Hawaii DoE Student Transportation Study Report

Executive Summary, Released by Hawaii DoE November 30, 2012

PROJECT BACKGROUND

The cost of providing K-12 student transportation services in the State of Hawaii has been escalating at an unsustainable pace. A recent report by the Office of the Auditor questions the ability of the Department of Education’s Student Transportation Services Branch to adequately address the issues facing the Department. The legislature, also in an expression of concern, reduced transportation funding for 2012/13. The funding reductions resulted in the consideration and elimination of a significant number of existing bus routes. While stabilizing overall expenditures on transportation, this reduction resulted in substantial public concern and additional calls for reform.

Against this backdrop, the Department of Education issued a Request for Proposal for a comprehensive review of student transportation operations and management. In September 2012, Management Partnership Services, Inc. (MPS) was engaged to conduct the assessment. This report presents the resulting analysis, findings and recommendations. Given the significant recent attention given to the issues, the focus of the MPS review was placed on rapidly assessing the current situation and developing a viable program of improvement for immediate action.

THE CURRENT SITUATION

Student transportation service delivery in Hawaii is a large and complex undertaking. More than 35,000 students are transported using over 700 buses provided by 12 bus contractors on a daily basis. This program is managed by 14 Department of Education employees within the Student Transportation Services Branch. Approximately $60 million will be expended in 2012/13 for regular home-to-school and special education transportation services. Current annual contract costs have been calculated to be approximately $86,500 per active route bus, and approximately $1,750 per transported student. In the experience of MPS these far exceed national norms, and are comparable to the most expensive student transportation operations MPS has worked with throughout North America.

This review has found the entire student transportation services program to be in need of systemic change. Every aspect of the program from the statutory underpinnings, procurement of bus contractors and contract management methodologies, through the day-to-day operational practices of the Student Transportation Services Branch will require comprehensive revision. Particular emphasis must be placed on improving the contracting process and STSB’s contract management philosophy and approach.

Key findings from the assessment include:

• The challenge inherent in geography is a real but manageable constraint on efficiency.

• Dramatic increases in bus contractor costs are apparent in the four fiscal years from 2006 to 2010, with the primary cause being increases in the rates paid to contractors.

• The contracted service model is fundamentally sound, but structural problems exist with current procurement and contracting practices.

• The organization structure of the transportation program is misaligned relative to its responsibilities.

• There is an absence of the basic technological tools required to support an efficient and effective transportation program.

THE PATH FORWARD The core recommendation resulting from this study is to retain the current contracted service model but with major revisions to virtually every associated business process. This heavily revised business model will be reliant on three interdependent principles:

• Contracted service provision – There is no need or solid rationale for the State to assume the significant costs, risks, and operational burdens associated with owning and operating a fleet of school buses. Instead, significant improvements to existing procurement, contracting, and contract management methodologies will achieve the necessary gains in efficiency, effectiveness, and sustainability.

• Centralized planning and information management – The contracted service model can never be allowed to relieve the Department of Education of full responsibility and accountability for the performance of the system. The foundation for this must be the awareness and control provided by centralized planning and the coordination of all data and information related to the program.

• A functionally oriented transportation services organization structure – Success requires a technology-enabled, functionally oriented organization that distributes responsibilities appropriately, establishes properly trained positions in key locations, and facilitates the development of the specialized expertise required in critical functions such as route planning, contract performance management, and operations.

Implementation will require a structured and deliberate plan for managing the transition. The proposed approach is focused on three critical components:

1. A clean break with the current business model to enable substitution of the revised approach;

2. A substantial pilot program followed by a rolling implementation schedule that ensures a deliberate transition and mitigates risk; and

3. A means to facilitate the continuation, and eventual winding-down of current operations during the implementation of the revised model.

These three elements must work together and in parallel to ensure a successful transition. A reengineering effort as large and complex as the one proposed and described throughout this report can initially seem like an overwhelming prospect. The State and the Department of Education must accept that there is a great deal of institutional and operational risk inherent in committing to the change. However, it is the firm assessment of MPS that the State and Department of Education are both committed and able to undertake this critical transformation.

The first required step is one of commitment to a long-term program of change. No stakeholder in this process should be under any illusion that this will be a short or simple process. It will require a multi-year commitment of both time and resources. With the commitment in-hand this transformation will, in the assessment of MPS, result in substantial cost savings and service improvements to the K-12 student transportation program in Hawaii.

FULL TEXT: Hawaii DoE Student Transportation Study Report

SA: Cost-cutting overhaul won't be quick or easy