The following is from the Central Bucks Transportation Association.
A new study reveals why it is too costly for Pennsylvania school districts to fully outsource their transportation operations as Central Bucks administrators have proposed. Among other factors, outsourcing a school district’s entire fleet to a private company gives the company too much power to increase prices.
Pennsylvania school districts that contract with private bus operators end up spending more taxpayer dollars on transportation than those that manage their own bus fleets, according to a new report from the Keystone Research Center.
Total costs for all taxpayers are nearly $223,900 higher when a typical Pennsylvania school district goes from providing all bus services in house to contracting with a private operator. If every school district in Pennsylvania in-sourced transportation services, taxpayers would save an estimated $78 million.
“When you outsource everything, the company you outsource to no longer has any competition, and then they can increase their prices—and their profits—as high as they want to,” said Deb Reblock, Central Bucks Transportation Association president.
The new report’s authors agreed.
“Handing the reins over to the private sector is not always a good bargain for taxpayers,” said Dr. Stephen Herzenberg, an economist and co-author of the study. “Over two decades of hard data make clear that school bus contracting is a poor bargain. At a time when deep cuts to schools are driving up class sizes and limiting student opportunities, should we pay more to private companies?”
Limited competition, contractor leverage, and high private salaries that lead to higher costs with privatization are not unique to the school transportation industry. Academic research shows that these challenges arise with privatization of many services. This underscores the importance of using data to evaluate when to privatize or in-source, and not simply assuming that privatization is always less expensive.