Improving pupil transportation in North Carolina

North Carolina uses data envelopment analysis (DEA) to produce a pupil transportation funding process that encourages operational efficiency and reduces expenditures. To do so, the authors extended the DEA methodology to nonhomogeneous units by integrating DEA with a regression model that adjusts the DEA output to account for variations in site characteristics and to ensure that the final funding allocations were fair. The new process has led to changes in bus routes and schedules, adjustments in school start and stop times, and reductions in the inventory of buses. Between 1990 and 1993, the state saved $25.2 million in capital costs and $27.9 million in operating costs and it expects savings to increase.