Saugus Union School District Report

Saugus Union School District Transportation Review July 11, 2012 Joel D. Montero Chief Executive Offi cer FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM July 11, 2012 Joan Lucid, Ed.D., Superintendent Saugus Union School District 24930 Avenue Stanford Santa Clarita, CA 91355 Dear Superintendent Lucid: In January 2012, the Saugus Union School District and the Fiscal Crisis and Management Assistance Team (FCMAT) entered into an agreement for management assistance. Specifi cally, the agreement states that FCMAT will perform the following: 1. Review the pupil transportation revenue, expenditures and contributions from the district’s unrestricted general fund and make recommendations to increase the operational effi ciency of the department. 2. Evaluate operational effi ciency related to the district’s contract service provider for student transportation services and make recommendations for potential cost reductions. 3. Evaluate the transportation department’s routing methodologies and effi ciency model and make recommendations for improvement. 4. Review the transportation department’s vehicle maintenance program including the current status of the vehicle inventory and replacement schedule, and make recommendations for improvement. This report contains the study team’s fi ndings and recommendations. FCMAT appreciates the oppor- tunity to serve the Saugus Union School District and extends its thanks to all the staff for providing information to the study team. Sincerely, JJooeell DD.. MMoonntteerroo CChhiieeff EExxeeccuuttiivvee OOfffifi ccer FCMAT Joel D. Montero, Chief Executive Officer . . 1300 17th Street - CITY CENTRE, Bakersfield, CA 93 . 301-4533 Telephone 661-6 . 36-4611 Fax 661-63 . 6-4647 422 Petaluma Blvd North, Suite. C, Petaluma, CA 94952 Telephone: 707-775-2850 Fax: 707-775-2854 www.fcmat.org Administrative Agent: Christine L. Frazier - Office of Kern County Superintendent of Schools i TABLE OF CONTENTS Table of Contents About FCMAT .........................................................................................iii Introduction ............................................................................................1 Background ......................................................................................................1 Executive Summary ..............................................................................3 Findings and Recommendations .....................................................5 Transportation Finance ................................................................................5 Transportation Services Contract .............................................................9 Routing Methodology ................................................................................15 Vehicle Maintenance ..................................................................................17 Appendices ............................................................................................21 SAUGUS UNION SCHOOL DISTRICT ii TABLE OF CONTENTS FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM iii ABOUT FCMAT About FCMAT FCMAT’s primary mission is to assist California’s local K-14 educational agencies to identify, prevent, and resolve fi nancial and data management challenges. FCMAT provides fi scal and data management assistance, professional development training, product development and other related school business and data services. FCMAT’s fi scal and management assistance services are used not just to help avert fi scal crisis, but to promote sound fi nancial practices and effi cient operations. FCMAT’s data management services are used to help local educational agencies (LEAs) meet state reporting responsibilities, improve data quality, and share information. FCMAT may be requested to provide fi scal crisis or management assistance by a school district, charter school, community college, county offi ce of education, the state Superintendent of Public Instruction, or the Legislature. When a request or assignment is received, FCMAT assembles a study team that works closely with the local education agency to defi ne the scope of work, conduct on-site fi eldwork and provide a written report with fi ndings and recommendations to help resolve issues, overcome challenges and plan for the future. Studies by Fiscal Year 90 80 70 60 50 40 30 20 10 0 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11* 10/11** *Projected **Actual SAUGUS UNION SCHOOL DISTRICT seidutS fo rebmuN FCMAT also develops and provides numerous publications, software tools, workshops and professional development opportunities to help local educational agencies operate more effec- tively and fulfi ll their fi scal oversight and data management responsibilities. The California School Information Services (CSIS) arm of FCMAT assists the California Department of Education with the implementation of the California Longitudinal Pupil Achievement Data System (CALPADS) and also maintains DataGate, the FCMAT/CSIS software LEAs use for CSIS services. FCMAT was created by Assembly Bill 1200 in 1992 to assist LEAs to meet and sustain their fi nancial obligations. Assembly Bill 107 in 1997 charged FCMAT with responsi- bility for CSIS and its statewide data management work. Assembly Bill 1115 in 1999 codifi ed CSIS’ mission. AB 1200 is also a statewide plan for county offi ce of education and school districts to work together locally to improve fi scal procedures and accountability standards. Assembly Bill 2756 (2004) provides specifi c responsibilities to FCMAT with regard to districts that have received emergency state loans. iv ABOUT FCMAT In January 2006, SB 430 (charter schools) and AB 1366 (community colleges) became law and expanded FCMAT’s services to those types of LEAs. Since 1992, FCMAT has been engaged to perform nearly 850 reviews for LEAs, including school districts, county offi ces of education, charter schools and community colleges. The Kern County Superintendent of Schools is the administrative agent for FCMAT. The team is led by Joel D. Montero, Chief Executive Offi cer, with funding derived through appropriations in the state budget and a modest fee schedule for charges to requesting agencies. FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 1 INTRODUCTION Introduction Background Located in the Santa Clarita Valley area of northern Los Angeles County, the Saugus Union School District has a fi ve-member elected governing board and serves approximately 10,300 students in kindergarten through sixth grade at 15 elementary schools. Student enrollment reached a peak of 10,758 students in 2005-06, but has been slowly declining since then. The district includes approximately 99 square miles and encompasses the communities of Canyon Country, Saugus, Valencia and a portion of Santa Clarita. The district is adjacent to the Six Flags Magic Mountain theme park and immediately east of Interstate 5 south of the Grapevine. Pupil transportation is provided through a contract with an outside service provider, Student Transportation of America, Inc. The district has one regular education home-to-school route serving approximately 40 students, and 12 special education routes serving approximately 104 students. The governing board has taken action to eliminate the regular education route effective June 30, 2012. Study Guidelines In January 2012, the district and the Fiscal Crisis and Management Assistance Team (FCMAT) entered into an agreement for management assistance. Specifi cally, the agreement states that FCMAT will perform the following: 1. Review the pupil transportation revenue, expenditures and contributions from the district’s unrestricted general fund and make recommendations to increase the operational effi ciency of the department. 