The 2005-07 Operating Budget directs JLARC to conduct a study of the K-12 pupil transportation funding method. This study examines the current funding method and evaluates the extent to which the funding method reflects the costs of providing to/from pupil transportation. It also reviews funding methods used in other states and identifies whether there are alternative funding methods that would more accurately reflect transportation operating costs, promote the efficient use of resources, and allow for local control of transportation programs. Finally, the study identifies nationally-recognized best practices for promoting efficiency in pupil transportation operations and evaluates the extent to which Washington currently follows best practices. The study offers recommendations for improving reporting and tracking of transportation expenditures, clarifying statutes and rules regarding transportation costs that are eligible to generate state funding, and provides context for a policy decision regarding the funding method most appropriate for state and school districts’ needs.