The private bus company that now transports thousands of Grand Rapids Public Schools students has appealed a federal ruling saying it must recognize one employee union instead of another.

A number of companies and school district officials are watching the case, but opinion is mixed on whether the ruling, if it stands, will discourage private companies from entering the school transportation market.

Dean Transportation hired about 100 former Grand Rapids Public Schools bus drivers when it signed a five-year contract with the district in June 2005. Dean says those drivers now are part of the Dean Transportation Employee Union, which represents other Dean drivers and related transportation staff. But the Michigan Education Association, a school employees union, says the drivers still are represented by the Grand Rapids Education Support Personnel Association, an MEA affiliate, just as they were when they were district employees.

The MEA filed unfair labor practice charges against Dean last fall when Dean declined to bargain a new contract with GRESPA. The NLRB case is one of several disputes related to the contract.

The union also had filed a lawsuit against Dean in 17th Circuit Court in Kent County, alleging "tortious interference" with the contract between the union and Grand Rapids Public Schools. Tortious interference cases allege intentional damage to a business relationship or contract by a third party. The parties settled out of court in early February, with Dean agreeing to pay $600,000 to the union. According to a report in The Grand Rapids Press, Kellie Dean, company owner, said the settlement was a "business decision," and that the union had requested more than $30 million.

In the NLRB case, Administrative Law Judge Michael Marcionese agreed with the MEA in a ruling in September, saying that Dean must recognize GRESPA. He said that the former Grand Rapids Public Schools drivers report to the same location and the same supervisors as previously, that they do not regularly mingle with Dean drivers in other locations, and that they should retain their identity as a separate bargaining unit, not as part of a larger Dean workforce. The Grand Rapids drivers report to a bus center at 900 Union Street.

In the same ruling, the judge said that the Dean Transportation Employee Union "has been restraining and coercing employees" by applying its collective bargaining agreement with Dean to the new drivers. The judge said that the union violated labor law when it told the new drivers they would be required to join DTEU and pay dues.

Dean is appealing the decision to the full National Labor Relations Board on the grounds that Marcionese "failed to consider the regionalized nature of Dean transportation and Dean operations," Dean attorney David Khorey told Michigan Education Report.

"The question is, what is the appropriate bargaining unit? Is it just Union Street or is it everybody?" Khorey said. Most of the Union Street drivers transport special education students, he pointed out, and Dean believes those drivers have more in common with other drivers of special education students than with regular education drivers who are at the same location. "Who’s got the community of interest here? It’s not just the Union Street garage."

Khorey said he believes the ruling, if it stands, would discourage private bus companies from signing contracts with public school districts in Michigan, but the general manager of another private bus company, Laidlaw Education Services, said he doubts the ruling would have any impact on his company.

"It doesn’t affect our continuing desire to work in Michigan," said Robert Rutkoski, who oversees Laidlaw’s operations in 10 Michigan school districts.

Based in Lansing, Dean Transportation has more than 500 employees and transports special education students in school districts in the Grand Rapids area as well as in Alma, Mount Pleasant, St. Johns and Holland. Most of the transportation is arranged through intermediate school districts. During the hearing, Dean pointed to its central hiring system, centralized policies and procedures, and single system for wages and benefits as evidence of its regional approach.

The reason the former Grand Rapids drivers report to the same location and do essentially the same job as previously is that Dean and the school district wanted a smooth transition on behalf of special education students, Khorey said. The idea was to "be seamless, and over time do the consolidations. This was seen as a process. … You’ve got to look at this down the road a little."

In a statement issued after the ruling, Kellie Dean said, "(W)e remain focused on our key priority of providing safe, reliable transportation for the students of Grand Rapids Public Schools."

However, the president of GRESPA said the judge’s ruling "shows you that we did things right."

"Anybody who works out of the 900 Union center is our member," Steve Spica told Michigan Education Report. "I hope it makes other districts think twice about privatizing any of our positions."

Similarly, MEA Uniserv Director Buz Graebner said the ruling means GRESPA has the right to represent all full-time drivers, regular part-time drivers, mechanics and route planners at the Grand Rapids center. "We think the full (National Labor Relations) Board is going to uphold it," he said.

A date for the hearing has not been set. In the meantime, Dean is treating the Grand Rapids drivers as if they are part of the DTEU, Khorey said.

Rutkoski, Laidlaw’s area general manager, said private bus companies can help school districts save money regardless of union contracts.

Each of Laidlaw’s 10 contracts for transportation is handled differently. Some of the districts are non-union, he said, but some are represented by MEA affiliates and others by the Teamsters union. Laidlaw does not have its own employee union.

One reason Laidlaw can offer school districts competitive contracts is the large size of its operation overall, he said. The company contracts with some 1,000 districts in various states, with more than 40,000 vehicles and 41,000 drivers.

"When you operate 40,000 vehicles, there are economies of scale in cost of parts ... electronic routing … and mechanics," he said. "We find that our staffing levels are much more efficient."

The company also does not have to pay the retirement benefits that are required of public school districts he said, which considerably reduces the cost.

The number of school districts hiring private firms to provide food, custodial and transportation services is growing steadily. According to the Mackinac Center for Public Policy's 2006 privatization survey, 37.8 percent of public school districts have a competitive contract in place for one of those three services. When the Grand Rapids Public Schools Board of Education approved the contract with Dean, school officials estimated a savings of $18 million over five years. With student enrollment at about 20,500, the savings would equal about $870 per child for the five years combined.

According to the Michigan State Police, which is responsible for school bus safety inspections, there is a fleet of about 17,500 school buses in Michigan. Of those, about 1,300 are contracted vehicles owned by private companies. However, in some cases a public school may retain ownership of its vehicles but hire a private company to provide drivers and management.