Kansas University’s bus system operating budget is in the red, to the tune of nearly $320,000.

At Wednesday night’s Student Senate meeting, senators approved legislation that would allow the KU on Wheels bus system to transfer $3 per student from the bus acquisition fee to the bus operation fee. Students pay $36 per semester to KU on Wheels – $16 for operations and $20 for new bus purchases.

While the fee change will not affect the amount students pay, it will reduce this year’s operating deficit by about $141,000.

“It’s so we can continue to have the same levels of service you’ve had all year,” transportation coordinator May Davis told senators.

When combined with profits from last year’s operations, reallocating the $3 allows the bus system to reduce the deficit to $62,000. Danny Kaiser, associate director of parking and transit at KU, said the bus system must pay off the deficit this year.

“If there’s nothing else, we can go in to the transit reserve fund,” Kaiser said.

The reserve fund currently has $400,000 in it, though it is already lower than Kaiser would like. Kaiser said the bus system, which generated a profit last year, was hit with budget problems this year because it is the first year of a new contract.

The bus system originally expected to pay in the neighborhood of $1.5 million to operate this year; however, the bid from MV Transportation came in at $2 million. MV Transportation provides bus service to the city of Lawrence and began providing KU’s bus service this year.

“Whenever we’re in the first year of a new contract, we’re shooting blind,” Kaiser said. “Fuel prices also keep going up and we’re feeling that.”

So while revenue has increased about $280,000 this year, higher prices quickly eliminated the extra revenue.

While the budget deficit will be paid off this year, the red ink will remain next year unless more money is raised or operating expenses are reduced.

“The options are look for more economies, look for other sources of revenue or reduce service,” Kaiser said. “Those options are what we’ll be looking at the rest of the spring semester.”

Kaiser said there’s already a nearly $3 increase in the student transportation fee planned for next year.

He also said that the city and university have asked for joint transportation proposals beginning Jan. 1, 2009, which he hopes will reduce the costs both entities have to pay. While the systems will still operate separately, the provider would be able to share management, operations and other expenses. Kaiser also said the new contract would be for five years, allowing better revenue and expense planning.

The proposal approved Wednesday night does come with drawbacks. KU on Wheels will have to slow down the rate at which it purchases new buses. While KU did get “new” buses this year, all were previously used, some for more than 20 years.

Kaiser said the fee transfer would slow down the rate of new bus purchases, but ultimately the bus system would catch up and complete purchasing of new buses as scheduled.