has never been about the merits of outsourcing school transportation. The issue has been the way this was handled – a hasty, secretive review process for a $30 million contract affecting bus drivers who are working under a labor agreement that does not expire until June 30, 2011.
The questions I have are: Why did the district not pursue outsourcing in 2008 when it was negotiating a contract with the bus drivers? And why couldn’t it wait until a year from now when it would start negotiating a new contract for the one expiring in 2011? Is the financial situation in the school district that drastic? And if it is, who is responsible for letting it get to that point?
Let’s be frank. From the bus drivers’ perspective, there is probably never a good time for outsourcing. But the school board could have handle this a lot better.
A more measured, cautious approach would have served everyone better – the drivers, the contractors and the students. As of now, Durham School Services, the winning bidder, has entered a corrosive environment and will have to do some mighty public relations work to undo the damage that has been done to it by the school board.
Unfortunately, the cloud of secrecy that has enveloped this decision has only gotten worse. In this case, silence is not golden.
The relationship between the district and the bus drivers union is almost irretrievable. There may have been an opportunity to work with the bus drivers over the issue, but that opportunity is probably gone. A three-year union contract was negotiated and settled last year. Talks with the union over outsourcing didn’t really start until the RFP was prepared and advertised this year. Negotiations drew to a hasty end with a declaration of an impasse after just four meetings and before mediation and fact-finding were done. And isn’t it interesting that the issue was presented to the union right after the completion of the school year when bus drivers are scattering into the wind to vacations and their summertime jobs? Where’s the good faith?
I can’t help but wonder how district officials (and Durham officials, for that matter) ever expect some of the bus drivers to trust them.
The drivers transport children and have an immense responsibility to protect the safety and well-being of the district’s students and those who attend private schools.
My cynical side believes that the district felt the bus drivers union was ripe for the picking, notwithstanding the overwhelming vote in 2007 to form the Central Dauphin Bus Drivers Association. Not affiliated with any larger unit such as AFSCME, the Teamsters or the PSEA, the union struggles to make ends meet. With all the legal battles it now faces, the costs for financing an attorney and a recently hired business agent must be staggering for a unit that needs to hold car washes and bake sales to support its operations. The union has an older age cohort and many of the members might be at a point in their lives where they don’t need to put up with this nonsense anymore. Turnover can only weaken the union.
The district’s hurried process has led to confusion, litigation and unnecessary conflict with a vital component of the educational system. Projected cost savings are evaporating with every day of hearings between the unions and the district. The fact that the school board is silent about the situation says a lot about how it views its partnership with its constituents and its employees.
The school board is hiding behind the ongoing legal conflicts that amount to a David and Goliath battle – a school district with a $149 million budget pitted against a group with $10,000 in operational costs. Somebody should end this madness.
It might have to be the new board that takes office in December. Let’s hope the board, which will have four new members, is more open with information and takes a more measured approach to multi-million-dollar contracts.
Karen McConnell, the CD business manager, said during an unfair labor practice hearing that the board gave the go-ahead on June 8 for advertising the RFP for bus transportation services. The board held a meeting that day, but no such action is indicated in the meeting minutes.
If McConnell’s testimony is accurate, then the board apparently authorized the advertising outside public purview.
To address this situation, I would suggest that school boards should be required to vote publicly on advertising for bids and requests for proposals if they knowingly expect the bids to total $1 million or more. A lower threshold could be considered for much smaller school districts. You have suggested a uniform procurement policy for contracts of $50,000 and more.
Whatever the base figure, this will get the issue out in the open earlier. There’s nothing wrong with transparency with agencies handling public dollars.
Another suggestion is that the school board should explore separating the legal duties of its solicitor and labor attorney. Currently, Rhoads & Sinon handles both. I’m not sure how other districts handle this, and I didn’t research this, but it seems having one firm for solicitor duties and another specializing in labor negotiations, etc., would be beneficial.
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