Improving the provision of student transportation requires two changes, a better volume index than Average Daily Membership Weighted (ADMw) and a dynamic compensation method that rewards and encourages intelligent cost reductions.
There are a lot of criteria for a good volume index. The statistical ones end up being some kind of regression diagnostic. Essentially you make a scatter plot with the volume index on the horizontal axis and the costs on the vertical. If they form a tight line, you have a good index. You need to make changes if the relationship is not tight or if there is a relationship that does not form a line. Once you get the indexes forming lines you can compare two indexes with the R squared statistic.
If you do this for the current funding formula and plot total transportation costs against ADMw, my guess is that you are going to see a big mess. The Oregon Department of Education has this data. They produce payment letters like this every year and both the ADMw and transportation grant are sitting in a database. Making a scatter plot should take less than 2 hours.
The volume index I am proposing, Student Miles Traveled (SMT), requires a bit more work but it is not a year-long project. What you are doing with student miles traveled is just adding up how many miles each student travels travels to get to school. There is more than one definition you can use, it could be bus miles, but this is simplest.
All you need is the address of every student in every school district, what school they go to and the address of the school. Each district has this directory information and they will have a policy about releasing it. Once the database is constructed and cleaned, a competent GIS programmer can have your graphic and analysis in just a few hours. My bet is that this is index better than ADMw.
Now what do you do with it? Well, we are going to use yardstick regulation. Yardstick regulation is a way of regulating a monopoly and figuring out a fair price or fair cost recovery. It is used for rail, electricity, gas and water all over the world.
What we use right now is a simple cost sharing contract. There is little incentive to reduce costs. The example that I used before is that spending a dollar to save two, leaves you sixty cents worse off. Cost sharing contracts are most often used in high-risk RD&D projects like developing weapons systems for the military. Transporting kids to and from school is nothing like that.
The trick to producing good cost reduction incentives is to disentangle what a district does from their compensation. Yardstick regulation ties compensation to what the other districts are doing.
My proposal is that each year, districts are compensated X dollars per SMT. The compensation per SMT will be determined by the 70th percentile of the costs per SMT reported by the districts. The 70th percentile is just a guess on a good number. It is one of the parameters you can use to increase or decrease the speed of cost reductions.
Here is how it helps reduce costs over time. Suppose you are a school district and you are paid $1 per SMT and you figure out how to get costs down to $0.90 per SMT. You get to keep the extra ten cents and put it into educational programs. Everyone now has an incentive to do this because now they get to keep their cost savings.
Now look what happens the next year, everyone figured out ways of saving money, so the 70th percentile of costs falls, to say, $0.95 per SMT. That school district that figured out how to save ten cents a mile still keeps part of the benefit and the whole transportation system has gotten much less expensive in the process.
Eventually, cost reductions will stop happening so frequently and the rate per SMT will stop falling. The other beauty of the system is that if something systemic happens, like increases in gas prices, the payment per SMT will increase but with a one year lag.
Can I provide you with cost savings estimates? Nope. It is a game changer. But think about all the cost savings practices spreading to all the districts in the state. Maybe an Educational Service District figures out that they can make less expensive bulk fuel purchases or that they can insure fuel prices with a futures contract, or they figure out a better route schedule system. Ideas are out there. There are just no rewards for implementing them.
Now on to the other formula.
0 comments:
Post a Comment