Rising diesel costs from Iran war strain US school budgets

Soaring diesel prices since the onset of the Iran war are draining already tight US school district budgets, making it more expensive to bus students and run generators in a shock officials say they will not be able to afford for long.

School districts from Yakima, Washington to Waco, Texas are tapping emergency funding reserves to keep buses running. In remote Alaska, officials are scrambling to secure enough fuel to keep the lights on, according to Reuters interviews.

“It’s more than a straw on the camel’s back, it’s like a haystack,” said Yakima Superintendent Trevor Greene.

The stress reflects one of many knock-on impacts of the US-Israeli war on Iran, which has disrupted the flow of around a fifth of the world’s oil supplies.

Since the war started in late February, fuel prices have posted one of their most rapid climbs on record. The spike has upended economies around the globe.

It has caused enough pain in the US to be a political liability for President Donald Trump ahead of November mid-term elections when his Republican party is trying to maintain slim majorities in the US Congress.

US school bus operators are major buyers of diesel, consuming more than 800 million gallons of diesel annually, according to the American School Bus Council.

Since December, the price US fleets of all types pay for diesel fuel has jumped 67 per cent to $5.52 a gallon, an increase that would add about $1.8 billion to the annual cost of operating those school buses, according to a recent analysis by fleet management technology provider Samsara.

That’s a huge challenge for schools already facing tight budgets, said James Rowan, executive director of the Association of School Business Officials International.

“Districts can plan for higher costs, but rapid swings in prices make it very difficult to budget accurately,” he said. “Even districts that have been able to absorb costs this year through reserves or temporary measures — they may not have that same flexibility going forward.”

Close to a third of US school districts are now siphoning money away from other funds or programs to cover their increased fuel costs, while almost a fifth are tapping reserves or rainy day funds, according to a survey of 188 school officials commissioned by the School Superintendents Association (AASA) and conducted during the week of May 4.

School officials are trying to save money by consolidating bus routes, enforcing anti-idling measures, changing fuel purchasing practices, deferring maintenance work and reducing administrative spending and staffing, according to the survey, the results of which were shared exclusively with Reuters.

‘Tremendously underfunded’

Washington State’s Yakima School District executives said the price they pay for diesel was recently up 64pc year-on-year to $6.30 a gallon. At that price, the district would need to pay $213,000 more a year on fuel to operate its 60 buses roughly the equivalent of salaries for two teachers, said Greene.

That is a big burden in an agriculture-dominated school district that has a poverty rate of 86pc, and which is already “tremendously underfunded,” he said.

In the meantime, the district is making piecemeal purchases for its 30,000-gallon diesel tank on days when prices dip, instead of filling it up, as it “limps through the end of the year,” district CFO Jacob Kuper said.

Christopher Mills, superintendent of Thief River Falls Public Schools in northwestern Minnesota, said diesel costs tied to transporting as many as 800 students are up around 30pc since the Iran war began.

The district is working to limit direct impacts on classrooms, Mills said, “but if the prices continue to increase we could be in a position of reducing support services to students.”

Even schools in oil-rich Texas have not been spared. The Waco Independent School District, which has more than 80 buses and average round-trip routes of about 60 miles per day, experienced an 84pc year-over-year increase in the price it paid for diesel in early April, the district said.

Pressure-packed

In Southwestern Alaska’s Yupiit School District, diesel is not used for buses but for classroom heat, and community generators for power.

“If they can’t produce electricity, then we can’t run the school,” Yupiit School District Superintendent Scott Ballard said in a telephone interview from his office in Akiachak.

The district, which serves 550 students, is icebound for much of the year, giving it a short window to get fuel.

So, leaders now face a difficult choice, Ballard said: Do they lock in a price almost 66pc higher than last year or gamble prices will fall? “We’re in a very pressure-packed situation.” At the other extreme, some of the largest US school districts are partially insulated from fuel price swings.

The New York City district, the nation’s largest by population, outsources about 60pc of pupil transportation in arrangements that often shift fuel price changes to contractors, said Paul Quinn Mori, president of the New York School Bus Contractors Association.

Meanwhile, the Los Angeles Unified School District, the nation’s second-largest, has been moving away from diesel-powered buses for years. Of its roughly 1,300-bus fleet, 70pc run on alternative fuels or batteries, a district spokesperson said.

“Rising diesel prices continue to impact Los Angeles Unifieds transportation budget; however, the district has taken proactive steps to reduce reliance on fossil fuels through significant investments in clean transportation,” a spokesperson said.