Transportation Lessons: 2010-2012

Preface

In ninth grade, I had an algebra teacher who always wore cowboy boots (I grew up in New York! That was not usual). About mistakes, he had this to say, "It's okay to mistakes. But it's preferable to make a different mistake every time."

That story is meant to say: I know that hindsight is perfect, and foresight is imperfect. So the point of this lesson is to use that knowledge to improve decision-making in the future.


Transportation Lessons: What Can We Learn? (Or: More Proof of the Importance of Evalutation)

Our object lesson is the transportation consolidation that took place over the past two years. You may recall that back in 2009-2010, the Ann Arbor schools (and Ypsilanti and Willow Run) each had their own buses and bus drivers. And all of the county's districts were looking for ways to save money--including on transportation. After much thought, Dexter went to a "one-tier" bus system (all schools start and end at the same time of day, so they can do one run through a neighborhood instead of two or three). Lincoln bus drivers took major pay cuts in order to avert consolidation.

Ann Arbor bus drivers also offered major concessions as an alternative to consolidation. But remember--Ann Arbor is the biggest district in the county, and it is right in the middle of the county. I think the school board felt that if Ann Arbor didn't choose consolidation, then consolidation couldn't work. That, by itself, brought some additional pressure to the Ann Arbor schools.

However--the biggest incentive, by far, was the money savings that were promised. As described by deputy superintendent Robert Allen in April of 2010, in an annarbor.com article that David Jesse wrote,

Hiring a private company to run the district’s busing operations would cost $7,019,214, said Robert Allen, the district’s deputy superintendent for operations. Joining with five of the county’s other traditional districts to form a consolidated busing system would cost the district $6,578,274.

Both those options are cheaper than the district’s current busing system, which costs $8,718,669, Allen said.

In other words, the savings were estimated to be over two million dollars! [I think it was understood that the savings would be a little bit less if fewer districts joined in--which was, in fact, what happened--and in a later article (October 2011, Ann Arbor Chronicle) Robert Allen says the final savings were estimated to be closer to $1.5 million. Still, that is nothing to sneeze at.] It was understood that the bulk of savings would come from reduced staffing costs, despite the fact that the estimates were based on the idea that service levels would remain the same. The reduced pay for bus drivers was ostensibly based on a market rate study.

So on the one hand, I don't blame the school board officials and the school administrators for getting a little bit starry-eyed at the thought of saving all that money!

On the other hand, there were some warning signs that promises from privatization and consolidation don't always turn out all that well. 

Somebody Evaluated Food Service Privatization, But Did We Pay Attention?

Food services had been privatized in Ann Arbor a few years earlier. Had the savings from that approached the promised savings? Not according to University of Michigan researcher Roland Zullo, who is also an Ann Arbor Public Schools parent. Prompted in part by the specter of privatization of Ann Arbor schools custodial and transportation staff, he undertook an evaluation of the food services privatization. (Earlier he had done a larger study of food service privatization.) According to this (very interesting) New York Times article (12/3/2011),

Roland Zullo, a researcher at the University of Michigan, found in 2008 that Michigan schools that hired private food-service management firms spent less on labor and food but more on fees and supplies, yielding “no substantive economic savings.” Alarmingly, he even found that privatization was associated with lower test scores, hypothesizing that the high-fat and high-sugar foods served by the companies might be the cause. In a later study, in 2010, Dr. Zullo found that Chartwells was able to trim costs by cutting benefits for workers in Ann Arbor schools, but that the schools didn’t end up realizing any savings.

[An aside: this, by the way, is consistent with the findings of the AAPS Privatization History blog post that I wrote in March 2010.]

In Zullo's March 2010 review of Ann Arbor food service (read the full report here), he reported that there were initial savings the first year, but the savings evaporated after that. And he says,

By losing their AAPS employment status, food service workers lost their state pension benefits, had their health insurance co-pays skyrocket by 500%, and lost union representation. New employees are offered wages at about $9.00 per hour.

 
It Was Consolidation, Not Privatization

But wait--the Ann Arbor school board did not choose privatization. They chose consolidation with another public entity, the Washtenaw Intermediate School District.  Employees who chose to apply for jobs with the WISD would--if rehired--be able to keep their state pension benefits, and they would be able to unionize if they wanted (in fact, they have voted to affiliate with the Michigan Education Association, or MEA).  In fact, one thing that the board appears to have taken away from the food services privatization discussion is that many people lost their pensions, and that was a bad thing. I know from conversations with board members that they saw consolidation as different from privatization, although I'm not sure that the bus drivers saw it very differently. Just read, for instance, my interview with Andy Thomas when he was a school board candidate earlier this year.

