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Fargo transit staff propose moving drivers in-house; project shows near-term savings and potential service changes
Summary
Transit Director Julie Baumelman proposed converting contracted drivers to City of Fargo employees, projecting about $500,000 in 2026 budget savings and up to $2 million later; staff also recommended route and service adjustments, possible fare changes and noted a new state allocation worth roughly $425,000 to Fargo.
Julie Baumelman, Transit Director, told the Fargo City Commission that transit staff propose bringing contracted bus drivers into City of Fargo employment to gain operational efficiencies and reduce costs.
“We are looking here at apples to apples…we are projecting as far as the impact to the 2026 budget, there would be about a $500,000 savings,” Baumelman said.
The proposal would convert a contractor model to a city payroll comprising approximately 75 drivers, 16-year drivers (senior drivers with training duties), four road supervisors, one HR generalist and six part-time temporary positions. Baumelman said the payroll and benefit projections used city HR assumptions for single and family plan participation and included built-in overtime.
Benefits of the conversion cited by staff include eliminating the annual RFP process and related negotiation load, removing an annual performance bond cost (about $100,000), avoiding a contract-related insurance surcharge (estimated $200,000 if drivers remain contractors) and reducing turnover (current contractor turnover cited at 53 percent annually).
Baumelman said longer-term adjustments and route changes are part of the Transit Development Plan (TDP), now about three-quarters complete. Staff recommended several operational proposals to the commission: eliminate low-performing Route 16 and reallocate resources to West Fargo if partners will assume cost; expand time on high-performing Route 15 to improve on-time performance; reallocate southern portions of Route 18 to serve Elliot Place senior housing; consider eliminating on-demand industrial-park service (about $300,000 per year) and consider removing Sunday paratransit service (saving roughly $125,000 per year), which currently serves about 10–11 riders on Sundays.
“We would recommend eliminating that service if that is what the Commission would be willing to support,” Baumelman said about on-demand industrial-park service.
Baumelman also told the commission that a new North Dakota legislative allocation of $2,000,000 for the state’s four urban transit providers would bring Fargo roughly 42.46 percent of the new funding—about $425,000—in 2025 and 2026. Staff requested a study and additional work to identify a long-term dedicated funding source for fixed-route transit.
Commissioners and staff discussed potential fare increases; Baumelman said industry practice assumes a 10 to 15 percent fare increase could reduce ridership and noted the memo includes elasticity analysis for 10 and 15 percent fare increases. Any fare changes would require agreement from partner jurisdictions (Dilworth, West Fargo, Moorhead, NDSU) because of cost-sharing arrangements.
Baumelman asked commissioners for questions specific to bringing drivers in-house; staff said they plan to bring a formal item through FAR (finance/administration/resolution process) so the conversion decision can be incorporated into the 2026 budget if approved. The TDP recommendations will be consolidated with the city budget and brought to the commission for public hearing and adoption in mid to late June, with final public input sought in early June.
Next steps: staff will return with detailed budget impacts, a formal FAR request for the drivers-in-house decision and TDP route/fare recommendations for public hearing in June.
