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Meeting of the Board of Regents | February 2009

Tuesday, February 3, 2009 - 11:00pm

sed seal                                                                                                 







Johanna Duncan-Poitier


Regents 2009-10 Proposal on State Aid to School Districts—Cost Containment


February 3, 2009



1, 2, 3 and 5








Issue for Discussion


What are the details of cost containment proposals advanced by the Board of Regents in its 2009-10 State Aid proposal? 


Reason(s) for Consideration


Policy implementation.


Proposed Handling


These questions will come before the Subcommittee at its February meeting. 


Procedural History


The Regents approved their 2009-10 State Aid proposals at a special meeting of the Subcommittee in December 2008.  At the January meeting the Subcommittee met and discussed cost containment proposals relating to regional pupil transportation and BOCES.  The Subcommittee held a joint meeting with the VESID Committee and discussed special education mandate relief proposals.  The Subcommittee asked staff to get stakeholder input and come back to the Regents in February with more detailed proposals that have some field support.



Background Information


The Regents have carefully crafted this year’s State Aid proposal to retain those critical funding directions necessary to continue the State’s progress toward educational adequacy, despite the State’s worsening revenue picture.   The Regents recommended that the State continue to phase in the Foundation Aid formula and to continue to increase support for universal pre-kindergarten.  In order to preserve funding for these crucial priorities, the Regents recommended cost-containment strategies including mandate relief, regional transportation and greater use of BOCES shared services.  In a separate item to the Regents VESID Committee, the Department is considering mandate relief in requirements for special education.


In this report, Attachment A considers the potential for cost savings and other benefits from:


  • Regional approaches to transportation offered by BOCES and school districts;
  • Regional cooperative purchasing of school buses;
  • Piggybacking on transportation contracts; and
  • Expanding the role of BOCES in providing central business office services.

Attachment B presents areas for further discussion and consideration including:

  • Regional task forces to develop opportunities for district or functional consolidation; and
  • Regional high schools for small school districts.




Not applicable.


Timetable for Implementation


The Department and Regents will advocate for the Regents proposal in the next two months.  The Governor has asked the Legislature to approve a State budget before April 1. 







Regents Proposal on State Aid

to School Districts for 2009-10

Supplement on Cost-Containment Proposals




This report presents additional detail on a set of recommendations that are expected to help school districts contain costs while maintaining the State’s progress in closing the gap in student achievement.  It presents recommendations in two areas: expanding regional transportation initiatives and strengthening the role of BOCES to offer central business office services.  In each area, the report describes expected benefits including estimates of cost savings and other potential benefits.  The report presents additional detail concerning each recommendation.  The report presents two areas for further discussion: regional study groups on expanding consolidation approaches and regional high schools for small school districts.  A separate report to the Regents VESID Committee presents recommendations to reduce local school district costs through special education mandate relief.




Expand Regional Transportation Initiatives

Potential Benefits

Potential Cost Savings:   School districts currently spend approximately $2.8 billion for pupil transportation for which they receive $1.5 billion in state aid or approximately 54 percent of these expenses.  While savings have the potential to increase over time and depend on the constraints placed on school districts and BOCES, conservative estimates are that it may be possible to achieve state-wide savings from $30 million to $60 million in the first year and $60 million to $120 million upon full implementation.  The following considerations should be borne in mind.

  • Any transition to a regional model of pupil transportation will take a number of years. By starting with regionalization of nonpublic and special education transportation, along with some shared maintenance services savings, would accrue.   A greater level of savings would accrue to those districts having the most out-of-district special education and nonpublic transportation services. 
  • Smaller districts which might not want to consolidate could share transportation administrative and training staff. 
  • Additional savings will accrue as larger school districts take on the task of providing all the transportation services of smaller districts within their region.
  • School district expense for the purchase of school buses in the 2008-09 school- year is estimated to be $105.5 million.  By moving to a regional or cooperative model of bus purchasing a savings of 5 to 15 percent is possible, depending upon the method school districts are currently using to purchase school vehicles.
  • Regionalization of school bus maintenance would result in less duplication in the purchase of repair and maintenance equipment and construction of garage and bus bay facilities.
  • Over time potential cost savings to the state and local districts from adopting a true regional model of pupil transportation would increase as efficiency increases.


