Audit shows school bus safety program’s costs $67 million each year

By Don Thompson, The Associated Press
Saturday March 30, 2002

SACRAMENTO — A school bus safety program projected to cost no more than $1 million each year is instead costing California $67 million annually, according to a new audit. 

Through this year, schools will have claimed $290 million since the program’s inception — 48 times its expected cost. 

The cost is so much higher than anticipated that legislators passed a new law last year halting any reimbursements to local school districts until the state audit was completed Thursday. 

The Legislature had expected annual costs wouldn’t top $1 million a year when it adopted new school bus safety rules between 1994 and 1997 in response to a fatal accident involving a student who was crossing the street after a school bus dropped him off. 

Even the revised estimate is questionable because schools varied greatly in claiming reimbursement from the state, based mainly on which private consulting firm they employed, state auditors found. 

Four of the six consultants reviewed by the auditors were conservative in their reimbursement recommendations. Their highest claim was for $41,155, or $14.72 per bus rider. A fifth was much higher only because of a unique condition related to a single school district that skewed the results. 

The sixth consultant, however, was the adviser for 78 percent of the 787 reimbursement claims filed for the 1999-2000 school year. Claims filed with the advice of Rancho Cordova-based Mandated Cost Systems Inc. accounted for $58 million of the $59 million sought by school districts statewide that year. 

Mandated Cost Systems “took a more aggressive approach,” seeking reimbursement for all associated transportation costs, State Auditor Elaine Howle said — including those its client districts were incurring before the new state safety mandate. 

One client, Elk Grove Unified School District near Sacramento, claimed $1.8 million from the state — or $198.84 per rider, 13 times higher than the per-rider claim by the next highest representative district. Mandated Cost System’s per-rider cost for all its client districts averaged $97.91. 

Auditors also found most school districts they sampled lacked sufficient data to back up their reimbursement claims. 

Yet Howle blamed neither the consultant nor the school districts for the unexpectedly high reimbursement claims. 

Rather, she blamed the state’s Commission on State Mandates for failing to set clear reimbursement guidelines. That, she said, opened the door for broad interpretations both in what districts claim and in how they document their claims. 

The commission specifically “chose to use the ’broadest, most comprehensive’ language it could to ensure that large and small school districts would be covered for any activities they have in their transportation safety plans,” Howle said. 

Problems caused by the lack of clarity were aggravated because the commission had delays totaling more than 14 months before it decided in 1997 that school districts’ compliance costs were reimbursable by the state, she said. 

Commission Executive Director Paula Higashi said in her response that commissioners act as a quasi-judicial body and can only consider evidence and testimony put before them. In this case, state agencies never complained about the commission’s guidelines, so the commission never considered making them clearer. 

However, Howle noted the commission failed to ask the California Department of Education for its opinion “because of an oversight by commission staff.” Commission officials declined to comment Friday beyond their written response. 

Mandated Cost Systems’ owner Steve Smith said his lawyers were the only ones to ask questions during the commission’s hearings. 

“We could kind of see this coming three years ago,” Smith said. “Essentially, they confirmed our interpretation was consistent with what they anticipated.” 

Smith said most school districts resigned themselves to not being paid their full claims by the state once they saw that claims were far exceeding legislators’ expectations. 

Howle concluded lawmakers should enact yet another law, this one setting out reimbursement guidelines in line with what legislators originally intended the state to pay when they first enacted the safety laws between 1994 and 1997. 

The commission — made up of the elected state controller, treasurer and five governor’s appointees — agreed.