I want to take just a few minutes this morning to talk to you both in your role as teachers but also as Oregonians. I think we find ourselves at a moment in time and facing a certain set of economic circumstances that requires us to focus not just on how managing through this budget deficit affects us as individuals or as professionals. But how the way we manage through this budget deficit will affect our children and grandchildren for years in the future.
To do that I think we need two things, I think we need a north star, a compass heading, a destination that we can agree we want to head towards and we need a context in which to frame the often difficult choices that lay ahead of us.
So let me give you the compass heading, the same one I offered during my inaugural address. I think that by 2020, by the end of this decade, when the children that entered kindergarten last fall graduate from high school, we want to live in a state where all of our children are ready to learn, when they get to kindergarten, where those children have the resources and the attention that they need to learn and teachers have the resources and time and support to teach. Where dropout rates are steadily declining and graduation rates are going up. Where every single Oregon high-school graduate can enter post-secondary education without the need for remediation.
Where at least 80 percent of them get at least two years of post secondary education and 40 percent get 6 or 4 years or more. And a state where the economy is producing family wage jobs or career paths to reach those family wage jobs and where we have driven the per capita income of Oregonians in every region of the state back up above the national average. I want to live in that state, and I think you want to live in that state as well.
And we can in fact, live in that state, but the only way forward, the only way to that future is through this daunting budget deficit. And we have got to take that approach, that over the next 6 months and the next two years the focus needs to be on the next 8 years and on how what we do in the short term effects where we want to end up in the long term.
Now to provide a context, for the challenge of reaching that destination and setting our compass heading firmly in the right direction, I want to tell you a story.
My parents were what Tom Brokaw called the Greatest Generation. The people that weathered the first great recession and won the Second World War. My father was drafted in 1943 and on April 4th, 1944 he got on board the U.S.S. Robert Sherman in New York Harbor to sail across the Atlantic to Europe. And just before the ship left the harbor a Red Cross volunteer boarded the ship to tell him that his first child had been born. A daughter, my older sister Anne, who he wouldn’t see for almost 2 years. He entered France through Normandy and marched all the way across Europe through the Battle of the Bulge to Berlin. And before he died 4 years ago I used to call him up every year on June 6th, the anniversary of D-Day and I would thank him for saving the world.
Because in a very real sense that is exactly what that generation did, and when we talk about sacrifice and difficult choices, it pales in comparison to what that generation of Americans did. And when he got home, a grateful nation gave him a free college education through the G.I. Bill, which was probably the greatest social program of the last century. It was a program that lifted up a whole generation of Americans who repaid that debt many times over through increased productivity, and increased earnings and incomes and made possible all the incredible innovations that built the American economy and the fabric of our society literally over the next 25 years. Because not only did that generation win the Second World War, but they built up our system of higher education, they created the interstate transportation system and the mission grid, they eradicated small pox, they cured polio, they went to the moon, they gave us the Civil Rights movement. I now serve under the first African American President in our history. And they gave us the great social programs of the last century, not just the G.I. Bill, but Social Security, and Medicare and Medicaid as well.
But there is something else they gave us. They gave us the American middle class. They gave us the opportunity for working people to experience the American dream. And the great army in that cause was the American labor movement, and we should never forget that.
Now, these remarkable accomplishments, of that remarkable generation, their institutions and their policies and their programs were the vehicles to make the world a better world for their children and their grandchildren. And in many ways they did. Because as a result of their foresight, their willingness to invest and sacrifice, their willingness to rethink how they did things, my generation, the Baby Boom generation has enjoyed more promise and opportunity that probably any generation in the history of our nation.
Now, both my parents were teachers, at the University of Oregon at the end. They are both gone now. But among the many lessons and blessings that they and their generation left to me are three in particular that I think are relevant to provide a context for the challenges that I think we are going to face over the next six months.
The first one is the importance of public education, to lift up our society to give people a pathway to economic security and a family wage job. Because if, as I believe, it is the promise of opportunity of upward mobility that lays at the heart of the American dream, than clearly education is the vehicle through which that dream is most directly fulfilled in the twenty first century.
The second lesson is that the right to organize, the right to form a union, the right to bargain collectively for wages and benefits and working conditions is not only what created the middle class in the last century, but it is what will restore and grow the middle class in the twenty first century.
And the third lesson, is that the vehicles that each generation uses to build a better world for the next generation have got to evolve to meet changing circumstances. So for example the healthcare system, the modern U.S. healthcare system, or sick care system, that we put together in the 1960’s is clearly incapable of addressing the needs of an aging population at a price our nation can afford. Our national debt is essentially Medicare and Medicaid going forward. Increasingly financed by selling U.S. securities to China. Not a happy picture.
By the same token, the silo-ed, fragmented system through which we seek to educate our children and to re-educate a growing part of our workforce, is no longer capable of meeting the demographic and economic and technological challenges of the twenty first century.
