The Supreme Court's ruling in City of Richmond v. J. A. Croson (1989) has restricted the use of government procurement assistance programs for minorities and women without the prerequisite support of a disparity study. Recently, an increasing number of disparity studies have been rejected by the courts as "junk science" and the related programs have been ruled unconstitutional. A central issue in these cases has been the approach used to estimate the availability of minority and women firms. Data from the Economic Census are commonly used as the basis for these availability estimates. However, there are significant problems and limitations with the Census data relative to the Croson guideline that the availability of women and minority firms should reflect the number of qualified, willing, and able firms. Given the number and difficulty of the required adjustments to the Census data, it is unlikely that these data will provide availability estimates that are accurate enough to allow for valid statistical tests of an inference of discriminatory exclusion. If minimizing court challenges is a goal of the public administrator who is responsible for the program, then the recommendation here is that a primary source of availability data should be considered. Furthermore, the information system needed to support the women and minority assistance programs should be designed and installed prior to initiating the program.
In recent years, the volume of municipal bond financing has increased dramatically. This, in conjunction with soaring interest costs and a perhaps strengthened awareness of risk by investors, has created a need for municipalities to curtail borrowing costs. One means by which municipalities have attempted to accomplish this goal is through the purchase of municipal bond insurance. Three firms offer private municipal bond guarantees at substantial premiums. It is their claim that municipalities can gain interest cost savings in excess of the fee paid for coverage.Municipal bond insurance assures timely and full payment of interest and principal to investors in the event of default by the issuer. Demand for this type of insurance has grown significantly since 1975. The actual amount by which borrowing costs are reduced, however, is largely unknown, since very little empirical evidence has been examined to determine the actual interest cost savings of municipal bond insurance. To date, only three empirical studies [3, 4, 71 have attempted to quantify the interest cost savings of private municipal bond insurance. Of these studies, none is comprehensive, nor are any firm conclusions derived. Each study attempts to accomplish a different goal, consequently there is very little collaborating evidence among them. As a result, the value of municipal bond insurance is unclear.This study uses a regression model to empirically investigate the effect of insurance on the true interest cost (TIC) to the issuer. The T I C of the issue serves as the dependent variable with independent variables reflecting characteristics of the issue, the issuer, and the market. The effect of municipal bond insurance on the cost to the issuer is captured by a dummy variable. This paper is presented in four sections. Private municipal bond insurance is discussed in Section I. Section I1 contains a presentation of the model, and the empirical results are presented in Section 111. O u r conclusions are summarized in Section IV.
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