This study examines the cost of transportation services for Pennsylvania's school districts, focusing especially on the impact on costs of contracting out. Using data from the Pennsylvania Department of Education from 1986 to 2008, the study statistically analyzes total costs, the costs to the state, and the costs to local school districts. On average 72% of transportation services were contracted out by Pennsylvania school districts in 2008, up from 62% in 1986. Findings include: (1) Contracting out significantly increases total costs; (2) Contracting out also increases costs to the state, in part because the state reimburses contracted transportation services at a higher rate than district self-provided services; and (3) For local school districts, there is no statistically significant difference (at the 5% level) between what they pay for transportation services when they contract out versus when they self-provide transportation--in effect, the more generous state reimbursement of contracting out compensates for the increase in total costs. Appended are: (1) Rural and Urban; (2) Results with Enrollment and Students Transported 2004 to 2008; (3) Results with Special Education Enrollment 2001 to 2008; (4) Pennsylvania Association of School Business Officials (PASBO) Student Transportation Benchmarking Survey; (5) School Districts That Privatized between 1992 and 2001; and (6) Contracting Out Shares by School District. (Contains 19 tables, 2 boxes, 1 figure, 26 footnotes.)