Could an Arkansas school district set a 20 percent minority-business contracting goal without using race to award contracts?

Plain-English summary

In 2013, the Arkansas Attorney General considered a proposed school district policy with an annual goal of 20 percent participation by minority-owned businesses. The proposal said that contracts would still be awarded without regard to race. On that stated condition, the AG concluded that the goal "would not be in clear conflict with state or federal law."

That answer did not permit racial preferences. The opinion said that any race-conscious government action was "presumptively invalid" and would have to survive strict scrutiny. In public contracting, the opinion identified the potentially compelling interest as remedying past discrimination for which the government itself bore responsibility, supported by a "strong basis in evidence."

The AG also warned that the goal could have "materially adverse effects." A disappointed contractor might use the policy as evidence that race influenced an award, and the opinion questioned whether a school board had statutory authority to pursue the racial composition of its contractor pool. On the second question, the AG knew of "no relevant and authoritative definitions" of "goal" and "mandate" under Arkansas law.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical significance for affected readers

School boards and procurement officials

At the time, the opinion distinguished a stated participation goal from actual race-conscious decision-making. Its favorable answer "hinges on" the representation that the district would not take race into account when awarding contracts.

Contractors

The opinion said a contracting goal could give an unsuccessful bidder a basis to claim that the district "considered race in making the decision in order to meet the goal." It did not decide any particular contract dispute.

Lawyers reviewing public contracting policies

The opinion framed any race-conscious implementation as subject to strict scrutiny. It also identified separate questions about school-board authority and constitutionally restricted uses of school funds.

Common questions

Did the AG approve a 20 percent set-aside for minority-owned businesses?

No. The proposal was described as a goal that tracked voluntary disclosures while awarding contracts without regard to race. The opinion repeatedly stated that race-conscious action would require strict scrutiny.

Could the district consider race as one factor among several?

The opinion treated taking race into account, even as one factor, as a racial classification. It said any such action was "presumptively invalid" and required a compelling interest and narrow tailoring.

Did Arkansas law define the difference between a goal and a mandate?

The AG said, "I know of no relevant and authoritative definitions of those words under Arkansas law." The practical distinction in this opinion was whether the policy merely stated a desired result or permitted race-conscious means.

Why did the AG warn about lawsuits if the goal itself did not change awards?

The opinion reasoned that a bidder could point to the goal as evidence that race influenced a contract award, particularly when an award moved the district closer to its stated participation percentage.

Background and legal framework

The request described a school district that wanted to support minority-owned firms in construction, professional services, and purchases, with an annual procurement goal of 20 percent. The request also represented that the district "will not discriminate on the basis of race" and would award contracts based on the district's best interest.

The opinion applied federal and Arkansas equal-protection guarantees. It said a race-conscious contracting measure would need a compelling governmental interest and narrow tailoring. It also discussed school purchasing laws, school-board powers under AC.A.§ 6-13-620, and the Arkansas Constitution's restrictions on the use of school funds.

Citations discussed

• U.S. Const. amend. XIV, § 1, the federal equal-protection provision quoted in the opinion
• Ark. Const. art. 2, §§ 2, 3, 18, the state equality provisions cited by the opinion
• Fisher v. University of Texas at Austin, No. 11-345, slip op. at 8 (U.S. June 24, 2013), quoted for strict-scrutiny principles
• City of Richmondv. JA. Croson Co., 488 U.S. 469 (1989), discussed as the central public-contracting precedent
• Humphries v. Pulaski Cnty. Special Sch. Dist., 580 F.3d 688 (8th Cir. 2009), cited on evidence connecting a government action to an affirmative-action plan

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2013-045
August 15, 2013
STATE OF ARKANSAS
THE ATTORNEY GENERAL
DusnN McDANIEL
The Honorable Linda Pondexter Chesterfield
State Senator
12 Keo Drive
Little Rock, Arkansas 72206
Dear Senator Chesterfield:
This is in response to your request for my opinion about a proposed school district policy. You provide the following information: It is my understanding a school board is looking at creating a policy to support equal opportunity as well as economic development across the community by enacting a policy to support the participation of firms owned and controlled by minority persons in construction programs, professional services and in the purchase of other goods and services for the school district. Their annual procurement goal is 20% with minority businesses each year. A minority business is defined as a resident of the state who is African-American, Hispanic American, American Indian or Asian Pacific Islander. The school district will not discriminate on the basis of race or ownership in awarding contracts, and the policy acts to set goals and track those vendors who voluntarily disclose their racial status. All contracts will be awarded based on the best interest of the district, without regard to the race, gender, national origin etc. of the owners, operators or management company. Your questions are:

