In the midst of the most severe budget cuts in recent memory, education officials are also anticipating the public school system will have to spend more money to deliver some of its most basic services — bus transportation, meal service and powering buildings with electricity.

Last week, the state Department of Education unveiled a plan to slice more than $31.5 million from its budget by eliminating vacant positions and scaling back on dozens of programs. But even as the DOE continues to work toward cutting deeper into the public school budget — the DOE must plan to cut up to $69 million — the agency is also bracing for higher costs for its most vital services.

"The challenge is, the costs continue to go up. The cost of food is going up. The cost of labor is going up. The cost of electricity is going up. It's going up and up and up," said Randy Moore, assistant superintendent of business services.

To counter rising food and transportation prices, Moore said the DOE plans to implement cost-saving measures — from rerouting buses to encouraging schools to monitor electricity usage to increasing lunch prices. Even so, education officials say it will be difficult to offset rising costs.

"We are definitely scratching our heads to come up with cost reductions," Moore said.

Over the past five years the DOE's electricity costs have risen by more than 72 percent, according to recent figures released by DOE's office of school facilities and support services.

In 2007-2008, the department shelled out about $38 million for electricity throughout the statewide system of 283 schools. That compares with a little more than $32 million just a year before that.

And this year, with the rising cost of electricity, the DOE is anticipating a bill of more than $40 million, Moore said.

"Consumption has been fairly stable but price has gone way up," Moore said.

One way the DOE is hoping to save some money on its electricity bill is through its Energy Conservation Program, which started last school year and is intended to encourage less consumption and more conservation in schools statewide.

The program asks schools to reduce their energy usage, and if successful, they will receive a rebate for half of the value that they were able to save. However, schools that increase their energy usage will have to pay back half the value.

With the DOE's current fiscal situation, Moore said it's possible that the DOE may no longer be able to afford to offer incentives.

"We can simply say, this is a requirement. You must take these measures to reduce electricity consumption," Moore said.

HIGHER BUS FARES

With the steady rise in cost to provide public school students with bus transportation, the DOE now is exploring several options to reduce the cost of the service, from creating more efficient bus routes to even increasing bus fares.

About a fourth of all public school students — 40,000 — ride a school bus each day. This year, the DOE anticipates that it will spend more than $56 million to provide the service, which runs mostly in the Central, Leeward and Windward districts on O'ahu and throughout the Neighbor Islands.

That's a nearly $10 million increase over last year, when the DOE spent more than $47 million to provide buses to students.

Aaron Kimura, DOE's student transportation services manager, said the reason transportation costs have increased exponentially is because the DOE's bus contracts run for six years and about 15 percent of those contracts are up for rebid every school year.

Because of the increase in labor, fuel and maintenance costs, Kimura said when a contract comes up for rebid, the price nearly doubles from when it was last negotiated six years ago.

"The contracts that had expired last school year, but out to bid for this school year, the increase was close to $9 million," he said.

To deal with the increase in those prices, the DOE is examining several possible ways to save money.

"We definitely need to examine the way we provide student transportation," Kimura said.

The DOE currently has about 540 buses and spends up to $100,000 a year per bus. So one strategy is to reduce the number of buses in the DOE fleet.

One way to do that is to increase the "walk distance" requirement, Kimura said. In other words, the DOE is proposing to increase the distance a student lives from school to be eligible to ride a school bus.

Currently, students living within a mile of their school cannot ride the bus, because they are considered within walking distance. But Kimura said the DOE would like to increase that distance to a mile-and-a-half for students in grades six to 12.

It is unknown how much of an impact that change may have, Kimura said.

In the department's most recent budget reduction plan, the DOE outlined some $320,000 in cost-savings by reducing buses through more efficient bus routes.

Moore said the DOE plans to begin using computer software to map out more efficient routes and it's anticipated that some 10 buses can be taken off the road.

Ultimately, the DOE would like to increase bus fares, Moore said, acknowledging that bus service is heavily subsidized.

Currently students pay $119.60 a year. But it costs the state more than $600 per rider to operate the DOE school bus system.

In other words, of the approximately $47 million that the DOE spent to operate its bus service last year, only about $2 million was paid for by fares.

"By increasing food or bus prices, all that would do is decrease the size of the subsidy," he said.

Regardless, increasing bus fares would be long away since it would require a change to the administrative rules, which must be approved by the Board of Education after public hearings. Education officials are proposing to change an administrative rule that would give the DOE the authority to increase school bus fares.

The soonest bus fare increases could occur would be in 2009.

LITTLE MORE FOR LUNCH

Food service is also heavily subsidized by the state and the DOE is also expecting to push for meal price increases next year, said Glenna Owens, director of the school food services branch.

The DOE spent about $27 million just for food on school campuses and the DOE is projecting that cost is likely to increase to close to $30 million this year.

The DOE has officially projected a 6.5 percent increase in food costs, but Owens says she suspects that the increase will be much higher.

"Nationally there was such a price increase for food," Owens said. "What's going to be remarkable is when our food contract is renewed in January. I'm predicting closer to 11 percent," she said.

School lunch prices were last increased in 2007 by 25 cents to a total of $1.25 per lunch. But Owens said it is likely that the DOE will increase lunch prices to $1.50 next year.

In addition to raising the lunch fee, the DOE is also seeking to change the administrative rule that regulates lunch prices. Right now, the rule says that the lunch price shall be set to 1/3 of the average of the actual cost of lunch over the past three years, rounded to the nearest 25 cents.

While the rule sets lunch fees at a 1/3 of cost, state law actually sets lunch fees at 1/2 of cost.

"Most school districts on the Mainland, the meal program is expected to be self-sufficient," Moore said. "So obviously that's the challenge. How do we efficiently subsidize meal service?" he said.