School District Business Administrator Peter Curro and Greg Stinson of STA (Student Transportation of America) Transportation presented the school board with a plan for the district to buy 44 school buses at the end of 10 years.
School Board Chairman Leitha Reilly noted at the Tuesday, Aug. 5 meeting that the board had asked Curro and Superintendent Nathan Greenberg to find cleaner, more efficient and less costly ways to help the district out and this was one suggestion.
Stinson said the proposal would extend the current contract by six years for a total of 10 years.
“You can capture the total cost of the vehicles over 10 years, so the payments will be that much less than you would be paying with a contracted rate,” Stinson said.
Stinson said STA currently provides all vehicles, drivers and associated costs for the district’s student transportation.
He said that under the municipal lease program proposed, the district purchases the fleet of buses with assistance from STA and finances the purchase with the municipal lease, rather than having STA provide the fleet.
“STA’s capital investment is significantly re-duced under the municipal lease program so a lower fee can be charged to the school district,” Stinson said.
He said the advantage for the district is a lower cost of transportation, a new fleet of buses at the beginning of the contract, and lower vehicle purchase pricing throughout the life of the contract. The contract would begin with the 2015/2016 school year.
“The advantage for STA is lower capital requirements and STA is relieved of sales and personal property tax burdens, as the tax-exempt school district is the owner of the equipment and all associated savings are passed along to the school district,” Stinson explained.
Based on 44 vehicles the district would have a 10-year savings of $319,365 and a fixed yearly cost of $402,240. The cost of the buses would be $3,608,440 at an interest rate of approximately 2.5 percent, Stinson added.
Curro said the arrangement would allow the district to use STA’s purchasing power while using the district’s tax-exempt status in financing the fleet.
He noted that the district’s insurance carrier and its attorney, Gordon Graham, said liability would be “slightly higher” should an accident with personal injury occur, but both the insurance carrier and attorney said that should not stop the district from “moving forward.”
The current contract is set to expire in 2017.
“I consider this a ma-jor change and this is something that should be re-bid at the end of the contract that we already have,” board member Steve Young said. “We are going from a concept of having new buses, we have always kept our fleet young, they have sold off the fleet because it was the best thing to do for our community, and now we’re going to say that we’re going to go to a 10-year-old fleet in a period of time. To me, the district picking up the leasing of the vehicles is a major, major change,”
Board member John Laferriere concurred with what Young was saying. He said the current recycling of buses was good but that given the apparent growth of the community, 40 buses may not be enough. Another concern he shared was that the technology of transportation today could be different in 10 years.
“We will be saddled with 10-year-old technology,” Laferriere said.
Board member Dan Lekas asked what would happen if a bus were damaged in an accident. Stinson said it would be an insurance issue and as the service management company for the district, it would be STA’s responsibility.
The consensus of the board was to revisit the issue in October or November, after the board had time to look at it more closely.