Allen Alley Times for Governor

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IMAGINE OREGON...� Allen Alley for Governor★ Paid Advertisement ★

Paid For by Friends Of Allen Alley, 333 South State Street, Suite #216, Lake Oswego, OR 97034

So many AssetsMy 400-mile walk across Oregon in the summer of 2009 brought our challenges and opportunities to light. Oregon has every advantage imaginable:

A prime location on the Pacific Rim Access to Asian marketsMultiple deep water portsTimberGreat agricultural and ranch landsMountains and riversFresh waterAbundant CO2-free sources of electricity & low power ratesUndeveloped renewable energy resourcesAbundant fisheriesStrong manufacturing base andSome of the greatest companies on earth

We are a state blessed with more assets than most, maybe more than any other. Yet, we are among the leaders on several lists you don’t want to lead.

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1 Oregon Employment Department. 2 Measuring Food Security in the United States Household Food Security in the United States, 2008 Mark Nord Margaret Andrews Steven Carlson. OR 49th, MS 50th.

Imagine Oregon...

Oregon’s Unemployment has been higherthan the US avg 26 out of 32 years...

1995 1996 1997 1998

2003 2004 2005 2006

1999 2000

2007 2008

2001 2002

2009 2010

1987 1988 1989 1990 1991 1992 1993 1994

1979 1980 1981 1982 1983 1984 1985 1986

Oregon’s Unemployment has been higher than the US avg 26 out of 32 years...

Figure 1: Oregon’s Unemployment

blessed with a moderate climate. Our social safety net is among the most progressive in the country, but we have focused on a symptom of our economic disease not the cause. Homelessness and hunger are symptoms. Lack of a vibrant, globally competitive economy is the cause. We must focus on providing the environment where the private sector can create jobs and careers or face the prospect of the mass of our people crashing into our social safety net will tear it to shreds.

How can a state with all of our assets be among the national leaders in homelessness?

How did we manage to squander these assets? It is because we have ignored our economy for 23 years.

We must restore the economic vibrancy of all of Oregon. The solution for Oregon’s economy must include utilizing our rural assets of forests, fisheries, farms, energy resources and ranches as well as our technology and manufacturing base. A “Westside only” solution is not the answer and it is not sustainable.

Oregonians are worried My walk across the state also showed me that Oregonians are worried. They cannot recite the statistics that we are among the leaders in unemployment, hunger and homelessness, but they don’t have to. They see it, feel it and live it every day.

Oregonians are worried that un-regulated actions of speculators and criminals on Wall Street brought our financial system to the brink of bankruptcy.

Oregonians are worried that American can-do spirit is being replaced by “What can you do for me?”

Oregonians are worried that un-checked government spending guarantees our children will be indentured servants to our national mortgage.

Oregonians are worried that there is nothing healthy or caring about a medical system where costs spiral out of control.

Oregonians are worried that as the rest of the world sprints ahead of our educational system, our children will be relegated to the intellectual bench.

Oregonians are worried that hard work with your hands is being replaced by hand-outs and hay bales are replaced with bail-outs.

Oregonians are worried that as we argue about enhancing our environment, our forests are tinderboxes. We continue to burn fossils as if the price will never rise and the flame will never extinguish.

Oregonians are worried that our children will not be able to pursue the dream we had, the American dream; the same dream that drew my grandparents to America, the land where the streets were paved with gold, the gold of opportunity. All they asked for was a chance to take a shot and to make a better life for their families.

I am running for Governor of our great state of Oregon not because we are worried, but because I know how to do something about it and with your help we will.

Oregon is among the top few states in unemployment. Our economic base is crippled and it shows in the numbers.

Many say this is a recent aberration but the reality is 126 out of the last 32 years our unemployment rate has been higher than the national average.

When people do not have jobs they also struggle to cover basic necessities of food and shelter.

Oregon and Mississippi rank highest in the nation for 2state hunger rates. How can a state with so much abundance have more people at hunger risk than any state other than Mississippi?

Without a job, shelter also becomes an issue. Oregon is among the leaders in homelessness as well. We have a dearth of employment, but we are

Stimulus money can create a job, a task that

someone does today. We need careers… jobs with a future.

�Allen Alley for Governor ★ Paid Advertisement ★ IMAGINE OREGON...


Our Ten Point One Point Plan for Oregon

In business we prepare strategic plans. Usually these plans have 10 points and they usually all say the same things. I thought about my 10 point plan for Oregon and decided that at this time we really only need one point…

1. Get Oregon Back to Work. It all gets back to jobs, careers and the economy. A stable job creates a stable home…kids learn… food is on the table….crime is low. The foundation of a strong community is an abundance of jobs.