Other Potential Benefits:   Moving to a regional model of providing pupil transportation services to pupils would result in several benefits to member districts. 

  • Smaller school districts would be able to share transportation supervisors and safety training staff thus providing a level of expertise that is not currently affordable for smaller districts.
  • Employees who are currently performing multiple duties such as building and grounds, school business official and transportation director would have more time to expend in these other functional areas.
  • There would be less duplication of services or routes for the transportation of nonpublic and special education pupils resulting in lower cost and higher capacity utilization of school vehicles.
  • Such a model would increase the opportunity for fulltime employment for school bus drivers, safety trainers and support staff.  A regional maintenance model would increase the number of fulltime positions for mechanics and bus maintenance staff.
  • The ability to offer fulltime positions would aid in attracting and retaining employees.  There is a current national shortage in bus drivers in large part due to the part-time nature of the position with little fringe benefits. 




Option 1:  Enable public school districts to conduct regional pupil transportation services and to require the BOCES to create task forces to study and implement consolidation of pupil transportation on a regional basis.


Background Information – School District Services: 


Education Law section 3635 authorizes school districts to provide pupil transportation services to distance eligible resident pupils.   It provides that school districts transport pupils to both public and nonpublic schools and provides a minimum eligibility distance of two miles for k through 8th grade and 3 miles for 9 through 12th grades.   Education Law 3602 (7) provides for the payment of transportation aid for pupil transported 1.5 miles out to a maximum distance of 15 miles from their home to the school they attend.


School districts do have the legal authority to do limited “shared services.”  Current law provides that shared services be provided on district owned or leased buses.  The provider district must have a pupil attending the same private school to which they are busing another district’s student.  Shared services provided by school districts are generally limited to nonpublic school students and students attending a BOCES program.   There is no legal authority for a public school to transport the pupils of another school district who are attending a public school in their home school district.


In densely populated areas of the state regional transportation services provided by a public school district (or private contractor) could increase capacity use of school buses and reduce total transportation costs.  Such regional transportation would require a commitment from member districts and their nonpublic schools to stagger start and dismissal times, and prepare regional emergency management plans.  In sparsely populated areas of the state, districts might share pupil transportation administrative and safety training staff that they might not be able to afford individually.  We believe that there can be cost savings in many areas of the state by using a regional pupil transportation and/or regional bus maintenance system.


Change in this area would require an amendment of Education Law section 3635 to authorize public school districts to conduct regional pupil transportation services for both public and nonpublic students residing within member districts.  An Enterprise Fund would provide the means of accounting for the regional transportation costs and revenues.


Background Information – BOCES Services:


BOCES currently have the authority under Education Law to provide regional transportation including a number of pupil transportation services that have approved COSERS including:


  • School bus driver training and safety training programs;
  • School bus maintenance and repair;
  • Transportation of pupils to and from BOCES occupational education classes;
  • Transportation of pupils to and from BOCES programs for students with disabilities;
  • Transportation of pupils to and from public and private programs for students with disabilities;
  • Drug and alcohol testing for school bus drivers; and
  • School bus communications systems.


BOCES has the legal authority to act as an administrative agency for school district cooperative bids.  BOCES also has the legal authority to provide certain central business office functions.


Small school districts may not have the need for or financial capacity to support a fulltime transportation director and safety training staff.  The cost of providing transportation for special education pupils and to nonpublic schools is higher and less efficient due to the small numbers attending a specific school.  If the districts within a region would share a school bus to a particular location the cost to each for that service should decrease.  If BOCES were to provide pupil transportation services for school districts within their region there should be more efficient use of vehicles and lower cost overall for the service compared to if the individual districts provided the service.  The sharing of administrative and training personnel would also provide a higher level of services to smaller districts than is currently available which should lead to safer and better coordinated service.