2. Evaluate operational effi ciency related to the district’s contract service provider for student transportation services and make recommendations for potential cost reductions. 3. Evaluate the transportation department’s routing methodologies and effi - ciency model and make recommendations for improvement. 4. Review the transportation department’s vehicle maintenance program including the current status of the vehicle inventory and replacement schedule, and make recommendations for improvement. FCMAT visited the district on March 19 and 20, 2012 to conduct interviews, collect and begin reviewing documents, and observe the transportation facility and buses. This report is the result of those activities and is divided into the following sections: I. Executive Summary II. Transportation Finance III. Transportation Services Contract IV. Routing Methodology V. Vehicle Maintenance SAUGUS UNION SCHOOL DISTRICT 2 INTRODUCTION Study Team The study team was composed of the following members: Diane Branham Joseph Bjerke FCMAT Chief Management Analyst FCMAT Consultant Bakersfi eld, CA Coeur d’Alene, ID Timothy Purvis* Michael Rea* Director of Transportation Executive Director Poway Unifi ed School District West County Transportation Agency Poway, CA Santa Rosa, CA Leonel Martínez FCMAT Technical Writer Bakersfi eld, CA *As members of this study team, these consultants were not representing their respective employers but were working solely as independent contractors for FCMAT. FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 3 EXECUTIVE SUMMARY Executive Summary Transportation Finance Pupil transportation in California was fully funded for school districts up to 1977. Since funding decreased and costs increased over time, the state funding now provides for approximately 35% of the statewide transportation costs. State budget discussions have continued regarding 2012-13 transporta- tion funding, and the outcome is unknown at this time. The district should continue to evaluate its annual per mile and per student costs to determine how they may be improved and ensure that home- to-school (HTS) transportation costs are suffi cient to protect its approved state apportionment. School districts annually report their costs on the Form TRAN, which is the California Department of Education’s pupil transportation report. The report is separated into two columns, HTS and severely disabled/orthopedically impaired (SD/OI), and the cost informa- tion is automatically generated by the district’s fi nancial system. The district should ensure that students are correctly identifi ed, transportation costs are reasonably distributed between HTS and SD/OI and costs are charged to the proper accounts so that information is reported correctly. Transportation Services Contract No single district employee manages the contract with Student Transportation of America, Inc. (STA). Consequently, elements of the contract are not followed, and interviews indicated that some elements of the contract have been amended by verbal agreement over its term. A single employee should be immediately assigned to oversee the contract, and the district should either follow the contract terms or amend the contract in writing to refl ect current practices. The term of the contract with STA ends on June 30, 2012. The district should extend the term of the existing contract one fi scal year and prepare documents to go to bid and award a new contract for transportation services prior to July 1, 2013, to ensure competitive pricing, best available service, and review of contract terms. The district is invoiced weekly for transportation service; however, the invoice information is not suffi cient for district staff to properly audit. The district should require the contractor to include the following information on the weekly invoice: the established route time, actual daily route time, total variance between the two times, and the reason for the variance so that the informa- tion can be easily compared and reconciled to each driver’s daily bus report. Five buses are considered out of service and no longer maintained under the contract. The district has requested that STA continue to maintain these buses to retain their California school bus certifi cation, and the district pays additionally for this service. However, the buses are inspected more frequently than required by law. The district should ensure that out-of-service buses are inspected on a 45-day calendar and determine whether the buses should be reinstated and used for fi eld trips. Routing Methodology The district’s board policies for pupil transportation service are outdated and should be reviewed and updated regularly. Some of the district’s special education students who attend programs outside the district and/or nonpublic schools are transported on buses operated by Forsythe Transportation, the contractor for William S. Hart Union High School District. A written contract should be developed for these services, and suffi cient detail should be included on the invoices so that they may be properly audited. SAUGUS UNION SCHOOL DISTRICT 4 EXECUTIVE SUMMARY Special education student transportation service needs are included on a spreadsheet at the beginning of each school year, and changes are often communicated by a telephone call or e-mail throughout the year. The district should develop and use a transportation request form for special education students who require transportation and ensure that it is used for all changes. The district should also ensure that students are identifi ed as severe or nonsevere based on defi nitions included in Education Code Sections 41850 and 56030.5. Bus route effi ciency is often tied to school bell times, and adjustments to bell times may yield pupil transportation savings. The district should work with STA annually to determine if some minor bell time adjustments could yield additional route effi ciency. Vehicle Maintenance The California Highway Patrol’s (CHP) Motor Carrier Division annually inspects every bus and evaluates school transportation operations. They produce a report commonly known as the “terminal grade.” The inspection includes evaluation of the preventive maintenance program, vehicle maintenance records, driver training records, driver hours on duty and driver drug and alcohol testing program. The district received the highest grade awarded by the CHP, “satisfac- tory,” on the 2011 annual inspection. Five of the district’s buses are out of service. Although discussions have occurred regarding disposal of the buses, the district should consider keeping and maintaining them as they may qualify for future grant replacement programs. The district should ensure that training is provided to staff to apply for bus replacement