So How Has Consolidation Worked So Far?

The first problem was that only three districts agreed to consolidate.
There were quite a few service problems in the beginning, and in fact Ypsilanti ended up giving a private bus company, Trinity, a $180,000 contract in the first year, because the WISD couldn't keep up. (I still see a lot of Trinity buses in Ypsilanti, so I assume that they still have some kind of contract.)
I have heard alleged--in other words, nothing that I have substantiated--that bus drivers who were active in their unions were not re-hired.
And the WISD reported to the Ann Arbor school board, in October 2011, that turnover rates were astoundingly high--over 40%.
Most of us know that even with lower staffing costs, high turnover is going to increase costs and probably reduce service quality. High turnover requires increased training and recruiting, makes it more likely that drivers will make mistakes on routes (because they are new), and means that students are always seeing new drivers and/or substitute drivers.

Partly because of the complaints, the Ann Arbor school board asked the WISD for an evaluation of the first year (2010-2011), and it took the WISD several months into the 2011-2012 school year to provide it. If you want, you can read the full report here.

But here is the summary:
Total savings were not quite $619,000--just over 40% of the expected savings.

According to the WISD, unemployment compensation costs; higher than expected gas prices; workers' compensation claims; and a retirement rate increase were the primary reasons that the savings were so low. Aren't those things that should have been expected and included in the initial budgeting plan? It looks like we got the "pie in the sky" budget (hence the starry eyes) when we should have gotten the plain pie budget.

The report also makes clear that whereas before, many people were school bus drivers as a primary job, that has changed. For most people, these are secondary jobs now--and when they find a better job, with more hours/no-split shift/more pay, they take it and leave the school buses behind. Remember--the bus drivers did offer concessions to the district. They simply were not deemed to be enough.

The projected savings for the Ann Arbor schools for 2011-2012, according to Robert Allen, are about $1 million. But those savings are largely a function of all of the cuts that they made to busing schedules at the beginning of this year, and not of consolidation.

More recently, Ypsilanti and Willow Run have said they may completely pull out of the WISD consortium, leaving Ann Arbor as the only district in the consortium, making it not a consortium at all. I assume that is because they are not getting the savings that they expected. Should this be a shock? No.

So I was glad to see the Ann Arbor Chronicle report that in light of these changes, on January 25, 2012 the school board directed the administration to

...examine and make a recommendation on the following transportation options: improving busing within the current framework of the WISD; consolidating busing with Ypsilanti and Willow Run outside the WISD consolidation; bringing busing back into the AAPS budget with bus drivers remaining public employees; bringing busing back into the AAPS budget but privatizing bus drivers; eliminating busing entirely; or collaborating with the Ann Arbor Transportation Authority (AATA) to transport AAPS students.

Hindsight is Perfect

If we go back to the preface--hindsight is perfect.
Looking back, do I think it was a good idea to privatize? No. I think we could have gotten those same savings with salary concessions from the bus drivers and revamping the bus schedules--with much less disruption to both the school district and to the employees' lives.  (I admit it--I was always skeptical, and I wrote about that here.)
 
In fact, on June 24, 2010, I wrote that:

Regarding the teacher contract, kudos to the negotiators. It really is a creative collaboration. However--the teacher contract makes the vote to consolidate bussing--which means that workers lose their jobs with no guarantee of re-hire, or even of seniority preference in hiring--all the more disappointing. . . It is disappointing because it is clear--based on the teacher contract--that the district has the capacity to develop creative agreements that serve workers well. Yet in the case of the transportation workers, they chose not to do so.

As I read back over my notes though, I think I know why they chose not to do so. It's not simply because transportation is not considered a "core service." I think it's because transportation departments have a reputation for being difficult to run. They've got all those buses with maintenance; lots of parts, supplies, and gas; and difficulty scheduling multiple routes, special education needs, and staffing. Maybe they thought the WISD could actually do a better job--even though that turned out not to be true!


It's Better to Make a Different Mistake Every Time

And since it's better to make a different mistake every time, as we look forward to another round of budget cuts, what should be done differently?

If privatization comes up again (and I will bet that it will), what questions should the school board and administrators be asking that they didn't ask last time? Let's articulate those questions now. 

Coda
One good thing that did come out of this--although the Ann Arbor schools did not ever have a major problem with buses passing state safety inspections, the Ypsilanti and Willow Run schools sometimes did, and their pass rates have improved dramatically, as I note here. They sold the buses to the WISD for $1, and the agreement is that they will be sold back to the districts for $1 if they leave the consortium.