Option 2:  Require school districts to choose the least costly option including cooperative regional bids for the purchase of school buses.


Background Information:


School districts may currently purchase school buses in one of four ways.  They may purchase through the State Contract, purchase a bus from another school district or BOCES, conduct a local competitive bid or participate in a cooperative competitive bid.


Approximately seven years ago, Education Law section 3602 (7) was amended to permit school districts to be aided on the base price of the school bus plus any option purchased off of State Contract.           The Office of General Services restricted the options permitted at the request of SED. 


The State Contract differs from a competitive bid in that there are no defined quantities, so prospective vendors are not guaranteed any sales, and have no quantities upon which to calculate a reduced price from full retail.  An increase in the quantity purchased coupled with fewer options would result in a lower cost per bus. This does not happen on the State Contract.  Therefore, school districts can often obtain better pricing by doing a local bid with defined quantities.  


School districts/BOCES have the authority to join together to do cooperative bids.  The greater the number of vehicles bid, the more the potential cost savings.  If the school districts in a region standardize on a particular brand of school bus with limited options the quantities would increase and the price per bus decrease.



Option 3:  Permit piggybacking on pupil transportation contracts of other school districts with the consent of the contractor.


Background Information:


School districts have the legal obligation to transport distance eligible pupils to and from home and school.   They may provide the service on school district owned buses, via public transit or by contracted services with private school bus companies.   School districts have the legal authority to join together to provide pupil transportation services on district owned school buses.  This is called shared services.  They do not have the authority to transport any pupils on a school bus owned by a private contractor with whom their district does not have a contractual relationship. This is called piggybacking.


School districts are reluctant to do a competitive bid to transport pupils to a location for which another school district already has had a private contract in place for several years.  That is because such a bid would likely result in a much higher award price.  If other school districts were permitted to use the existing contract, with agreement of the contractor, state and local costs would be less.


Expand the Role of BOCES to

Provide Central Business Office Services


Potential Benefits

Potential Cost Savings:   The BOCES Central Business Office service can have a direct financial impact on participating districts by decreasing school district costs for the business office.  Central Business Office services may also create greater efficiencies in other district costs, such as the impact of long range budget planning on district commitments for employee salaries and benefits over time.

Other Potential Benefits:  There may be other benefits associated with participation in a BOCES Central Business Office, such as:

  • Greater focus of administrators on educational issues;
  • Greater expertise at the Central Business Office in areas such as budgeting and multi-year forecasting; and
  • Improved efficiency of any business office staff still in district.


Background Information:


In 1995, the Broome-Tioga BOCES began the Central Business Office based on discussions between districts and BOCES related to efficiencies that could be achieved through shared services.  Thirteen years later the concept of a shared business office has grown from three full-service districts to eight.  This synopsis presents some details regarding this BOCES’ service and its delivery and growth.


Financial Services Provided


Full Service: Budgeting, accounting, accounts payable, purchasing and payroll, cooperative bidding

Ala Carte Services:  Any individual activity

Shared Business Executive: School district may elect to share a school business official with one or more other school districts.


Participation in Services


              Districts Participating in Full Service (District enrollment in parentheses):


              Binghamton City School District (6,019)      Union-Endicott CSD (4,246)

              Vestal CSD (3,956)                                              Windsor CSD (1,857)

              Newark Valley CSD (1,298)                            Owego-Apalachin CSD (2,171)

              Deposit CSD (612)                                              Susquehanna Valley CSD (1,921)


              Districts Participating in Ala Carte Services (District enrollment in parentheses):


              Maine-Endwell CSD (2,586) – Payroll, Accounts Payable and Fixed Assets


              Districts Participating in Shared Business Executive Service:


              Susquehanna Valley CSD (1,921) and Deposit CSD (612)




