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Board approves transportation contract with fuel-surcharge formula; trustees raise cost concerns
Summary
The board approved a multi-year transportation contract that includes a benchmarked fuel-surcharge clause. Staff explained the benchmark is a three-year Atlantic-region diesel average adjusted upward by 10%; trustees pressed for clarity on monthly calculations and warned the contract could raise district costs over prior arrangements.
The Jersey Shore Area School District board voted to approve miscellaneous contract items including a new transportation services agreement that contains a fuel-surcharge mechanism trustees examined in detail.
Business staff explained how the fuel surcharge is calculated: the contract sets an annual benchmark using the three most-recent years of Atlantic-region diesel pricing (the administrator described the benchmark calculation and a 10 percent upward adjustment to set the benchmark), and then compares each month's published regional price to that benchmark. If a month's price exceeds the benchmark, the district pays a surcharge calculated on a per-route basis (the contract used a 12.5-gallons-per-day-per-route multiplier in examples).
"The benchmark is calculated as follows... the average is then increased by 10%. That will set the benchmark for the remainder of the year," the business official said, describing how monthly publication of regional prices creates the surcharge trigger. Using historical numbers, staff said they would have paid roughly $13,000 for March through June in a prior year under the benchmark cited in the presentation.
Trustees questioned whether the benchmark and region chosen were representative of the district's local fuel costs and noted the proposed multi-year contract projection could mean higher total payments over three years (staff cited a comparison figure of roughly $131,000 against the prior arrangement across the contract period). Trustees asked whether surcharges apply to short runs as well as long routes; staff said the contract applies the surcharge across runs per route standard.
The board approved the miscellaneous items (a through h) by voice vote and completed roll-call votes on the remaining item(s); the contract will be administered by the business office and any surcharge payments above the state reimbursement formula will be borne by the district.
What happens next: The transportation contract goes into effect as written; the business office will monitor monthly published prices and report any significant surcharge impacts to the board.
