However, if this is all there is to this portion of your transform, why use
variables at all? Why not just give:

<xsl:for-each
select="key('schedTimes',xalan:nodeset($new-schedule)/schedule/myschedule[no
t(myschedID = preceding-sibling::myschedule/myschedID)]/myschedID)">
 <xsl:call-template name="end-time-format">
  <xsl:with-param name="endtime-param" select="time"/>
 </xsl:call-template>
</xsl:for-each>