FAIRBANKS — The Fairbanks borough’s door-to-door van service for elderly and disabled riders could be cheaper if privatized, a new study finds, but not by as much as fiscally conservative assembly members hoped.
The $25,000 study, approved by the Borough Assembly late last year, looked at the benefits and risks of privatizing the $1.3 million Van Tran service. It will factor heavily as the assembly re-evaluates transit employees’ labor contract at its meeting tonight.
The study was proposed by assembly members Diane Hutchison and Michael Dukes to look at the benefits and risks of privatizing the program and bring its costs more in line with programs in Anchorage and Juneau, where services are contracted out. Van Tran riders pay a $2 fare, but a ride on one of Van Tran’s wheelchair accessible buses costs the borough about $70 — nearly double the price Anchorage and Juneau pay.
The study, done by Virginia-based Management Analysis Inc., compared the labor costs of the three services and suggested a number of options. It found that privatizing similar to Anchorage would shave an estimated $138,000 off Van Tran’s price.
That’s less than expected, Hutchison said. She hoped privatizing Van Tran — and reducing the hefty labor cost — would have incurred deeper savings.
“In general, I was expecting to hear more of a cost savings than what it shows,” she said. “It’s fine, that’s a reason to do the study.”
Some of Van Tran’s biggest costs include fringe benefits, such as health care and pensions, at about 72.45 percent of wages, compared to about 39 percent in Anchorage. Additionally, the Van Tran employees have 13 days off, whereas private sector paratransit agencies get 6.9 days off.
Many of the benefits in privatizing have been partially mitigated by a voluntary 10 percent pay cut Van Tran employees have agreed to in the contract the assembly will be reviewing tonight. Without the cut, privatization would save an estimated $250,000.
The report suggested a staggered approach to privatization, where the borough would accept the current contract and prepare a bid request next year, allowing Van Tran employees to attempt to bring their costs down.
There were other, limited, options to reduce costs, such as consolidating maintenance staff, grouping rides together and having drivers work split shifts during slow times of the day.
Adam Barth, the borough’s transportation manager, said he felt the study was flawed because it narrowly looked at the impacts of privatization. He said significant savings will be found through a more efficient program regardless if it’s privately or publicly operated.
He said the borough has already been considering many of the ideas put forward in the report, and the report will help push the borough to make changes.
“There’s lots of ideas out there, but something we can put forward and implement is different,” he said. “This has been a good process to jump start regardless of how it turns out. Either way, whether the borough continues it or a contractor, we’ll start to see some better efficiencies while still maintaining the quality service.”
For the most part, advocates for VanTran’s ridership have been optimistic about the effort to bring down the service’s costs. Art Delaune, a coordinator at Access Alaska, wasn’t available to comment on the latest report, but in an earlier interview with the News-Miner said he was open to contracting or other cuts as long as it provided equal or better service to the riders.
Hutchison said she’s unsure what action the assembly will take tonight. Members are still reviewing the study, which contains options for saving.
“One way or another, it should be helpful,” she said.