Politicians talk about jobs and more often than not they are talking about government jobs. Government jobs are funded entirely by taxes from the private sector economy. We have to focus on providing an environment where private sector jobs are created.

Imagine Oregon Working…

Oregon’s next Governor needs to focus on creating an environment where the private sector can create jobs and careers. For too long the government has put more regulations, taxes and fees in place that have crippled Oregon’s career creation engine. It has been equivalent to death by a thousand paper cuts.

For 23 years Oregon’s Governors have focused on creating government jobs. This has required growing government faster than our private sector economy. Raising higher and higher taxes on fewer and fewer taxpayers is not sustainable.

Our economic development strategy has also fallen victim to simple-sounding solutions: entice foreign or out-of-state employers into Oregon with the promise of large tax incentives. While this may work in the short-term, these companies often have no allegiance to our state and can leave on a moment’s notice, as Hynix did in Lane County.

We need to change our priorities. We need to invest in Oregon first. There are great businesses that started here and remain despite an ever-increasing tax and regulatory burden. Businesses that start here are more apt to stay here. They spin-off more businesses that create additional careers. It is a cycle of innovation and economic development that we need to encourage.

I learned in business long ago that your best customer is the one you already have. Yet our politicians treat Oregon businesses like ATM machines, not customers. The result is fewer new companies, fewer new careers, and more of our best and brightest young minds fleeing the state for opportunity elsewhere. This cannot continue.

Many people who move to Oregon say they move here because of the desirable quality of life for their families. Oregon is a great place to live; it needs to be a great place to work.

Businesses and individuals in Oregon tie up their investment capital in non-productive activities because there is no incentive to invest in growing companies. Oregon has the highest capital gains tax rate in the country. This means we actually punish risk taking and investment to a greater degree than any other state in the country. Rather than rely on government to create more government jobs, we

need to free up private capital and direct it at career-creating activity in Oregon.

Action: Eliminate Oregon capital gains taxes for businesses and individuals who invest in Oregon.

There is a serious lack of capital in the market as a result of uncertainty and tight lending practices. Let’s unlock individuals’ capital assets and get them working for Oregon companies.

Nurturing Young Companies Oregon needs to be a place where people want to innovate and start companies. Companies that succeed spin off other young companies and a cycle of economic development and innovation results in career creation. But, young companies struggle in their infancy.

Action: Allow small businesses to borrow against their state tax liability if they need cash to invest and grow. They can apply for and receive a two-year deferral on their taxes as long as they can demonstrate their re-investment and their liability is paid off, with interest, after their deferral period ends.

Government needs to start treating Oregonians like customers, not like an

ATM machine...

One of every 213 Oregonians are Homeless...

Third highest in the United States... Figure 3: Oregon’s Homeless Rate

Oregon’s hunger rate is higher than every state ex-cept Mississippi...

Figure 2: Oregon’s Hunger Rate

3 Oregon Growth Account (OGA) $92 million http://www.ost.state.or.us/About/OGA/About.asp, Oregon Investment Fund (OIF) $119.5 million http://www.oregoninvestmentfund.com/oif_fund_progress/

Why do we put our economy in the vice grip between

China/India and the Middle East? Why don’t we use our domestic resources

and develop the technologies to wean us off a resource

that we don’t control?

Direct Investments in Oregon The citizens of Oregon have a $50 billion endowment to help defray the expense of servicing the Public Employee Retirement System (PERS) liability. This money must be invested to stabilize our ability to meet our retirement obligations. The PERS retirees expect it and the taxpayers of Oregon expect it.

Little of this reserve is currently invested in Oregon even though more than 3$200 million has been allocated for investment in our state. We simply must do a better job of managing this money.

Action: The funds allocated to the Oregon Investment Fund and the Oregon Growth Account must be more focused on investment, career creation and return for Oregon. Additionally we should allocate an additional $200 million for investment in Oregon businesses and investment funds.

Invest in Transportation Infrastructure If Oregon is going to have a 21st Century economy, we need a 21st Century transportation infrastructure. Our roads are too congested, and it is creating a significant cost to businesses selling services and goods. If we want businesses to stay here or locate here, they need to know that investments in the transportation system will allow them to grow and create more career opportunities.

