2 Practical Approaches to More Equitable Government Spending

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Public Finance Update - Nov. 1, 2022

Hi there, I'm Liz Farmer, welcome back to Route Fifty's Public Finance Update. It's been more than two years since policy-makers were forced to take a harder look at systemic racism in programs and budgets. The shift was brought on by the police killings of George Floyd, Breonna Taylor and others and the especially hard hit the Covid-19 pandemic dealt to communities of color. Since then, I've heard a lot of people talk about approaching public spending through an "equity lens."

Equity and inclusion efforts over the past couple years have featured engagement and outreach to underserved populations, reports on equity goals and dozens of pilot projects. But just how exactly will any of this work change the way governments regularly spend the public’s money—if it does at all? And what methods can other places copy?

Now could be an important time to answer questions like this, as some are worried that the looming recession and rising inflation will stop previous momentum. “The window of opportunity is shrinking and we’re trying to maximize this moment to help governments go to that next level,” said Marta Urquilla, president of the Centri Tech Foundation, which gives money to social justice startups.

This week, I’ll look at two examples of how governments are reshuffling dollars to achieve more equitable outcomes.

Budgeting for Equity

When she was the deputy director of Washington, D.C.’s juvenile justice agency, Omolara Fatiregun saw firsthand how spending decisions can perpetuate cycles of poverty. For example, she said, child welfare agencies spend more on foster care than on prevention programs that keep kids safe. While it may seem like temporarily housing a child with a foster family is at least better than nothing, she noted, “all of the academic literature for the past 30 years says that short-term interventions like that are harmful to kids because it retraumatizes them [when the intervention ends].”

That experience was one of several that prompted Fatiregun to start looking at how state and local governments could make budget changes that help break the cycle of poverty. She’s now working with San Juan Unified School Board in Sacramento County, California, and is putting the district’s budget through an equity assessment. In 2020, the school system began an outreach effort that resulted in eight goals and strategies for improving educational justice. Fatiregun’s startup, Thrive!, is essentially analyzing the schools budget to see if it’s actually spending money on the things that will help it achieve those goals. The assessments also include recommendations for redirecting spending, if necessary.

The audits are conducted by comparing the system’s spending and goals against an index of positive interventions based on research, academic literature and case studies developed by Fatiregun. 

For example, research indicates that ready access to bilingual educators is associated with positive outcomes for English language learners. California is home to over 1 million English learners and of those, 54% are long-term English learners or at risk of becoming so, according to Education Trust-West. So, if a school wants to improve the chances of success for those kids, Thrive! looks at the school system’s budget for biliterate paraprofessionals. 

After the assessment is complete, local community members will be invited to essentially gut check the results and provide input and ideas on the audit recommendations. 

That bottom-up approach is key, said Fatiregun, because the community input helps officials prioritize what changes to make first. For example, during a recent public engagement on Somerville, Massachusetts’ “Cradle to Career” plan, mothers said they wanted more access to training programs. “It was eye-opening to officials that moms didn’t necessarily want more services for their kids—they were interested in those economic mobility measures,” Fatiregun said.

So far, 30 government equity staff and legislators across twelve states have inquired about equity audits, including policy-makers in Florida, Georgia, Massachusetts, Michigan, New Mexico, Oklahoma and Pennsylvania, according to Thrive!. 

“We’re moving money and we’re moving power to influence policy and budget,” Fatiregun said. “And that’s how you combat the cycle of poverty.”

Inclusive Procurement

Local governments are often some of the biggest—if not the biggest—spenders in their region, giving them the ability to directly influence their local economies. But this significant area of spending often gets overlooked when it comes to policy-making because procurement officers aren’t always involved in those executive-level conversations. 

The issues with government procurement are well known. Accessing and navigating systems isn’t easy. Responding to a request for proposals is often confusing and time consuming which puts smaller businesses at a disadvantage, disproportionately affecting minority- and women-owned businesses. It also results in less competition, which can mean less competitive pricing for governments.

Long Beach, California, has spent years overhauling its procurement procedures and tools in an effort to make the entire process better for local vendors and staff. The project was adapted to include recommendations in the city’s Framework for Racial Equity and Reconciliation in 2020, and in the following year it used American Rescue Plan Act funding to start testing out improvements. Changes included: simplifying procurement templates, holding pre-bid information sessions, videos and other “how-to” materials in all the languages commonly spoken in Long Beach, and doing direct outreach to local vendors about opportunities.

“These are generally small, easily feasible ideas but when taken together our hope has been it’ll make a difference toward making procurement more equitable for BIPOC [and] women-owned businesses that haven’t really participated before,” said Augusta Gudeman, Long Beach’s recovery and equity in contracting officer, during a recent webinar on inclusive procurement.

Long Beach also launched a more user-friendly procurement platform earlier this year that records vendor demographics and other statistics to help the city track progress on its equity goals. The preliminary results are promising: nearly all of the requests for proposals in the sample set had more than three bids and an average of 15 vendors per request. (In 2021, nearly half of RFPs had three or fewer bids.) And, nearly 60% of the responses are from local businesses while participation from minority- and women-owned businesses has jumped by as much as 10 percentage points over 2021.

Gudeman said the results are from a sampling of health and human services and economic recovery-related projects and not all of the city’s buying, “but the impacts we are seeing are really exciting.”

Patrice Green, the Surdna Foundation’s Inclusive Economies Program director, added that the influx of federal funding has put procurement offices in the role of grantor, making it more important than ever to prioritize access and equity. Adding to that pressure is the fact that some of the fastest-growing categories of procurement are in industries where there tends not to be as many women- or minority-owned businesses.

“Through procurement, local governments can help stimulate wealth creation and help spur generational wealth,” she said. “But there’s also a risk that wealth gaps can widen.”