Budget & Finance

How Skyrocketing Fuel Prices Are Hurting Schools

By Mark Lieberman — March 17, 2022 7 min read
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Fuel prices across the globe have been rising for months, propelled in recent weeks by ripple effects from the war in Ukraine. The latest spikes are already straining school budgets and causing headaches at the pump for school district administrators, bus drivers, and parents.

The nation’s school districts rely on tens of millions of gallons of diesel fuel each month to send more than 20 million students to and from school, extracurricular activities, athletic events, and field trips on a fleet of nearly half a million buses. Diesel fuel is slightly thicker and more fuel-efficient than regular gasoline that powers cars, though researchers warn that diesel fumes can be harmful to the environment and people’s health.

Lately, that fuel has come at a steeper cost. The Lincoln school district in Nebraska, for instance, orders 20,000 gallons of diesel fuel every two to three weeks. In late February, the order cost $62,800, or $3.14 per gallon. Last week, the same quantity cost $90,400, or $4.52 per gallon, said Liz Standish, the district’s associate superintendent for business affairs.

The national average cost of diesel fuel crossed the $5 mark this week, according to the federal U.S. Energy Information Administration. Experts believe those prices aren’t likely to drop anytime soon.

Some school districts make bulk fuel purchases at the start of the year to lock in prices, or in tandem with other districts through consortia to achieve bigger bargaining power. But most are largely subject to price fluctuations in the market.

To make matters worse, some district leaders say parents are sending children on school buses more frequently now to cut down on their own visits to the gas pump; school bus contractors are asking for higher pay rates to cover exploding fuel and maintenance costs; and school business officials are scrambling to revise projections, adjust budgets, and even contemplate cuts to academic programs and transportation offerings as the price increases appear likely to persist over the long haul.

“It’s killing us,” said Josh James, chairman of the school board’s budget committee in Campbell County, Tenn.

The 5,000-student district is paying $5 per gallon of diesel fuel, compared with $2.70 at the start of the year. Those price increases are on top of the fact that enrollment has been declining in the district for years, and its operating budget has shed nearly $6 million since James joined the board four years ago.

The district is the rural area’s largest employer. With a current deficit of $1.5 million, “every single decision we make right now to spend any dollar that we’ve not budgeted already for this year takes serious consideration,” James said.

Districts are taking steps to cut costs and help school bus contractors weather the storm

Rising fuel prices have plagued school districts for decades: during the the Gulf War in Kuwait and Iraq in 1990; in the wake of Hurricane Katrina in 2005; and in the early days of the Great Recession in 2008.

Economists always assert that the reasons behind fuel price increases are multifaceted and complex. This current spike followed a lengthy period of price declines during the early days of the COVID-19 pandemic, when demand plummeted as millions of people stayed at home more than usual. When public health restrictions eased, oil companies took time revving production back up to meet increased demand, and prices rose as a result.

Then Russia’s invasion of Ukraine further inflamed the situation. The market added a risk assessment to the sale of crude oil, and President Joe Biden moved to ban imports of Russian oil altogether. Russia’s oil makes up only 3 percent of America’s supply, but the wavering prospects unsettled the market and drove prices up.

These higher prices aren’t unprecedented when adjusted for inflation. But they are having a significant effect on school district finances.

Some districts have already begun scaling back routes or canceling transportation for after-school events. Others are rushing to switch to more fuel-efficient vehicles powered by propane or electricity.

The turmoil is cresting as many districts are deep into the painstaking process of assembling their budgets for next school year. That process already involves making complex decisions based on incomplete data, for example, on how much state aid they’ll receive and how much enrollment will fluctuate. Widespread inflation adds yet another wrinkle on top of staff shortage woes and the ongoing disruption wrought by COVID-19.

Owners and employees of private companies that provide school bus services to schools are being hit especially hard by the higher prices.

David Chiverella owns a school bus company that operates in the Crestwood and Hazleton districts in northeastern Pennsylvania. He’s been driving school buses for more than four decades—but now he’s pondering whether to shut down the business after the school year ends in June.

“It got bad back in 2008, but it’s nothing like the way it is now, and we don’t see any relief in the future,” he said.

Some school districts’ contracts with bus companies include a clause that requires the district to split the cost of fuel with the company if fuel prices exceed a certain level. Chiverella does not have that deal with the districts he serves. His company has already weathered increased costs after recently raising wages by 30 percent to attract more drivers.

It’s unclear, so far, whether or how local or state governments will step in to help schools and bus contractors if costs continue to rise. More than a dozen states have proposed temporarily suspending gas taxes. Two Democratic U.S. senators are trying to gain support on Capitol Hill to pause the federal gas tax as well.

It got bad back in 2008, but it’s nothing like the way it is now, and we don’t see any relief in the future

Some critics of those proposals argue cutting taxes will end up doing more harm than good by forcing cuts to vital public services such as highway renovation. Richard Woods, the state schools superintendent in Georgia, has a different idea: He wants the federal government to explicitly allow school districts to use pandemic relief funds to address the fuel crisis.

Woods has firsthand experience with the impact of rising fuel costs. As a school administrator in Georgia’s Irwin County from 2002 to 2010, he watched as district leaders pulled $600,000 from elsewhere in the budget to cover fuel cost increases.

The consequences of failing to act now, Woods said, could include more remote learning and fewer extracurricular opportunities for students. Those effects could hit rural states like Georgia particularly hard, he said.

The three rounds of federal COVID-19 aid are geared toward helping students recover from learning loss and keeping school buildings open safely. But Woods thinks the definition could easily be expanded to cover fuel cost increases.

“It is tied to COVID in my mind. We’re trying to get kids caught back up,” Woods said. “We don’t want to compound the situation by having another interruption of learning.”

In a statement to Education Week, a spokesperson for the U.S. Department of Education said districts can spend federal relief funds on fuel for transportation, “as long as the need is related to COVID-19, including to address the impact of lost instructional time.”

Fuel costs are just one of the pressures districts are facing

Darren Harris manages finances for three districts in southern New Jersey. When he sat down in January to draft the 2022-23 budget, he estimated fuel costs would increase 25 percent to 30 percent over the previous academic year. Just two months later, before the current school year even ends, fuel costs have already increased that much, and may increase even more.

“We’re budgeting over double what we spent last year, and it’s probably not going to be enough,” he said.

Fuel costs represent roughly $300,000, or about 1 percent of his districts’ budgets. Spending another $150,000 means making cuts somewhere else.

But it’s not just fuel prices that are draining school finances. In Campbell County, Tenn., a single bus tire in the last year went from $300 to $450, transmission fluid went from $12 to $17 a gallon, and maintenance went from $220 to $350 a month per bus, said David Seals, who owns a bus company that contracts with Campbell County schools. His company is trying to negotiate with James and the rest of the county school board on some temporary relief.

From one particular bus last year, he earned nearly $1,200 a month. He’s now operating that same bus at a monthly loss of $119.

The job is getting harder in other ways, too. The number of students riding buses in Seals’ area has increased 15 percent since February, he said. Evening routes are particularly crowded, because many parents are still at work, and grandparents and neighbors who usually pick their kids up are now trying to conserve gas.

For Seals, driving a bus has been an extension of his workday, and his favorite part, for nearly 20 years. He teaches high school special education and uses the bus driving gig to supplement his retirement fund.

“Now, I’m dipping into my savings to pay bills,” he said.

James said the district is trying find a temporary solution to keep the buses running. “The only thing I can tell everyone is just hope and pray that costs come down.”

A version of this article appeared in the March 30, 2022 edition of Education Week as How Skyrocketing Fuel Prices Are Hurting Schools

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