THE SENATE	S.B. NO.	2549
THIRTY-THIRD LEGISLATURE, 2026		S.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO STUDENT TRANSPORTATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that, while the number of school bus drivers has increased since the governor's August 2, 2024, emergency proclamation relating to school bus services, the department of education continues to experience a school bus driver shortage.

The legislature further finds that some school bus contractors enter into contracts but are later unable to provide transportation for all contracted routes. Under existing law, the department of education cannot simply cancel or reassign the unfulfilled portion of the contract. This leaves students without access to school transportation.

Accordingly, the purpose of this Act is to strengthen the reliability, flexibility, safety, and accountability of student transportation by:

(1) Requiring the department of education to:

(A) Remove or suspend portions of school bus contracts if the contractor does not provide services for five or more instructional days; and

(B) Enter into one or more interim agreements with multiple qualified carriers and to divide transportation routes or service areas into smaller segments as necessary to maintain continuity of service; and

(2) Ensuring the consistent enforcement of financial penalties for contractor nonperformance by excluding routine workforce shortages as a valid justification absent a declared state of emergency specifically affecting the workforce.

SECTION 2. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to part II, subpart C, to be appropriately designated and to read as follows:

"§302A-   Student transportation contracts; failure to provide service. (a) Notwithstanding any law to the contrary, when a contractor under a student transportation contract fails to provide service on a contracted route for five or more consecutive instructional days, the department may recommend to the governor the suspension or removal of the affected route or routes from the contract.

(b) The governor may specify conditions and timelines for, and other limitations on, the suspension or removal of a route, as deemed necessary to protect the public interest.

(c) Upon written approval by the governor, the department shall:

(1) Remove or temporarily suspend the affected route or routes from the contract; and

(2) Enter into one or more interim agreements with one or more qualified carriers to provide transportation for the affected route or routes, including through the division of a single route or service area into multiple segments.

(d) An interim agreement executed under this section shall be exempt from chapter 103D; provided that:

(1) The agreement shall be limited to the scope of the suspended or removed route or routes;

(2) The agreement shall not exceed thirty months in duration; and

(3) The department shall ensure compliance with all applicable student safety standards.

(e) The department shall complete a competitive procurement process under chapter 103D for a permanent replacement service within thirty months of executing an interim agreement under subsection (d).

(f) The department shall assess a financial penalty against any contractor that fails to provide service on a contracted route without an approved justification; provided that a lack of available labor or inability to recruit drivers shall not constitute an approved justification for failure to provide service absent a declared state of emergency specifically affecting the workforce. The penalty shall be one hundred per cent of the daily contract or liquidated damages equal to the reasonable cost of replacement transportation services, whichever is greater, for each day the route is unfulfilled. Collected penalties shall be deposited into the school bus fare revolving fund under section 302A-407.5 and may be expended to offset costs associated with procuring replacement transportation services for affected routes.

(g) The removal or suspension of a route under this section, and the execution of an interim agreement, shall not otherwise affect the validity or enforceability of the remaining portions of the contract.

(h) Beginning July 1, 2026, all requests for proposals issued and contracts executed by the department for student transportation services shall specifically reference this section."

SECTION 3. Section 302A-407.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-407.5[]] School bus fare revolving fund. (a) There is established in the state treasury the school bus fare revolving fund, into which shall be deposited [all]:

(1) All moneys received from students and parents or guardians of students by public schools for state‑provided school busing services, as authorized by section 302A-406[.]; and

(2) Financial penalties assessed under section 302A-  .

(b) Except as otherwise provided by the legislature, moneys in the school bus fare revolving fund shall be used [for]:

(1) For school busing services, as authorized by section 302A-406[.]; and

(2) To offset costs associated with procuring replacement services for a student transportation contract under section 302A-  ."

SECTION 4. The department of education shall submit a quarterly report of its findings and activities pursuant to this Act to the legislature. Each report shall include but not be limited to:

(1) The total number of school bus driver vacancies by county;

(2) The total number of school bus driver hires and separations;

(3) The number of canceled or restored routes attributed to provisions established pursuant to this Act;

(4) School bus driver retention at six, twelve, and twenty-four months; and

(5) Specific barriers encountered and recommended legislation.

Each report shall be posted to the department of education's website to be available for public review.

SECTION 5. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.

Report Title:

DOE; Student Transportation; Governor; Reports

Description:

Requires the Department of Education to hire a new contractor or contractors with the Governor's approval if a contractor under a student transportation contract fails to provide service on a contracted route for five or more consecutive instructional days. Requires the DOE to assess a penalty if a contractor fails to provide service on a contracted route without an approved justification. Specifies that the assessed penalties be deposited into the School Bus Fare Revolving Fund. Beginning 7/1/2026, requires all requests for proposals issued and contracts executed by the DOE for student transportation services to specifically reference certain new provisions. Authorizes the use of the School Bus Fare Revolving Fund to offset costs associated with procuring replacement services. Requires quarterly reports to the Legislature. (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.