Report 2001-120 Summary - March 2002
School Bus Safety II:
State Law Intended to Make School Bus Transportation Safer Is Costing More Than Expected
Our review of the School Bus Safety II mandate found that:
- The costs for the mandate are substantially higher than what was
- The costs claimed by seven school districts varied significantly depending upon the approach taken by their consultants.
- The different approaches appear to result from the lack of clarity in the guidelines adopted by the Commission on State Mandates (commission).
- Most of the school districts we reviewed lacked sufficient support for the amounts they claimed.
- The commission could have avoided delays totaling more than 14months when determining whether a state mandate existed and in developing a cost estimate.
RESULTS IN BRIEF
In response to a fatal accident involving a student who was crossing a street after a school bus had dropped him off, the Legislature enacted a number of requirements between 1994 and 1997 that were intended to improve the safety of students riding school buses. In 1999, the Commission on State Mandates (commission) determined that these laws imposed new requirements on California school districts and thus constituted a reimbursable state mandate, which it referred to as "School Bus Safety II." Later that year, the commission issued parameters and guidelines (guidelines) that described the costs the State would reimburse and the documentation required with each claim. When school districts began submitting claims for reimbursement, the commission reported that the statewide cost estimate for the mandate totaled $290 million for the six-year period from fiscal year 1996-97 through 2001-02, with an estimated annual cost of approximately $67 million for fiscal year 2001-02. Because the Legislature initially had expected the annual costs of the 1997 law to be no more than $1 million, it enacted state law in 2001 that prohibited payment of the claims until this audit is complete.
Most of the school districts employed consulting firms (consultants) to assist them in claiming reimbursement. Our testing of the claims filed by seven school districts revealed that the costs claimed varied significantly depending upon the approach taken by the consultants. For instance, four of the six consultants took a conservative approach, advising school districts to claim only additional costs that directly resulted from their compliance with the mandate. The costs claimed for fiscal year 1999-2000 by the four school districts assisted by these consultants ranged from $5,818 to $41,155, with an average cost per rider of $1.07 to $14.72. A district assisted by a fifth consultant claimed higher costs. However, these were largely the result of its interpretation of how the mandate affects a unique practice within that district.
The sixth consultant, Mandated Cost Systems (Mandated), assisted school districts in preparing 613 (78 percent) of the 787claims filed for that year, accounting for approximately $58million of the $59 million claimed. Mandated took a more aggressive approach than the other consultants, advising the school district we reviewed to claim all costs related to the mandate, including those for activities that it had provided before the School Bus Safety II mandate. The school district claimed significantly higher total costs, and the average cost per rider was higher than for the other districts in our sample-approximately $1.8 million and $194.84, respectively. Although the district claimed costs for various activities included in the mandate, one requirement in particular-implementing transportation safety plans-was responsible for 99 percent of the direct costs that it claimed. Most of the district's costs associated with implementing its transportation safety plan related to ensuring compliance with school bus boarding and exiting procedures.
Although the seven school districts we reviewed asserted that they had sufficient support for amounts they had claimed, we found that most relied substantially upon incomplete data. For example, one district used assumptions to support approximately $601,000 it attributed to the time related to bus drivers ensuring that students board the appropriate buses and monitoring students boarding and exiting buses. This district lacked corroborating evidence such as a time study that could have supported the average number of hours it stated that drivers spent on these activities. The consultant that assisted the district in preparing the claim asserted that the guidelines issued by the commission provide broad discretion as to how costs can be supported. Commission staff told us they intended districts only to claim average numbers of employee hours if they could support their claims with documented time studies. However, although the commission provided this direction in one part of the guidelines, it listed various examples of supporting documents in another. The consultant believes these various examples provide discretion.
The differences in opinion about which costs can be claimed may in part reflect the fact that the guidelines adopted by the commission for the School Bus Safety II mandate do not adequately define reimbursable activities. They also do not provide sufficient guidance for claiming reimbursable costs, leaving various issues subject to interpretation. Instead, the guidelines use broad, nonspecific language that is very similar to the language used in the statutes that led to the mandate. Moreover, the guidelines do not distinguish between a school district's obligations under prior law and the new obligations placed on school districts with regard to ensuring compliance with school bus boarding and exiting procedures.
The process the commission follows in adopting the guidelines seems to have contributed to their lack of clarity. State law and regulations outline a process that requires the test claimant (in this case, a school district) to propose guidelines under which costs can be claimed. However, the guidelines proposed by the school district were also not specific. Further, according to its executive director, the commission, as a quasi-judicial body, is limited in making changes to the proposed guidelines as commission staff can only analyze the issues that are presented by the claimant, affected state agencies, and other interested parties and then only in light of the commission's statement of decision concerning the test claim. In the case of the School Bus Safety II mandate, relatively few comments were made regarding the specificity of the guidelines. However, when some comments were made regarding the "Implementing Transportation Safety Plans" component, the commission chose to use the "broadest, most comprehensive" language that it could to ensure that large and small school districts would be covered for any activities they have in their transportation safety plans.
The problems that arose because of this lack of clarity were exacerbated by the fact that the commission did not develop and adopt a statewide cost estimate until more than three years after the passage of the 1997 law. When the Legislature passed this law, it was not aware of the magnitude of the fiscal impact the mandate would have. In fact, those who analyzed the law before its passage believed it would not be a state-reimbursable mandate. The Legislature remained unaware of the actual costs of the mandate until the commission finally adopted its statewide cost estimate in January 2001, and thus it could not intervene earlier to resolve the issues of concern. Although the commission is required to follow a deliberate and open process when determining whether a state mandate exists and in developing a cost estimate, it appears that it could have avoided delays totaling more than 14 months.
The Legislature should amend the parameters and guidelines through legislation to more clearly define activities that are reimbursable and to ensure that those activities reflect what the Legislature intended. The guidelines should clearly delineate between activities that are required under prior law and those that are required under the mandate. Additionally, the guidelines should address several specific issues we noted during our review.
The commission should ensure that it carries out its process for deciding test claims, approving parameters and guidelines, and developing the statewide cost estimate in as timely a manner as possible.
School districts should ensure that they have sufficient support for amounts they claim. In addition, the commission should work with the State Controller's Office (Controller), other affected state agencies, and interested parties to make sure the language in the guidelines and the claiming instructions reflect the commission's intentions as well as the Controller's expectations regarding supporting documentation.
The commission states that it agrees with the factual findings in the report and will use the findings and recommendations to look for opportunities to improve its process. The Controller and four of the five school districts to which we made recommendations concur with the recommendations we directed to them. The fifth school district, Elk Grove Unified School District, disagrees with our conclusions regarding the sufficiency of its supporting documentation. We did not make any recommendations to the San Diego City Unified School District or the SanJose Unified School District and therefore, did not request that they respond to the audit report.