Smithfield school bus driver Lisa LeBlonde, of Woonsocket, fuels up before her afternoon run yesterday. To save money, the Smithfield school superintendent says he hopes to cut the number of buses from 26 to 24 and reduce the number of runs from 4 to 3.

The Providence Journal / Bill Murphy

Six months ago, Smithfield School Supt. Robert O’Brien thought a $310,000 heating budget would be more than enough to keep students and teachers warm this school year.

He also thought his estimate for next year — $499,000 — would be enough, even with prices for heating oil and petroleum products on the rise.

Today he knows better. This year’s heating budget is $80,000 in the red, and, with the schools needing $2 million in cuts just to balance next year’s budget, he can only hope that his guess for next winter comes true.

O’Brien is not alone. Across the state, the fuel and oil prices that are whacking motorists and home heating oil users are also straining school and municipal budgets.

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In Providence, the budget for gasoline — needed to power more than 200 police vehicles — is in the red by $600,000. In Pawtucket, the accounts for diesel, gasoline and heating oil are over by $100,000. In Warwick, higher diesel prices are contributing to a projected $60,000 deficit in the Fire Department.

Local officials say the spike in fuel and energy prices is not the biggest budget challenge they face this year. But with the state looking to cut local aid, and other revenues down because of the sputtering economy, they say the spike is coming at the worst possible time.

“We’re getting hit from so many different directions, there’s only so much you can do,” O’Brien said. “I still have to heat schools. To do that, I have to take from another line item.”

The fuel spike is not the only energy increase cities and towns are facing.

Thirty-five of the state’s 39 cities and towns — all except Burrillville, Block Island, Johnston and Woonsocket — buy electricity for non-school departments through a consortium run by the Rhode Island League of Cities and Towns. The current four-year contract, which held the price of electricity to 5.9 cents per kilowatt hour while market prices more than doubled, expires in December, said Daniel L. Beardsley Jr., the league’s executive director.

Everyone expects the rate to go up. The new price will depend on the market when a new deal is struck, but cities and towns are getting ready.

In Middletown, Interim Town Administrator Shawn J. Brown is budgeting for a 19.2-percent increase, which would raise costs to $248,515.

In Pawtucket, Finance Director Ronald L. Wunschel is preparing for a 53-percent, $630,000 increase. That’s on top of the 27-percent, $172,000 increase he is budgeting for diesel fuel, gasoline and oil. Most of the projected electricity increase — $503,000 of it — would pay the bills for city streetlights, Wunschel said. The rest would be for city buildings.

“That’s probably my biggest line-item increase in the whole budget, other than possibly salaries,” he said.

WITH THE ABILITY to buy in bulk, cities and towns can get a slightly better price on fuel and heating oil than the typical motorist or homeowner.

But even when cities and towns “piggyback” onto the state bid for heating oil or diesel fuel, avoiding the federal highway tax in the case of diesel, they are only guaranteed prices that are so many cents above the going rate when oil or fuel is delivered to the Port of Providence — there is no ability to lock in at a set price, as there is with electricity.

One exception comes when school districts hire bus companies. If they want, school districts can write bid specifications that require bus companies to assume the risk for rising fuel prices.

In South Kingstown, that setup has led to a spat between the School Department and its bus contractor, DATTCO, of New Britain, Conn.

DATTCO announced in December that it could not fulfill two option years on a contract that took effect in 2005. The School Department, noting complaints about buses running late, responded by seeking bids for a new contract.

The district hoped to get a better price than it had with DATTCO, but with diesel prices roughly double what they were three years ago, the bids came in high. One, from DATTCO, would charge $300,000 more than the department planned to spend next year. The other, from First Student Inc., was over by $600,000.

Supt. Robert Hicks said school officials believe the decision to extend or not extend the current contract rested with the School Committee. Cliff Gibson, senior vice president and chief operating officer at DATTCO, said the company disagrees.

The two sides are talking about “what the terms and conditions would be” to release DATTCO from the contract, Hicks said.

THE MOOD WAS brighter at the Chariho Regional School District, which signed a four-year contract and locked in a diesel price last year with Laidlaw International Inc., since acquired by First Student.

Timing is everything when it comes to buying fuel, and in this case Chariho is reaping a reward. Diesel prices were lower when the deal was signed, and it guarantees that First Student’s diesel bills for transporting Chariho students will be no higher than $1.80 per gallon, said Brian Stanley, the district’s director of administration and finance. The going price for diesel at the Port of Providence last Friday was about $3.56.

Bus companies say they prefer to have fuel-cost escalators built into their contracts, but the specifications to which they bid are set by school districts.

That means companies can only guess as they bid on three- , four-  and five-year deals.

“You do your best estimate and hope that you’re close,” said Jim Flahive, regional vice president for First Student, which provides school buses for 21 Rhode Island school districts, including Providence, Pawtucket and Warwick. “But it’s hard to be certain that the numbers you’re putting in today are going to be valid four or five years from now.”

AS PRICES RISE, cities and towns and school districts have been taking steps to become more fuel efficient.

In Narragansett, a $21.5-million school renovation project is replacing windows and heating systems and adding timers and new lights that are expected to reduce consumption of natural gas and electricity. The district is also looking to reduce the number of full-size school buses from 13 to 11, said Supt. Katherine E. Sipala.

In Warwick, Mayor Scott Avedesian said there is a no-idling policy for Department of Public Works vehicles, and the city is trying to buy more fuel-efficient cars as it replaces its fleet. A similar effort is under way in Middletown, where the building inspector’s full-size Ford Crown Victoria was replaced with a compact Ford Focus and Crown Victoria police cruisers are being replaced with Dodge Chargers. The Chargers have eight-cylinder engines that run on four cylinders when idling, said Brown, the interim administrator.

In Smithfield, the school district is looking to cut the number of buses from 26 to 24 and reduce the number of runs from four to three, by combining runs for middle and high schools, said O’Brien, the superintendent.

Still, it’s an uphill fight. O’Brien said he is projecting heating and electricity costs next year of $840,000, which amounts to 2.6 percent of the school budget approved by the Town Council. In 1995-1996, those items cost about $290,000, making up about 1.9 percent of the budget, he said.

Faced with the prospect of cutting more than 20 teachers to balance his budget, O’Brien said he is trying to cut where he can.

One plan would have the school district buy diesel fuel with the town.

“If we can get lower than $4 per gallon, I’ll look like a hero,” he said. “If it’s above $4, we’re going to be in trouble.”

Losing confidence

The Consumer Confidence Index falls to its lowest level in five years. A7 America for sale

Families find themselves forced to sell off prized possessions to get by. A7

No quick fix

President Bush says there is no easy

solution to these “very difficult times.” A7

redgar@projo.com