              1997:    Total General Fund Budgets for Original 3 Districts

                            W-2’s for Original 3 districts – 3,007 (includes all district staff)

                            CBO Staff for the Original 3 districts – 22 (includes shared staff)


              Today: Total General fund budgets for 2008-09 for 5 districts - $366 million

                            W-2’s for 6 districts on 12/31/07 – 7,470

                            Current CBO staff for eight full-service districts, cooperative purchasing,

                            Ala carte and Shared Business Executive services combined – 43       


Benefits/Value Added Services Provided/Requested


  • Personnel cross-training and back-ups
  • High level of experience and expertise in private and public sectors
  • Internal controls implemented at CBO
  • Cooperative bidding and purchasing service – buying power
  • Each district benefits from experiences of all other districts
  • Most districts save money on a gross cost basis
  • Since business office costs in a school district are not aidable and mostly borne by taxpayers, the BOCES Aid that the CBO affords all districts shifts significant costs to the state



Topics for Further Consideration


Two topics have been raised by the Lundine and Suozzi Commissions that merit additional discussion and consideration:  establishing regional task forces on consolidation and establishing regional high schools for small school districts.  The following paragraphs describe background on each proposal.


Topic 1.  Establish regional task forces on consolidation.


Background Information:


There are many existing mechanisms for sharing of services and functional consolidations that could result in substantial cost reductions and have been implemented in some parts of the state but are not widely used.  There is a need to generate local sharing and consolidation initiatives that make use of the best practices of other BOCES and school districts.  There is a need for flexibility in determining which approaches are best suited for each region of the State.


This report recommends further discussion of a proposal to create regional task forces to study and make recommendations on opportunities for greater consolidation in each region--both school district reorganization and functional consolidation--for the purpose of reducing costs and increasing achievement.  The regions could be charged with reporting annually on consolidation efforts pursued, savings achieved or expected and identifying obstacles to consolidation.  Task Forces should have representation from the BOCES, superintendents of schools and school boards of component school districts, teachers, school business officials, parents and the business community.


Areas to be studied and implemented could include:

  • Expansion of shared educational program opportunities that increase student achievement results, increase high school completions and improve student readiness for work or college;
  • Regional transportation approaches including regional administration of pupil transportation programs for component districts, cooperative bidding on new school bus purchases and regional maintenance;
  • Expansion of central business office within limits established by law, regulation and professional auditing standards;
  • Health insurance programs that reduce costs by increasing the pool of insured individuals through cooperative plans involving several districts.
  • Programs and services that reduce school district and BOCES costs for energy;
  • Budget forecasting services that strengthen school district financial condition by helping school districts to budget for the cost of employee salaries and benefits over time; and
  • The expansion of other programs and services consistent with existing provisions of law that improve educational outcomes or contain costs.


Topic 2:  Establish Regional High Schools for Small School Districts


Background Information:


Two approaches are possible for implementing a regional high school, a regional high school operated by BOCES, such as Tech Valley High School in Troy, and a central high school district, such as is operated on Long Island.  Each model would require the amendment of state law.


The regional high school is provided by BOCES with districts opting to send students.  Those districts sending students then receive BOCES Aid on that expense.   The sending school district awards the high school diploma and the regional high school has no authority to tax or borrow. 


The central high school district is an independent district which operates the secondary school of two or more school districts with the authority to borrow and award high school diplomas, while component K-6 districts operate the elementary schools and levy taxes to support both the central high school district and the elementary schools.


On the positive side, central high school districts have operated well on Long Island and offer a viable model for regions of the state with school districts with small student enrollments.  They answer a need for small enrollment districts that don’t want to merge and are a way to create a larger, more educationally viable high school unit.

On the negative side, the central high school district model is a high cost form of reorganization.  It adds to the number of districts in the state and resulting administrative staff.  Many low-enrollment districts are located in areas where a central high school is not logistically feasible due to large geographic areas requiring students to spend long periods of time in transit.