Action: Expedite the process of construction of a new Columbia River Crossing. We cannot have economic vitality while our largest city is isolated

We talk a lot about job creation. We are missing the point. Stimulus money can create a job, a task that someone does today. We need careers, jobs with a future. Our children need to see that their investment in schooling and training will provide a stable and prosperous future. Not a job funded by taxes that is here today and gone tomorrow.

Folks with careers don’t need a social safety net. They provide the resources for the safety net for those who truly need it. They serve on school boards, coach baseball teams, work in the church and volunteer at the homeless shelter. Why do we spend so much time worrying about providing more resources to the safety net and so little time providing resources to build our economy?

The fact that we have been in the top five unemployed states recently should come as no surprise. We are always the first into a recession and the last out. That reflects a lack of dynamism in our economy.

Salem politicians propose to continue the policies that have failed for 23 years: ever-increasing taxes and fees, more regulation, unsustainable government spending, and increasing energy prices. Our number one focus needs to be creating an environment where Oregonians can make great products that create great careers.

We need to get Oregon back to work.



by an antiquated highway connection. Investments like the I-5 bridge are vital to the long-term economic health of the region. International trade is responsible for tens of thousands of Oregon jobs, but we are not the only port city available to exporters and importers. If it costs too much – in both time and money – to send goods through Oregon, companies will go elsewhere.

Action: The Sellwood Bridge is a safety hazard and vital commercial route. It needs to be replaced. The bridge should not be a political football passed from city, to county, to Metro to the state. We should just sit down and get it done. The lack of progress on the Sellwood Bridge while other bridges in the state are being repaired and replaced is a stark symbol that the government is not making good value decisions for Oregonians.

Invest in Energy Infrastructure We need a national energy policy and as Governor I will advocate for one. This is not driven from a fear that CO2 emissions from humans are causing climate change. Nor do I support a cap and trade system that could cripple our economy.

Action: Build capacity to support electric vehicles and consumer-level renewable energy. Supporting these technologies will spur Oregon innovation – both local and imported – and ensure that we are at the front edge of new energy and transportation technologies. Why does Oregon lead the world in the footwear and apparel sector? Because we developed the intellectual infrastructure that led others to locate here.

Action: 4Expand the region’s electric transmission system to meet the needs of our future growth. The investment should ensure adequate capacity for traditional energy sources as well as integrate increasing amounts of wind power and other renewable energy (solar, geothermal and biomass) and maintain system reliability.

Action: 4Maintain and enhance Oregon’s existing hydropower resources so that they can be used to meet electric demand and assist with integrating intermittent wind resources into the power grid.

There are also great opportunities in our forests to produce clean energy for Oregon families. Whether it is cellulosic ethanol created from forest and agricultural waste or renewable energy created from burning biomass from our forests, we can create jobs and protect our environment with energy sources that come from within our state, not from rogue governments or dictators overseas.

Wood is the greenest building product. It literally is comprised of CO2. Wood is nature’s carbon fiber. Why don’t we encourage the use of wood in building products? It is completely renewable and literally green.

Action: Manage our national forests to provide resources for mills and energy production.

Action: Promote Oregon wood as the most sustainable building product. Work with green building certification firms to get more wood approved for use in green buildings.

Action: Invest in Oregon University Research to develop innovative uses for wood as a commercial and residential building material.

As our rural counties face the elimination of the Federal Secure Rural Schools (County Payments) Program, we must look to innovative economic development opportunities to strengthen rural Oregon. Our state was built by rural Oregonians and as Governor, I will do all that I can to strengthen these communities.

Action: Restore the position of Office of Rural Policy Director in the Governor’s office. The economies of urban and rural, east and west Oregon are inter-twined. The Governor needs daily input on how the economy in rural Oregon is doing and how it can be improved through regulatory or Executive Branch action.

Wood is earth’s greenest building product. Wood is completely renewable and

organic. It is literally green.

$30.5 billion

$35.5 billion

$38.7 billion

$40.8 billion

$49.2 billion

$55.9 billion

1999-01 2001-03 2003-05 2005-07 2007-09 2009-11

Oregon Government spending increased 83% in 10 years...

Figure 6: Oregon Government spending increase 1999-2009

4 Oregon Business Plan Recommendation 2008-2009

What I do support is a rational policy that uses our domestic fuel resources and weans us from dependence on foreign fuels because it just makes sense. It makes sense environmentally, it makes sense for national security and it makes sense for our economy.

Over the long term China and India will consume fossil fuels at a rate that will completely alter the energy portfolio of the world. Competition for energy will drive prices higher and higher. Why do we put our economy in the vice grip between China/India and the Middle East? Why don’t we use our domestic resources and develop the technologies to wean us off a resource that we don’t control?

