November 5, 2026, by Jake Dye for the Seward Folly

The Kenai Peninsula Borough School District will spend at least $55,000 per day on student transportation next year, under a new contract with MV Transportation approved unanimously by the district’s Board of Education on Monday.

The new contract, which begins with the start of the next school year and extends for up to seven years — potentially into 2034 — comes amid steep increases in both the price of fuel and the cost of employing bus drivers.

Kevin Lyon, the district’s head of planning and operations, told the board during a Monday work session that the winning proposal by MV and another proposal by First Student — who currently provide transportation services to the district — significantly overran both the district’s current costs and the amount of state funding the district receives for student transportation.

This year’s budget includes a projected spend of roughly $8 million on transportation. The proposal for next year would start at nearly $10 million for daily service, before considering the increased cost of fuel or additional costs like activities.

The key reason for the increase, Lyon said, “is wages.” Alaska Statute includes a minimum wage provision specific to public school bus drivers that says they must be paid at least double the state’s minimum wage. The statute also says that wage adjustments don’t have to be made when an employer is under contract.

In 2017, when the district inked its last transportation contract, the Alaska minimum wage was $9.80, so bus drivers had to be paid at least $19.60 an hour — a rate frozen in that 2017 contract. Today, the minimum wage is $15, so bus drivers have to be paid at least $30 an hour under a new contract.

That increased wage is a major component, but Lyon said the costs also come from the gas it takes to drive thousands of miles across a proposed 56 routes, burning diesel fuel that has increased in price dramatically this year amid the United States’ war with Iran.

The contract projects that the cost of fuel will be $3 per gallon. That total doesn’t resemble the nearly $7 per gallon of diesel that drivers are seeing at Kenai Peninsula pumps. Lyon said that the $3-per-gallon estimate made more sense in February, before the war, and that if they’d budgeted for $7 gas, the contract would cost millions more — though the district will be on the hook to pay the difference.

Superintendent Clayton Holland said the district will be making a roughly $700,000 supplemental transfer this year to pay overruns on the cost of gas.

The district is only receiving around $8 million for student transportation per year, and has made deep cuts to its bus routes to cut costs. There aren’t, Lyon said, many places left to shave off transportation expenses. He said the district will either have to come up with the money to pay for the increased costs — be it state funding or other sources — or face difficult decisions about the future of busing on the Kenai.

“At some point, we’re either going to have transportation or we’re not going to have transportation.”

Mica Van Buskirk, who represents Seward on the board, said that under the current contract and under existing revenues, the district expects to be allocating $2.5 million more per year to transportation. That money is coming from other areas of the budget.

“End of the day, you know, our contract is up with the other company,” Holland said. “We’ve gone through this process, we have to do it.”

Board president Jason Tauriainen said the district needs to advocate for increased transportation funding from the state, not just to maintain current service but to reverse some of the cuts the district has made in recent years. In his district of Nikiski, he said, students are often driven miles from their home and left by the highway to await pickup — “that’s a really inequitable situation that we’re in.”

That conversation should be easier this year, he said, as the increased gas prices putting pressure on the district are directly correlated to increased state oil revenues.

Despite chafing under the increased cost of the contract, the board ultimately voted unanimously in favor of its approval.

“I simply just don’t have this amount of money in that budget,” Van Buskirk said. “If (the state) don’t increase the way they fund education, we have a multi-million dollar deficit. We don’t have the money for this.”

The full cost proposal and draft contract can be found at egov.kpbsd.org.