and diesel particulate fi lter grants when funding opportunities are available. In addition, six van-type buses will soon need replacement, and the district should develop and implement an equipment/vehicle replacement plan. The district should obtain quotes and secure competitive pricing for fuel deliveries and order in larger quantities to benefi t from the lowest possible prices. Fuel is dispensed through an electronic fuel management system, but the system has reporting capabilities that the district does not use. The district should manage its fuel use and produce weekly reports to ensure fuel is charged to the correct accounts. FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 5 TRANSPORTATION FINANCE Findings and Recommendations Transportation Finance California’s pupil transportation program has been underfunded for many years. Prior to 1977, the state fully reimbursed school districts for their approved pupil transportation operational costs. School districts reported their operational costs at the end of each fi scal year and received reimbursement in the subsequent year. After Proposition 13 passed in 1978 and up to the 1982-83 fi scal year, the state reduced the percentage of reimbursement to 80% and capped funding at that level. School districts that have increased their pupil transportation service due to enrollment growth do not receive additional funding. Following the 1982-83 base year, the state continued to reduce the percentage of funding for the program although cost-of-living adjust- ments (COLAs) have been applied inconsistently. Funding for education has been severely reduced for the last four years due to the state and federal budget crisis. Transportation funding has continued to decline because of state budget cuts and defi cits that have been applied, and from 2008-09 to 2009-10 funding was reduced by approxi- mately 19.84%. Consequently, the current level of state funding only provides for approximately 35% of the total reported pupil transportation costs statewide. As pupil transportation costs have increased and the state funding that supports the program has decreased, many school districts have experienced larger unrestricted general fund contributions to transportation each fi scal year. The 2011-12 state budget included language that provided for automatic mid-year cuts to education funding if the projected revenue levels did not materialize. In December 2011, the California Department of Finance announced that the annual revenue estimates were $2.2 billion less than projected. Therefore, mid-year cuts that were to include a 50% reduction in transportation funding, were imposed on school districts. Senate Bill 81 restored the funding to pupil transportation but reduced school district revenue limits statewide to offset the restoration. The state’s fi scal crisis has already resulted in deep budget cuts to local educational agencies (LEAs), and funding for the 2012-13 fi scal year is uncertain given the ongoing state budget defi cit. The gover- nor’s January proposal for the 2012-13 state budget included complete elimination of transportation funding. The governor’s May Revise proposal provides for the 2011-12 amount of transportation funding, but allows the funds to be spent for any educational purpose; this proposal is contingent on passage of the governor’s tax initiative. State budget discussions have continued regarding 2012-13 transportation funding, and the outcome is unknown until the state budget is approved. Regular education home-to-school (HTS) transportation is not mandated under California law, but may be provided under local school district policies and practices. However, federal law mandates that special education students identifi ed through their Individualized Education Program (IEP) as requiring transportation as a related service to access their education program location to be provided with transportation (Individuals with Disabilities Education Act (IDEA), Code of Federal Regulations Title 34, Section 300.34 (c)(16)). Education Code (EC) Section 41850 defi nes HTS transportation, which may include nonsevere special education pupils. Special education transportation is specifi cally defi ned in EC Section 41850(d)(1) in two categories: severely disabled and orthopedically impaired (SD/OI). Orthopedically impaired refers to pupils who require a vehicle with a wheelchair lift and severely disabled is defi ned in EC Section 56030.5 as follows: SAUGUS UNION SCHOOL DISTRICT 6 TRANSPORTATION FINANCE …individuals with exceptional needs who require intensive instruction and training in programs serving pupils with the following profound disabilities: autism, blindness, deafness, severe orthopedic impairments, serious emotional disturbances, severe intel- lectual disability, and those individuals who would have been eligible for enrollment in a development center for handicapped pupils under Chapter 6 (commencing with Section 56800), as it read on January 1, 1980. Many school districts have been reducing or eliminating regular HTS transportation in response to declining state funding. School districts need to be cautious, however, because reducing costs below the district’s state-approved apportionment level (the highest level of funding) will reduce future apportionments to the lower cost level, as outlined in EC 41851(c). School districts are required to report their pupil transportation costs and related data to the state annually on Form TRAN, with the unaudited actuals fi nancial report. Form TRAN includes the number of buses used, number of students transported daily, total miles driven and related annual costs in two columns: home-to-school (HTS) and SD/OI. To report transportation cost information to the state, districts are required to use the Standardized Account Code Structure (SACS) software. The SACS software necessitates the use of Resource 7230 for HTS transporta- tion for all students that are not SD/OI, and Resource 7240 for SD/OI students. The table below summarizes pupil transportation data from the district’s Form TRAN and the California Department of Education (CDE) for the past three years. Transportation Data 2008-09 2008-09 2009-10 2009-10 2010-11 2010-11 HTS SD/OI HTS SD/OI HTS SD/OI Number of Buses 14 5 6 8 9 5 Number of Pupils 456 37 88 60 119 32 Number with Transportation in IEP 103 37 102 57 81 32 Number of Miles 145,887 70,564 70,326 105,353 114,131 47,775 Cost per Mile $7.47 $4.41 $8.00 $4.58 $5.03 $7.35 Cost per Pupil $2,391.07 $8,402.11 $6,396.56 $8,038.27 $4,824.27 $10,978.40 Total Approved Expense $1,090,325.50 $366,201.15 $562,897.06 $482,296.09 $599,088.09 $376,308.74 Revenue $185,007.00 $290,617.00 $148,299.00 $232,954.00 $148,766.00 $233,688.00 Encroachment $905,318.50 $75,584.15 $414,598.06 $249,342.09 $450,322.09 $142,620.74 Encroachment % 83.03% 20.64% 73.65% 51.70% 75.17% 37.90% Total Encroachment $980,902.65 $663,940.15 $592,942.83 Total Encroachment % 67.35% 63.52% 60.79% A review of the data indicates that in the 2009-10 fi scal year, 60 SD/OI students were reported, with 57 having an IEP requirement for transportation service; the two numbers should be iden- tical. The district’s cost per mile and cost per pupil varied signifi cantly from year to year. Based on the FCMAT study team’s