This shift will require energy infrastructure changes. Continued access to an adequate and diverse supply of energy is vital to our region’s economic advantage. Hydroelectric power, natural gas, wind, solar, geothermal, biomass and even nuclear….all of these power sources should be a part of our future, but more energy capacity and transmission needs to be constructed, particularly if renewable energy is going to become an even greater percentage of our energy portfolio.

As more renewable energy is brought online, we will need to invest in new infrastructure for natural gas that will be necessary to back up the renewable power when the sun is not shining or the wind is not blowing.

Action: I support the construction of a 4Liquefied Natural Gas (LNG) terminal in Oregon and new pipelines that can serve our market. We need a Governor willing to put Oregonians to work building the next generation of energy infrastructure. This is also important because early adopters of green technology will have a market advantage.

Invest in Managing Our Forests and Strengthening our Rural Communities Our forest policy is broken. While politicians continue to focus on the need to reduce carbon emissions in the atmosphere, they refuse to take common sense steps to curtail one of the biggest contributors to carbon release: forest fires.

While parts of rural Oregon see their unemployment rates skyrocket past 20%, it is unconscionable that we do not take steps to manage our forests by scientifically-based, selective thinning and salvage operations after catastrophic fires.

Action: Reduce the likelihood of fires through forest management and attaining value for timber after a burn. We can accomplish the dual objective of forest health and rural careers. That is a win-win proposition that I promise to enact as Governor.

A healthy and growing economy is the best single thing we can do to ensure we have the resources to

meet the needs of Oregon citizens.

I support green jobs. But I also want red jobs, and white jobs,

and blue jobs. If you’re unemployed, do you

care what color a job is?

This Land is Our Land Fifty three percent of Oregon land is claimed by the Federal Government. That means that the economic benefit of only 47% of our land accrues to the citizens of Oregon. There are 12 Western States where more than 30% of the state is claimed by the Federal Government. In contrast, a state like Texas has more than 98% of the land for the benefit of Texans. I don’t believe the Federal Government will make the best decisions about how to manage our land.

Action: Review all treaties, contracts and other agreements that relate to Federal claims on Oregon land. We should clarify title with the intent of returning as much local control as possible. And, we should resist having additional acreage placed under Federal control.

Source: Oregon Employment Department

Oregon’s Current Recession Job Trends

Nov 2007 Jan 2008 Mar 2008 May 2008 Jul 2008 Sep 2008 Nov 2008 Jan 2008 Mar 2008 May 2008 Jul 2008 Sep 2008

-26,000

0

-52,000

-78,000

-104,000

-130,000

Private Sector Jobs

Government Jobs

Figure 5: Government Employment Growth vs.

Private Sector Losses

12.5%

Total all funds expenditures as percent of state GDP

*Date not �nal. Based on Estimates as of June 2009

Source: State of Oregon Legislative Fiscal Of�ce, June 2009. Of�ce of Economic Analysis, May 2009. Our analysis.

State has been growing as a sector of the economy

Percent

1996–97 1997–99 1999–01 2001–03 2003–05 2005–07 2007–09 2009–11*

12.5%13.9%

15.3% 15.3% 15.6%17.1%

18.9%

Figure 4: Government Spending as a Percent

of State GDP



Imagine Oregon Government For the People… Oregonians like to talk about sustainability, and that’s a good thing. But, Oregon politicians have set us on an unsustainable path. Between 1999 and 2009 state spending grew by 83%. Between 2005 and 2009 alone, state spending grew by 37%. Are your schools 37% better? Are your roads 37% more efficient? Of course they’re not. Our problem is not that there isn’t enough money to fund vital government services; it’s that Salem politicians have never tried to live on a budget.

Yet, when government needs more money they have no problem asking Oregon businesses and families to do more with less. They increase taxes, fees, and regulation without regard to the impact on family budgets or job creation.

This culture in Salem has created a vicious cycle that continues to push the problem onto future generations. They are betting that an unforeseen economic miracle will come along and make these

This simply has to stop. We are not victims of our current system. We need to open up the process and prioritize spending across the entire state budget.

Five Steps to Sustainable Government

1) Grow the Economy A healthy and growing economy is the best single thing we can do to ensure we have the resources to meet the needs of Oregon citizens. We need private sector job growth. In fact, what we really need are careers, jobs with a future, for ourselves and our children.

