As the ongoing war in Iran drives up fuel prices across the globe, some school districts are already feeling the strain on their budgets—and many more are bracing for impact.
Last school year, the Yakima district in Washington state spent about $3.84 per gallon on diesel for school buses. In the 16,000-student district’s last fuel order in late April, it shelled out about $6.30 per gallon.
In total, the district has already spent about $100,000 more than it expected to for fuel this school year, said Jake Kuper, the district’s chief financial officer.
“It’s a significant increase,” Kuper said. “Who knows what’s going to happen with fuel in the next month or few months? But it definitely starts to chip away at the budget when there’s that large of an increase.”
Yakima schools operate about 60 school buses each day, and just under half their students use district transportation, so ensuring buses run is non-negotiable, Kuper said.
For now, the district is managing the increased costs by pulling funds from other areas of its budget. For the next school year’s budget, the district plans to earmark more money for fuel, just in case.
Districts will also have to monitor the possibility that food service costs could rise if fuel prices stay high, as the elevated prices could strain transportation and delivery costs associated with preparing and distributing food to schools, Kuper said.
The Yakima district is one of many that are already making changes to accommodate rising fuel costs, according to a survey of 188 district leaders administered this month by AASA, The School Superintendents Association; the Association of School Business Officials International; and the National Association for Pupil Transportation.
Forty percent of respondents said their districts are managing by adjusting bus routes, and 20% said they are limiting non-essential bus trips, like field trips.
Seventeen percent said they’ve made no budget cuts because they’ve pulled from reserves, while 16% said they’ve deferred district maintenance work. Another 13% said they’ve reduced support personnel and reduced administrative spending, while 12% reported reducing planned summer instruction.
Looking ahead to 2025-26, a little more than half of districts surveyed (55%) said they haven’t made any budgetary changes yet to account for rising diesel costs. If fuel prices remain high, district leaders said they anticipate budget cuts for extracurricular activities (30%), facilities maintenance (29%), noninstructional staffing (23%), professional development (22%), and purchasing or replacing technology (22%).
Schools will feel different impacts depending on how they purchase fuel
As with the explosion in fuel prices that followed the start of Russia’s war on Ukraine in 2022, the impact of rising fuel prices will feel different from one district to the next.
The vast majority of the nation’s fleet of 500,000 school buses runs on diesel fuel. Nearly two-thirds of school districts also use gas that’s similarly subject to energy market volatility for their HVAC systems, federal data show.
Some districts that purchase diesel fuel on a weekly or monthly basis have seen dramatic increases hit more quickly. In Salem, Ore., a two-week order of gas cost $31,000 in early March, up from $24,600 in late February, just before the war began. The school district in Brownsville, Texas, has seen monthly fuel costs rise by $10,000 over the last few months.
But even in districts that purchase fuel through contracts locked in well in advance, soaring fuel prices are a cause for concern.
Howie Barber manages finances for four school districts in Plymouth County, Mass. Even when fuel prices are stable, the transportation part of the job is complex.
When the cost of a single transportation contract for all four districts was proving too steep in 2024, Barber had to pivot to three separate contracts, one for each town covered by the four school districts (the biggest town has separate elementary and high school districts).
Each of those contracts locks in the price of fuel—but only for one school year. In September, if the cost of fuel has risen by 5% year over year, the district starts paying a higher rate when the next fiscal year begins the following July.
That means Barber has had to pre-emptively cut tens of thousands of dollars from the districts’ annual budgets, without knowing for certain that the increased fuel cost will actually kick in—or that the cuts are sufficient for the rising costs to come.
Barber also has to contend with the reality that many of his school districts’ growing costs are fixed, whether by union contracts with teachers, contracts with utility providers, or laws that require costly services for students with disabilities.
“Something as simple as $20,000 on a $9 million budget, that $20,000 is extremely important,” Barber said. “That could cover a paraprofessional, or at least half of one.”
Most school buses still run on diesel, despite incentives to transition
Districts’ ability to weather these costs varies dramatically depending on their capacity to raise local taxes, and the amount of support they get from state funding sources. School districts that transport K-12 students across long distances in rural areas also face disproportionate budget strain when fuel costs rise precipitously.
“Too many states use outdated funding mechanisms that make getting students to school an afterthought, push risk onto local districts when fuel costs spike, and don’t do enough to encourage school bus fleet upgrades that would reduce exposure to diesel, both in budgets and in students’ lungs,” wrote Bonnie O’Keefe and Jennifer O’Neal Schiess, school finance analysts for the education research firm Bellwether, in a newsletter this week.
The federal government and some states in recent years have dangled financial incentives for school districts to replace diesel buses with their more energy-efficient electric equivalents. Some states have even imposed mandates to eventually switch.
But momentum for those changes has let up—New York lawmakers recently eased the timeline for their state’s electric bus mandate, and the Environmental Protection Agency under President Donald Trump has slowed the release of grants and rebates for electric bus conversions.
Some districts are buoyed—for now—by the impending start of summer. With it comes reduced bus service, though most maintain at least some routes for summer programs.
In the short term, the Thief River Falls school district in northwest Minnesota hasn’t experienced any “major impacts” from rising fuel costs, even though diesel prices are up about 30% in the area, Superintendent Chris Mills said. But classes will dismiss in late May, leaving district leaders the summer to try to plan.
Should fuel prices remain high, Mills said, his district—which transports about 800 students by bus on a regular school day—might have to turn to budget reserves.
“It’s pretty difficult to figure out what it’s going to look like and how you prepare for it, but that’s one of the reasons we do have those reserves, is to ensure when costs are high or unexpected costs come up, we have a way to cover them and keep things moving,” Mills said. “But it’s incredibly tough to prepare for because you just don’t know what’s going to happen.”
Reserves aren’t a silver bullet, though, he added, they’re a last resort. There are many external forces that have increased costs in recent years, often quickly and without much warning, like the prices of food and new school buses.
“I think all of those competing interests are things we’re dealing with and you have to be able to budget for and plan for,” Mills said.
Some districts have large teams of people managing these constantly changing pressures. But not all do.
Earlier in his career, Barber served as CFO for the Springfield, Mass., school district, where he worked alongside a director of transportation and other administrators who covered aspects of this work. Now he does a lot of it by himself.
“You have to really know a lot of everything,” Barber said. “You’re having to do a lot of research but also asking a lot of questions.”
For budgeting guidance, Barber often turns to state networks of school finance administrators. Still, he said, “There’s things that are happening that can’t be forecast.”