Now these three lessons: the importance of public education, the importance of the labor movement and the need and importance of redesigning the systems through which we deliver public services it seems to me provide a useful context that we are going to provide in the near future. And I want to put two of those challenges on the table today, both of them you have heard from me before. I want to get them on the table today because we have to begin to lean into these in short order. The first one is the actual magnitude of the budget deficit, and I am not sure that even some people in this room have fully wrapped their minds around how big this challenge is, this 3.5 billion dollars. It is huge, not just because of the poor economy, but also because the current budget that we have today, this school year, has been propped up by 1.3 billion dollars in one time revenue, most of that went into the state school fund and went into the Oregon health plan. In the Oregon health plan, so I am putting together a budget that essentially is a clear eyed representation of where we are today – that is not the money we hope we have, that we would like to have, but the money that we actually have in general fund and lottery funds going forward.
In the Oregon Health Plan, that represents a 40 percent reduction in that budget. So they are worse off than you, you don’t need to believe that and it sure doesn’t feel that way, but this is very very big because there is a tipping point between how high you can raise provider rates and how much you can cut the benefit before people walk away from the program sending thousands of Oregonians into the Emergency Room, which just costs us more down the road.
Under that way of developing a budget, the number, the biennial number for K through twelve is around 5.4 billion just under 5.4 billion a really low number, a number that is way too low. And I think that all of us recognize that we would be much better off if we could drive that number up to 5.7 or 5.8 billion over the next, over the course of the next biennium. And we do have some resources that we can buy some of that back with we are expecting about a 9 percent revenue growth in the next biennium which will produce just a little over a billion dollars so it is not as if we don’t have some resources to put back but it is a common pool of resources we have to spread across the general fund.
My point is that we – there is no way that we can sustain funding at a 5.7 plus level for both years of the biennium by doing things the way we are doing them today. So what we have done with health care, is we have tried to buy down the bite in the first year of the biennium and set up a process where the medical community can fundamentally change the way we deliver health care to the Oregon health population in the second year of the biennium. And the same is true with the state school fund.
I think we need to front end load the K through twelve budget in the first year and create an opportunity to create significant reductions and efficiencies in the second year to maintain that level practically through the biennium. And that means talking about things that are difficult to talk about. It means talking about how we can gain efficiencies in how we provide school transportation, it means talking about consolidations, it means talking about considering sending the ESD money straight to school districts and letting them purchase their programs back from the ESD, it means talking about something we should have done a long time ago and can certainly do better – community coalitions and partnerships that can help our school districts through these next two years and beyond.
The second thing I want to get on the table is the post Measure 5 disconnect between 197 local bargaining units that bargain one or two or three year contracts essentially in a vacuum, and then the state comes in and picks up 70 percent of the const on the back end. And it’s the disconnect between what is bargained for at the local level and the actual fiscal condition of the state that is one of the elements that creates the fluctuation and the instability in school funding. I think that we need to figure out a way at least for this biennium to try to have the local collective bargaining process to be based on the dollars that we actually have.
Now I don’t support, do not support, statewide collective bargaining and I will continue to oppose statewide collective bargaining as I told you at the general election endorsement meeting, but there was another part of that sentence that I don’t want you to forget, the other part of that sentence was: but we still have to fix this disconnect. Which means we are probably going to have to have some expectations on how the state dollars are being spent at the local level so we have a statewide response to this crisis, this challenge not 197 different local responses.
I don’t know what that looks like. We have to work it out together. But we have to work it out. And we don’t have very much time to do it. My budget is going to be released on February 1st which is the same day the legislature reconvenes. It is essential that we have a common strategy by that date or soon thereafter, and you have to be at the table every step of the way. It’s going to be a big table, we are all going to be at it, but the focus of this table has to be moving forward together not clinging to the past as defined by each individual stakeholder. We should not underestimate for a minute the magnitude of the challenge that lies before us or the rapidity of the changes that we are going to have to figure out how to make together.
But we should never, not for a minute question our ability to successfully do this. If we do this together, and if we do this right, then we can build a solid foundation in which to rebuild Oregon’s economy, on which to rebuild Oregon’s system of public education, on which to rebuild that sense of community and common purpose that is so important and has been the basis for most of the great things that we have done in the past.
Let me close with a story by Kim Stafford, who read a wonderful poem at my inauguration and it is called Lloyd’s story. And I think it – I just want to leave it with you as food for thought as we go into the next two and three weeks and particularly the next six months. This is a true story by the way.
Lloyd Reynolds, the international citizen of Portland spent his last days silent, unable to write or to speak, lying in a hospital bed. In his last day at home as his wife scurried to pack his suitcase for the hospital Lloyd made his way outside to the garden, and there she found him on his knees awkwardly planting flower bulbs with a spoon. Lloyd she said, “you will never see those flowers bloom.” He smiled at her, “They are not for me” he said, “they are for you. Salmon coming home, they are for you, the calls of the wild geese, they are for you. The last old trees, they are for you and your children, for the seventh generation and beyond they are all blooming into being for you.”
I want us to remember that over the next six months, because that is our challenge, to use the next six months to plant the seeds of tomorrow. To take charge of our lives, to take charge of our state.
Not as captains of the past, not as victims of the status quo, but as proud, confident, united Oregonians, the architects of a new and better future.
Thank you very much.