Transportation firm quits Philadelphia School District over loss of trust

Another report in a series examining the rampant use of overtime in Philadelphia government.

A consultant managing the Philadelphia School District's transportation department - frustrated by what a source labeled "overtime abuse" by drivers and others - is pulling out of its contract more than a year early.

The unusual request means TransPar Consulting Group of Missouri is walking away from $1 million it was set to receive over the next 14 months. A company official wrote in a letter to the school district last month that "it has become apparent that the collaboration and trust necessary to manage the transportation department between our firm and the district has deteriorated."

The firm has worked for the district nearly two years under a three-year, $2.6 million contract set to run through June 2015. The district has agreed to the termination, effective at month's end.

School district executives declined to be interviewed for this story. Spokesman Fernando Gallard said ending the contract does not change the strategy to seek more cost savings through efficiencies and reductions in overtime.

But Philly.com has learned through a source familiar with transportation department operations that while overtime had finally been decreasing, TransPar became concerned when it started creeping up again after district officials "suspended" overtime cost controls.

The source, who spoke on condition of anonymity, said driver overtime alone at one of the district's three garages, Shallcross in Northeast Philadelphia, reached $35,000 in March.

"Overtime abuse is rampant and when [TransPar] is removed, the abuse will go unchecked and more drivers, dispatchers, route analysts, and other line staff will return to the days when earning more than $20,000 in overtime was the norm," the source told Philly.com.

The source said extensive reviews and changes to bus routes to increase driver efficiency, along with much tighter management of employee time sheets, had led to large decreases in overtime.

The revelations about district overtime use come on the heels of a series of Philly.com stories calling into question widespread overtime among city workers in other departments. The stories documented large amounts of overtime collected by thousands of workers, which then can pump up individual pension payments by tens of thousands of dollars a year in retirement.

Although school district operations are separate from those at City Hall, the source's documentation of rampant overtime use by district transportation workers fits a pattern that seems to permeate public payrolls in Philadelphia.

Overtime for the transportation department's 601 employees totaled more than $2.2 million during the 2012-2013 fiscal year — an average of $3,960 per employee, according to payroll records provided to Philly.com.

Those overtime costs would pay for 49 first-year teachers under the current collective bargaining agreement. That's more than the number of full-time teachers at many district schools.

And like thousands of Philadelphia's municipal workers — except for police and firefighters — district employees have overtime factored into their pension calculations, greatly spiking their retirement pay.

Additionally, the district's use of full-time bus drivers is out of step with the rest of the public education sector, the source noted. The district employs 131 full-time drivers and 266 part-time drivers.

For instance, New York City's school district employs none of its own drivers, using outside contractors for all 7,000 of its bus routes. The Philadelphia district currently contracts out 773 of its 1,121 routes.

The April 15 termination letter signed by Superintendent William Hite to TransPar President Ruth Newby gives no reason for prematurely ending the contract, which began in July 2012.

But a March 20 letter from TransPar vice president Andy Forsyth to Fran Burns, the school district's chief operating officer, prefaced Hite's decision.

"Accordingly, this will serve as notice that we will be seeking a meeting with [Deputy Superintendent Paul] Kihn to explain our position and request that the district exercise the right to terminate the contract for convenience," Forsyth wrote.

According to the source, TransPar had reduced average salary with overtime to $41,260 for full-time bus drivers so far in the current school year. The average pay was $56,131 in the 2012-2013 school year, reflecting a 26 percent drop.

Under TransPar management, the district continued to shift bus routes from staffers to outside bus contractors and modernized the routing system, according to the source.

"From 2012 to date, (TransPar) was able to transition 65 routes to private contractors … and award a contract to USCi Compass to implement a software routing solution," the source said.

The district has touted $2 million in savings from updated route efficiencies, according to budget documents available on its website.

The source added that the department planned to shift another 80 routes from in-house drivers to outside contractors, but "that plan is up in the air now."

TransPar, established in 1995, manages transportation departments for school districts in 26 states, according to its website. It also performs analysis and case studies for transportation organizations.

In hiring Transpar at a time they faced a $280 million deficit, Philadelphia school district officials touted the firm's saving of millions for the Chicago and Orange County, Calif. school districts. (The district faces a $400 million deficit next year.)

Earlier in 2012, a district-funded report prepared by the Boston Consulting Group had blamed overtime and underuse of full-time bus drivers' midday hours for wasting millions of dollars.

"Schedules allow employees to accumulate large amounts of overtime pay, with some personnel earning more than $20,000 in annual overtime compensation," the Boston Consulting report said. "A mix of both full- and part-time positions allowed for employee underutilization between routes, causing (the district) to pay for unassigned work time."

TransPar's mission was to address that problem by increasing efficiency and decreasing costs.

Full-time bus drivers on 95 of the district's routes will cost the district an estimated $1.2 million "for time not worked" during the 2013-2014 school year, according to an analysis provided by the source, which looked at how in-house drivers spent their time on the clock at the district's three bus garages.

Full-time drivers, who during the downtime between morning and afternoon routes are supposed to perform jobs ranging from bus upkeep to garage maintenance, often use the time to relax, according to the source. Some play cards; one operates as a makeshift snack vendor.

The downtime currently averages out to $12,867 per full-time driver each year — roughly four hours per day.

Drivers were not alone in collecting overtime. A copy of the transportation department's 2012 payroll shows that hundreds of workers collected more than $5,000 in overtime:

More stringent controls did reign in the overtime this year, the source said.

TransPar's relationship with the school district began to weaken when the district hired Burns as chief operating officer last June, the source said.

"There has been a persistent undermining by her of current management and a retrenchment into the old ways," said the source. "There's this cultural thing here where it's perfectly acceptable for these conditions to exist."

Neither Burns nor Kihn responded to numerous requests for comment. Gallard said the district will continue to "aggressively" seek reductions in overtime while modernizing the transportation department's route management.

"This separation does not in any way indicate that we're moving away from a strategic direction on how we can better improve service," said Gallard, who noted it's possible another consulting group could be hired.

When asked about the early end to the contract, Newby, the TransPar president, told Philly.com: "Our project wrapped up early."