experience and data posted by the CDE, the district’s per-pupil cost was higher than that of other school districts. For example, the statewide average cost per pupil in the 2008-09 fi scal year was $1,520 for HTS and $6,268 for SD/OI. Saugus’ cost per pupil in the same year was $2,391 for HTS and $8,402 for SD/OI. In addition, the district’s SD/OI cost per pupil increased signifi cantly over the subsequent two years to $10,978. As previously noted, the state pays for approximately 35% of pupil transportation costs statewide. School districts on average must contribute 65% of the overall cost; Saugus had an overall encroachment that was slightly less than the statewide average in 2009-10 and 2010-11. FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 7 TRANSPORTATION FINANCE Staff members identify bus routes as “regular ed,” “special need” or “severe special need” based on input received from the contracted service provider. The cost for the severe special needs routes are assigned to the SD/OI column on Form TRAN. However, the Student Support Services Department has not had input on this critical determination. Staff indicated that more of the special education students should be categorized as severe; therefore, their costs would be reported in the SD/OI column of Form TRAN. Also, because special education student transportation needs and routes change throughout the year, the determination for proper cost assignment must be regularly reviewed. In the 2009-10 fi scal year, the district eliminated regular education HTS transportation except for one bus route that serves Bouquet Canyon Road and Lily of the Valley Trailer Park, delivering those students to Highlands Elementary School. The governing board eliminated this bus route for the 2012-13 school year, and this change should save approximately $62,000 based on the current contract price. Fuel is purchased in bulk and stored in underground tanks at the transportation facility, a 5,000-gallon diesel tank and a 3,000-gallon gasoline tank. All fuel is paid from the HTS account (resource 7230) regardless of which district department uses it. Fuel use should be tracked and charged to the appropriate departments to ensure that costs are reported accurately for each program. Interviews indicated that all transportation facility and vehicle repair costs are also being charged to HTS transportation. All pupil transportation costs should be split appropriately between HTS and SD/OI. Recommendations The district should: 1. Continue to evaluate the annual per mile and per student costs and determine how they may be improved. 2. Ensure that HTS costs are suffi cient to protect its approved state apportion- ment. 3. Identify HTS and SD/OI students and bus routes appropriately and report the specifi c data and costs on the Form TRAN per CDE guidelines. 4. Bill fuel costs to the appropriate departments. 5. Distribute all transportation costs reasonably between HTS and SD/OI, including facilities. SAUGUS UNION SCHOOL DISTRICT 8 TRANSPORTATION FINANCE FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 9 TRANSPORTATION SERVICES CONTRACT Transportation Services Contract The district’s home-to-school and special education transportation are provided under a contract with a for-profi t provider, Student Transportation of America, Inc. (STA). The contract term is July 1, 2009 through June 30, 2012. The rates charged for service are increased annually by the Consumer Price Index (CPI) for All Urban Consumers in the Los Angeles-Anaheim-Riverside area for the preceding annual period, July 1 through June 30, and the adjustment is never less than 2% or more than 7%. The district still retains ownership of the buses, and the contractor is allowed to operate from the district’s transportation facility. District staff indicated that they are pleased with the responsiveness and dedication of STA staff. Staff members indicated that an individual was hired part-time on an outside services contract to manage and oversee the agreement with STA; however, the service was terminated approximately two years ago. Since then, no district employee has been assigned overall responsibility for daily oversight of the contractual relationship with STA, and multiple district employees interact with the contractor for various reasons. This condition has created lax oversight of the contract and failure to implement some of the required contractual services. Interviews indicated that oral agreements have supplanted or amended the contract. Best business practices would provide for one district employee to have direct oversight responsibility for the transportation services contract and work in immediate proximity to the transportation facility. Because no single individual manages the contract with STA, several contract terms have not been consistently followed, including: • A weekly summary of all late or missed trips that includes the cause of the problem and corrective action taken is to be kept by the contractor; however, these reports are not provided to the district (contract - page 12). • Copies of drivers’ drug and alcohol testing results, copies of the drivers’ background check, fi ngerprint clearance, California Highway Patrol (CHP) vehicle inspection reports, school bus accident information, and driver training information are kept by the contractor; however, no district offi cial has requested to review these documents other than the occasional bus accident report. In the case of preemployment driver requirements, the contract stipulates the driver cannot begin work until the district receives and reviews this information (contract - pages 12-20). • The contractor provides for the routing and scheduling of service; however, no district employee reviews bus routes for effi ciency (contract - page 14). • After any preventable accident or incident, the driver must receive at least four hours of retraining. No district staff member monitors this requirement (contract - page 19). • The contractor is to fi ll specifi c management and support staff positions. In addition, the contract stipulates a minimum salary for these positions. However, the dispatcher position is not fi lled, and other staff members, such as the driver instructor, serve in dual roles (contract - pages 21-24). • Most fi eld trips are to be accomplished with district buses. Since most of the regular education home-to-school routes were eliminated at the beginning of the contract term, the buses have been parked and placed out of service. However, only in-district and local trips that do not confl ict with regular routes are provided using district buses. Any trips outside the district that confl ict with regular route times are provided with STA buses that come from a yard in North Hollywood. These buses are charged at a higher rate (contract - pages 26-27). SAUGUS UNION SCHOOL DISTRICT 10 TRANSPORTATION SERVICES CONTRACT • Liquidated damages are allowed to be charged for items such as late routes or trips or other service problems; however, district staff members indicated that liquidated damages have not been charged in the past two years (contract - pages 27-28). • A list of weekly vehicle defects and their repairs are required to be recorded by the contractor, but that has not been done in the past two