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After reviewing a consultant’s study that some hoped would be the silver bullet to bring down soaring student transportation costs, state lawmakers left a legislative briefing Wednesday still wondering how much money the Department of Education will be able to save through the recommended policy changes.

Hawaii school officials said they’re still not ready to take on a sweeping reforms of state laws this coming session, but they will need an extra $8 million to buy them another year so they can implement some of the fundamental changes needed to fix the program over the long term.

A seven-member panel, led by Senate Education Chair Jill Tokuda and House Education Vice Chair Della Au Belatti, grilled Assistant Superintendent Ray L’Heureux, who oversees bus services, and Tim Ammon, who works for the firm that recently finished a two-month study of the DOE’s transportation program.

The legislators wanted to know what laws, if any, they may need to address when session starts in January and how much money the department thinks it needs to undergo the complete system overhaul recommended by Management Partnership Services.

L’Heureux didn’t have any concrete numbers. He said as the department improves efficiencies, savings will be realized, but it’s difficult to determine precisely how much at this point.

The Legislature gave the department $17 million less than it asked for last session to operate its school bus services this year. The department made up the shortfall by cutting dozens of routes, impacting nearly 2,400 students, and diverting funds from other programs and resources.

Amy Kunz, DOE chief financial officer, told the panel that the district should be able to get through next year on an extra $8 million from the state. If changes to the program are implemented as expected, she said the department wouldn’t need an additional $8 million the following year as requested in its biennium budget request the Board of Education sent to the governor in October.

What neither school officials nor lawmakers addressed Wednesday, however, were the millions of dollars in federal money that may not be coming in next year due to anticipated federal budget cuts.

The department covered a big chunk of its student transportation deficit last year with $8 million in so-called federal Impact Aid money that was over and above what the district was expecting. Impact Aid is a program that provides funding for a portion of the educational costs of federally connected students, which in Hawaii primarily means military.

House Finance Chair Marcus Oshiro told Civil Beat in a recent interview that the state has its eye on the expected shortfall in federal funding next year.

But the state’s plans to deal with the cuts are unclear at this point.

Hawaii Budget Director Kalbert Young told Civil Beat last month that the cuts would likely erase up to $40 million in federal support for more than 100 state government programs. Education programs would face the largest cuts, including $3.8 million in Impact Aid money.

Changing Procurement Law

L’Heureux said “sweeping reforms” in certain laws may be necessary but would be unrealistic since the next legislative session starts in less than two months. He said the department can use administrative rules and the superintendent’s authority to immediately refine particularly problematic policies, such as the procurement process.

The MPS study — and a state audit released in August — identified elements of the procurement law as part of the reason the district has struggled to bring down soaring costs for school bus services. As Civil Beat has documented in its Taken for a Ride investigative series, the department’s student transportation budget more than doubled to some $75 million over the past several years as bidding among contractors dropped off.

L’Heureux said lengthening the procurement process could help create a secondary market. For instance, a new company may be dissuaded from bidding because the turnaround time to be up and running is not long enough to be able to set up shop in Hawaii.

Another tweak to the procurement rules L’Heureux said the department can do without legislative help deals with price- versus performance-based models.

He said if the department is required to pick the lowest bidder on any contract, it can’t factor in the value of that service. For instance, it may have to go with an old bus that shouldn’t even be on the road when for only a bit more money the department could get a newer bus with modern safety features.

Tokuda cautioned that even minor revisions to the procurement law can take years to implement.

“The p-word can sometimes be a bad word over here at the Legislature,” she said.

Tokuda also asked about bell schedules. She sponsored a bill last session to standardize bell schedules throughout the state.

Originally introduced for academic reasons, staggered bell schedules are often considered as a way to reduce student transportation costs. If properly aligned, one bus could make more trips, thereby increasing efficiencies. School officials have estimated potentially saving millions of dollars by changing bell schedules, but the teachers union has fought the legislative effort.

L’Heureux said the department doesn’t currently have the data to recommend any changes to bell schedules. Part of the transportation program’s shortcoming is not knowing how many students are getting on what buses and when.

“Are there efficiencies to be gained there? You betcha,” he said.

The department has estimated that 35,000 students take the bus, but L’Heureux said he doesn’t have a lot of faith in this number because it was gathered using the department’s 30-year-old pencil-and-paper tracking method. Implementing modern route tracking technology is something he said he plans to do over the next year.

Ammon said it could be that 35,000 students are eligible, but only 25,000 ride the bus on any given day. He recommended the department change its bidding process to solicit companies to provide services for what’s actually needed.

Aside from needing more contract oversight and better performance management, Ammon said the current model should be changed so the department buys assets for a particular time as opposed to a particular path for a particular day. This would give the DOE’s transportation office control over how buses operate, with improved flexibility based on demand, instead of leaving it up to the bus operators to decide.

The challenge, Ammon said, is figuring out how to make this change without costing the department significant financial penalties. The current contracts force the department to pay the contractors an idling fee if their buses aren’t running as planned. There’s also a fee if the department wants to end a contract early.

It remains unclear which bus routes the department is planning to cancel or what contracts it may not renew. Another unspoken issue is how much the department is budgeting for any related fees that may be incurred as a result.

L’Heureux told the panel that he didn’t want to share what routes might be canceled as part of the pilot project for next year, which is the consultant’s recommended first step for the department to fundamentally change its transportation program.

“I cannot disclose that at this point because there are people in the room that it would affect,” L’Heureux said, without looking at the various bus company representatives and industry lobbyist seated behind him. “We’ve been strategizing on this. I know how I want to implement this.”

Tokuda said lawmakers have been asking education officials for years to identify an action plan to achieve short-, medium- and long-range goals, but so far little has been done to change the student transportation system.

“We need to keep that kind of fire going — that kind of insistence going — so that we have some real goals laid out,” she told L’Heureux. “It helps us make budget decisions.”

Tokuda said the discussion on student transportation will be ongoing as lawmakers consider how much money to give the department and whether any state laws need to be changed.