My comments at the BOE meeting on 9/6/11

The Newtown Owner/Operators have long provided good service to this community in a system that has become a tradition.

However, it has not been well managed.   Despite policy to the contrary, the regular bus routes have never been put out to bid.   The result is that we have been significantly overpaying for our bus services.   During the 5 years of the current contract alone, the District will have paid in excess of $2.5 million more than it should.   That is $2.5 million that could have been better used directly in the classroom, or returned to the taxpayers.

While there are many instances of the Owner/Operators going out of their way to provide personalized service, it seems that they have struggled with the growing legal and technical complexities of operating a bus system.   For the last three years, the Owner/Operators as a group have had one of the worst safety inspection records of any bus operation in the state.     Neither are they immune to some of the difficulties facing any modern workforce: during the current contract period the District had to terminate three Owner/Operators due to serious safety related causes.

Nor has the Owner/Operator system been kept on an appropriate legal footing; after a careful analysis by both the Board’s attorney and other counsel, we learned that the structure of the system is not on an appropriate legal basis and may place the town at significant liability risk.   These legal complexities have been highlighted by the Owner/Operators’ complaint filed with the State Board of Labor Relations.

The current bid specification was designed to create an appropriate legal basis for our transportation system and to off-load much of the administrative work to a provider who has the specialized expertise to perform these functions more cost effectively.

Some people have charged that the Owner/Operators did not have a chance to respond appropriately to this bid specification.   The Owner/Operators should not have been surprised.  The Board has been very upfront for the last year about its intention to follow the mandated bidding process.  The bid specification is almost identical to that used by many other districts around the state, and to that used by this district when it bid the special needs transportation 3 years ago, which was won by a bus company started by 3 of the current Owner/Operators.  The Owner/Operators know the Newtown bus system better than anyone and have amongst their ranks the experience needed to start a company. However, instead of creating a competitive bid, they chose a course of legal action, one ironically which disavows the independent contractor system, claiming that they are actually employees of the District.

There have also been charges made by some that the bid process was managed unfairly, that the Owner/Operators should have been disqualified early on.  However, there is no law, policy, or practice that requires that bidders be disqualified early in the process; in fact, there is no requirement that bidders ever be disqualified.   Further, the Board’s policy does give it some discretion to consider factors other than strictly price.   Eliminating a bidder early on would have made it impossible for the Board to conduct the study of their bid and the many legal issues necessary to responsibly exercise that discretion.

There have also been suggestions that the Board should reject all the bids and restart the bidding process.   A careful study of all the issues shows that there is no legal basis for rejecting all the bids, and further doing so would put the Board at risk of legal action.

Finally, we have a low bidder with an excellent track record:  many years of services to dozens of communities across Connecticut, an outstanding safety inspection record, an organization that has clearly mastered the various technical and legal issues surrounding operating a fleet of school buses in today’s environment, and a business model based on operating locally and hiring local people.   They clearly plan to be both financially and socially part of this community.

In short, I believe that the Board has no choice, from the perspectives of safety, cost, community, and ethics, but to put our transportation system on a sound business-like footing by awarding the bid to our low bidder.

My comments to the Legislative Council 8/17/11

These were my opening remarks at the Legislative Council meeting on 8/17/11:

Thanks for the opportunity to discuss the Board of Education’s transportation bid process.  I think that it is important to maintain an open dialog between all parts of our town’s government.

When I moved to Newtown nearly 2 decades ago, I was happy to see that the school buses were run by independent contractors.   As a small businessman myself, I am glad to see successful entrepreneurs anywhere.  As my 3 children have gone through the school system, we have enjoyed good service from our bus drivers and have gotten to know some of them well.   In the mornings I liked chatting with our elementary school bus driver, Mary Ellen Sideleu, and enjoyed watching her daughter, who we first met riding in the car seat next to her, grow up over the years.