years (contract - page 30). Contract Billing The contractor’s charges for service are established on a fi ve-hour base rate for different sizes of buses. The rate is $349.57 for transit buses, $317.08 for conventional buses and $246.75 for cutaway buses. Typically, a transit bus holds 84 passengers, a conventional bus holds approxi- mately 66 and a cutaway holds no more than 20. Cutaways are often used for special education routes, and the larger buses are used for regular education routes and fi eld trips. Services provided over the fi ve-hour base rate are reported by the quarter hour and charged at $31.49 per hour. STA invoices the district weekly for the service provided; however, the invoicing format does not lend itself to accurate auditing. The invoice lumps all buses of each type together, so there may be several bus routes in each category. The invoice also refl ects any hours over the base rate for each route and adds them together by bus type. This process should be changed so that the district is able to properly reconcile and audit each invoice. The district and STA should agree on an established time for each route, and STA should produce a weekly invoice that lists the following information by day for each route: the established route time, the actual route time, the total variance between the two times, and the reason for the variance. The daily bus report forms completed by each driver should be submitted with the invoice, and a district staff member should compare the invoice to the actual source document. Each variance should be reviewed by district staff before approval for payment to determine whether the excess time is to be paid or liquidated damages are to be assessed according to the contract terms. Interviews indicated that the rates included on the 2011-12 rate schedule include a fi ve-hour base rate, and the over hours summary portion of the weekly invoice appears to be calculated using a fi ve-hour base rate. However, the fi rst two pages of the weekly invoice list the rate for each type of bus, but states it is “per bus for the fi rst four hours.” It also appears that the contractor is considering total route hours divided by the number of routes and giving the district credit for routes that are less than fi ve hours per day. For example, four routes served special education students in conventional buses the week ending December 2, 2011. Each route was driven two days during the week, and the hours shown on the invoice are: 5.00, 5.25, 5.25, 5.00, 4.50, 5.25, 5.25, and 4.75. The invoice indicates that the district was charged for .25 hours over the fi ve-hour base for this group of buses, rather than for 1.00 hour over the base if each route were calculated at a minimum of fi ve hours. This is a benefi t to the district but is not clearly defi ned in the contract or on the rate schedule. A sample invoice is attached as Appendix C of this report. Insurance The contract requires the contractor to maintain public liability insurance, automobile liability insurance, workers’ compensation insurance and employer’s liability insurance. District staff members indicated that the district also insures its buses, and that the district’s insurance is primary unless an accident is the fault of the contractor. Interviews further indicated that STA does not insure out-of-service buses. It may be duplicative for both entities to insure the vehicles that are in service; therefore, the district should research the matter with its insurance carrier and determine the appropriate insurance coverage. FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 11 TRANSPORTATION SERVICES CONTRACT Cocurricular Trips The contract requires the contractor to provide service for cocurricular trips that confl ict with home-to-school transportation route times based on the number of spare buses/vans and a 10% spare factor. The contract states that trips that do not confl ict with route times are to be billed at the rate charged for home-to-school excess hours that are over the base rate. Any other trips may be contracted to STA using its buses and other drivers or to another contractor. The rate for providing trips in district buses is $199.42 for a fi ve-hour minimum, with each additional hour charged at $36.74. Each school is responsible for the fi eld trip charge. In addition, the district charges each school $1 per mile to cover the cost of fuel and other operational costs. Over time, the fi eld trip procedure has changed and interviews indicated that oral agreements have supplanted contract language. For example, trips that are within the district boundaries or are considered to be local are taken on district buses and charged at the $199.42 rate. Trips outside the district boundaries are provided by STA’s charter division that sends buses from North Hollywood, and the rate is $350 for the fi rst fi ve hours and $55 for each additional hour. The trip time is calculated and charged from the applicable school and back to the school, rather than from the contractor’s yard in North Hollywood. Each trip should be analyzed prior to approval and scheduling to determine whether the district has enough buses to provide for the nonlocal trips and if so, the potential cost savings. Out-of-Service Buses At the beginning of the current contract term, the district eliminated all of its regular education HTS bus service except for one route. At that time, fi ve buses were parked and no longer main- tained under the terms of the contract with STA. To retain certifi cation, the California Code of Regulations Title 13, Section 1232 requires that school buses be inspected every 45 calendar days or 3,000 miles, whichever comes fi rst. The district requested that the contractor continue to maintain the out-of-service buses and pays $52.40 per labor hour plus the cost of parts for this service. Based on the information provided, the contractor completes these inspections more frequently than legally required, often approximately every 30 days. These inspections should be done every 45 days to comply with legal requirements and ensure the lowest cost for the service. The contract requires STA to maintain district buses, and the contract states that, “Notwithstanding any signifi cant reduction in the District’s transportation program, the Contractor shall always maintain all vehicles in a fully operational and fully certifi ed condition.” However, the contract has no provision describing what is to occur if the district takes buses out of service, or the number of routes is decreased. It also has no section allowing the contractor to charge additionally for this service. Staffi ng The contract requires specifi c management and support staff positions to be fi lled and includes the minimum salary level and the hours that staff must be on duty. However, one of the positions is not fi lled, and the required hours of operation are not followed. The contract requires a terminal manager, driver instructor, dispatcher, and bus washer or vehicle washing service to ensure that buses are washed a minimum of once every two weeks. A terminal manager and driver instructor have been assigned to the district, but the driver instructor acts as the dispatcher in the mornings and a cover driver acts as the dispatcher in the