CITY HALL — City officials have announced their intention to end an underperforming charter program for the Big Blue Bus that has made the bus system ineligible for a number of federal grants.

As of July 1, 2012, private parties will no longer be able to charter out Big Blue buses, a side business that included a fleet of 40 vehicles as recently as 2007.

That number has declined to four coaches and 18 locally-funded transit buses as the system has slowly wound down the program with the intention of closing it in the next fiscal year.

That will allow the Big Blue Bus to apply for three federal grants that will bring in more than the $69,200 in revenue the charters received in 2011-12.

At the beginning of the fiscal year, officials believed charters would net $169,000 for the bus system. Instead, they had to be subsidized by almost $20 per hour.

It wasn’t always that way.

At one point, the charter program was a revenue generator, bringing in more than the federal grants were worth with its monthly “Getaway” excursions, special event shuttles, charters for city departments and private party charters.

One of the more profitable areas was busing for local public and private schools. That required bus operators to maintain a special license called the School Pupil Activity Bus certificate in order to drive kids under the age of 18.

In 2008, City Hall dropped that requirement from the operators’ contracts.

Administering the program was very time consuming both on the paperwork end of things and the additional two hours of training per operator, wrote Linda Gamberg, spokesperson for the Big Blue Bus, in an e-mail.

That resulted in a dwindling pool of drivers that could pick up school-related gigs. Most of them were veteran operators who worked all week, which meant a Saturday charter was overtime for them, which cost 1.5 times their normal hourly wage.

As costs rose, staff considered raising the rates to compensate. It quickly became evident that the BBB could not compete with private companies, according to a report.

In the meantime, the system began reducing the amount of buses available for the charter program and started using more federal funds to purchase new buses, Gamberg wrote.

Officials do not expect the shutdown to impact many of their former clients, Gamberg wrote.

Certainly, the school district doesn’t mind.

The loss of the school-related certification in 2008 made it impossible for the district to continue contracting with the BBB, said Neal Abramson, director of transportation with the Santa Monica-Malibu Unified School District.

“We used to use them prior to that, but when they gave up that certification, we had to stop,” Abramson said.

Now, the district relies on its own buses and occasionally hires outside contractors, Abramson said.

Going forward, the BBB will sell off its remaining diesel-powered vehicles and focus its staff time on core services, according to the report.

ashley@smdp.com