1. Are there any state or federal regulations that would be in conflict with
   this policy/goal?
   323 CENTER STREET, SUITE 200 •LITTLE RocK, Aru<ANsAs 72201
   TELEPHONE (501) 682-2007 •FAX (501) 682-8084
   INTERNET WEBSITE. http://www.ag.state.ar.us/ The Honorable Linda Pondexter Chesterfield State Senator Opinion No. 2013-045 Page 2
2. Under Arkansas law, can you provide the legal definition of "goal" vs.
   "mandate" and include how it relates to public school policy?
   RESPONSE
   In my opinion - based on your representation that "the school district will not discriminate on the basis of race" - a school district's goal to achieve a stated level of minority participation in contracting would not be in clear conflict with state or federal law. As discussed further below, however, this is not to say that such a goal's adoption would be prudent or without significant practical risk. To the contrary, I believe it might be held invalid or have materially adverse effects without clear countervailing benefits. I know of no legal definition of the word "goal" or the word "mandate" under Arkansas law. But I comment below on how the words might relate to the equal protection issues your first question raises. Question 1 -Are there any state or federal regulations that would be in conflict with this policy/goal? Our constitutions guarantee equal protection of the law.1 In the context of your question, these guarantees mean that, absent extraordinary circumstances, a governmental body (including a school district) may not distinguish between people on the basis of race: Distinctions between citizens solely because of their ancestry are by their very nature odious to a free people, and therefore are contrary to our traditions and hence constitutionally suspect. Because racial characteristics so seldom provide a relevant basis for disparate treatment, 1 See U.S. Const. amend. XIV, § 1 (No State may "deny to any person within its jurisdiction the equal protection of the law"); Ark. Const. art. 2, §§ 2 ("All men are created equally free and independent"), 3 ("The equality of all persons before the law is recognized, and shall ever remain inviolate; nor shall any citizen ever be deprived of any right, privilege or immunity; nor exempted from any burden or duty, on account of race, color or previous condition"), 18 ("The General Assembly shall not grant to any citizen, or class of citizens, privileges or immunities which, upon the same terms, shall not equally belong to all citizens"). The Honorable Linda Pondexter Chesterfield State Senator Opinion No. 2013-045 Page 3 the Equal Protection Clause demands that racial classifications be subjected to the most rigid scrutiny. To implement these canons, judicial review must begin from the position that any official action that treats a person differently on account of his race or ethnic origin is inherently suspect. Strict scrutiny is a searching examination, and it is the government that bears the burden to prove that the reasons for any racial classification are clearly identified and unquestionably legitimate. 2 Any race-conscious3 governmental action is presumptively invalid4 in an equal protection challenge, regardless of the claimed motivation or the identity of the racial group benefited or burdened. 5 Accordingly, if a school district takes race-conscious action, it will have the burden of proving in the event of a challenge that it has a legitimate, compelling interest to be advanced by the racial classification and that the racial classification is narrowly tailored - not more extensive than necessary - to further the compelling governmental interest. 6 2 Fisher v. University of Texas at Austin, No. 11-345, slip op. at 8 (U.S. June 24, 2013) (citations and internal quotation marks omitted). 3 By "race-conscious" 1 mean the taking into account of a person's race in making a decision about who will enjoy some governmental benefit (like a contract with a public body) or suffer some burden imposed by the government. Any such taking into account appears to be sufficient to constitute a racial classification. It appears, in other words, to make no difference for equal protection purposes whether race is the sole determinant or is merely one factor among many - both are disfavored in law and subject to strict judicial scrutiny. See, e.g., Fisher, supra note 2, slip op. at 3 (Ginsburg, J., dissenting) (action taken under university's affirmative action program that considered race not as a determinant but only as a "factor of a factor of a factor of a factor" was nonetheless subject to strict scrutiny). I also characterize as "race-conscious" for purposes of this opinion any action taken on the basis of a seemingly race-neutral distinction between people that is in fact a proxy for race. See, e.g., Sherbrooke Turf, Inc. v. Minnesota Dept. of Transp., 345 F.3d 964 (8th Cir. 2003) (plan favored "socially and economically disadvantaged individuals" but defendant government conceded that plan created racial classifications in fact). 4 See, e.g., Personnel Adm 'r of Massachusetts v. Feeney, 442 U.S. 256 (l 979). 5 See, e.g., City of Richmondv. JA. Croson Co., 488 U.S. 469 (1989); Feeney, supra note 4. 6 See, e.g., id. The Honorable Linda Pondexter Chesterfield State Senator Opinion No. 2013-045 Page 4 What governmental interests are compelling? In the public contracting context, it appears that the only governmental interest that can ever be sufficiently compelling to justify race-conscious action is an interest in remedying past racial discrimination in contracting for which the government itself is in some sense responsible.7 A desire for more minority participation for its own sake, or a desire to remedy past or present discrimination in society at large, is not sufficient and cannot serve as a compelling governmental interest. 