AUSTIN, Texas – The Austin Independent School District plans to spend nearly $1 million to set and track race- and gender-based quotas for district contractors.

Austin school board members on Monday approved a new “Historically Underutilized Business” program to replace the district’s voluntary process for soliciting contract for work on school projects and other contracts, the Austin American-Statesman reports.austinISD

“This is a historic step for the district,” said Nicole Conley, AISD CFO who headed an advisory committee pushing for the program. “Although many school districts in Texas have minority purchasing programs, AISD has joined the likes of Dallas and Houston by taking the additional step to create a narrowly tailored HUB program … to help broaden opportunities for local businesses and ensure our contract awards reflect the markets, communities and families we serve.”

For the first two years, the program will apply to school projects funded through bonds, but district officials plan on applying it districtwide in September 2018. The goal is to increase the percentages of woman- and minority-owned businesses doing work in the district.

According to the American-Statesman:

The annual goals are for 21.9 percent participation among minorities and women for construction work and 28.5 percent for professional services. The annual goals, which will be reviewed annually, will serve as a benchmark to the overall effectiveness of the program, but there will also usually be contract-specific goals.

Contractors who don’t make a good-faith effort to meet those standards could face fines or have their bids or proposals rejected.

The first phase, which applies the program to bond-funded work, is expected to cost about $631,000 per year, but that cost is expected to balloon to $956,000 when the program is expanded to all contracts, Conley told the Austin Monitor.

The move follows a similar program used by the city of Austin, and AISD plans to hire the city’s assistant HUB director, Debra Dibble Boone, to administer the school district’s program.

The change was motivated by a “disparity study” conducted by Nera Economic Consulting that looked at how often the school district, city and county use minority- or women-owned businesses for contracting services like construction work, professional services, food supplies and pluming repairs, the Monitor reports.

“Lino Mendiola, outside legal counsel for the district, said AISD’s HUB program will create positions for a HUB director and staff members who will answer to the AISD chief financial officer,” according to the news site. “The HUB director’s oversight should help stem some of the abuses seen in other programs, Mendiola said, such as when a contractor hires an HUB firm and then substitutes a non-HUB firm once the contract is awarded. AISD’s program also allows for contractors to be sanctioned or fined if promises to include HUB firms are not kept, Mendiola said.”

Some school board members, however, have questioned whether minority- and women-owned businesses, which are often smaller outfits, could meet the rigorous regulations for doing work in the district.