People ask me, “How are you going to do this? What jobs programs will you create?” The bottom line is we have to get out of the way. Government is getting in the way of career creation. We have focused our Economic Development efforts on recruiting companies from outside of the state. We give them massive incentive packages to re-locate here. Once those multi-million dollar packages run out, many of the companies leave.

Action: We have to focus on the businesses that are here. On the people who have made a willing investment in Oregon and help them build businesses in Oregon. Many of these businesses are smaller businesses, so the assistance has to be structural (meaning we set policies that encourage business development and growth) rather than picking winners and losers with expensive incentives. Government has gotten way too involved in picking winners and losers through their use of tax credits and other incentives.

the Other Funds, claim there isn’t enough money in the General Fund to fund education. The result is that the fungible General Fund is $14 billion while the statutorily funded Other Funds budget has ballooned to over $40 billion.

When politicians run out of money to pay for General Fund programs, they simply raise taxes on Oregon families or borrow money. Debt per capita has increased 101% since 2000 to over $2,800 per person. Yes, that’s per person - every man, woman and child. Our debt has doubled in ten years.5

Most citizens don’t realize that the entire state budget is $55 billion per biennium. They only see the rancorous debate every other year dealing with the General Fund, which is currently $14 billion.

Budgets for most of the state government are approved with little discussion while we make decisions that compromise our state’s education and public safety systems. It is unconscionable that our state budget has increased by 37% over the last four years and Salem politicians still can’t find the resources to keep schools open for an entire year and are still granting early release to violent criminals.

I think it’s time to stop taxing families and businesses or mortgaging our children’s future. It’s time to start taxing the government.

$30.5 billion

$35.5 billion

$38.7 billion

$40.8 billion

$49.2 billion

$55.9 billion

1999-01 2001-03 2003-05 2005-07 2007-09 2009-11

Oregon Government spending increased 83% in 10 years...

Figure 6: Oregon Government spending increase 1999-2009

problems go away. Every step we take further down this path makes any economic recovery less and less likely – and no one in Salem seems to recognize this fundamental fact.

Now, Salem politicians are already asking for a federal bailout because they want to grow government unsustainably over the next four years and are gnashing their teeth over projected tax receipts that will increase by “only” 30% over that same time period. They are saying we will have a shortfall because they want to grow spending by 42% in four years! It is hard to imagine that a 30% tax increase in four years is not enough. Hard to imagine unless you live in a state where an 83% increase over the last 10 years was not enough either.

If our economy is forecast to grow 10% in the next four years but government spending is growing 30%-41% how do we think we will finance that growth? The only way is raising taxes and fees higher and higher above the astronomical increases enacted in the 2009 legislative session. This is not sustainable.

The other source of unsustainable funding is the Federal Government. The federal bailouts exacerbate our financial problems in two important ways: they delay the day when we as Oregonians will have to bring spending in line with revenue (not the other way around), and they artificially inflate the “Current Services Level,” thereby allowing Salem politicians to rationalize higher and higher spending.

Why do we want to make Oregon a ward of the federal government? A state founded by pioneers and proud of its fierce independence must grab hold of its own destiny.

I’m for green jobs. But, I’m also for red jobs, white jobs, and blue jobs. In fact, if you’re unemployed, do you care what color a job is?

No! You want to earn a living to provide for your family. Let’s let Oregonians create jobs, whatever their color, and get this state moving again.

5 Oregon Comprehensive Annual Financial Report, Fiscal year ended June 30, 2009

Salem’s solution is to tax the people more. I think it’s time to

tax the government.

Action: I propose enacting a 0.5% annual “tax” on the All Funds Budget (General Fund + Other Funds) and directing these funds into a Rainy Day Fund. For ‘09-’11 this would be approximately $275 million. Additionally I would direct any ending balance between 0% and 2% into a Rainy Day Fund. I would place a cap on the Rainy Day Fund equal to 5% (currently approximately $2.75 billion) of the All Funds Budget and any additional tax and fee receipts above this cap would go to pay down our debt.

Taxing the government may at first sound like a radical concept, but here is why it makes sense:

Firmly establishes our priorities as a state. My focus as Governor will be on education and public safety, which we must fund adequately.

Asks for very modest efficiencies – provide the same services with 99.5% of the funding – which will start demanding better performance from all corners of the government.

Avoids passing our debt forward to future generations or imposing taxes that will further erode job creation and push the crisis unfairly onto the shoulders of hard-working Oregonians.

