What happens to costs when MSF takes over?

I read the NY Comptroller’s audit report on MANYS and the attached DMV letter in response today. I couldn’t help but notice that DMV’s Edward J. Wade, Director of Audit Services practically apologizes that MANYS was the administrator of the program, then he explains how it had to be because of how the law had been written, then he gloatingly took credit for the bill, S7405, that was rushed through the NY legislature last year in time for MSF to bid on the NY state program.

That bill was sold to both the DMV and the state ABATE as needed because “Due to the lack of competition, the cost of rider training in New York has risen to the highest in the nation. This lack of competition also impedes efforts to correct deficiencies in the performance of any coordinating organization,” according to this official communiqué from Pam Wright the state legislative officer for ABATE in 2008. Competition–that free market fundamental–is supposed to do what it’s supposed to do and benefit New York and its motorcyclists. So let’s see if that’s true:

Training, upstate, is $275 and in the NY metro area is $350 according to the Comptroller’s Report.

It’s certainly not the most expensive training in the nation. For example, Rider’s Edge in Glendale, CA costs $395. Lakewood, NJ is outside the exurban metro NY area but Rider’s Edge is still $350. Iow, brand name costs the same price that a private school operating a 1 ½ acre range in the most expensive real estate in the nation costs.

Non-brand name training prices are pretty comparable to other courses in the region, too. In NJ, for example, the non-profit Rider Training of New Jersey in Camden, NJ near Philadelphia, it costs $295. At Fairleigh Dickson University (with the mailing address of Hackensack, NJ) it’s $300. Rider Education of NJ charges $250 for training in locations such as Sussex, Middlesex or Randolph counties. If cost-of-living is considered, New Yorkers have an even better deal: The $275 course in Boston, MA seems cheaper NYC but it would cost $452 in Manhattan if cost of living is considered. The $250 course in LA would cost $372 in the city.

So I have to wonder—don’t these well-intentioned people do any research or do they simply believe what they’re told?

It also should be noted that MANYS hadn’t raised the price cap since 2005. MSF’s press release says it will keep the prices the same for two years and then raise them.

For this reason alone, the rationale given by NY’s ABATE and NY’s DMV that competition would be good for the cost of training is bogus. It won’t be—in fact, MSF has promised that the cost that’s supposedly the “highest in the nation” will go even higher.

Wade, in the DMV’s response to the Comptroller goes on to assure them, “The new contractor [the Motorcycle Safety Foundation] has a proven record of accountability and effectiveness with experience administrating the motorcycle safety program for four other states.”

Oh really? Just wait until you see what it costs after MSF takes over:

New Mexico

In 1997, the year before MSF took over training in NM, training cost $75 per adult student and there were 10 training sites of which most were mobile. In 1998, MSF got a $70,000 administration fee a year.

In 2002, the program trained 2,550 according to MSF’s “Cycle Safety Information 2003” with a budget of $302,059. Training now costs $150—double what it did before MSF took over.

In 2006, according to this report to the NM Confederation of Clubs, MSF trained 2,771 students (however, the SMSA survey states that 3,029 took the course—and 2,421 passed).

As of 2007, according to the SMSA annual survey, just three more sites had been added in ten years bringing the total to 13. MSF was getting $100,000 a year for administration. MSF had a budget of $485,00—$100,000 of which includes MSF’s administration fee.

Up to $454,350 in revenue came from student fees—iow, almost all MSF’s budget was met before money from the state collected in fees on motorcycle registration.

Training is still not happening in several areas of the state. And, according to the report to the confederation of motorcycle clubs, MSF wanted to raise the motorcycle registration fee from $2 to $5—a 150% increase—even though the vast majority of the training costs were borne by student course fees.

Pennsylvania

When MSF took over the Pennsylvania program in 1999, it also underbid the previous contract holder. Shortly after ABATE President Joe Dickey became an instructor, he spearheaded legislation that more than doubled the surcharge on licenses and registrations—strangely enough from $2 to $5—another 150% increase. MSF subsequently increased its fee for running the program when the contract was renewed. Training continues to be free for students in the basic course.

West Virginia

MSF took over West Virginia’s program in 2002. In MSF’s 2003 publication, Cycle Safety Information, it states it cost WV students $50 to take the BRC. The West Virginia Motorcycle & Safety Awareness site lists that as $100 today—double what it cost before MSF took over.

MSF also has significantly increased the fee it charges the state with every renewal of the contract though so far I’ve been unable to get hard evidence of fees—or numbers of students trained. WV does not participate in the SMSA survey.

