Oregon School Boards Association 2008

Remarks by Governor Ted Kulongoski

November 14, 2008

Thank you Craig for your very generous introduction.  And I especially want to thank all of the members and supporters of the Oregon School Boards Association for not only being here today – but for your tireless work helping to prepare Oregon’s children for the future.

 

I often like to say that my vision for Oregon is to have the best skilled, best trained, best educated workforce in America.

 

That won’t happen unless those of us who work in Salem invest in those of you who set policy for our schools, teach in our classrooms, and advocate for our children.

 

I’ll have quite a bit more to say shortly about my commitment to investing in education in these tough economic times.  

But let me first point out that all the money in the world cannot substitute for people whose spirit moves them to pass a love for learning from one generation to the next.

 

Building young minds.  Supporting parents who want the best for their children.  Thinking creatively and persistently about how to help all Oregon students reach their full potential, . . .. . . these are the qualities at the heart of any successful K through 12 education system.

 

Yes, you need adequate funding to keep class sizes manageable.  To hire and retain the best teachers and administrators.  To offer a full range of programs that will allow our kids to compete in math, science, and reading comprehension.  And to supplement those basic skills with art, music and sports.

 

But while robust education funding will help make an already well led school even better – that funding is still no substitute for excellent teachers and strong parental involvement. 

 

That means you – school board members, principals, teachers, teacher aides, and everyone else working on the frontlines to give our children a world class education – are absolutely the indispensible asset in Oregon’s education system.

 

The fact is:  In good economic times and bad economic times – one thing does not change:  Our children need education professionals to be at the top of their game, . . .

 

. . . and for all the years I have been involved with improving education in Oregon – a passion that started long before I became Governor – you have never failed to achieve that standard.

 

* * *

In the Biblical story of Joseph, Egypt was given seven good years before the lean years started. 

 

Unfortunately, our good economic years numbered far fewer.

 

So after the Oregon’s very strong economic performance in 2006 and 2007 – which allowed us to work together and substantially increase funding from pre-school to graduate school – we are today, once again, caught in the downdraft of the national economy.

 

You would almost have to be living under a rock not to know that Wall Street was hit by the largest financial crisis since the Great Depression – and that crisis is now hitting Main Street.

 

Oregon was actually holding up pretty well. 

 

Our housing market remained far more stable than most other states.  We’ve greatly diversified our economy over the last six years – and we’re on track to lead the nation in green technology.  Our unemployment rate dropped to the level of the national average.  And our students continued to perform near the top on college admission exams.

 

I don’t expect any change on that last point:  I always want our students to have the skills they need to succeed in any community college or university – anywhere!

 

 

We’re still growing, but modestly and not nearly as much as expected at the close of session in 2007.

Furthermore, demand is up, our costs are up, and those costs are increasing at a faster rate than anticipated revenue is coming in. 

 

The result is similar to the budgetary pain we experienced in 2002 and 2003.  However, that doesn’t mean we have to make the same choices in response to that pain.

 

But before I start talking about choices – let me put Oregon’s current economic and budget issues in the context of what is happening all across the country.

 

What began as a decline in the national housing market – followed by a near doubling of gas prices; a 4,000 point drop in the Dow; major bank failures – including Washington Mutual, the nation’s largest thrift; massive federal intervention in the credit markets to prevent a total financial collapse; and rising unemployment – has now become a full blown recession.

 

The United States has lost more than a million jobs this year, including almost 250,000 just in the month of October. 

 

The national unemployment rate is now 6.5-percent – the highest in 14 years, . . .

 

. . . and that doesn’t include people who can only find part-time work or have simply given up looking altogether.  Add them in, and the real unemployment rate is closer to 11-percent.

 

Most economists believe that America will continue to shed tens or even hundreds of thousands more jobs every month well into next year.

 

At the same time – retail sales have dropped by double digits, and manufacturing – especially the automobile industry – is reeling from the fall off in consumer demand.

 

Was there any chance that Oregon would be able to avoid this very rough economic storm?  The answer is obviously no.

 

That’s why on both the national and state level – the emphasis has to be on jobs, jobs, and more jobs.  Putting people back to work is the only way we will put an end to this recession.

 

But in the meantime, we need to focus on picking our budget priorities – and facing up to some very difficult choices. 

 

My guiding principle for the 09-11budget is that we must do everything we can to invest in those things that put Oregon in a position to succeed in the global marketplace when the national economy rebounds – as it is certain to do.

 

The worst thing we can do now is fail to have an optimistic long-term vision for Oregon – because this will be a self-fulfilling prophesy. 

If we shrink from planning for success – we are certain to never achieve success.

 

That’s why I am determined not to do what we did in 2003 – when we made across the board cuts implementing what I refer to as the “let everyone share equally in the pain” theory of budget deficits.  Instead I want to prioritize policy choices and invest in the pillars on which a healthy, growing, and sustainable economy is built.

 

On Monday I rolled out the transportation package I will submit to the Legislature.  And prior to that I announced my legislative plans for climate change and children’s health.

 

But my absolute top priority remains education. 

 

This goes back to what I said my first day as Governor:  In tough economic times – children go to the head of the line.  That’s true for keeping them healthy – and it is true for educating their minds.

 

So I am not looking in the rearview mirror – and neither should the Legislature.  We are going to move forward on education – and other investments that are absolutely critical to Oregon’s future prosperity.

 

But moving forward – especially in this upcoming legislative session – is going to be an uphill – a very uphill – climb.

