Fred McKinney, president and chief executive officer of the Greater New England Minority Supplier Development Council
By Dr. Fred McKinney
Special to CTLatinoNews.com
For the past several years and over multiple administrations, the Greater New England Minority Supplier Development Council has been attempting to get the state of Connecticut to acknowledge that its minority and women development program is not effectively promoting and utilizing minority-owned businesses in the state.
State law currently has a goal that sets aside 25 percent of all non-exempt contracts for small businesses located in the state. Of this 25 percent, 25 percent of this is set aside for ethnic-minority-owned businesses or women-owned businesses (called M/WBEs). The state is currently conducting a disparity study to identify if there is evidence of systematic discrimination against minority and women owned businesses. A disparity study is a legally necessary step in order to protect the state from charges of “reverse discrimination.”
It was recently brought to my attention that one of the largest state organizations, the Department of Corrections, has a particularly poor track record when it comes to the utilization of minority businesses. The DOC spends about $670 million every year incarcerating and caring for more than 16,000 inmates. Doing the math, this works out to about $41,000 per inmate per year. The full cost of a year at the University of Connecticut, room, board, books, technology, travel is under $27,000 for in-state students. While some may not like the apples to oranges comparison, as an economist, we spend a lot of time thinking about the opportunity cost of public and private decisions, and these comparisons are inevitable and sometimes enlightening. Incarceration, unfortunately, is an expensive and necessary enterprise with real opportunity cost for Connecticut taxpayers.
Statistics also indicate significant racial disparity in who is incarcerated. Over 68 percent of incarcerated felons in the state system are black (41 percent) or Hispanic (27 percent). The state’s population is 24.9 percent black (11.1 percent) and Hispanic (13.8 percent). The incarceration rate for blacks and Hispanics is almost three times the population percentage.
I state these statistics on cost and population because when it comes to the utilization of minority businesses, the Connecticut Department of Corrections in the 2012 had a small-business goal of only $21.7 million and a M/WBE goal of a paltry $1.3 million. This is an organization with a $671 million budget. In the first quarter of 2012, the DOC spent only $3,700 with one black firm, only $3,900 with a Hispanic woman firm and no money with either a black-woman-owned firm or a Hispanic-male-owned firm. Yet despite this performance, the state of Connecticut DOC is meeting its goals. The DOC spends less than two-tenths of one percent with ethnic and racial minority businesses in the state. In a system that routinely locks up blacks and Hispanic men, you would hope that an institution like the DOC would contribute to conditions that would create an environment that would lower incarceration rates.
You might be asking how is this performance is consistent with established state goals. There are several dimensions to the answer to this important question. First, the state lumps minority and women owned-businesses together in the setting and performance of goals. This means the state can meet its M/WBE goals by not doing any business with ethnic and racial minority owned enterprises. That is currently state law, but I am certain that this is not the intention of the minority business community or the minority community at large. In fact, if the state does not change the program so that women and minority-owned businesses are tracked separately with separate goals, they would be better to just shut down the entire State Supplier Diversity program. And I say this without any ill feelings toward women-owned businesses. Women-owned enterprises should get their share of state contracts not at the expense of minority-owned enterprises and vice versa.
Secondly, a major problem with the DOC and other state agencies is that state law allows them to apply for an exemption for certain goods and services so that the state’s M/WBE goals are not included in these contracts. The DOC has used this to take significant opportunities away from M/WBEs. The exemption process is one of those decisions that is too important to be left to internal decision makers. The state needs to look into getting assistance to make certain that M/WBEs are not outstanding performers in these commodity and service categories that are being exempted. To just accept what these agencies want to exempt makes a mockery of the state’s minority and women business development program and suggests the possibility of restraints of trade that border on public corruption.
And finally, we are missing an opportunity to strategically develop solutions to high incarceration rates in minority communities in the state. The statistics on why these 16,000 men and women (mostly men) are incarcerated is because of bad personal decisions that are complicated by severely restricted economic opportunities. The data on the state’s prison population convincingly shows that poverty and race are the key social determinants of incarceration. Minority business development works to reduce poverty in communities that are sending the vast majority of people into the state’s penal system. Minority businesses are twice as likely to hire minority workers compared to non-minority businesses.
There must be a way for state spending, particularly by the DOC, to assist the building of stronger minority communities. Just as the goal of the Greater New England Minority Supplier Development Council is to one day not be needed; a similar goal for the DOC is for one day the people of Connecticut will not be needing to send so many minority men and women away to waste their lives at the public’s expense. Neither the state nor the DOC has made the investment in business development to make either of these ultimate goals a reality.
(Fred McKinney, president and chief executive officer of the Greater New England Minority Supplier Development Council, based in Bridgeport, submitted this to CTLatinoNews.com. The opinion piece was originally printed in the Connecticut Post.)