However, when I became involved with the BOE 2 years ago, I learned that all was not as it appeared with this system.   While Newtown clearly has a highly cost effective educational system – our cost per pupil is 5.7% below our District Reference Group average and 10.1% below the state average; our cost for transportation was more than 40% higher than either the DRG or the state.   This seemed pretty counterintuitive to me, since one would expect small business to have lower overhead and costs than the big companies.

The first explanation I heard was that Newtown was geographically very large and had unusually twisty roads increasing our travel costs.  However, the results of the competitive bid conducted for the District’s special needs transport conducted in 2009 didn’t bear this out.   The competitively bid rate was about 30% less.

Normally the costs for the District are controlled by a system of checks and balances that protect the tax payer.    For our unions, it is the binding arbitration process.   For services, it is the competitive bidding process.  And for the most part it has worked well.   For example, our largest union, the teachers, earn on average 5.7% less than the average for the DRG.     However, I was surprised to learn that the regular bus transportation has apparently never gone out to bid.   It hasn’t ever been subject to the same checks and balances as our other costs.  And the suppliers hadn’t felt the same competitive pressures that other business people are used to.

Clearly, both to meet the policies of our board and the town, and to uphold the fiduciary responsibility that we were elected to fulfill, it was imperative that work of this magnitude be put through the competitive bidding process.  It is the execution of a legal and fair bidding process to which we are committed.

I recognize that this could be potentially disruptive for the owner/operators.   They are dedicated people who have provided good service to the community.   There are many examples of the good service that they have given.   However, they are not the only group of dedicated people who serve this community.   Newtown is truly fortunate to be well served by people in all areas: our custodians, policeman, teachers, snow plow drivers, etc. will all frequently go out of their way to help.   I had a chance to watch this winter as our custodians became aerial snow shovelers clearing the roofs, and see Don Roos’ backyard plumbing at the Middle School to stop the leaking water.   Several years ago, when my wife became ill, educators such as Gale Lynch, Carol Wexler, and Donna Pagé went out of their way to help my children and me.

The dedication of all our public servants is what makes Newtown a good place to live. Creating a special status for one single group simply isn’t fair.   The economic reality is that all of us have to be competitive.   I am sure that no one on our board wants to see anyone lose their job. However the economic realities of the past 3 years, which have required that we eliminate nearly 60 positions, has taught us that we have to be prepared to make tough choices.

The intrusion of the LC into our bidding process is also I believe inappropriate.   State law clearly vests this decision exclusively in the hands of the Board of Education.  Second, for the LC to attempt to grant favored status to one of our bidders compromises the bidding process and may hurt the ability of the District and the Town to attract bidders in the future.

We as a Board are committed to conducting a fair and legal bidding process.  We have retained expert technical and legal advisors to ensure that our bid protected the tax payers, the Board, the town, and the bidders.   We have also made every effort to provide information to the public.

The Board of Education has not yet made a decision.  We are going through a process to carefully, and publically, examine the bids.  This isn’t easy for any of us.  Your support in helping us conduct this process is greatly appreciated.

Slides from August 16 Board Meeting

The slides that I used for the August 16 board meeting can be found here.

DMV School Bus Safety Inspections

This week I called Sergeant Green of the CT Department of Motor Vehicles commercial vehicle inspection division to learn about the school bus safety inspections.   He was able to do a nice job explaining the basic process.  Subsequent to our conversation I also found a copy of the DMV regulations 14-275c regarding school buses on the state website at http://www.ct.gov/dmv/lib/dmv/regulations/275c.pdf.  

In summary, the safety inspections are not surprise inspections.  They are annual inspections scheduled in advance and are conducted according to well defined criteria.  Buses with one or more severe problems are classified as “out-of-service” and must be repaired prior to carrying passengers.  The school bus out-of-service carrier ratings (which were presented at our last meeting) are available on the DMV site (http://www.ct.gov/dmv/cwp/view.asp?Q=456720&A=798) and show percentage of each carrier’s fleet which was classified as “out-of-service” by the DMV inspectors. 