8 And a state or local government must have a strong basis in evidence, something at least approaching a prima facie case, that discrimination has in fact occurred. 9 If a government proves a compelling interest, it must then demonstrate that the race-conscious action taken is narrowly tailored to advance the compelling interest without unnecessarily trammelling the rights of those not favored.10 In determining whether race-conscious action is narrowly tailored, courts consider the prevailing facts and circumstances, including the availability and efficacy of alternative (race-neutral) remedies, the flexibility (e.g., waivers) and duration of the race- conscious action, the relationship between the stated goal and the racial composition of the relevant market, and the reliefs impacts on third parties.11 I realize that your opinion request does not represent an effort to justify race- conscious action under strict scrutiny. I note nevertheless that your opinion request does not even allege, let alone show by way of a strong basis in evidence, any past discrimination in contracting for which the district is responsible. Nor does it indicate that the district has considered alternative remedies, or that the goal will be of limited duration, or that the 20% level stated in the goal bears any relation to 7 Croson, supra note 5, 488 U.S. at 486-493 (race-based measures to increase minority participation in government contracting may be permissible to remedy government's own discrimination or discrimination by private actors resulting in private system of racial exclusion in which government has become passive participant). s Id. 10 See, e.g., Croson, supra note 5, 488 U.S. at 507. 11 See, e.g., United States v. Paradise, 480 U.S. 149, 171 (1987). The Honorable Linda Pondexter Chesterfield State Senator Opinion No. 2013-045 Page 5 the proportion of minority-owned businesses in the pool of all potential contractors. It is clear that the facts stated in your opinion request would, without more, be insufficient to justify race-conscious action under strict scrutiny. Again, however, I recognize that your opinion request does not necessarily state all the relevant facts and circumstances. The foregoing is a discussion of law that applies when a government takes race- conscious action.12 But you state that "[t]he school district will not discriminate on the basis of race .... " I interpret that statement to mean that the district will not take any race-conscious action in furtherance of the goal. That is a critical fact, and my opinion that the goal you describe would not be in clear conflict with state13 or federal law hinges on that fact. Judging solely from the information provided in your opinion request, the goal - which hardly rises to the level of a plan or program - apparently contemplates almost no action at all, only the "set[ ting of] goals and [the] track[ing of] vendors who voluntarily disclose their racial status." It is a "time-honored principle that the
   [equal protection clause of the] Fourteenth Amendment, by its very terms, prohibits only [discriminatory] state action."14 The mere existence of a governmental goal, without actual discrimination on the basis of race, likely will not in my opinion be subject to plausible equal protection challenge. I think it is more likely than not, in other words, that a court would find there to be no racial classification present in a case where a government merely pronounces that it would prefer a stated result but does not take any race-conscious action in 12 Because I interpret your request to involve a scheme that does not include any race-conscious action, I have only briefly discussed equal protection analysis of race-conscious action. Predecessors in this office have considered the constitutionality of affirmative action plans in greater detail in Op. Att'y Gen. 95-116, 94-402, 91-036, and 89-023. As even my abbreviated discussion should make clear, because racial classifications are presumptively invalid and may be used only in limited circumstances and on exacting conditions, a school district or other local government should use race-conscious means in making contracting or other decisions only in accordance with local counsel's advice. 13 School districts are subject to a statute governing the purchase of "commodities," a term broadly defined to include some services. A.C.A. §§ 6-21-301 to -306 (Rep!. 2007, Supp. 2011). I assume your statement that "contracts will be awarded based on the best interest of the district" contemplates compliance with this statute and any other similar applicable state laws, which I do not consider further here. 14 United States v. Morrison, 529 U.S. 598, 621 (2000) (emphasis added). The Honorable Linda Pondexter Chesterfield State Senator Opinion No. 2013-045 Page 6 furtherance of the pronouncement. Absent a racial classification - a race-based difference in how people are actually treated - there is no clear basis for a discrimination claim under equal protection guarantees. My opinion should not, however, be taken to suggest that the goal's adoption and maintenance would necessarily be prudent or without significant practical risk. I know of at least two matters to consider in that regard. First, the school board may not have authority to adopt and maintain the goal. The prevailing opinion in Croson noted that a local government may act to remedy past racial discrimination within the locality "if delegated the authority from the State" to do so.15 A school board's authority under Arkansas law to take action to alter the racial