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‘There will be like zero income’: How coronavirus is crushing Minnesota’s private bus companies

Minnesota Valley Transit Authority
Schmitty & Sons bus company in Lakeville operates transit buses for the Minnesota Valley Transit Authority.

As health officials urge a retreat from public life because of the COVID-19 pandemic, a swath of Minnesota industries are reeling from the economic effects. Among them are Minnesota’s private bus operators, which provide roughly 60 percent of school buses in the state and employ thousands of workers.

Bus companies across the state have seen a plummet in bookings as people clamp down on non-essential travel and schools close their doors. “It’s been pretty devastating for us,” said Kathryn Forbord, the director of sales and business operations for Schmitty & Sons bus company in Lakeville. “We’ve had a substantial amount of business that’s been halted.”

Companies say they’re looking for financial help to keep from laying off employees — or closing — and scrambling to convince school districts to keep contracts that could help the business stay afloat. For some, the crisis is threatening their chances at providing school busing once kids eventually return to class.

“We aren’t too proud to ask for help,” Forbord said. “Not just for our company but for the industry as a whole.”

Ordinary services disrupted

Forbord said that Schmitty & Sons has been operating since the 1950s. After its longtime owners recently retired, the business became employee-owned. It has about 700 employees.

Normally, the company has a few lines of business. It operates transit buses for the Metropolitan Council and the Minnesota Valley Transit Authority. It buses students to school, sports games and field trips in Lakeville and Burnsville. And it has a charter business for event-related transportation, airport rides and more. The charter business “basically stopped,” Forbord said, and the loss of those trips and other coronavirus disruptions have “impacted 100 percent of our company.”

Schmitty & Sons is not alone. Amanda Boadi, manager of Holt-Peterson Bus in Cokato, said normally this time of year is one of their busiest. Two of their top services are cross-country bus tours advertised for people aged 50 and older, and transportation for student bands and choirs participating in concerts in other states. But the company’s bookings came to a “screeching halt” by the end of last week, Boadi said. While she said Monday there had not been layoffs at the 75-employee business, Boadi said she’s “praying” the company qualifies for federal small-business disaster loans. “We will need government assistance,” she said, particularly if travel disruptions continue for months.

Uncertainty over school contracts

One lifeline for bus companies could be contracts with school districts. Even though Walz ordered school closed for at least eight school days, his administration has urged districts to continue to pay school bus drivers and utilize them in other ways, such as delivering food to students.

Bus companies are hoping districts don’t simply pay drivers wages, but instead keep full contracts, since their costs go beyond paying drivers, said Shelly Jonas, executive director of the Minnesota School Bus Operators Association (MSBOA). “When school is not running basically the only thing that we save on is fuel,” she said Monday. 

One company particularly worried is Lorenz Bus Service in Blaine. In an emailed statement, Benjamin Canine, vice president of the company, said 120 of their 200 employees are school bus drivers, and they serve Minneapolis Public Schools and Spring Lake Park Schools.

Canine said he isn’t sure if either district they work for will fully compensate the company during closures. That could lead to a cascade of crises, he said. For one, he said his drivers have begun to file for unemployment insurance payments and look for other work. The industry is already struggling with a shortage of drivers, and so retaining workers for after the coronavirus pandemic is critical, Canine said.

In addition to wages for bus drivers, Canine said it takes “a full complement of staff to run route service every day,” such as dispatchers, manager, mechanics, safety personnel and more. Lorenz must pay loans, maintenance costs and other expenses on top of that.

If districts do not pay the full contract, the school closures “will jeopardize the existence of not just our company but the entire pupil-transportation industry,” Canine said.

“If there are no private school-bus operators left, and over 60 percent of the children in the state ride on contractor-provided school buses, how will the districts bring the kids back to school after the coronavirus passes?” Canine said.

Forbord, of Schmitty & Sons, said school busing is a “fairly large part of our business” as well.

Minneapolis Public Schools could not be immediately reached for comment this week and a spokeswoman for Spring Lake Park Schools said in an emailed statement that the district is having “direct conversations with our busing partners right now and working with them to navigate this unprecedented situation together.” 

“We value their partnership and the services they provide our learning community,” the statement says.

But Wendy Hatch, a spokeswoman for the state Department of Education said the agency told school leaders this week it “has the expectation that districts and charter schools maintain their collaboration and contracts with our bus transportation providers.”

“These professionals are instrumental in supporting the efforts of distance learning specifically for transporting the students of our healthcare and emergency care workers and food to our students throughout the community,” Hatch said.

