Thank you for having me. A lot of things come to mind listening just now, and there are some thoughts I’d like to share about this whole idea of collaboration and continuous improvement, and creating a culture of where we don’t view self-assessment as criticism but as an opportunity to learn and to improve – it’s a culture and environment that we actually have to create. That’s particularly true in this day and age of public employee bashing, of trying to find scapegoats.
One of the issues in my profession, if you make a mistake in medicine, you often get sued. So there’s this whole idea of defensive medicine and doing things that aren’t really necessary. We took that on after the last session: I brought leadership from the Oregon Trial Lawyers Association and the Oregon Medical Association together. They’re actually going to bring a bill that they both endorsed to the Oregon legislative session that’s designed to improve the practice environment, so that if a physician makes a mistake, there’s a way to deal with the consequences for that individual – maybe even an eventual notification system – but there’s an opportunity for that information to come back to all physicians so that the same mistake isn’t made again.
It’s like the air traffic safety system, where if the pilot is flying the wrong way at the wrong altitude, they report it, analyze why it happened, then all pilots get that information – which is why we have such a remarkable air traffic system. It’s a system where everyone is committed to continuous improvement.
The other important area is collaboration. Collaboration, I think, is one of the most powerful tools we have today. It’s refreshing to see that we’re rediscovering it. To me it’s sort of like we’re going back to Jeffersonian democracy, which was all about the belief that individuals could sit down and work together and solve problems in a way that was usually satisfactory – the way we did it for most of the 19th century. Then, in the early 20th century, because of the industrial revolution and a number of other things, we shifted to a federalist form of government, where decisions were made by third parties. So when you go to the Legislature and appear at a committee hearing, people who are disagreeing with each other don’t talk to each other – they appeal to a committee to make a decision for them.
Back in my first term, we developed something called the Network of Oregon Watershed Councils, which was a way to take people in the timber industry and in the environmental community to do things together in their community to improve water quality. And the interesting thing about watershed councils – there are several hundred of them around the state – not only do they improve water quality, they improve community. They have an impact that’s much larger than themselves.
Our Coordinated Care Organizations, which are changing the way we’re delivering health care, are likewise inventing something totally new. One of the physicians involved told me a few months ago that he was terrified and excited. He’s terrified because he’s developing something that’s never been done before … and he’s excited because he has the opportunity to develop something that’s never been done before.
I think that’s the moment we’re finding ourselves in right now with public education. It’s not that public education is wrong and bad. But we have to evolve and change to meet the challenges we face today in a much more complex and diverse world.
So it’s important for us – to achieve our educational objectives in this state and in this country – to develop that kind of culture, and I tip my hat to District 4J because I think you’re leading by example.
Coming to Eugene is a lot like coming home for me on a lot of levels. I come from a family of educators; both of my parents were professors at the University of Oregon. My older sister Anne is a teacher at Lane Community College. My younger sister actually graduated from and wrote the school song for Edgewood. I remember the song to this day. I graduated from South Eugene High School. My chief of staff Curtis Robinhold graduated from South Eugene High School. My state police security guy over here, Michael Bates, graduated from South Eugene High School.
We lived at 430 E. 46th Avenue, right across from the track, so I feel very much at home here. I thought I’d tell you a quick story on how we ended up in Oregon and the impact that’s had on my view of education, particularly the education reforms that are going on today.
I was born in Colfax, Wash., but we ended up in Kansas – my father was teaching at KU. This was the 50s, and in 1957 the Russians launched Sputnik. We bought our first television set so we could watch the news coverage of that. I remember sitting with my mother on a white shag rug in our house in Lawrence, watching the coverage and just being mesmerized, and then going out in the evening and seeing this little speck of light going across the Kansas sky.
To me it was just amazing, but to the U.S. it was a terrible wakeup call. We were in the depths of the cold war, and the military implications were that we were number two to Russia. So there was this big re-evaluation of our public school system. This is going to sound familiar: people said, we really need to lean into math and science – this was way before STEM.
As a result of that, the Portland Public School System, like many places, wanted to re-evaluate their curriculum to see if it was getting kids ready for those disciplines and college. My father applied and was actually hired, and we moved to Portland in late 1959. This was a time when, each month, every siren in town went off to help us practice for something dropping on the Rose Garden. It was terrifying at my age.
