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Hawaii school board members on Tuesday rejected the Department of Education‘s plan to plug a $17 million shortfall for student transportation services that includes eliminating 190 buses.

Some 7,500 students would need to find another way to get to and from school next year if the recommendation was approved. But the Board of Education‘s Finance and Infrastructure Committee decided the number was too high and asked department officials to find another option to cover the deficit by its July 3 meeting.

Most of the discontinued routes were slated for Oahu, but significant cuts were also proposed on the Neighbor Islands.

The board also nixed the department’s plan to save money by increasing the distance a student has to live from school to qualify for bus service. The department had drafted legislation to up the distance from 1.5 to 2 miles for grades 6-8 and from 1.5 to 3 miles for high school students.

Time is running out for the board and the district to come up with a plan. Kids head back to class on July 30.

Education Superintendent Kathryn Matayoshi and Assistant Superintendent Randy Moore made the formal recommendation to the board after months of political wrangling. The Legislature in May decided to provide far fewer funds than the DOE requested — $25 million instead of $42 million — because the department has failed to rein in skyrocketing costs for school bus contracts.

Representatives from the major companies providing student transportation services throughout the state — including Roberts Hawaii, Gomes and Ground Transport — showed up in full force for the Tuesday morning at the Queen Liliuokalani Building. It marked the first time they have testified since April 3 when the board started discussing specific ways to plug the projected hole.

In it’s investigative series, Taken For A Ride, Civil Beat has reported extensively on rising bus costs, which have climbed from $47 million in 2007 to some $75 million this year. Civil Beat documented that costs skyrocketed when bus companies abruptly stopped bidding against each other for lucrative routes, and that the school district did little to correct the situation until the Legislature threatened to cut its funding last year.

Even now, district officials have not adressed issues surrounding the sudden lack of competition, a lapse that angered legislative education committee leaders and prompted lawmakers to dig in and reduce funding for transportation. In approving the $25 million budget this year, that requires the district meet certain requirements, including conducting a cost-benefit analysis.

On Tuesday, blame continued to swirl, albeit interspersed with mahalos for all the hard work each side does. The contractors blame the board. The board blames the Legislature. And lawmakers blame the department.

“The insanity needs to stop,” said Ken LeVasseur, who has worked in the school bus industry for decades. “The busses need to start being maximized again by reducing the fare and reducing the qualifying distance for service. Get those kids back on the bus!”

The 7,500 students who would no longer have bus service if the board had approved the department’s recommendation represent roughly 18 percent of all the general education riders in the state. This is about 4 percent of total student enrollment in Hawaii, according to a letter Matayoshi sent the board Tuesday.

Board Chair Don Horner said he expects the department to drop this number below 10 percent. He and Wesley Lo, who chairs the finance committee, said they believe the superintendents can find a way to cover the shortfall with less of an impact on student achievement. Earlier this year, school officials said the cuts would mean 17,000 students would be without bus service.

In her letter, Matayoshi acknowledges the serious impacts of cutting bus routes.

“Reducing student transportation services will likely increase student tardiness and absenteeism, will increase traffic congestion, may increase air pollution depending on how many of the student who formerly took the school bus to school instead ride in personal vehicles, and puts students at greater risk for traffic accidents,” Matayoshi said.

Searching for ‘Sustainable’ Solutions

Lo said the committee was “not satisfied” with the department’s recommendation. He asked the superintendents to find additional money for a “one-time transitional cost” as school officials work together to develop a new “sustainable model.”

This could include the state leasing the buses, providing parking on school campuses and implementing a staggered bell schedule to improve efficiency, he said.

Aside from consolidating some routes and eliminating others, the department is also looking at covering the shortfall by transferring federal “impact aid” money. The exact amount from each source and which programs will be effected has not been determined.

“It’s a question of priorities,” Horner said. “It’s a zero sum game.”

Matayoshi said in her letter that roughly $4 million could be allocated from federal sources, but in the meeting she said this could be as high as $8 million. However, she stressed to the board that this is “one-time money.”

