Wednesday, 14 March 2018 16:14

Chinook School Division to purchase bus fleet from contractor

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The Chinook School Division will be taking over the operation of the school bus service in Swift Current after purchasing the fleet of buses from the contractor that is currently providing the service.


The Chinook School Division Board of Education approved the purchase to offer the buses from Rilling Bus Ltd. at a regular board meeting, March 12.
The school division contracted Rilling Bus Ltd. four years ago to provide the bus service in Swift Current. According to Acting Director of Education Kyle McIntyre the school division's move to purchase the bus fleet was prompted by the decision of the bus company's owner to retire.
“Our business department and transportation department put together a very thorough business case,” he said. “We looked at every single angle around this case. We looked at every single expenditure and what potential future expenditures will be.”
He noted that the buses are propane-powered and their life expectancy on the city routes should therefore be better than average.
“It’s fairly robust equipment and we’re feeling the miles aren’t very hard in the city,” he said. “We should be able to run that equipment a lot longer than we can in the rural area. So we thought there were a lot more advantages than disadvantages and I think when the board reviewed that information they felt there was a strong case to move forward with the purchase of those buses.”
The school division is already servicing the buses and the transition to owning the bus fleet will therefore not present any problems.
“When we built the bus garage in Swift Current six years ago it was always with the mind that if we ever had to take over transportational services for the city then we would have the shop space and the personnel to service that equipment,” he said.
“We already service that equipment for our contractor. So we assume it’s going to be a fairly natural transition.”
The Chinook School Division will take ownership of the 22 buses on June 30 and it will start to operate the bus service for students from both Chinook and Holy Trinity school divisions in the fall. There will be an arrangement with the Holy Trinity School Division to pay a portion of the ridership cost for their students.
Rod Quintin, the Chinook School Division's chief financial officer, said about 26 employees will be added to the payroll as a result of this decision. The bus drivers have already been informed about the upcoming change.
“We’re fairly confident that we’ll get most of the drivers decide to come over to Chinook,” he mentioned. “We’ve asked for them to give us an indication of their interest. That would be by the end of April, and then in the interim we’ll put together the package – their pay, their benefits, that type of thing.”
The total value of the agreement to purchase the bus fleet is about $1.84 million. There are three different components to the agreement. The main portion of this amount is the cost to purchase the equipment, but Rilling Bus Ltd. will also be compensated for the loan penalties to buy out the loans on the buses and there is also an amount to compensate the company for lost profit as a result of buying out the contract a year earlier.
The Chinook School Division had to obtain approval from the Ministry of Education for the debt.
“With respect to the loan for financing this, the cost of repayment of the loan, principal and interest, will be financed out of money that's already been committed to the contract as it exists,” Quintin explained. “So there's no new dollars related to repaying the loan.”
The school division is confident that the buses will last longer than the period of the debt. The amortization period for the debt will probably be about five to six years.
“In that time frame we will pay for that equipment and then after that we would be in a position where we wouldn’t have those capital cost, but we would still be able to access the equipment because we don’t believe it’s going to be at a point where it needs to be replaced,” he said.
The school division is anticipating a cost saving of five to 15 per cent to operate the school bus service for Swift Current students as an in-house service.
“Fifteen per cent is pretty optimistic, five per cent is quite conservative,” he said. “So it would be somewhere in-between there. It really depends on the degree of repairs that we may have, but we’ve got a lot of experience working on these buses. We know how reliable they are and based on that experience we’re fairly optimistic it’s going to be definitely a saving.”
The school division's own calculations indicate that it will be possible to operate the service for less than $1 million per year.
“Right now we’re about $1.07 million a year,” he said. “So we’re looking at in the range of $80,000 to $100,000 less cost based on our modelling. We’ll have to wait and see what our actual numbers are, but I am certain that it will not exceed our current costs and I’m also very certain that it will be less than our current cost.”

Read 482 times Last modified on Wednesday, 14 March 2018 16:51
Matthew Liebenberg

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