Ensures the kicker remains untouched as the most important taxpayer safeguard against unchecked government growth.

his is the type of accountability and conviction I demand from Salem. Over time, I would hope this is a temporary solution that is resolved by a more rational way to run our government. Until then, this is a way for us to actually demonstrate leadership in Salem.

This can be done and it is not difficult. Oregon families and businesses get up and do it every day. Salem politicians pass tax increases and tell families and businesses to do more with the same resources; it’s time for them to do the same.

3) Establish Oregon PERS Reform Commission Our teachers, police officers, fire fighters, and other government workers provide an invaluable service to our state. Yet, their retirement security is risked by underfunded pensions.

Every elected official in Salem knows this, but there is no leadership to address the problem. We must act to preserve the retirement benefits of 300,000+ hard-working state employees who served our state well and whose contract we must honor.

The kicker has returned $3.1 billion to taxpayers. It is our most effective check

against government growth. We must protect it.

It is our duty to pay for our promises today, not pass them on to the next

generation of Oregon taxpayers.

2) Tax the Government & Fund a Rainy Day Account. It’s time to “tax” the government. A constant refrain in Salem is that a budget cannot be touched because it is guarded in “statute.” Are our lawmakers really arguing that they’re not allowed to change the law? Their argument is that a fee or a tax that has been established for a specific purpose cannot be touched. When you’re cutting school days and letting violent criminals out of prison early, it’s time to re-evaluate this position.

The Salem game is to put as many things in a dedicated category as possible and then, once they’ve shifted a budget from the General Fund to



The current PERS structure is not sustainable. Current projections6 to fully fund PERS suggest we have to increase the reserve by an average of more than $2.2 billion per year to a total reserve of $85 billion over the next 15 years.

Additionally, people are living longer. The average 51-year-old state employee who retires today after 30 years of service, based on an average life expectancy of 86 years7, will receive PERS retirement benefits for 35 years. That is five years longer than they worked.

We have created a system that cannot be supported. It places the retirement of our state employees at risk and the entire economic viability of our state in peril. We need to create a sustainable system that ensures benefits for future retirees.

Action: There are four things I have identified that must be addressed:

We must control the growth of the state government payroll. All of the current forecasts assume state government payroll will increase by 80% over the next 15 years8. This is unsustainable. We will ask our government to do more without more people. We must invest in tools and training to make our employees more productive. Technology, software and other tools of the trade must be upgraded. We must train our employees in global best practices to insure that they are as productive as possible. Unleash the creativity of our employees and enlist them to help improve government services. Offer optional voluntary retirement plan alternatives that could present a win-win scenario. Retirees could elect a buy-out and get cash up front in return for limiting the ongoing liability for the state. Create a fourth tier of retirement benefits that is more of a shared responsibility model where individuals can craft their own plan and share in the funding of the plan. This would be offered to any new public employees.

1)

2)

3)

4)

I propose the creation of a bipartisan commission chaired by the Governor to expand on these recommendations to ensure the long-term stability and viability of PERS.

We need to put PERS on solid financial ground for current and future retirees. But, that will only happen if the Governor and Legislature are all invested in the solution.

Action: Use external private auditors. Private audit firms have the benefit of seeing best practices in other states and can offer a valuable perspective. Audits can uncover issues but the biggest benefit is to recommend process improvements. Only external private auditors can provide this valuable feedback.

b) Create a strong state budget and management office in the Governor’s office – The Governor needs a more robust process to question agency budgets and drive efficiencies.

Action: Move the current executive budget and controller functions from within the Department of Administrative Services and raise it into a cabinet-level position in charge of analyzing and approving every agency budget. This new budget director would report directly to the Governor.

Action: Hire an accomplished senior finance and operating officer with deep experience in analyzing department operations and finding ways to do more with less. The Current Services Level budget process, which automatically takes the last biennium budget and adds a double-digit increase, would never survive in the real world. It’s the outcome of a system that is never challenged to create new ways of delivering service to Oregonians.

6 PERS Actuarial Accrued Liability 12/31/2024 estimate is $85 billion 7 PERS retiree (age 50-65) life expectancy estimate age 868 Mercer - Oregon PERS Financial Modeling Economic Projections May 29, 20099 State of Oregon Legislative Fiscal Office, Office of Economic Analysis May 2009 and U.S. Census Bureau, Oregon 2009 population 3,790,06010 Trends in International Mathematics and Science Study, National Center for Education Statistics, 2007

Regardless of the issue, I believe the best solutions are developed by those closest to the problem. Our education system

is built on a theory that those furthest away know

what’s best.