So we came to Portland and my dad did this curriculum study that was put out in 1960; it was called the Kitzhaber Report. Like deja vus all over again. This focus on math and science was part of a report, and my father was invited to the White House to meet the then-equivalent of Arnie Duncan in the Johnson administration. He was a man who believed that this focus on math and science was lowballing English and the humanities. We didn’t want just a society of technocrats. We wanted good citizens as well.
That led to an NEA grant at the University of Oregon to work on what was called Project English in the 1960s, which rewrote the English curriculum for the Oregon public school system for grades 7 through 12 – things like structural linguistics and transformational grammar, and Noam Chomsky came out and there was a lot of controversy.
It was essentially trying to do with English and literature what was being done with math and sciences. I’ve been going through my dad’s papers – he died in 2007 – and literally last night I read about “The Short Happy Life of the Sputnik Education Reform Movement,” which is very interesting when you read it, and it takes us to where we are today. We’re re-evaluating our curriculum and re-evaluating how we teach programs, and there’s a cry for STEM so we can keep up with the Chinese. But I think there’s a much more practical reason why we need to be going through this exercise that you’ve been talking about today.
It’s not just about methods. Teachers are clearly the most important resource in the classroom. It’s really about the fact that there’s an increasingly close correlation between education and economic attainment. When I was elected to the Oregon Legislature in 1978 from Roseburg, kids were dropping out of Roseburg High School in 10th and 11th grade and getting great jobs in the woods with super benefits and good wages and the expectation that they’d be able to do that for the rest of their lives.
Those days are just gone. In the last two decades, the relationship between earning power and education is much more closely aligned. In 1978, the average college grad made 38 percent more than a high school graduate. Today, that’s 75 percent. The fact is, 60 percent of the jobs we expect coming down the pike in the next decade will require at least an associate’s degree.
So this is really about how we rebuild the American middle class and how we fulfill the American dream. If you believe, like I do, that at the heart of the American dream is the promise of opportunity, and the belief that there is that upward mobility, and if you work hard you can move yourself up and leave your kids better off than you were, then public education is the vehicle by which the American dream is most directly fulfilled today.
In the past two years what we’ve tried to do is put together the policy infrastructure to ensure that every Oregonian gets their shot at the American dream. We’ve begun to break down the silos and improve the connections between early childhood and K-12 and post-secondary education and training. In a policy sense, we’re trying to reflect the importance of the connection between early childhood health and nutrition and the ability to be ready to learn in kindergarten, and the connection between kindergarten readiness and third grade reading proficiency, and the relationship between third grade reading proficiency and high school graduate rates, and the relationship between degree attainment and, basically, income mobility.
So we’ve done that in the state. We’ve freed ourselves from the restrictive nets of No Child Left Behind and replaced the punitive labels with a legitimate and authentic way to evaluate our schools, and a tailored, homegrown way to actually improve. We’ve hired Dr. Rudy Crew – big personality, sharp elbows – to oversee that. We’ve developed our achievement compacts, which is really an effort to try to align our public education goals around this 40/40/20 effort. I will be the first to admit it’s extraordinarily aspirational. It says by 2025, kids who started kindergarten this last year, all will graduate from high school, and at least 40 percent will get post-secondary education and training and 40 percent will earn a bachelor’s degree or higher.
If you dig down to what 40/40/20 really means, it means that every child in Oregon has the capacity to be successful – regardless of race, home language, income, immigration status, they have the ability to succeed. The job is for us adults to meet them where they are and create pathways for success in college and career. So that’s the policy infrastructure that we’ve put into place over the past two years.
I want to take a few minutes now to talk about the fiscal structure. The fact is, our system of public education is horribly underfunded at every level, from early childhood to post-secondary education. There are a lot of reasons why – ballot measure 5 is one of the major ones – and I think there’s a lack of understanding in the general public about what kind of investments it actually takes to meet the diverse needs of our student body. Yet it’s clear that we will not be able to meet our 40/40/20 objectives without a very substantial reinvestment in the classroom.
