Every year we hear the same refrain from many school districts, “We need more funding or we will have to fire teachers.” It would seem that Alaska’s funding of more than $20,000 per student (the second highest in the nation would be adequate to ensure that we have enough classroom teachers in the state. So perhaps the question one should be asking is: how much education funding does not go to the classroom? The answer is: millions of dollars. In fact, in FY2016 more than $79 million was funded by the state for student transportation.
In spite of the millions of dollars funding pupil transportation, some Alaska school districts are tearing through their transportation budgets and have recently been calling for even more transportation funding. One reason for this increased demand for student transportation funds is the result of an unusual provision put into Alaska law more than 25 years ago that has resulted in Alaska school districts having to pay bus drivers twice the minimum wage. Consequently, some districts have recently resorted to using instructional funds (classroom dollars) to pay bus drivers at rates of pay that are the fifth highest in the nation.
How Alaska got in the Top Tier pay for school bus drivers
A quick look at history explains how Alaska got in the top tier of bus driver pay. In 1989, a state legislative committee added an amendment to the Alaska School Bus Safety Act (HB90) which essentially requires the starting wage for school bus drivers to be double the state minimum wage. What was originally a reasonable 50 cent (25%) differential on February 8, 1989, became a (100%) doubling of minimum wage 20 days later on February 28, 1990.
In 1989, the Alaska minimum wage was $3.85. When the amended act became law, school districts which were expecting to pay drivers $4.35 per hour saw bus driver pay double to $7.70 per hour. However, at that time the State of Alaska paid for all school transportation costs, so there was no immediate effect on local school district budgets.
Tops in Pay Nationally
Alaska is unique in having this expensive “double minimum wage” requirement in statute which has proven to have unintended consequences.
As the cumulative effect of this provision comes to bear, school bus drivers in Alaska were in the top three in the nation for pay in 2016.
And with the increase in Alaska’s minimum wage effective January 2018, the state could well move up in the rankings. Alaska’s higher rate of school bus driver pay, with an hourly mean wage of $18.99, is definitely proving to be a challenge for school district budgets.
Impacts on Classroom Funding
Before 1998, the state reimbursed districts for actual transportation costs. In 1998, a new funding process was implemented, state block grants. This system, which will be discussed in more detail later in this report, transferred direct responsibility for payment of student transportation costs to the individual school districts. And so, twenty-seven years after the doubling of the minimum wage for bus driver pay, school districts are now having to offset these expenses by reaching into instructional funds and reserves to pay for higher transportation costs that local school districts have negotiated in their collective bargaining contracts.
In March 2016, the Fairbanks NorthStar Borough School District had to slide $1.88 million into the transportation account from its operating fund and its reserves fund. The district cited the legally mandated raise in bus driver wages as a “significant cost driver.” This is money taken from the classrooms.
As of December 2017, the Anchorage School District had a $3.5 million transportation shortfall (almost 14% of the total transportation budget), and has even been considering charging students to ride on its school buses.
The Kenai Peninsula Borough School District also projected a transportation shortfall of $504,000 in 2016.
The Long-Term Costs
The pre-1998 system whereby the state reimbursed districts on a per-student-transported basis was a much less expensive system than what is now in place.
After oil wealth, in 1998 the State of Alaska switched to a block grant system, which is still being used. This system has proven to be a more costly and inefficient system. It funds school districts by the number of students in the district, not the number of students actually transported.
Currently, the state provides student transportation grants to 48 school districts. These grants have increased from $53 million in FY2005 to over $78 million in FY2016.
This is an increase of 48% while inflation during that same period was 27.1%. Of these 48 districts, the grants to 14 districts have increased at a rate more than double the rate of inflation, and to seven districts, more than triple the rate of inflation. The grants to one small school district have increased by more than 6000%. All this while student enrollment for the state has been declining.
The school districts providing student bus transportation have been given no directive or incentives to hold down transportation costs. As a matter of fact, there is a disincentive to save money. If their transportation funding falls short, the districts go to the legislature and clamor for more money. In the past, the legislature has rewarded this behavior, leading to little cost control by anyone.
The state has three choices (or a combination of these):
- Continue to increase the amount of transportation grant funding it provides to districts above the rate of inflation (very difficult in our current fiscal climate) or;
- Change the law that now requires double minimum wage as starting pay for school bus drivers and return to the 25% or a more reasonable differential or;
- Return to the former system of student transportation funding, paying only for each student transported.
The bottom line: all school districts need to implement best practices in student transportation funding, including the possible privatization of student transportation. The state and school districts should focus educational resources on the classroom and students. We cannot afford to do otherwise.
 https://education.alaska.gov/schoolfinance/pupiltransport —> Pupil Transportation Grants by District