California

MSF took over California in the same way that it took over New York. It also aggressively under-bid Crayne and Associates. It also claimed it “saved” Californians $400,000 however, the CHP liaison officer dryly pointed out that it didn’t save any money—it just hadn’t spent as much as it said it would up until that point—however, the contract wasn’t finished yet. Nor had it trained as many students as it said it had.

Like in NY, Crayne and Associates gave motorcycles to the sites. And under Crayne and Associates, sites were reimbursed $75 for each 18 and under student they trained. Both of those stopped when MSF took over.

Before MSF took over Harley-Davidson could not offer Rider’s Edge in the state and get the driver’s license-waiver. After MSF took over California, Harley-Davidson sponsored a bill through Assemblyman Rudy Bermudez to get the price cap taken off. A later version was worded it in such a way that it would remove all authority over the program from the California Highway Patrol. After Assemblyman Rudy Bermudez, lobbyists from Harley and CHP officials met, the CHP created a new classification for training—premier—that could charge up to $400 and Rider’s Edge could be profitably offered in the state. The price cap on standard courses remained and training now costs $250 because of the CHP—about a 21% increase over the $198 it was when Crayne and Associates had the program.

Just as that change was announced:

the CHP got a really great deal on Electra Glide police motorcycles.

The bill that would’ve stripped all power from the CHP over the program disappeared.

And Bermudez got a lot of donations from clients of the same lobbyist that Harley had used—who had never given to him before.

But in the months after that:

Bermudez narrowly lost his senatorial bid.

CHP decided that the wobble problem with the Electra Glides were so treacherous it decided not to purchase them.

Otoh, Harley got to get the driver’s license-waiver and charge up to $400 for the BRC all dressed up in black and orange.

Right now, there are only three states in the USA where Harley-Davidson’s Rider’s Edge is not offered. New York is one of them. Will it still be next year?

The idea that competition could keep training costs down when the only “competition” is the Motorcycle Safety Foundation isn’t borne out in MSF’s administrative history with the four states it already took over.

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8 Comments on “What happens to costs when MSF takes over?”

  1. Joe Says:

    There is one more very important cost to be considered…

    MANYS was a member of the Points and Insurance Reduction Program. Every student who completed a BRC (regardless if they were successful…they just had to be present for the whole course), was eligible for this program. The PIRP program lowered insurance rates on all of your car AND motorcycle insurance by 10% for 3 years and removed up to 4 points from your license for insurance purposes. The MSF is NOT a member of this program.

    Calculate the 3 year savings and you can see how the course could end up being free. If you had higher insurance rates because of points, that would save you money on top of it.

    So, by passing the bill in an effort to “reduce costs”, student will be guaranteed a tuition increase in 2 years and will immediately lose any PIRP benefit that offered insurance savings that could easily have offset the entire cost of tuition.

  2. ExCoach Says:

    But since the MSF isn’t offering the points and insurance reduction in NY it’s actually costing quite a bit more to the students right from the start. The PIRP offered a 10% reduction on car as well as motorcycle insurance over a 3 year period, so the whole idea of “less cost to the student” is really moot.

  3. wmoon Says:

    For both of you–point is well taken re: PIRP and cheaper for the student. However, costs are just to the student but the state (i.e., motorcyclists who pay their fees).

    But it’s also the independent contractors–but we’ll get into that in another entry.

    P.S. sometimes something like PIRP doesn’t really make a difference. For example, it would’ve saved me $40 this year–nice but not more than a dinner out.
    W.

  4. A. Nonymous Says:

    Don’t forget that the PIRP nsurance reduction applied to car insurance, too. In New York that savings alone can more than cover the entire cost of the class. No more.

  5. wmoon Says:

    You guys seem to be really obsessed about the PIRP. I can see it’s a point–but surely far less important than a corporation coming in that’s done everything in its power to dominate and to hide all under a cloak of secrecy. AND has caused the costs to the student and state to be driven up while putting a greater burden on the small business owner. Priorities, boyz! Priorities.
    W.

  6. hop sing Says:

    linkie no workie to goodie to NY Comptroller’s audit report on MANYS. me go to wong state

  7. wmoon Says:

    me thank you for pointing it out. Me fixie–you should go to right place now.
    W.

  8. A. Nonymous Says:

    We’re not obsessed about the PIRP; you’re right, the other stuff is more significant. The point about the PIRP is that you seemed to ignore the fact that the loss of it is a much more significant factor in the over-all cost increase to the student. The insurance discounts that SOME students got was actually MORE than the cost of the course.


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