With limited budgets, transportation directors and school boards across the country are forced to make tough budgetary decisions every year. Decisions like how many new school buses to acquire and what state-of-the-art safety features like stop-arm cameras, seat belts, and collision avoidance systems can be afforded. The harsh reality is that most districts have an older fleet than they’d like and aren’t able to spec their buses with the latest in technology features. While the average age of most school bus fleets today is around nine years, many school districts are reporting retirement of their Type C and D buses after 16 years or more.
While budgeting for new school buses may seem cut and dried, playing the numbers game isn’t always straightforward. Deciding how and when to replace newer school buses isn’t just about how much money you have allocated for capital costs. It’s about much more. It’s about spending money now to save money in the long run, minimizing the total cost of ownership of a school bus fleet.
Newer school buses stretch a budget in the long run because they save on maintenance and fuel costs, but many schools can only afford 1-2 new buses a year. So, what to do?
Instead of feeling trapped, school districts across the country are now finding success through tax-exempt municipal financing. In the short-term, financing options like tax-exempt municipal financing allow a school district to immediately stretch its budget to afford more new school buses with the specifications that matter most to them. Here are a few success stories to consider:
Buying New School Buses Saved School District $300,000 Annually
Just last year, a school district in Ohio was operating an aging fleet of more than 350 school buses. On average, the district budgeted to replace 10 buses per year with newer models, but the fleet was aging faster than the district could afford. With limited options, the district needed a solution to revitalize their aging fleet. Their hopes were to increase their average annual acquisition rate from 10 buses per year to 15.
“The customer needed a unique solution, so we worked with them to come up with a solution that not only met their needs but far surpassed them,” said Tom Pressney, district finance manager, Central Region for Daimler Truck Financial.
After meeting one-on-one, Daimler Truck Financial created for the district a specialized tax-exempt municipal financing program with a flexible payment structure, which allowed the school district to purchase 115 new buses in 2017 with a plan to finance an additional 40 to 75 buses in 2018. Instead of chipping away at the problem year after year, the district completely revitalized their fleet and saved money along the way. How much money? In total, they were also able to save approximately $300,000 annually in maintenance and fuel costs as a result of having an overall newer fleet.
When Financing Actually Saves You Money
In a recent interview, Patrick O’Malley, administrator of ancillary services at St. Charles Parish Public Schools talked about how tax-exempt financing through a lease-purchase agreement bolstered the district’s fleet replacement plan by allowing them to acquire more buses more quickly while saving the district money. How many more buses were they able to acquire? Double the number of buses with the same annual budget.
“We’ve found that after 12 years, a school bus costs between 1.5 to two times more to maintain than newer buses,” O’Malley said. “In many cases, people think that financing means it will cost more money. What we have found is that it actually SAVES us money.”
Through tax-exempt financing, St. Charles Parish was able to reduce the average age of their fleet, increase their fuel mileage, decrease their parts inventory, decrease their maintenance costs and actually save money year over year. Watch this video for his complete story.
From an Aging Fleet to More Than 50 Brand New Buses on a Limited Budget
A school district in New York had a similar problem. With a fleet of 110 buses, their fleet was aging, and aging fast. The average age of their buses was 15 years, and the district was burdened with many school buses that were beyond their useful life and wouldn’t even pass emissions inspections.
The district didn’t know where to turn. They knew they had to replace their aging fleet quickly, but with a limited annual budget, their options were limited. Year after year, the school district had been using their annual budget to purchase as many new buses as they could afford. But at the rate that the fleet was aging, the district could not replace the school buses fast enough.
Through working with their local Thomas Built Buses dealership and a representative from Daimler Truck Financial, the school district was able to replace 50 percent of their fleet in one year with brand new buses under warranty. Their budget didn’t increase, and in fact, they ended up SAVING money. How did they do it?
Through a tailored federal tax-exempt lease/purchase agreement from Daimler Truck Financial, the school district refreshed their fleet with new school buses without increasing their annual budget. With low, manageable monthly payments, the solution alleviated the burden of aging school buses and even allowed the district to achieve some savings in annual fuel and maintenance costs.
“These are a few examples of how school districts are maximizing their budgets through financing,” says Keith Courtney, national sales manager at Daimler Truck Financial. “Too often we hear from customers who aren’t able to afford the latest in safety or maintenance equipment for their buses. By working collaboratively, our customers get more buses and technology with lower budgets, without having to make sacrifices on safety features or the latest innovations. Personalized, one-on-one service is key to creating unique financing programs for each customer. It’s something that helps set us apart from the competition.”
Daimler Truck Financial is dedicated to the school bus market and has regional experts located throughout the United States to personally serve customers. Their bus financing experts work in a consultative and collaborative manner with customers and Thomas Built dealers to provide competitive, cost-effective finance programs like tax-exempt municipal financing, which allows customers greater flexibility through lower interest rates and flexible repayment terms.
Daimler Truck Financial, a business unit of Mercedes-Benz Financial Services USA LLC, provides a broad range of financial and insurance products and services for Daimler Trucks North America’s commercial vehicle brands, which include: Thomas Built Buses, Freightliner, Western Star, Mitsubishi Fuso, and Sprinter. For more than 40 years, the company has been a trusted partner in the industry, creating specialized finance solutions tailored to specific customer needs.
©2018 Daimler Truck Financial is a business unit of Mercedes-Benz Financial Services USA LLC. All Rights Reserved.