Now we’re in a lot better place than we were two years ago, although it may not feel like that to you in the trenches. Two years ago, we had a $3.5 billion budget deficit. Now we have a budget that is balanced and has $30 million to the plus. That’s a pretty big turnaround in two years, but $30 million is not a reinvestment budget.
So I feel strongly that it’s very important for us to try to begin that reinvestment process in the 2013-2015 biennium. The path I chose to take is not without controversy, and I want to talk about it – not necessarily to get you to agree with it, but to get you to understand what it is I’m trying to do, and hopefully gain some support.
There’re two things we have to do: in the long term, we have to fundamentally reform our system of public revenue. There’s no question about that. It’s going to take time. It’s going to take discipline. It’s going to take patience. And it’s clearly on the list of things to do – to begin to rebuild the coalition of labor and business that was sort of fractured by measures 66 and 67. We’re engaged in developing some strawman proposals, so it’s coming, but it’s not going to come in the next two years.
But in the meantime, we can’t wait. If we look at the statistics in our own schools districts about attainment levels in third grade reading levels, benchmarks in math and science, for people who are English-language learners, in generational poverty and communities of color, it’s not inspiring. You don’t close the achievement gap unless you lean into that.
We can’t wait for the economy to get better; we can’t wait for major tax reform before we begin this reinvestment process.
So I felt we needed to try to make some space in the general fund so we can start making those investments today. And I think that involves a couple of things: reducing the costs of health care and public safety, and reducing some of the cost drivers that divert dollars from the classroom, and that involves PERS – and I, by the way, am a Tier 1 PERS member, so I’m not suggesting anything that doesn’t affect me as well. Finally, we have to have a serious conversation about our tax expenditures – billions of dollars that are essentially tax credit and tax deductions that we have to look at.
So on health care, the CCOs that I mentioned, the projected savings is $11 billion in total costs. These organizations are going to grow at 3.4 percent a year, way below the current inflation rate. That frees up $100 million this biennium we can roll into education. It will free up almost $200 million in the next biennium, and almost $400 million the biennium after that. The point is, the delta, by simply reducing the rate of inflation in the Medicaid program, creates significant resources that can be reinvested in education. And if we’re successful in listing this care model on the insurance exchange, offering a low-cost, high-quality care model for school teachers and other public employees, the potential savings over the decade are another $5 million. So this is a huge game changer for state finances, and making this work has everything to do with our ability to make long-term investments in our school system.
The second is public safety. We are projecting to have to build another 2300 prison beds over the next 10 years at a cost of $600 million, and most of those beds will be occupied by nonviolent offenders – people who violated a technical provision of their parole go back to occupy a prison bed. So the point is, we have public safety commission that’s just issued some recommendations, and we’re trying to find, based on best practices around the country, alternative ways to sanction nonviolent offenders rather than building more prison beds to free up those resources and make sure we have those dollars available to put back into the front end. Because what’s been going on in Oregon is this disturbing trend in the general fund of increasingly spending the dollars we do have on public safety, on health care, on the human consequences of abuse, neglect, and addiction, and those dollars come right out of investments for children, families, and public education, so we have to turn that around.
The second one has to do with the fact that the crisis in public education is no longer just a revenue problem. It’s not anybody’s fault, but the fact is that our PERS system and our funds are linked to the stock market. And hen the bottom fell out of the stock market in 2008, our portfolio lost 27 percent of its value. To make that up, employer contributions have gone up dramatically. I don’t think anyone believes we’re going to go back to the economy we had in the 1990s, so we have about a $16 billion unfunded liability. It’s still a great program; this is just a dollars and cents thing.
What that means, is the average cost per pupil in Oregon will go up about $1000 per pupil this next biennium; $500 of that is the increase in PERS. About $300 is salary and other benefits. The point is, we’re going to increase the cost per pupil by $1000, but for that, we’re not going to be adding back teachers, spending more on professional development, or adding back lost school days.
So this isn’t about the value of public employees – I being one as well as you. It’s about how in the short term do we balance the importance of our retirement system with the ability to invest dollars in the classroom today so kids can be successful tomorrow. So what I proposed is capping the cost of living adjustment in the system, but structuring the bill in such a way, if it passes, so if the unfunded actuarial liability, we have to give it back. I’m not expecting you to leap up and down and embrace it, but we need to find a way to free up money for investment, because these kids can’t wait.
