How First Student’s CFO Keeps School Buses En Route

The wheels on the bus go round and round, provided somebody can find a driver and keep the tank full.

In a 2025 survey by AP-NORC and student transportation company HopSkipDrive, 81% of the 510 school administrators surveyed said bus driver shortages were a problem in their school or district. Of those who reported a shortage, 26% said their school or district had cut or shortened bus routes in response. 

For First Student CFO Joe Schwaderer, a big part of the job is explaining to districts what it costs to keep those routes staffed and what they can change when the price is more than they can afford.

“The most consistent reason why there’s busing issues is because of driver labor or being able to maintain vehicles,” Schwaderer told CFO Upside in a recent interview.

First Student talks with districts about the wages it needs to pay to recruit enough drivers to cover the routes in a contract. On the recruiting side, it now uses an AI assistant it calls Olivia to schedule interviews, answer questions and guide applicants through training.

Schwaderer described it as “almost like a white glove service that’s available 24/7.” He said recruiting costs fell 26% after First Student implemented it, a reduction he put at about $8 million a year.

Finding a driver only gets you so far, however, if the bus won’t start. First Student has more than 1,500 mechanics, Schwaderer said, with a considerable chunk of their business providing maintenance for districts that run their own transportation.

“Through our technology, we’re often able to deliver preventative maintenance that leads to a situation where we don’t have reactive maintenance,” Schwaderer said. “Reactive maintenance is always what you have when you see a school bus broken down on the side of the road, or it won’t start in the morning.”

Who Pays at the Pump?

First Student goes through more than 75 million gallons of fuel a year, Schwaderer said, but who picks up the tab depends on the negotiation behind the contract. 

In roughly a third of its contracts, the district buys the fuel and First Student fills up on-site. Another third have “caps and collars” that limit exposure. When First Student prices those contracts, it budgets for the upper end of what it could owe. On the remaining third, the company takes the full risk of swings in fuel prices.

Schwaderer noted that he put a fuel hedging program in place after he joined First Student. The company adds hedges monthly, targeting 90% of its fuel exposure in the year ahead, 50% in the second year and 10% in the third. That gives finance more certainty about the costs it has to cover in the near term and leaves more of its exposure open further out.

At the time of the interview, Schwaderer said the company had more than $20 million in unrealized gains on its hedges. The payoff he emphasized was being able to give districts a clearer idea of upcoming prices while they’re putting their own budgets together.

A district can also lower its bill by letting buses stay in service longer, where its fleet-age requirements allow. And if a district thinks it needs 100 routes, First Student can look for ways to redraw the map and run fewer routes. Since the route is typically what the district pays for, that can cut costs. It can also mean a longer ride, which, as Schwaderer put it, “maybe sometimes doesn’t leave parents quite as happy.”

More Routes, Same Roll Call 

Enrollment can give finance a misleading read on how many buses a district will need. Schwaderer said First Student is seeing route counts rise even though the broader enrollment picture is flat to slightly down. He attributes that to growing demand for transportation for students with individualized education programs. 

Depending on the student’s needs, the company might send a car or a van instead of a full-size bus. Schwaderer said specialized transportation now accounts for about 35% of First Student’s business.

For districts that run their own buses and are under budget pressure, First Student can offer to buy the fleet, giving the district an infusion of cash, and hire its existing drivers if they meet the company’s training and safety requirements and pass background checks. That can give the district a way to keep experienced drivers on its routes even as it hands over their jobs to a third party.

Busses Like Burgers: The company has since standardized procedures across roughly 550 locations, using common systems for finance and maintenance. To describe what he was after, Schwaderer reached for an example from McDonald’s. “The fries are made the same way every day, the burgers are made the same way every day,” he said, “so you know what you’re getting when you go to each one of these.”