The Newtown Owner/Operators do not appear on this list because it includes only those carriers with 20 or more buses.   For the chart below, the Owner/Operator out-of-service rate was computed from inspection data available on the Courant website.  This site only lists data for the Owner/Operators for 2008-2009.   It has been computed using the same methodology as used by the DMV for their table.   (The rating for the O/Os differs slightly from one I previously published (53.11%), the change is the result of a more careful scrubbing of the Courant data.  This data point should be updated when inspection reports are obtained directly from DMV.)

(Updated 8/16/2011) The District was able to obtain the DMV inspection reports for the 2009-2010 year for28 of the 32 Owner/Operators buses.   The entry in the table below for the 2009-10 year reflects that data.

The out-of-service percentage data for the original 7 bidders are:

Bidder	2009-10	2008-09
All-Star Transportation	0.19%	1.37%
Baumann & Sons Buses Inc.	13.64%	4.55%
MTM Transportation	23.08%	10.34%
Dattco	12.56%	19.21%
First Student, Inc	24.37%	33.37%
Durham School Services	20.99%	34.54%
Owner Operators	32.14%	58.06%

I believe, that because these safety inspections are conducted by the DMV on all school buses using a published set of criteria this data provides one objective measure, in addition to others, that we can use to compare bidders.   Further, because these inspections occur with plenty of prior notice they become a good measure of how well the carrier’s maintenance program is functioning on an on-going basis.   Since the carrier has ample opportunity to be prepared for the inspection, it would seem likely that it represents the best condition of the vehicle throughout the year.   

I have written up a summary of the DMV school bus inspection process based on what I learned from Sargeant Green and the regulations.   It can be found here.

Newtown's Transportation Contract

The Newtown School District has recently issued a request for bid for the District’s regular school bus service starting in the 2012-2013 school year.   The Board is pleased at the number of providers who have chosen to submit bids, a group that includes the current owner/operators. We are currently in the process of examining those bids and carefully considering the future of school transportation.

Newtown has a long standing tradition of being serviced by a system of owner/operators who have demonstrated dedicated service to the community.   However, despite school and town regulations requiring bids for all purchases over $30,000 , these transportation contracts have not previously been put out to bid, at least in recent memory.   Consequently, the District is currently paying about 33% more for its regular bus route services than the going market rate.   The District also incurs additional administrative expenses managing 32 separate contractors than it would with a single supplier.

Over the past several years, the Newtown tax payers have clearly spoken about the need for fiscal responsibility, with school budget increases below the rate of inflation for the last 3 years.   Could the District have eliminated the roughly $600,000 premium it is paying under the current bus service contract for the 2012 Fiscal Year, the cuts in educational assistants and other staff that were made after the first budget referendum might have been avoided.

Cost is one important criteria, but it is not the only factor the Board will consider when making its decision.  The Board will scrutinize carefully each of the bidders, fairly evaluating all the critical factors, including: legal issues, safety, reliability, quality of maintenance, driver qualifications and training, driver consistency, service to the community, and the ability for the District to cost effectively reduce the size of the fleet if the projected enrollment decline comes to pass.

The District’s administrative staff, assisted by representatives from the Town administration and Education Connection, our Regional Service center, are doing an excellent job gathering information on the bidders and performing the initial analysis.   However, this decision will ultimately be made by the full Board of Education, based on input from the staff, direct examination of the bidders, and input from the community.   The next step in our process will be a public meeting where each of the 4 lowest bidders, including the owner/operators, have been invited to make a presentation and answer questions from the Board.  This meeting will be held at 10:00 a.m. on Saturday, August 20, at the Newtown High School, and I encourage all interested parents and families to attend.

I know that this is an important decision for Newtown and I welcome the input that we have received from the public.   I want to thank everyone who has taken the time to speak at board meetings or write to us, and I encourage people to continue to be involved as this process continues.  In an age when public discourse too often becomes negative and hurtful, I particularly want to acknowledge how polite and civil the vast majority of the discussion has been.   This has helped us keep the focus in this process where it belongs, on the facts.