afternoon. If the cover driver has to drive a route, the terminal manager acts as the dispatcher. The contract states that, “The Terminal Manager, Driver Instructor, Dispatcher may not be utilized to drive or cover routes or trips.” The contractor does not provide a bus washer but uses an outside company to wash buses throughout the year. The buses were clean during FCMAT’s visit to the district. SAUGUS UNION SCHOOL DISTRICT 12 TRANSPORTATION SERVICES CONTRACT The contract requires that STA staff be on duty from 5:30 a.m. to 5:30 p.m. on all the days that school is in session. Interviews indicated that staff members arrive at approximately 5:45 a.m. and depart at 5 p.m. Facility and Equipment Use The contract requires the district to allow the contractor to use all district-owned school buses, provide and maintain two-way radios for the buses, and provide a shop truck for servicing district vehicles. The district also provides the contractor with use of the transportation maintenance garage, the bus parking area, and offi ce, classroom and lounge space. The contractor is not allowed to manage, maintain or park nondistrict buses at the site without district permission. No nondistrict vehicles were on the premises during FCMAT’s visit. The district is also to provide the telephone system, and the contractor is to pay for the cost of telephone service. Other utility costs including water, electricity, natural gas and garbage service are to be charged to the contractor based on 80% of the total cost of the facility. However, interviews indicated that only 50% of the utility costs are charged to the contractor. Considerations for Future Contracts Education Code Sections 39802 and 39803 state the following regarding the bidding require- ments for transportation services: 39802 - In order to procure the service at the lowest possible fi gure consistent with proper and satisfactory service, the governing board shall, whenever an expenditure of more than ten thousand dollars ($10,000) is involved, secure bids pursuant to Sections 20111 and 20112 of the Public Contract Code whenever it is contemplated that a contract may be made with a person or corporation other than a common carrier or a municipally owned transit system or a parent or guardian of the pupils to be transported. The governing board may let the contract for the service to other than the lowest bidder. 39803 (a) - If a continuing contract for the furnishing of transportation of pupils in school districts to and from school is made it shall be made for a term not to exceed fi ve years. A contract is renewable at the option of the school district and the party contracting to provide transportation services, jointly, at the end of the term of the contract. The contract as renewed shall include all of the terms and conditions of the previous contract, including any provisions increasing rates based on increased costs. The contract for transportation services expires on June 30, 2012. The district should conduct a formal bid for transportation service to ensure that it receives the best possible price and service. Because there is not enough time remaining to complete this task before the contract’s expiration date, the district should consider extending the current contract for one fi scal year and imme- diately begin to prepare bid documents so that the bid process may be completed before July 1, 2013. In the future, the district should go to bid for transportation services every three to fi ve years to ensure competitive pricing, best available service and review of contract terms. When the district develops a new contract for transportation services, the following items should be considered: • Determine if it is necessary to require specifi c staff positions and salary levels. Stipulating these items typically increases the cost of the contract. FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 13 TRANSPORTATION SERVICES CONTRACT • Determine if the district should provide its own district-developed bus routing. A contractor generally has no incentive to create effi cient routes when the price of the contract is based on each bus route. As an option, the district could have the contractor provide the routing, but establish the contract price on a per-pupil-transported basis. This method serves as a motivation to route more effi ciently. • Use a three-hour base if per-route rates are established with each additional hour billed beyond the base. A standard route time should also be established for each route. This is a standard contract practice and agreement on a standard route time should provide for fewer daily time overages. • Consider selling the bus fl eet to the contractor, requiring professional appraisals of the value of each bus and incorporating a stipulation relative to the maximum bus age allowed for district transportation services. A condition could also be included allowing the district to purchase the buses back at the end of the contract term for their fair value. This may provide for more effi cient contract oversight. • Consider a more formalized agreement on the use of the district’s facility, which may include the fair rent value and clearer language relative to the specifi c areas and use of the facility. • Consider not purchasing fuel for the contractor’s use. The contractor should purchase and use its own fuel and could rent one of the underground tanks for this purpose. This may help the district better monitor fuel usage and control costs. Recommendations The district should: 1. Appoint one district employee to oversee and manage the contract with STA. 2. Follow the terms of the existing contract or amend the contract in writing to refl ect current practices. 3. Require the contractor to produce a weekly invoice that includes the following information for each route: the established route time, the actual daily route time, the total variance between the two times, and the reason for the variance. The district should also ensure that a district employee is assigned to review the reasons for each reported variance. 4. Ensure that the number of hours included in the base rate is consistently reported on the contractor’s weekly invoices. 5. Contact its insurance carrier and determine the appropriate insurance coverage for the buses. 6. Complete an analysis of fi eld trips to determine whether to reinstate district buses to be used for fi eld trips and any potential cost savings. 7. Inspect out-of-service buses on a 45-day calendar, as legally required. SAUGUS UNION SCHOOL DISTRICT 14 TRANSPORTATION SERVICES CONTRACT 8. Extend the term of the existing contract one fi scal year to allow adequate time to go to bid for transportation services. 9. Bid transportation services every three to fi ve years to ensure competitive pricing, best available service, and review of contract terms. 