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School bus drivers will refuse to work for the city’s new nonprofit bus company unless it guarantees the payment of employee pension liabilities currently totaling $142 million, a union official told The Post.
The city bailed out a major donor to Mayor de Blasio when it set up the nonprofit NYC School Bus Umbrella Services, Inc. to take over Reliant Transportation and it’s 900 routes for children with special needs starting in January.
The controversial deal — to be voted on Monday by a Department of Education panel — benefits Reliant co-owner Alex Lodde, who donated $100,000 to de Blasio’s scandal-ridden 2014 effort to bankroll a Democratic majority in the state Senate.
Under a contract with NYCSBUS, the city will pay $890 million over five and a half years to operate the buses, or about $1,095 per day, which the DOE says is comparable to what the private companies get. Last year, the DOE supplemented payments to Reliant with a $36 million grant.
The DOE said it believes the takeover will improve services for 10% of the students it transports to and from school. It will continue to pay private companies for the other 90%.
In what critics call a shady part of the deal, it protects Reliant from having to pay a “withdrawal liability” for any pension debts five years after it is sold.
“Reliant’s owner is getting a very good deal, allowing it to walk away,” said Patrick Sullivan, a former member of the Panel for Educational Policy, which will vote on the contract.
What’s more, the new nonprofit will shield Reliant’s owner from liability for withdrawing from the pension plan, sources said, which help explains why the city created it to run the Reliant buses.
“We feel very confident that the way this deal is structured avoids a withdrawal liability,” DOE contracting officer Nicolas Storelli-Castro told the Panel for Educational Policy’s contract committee Friday.
Industry insiders said the city is “playing Russian Roulette” with the workers’ pensions, but a union leader told The Post it won’t happen on his watch.
“Either the nonprofit is on the hook, or we’ll go after Reliant — and we won’t wait five years,” said Michael Cordiello, president of ATU Local 1181, which represents Reliant’s 2,000 bus drivers and attendants.
Cordiello said the union has yet to meet with the nonprofit to negotiate a collective bargaining agreement. NYCSBUS will be led by a board of trustees including Chancellor Richard Carranza and three others he appoints. An executive director will be hired.
Education advocate Leonie Haimson was stunned that the worker pension costs remain in question.
“It is truly irresponsible for the city to go ahead with an apparent sweetheart deal without first negotiating an agreement with the union to confirm exactly how much this purchase will cost city taxpayers,” she said.
The $890 million deal comes as the DOE is being hit with an another huge, and unexpected, expense. The state, which usually reimburses district busing costs at 50%, will not give any funding for the period all schools were closed during the Covid shutdown starting Mid-March. The DOE agreed to pay bus companies $225 million — largely for pension debts.
“We are disappointed with this interpretation, which results in further financial challenges for us and every district in the state, especially during a financial crisis caused by COVID,” said DOE spokeswoman Danielle Filson.
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