School & Employee Bus Transportation

The 2,400 school and employee bus transportation services in the US contract with public school districts, private schools, parents, colleges and universities, airports, and private businesses to provide bus and shuttle services for students and workers. About one-third of the 13,300 public school districts in the US outsource student transportation services and that number is expected to grow.

Aging School Bus Fleets

Faced with tight budgets, school districts postpone replacing older buses in their fleet.

School Bus Driver Shortage

Many school districts and transportation contractors are having difficulty meeting demand for school bus drivers.

Jul 28, 2026 - Driver Shortages Accelerate Fleet Technology Investments

• School and employee bus operators are increasingly turning to technology to help offset persistent driver shortages that continue to strain the industry. The Bureau of Labor Statistics projects about 81,800 bus driver job openings each year, largely due to retirements and turnover, while school transportation leaders consistently rank driver recruitment as one of their biggest operational challenges. In response, operators are investing in route optimization software, AI-powered scheduling, GPS tracking, and predictive maintenance systems that reduce deadhead miles and maximize bus capacity. The technology can also improve on-time performance and provide real-time updates for parents, schools, and employers, helping transportation providers maintain service levels despite ongoing labor constraints. As labor shortages persist, technology is becoming an increasingly important tool for maintaining service reliability and improving operational efficiency.
• A May 2026 survey of US school districts found that rising diesel costs are putting growing pressure on school budgets nationwide, prompting many districts to absorb higher transportation expenses through route optimization, deferred maintenance, and reserve funds. The survey, conducted by AASA, The School Superintendents Association, in collaboration with the Association of School Business Officials International and the National Association for Pupil Transportation, showed that many districts reported diesel expenses running 6-20% or more above budget. Districts have responded with measures such as consolidating bus routes, enforcing anti-idling policies, and limiting non-essential trips. While instructional staffing and programming have largely been protected so far, respondents expect continued fuel volatility could eventually affect extracurricular activities, facilities spending, and rainy-day reserves, especially since most states do not automatically adjust transportation funding to reflect fuel price increases.
• Electrification of the US school bus fleet is accelerating but remains in an early, policy-driven stage. Of roughly 490,000-500,000 school buses nationwide, about 90% still run on diesel, while just over 5,100 electric buses are currently in operation as of 2025, with around 13,800 funded or ordered - about 3% of the total fleet (according to the Electric School Bus Initiative). Growth has been rapid, with electric buses rising from ~1% of new sales in 2020 to 7.5% in 2024, largely driven by the Environmental Protection Agency’’s $5 billion Clean School Bus Program, which has funded approximately 8,600 electric buses. Momentum has recently slowed, however, due to funding uncertainty, infrastructure constraints, and manufacturer instability. While electric buses offer health benefits and lower long-term operating costs, high upfront expenses and charging challenges mean widespread adoption will likely take decades, leaving the industry in a transitional phase.
• Bus transportation for schools and workers stayed busy - and under pressure - in 2025. Roughly 480,000 school buses continued moving about 25 million K-12 students nationwide, but staffing remained the choke point: employment in school and employee bus transportation was still nearly 10% below 2019 levels, even after modest year-over-year gains. Many districts reported route consolidations or staggered schedules as a result. On the worker side, employer-provided shuttle and commuter bus services kept expanding, helping drive a school and employee bus services market estimated at roughly $60-75 billion annually. Corporate shuttles grew fastest around large campuses and logistics hubs, where buses can replace hundreds of daily car trips. To cope, operators doubled down on GPS tracking, route optimization, and scheduling software, while slowly upgrading fleets. Electric and alternative-fuel buses still make up a small share, but purchases continued to climb through 2025.

Industry size & Structure

The average school and employee bus transportation firm has 87 employees and generates about $5.1 million in annual revenue.

• The school and employee bus transportation industry consists of about 2,400 companies employing 210,600 workers and generating about $12.4 billion in revenue.
• There are about 13,300 public school districts in the US, along with over 29,700 private schools, and about 8,000 charter schools. Many school districts operate their own bus transportation services and about one-third outsource to transportation services firms.
• There are more than 480,000 school buses operating in the US transporting an estimated 25 million students to and from school and school-related activities. The average school bus carries 49 student passengers.
• The average annual public expenditure to transport a student by bus is almost $1,200.
• The industry consists of many small companies providing services to a local area - 63% of firms have less than 20 employees.
• The 20 largest firms account for about 51% of industry revenue.
• Large firms include First Student (part of FirstGroup, PLC), Durham School Services (part of National Express Group, PLC), Student Transportation of America, and North American Central School Bus.