CHICAGO -- Gov. Tommy Thompson of Wisconsin has signed into law legislation that allows Milwaukee to sell a $35 million note issue for its public schools without voter approval and sets a goal of 50% participation by minority underwriting firms.
The legislation also requires the city to hire a minority firms as financial adviser for the note issue.
The school district had asked the state Legislature to approve the note issue because of an immediate need to build two schools and complete repair work on existing facilities, according to Denise Callaway, director of the school district's office of public information. Without the legislation, the district would be forced to wait until November to hold a referendum on the note issue, she added.
The 50% minority participation goal was inserted in the legislation by state Sen. Gary George, D-Milwaukee, who represents the largest contingency of blacks in Wisconsin, according to a senior policy adviser.
Walter C. Farrell Jr., the adviser, said that although the goal of 50% was relatively high, that level was needed because minority participation in past debt issues for the schools was "pitifully low."
Milwaukee Mayor John Norquist, who must approve the note issue, supports the legislation, according to Jeff Bentoff, the mayor's spokesman.
City officials are studying how the debt issue can be structured to meet the goals and requirements contained in the legislation.
Thomas Hayes, Milwaukee's special deputy city attorney, said that once the mayor gives his approval, the Milwaukee Common Council will direct the city's Public Debt Commission on how to proceed with the issue.
"The common council will establish the goals," Mr. Hayes said. He added that his office would recommend the council treat the minority firm participant goals as "voluntary encouragement, as opposed to a mandatory requirement."
Mr. Hayes said his office is taking that position because of concerns in the wake of Richmond v. J.A. Croson Co. In the 1989 case, the U.S. Supreme Court ruled that cities must prove they are remedying past discrimination before setting contracts aside for minorities. He noted that no Milwaukee study has ever indicated that minority groups were excluded from city business.
As for the legislation's requirement of a minority firm financial adviser, Mr. Hayes said that requirement would have to be reviewed in the context of the Croson case.
He said the council would determine whether the issue is sold in a competitive or negotiated deal, adding that either was allowable under Wisconsin law for note issues.
Mr. Farrell, who is also a professor of educational policy and community studies at the University of Wisconsin at Milwaukee, said participation by minority firms in school debt issues was under 20% in recent years, even though 70% of students attending Milwaukee public schools are minorities.
But W. Martin Morics, the city's comptroller, said the issue of minority participation in past debt deals for the school district was moot.
The city has not issued much debt for schools over the last decade and the debt that has been issued was done competitively, he said adding that the last debt issue for the district was $27 million of general obligation notes in 1990 that were sold competitively.
Mr. Morics estimated that minority firm participation in debt issues for Milwaukee schools was "not much more" than 5%.
According to the legislation, the Milwaukee Public School Board must submit a report ot the legislature's audit and finance committees on the involvement of minority firms in the financing. Mr. Farrell said that requirement was made to show that the Legislature was serious about monitoring the effort to include minority firms.
"If the goals are not met, they would have to show good cause why they were not met," he said.
The legislation calls for minority bond firms that want to participate in the note issue to be certified by the state. Wisconsin statutes define a minority firm as one that is 51% owned, controlled, and actively managed by a member who is black, Hispanic, Asian, or Native American, according to Robert Wynn, the state's director of minority business development.
About 31 firms are currently certified as minority financial firms, according to a list from the Wisconsin Department of Development.
Napoleon Brandford, a partner at Grigsby, Brandford & Co., one of the certified firms, said although he did not think the 50% goal was unusually high, he believes setting goals is "dangerous" because the goal becomes a cap for minority firm participation.
Ms. Callaway, the school district's public information director, said the district would do its best to meet all the goals contained in the legislation.
Mr. Morics said if the notes are approved, he does not expect them to be issued until the fall.
The Milwaukee school board earlier this month approved a set of "educational standards" that would cost the district $337 million if implemented.
