Hempfield Area School District Transportation Outsource Success

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Hempfield Area School District Transportation Outsource Hempfield Area School District Transportation Outsource

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

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

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

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

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

Example of Comparison HASD Comparison at 1 % 4 YR Contract First Student Conventional Example of Comparison HASD Comparison at 1 % 4 YR Contract First Student Conventional Mini Other activity Based on 61 routes daily Based on 9 routes daily Based on 650 trips @$220 per Adjusted based on reduced routes Total Hempfield 2009 -10 Budget Bus Operations Driver Wages Yr 1 -Initial year $2, 662, 650. 00 $399, 600. 00 $143, 000. 00 $3, 205, 250. 00 Driver Benefits Yr 3 1% increase $2, 716, 169. 27 $407, 632. 00 $145, 874. 50 $3, 269, 675. 77 Vehicle Insurance Yr 2 1% increase $2, 689, 276. 50 Yr 4 1% increase $403, 596. 00 $2, 743, 330. 96 $411, 708. 28 $10, 811, 426. 72$1, 622, 536. 28 Total 4 yr cost Four Year Contract Price $ 10, 649, 601 $580, 637. 54 Discount in Lieu of rental $ Sale of Fleet $ $ Yr 4 1% increase $ Yr 3 1% increase $ Total Cost 4 yrs Contract $ 400, 000. 00 Radio Lease payments Bus Lease payments Equipment Purchases Other Miscellaneous Subtotal Bus Operations A. Mechanic Wages Mechanic Benefits Medical benefits co-pays Mechanics uniform service 3, 785, 358 3, 823, 212 Savings First Student vs. HASD 140, 000. 00 15, 000. 00 267, 565. 69 13, 500. 00 15, 050. 00 3, 272, 022. 01 Mechanical Repairs 3, 747, 879 15, 067, 220 68, 000. 00 Fuel $13, 014, 600. 54 Engine/Trans/Tire repairs Hempfield Area increased by 1% $ 3, 710, 771 Yr 1 -Initial year Yr 2 1% increase (21, 704. 07) 210, 000. 00 (480, 000) (1, 885, 000) 921, 296. 77 $3, 302, 372. 28 General bus supplies 12, 534, 601 Total Cost 4 yrs Contract $ $147, 333. 04 $3, 237, 302. 50 Medical benefits co-pays 13, 014, 601 Savings before sale of fleet $ $144, 430. 00 1, 243, 313. 62 Subtotal Mechanics 173, 870. 46 66, 105. 25 (2, 175. 57) 3, 700. 00 241, 500. 14 Admin and Management B. Admin/Mgmt wages Admin Benefits 4, 417, 619. 48 B-A Medical benefits co-pays Copier Lease Postage Administrative other TOTAL EXPENDITURES 126, 480. 00 52, 939. 64 (1, 620. 36) 1, 000. 00 17, 450. 00 197, 249. 28 3, 710, 771. 43

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

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

An Exceptional Reference and Tool An Exceptional Reference and Tool

A Summary of the Manual 1. 2. 3. 4. 5. 6. Convincing Analysis Board A Summary of the Manual 1. 2. 3. 4. 5. 6. Convincing Analysis Board Advocacy Community Support Driver Cooperation Media Relations Proposal Development

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

Grading the Submissions CATEGORY Board's direct experience with Proposer's direct experience in school transportation Grading the Submissions CATEGORY Board's direct experience with Proposer's direct experience in school transportation Proposer's staff experience Proposer's references Proposer's maintenance program Proposer's hiring and retention programs Proposer's driver safety and training programs Proposer's student safety programs Proposer's routing plan and process Proposer's proactivity in offering counsel, new ideas Proposer's financial standing Proposer's ability to handle additional work Proposer's insurance coverage and bonding Proposer's price POINTS 10 10 35 35 40 35 35 50 20 25 15 150 Total 500

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

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

Pricing Pricing

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

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

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

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




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