Kasich Budget Will Slash Minority and Women’s Interests in State Purchasing

If John Kasich has made up any ground with the Ohio Legislative Black Caucus over the past six weeks, he may have lost it by proposing to gut the Equal Opportunity Division within the state’s Dept. of Administrative Services.

Kasich’s budget plan calls for cutting the funding by more than half over two years for the organization that manages two programs that foster minority-owned small businesses in Ohio by getting them involved in state contracting opportunities. The operating funds for EOD will be cut by 45% in FY 2012 and an additional 8% in FY 2013. (Page D-17 of Blue Book (linked) Fund 1880 ALI 100649)

When it comes to competing for state contracts for everything from green beans to construction projects, minorities and women are apparently not on the bus.

The specific programs to be harmed by Kasich’s cuts are the Minority Business Enterprise (MBE) and Encouraging Diversity, Growth and Equity (EDGE).  MBE provides for setting aside a small percentage of state spending on goods and services for minority-owned businesses.  It was created to foster growth in these businesses many of which are located in the state’s urban areas and were historically left out of state purchasing opportunities.  EDGE sets goals for the state to do a small percentage of its purchasing from businesses owned by members of  historically disadvantaged populations.

Both of these programs are mandated in Ohio Revised Code and deal only with public spending.

Allow me to make two points, although there are many which could be made regarding cuts to the MBE and EDGE programs.

First, the majority of MBE and EDGE vendors are Ohio small businesses. The MBE program – long championed by the OLBC – is seen as integral to giving many minority businesses an important leg up through the state setting aside a small percentage of its spending to for MBE vendors. These are business people who can’t afford to hire a former Kasich staffer to represent their interests in Columbus but can benefit by going through the MBE certification process and bidding on the contracts or portions of contracts set aside for this community. EDGE works similarly but is a program that does not consider only race as one of the components for becoming certified and does not carry the legal guarantee that spending will be set-aside, but rather sets purchasing goals. EDGE has historically been a way for women-owned businesses to gain entre into state contracting.

The fact that Kasich is willing to cut these programs which help grow and retain jobs in Ohio is counter to the notion of a “Jobs Budget” – on its face. It doesn’t make sense.

Which leads to point two. Republicans have generally not been fans of MBE or EDGE. Despite the fact that both programs are mandated in Ohio law, during previous Republican administrations a practice called “buying around” the programs flourished. This is a polite way of saying that they ignored them. Funding for EOD was also cut in previous GOP administrations. On this count, Kasich is not blazing any New Way trails. We’ve seen this movie.

There is something unnerving about quietly in the dark of night sticking the knife in a community’s back rather than trying to make your case out in the open. If Kasich’s budgetary and political approach is truly “unique” as Tim Keen describes the budget, it’s a shame that women and minority businesses are being looked upon the same way previous GOP administrations did.

The final shame is that these programs had begun to work and flourish again under former Gov. Ted Strickland. In 2008 he signed an executive order which essentially stopped the “buying around” and made state agencies accountable. By the end of 2009 the state had increased spending with MBE firms by $95 million. In 2010 MBE spending had increased another 43%.

What the Kasich cut will do is inevitably force layoffs in EOD. These employees work with MBE and EDGE eligible businesses to become certified. They also work with state agencies to help their purchasing officials line up opportunities with qualified MBE and EDGE vendors. Most importantly perhaps, these employees track the numbers. Under the Strickland Administration these numbers were reported, agency by agency, directly to the governor’s office. Cabinet members whose agencies were lagging found their numbers – in comparison with their colleagues – published on the DAS website. Transparency paid off and opportunity was created for many disadvantaged, small businesses.

Importantly, state law began to be followed again.

I think the Kasich team is going to end up with some explaining to do. It’s been 36 hours since the budget release and I haven’t heard anything on this yet, but I can’t believe it will go unnoticed.