MONTGOMERY, Ala. – The rising cost of school buses and a shrinking share of state funding could push Alabama into a K-12 transportation funding crisis within five years, State Superintendent Eric Mackey told state board members Thursday.
“A new school bus now averages about $160,000,” Mackey said. State funding covers 54% of that cost, down from 85% to 90% at one point, he added.
“Five years from now, we’re going to be in an unbelievable economic crisis that is going to cost us $200 million.”
Under the state’s Foundation Program, Alabama provides what’s known as “fleet renewal” funding, paying one-tenth of a bus’s cost each year for 10 years. After 10 years, the state considers the bus fully paid for and stops providing funding for it.
In theory, that allows districts to replace buses every decade. When buses were less expensive, the 10-year payout nearly matched the purchase price. But in practice, the funding no longer comes close to covering the full cost.
That growing gap is prompting concern that districts may stop buying new buses altogether.
Mackey said something similar happened during the 2009 recession, when districts used fleet renewal funds to pay for other needs, such as personnel. “ I saw a lot of systems get upside down…and then take years to get out of it,” he said. “This was a true crisis.”
To address the problem this year, the Alabama Department of Education requested $100 million from the state’s $524 million supplemental appropriation to help cover bus costs.
“If we had gotten all the money we asked for in the supplemental, everybody would have an up to date fleet,” he said. “But that money got completely eliminated.”
Today, the funding shortfall is compounded by new costs. Bus manufacturers are now tacking on $2,500 to $4,500 per bus to cover tariffs. Autauga County school officials were recently hit with $15,000 in tariffs on the purchase of six buses.
While tariffs could eventually be reduced or eliminated, Mackey said the overall cost of new buses continues to rise.
Mackey said he plans to work with lawmakers to address the growing gap.
“We could end up in a serious financial problem with school buses being upside down…in five years, if we don’t address it, probably in the next two budget cycles.”
He added there are things schools can do now like making sure bus routes are being run efficiently and consolidating bus routes where possible.
Mackey said he’d look into the possibility of negotiating bus purchases at the state level to generate cost savings.