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AISD HUB policy gets final vetting

Friday, August 19, 2016 by Courtney Griffin

The Austin Independent School District board of trustees took a final look this week at the district’s proposed new historically underutilized business program, which is tentatively set to be implemented in mid-November. Contrary to past meetings, the Monday workshop meeting showed trustees to be largely in agreement about the program’s details.

While AISD has long operated under a voluntary policy for contracting with historically underutilized businesses (known as HUB), some AISD board members pushed for a formal program after hearing the findings of a joint disparity study in December that declared the district to be a “passive participant in a discriminatory marketplace.”

Conducted by Nera Economic Consulting, the study examined how often the district, city and Travis County hired minority- and women-owned businesses in the Austin area for varying contract needs. AISD contracts for a variety of services, including facility construction, professional services, food supplies and plumbing repairs.

The study also explained the hiring practices legally required to implement a formal HUB program, which carries more legal weight than a voluntary one. For instance, it requires AISD contractors to employ a certain percentage of HUB firms – which AISD’s policy defines as majority-owned women or minority businesses – or to make a good faith effort to employ them. That HUB percentage must have statistical backing, which the disparity study helps provide.

“The work towards this goal started many years ago,” said Lori Moya, tri-chair of the Community Bond Oversight Committee and former AISD board member. She and other board members helped lay the groundwork for the disparity study, she said.

Lino Mendiola, outside legal counsel for the district, said AISD’s HUB program will create positions for a HUB director and staff members who will answer to the AISD chief financial officer. The HUB director’s oversight should help stem some of the abuses seen in other programs, Mendiola said, such as when a contractor hires an HUB firm and then substitutes a non-HUB firm once the contract is awarded. AISD’s program also allows for contractors to be sanctioned or fined if promises to include HUB firms are not kept, Mendiola said.

The program will have “aspirational” goals – likely quotas of the number of HUB firms employed in certain job types – but if contractors show documented “good faith efforts” to employ HUB firms, contractors are released from this goal under law, he said. In addition, AISD’s HUB program lays out aspirational goals for specific minority groups – African-Americans, Asian/Native Americans, women and Hispanics – instead of having a single “minority” goal like most other programs.

Peck Young, a member of the Community Bond Oversight Committee, presented the HUB program’s aspirational goals Monday. He said they were more ambitious than those recommended in the disparity study and in some cases equal to those employed by the city. The goals should be achievable, he said, given the district’s proven track record of voluntarily hiring HUB firms.

He also pointed out that HUB contracting was particularly low during the recession, when the study was conducted. “You have an excellent disparity study, but … it covered a period starting in 2008,” Young said. “In Austin, in particular, if you were an African-American subcontractor, you pretty much ceased to exist.” Given the timing, it should be feasible for AISD to improve on that past performance.

Initially, AISD’s HUB program was estimated to cost about $631,000 annually, with funding to be pulled from AISD bonds. However, if a district-wide program is implemented in September 2018, Chief Financial Officer Nicole Conley estimated that operation of a district-wide program would cost AISD about $956,000 annually, funding that will need to come from the district’s operating budget.

Asking for clarification on a variety of program details, District 5 Trustee Amber Elenz said she worried that Austin’s small businesses would not have the resources to adhere to the program’s regulations, whereas a larger company would.

Board members are set to vote on the program Aug. 29.

Photo by Taken made available through a Creative Commons license.

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