The superintendent also reiterated that the department still isn’t sure yet how much, if any, of this federal cash it can divert to the school bus budget because this money flows through a fund the Legislature said it can’t touch.

In 2011, state lawmakers didn’t give the DOE any money for general education transportation services due to its inability to control soaring costs for bus contracts. The department maintained bus services by using federal jobs money.

Outside the meeting room Tuesday, when board members were discussing the bus issue behind closed doors during a nearly two-hour executive session, LeVasseur said it was really just one main company that tripled its rates overnight and another company that doubled its prices. The other companies, he said, were unfortunately caught up in the public backlash.

Going forward, the department believes the $29 million in ongoing costs — excluding the $2 million of one-time contract termination costs — can be reduced to $25 million next fiscal year through further route consolidation, other efficiencies and stimulating competition among contractors for the disproportionately large number of bus contracts that expire June 30, 2013.

The department is looking to enlist some outside help to make this happen. Moore, who retires at the end of June, said the state procurement office has posted a solicitation for someone to do a “top-to-bottom review” of the student transportation program. The solicitation for proposals closes June 15, and there is a Nov. 15 deadline for the report to be finished.

Meantime, the board has to approve a plan to address the funding gap before students head back to class from summer break on July 30.

“This is where the rubber meets the road,” Lo said. He added that he considers the July 3 meeting, which he’ll be unable to attend, as the “finish line.”

Contractors Object to Proposed Cuts

Lee Gomes, representing Gomes School Bus Service, said the proposed cuts would affect her employees, the students and the public.

“Do you really care?” she asked the board.

Horner said he appreciated all the contractors do in providing bus service, but the board has to react to the amount of money lawmakers provide in the budget.

“We’re looking for all the nickles in the couches to try to figure out how to cover our increasing costs that continue to escalate and have almost doubled in the last six to seven years,” Horner said.

Gomes said the time for school officials to take care of that situation was when bids were put out.

But board members were not sympathetic. Horner noted that school officials suggested several ideas that bus vendors dismissed.

“Are you aware that we came to you folks and offered to change the depreciable life, we talked about parking on campus?” Horner said.

Gomes said contractors make business plans and they “do what they need to do to stay alive.” She said the time to make adjustments is not “mid-stream” in the contracts.

“As you know, we’re budgeted through the Legislature on a two-year basis, so that’s our challenge,” Horner said. “So when there’s calls for cuts, we have to make adjustments even though we have contracts. That’s the process. That’s why we went to the vendors and asked for some kokua from them — and got very little.”

Roy Pfund, representing Roberts Hawaii and the Hawaii School Bus Association, objected to the idea of increasing walking distance, raising fares and eliminating free ridership for poor students.

“The department should concentrate on implementing transportation cost efficiencies such as staggering school bell schedules to maximize bus utilization, and procurement processes to reduce system costs overall,” he said.

Horner told Pfund that school officials offered Roberts Hawaii the same deal as Gomes.

“We tried to work with Roberts, as with the other vendors, and we’ll continue to do so,” Horner said. “We made some suggestions to the vendors and to date we’ve gotten no real economic savings.”

Cheryl Gomes of Ground Transport Inc. said her company reached out to the department in March in response to the request for contractors to work with the state in reducing transportation costs. She said officials did not respond to her proposal.

As it stands now, the department has recommended ending dozens of routes that would impact 7,447 riders for a savings of $9.66 million.

The bulk of the savings would come from cuts in Honolulu where the vast majority of the state’s population lives, but routes on Neighbor Islands are also on the chopping block.

On Kauai, the DOE’s latest recommendation would impact 409 riders and is projected to save $536,574. In the Maui district, the proposal would end bus service for 655 students at a savings of $865,586. Big Island would lose routes serving 538 kids, saving just over $1 million.

This could all change over the next month as the department works to revise its recommendation to the board.