Board reviews school bus contracts as fuel, maintenance and rental fees push costs higher

Deming — School district staff, two contracted bus companies and board members on July 15 reviewed the district’s “to‑and‑from” transportation contracts and how fuel, maintenance and rental‑fee rules from the state affect local costs.

The discussion focused on three budget drivers: the PED allocation that is based on the state’s 120th‑day ridership count; a negotiated 6% increase the district approved this year for contractor salaries and for the combined operations, maintenance and fuel (OMF) per‑mile payment; and rental fees passed through from PED when buses are replaced.

That 120th‑day reporting, staff said, is a state statutory requirement and counts students who actually rode buses on that single day. "It's because they want as many kids to ride that day as possible," Superintendent Nick said, explaining why local allocations sometimes fall short of projected needs. Patty Treviso, transportation staff, told the board the district reported 2,819 riders on the 120th day; 184 were exceptional‑student riders. Local riders numbered 2,036 and 783 came via the port of entry, she said.

Why the numbers matter: Joe Adcock, district finance staff, showed a spreadsheet mapping PED allocations against contract line items and said the PED allocation to the district rose about 4% this year. District staff and contractors negotiated a 6% increase for "salaries and benefits" and a 6% increase for the per‑mile operation/maintenance/fuel figure, which contractors put at roughly $2.00 per mile this year from about $1.89.

Adcock and Treviso told board members the total dollar change is moderated by mileage shifts; M and T reported lower total miles this year, reducing the overall contract increase in dollars even though rates rose. The spreadsheet used by staff showed an example annual mileage figure of about 326,630 miles for one contractor’s routes in the year presented.

Rental fees, staff said, are handled separately. Treviso and Adcock said PED lists rental allocations when a bus is scheduled for replacement; the district passes that rental money to the contractor over the rental term while PED remains the source. As an example, staff presented a recent bus costing about $129,000 with a rental payment schedule that would yield about $33,000 a year to the district and, over 52 months, about $144,000 to the contractor depending on how the contractor finances the purchase.

Board members pressed for greater clarity. Member Kroll said board oversight requires that the district show how increases break down by fuel, maintenance, and salaries. "It would be more fair and make more sense and be more transparent ... if we were actually using the methodology based on average maintenance costs and actual fuel used and projected fuel per mile," she said. President Orozco and other board members asked staff to separate future negotiations into three distinct buckets — fuel per mile, maintenance by bus, and salaries — rather than a combined per‑mile payment.

Staff described two reasons the district sometimes must use operational dollars to cover contracted transportation costs: (1) the PED allocation is based on the single‑day ridership count and not total eligible riders, and (2) rental fees may appear or grow during a year when PED authorizes bus replacements. Adcock said the district will seek clearer financial detail from contractors in future negotiations.

Contractor representatives said driver recruitment and certain repairs are increasing their costs. David Sanchez of M and T and Brandon Hanes of Hanes buses described rising parts and labor prices, long tow charges for buses sent to larger service centers, and a limited local diesel mechanic workforce. Hanes said recruiting and training drivers is costly and some contractors now pay for medical and testing required to secure commercial driver credentials.

Board members and staff also discussed warranties, maintenance capability and the district’s limited ability to force changes mid‑contract. Treviso reviewed the termination process described in the contracts and the state code: if the district alleges violations, it must serve notice, hold a hearing within 10 days and the decision is subject to the state transportation director’s approval; appraisals by three board‑appointed appraisers are required if buses would be transferred to a successor contractor.

No formal change to contracts was made during the meeting. Staff said MOUs and any contract amendments for the upcoming fiscal year will be returned to the board for consideration; a full‑service quote the district solicited from out‑of‑area operators was shared with the board for comparison. The board voted to recess before moving to activity‑bus matters.

Why it matters: The district pays more than $2 million annually for contracted transportation. When PED allocations fall short of contract costs, the general operational budget subsidizes transportation — an effect board members said they want better data to explain to taxpayers and to compare against similar districts.

Staff direction and next steps: The board asked staff to present future negotiations with a clearer breakdown between fuel, maintenance (per bus) and salaries; to request more detailed contractor financial reports when appropriate; and to place any contract amendments before the board for formal approval.