We must create a plan that helps public employees achieve self-sufficiency in retirement without putting as much of the burden on Oregon taxpayers. Ensuring peace of mind in retirement for our public employees is an important part of attracting and rewarding a talented workforce. But, it is our duty to pay for our promises today, not pass them on to the next generation of Oregon taxpayers.

Debt per capita, $

$3,000

$2,500

$2,000

$1,500

$1,0002000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Figure 8: Oregon Debt per Capita

Figure 7: Oregon Population increase 1999-2009

1999−01 2001−03 2003−05 2005−07 2007−09 2009−11

Oregon population increased only 12% in 10 years...

1999−01 2001−03 2003−05 2005−07 2007−09 2009−11

3,400,000 3,800,000

Government up 83%

Imagine Oregon Learning…

There is no more important investment we can make as a society than the education of our children. The public education system commands the greatest share of our state budget, and for good reason. The statistics tell the story. A person’s level of education directly correlates to their level of income, overall health, and the stability of their home life. A well educated workforce is also a key determinant in a company’s decision on where to grow or relocate, bringing more jobs and opportunities to states with higher high school and college graduation rates.

In short, a more educated community creates greater stability, wealth, and resources with which to care for those who are the most vulnerable among us. But if we want our kids to compete in the global marketplace, we need to improve.

We are not only competing with Seattle, Minneapolis, or Atlanta for these jobs; we’re competing with China and India, which teach English proficiency, have a high school year nearly 50% longer than in Oregon, and expect college attendance. Kids in China go to school an average of 221 days per year10, compared to Oregon kids who go only 152 days per year 11. In fact, Oregon’s school year is one of the shortest in the United States.

Pouring more money into the same system will only ensure the

same mediocre results.

4) Begin Zero-Based Budgeting This is not a campaign slogan; it is a philosophy grounded in actual, real-world experience. When I ran my company, I implemented a “no budget” policy. That is, every year we started with the number “zero” and each department had to justify every dollar of budget they were requesting.

In government, it’s just the opposite. Agencies start with “Current Services Level,” which means they assume an automatic increase year in and year out despite the quality of programs or their performance. Not every business concept translates into the public sector, but this one does and we must do it to add the same accountability and rigor to our public agencies that we ask in the private sector.

Government is funded with the sweat-equity of Oregon taxpayers. Oregon spends more than $27,0009 per year for every family of four in Oregon. We need to start respecting their investment more and generating a real return on that investment.

Action: I propose taking every government agency to a “zero budget,” whereby they are asked to conduct a top-down audit of their programs and performance on an annual basis. Their funding will reflect a need to prioritize within agencies and drive efficiencies throughout government.

Implementing a zero-based budget is only the first step. To fully utilize our new budget system we must also invest in tools to manage government differently. For too long we have forced our public servants to make due with the tail end of the bell curve of technology. We have to break down silos and improve communications within departments, across departments and be able to benchmark our capabilities against the best states in the country. We cannot naively believe that simply instituting a zero-based budget will rectify the poor management of the past 25 years. We must also make a priority out of investing in the productivity and technology of the State’s Employees as well.

5) Build a More Accountable and Transparent Budget Process After spending some time in Salem, I found the budget process and allocation of funds to be convoluted. Our citizens deserve more accountability and transparency in their government. Here are two steps that will help ensure that is the case.

a) Outside Independent Audits– Oregon needs strong, independent audits that will hold government accountable regardless of which political party is in charge. There is a lack of investigation into the operation of government programs and the benefit of tax expenditures.



11 Comparison of Minimum School Requirements 2006, US Department of Education. Oregon minimum 990 hours or 152 days for 6.5 hr day.12 The Hispanic-White Achievement Gap in Oregon, Chalkboard Project 2009 13 A Deeper Look at the Black-White Achievement Gap in Multnomah County, Black Parent Initiative 200914 Oregon Department of Education Budget Memo to School District Business Managers, Feb 12, 2010 and www.Bluebook.State.or.us/education 15 Evaluation of Evidence Based Practices in Online Learning, US Department of Education 2009

Government programs are too often measured by the inputs (how much we spend on them) rather than outputs (whether the money is achieving results). When it comes to government expenditures, there is no more profound gap than the one between our commitment to funding and our ability to enhance student achievement. If we are going to commit future funding increases to the education system, which we must, we have to change our approach. Simply pouring more and more resources into the existing system will only ensure identical results.

