A 2021 study recommended reforms for the state’s troubled minority business contracting program. The state has been sitting on then, critics say. (Canva image)
Nearly two months have passed since advocates demanded a meeting with state officials to discuss fixes to alleged discrimination in its minority business contracting program.
So far, no meeting.
The groups that sent the scathing letter – the Rhode Island Black Business Association and Lawyers for Civil Rights – are waiting on more information before pressing for a face-to-face with the people in charge. The urgency has not diminished, according to Tasheena Davis, litigation fellow with the Boston-based nonprofit Lawyers for Civil Rights.
“It’s all urgent when we’re dealing with racial injustice,” Davis said. “We just want to go into any meeting informed.”
Meanwhile, some state lawmakers are looking to the upcoming legislative session to improve the state’s troubled minority business contracting program. And the state office that oversees the program has asked for $750,000 in the upcoming fiscal 2025 budget to pay for a study to recommend program improvements.
The problem, as stated in the Sept. 18 letter, is that the state already did a study, and has been sitting on a slew of recommendations.
The state-commissioned study published in 2021 laid bare the evidence that the state disproportionately awarded dollars and contracts to white-owned businesses at the expense of minority businesses. Yet the state has failed to enact most of the reforms recommended, perpetuating alleged violations of Title VI of the Civil Rights Act of 1964, according to the letter.
The Rhode Island Department of Administration, which oversees the Minority Business Enterprise (MBE) program through its Office of Diversity, Equity and Opportunity, pushed back against the allegations, noting the study does not reflect the improvements the office has made in recent years.
The study was published in 2021 and reflects data from 2014 to 2017.
Davis filed a public records request on Sept. 29 asking for the same data from 2019 to the present. The state has asked for an extension to finish compiling the information, planning to return her request by mid-November, Davis said.
Once the data is in, Davis and Rhode Island Black Business Association President and CEO Lisa Ranglin say they will assess next steps.
“I wish we had traction sooner, but this is the due process,” Ranglin said. “This is a long standing issue and it’s more than room time. The entire process needs to be improved.”
Raising the threshold … and expectations
Problems with the MBE program are hardly new – the state met or exceeded its 1986 law mandating that 10% of contract and purchase dollars go to certified women or minority-owned businesses only four times: in fiscal years 2018, 2019 and 2022, according to state data. It also exceeded the minimum in fiscal year 2023 with 12.3% participation, although 40% of the money went to companies owned by white women, and nearly a third of the businesses were out of state, according to an investigation by The Providence Journal.
This year, the bar has been raised to a minimum of 15% participation, rather than 10%. Some lawmakers originally proposed increasing the minimum threshold to 20%, but settled on 15% as put forth by Gov. Dan McKee in his fiscal 2024 budget.
The legislation was listed among 29 priorities for the Rhode Island Black, Latino Indigenous, Asian-American and Pacific Islander Caucus in a recent report assessing its accomplishments from the last two legislative sessions.
Sen. Jonathon Acosta, a Central Falls Democrat and co-chair of the caucus, credited McKee for having more years in compliance with the 10% minimum than any of his predecessors. Yet, he added that more work was needed.
“I think people struggle to hold contradictions,” Acosta said in an interview. “The reality is, it’s complicated. We have data now that should be leading us to greater participation.”
Rep. Leonela Felix, a Pawtucket Democrat and co-chair of the caucus, still hoped to increase the minimum percentage to 20%, along with other reforms to improve compliance with and access to the program.
“I don’t think it’s sufficient to simply raise the [threshold,]” Felix said.
She stressed the need to improve access to capital for minority businesses, such as through the $100 million forgivable loan and grant program recommended in a 2022 Rhode Island Foundation report.
The Rhode Island Black Business Association has separately asked the state to commit $100 million over the next 10 years to provide loans and offer support services to minority businesses.
Budget requests for another study, accelerator program
Neither of these programs are included in the Department of Administration’s fiscal 2025 budget request. The memo from Director Jonathan Womer seeks $2.5 million in funding for the Division of Diversity, Equity and Inclusion in fiscal 2025, up from $2 million included in the fiscal 2024 budget. That includes an additional $750,000 for a new study of the MBE program, as mandated by the state’s fiscal 2024 spending plan. Staffing would remain at current levels – 10 employees across the division – under the requested FY25 budget.
Rhode Island Commerce Corp., meanwhile, asked for an extra $2 million in the state’s upcoming spending plan for its minority business accelerator program. First funded in fiscal 2023, the $3 million program aims to help minority and women-owned businesses grow through help with technical support, bookkeeping, mentorship and more. The extra money would help continue these support services and provide capital in the form of $25,000-apiece, according to Commerce Secretary Liz Tanner’s budget memo.
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