Editor’s note: This is part of an occasional series on Hawaii’s runaway school bus costs. Read other articles on the topic.

For the last four years, Hawaii taxpayers have paid whatever price school bus contractors asked of the Department of Education.

That’s because in 2008, the state’s 12 school bus companies stopped bidding against one another for contracts, leaving the district with only three options: negotiate the bids, reject them or accept them.

It chose to accept them all.

The result is a $72 million budget this year for services that just six years ago cost only $34 million.

It wasn’t always this way. Competition used to thrive among dozens of small mom-and-pop operations throughout the state.

The state’s school bus industry had humble beginnings in the 1940s, when plantation owners provided transportation to and from school for their workers’ children.

By 1973, according to Hawaii School Bus Association spokesman and lobbyist John Radcliffe, there were about 50 bus companies operating in Hawaii. And budget records from the Department of Education show that back then the state was paying about $5 million a year for transportation services. Now it splits $49 million among just a dozen operators.1

There’s no history of school bus service in Hawaii. Because responsibility for overseeing student transportation changed hands several times over the last four decades, the school district’s records are spotty. Most of the bus contractors would not talk about it.

Akita Enterprises on Kauai is one of the few that has survived more than six decades of change. CEO Lindy Akita, 82, has worked in the school bus industry since 1948, a year after his father started Akita Enterprises. He helped piece together the following history of the Hawaii school bus business.

Trucks Were Used to Transport Kids

“At the time there were no ‘school buses,'” he told Civil Beat. “There were five plantations on the west side where I live, and they were transporting kids to and from school in these stick trucks.”

The trucks were primitive, he said, with no seats, no rear gate and only a stick fence to keep youngsters from falling over the sides.

“We were like cattle in the back,” Akita said. “Holding onto each other and holding onto the fence. It was not safe.”

Some of the plantations wanted safer transportation for the kids, so Akita’s father invested in two Chevy chassis and converted them into buses, with seats and steps in the back. Other entrepreneurial spirits all over the state got into the business under similar circumstances.

“At one time, there were 47 different operations in the state transporting school students,” he said.

Based on other interviews with Radcliffe and another former contractor, that peak in the number of companies occurred in the early 1970s.

Some charged riders, and some didn’t. Some counties subsidized the cost, and others didn’t, according to newspaper archives from the 1950s.

Most important, some had less stringent safety codes than others, which at times resulted in scenarios that would be comical had they not endangered the lives of children. Two school bus drivers for one of the numerous Maui contractors in 1961 were suspended for consuming alcohol while chauffeuring students, according to a Honolulu Advertiser article dated Feb. 4 that year. Police also discovered the drivers had served beer to students, and allowed adolescents to practice driving the bus with fellow students on board.

Both before and after Hawaii became a state in 1959, according to newspaper archives, counties ran the buses. In 1967 the Board of Education passed Rule 1, which adopted rules and regulations to make school bus service and safety consistent across the state.

Some of the regulations passed since then have been expensive to comply with, said Akita. He cited as examples the rule requiring the use of “complying school buses” and the retirement of buses after a set number of years.

Regulations aside, Akita told Civil Beat, the costs of fuel, vehicle registration, labor and insurance have risen over the years, making it increasingly difficult for a bus company to get by.

In the last 38 years, most of his peers have gone by the wayside. Akita says he’s one of the lucky ones.

“They got washed down the drain, because it was too expensive to survive,” Akita said. “People were going under right and left. And then the big tour bus companies came in and gobbled up all the contracts on all the islands.”

One of those tour bus companies now overshadows all the remaining school bus contractors.

Roberts Hawaii, a bus firm established in 1941 on Kauai, began bidding for school bus contracts in 1981. According to Civil Beat’s analysis of hundreds of bid documents spanning the last 11 years, Roberts has won 55 percent of the 840 regular education school bus routes put out for bid in the last decade.

“I think what you’ve seen over the years is just a consolidation, with Roberts being kind of the lead player,” said John Edney, who served as president of Leeward Bus Company from 1976 to 1980. Leeward Bus Company was owned by a mainland firm until 1980, when it was sold locally. According to registration records, it went out of business in 1998.

Roberts executives would not agree to an interview, but issued a statement saying the company is cooperating with the Department of Education to help reduce school transportation costs.

Rule Prohibited One Company Winning More Than Half a County’s Contracts

Before 2000, it would have been difficult for Roberts to legally buy up so much of the market. Until July of that year, the Department of Accounting and General Services oversaw the school bus program. Built into its solicitations was a limit on the percentage of routes one contractor could hold in a given county.

If a contractor sought to control more than 50 percent of the regular education routes in a county, its bid would have to be at least 10 percent lower than the next-lowest, said George Okano, the state’s school transportation services manager from 1991 to 2001.

This rule did not apply to special education buses, Okano said.

When the Department of Education took Okano’s school transportation office under its roof in 2000, the $21 million program was already running a $1 million to $1.5 million deficit, according to news reports at the time.

The department did not institute a similar limit on how many routes or contracts one company could control.

And since 2000, competition has dropped off while the average daily bid price on a school bus route won via an uncontested single bid has risen from $166 to $458.

As recently as the 1970s, the school bus market was “a little more diversified,” said Edney. “There were more operators on Oahu at that point.”

Of the dozen school bus companies left, most are small and barely getting by, says Radcliffe, the bus association spokesman. But none would provide Civil Beat information about their operational costs or how those have changed over time, so there is no way to know if they are indeed barely getting by.

The vice president of Durham School Services, the nation’s second-largest school bus contractor, told Civil Beat he feels local companies are overcharging, and his company has obtained the paperwork necessary to bid on contracts up for grabs this year.

But Edney, who worked in the industry for 30 years, both on the mainland in Hawaii, used to work for Durham and also served as president of the National School Transportation Association, said student transportation is especially expensive in the islands.

“I don’t know of anybody that has gotten rich in Hawaii in the school bus business,” said Edney. “A lot of these guys struggled.”

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