Editor’s note: This article is part of a series on Hawaii’s runaway school bus costs. Read other articles on the topic published today and earlier this year.

The overnight increase from one contract to the next is the critical measure of whether school bus contractors have taken Hawaii taxpayers for a ride.

That’s because school bus contracts automatically increase in cost over their six- to 10-year life.

When overnight price hikes are far larger than those built-in escalators, it raises questions. And when the increases are even larger in the absence of competition, it raises even more questions.

During the 11 years Civil Beat studied, 233 routes were rebid.

In 154 of those routes, the old contract was competitively bid and the new contract had only one bidder. In these cases, Civil Beat estimates that the average overnight price jump was 143 percent.

For the other 79 routes, one of three things happened:

• The old contract was noncompetitive and so was the new contract.
• The old contract was competitive and so was the new contract.
• The old contract was noncompetitive and the new contract had multiple bidders.

In those cases, Civil Beat estimates that the average overnight price increase was 76 percent.

Civil Beat found that the end of competition for contracts four years ago has been a significant factor in the runaway costs for school bus service. (Read the main article.)

Methodology

How did Civil Beat arrive at its estimates?

We first created a database using school district data from more than 100 contracts representing at least 700 routes.

Every route in every contract in the database has a known value for the first year. But in most cases we were unable to obtain the annual value going forward, which is affected by automatic adjustments for increases in fuel prices, labor rates and inflation.

Hawaii Department of Education transportation officials were able to provide some end values. For the rest of the routes, Civil Beat used trends apparent in the data to produce an informed extrapolation of overnight price increases.

We did that by using the known end values to determine by what percentage (roughly) the Department of Education adjusted contract values each year, numbers we termed “escalators.”

Civil Beat’s Annual Escalators

Source: Civil Beat analysis of Hawaii Department of Education data

We applied our escalators to every single route active that year.¹ For example, a route starting in 2001 and ending in 2006 would undergo the escalators after each of its first five years to come up with a final-year value. Repeating this step gave us approximate end values for all of the routes.

Then with those extrapolated end-of-contract route values, we were able to compute the overnight change to the next contract for every route that was rebid. Based on those numbers, we were able to subdivide the data into the table you see below.

The end result is a calculated estimate of the price hike between the end of one route’s contract life and the beginning of its next contract.

Overnight Price Increases

Source: Civil Beat analysis of Department of Education data