Editorial | The perils of privatization

Changing school bus system not as simple as it may sound

January 2, 2013 

If the state budget decreases and the size of S.C. government shrinks, does it mean taxpayers are also benefiting and paying less money? Not necessarily.

Take school bus privatization, which Gov. Nikki Haley proposed once more in her 2013 executive budget, released Dec. 20.

The governor seeks – as she did last year and the year before and the year before – to end the current statewide school transportation system and turn it over to either individual districts or outsource it to private companies. Interestingly, her budget proposal no longer argues that such a move would cost less or save money for taxpayers, perhaps because she’s realized it won’t. Instead, the reasoning given this year is that it would simplify the funding process, give local districts more control over their bus fleets and allow private companies the chance to participate.

There’s nothing wrong with any of those goals. State laws on student transportation are undoubtedly in need of some reworking, giving districts more say in how state-owned buses are used. It’s absurd, for instance, that Horry County must currently buy and operate its own buses to pick up homeless students and to transport those students who live within a mile and a half of school but in a place too hazardous for walking. The district must also use its own buses to take students to Early College High School and the Scholars Academy at our local colleges, programs that we should be supporting wholeheartedly, not making harder to operate.

As for private competition, it’s a fine thing. If companies could provide the same level of service for less, then open the doors and let them in. But the evidence so far contradicts that, at least in South Carolina.

The few individual districts and pilot programs across the state that have already privatized portions of their bus systems have failed to show any remarkable savings. In fact, it seems to cost more than the public system, as private companies struggle to find new efficiencies in an already efficient system, discover that they often must pay higher wages (state bus drivers are barred from unionizing, for instance, but drivers for the private companies in the state have already done so) and still eke out a profit. A pilot program begun in 2008 in Mount Pleasant, for instance, determined that after three years, the private contract was actually costing the state about $1,500 more per bus than the previous public support, and the district was getting significantly worse service for the higher price.

A 2006 study on privatizing the state’s buses predicted those findings, determining that “there is no evidence that operating costs can be lowered and instead a real possibility that costs may increase.” The same study found “the current system is very simple, lean and cost efficient” and the statewide system – unique to South Carolina – promotes economies of scale with a centralized decision making structure that keeps costs low.

Horry County Schools warned recently that if the privatization law proposed last year in the legislature had passed, it would have meant about $50 million in additional costs to the district at start-up and up to $5 million more per year in continuing annual operating costs. That’s a significant amount of money that would likely not be coming from the state, but from the pockets of local taxpayers, even as state lawmakers crow about reducing the state budget.

Rick Maxey, chief operations officer for Horry County Schools, spoke plainly in November while addressing a special legislative committee studying the topic: “I have not heard any proposal concerning the decentralizing of student bus transportation that convinces me that it will save the taxpayers’ money.”

Officials from other districts throughout the state have offered similar warnings, as has the S.C. Association of School Business Officials, which warned that districts would be forced to direct more money to transportation “to the detriment of classroom instruction.”

Shrinking the size of government and spending less tax money in the state budget are fine goals, but they should not be pursued blindly, without regard to costs down the line. In some cases, such as the state’s school transportation system, government really has discovered a more efficient, cheaper method of providing services than private industry. We ignore the results of previous attempts and current studies at our own peril.

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