10. Consider amending the terms of the new contract as discussed above. FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 15 ROUTING METHODOLOGY Routing Methodology Pupil transportation service is generally determined by board policy and administrative regula- tions. The district’s Board Policy 3541 states that, “The District will provide transportation for pupils in compliance with state law and regulations. The Superintendent is asked to administer the operation so as to: a) Provide for maximum safety of pupils. b) Supplement and reinforce desirable pupil behavior patterns. c) Assist handicapped pupils appropriately.” As previously discussed, regular education home-to-school transportation is not mandated by law. Typically board policy would include specifi cally defi ned criteria articulating eligible areas where transportation service would be provided. The district has no such policy. The district has reduced HTS transportation service in the past, and the governing board has eliminated the service for the 2012-13 school year. If the district decides to reinstate HTS transportation service in the future, a clear policy should be adopted that defi nes eligibility. The district provides transportation to special education students as a related service when it is dictated by a student’s IEP. The district’s Board Policy 3541 and 3541.2 include the details of this requirement; however, the language is outdated, and the policies provided to FCMAT did not include governing board adoption dates. Thirteen established bus routes serve district students. One is a regular education HTS route, but the district has taken action to eliminate it for the 2012-13 school year. The remaining 12 routes serve approximately 104 special education students that require transportation as provided by their IEPs. Bus stops have been placed at corner locations that students may walk to if they are able, and other students are required to walk to their neighborhood school site so they can ride the bus to their program location. The district has also implemented a transfer point at Highlands School. According to the federal Individuals with Disabilities Education Act (IDEA), students should be placed in the least-restrictive environment similarly to their nondisabled peers. Having students walk to a corner bus stop or to their local school if they are able is in alignment with this requirement. These changes have also enhanced bus-routing effi ciency. The district serves approximately 8.6 special education students per route, which compares favorably with load factors that FCMAT has observed in school districts with a rural/suburban population density that cover a relatively large geography. The Student Support Services Department reported that ride times for students are shorter this year, and fewer complaints have been received regarding ride times. In addition to the contract with STA for in-district students, the district also pays the William S. Hart Union High School District to transport some of Saugus Union’s special education students to out-of-district and/or nonpublic school sites on buses provided by William S. Hart’s contractor, Forsythe Transportation, Inc. However, there is no formal written agreement for this service. The district is invoiced weekly, and the information provided indicates its students are assigned on two to four bus routes, depending on the week. The district pays a percentage of the route cost based on the ratio of its students to the total number of students on the bus. The invoice does not include student names, the programs they attend, the total number of students on the bus or any other information that would allow the district to properly audit the invoices. Based on the sample invoices reviewed by FCMAT, the invoice amounts varied between $120 to almost $900 per week from July through December 2011. SAUGUS UNION SCHOOL DISTRICT 16 ROUTING METHODOLOGY At the beginning of each school year, the Student Support Services Department provides a spreadsheet that details the need for transportation services for special education students. The spreadsheet includes the student name, home address, school of attendance, and disability or special equipment needs. STA routes students based on this information, local knowledge regarding traffi c patterns and school bell times. Information regarding any subsequent modifi ca- tions during the school year; such as a change of student address or program location, a deletion of service, or addition of a student, is transmitted by a phone call or e-mail, and the spreadsheet is subsequently updated. Because use of this informal system allows for details to be missed, the district should develop and use a transportation request form that includes all information neces- sary to provide transportation services. A sample form is attached as Appendix A of this report. The district has designated four routes as “severe special need” and eight routes as “special need.” As previously discussed, the Student Support Services Department should specifi cally identify whether students are severe or nonsevere according to the defi nitions included in Education Code Sections 41850 and 56030.5. School site bell time separation could yield additional bus route effi ciency. If one bus can serve more than one school or program it may enhance bus route effi ciency. The district should meet with STA to determine if some minor bell time adjustments could yield additional effi ciency. Recommendations The district should: 1. Regularly review and update board policies, including Board Policy 3541 and 3541.2. 2. Develop a formal contract with William S. Hart Union High School District for special education students that are transported to out-of-district and/or nonpublic school locations. 3. Request that the William S. Hart Union High School District provide addi- tional detail on transportation services invoices so that they may be properly audited. 4. Develop and use a transportation request form for special education students who require transportation and ensure that it is used for all changes. 5. Identify students as severe or nonsevere based on Education Code defi nitions. 6. Determine whether bell time changes could yield additional bus route effi - ciency. FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 17 VEHICLE MAINTENANCE Vehicle Maintenance The objective criteria that can be used to evaluate a pupil transportation operation’s compliance with laws and regulations are included in the California Highway Patrol’s safety compliance report/terminal record update, also known as the terminal grade. This report annually evaluates and grades motor vehicle carriers, evaluates the preventive maintenance program and generally includes the inspection of several buses. In addition, the inspection includes the evaluation of driver training records, driver hours of service records, and driver drug and alcohol testing records. The district is the carrier of record, owns the buses and its identifying carrier (CA) number is on the buses. The district has received the highest grade possible, “satisfactory,” on the 2011 annual inspection, and this refl ects positively on the performance of STA in the listed areas. Facility The district’s transportation facility is shared between STA and the Maintenance and Operations Department. The facility includes a two-bay shop, but only one of the bays is dedicated to vehicle maintenance. The other bay is used for storage of district equipment. Numerous cargo containers are located at the facility; two are maintained by STA and contain parts for buses and other vehicles. The other containers store district equipment and supplies. A portable classroom building is