Lawmakers say the state’s once troubled school bus program has turned into a "success story" as the Department of Education anticipates saving a half-million dollars this year while serving more student riders.

The savings come about a year after the department started overhauling its student transportation program to step up efficiencies by way of revamped vendor contracts and use of new technology.

The DOE was forced to make changes in mid-2012 when faced with a $17 million shortfall for student transportation because lawmakers refused to fund escalating costs. As a result, the department cut service for about 2,000 students statewide at the time.

A state auditor’s report that year found since 2006 the cost of providing student transportation had nearly tripled to $72.4 million. The audit concluded the DOE had essentially lost control of its school bus program, failing to address anti-competitive behavior among contractors and allowing costs to dramatically increase.

A subsequent DOE-commissioned study called for a complete redesign of the student transportation branch to rein in costs.

"There was no (standard operating procedure) for procedures, there was no contract management, there was no contract oversight, there wasn’t even routing management or data collection with which to base those routes on," DOE Assistant Superintendent Raymond L’Heu­reux told the House and Senate Education Committees on Friday during a legislative briefing. "There had been zero implementation of technology."

The school bus branch has a $67 million budget this year. In all, about one-quarter of public school students are served: 39,000 general-education students and free curb-to-curb service for about 4,000 special-education students.

"As we fast-forward about 15 months, we’ve made significant improvements to the model to the point where we’ve got great momentum and great progress," L’Heu­reux said.

Among the reforms highlighted:

» Implementing technology tools that collect real-time data on bus routes and riders.

» Moving away from a bid model to request for proposals for vendor contracts.

» Creation of a contract performance management program.

» National certification and training for DOE transportation staff.

A phased overhaul of the system began with a pilot last fall with bus routes serving 30 schools in the Aiea/Pearl City/Radford complex area.

Under the previous contracting model, the state paid for single back-and-forth routes, regardless of how many students were using the service. The department now manages its own routes and pays vendors a daily rate.

"As we applied the routing software and the tracking with GPS to the pilot area, we discovered we had routes on top of routes," L’Heu­reux said. "We had very short distances with very few students on a very large bus."

Tim Ammon, vice president of Maryland-based Management Partnership Services, the consultant the DOE hired to recommend ways to improve the program, said the department has already saved $200,000 and expects to save $500,000 by the end of the fiscal year.

"Within the first six months of the pilot area, as a result of pursuing some of these efficiency initiatives, we’ve actually increased ridership … while at the same time we’ve had a nine-bus reduction just by more complete and more thorough collection of information, and the result of that is obviously a reduction in expenditures," Ammon said.

The department has increased service since August by about 1,500 students on morning routes and by about 1,200 students on afternoon routes.

The new contracting model and technology tools will be expanded to the rest of Oahu for the 2014-15 school year. Neighbor island contracts will be revised for the following school year.

Ammon said a key part of the overhaul is the revamped vendor contracts that address the anti-competitive behavior cited by the state auditor. A record-high six vendors competed for the Oahu bus contracts for the upcoming 2014-15 school year. (Roberts Hawaii and Ground Transport were selected.)

Ultimately, Ammon said, the reforms could save the department $5 million to $6 million in about two years.

"I think this is a real success story," said state Rep. Roy Takumi, chairman of the House Education Committee.