 

* * *

 

What will make that climb even more difficult is that we are going to do it without using the Education Stabilization Fund or the Rainy Day Fund during the upcoming regular session of the Legislature. 

 

Creating these two reserve accounts has been a reasonable counter balance to the volatile nature of our General Fund, which is based on the income tax. 

 

I know some will ask, “Isn’t this the time to tap these reserve accounts?”  My answer is no and here is why. 

 

The State receives four revenue forecasts annually – in March, May, September and December.   

 

So where are we today?   The 2008 September revenue forecast indicated a looming shortfall of 500-million dollars in the 09-11 budget.  It also showed that we would have almost no ending balance at the end of the 07-09 biennium. 

 

The December forecast will come out on November 19th.  Given the rising unemployment in Oregon and weakening corporate balance sheets – there is every reason to believe that this forecast – which I will use to draft my budget – will show an additional decline of several hundreds of millions of dollars. 

 

And if that isn’t disheartening enough – keep in mind that the December forecast is just a snapshot of where we are on that day, and may well be the high watermark for the 09-11 budget. 

 

In other words, by the time we get to the March and May forecasts we may look back at this year’s December forecast with nostalgia. 

 

Also keep in mind that we still have revenue forecasts after the first six month of the biennium in September and December 2009.  Since we don’t know how long the current recession will last, does anyone really want to speculate about what those forecasts will tell us? 

 

I believe it is prudent and responsible for the Legislature to hold onto the reserve funds until the next annual session in January or February of 2010.  

 

We need to make the difficult budget choices in the 2009 legislative session – without using the Education Stabilization Fund or the Rainy Day Fund.

 

While I’m giving you the unvarnished truth about the upcoming budget – let me do the same for the current budget.

 

There is a good chance that if nothing changes we will reach June 30, 2009 – the last day of the fiscal year – in the red.  That, of course, is illegal under the Oregon Constitution.  We must have a balanced budget.

 

That means we might have to go back and do a rebalance on the current budget.  I hope that’s not the case – but I will say this:  School districts and all other agencies of state government need to be very prudent in their use of resources.  If the money doesn’t absolutely have to be spent – don’t spend it!

 

This week I asked Superintendent Castillo to temporarily delay this school year’s distribution of the School Improvement Fund.

 

I asked for this delay as a precautionary measure to give all of us the chance to fully understand the challenges we face – and make fully informed decisions as we close out the 2007-09 biennium and prepare our budget for 2009-11.

 

This is a prudent step we must take until we know what November 19th will deliver.

 

Here is another thought:  I recognize that many school districts are starting negotiations soon with their professional staff.  Some association representatives are here today.

 

I simply ask you to remember the great economic uncertainty we are living with right now. 

 

Bargaining agreements that don’t take into account budget realities will lead to nothing but frustration, disappointment, and renegotiations down the road.

 

I also want to mention the issue of high school graduation requirements.  As you know, I have previously called on the State Board of Education to enhance our high school graduation requirements. 

 

The Board has worked hard to complete these requirements – and I have not backed off on my belief that to keep our students competitive we must raise standards for graduation.

 

But I am also very aware that enhanced graduation requirements come with a price tag.  I am opposed to new mandates that are not funded with new resources. 

 

Teachers and students cannot do this on their own.  And given the sharp decline in revenue that I’ve already mentioned – finding additional dollars to fully implement these enhanced diploma requirements is probably not in the cards for the upcoming session.

 

So I am willing to talk to the State Board of Education about stretching out the implementation timeline.

 

But there is a tradeoff – because while I’m willing to push for a longer timeline, I also want school districts to use their professional development dollars to begin planning for the implementation of our new diploma requirements.

 

In other words, when the budget climate improves, and the money is available to raise the bar on earning a high school diploma – preliminary planning should already be finished so that implementation can begin immediately.

           

If you are sitting there thinking that my remarks today have simply been an exercise in lowering expectations and preparing Oregon’s education community for the worst – I won’t completely disagree.

 

It has been very much my goal today to give you a realistic picture of the very difficult budget environment we are in, and the difficult choices that will be before the Legislature when it convenes in January. 

 

I can also tell you with near certainty that it is going to get worse before it gets better.

           

But I meant what I said about education being my top priority – and children going to the head of the line.

 

So let me conclude my remarks with a somewhat more hopeful message.  I want you to know that my commitment to education is unbending . . . . . and my faith in our ability to weather this economic storm and keep our schools training grounds for excellence and opportunity – is undiminished. 

 

* * *

 

I’ve given many speeches on education in my six years as Governor. 

 

In some respects this one has been the most difficult – because I know how important education is to our economy, to the lives of children who discover their full potential in the classroom, and to Oregon’s quality of life.

 

So anything that stands in the way – no matter how temporary – of creating that best skilled, best trained, best educated workforce that I mentioned at the start of my remarks – is a setback.  

 

But by investing the funds we have wisely, managing our schools  prudently, and working together cooperatively – we can keep education in Oregon moving forward even while we take the painful steps necessary to balance the budget.

 

The next two years will not be easy.  But we cannot tell Oregon’s students – be patient and wait for a brighter day. 

 

Instead, we have to do what the Oregon School Boards Association and millions of Oregonians who believe in the importance of education have always done, . . .. . . make the most of every dollar, make the most of our great partnership, and make the most of our children’s future by giving the most to their education.

 

Thank you.