The state Department of Transportation also told the MSBOA trade group it expects schools will maintain contracts with bus transportation providers, according to an email Jonas sent to private bus companies Tuesday. “To be clear, our goal is to get MORE than just wages covered,” Jonas wrote. “We have a lot of overhead and expensive equipment sitting idle.”

Still, not all buses have K-12 transportation as a backup. Boadi, of Holt-Peterson Bus, said their owner runs a school bus company as well, but they’re run separately from it. “As of right now, there will be like zero income,” for the charter company, she said.

Comments (9)

  1. Submitted by Bob Barnes on 03/18/2020 - 01:07 pm.

    This is going to make 1929 look pretty tame by comparison. Economic Armageddon is what this type of response will lead to and the govt knows it. The NYT has an article linking to a “leaked” govt response paper where the govt admits it’ll be an 18 month or longer pandemic with multiple outbreaks (as I’ve said before we will get another big outbreak when they end the shutdowns). They also admit there will be shortages for all. It’s on the front page of the NYT If anyone wants to read it.

    The economic damage isn’t being reported on accurately. If this shutdown lasts more than a month, upwards of 75% of all small businesses will be gone forever. Retirement plans are being wiped out by the market crash. Millions are or will lose their jobs. People won’t be able to pay rent or mortgages which means all those loans owned by say Pension funds won’t get repaid meaning pensions collapse so there won’t be any money to pay retirees. Delaying tax payments by 90 days creates an ever bigger deficit due to less revenue. Some are estimating 20% unemployment and that’s not unreasonable at all, if this shutdown last long enough it’ll be a lot higher than that. If they simply print money to give to everyone that will cause massive inflation so that most won’t be able to afford things even with the new money.

    We need facts, not fear or hyperbole. We must end this crazy policy and start dealing with those who get a severe case. A new abstract out suggests up to 85% of all cases go unreported. That means most aren’t sick enough to even call a doctor. Those who do get sick MUST stay home and self medicate to deal with the symptoms so they don’t infect others. Going to the doctor or even getting tested is a waste of time as they can’t treat you unless you are so bad you need hospitalization anyway. If you get tested and have the virus they’ll just send you home and tell you to deal with the symptoms like you would with the flu. All you’ve done at that point is risk infecting others at the doctors office including the medical staff.

    • Submitted by David Markle on 03/18/2020 - 01:49 pm.

      Let’s see how things progress in China and South Korea, where they’re several steps ahead of us in this uncharted territory.

    • Submitted by Paul Udstrand on 03/18/2020 - 03:20 pm.

      Let’s be careful about dispensing medical advice and mixing epidemiology and economics.

      COVID-19 can cause severe respiratory distress that requires hospitalization. Those hospitalizations will quickly overwhelm our medical facilities. Currently we only have around 28-30 ICU beds available statewide, those could be filled in matter of days or even hours if we don’t slow down the infection rates.

      Yes, with most corona viruses most people will experience mild or manageable symptoms. The problem with this virus is that no one’s immune system has ever seen it, so when smaller percentage of those who get more seriously ill get infected, it’s more lethal and requires intensive treatment. Run the numbers, 20% of 5 million is a million… we have 28 ICU beds.

      The only way we might hit the appropriate response, is to over-respond. You can survive bankruptcy… you can’t survive death.

    • Submitted by RB Holbrook on 03/18/2020 - 03:47 pm.

      “Going to the doctor or even getting tested is a waste of time as they can’t treat you unless you are so bad you need hospitalization anyway.”

      Since many carriers are asymptomatic, it makes sense to test as many people as possible. We don’t yet have a good handle on the number of people who are infected, or who may have been exposed. At the very least, it will be known if a person is a “severe” case who needs to be dealt with.

  2. Submitted by Paul Udstrand on 03/19/2020 - 08:56 am.

    By the way, maybe now is a good time to remind everyone that these private bus companies are actually more heavily subsidized than Metro Transit in terms of their fare recovery rates.

  3. Submitted by Jamison Swift on 04/06/2020 - 10:09 am.

    Any updates to this story? I’ve heard from drivers that they’re being told to go apply for unemployment. Why can’t school maintain their contracts in this environment? It’s not like they’re losing money by teaching kids at home. They’re still getting all of their per-pupil reimbursements as well as tax levy money. Their budgets shouldn’t have changed at all. Seems silly to not just pay furloughed drivers instead of increasing our unemployment burden.

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