Rutherford County work session outlines new four‑year school bus contract; insurance, penalties and pay are main disputes

Rutherford County School System officials on March 18 presented a proposed four‑year contract for school bus operators that would require contractors to carry their own liability insurance, add a $4,000 annual insurance fee per regular bus, institute fines for repeatedly uncovered routes and permit smaller buses on some routes.

The proposal was described by the presenter, identified in the meeting as Mr. Reed, as a redline of the current agreement meant to reconcile transport‑department requests and suggestions from the Bus Contractors Association. “They've been good partners with the school system for many years,” Reed said, summarizing the system’s relationship with contractors, and added that the draft attempts to “accommodate the concerns being raised by both sides.”

Why it matters: The changes would shift both operational and fiscal responsibilities and could raise the school system’s operating costs. School staff estimated the new insurance arrangement would cost the district substantially more than the previous arrangement in which the county carried contractors on its liability policy; school staff said the new per‑bus fee could total roughly $1.3 million at the proposed rate and route counts.

Insurance and fees

Under the draft contract, bus contractors would be required to carry their own coverage: auto liability of no less than $1,000,000, business liability of no less than $1,000,000 and a $2,000,000 umbrella policy for a combined $3,000,000 in limits. The draft also proposes naming the school system as an additional insured.

Reed said the change follows a state statutory change that now requires contractors to obtain their own liability insurance, and he presented the three‑part limits above as a reasonable market level. Reed said the $4,000 figure in the draft is intended to cover the first year’s premiums per regular bus and that the board would re‑examine the fee if premiums rose more than 30% by the start of year three.

Tom Russell, representing the Bus Contractors Association, said the association’s members are prepared to carry minimum liability but object to being made the primary source of coverage for students. Russell cited TCA 49‑6‑211 and the Tennessee Board of Education regulations as governing contractor coverage and said his members view student coverage as the school system’s responsibility under current law. “It is asking the association to take on responsibilities that they aren't required under the law to do,” Russell said.

School staff told the board the county historically insured contractors for school transportation but the statutory change removed that option. Staff also said the district’s actuarial review indicates the district would pay more under the contract's proposed approach than under the existing county policy: “This will be a new expense. That has not been in our budget before,” one staff speaker said.

Penalties, enforcement and appeals

The draft adds a structure to address routes repeatedly run by substitute equipment or not covered on schedule. It requires contractors to have a plan for covering routes when a bus or driver is unavailable and gives the transportation department discretion to assess fines: a $100 full‑day or $50 half‑day penalty if a contractor’s route is covered by another provider for 12 calendar days, with grounds for contract termination if a route is covered for 20 days or more in an academic year.

Reed emphasized the language is discretionary and includes exceptions for legitimate delays (for example, parts delays). He described a stepwise enforcement process before fines: verbal warning, written warning, and a performance infraction meeting with transportation management. If unresolved, contractors can appeal first to the director of schools and then to a newly proposed three‑person Transportation Contractor Review Board composed of a board designee, a non‑transportation staff designee from the school system, and the board attorney.

Contractor representatives said they worry that part availability and other mechanical delays — not deliberate neglect — could trigger penalties. “To find that part is completely out of the control of the contractor,” Russell said. Several board members discussed giving transportation authority latitude to resolve isolated incidents and coming to the board for repeated failures.

Compensation, fuel index and timeline

Board staff presented a placeholder 5% increase in seat and mileage rates but said the board must set the final increase before budget deadlines. Contractors asked for a much larger adjustment: Russell said the association had proposed a 34.8% increase to reflect higher labor, parts and fuel costs reported since the previous contract cycle. Staff noted a possible midpoint of 10% to 12.5% had been discussed.

The contract retains a fuel index. Staff proposed new base prices — $4.00 per gallon for diesel and $3.50 for gasoline — that are used to trigger fuel‑cost adjustments if the published index rises more than 10% above the base. The draft also says the board will review compensation if fuel exceeds $6.00 per gallon.

Staff asked the board to signal a compensation decision by April 10 (ideal) or no later than April 24 so the district can finalize numbers for the county finance director by mid‑May and complete the budget process.

Vehicle size, rosters and other operational changes

The draft allows contractors to use 78‑passenger buses (or larger) on approved routes; the system's historical minimum had been 90‑passenger buses. Reed said smaller buses would be permitted only with prior transportation‑department approval and warned contractors that choosing smaller buses carries the risk of route changes if enrollment grows in a subdivision.

The draft requires an initial roster share to contractors before the first day of school and allows an updated roster about 30 days after school starts. Reed said drivers remain obligated to pick up students who appear at stops even if they are not on the roster.

The draft also: proposes one annual transportation meeting on the fourth Thursday in July (SPED drivers would still have two meetings); bars animals on buses unless required by an IEP or for students with disabilities; prohibits glass, food and drink on buses except water and lunches (with exemptions for medical or free‑and‑reduced‑meal take‑home items); and allows contractors to request and view bus camera recordings during business hours within a short turnaround (the draft says two business days; staff suggested three days may be sufficient).

Seat repair and video access

Board members and contractors discussed a recurring operational complaint: damaged seats and vandalism. Transportation staff said they can provide estimates and a blanket purchase order that can, in many cases, get seats repaired quickly; contractors sought faster, consistent turnaround. Reed said the district is open to exploring mobile vendors or other arrangements if they are cost‑effective.

What was not decided

No formal votes were taken at the work session. Several issues were left for further negotiation or board decision: the final percentage increase for seat/mileage rates; whether the district will offer any form of retroactive or partial insurance support for student coverage; whether the $4,000 fee will be per bus or per route (the draft says per bus but used “per route” language that staff said needs editing); and the precise timeline for camera‑access turnaround and fine appeals to the review board.

Who spoke

Major participants in the discussion included the staff presenter identified as Mr. Reed; Transportation staff member Trey Lee; Director of Schools Dr. Sullivan; board members including Caleb Tidwell, Ms. Darby, Ms. Rosales, Mr. Vaught, Ms. Sharp and others; Tom Russell, who identified himself as representing the Bus Contractors Association; and multiple bus contractors and parents in attendance.

Next steps

Reed said the draft remains open to negotiation and encouraged continued meetings with contractor representatives. Staff asked the board to indicate policy choices on compensation and insurance structure by the April timeline so the district can meet budget deadlines. Contractors asked the board to consider use of a CPI‑style adjustment or a larger one‑time increase to reflect recent inflation in parts, labor and fuel costs.

Ending

Board members and contractor representatives agreed to continue negotiations; the board did not adopt the draft at the work session and scheduled no formal vote that evening.