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The next agenda

NW Reading

Excerpts from Oregon Governor John Kitzhaber’s State of the State address today.

The Oregon Business Plan, which has guided our work over the past two years, is built on three pillars: creating 25,ooo jobs per year through 2020; raising Oregon’s personal income levels above the national average by 2020; and reducing Oregon’s poverty rate to 10 percent by 2020. These three pillars recognize that private sector job creation is the foundation of an enduring prosperity – but they also recognize that prosperity must lift people in every community in every corner of our state; and that without reducing poverty, all Oregonians will not have their shot at the American Dream.

And that means that over the next two years, our commitment to these second two pillars must be no less than our commitment to the first.

Far too many Oregonians continue to struggle with unemployment, debt and the rising cost of health care. That is the urgency you bring with you to the 77th Legislative Assembly. And that sense of urgency is at the core of the budget I sent you last month – a budget that reflects the priorities that have guided us over the past two years: putting children, families and education first; investing in jobs and innovation; and reducing the cost of government. It is also a budget built on the assumption that even with constrained resources, we cannot wait to begin reinvesting in children, in families and in education.

When I first came to the Legislature in 1979, kids could drop out of Roseburg High School in the 10th or 11th grade and get jobs in the woods and the mills with good wages and benefits. Those days are long gone – and over the past few decades, the economic benefits of education have steadily grown. In 1979, the average college graduate made 38 percent more than the average high school graduate. Now, the average college graduate makes over 75 percent more. And more than 60 percent of the jobs in the next decade will require at least a technical certificate or associates degree – yet only 67 percent of our students are graduating from high school, taking them off the path to economic security. …

Although we have made huge progress – moving toward a seamless integrated educational system from early childhood through college and career – we’ve not yet had the resources to seriously invest in our 40-40-20 goals. It is clear to me that the entire enterprise of public education is underfunded at all levels. And it’s also clear that we can’t meet our 40-40-20 goals without a significant reinvestment of resources into the classroom.

To make that happen, a couple of things are required. In the long term, we need comprehensive reform of Oregon’s system of public finance. That’s going to take time, it’s going to take a strategic approach, it’s going to take discipline – and over the past eight months, we have begun to build the coalitions and the infrastructure necessary to make that happen.

But we can’t wait for comprehensive revenue reform to begin to reinvest in the classroom if we hope to achieve the educational and economic goals we have set for our state. It will not be an easy task but it is an urgent one. We may have succeeded in erasing our budget deficit, but we continue to face severe fiscal constraints – which means we need to make room in our current budget to being reinvesting in the classroom and other in other crucial public services today.

I am prepared to stand with you in making the difficult choices that will be necessary to do so, which include: reducing the cost of health care and corrections; reducing the cost drivers that are diverting resources from the classroom; and undertaking serious review of Oregon’ tax expenditures.

Let me start with health care, which is perhaps the fastest growing cost for individuals, families, businesses and state government. The new care model being developed by our Coordinated Care Organizations is projected to hold medical inflation in the Medicaid program to 3.4 percent starting in the second year of this biennium. That will save $100 million in the general fund in 2013-15; nearly $200 million in the 2015-17 biennium and $400 million the following biennium. In other words, the delta created by holding medical inflation constant creates a huge and growing opportunity for reinvestment as we go forward.

Therefore, our long-term ability to reinvest in public education depends to a large extent on our success in proving up this care model in the next biennium and then to extend it into the private market. If, for example, we could move public school teachers and state employees into the same kind of high quality, low cost care model being developed by our CCOs, the estimated ten year state savings could be as much as $5 billion. This would be a game changer for state finances and could lead to a huge competitive advantage for Oregon businesses both large and small.

Corrections is the second area where cost reduction is both needed and possible. Along with the cost of health care, the relentless growth in the Department of Corrections is one of the major reasons we cannot adequately invest in education; or in community corrections and other proven crime prevention measures at the local level.

It cost $10,000 a year to keep a child in school but $30,000 a year to keep someone in prison. Our prison forecast predicts the need to build 2,300 new beds over the next decade at a cost of $600 million – and that most of those beds will be occupied by non-violent offenders. And the fact is that this $600 million – if spent on public education – would keep hundreds of people out of the criminal justice system in the first place.

That is why Oregonians deserve the careful and objective consideration of the policy options forwarded by the Public Safety Commission to keep our communities safe while reducing the cost of corrections. There is an opportunity here to find alternative and effective ways to sanction non-violent offenders, invest in proven crime prevention and community corrections strategies instead of additional prison beds.

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