COLUMBIA, S.C. - A House subcommittee adopted a recommendation from Gov. Mark Sanford on Wednesday that would require the state Education Department to begin searching for a private contractor to take over school bus operations.

The Education and Public Works subcommittee took up some of the governor's budget proposals for the first time, moving some items one step closer to approval by House members. The subcommittee's work now must be approved by the House Ways and Means Committee.

Sanford also has proposed sweeping changes in the way the state funds its schools, including using $20 million in lottery money to increase per-pupil spending.

That proposal was not discussed Wednesday. Neither were proposals to eliminate the John de la Howe school's budget.

The subcommittee adopted Sanford's proposal to use $5.8 million not spent in the last fiscal year by the Education Department to increase per-pupil spending.

The operating funds are not a surplus and are used to pay bills generated by the account, said agency spokesman Jim Foster. For example, each year the agency prints diplomas for schools. Schools pay a fee to the agency to print the diplomas; the agency uses the fees to buy more diplomas the following year.

Another budget proviso adopted by the subcommittee would require the Education Department to send out requests for proposals to private companies who could apply to run the school bus system.

The stipulation does not set a deadline for the agency to make the request and allows privatization to occur on a statewide or regional basis.

South Carolina is the only state in the nation that owns and maintains its school bus fleet, costing about $85 million a year in maintenance, replacement and staffing, education officials said. But a privately run system overseen by the state would also be unique to South Carolina, Foster said.

"The key question is whether any private service could serve the state at the amount of money that's being spent today," Foster said. School districts have been free to privatize their bus systems for a number of years and two that have - Charleston and Beaufort - show no savings, he said.

A private company also would have to be willing to bus to rural areas of the state, which can be costly, Foster said.

Sanford thinks a privately run school bus system could save the state money. A 1998 study by the Budget and Control Board found the state could save as much as $250 million over a decade by privatizing its school bus system.

"The quicker we look at other more cost-effective options the better," said Sanford's spokesman Will Folks.

Colleges also pitched their funding requests to the House Higher Education budget committee. The schools offered some reactions to Sanford's spending plans to the committee, which is a few weeks away from deciding how much money to put into college budgets.

Fred Carter, Sanford's former chief of staff and the president of Francis Marion University, said the governor's proposal to cap tuition increases at 2.5 percent puts pressure on low-tuition colleges.

Clemson President James Barker called Sanford's plan to eliminate 40 percent of the budget for his university's public service programs "unprecedented." That would have a devastating impact on the college's agricultural programs, he said.