composition of the group with whom it contracts - or even to proclaim that its goal is to alter that composition - is less than clear. A school board's "powers ... are derived only from legislative authority."16 A statute enumerates powers and duties granted to and imposed on school boards "in order to provide no less than a general, suitable, and efficient system of free public schools."17 Boards have broad express authority under that statute, and additional powers implied18 from those named, to manage the schools. But a board has no express statutory authority to seek to alter the racial composition of its contractors. And it is not clear that a court would find such authority to be implied, given that it would be exercised in an area that has no apparent relevance to the board's central mission of providing free public schools in the district. Additionally, our state constitution 19 restricts school funds to uses that are "immediately and directly connected with the establishment and maintenance of a common school system"20 and are "convenient, useful, appropriate, suitable, 15 488 U.S. at 491. 16 Lynn Sch. Dist. No. 76 v. Smithville Sch. Dist. No. 31, 213 Ark. 268, 275, 211 S. W.2d 641 (1948). 17 AC.A.§ 6-13-620 (Supp. 2011). 18 See, e.g., Fortman v. Texarkana Sch. Dist. No. 7, 257 Ark. 130, 514 S.W.2d 720 (1974). 19 Ark. Const. art. 14, §§ 2, 3. 20 Gray v. Mitchell, 373 Ark. 560, 568, 285 S.W.3d 222 (2008) (quoting Little River Cnty. Bd. of Educ. v. Ashdown Special Sch. Dist., 156 Ark. 549, 556, 247 S. W. 70 (1923 )). The Honorable Linda Pondexter Chesterfield State Senator Opinion No. 2013-045 Page 7 proper or conducive to the proper maintenance of the schools."21 The propriety of an expenditure is a matter for the school board to determine, but the courts will "ensure that school money is not diverted to an unrelated purpose, such as to subsidize road improvements or to pay a county officer for duties unrelated to the operation of the schools."22 To the extent, if any, that the goal's adoption or maintenance would involve expenditures of school funds, the board should consider whether an attempt to alter the racial composition of its contractors is sufficiently related to the district's educational purpose. Second, even if the board may adopt and maintain the goal, it may have certain adverse effects, including the encouragement of reverse discrimination claims (i.e., claims made by persons not favored by the goal). Imagine two school districts, one having adopted the goal and one not. Each district will award a final, large contract at the end of the year. Minority business participation then stands at 18% in each district. Each district awards the contract to a minority business, which increases minority business participation to 21 % for the year. On the facts given, a majority-race competitor has no plausible reason to believe - with respect to the district without a goal - that he has been discriminated against on the basis of his race. He might reasonably conclude, however, that the goal provides a plausible explanation for the other district's decision; that is, that the district considered race in making the decision in order to meet the goal. And the hypothetical majority-race competitor, in considering whether to make a racial discrimination claim against the district that adopted the goal, will discover that the district has provided him with evidence to support his claim. Evidence that a government "followed" or "act[ ed] in connection with" an affirmative action plan in taking some challenged action may constitute direct evidence that the government unlawfully discriminated in taking the action.23 A challenger may, in other words, introduce the goal itself as evidence that the district's considered race in making a contracting decision. This result logically follows from the fact that all 21 Id. at 569. 23 See Humphries v. Pulaski Cnty. Special Sch. Dist., 580 F.3d 688 (8th Cir. 2009). The Honorable Linda Pondexter Chesterfield State Senator Opinion No. 2013-045 Page 8 governmental racial classifications are presumptively invalid. It is not clear that a governmental body would necessarily be deemed to have followed or acted in connection with an affirmative action plan that contains a disclaimer of any intent to act at all, but to the extent an action advances the stated goal, a person challenging the action may plausibly assert a connection between the goal and the action. Finally, there can be no assurance that the goal would not result m adverse consequences in ways I have not foreseen. Once again, because racial classifications are presumptively invalid and may be used only in limited circumstances and on exacting conditions, a school district or other local government should use race-conscious means in making contracting or other decisions only in accordance with local counsel's advice. Question 2 - Under Arkansas law, can you provide the legal definition of "goal" vs. "mandate" and include how it relates to public school policy? I know of no relevant and authoritative definitions of those words under Arkansas law. In the context of the proposal you describe, I opine above that a goal to increase minority participation to a stated level is not clearly unlawful if unaccompanied by race-conscious means to achieve the goal. By contrast, any plan that mandates - or even permits - race-conscious means in its implementation will be subject to strict judicial scrutiny. A school district or other local government should use race-conscious means in making contracting or other decisions only in accordance with local counsel's advice. Assistant Attorney General J. M. Barker prepared this opinion, which I approve. DM:JMB/cyh