The third is looking at our tax expenditures. I’m wide open on that – like the senior medical deductible. We’re the only state that allows people over 65 to deduct all their medical expenses, whether they make $2 or $10 million a year. We could look at maybe capping the total amount of the deductions. So those are the issues we’ve based the budget on.
Let me talk to you very briefly about the budget. What we’ve been able to do in the budget is allocate $6.15 billion to the state school fund. That in combination with the $253 million that are freed up in school districts by changes in the PERS system actually creates a state school fund that is just a little bit over current service levels. It’s the first budget since 2007 that is funded with real money, not one-time money. For years, we’ve been propping up our schools with stimulus money, bond money. This is a real budget. We’ve also been able to set targeted investments – up to $120 million for teacher effectiveness, trying to essentially do what you’re doing here, recognizing the fact that no state and no nation has moved the dial on student performance without significant investment in the performance and quality of its teachers.
We have about $10 million in third grade reading – we recognize that as a very important benchmark of later success. We have $13 million invested in science, technology, arms, math. We call it STEAM instead of STEM, recognizing that we don’t just want quality workers; we want robust citizens as well. And finally we have $11 million in counselors, dual-credit programs, so we can increase the number of kids who move on to post-secondary education.
There’s a relationship between these targeted investments and our ability to get long-term revenue. The idea is to take a little money outside of the state school fund and spend it on programs not just to sustain the current system but to transform it. We can demonstrate that by investing in educator development, third grade reading, dual credit, we can actually show discernable improvements in student success these next two years, then draw additional resources. But to make the case to the larger public that we have to refinance our system of public schools, we have to demonstrate two things: that the dollars we raise are actually going to the classroom and that those dollars are actually moving the dial on student achievement. It’s very strategic, it helps now, but it sets up that conversation that I think is absolutely important to our long-term success.
Let me just close by saying that this budget is very controversial with a lot of my friends and supporters. It’s a heavy lift. And I think there are a thousand reasons and excuses we shouldn’t do it. But to that, I want to offer an observation and a story. When we talk about teacher evaluation, we’re very concerned that teachers are going to be evaluated on one metric – like a standardized test. We know that there are a whole lot of factors that influence a standardized test. The metric that I think makes more sense is tracking progress that students are making. I want you to think about where we are today and where we’ll be tomorrow in terms of that same metric – that progress we’ve been making. Two years ago, we had a 10.6 percent unemployment rate, a $3.5 billion budget deficit, a divided legislature, and we were a polarized state with an uncertain future. We erased the $3.5 billion deficit in the state of Oregon with civility, with intention, we didn’t rip the state apart and scapegoat public employees like they did in Wisconsin, and we didn’t shut the state down like they did in Minnesota.
Since then, we’ve added 40,000 jobs and reduced our unemployment rate to 8.6 percent. We’ve improved our credit rating, and we have a budget with $30 million to the good. That’s a lot of progress. Though it doesn’t feel like that day-to-day, it’s a lot of progress. I’m asking you to stick with me for two more years. Just two more years. I think we’re on the verge of really being able to reinvest in the enterprise of education.
Last November, I was in Coos Bay at the Annual Government to Government Summit between the State of Oregon and our nine federally recognized tribes, and at one point, Diane Teaman from the Burns Paiute Tribe rose to speak. Now, the Burns Paiute is a relatively poor tribe in some ways … they don’t have the wealth of the Grand Ronde or the land base of the Umatilla or the Warm Springs. But they have something else …
Diane told the story of her grandmother – then a pre-teen—who, after the Bannock war of 1878, was marched to Fort Boise, and then more than 300 miles to a reservation in Yakima. Shortly thereafter, she and another young girl escaped, swam the Columbia River, and made it another 300 miles back to Burns. It was there, where they no longer had any land or any resources, that they began to rebuild their reservation, and it is where Diane lives today.
Diane said that when she looks out at the other tribes that are better off than the Burns Paiute, she is not envious. She remembers her grandmother and thinks: look how far we have come.
So my challenge to you, and my request of you, is stick with me. Let’s keep this conversation going, let’s have that dialogue, and let’s leave today with a commitment to collaboration so that two years from now, we can look at each other and say: look how far we’ve come.