located on site and is used as offi ce space for Maintenance and Operations Department staff, including the director, the custodial supervisor and an administrative assistant. The shop includes an offi ce used by two maintenance supervisors and another offi ce for the lock- smith. The facility is fenced and gated, includes an outside work area for the Maintenance and Operations Department, and is used for storing the department’s vehicles and equipment. The areas of the facility used by STA for pupil transportation are neat and clean. Fuel Two underground fuel tanks are located at the facility, a 5,000 gallon diesel tank and a 3,000 gallon gasoline tank. The dispensers are controlled by an electronic fuel management system, and a key is assigned to each employee who needs access to fuel. The Maintenance and Operations Department monitors the fuel use and reorders fuel. According to the contract terms, the district pays for all fuel for district-owned vehicles used by STA. The information provided to FCMAT indicates that fuel is ordered through one supplier; however, more competitive pricing may be achieved by requesting quotes from various suppliers for each delivery. Fuel may also be ordered more frequently than necessary. Invoices refl ect deliveries of diesel that are often below 2,000 gallons and deliveries of gasoline that are generally below 1,000 gallons. The district could benefi t from lower pricing that is generally attained through larger orders. The district’s electronic fuel management system can manage and control fuel usage and produce reports that may provide benefi cial management information. However, the system capabilities are not being fully used. As previously noted, all fuel is paid from resource 7230, home-to-school transportation, including fuel used for maintenance and operations purposes and for SD/OI transportation. The system should be used to separate uses by vehicle and assist in charging fuel to the proper accounts. The district received two propane buses through a grant from the South Coast Air Quality Management District (SCAQMD). The fuel is purchased from a station owned and operated by the William S. Hart Union High School District that is located at its transportation yard. Saugus Union also received some funding from SCAQMD that was used to help construct the station. Saugus and William S. Hart entered into an agreement dated June 1, 2011 that allows Saugus to SAUGUS UNION SCHOOL DISTRICT 18 VEHICLE MAINTENANCE fuel its propane buses at the facility. Hart invoices Saugus at the same rate they pay for the fuel. The agreement also requires Saugus to share in the maintenance cost of the fueling station based on the ratio of the number of buses fueled by each party who uses it. To appropriately plan and budget for the propane station maintenance costs, Saugus should work with staff at William S. Hart to determine its share of the cost. Buses The district owns 21 school buses and one eight-passenger van that are used to transport students; fi ve of the buses are no longer in service. As previously discussed, these buses are inspected regularly to remain certifi ed, at the district’s request. Interviews indicated that the district may be considering selling these buses. Because of the potential for replacement funding, the district should consider keeping the buses and applying for grants to replace them when the opportunity arises. Continuous certifi cation of these school buses is necessary to qualify for future bus replacement grants. The four oldest buses, among the fi ve that are out of service, include one 1987 coach-type bus, two 1988 coach-type buses and one 1988 van-type bus. The remaining 17 buses (including one of the out-of-service buses) have an average age of approximately 10.5 years. Six of the van-type buses are thirteen to fi fteen years old and approaching 200,000 miles. The California Association of School Business Offi cials (CASBO) School Transportation Performance Profi le recommends replacement of van-type buses at seven years and 100,000 miles. Many school districts continue to operate these types of buses up to 15 years and 200,000 miles. However, if the district main- tains ownership of the buses, a plan for replacement should be developed and implemented. The California Air Resources Board has adopted truck and bus regulations that require diesel buses with a gross vehicle weight rating of more than 14,000 pounds to have a diesel particulate fi lter. Thirty-three percent of the district’s buses must be in compliance by January 1, 2012, 66% by January 1, 2013, and the rest by January 1, 2014. While there are some exceptions to the regulation, interviews indicated that the district is in compliance, and 10 buses are outfi tted with the fi lter. Additional information regarding the regulations is attached as Appendix B to this report. Bus replacement grant funding and funding to install diesel particulate fi lters (DPF) have been available over time from the SCAQMD and other sources. A recent statewide opportunity for DPF funding was offered through the San Joaquin Valley Air Pollution Control District; however, the district did not apply for this program. The district should ensure that training is provided to staff so that funding opportunities are not overlooked in the future. Recommendations The district should: 1. Secure competitive pricing for fuel deliveries, and order in larger quantities. 2. Use the electronic fuel management system to manage fuel use and produce reports needed to charge the correct accounts for fuel. 3. Work with staff at the William S. Hart Union High School District to deter- mine its share of the maintenance costs for the propane fueling station, and include these costs in its budget. FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 19 VEHICLE MAINTENANCE 4. Consider keeping the fi ve buses that are no longer in service and applying for grants to replace them when the opportunity arises. 5. Develop and implement a plan to replace the six oldest van-type buses. 6. Ensure that training is provided to staff and apply for bus replacement and DPF grants when funding opportunities are available. SAUGUS UNION SCHOOL DISTRICT 20 VEHICLE MAINTENANCE FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 21 APPENDICES Appendices A. Sample Transportation Request Form B. California Air Resources Board Regulations C. Sample Invoice D. Study Agreement SAUGUS UNION SCHOOL DISTRICT 22 APPENDICES FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 23 APPENDICES A. Sample Transportation Request Form SAUGUS UNION SCHOOL DISTRICT 24 APPENDICES B. California Air Resources Board Regulations FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 25 APPENDICES SAUGUS UNION SCHOOL DISTRICT 26 APPENDICES C. Sample Invoice FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 27 APPENDICES SAUGUS UNION SCHOOL DISTRICT 28 APPENDICES FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 29 APPENDICES SAUGUS UNION SCHOOL DISTRICT 30 APPENDICES D. Study Agreement FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 31 APPENDICES SAUGUS UNION SCHOOL DISTRICT 32 APPENDICES FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM 33 APPENDICES SAUGUS UNION SCHOOL DISTRICT 34 APPENDICES FISCAL CRISIS & MANAGEMENT ASSISTANCE TEAM