Public versus private economic activity: A new look at school bus transportation

Outsourcing Public Services: Ownership, Competition, Quality and Contracting

“…25 Thompson (2011) notes that previous studies of student transportation have produced conflicting results. Notably, McGuire and van Cott (1984) find that private school bus transportation is 12 percent cheaper. Their study is, however, cross-sectional whereas Thompson has a panel with six school-years of data.…”

The estimated cost impact of privatizing student transportation in Minnesota school districts

“…Those studies produced conflicting results, with four studies finding contractors to be more cost effective (Bails 1979;McGuire and van Cott 1984;Ross 1988;Damask 2000) and six studies finding in-house operations to be more cost effective (Alspaugh 1996;Harding 1990;Hutchinson and Pratt 1999;Cassell 2000;Lazarus and McCullough 2005;Hutchinson and Pratt 2007). The magnitudes of the savings over the alternative method were generally estimated to be in the range of 5% to 20%.…”

“…This choice in defining the policy variable is important because modeling privatization discretely fails to measure the effect of what is often substantial variation in that institutional arrangement among districts that use both contrac-1 Several previous studies did not use the basic regression methodology outlined above. Specifically, three studies (McGuire and van Cott 1984;Cassell 2000;and Damask 2000) simply compared the mean or median costs of in-house and privatized districts, sorting the districts into sub-groups to control for other factors that may affect costs. Bails (1979) used a standard regression method but compared county level transportation costs in three states that he designated as in-house states and three states that he designated as contractor states, even though all six states used some combination of the two methods of provision.…”

“…Of the remaining six, various adjustment methods were used, ranging from simple straight line depreciation (Harding 1990;Hutchinson and Pratt 1999) to more sophisticated methods involving the estimation of opportunity costs and capital recovery approaches (McGuire and van Cott 1984;L&M). In general, we should bear in mind that school districts are part of large and complex government organizations that have numerous funding sources and complex accounting standards, and that their reported costs are subject to both human decisions and human error.…”

The determinants of the choice between public and private production of a publicly funded service reconsidered

“…The scale question might be investigated directly by making use of earlier work by McGuire and Van Cott (1984), in which they compare the costs of public and private (contracted) school bus transportation. Although many cost comparisons are made in their paper, there is no discussion of scale economies.…”