Despite the enormous increases in spending on public education, student achievement remains flat and the gap between whites and their minority counterparts remains disturbingly wide. By the 10th grade, Hispanic students lag behind their white peers by 28 percentage points in math and 33 percentage points in reading12. The same gap can be found between black and white children in Multnomah County13. We cannot afford to short-change minority students when it comes to education.

As Governor, I will make education my number one funding priority. But, the way we spend money needs to change.

I propose three very important reforms.

1) The Principal & the Power of the Purse If you wanted to start a school, would you first create a Department of Education, then an Educational Service District, then a school district, then your school? Of course not. But, that’s exactly the kind of system we’ve created, where layers of education institutions siphon off money with an inadequate amount reaching the kids in the classroom.

A fundamental philosophy of mine is that the best solutions lie with those closest to the problem. Our government recoils at that concept because it does not create a centralized organization. Nowhere is this more true than in education, where the federal and state government have suffocated our local schools with mandates and fixed funding formulas.

Giving local communities the power of the purse will put power in the hands of those closest to the kids. It will also ensure that necessary investments to produce student achievement will not go unfunded. Those will be the first dollars spent, rather than hoping something filters down to the classroom.

2) Build School Innovation and Leadership The history of public education reform is littered with top-down solutions that are forced on school districts, individual schools, and teachers. They are doomed to fail.

I have visited 30 schools over the course of the last several months in districts that face challenges that are as diverse as our great state. The schools I visit that are succeeding have one unmistakable common quality: leadership. They have strong, passionate administrators who manage for excellence. They have dedicated teachers who work collaboratively with their peers and administrators to improve their practice and deliver quality education.

Public charter schools, in particular, have been able to establish a learning environment that combines academic rigor with a unique value proposition, whether it is teaching science or turning around the lives of troubled youth. These local, innovative schools must continue to be available, and are an incredibly important part of our future education system.

The most important determining factor of student achievement is a quality teacher in the classroom and a passionate principal who can build a culture of success. But, these things cannot come from Salem or Washington, D.C.; they must come from schools and school districts working together

Full- or part-time virtual learning is an enormous opportunity for students around Oregon. Today’s kids are comfortable with computers and understand how to navigate and learn in a virtual environment. With zero inhibitions about technology, kids are much more progressive in their willingness to embrace its potential. We should not restrict the power of virtual learning.

The U.S. Department of Education recently conducted an analysis of 99 different quantitative studies of student achievement in a virtual classroom versus a traditional brick-and-mortar environment. The study found that virtual learners15 consistently test ahead of their brick-and-mortar counterparts. Whether it be rural students who want access to advanced learning or kids who simply need to learn at a different pace than a traditional classroom allows, virtual schools or classes can have a profound impact on learning.

Yet, too many Salem politicians want to restrict access to these schools because they see it as a threat to school district funding. We should not measure innovation by what it does to the status quo; we should measure it by what it does for students. Virtual schools aren’t for everybody, but they should be available for those who need the option.

Action: Expand access to full- and part-time online education to provide a credible public school alternative for kids who struggle in a traditional classroom. Technology has presented us with opportunities to tailor learning to an individual child’s need. We owe it to our kids to embrace this opportunity and help them succeed.

“Fund the classroom first and administration second.”

Oregon Government spends more than $27,000 per year for every family in Oregon

Are you getting $27,000 of value?Figure 9: Oregon Per Family Government Spending

Each student in the state of Oregon is educated for roughly $10,00014 per year. That works out to about $300,000 per classroom.

Instead of pouring that money into the top of the system and hoping it filters down to the classroom, I propose we turn the system upside down.

Action: Dedicate funding directly to the schools and let principals work with teachers and parents to spend that money in a manner that best serves the students. Fund the classroom first and administration second.

There are so many restrictions on every dollar of education funding that principals have very little discretion in how they spend money. The result is they are forced to invest in things they don’t believe will bring student achievement in their classrooms, while the needs of kids go unmet.

Fund the classroom first and

administration second.

– teachers, administrators, and school boards – to craft innovative solutions to improve student achievement. If local stakeholders don’t own the reform, then they won’t live it.

Action: Minimize state mandated top down solutions and promote school-district level innovations to keep the best teachers in the classroom. My school visits have shown me that there are great programs being implemented to provide incentives to teachers to innovate and help kids achieve at the highest levels. These range from pay incentives to innovative curricula that engage, challenge and inspire both teachers and students.

Action: Continue to promote school choice alternatives including charter schools and virtual schools. One size fits all solutions do not work for schools or communities.

3) Embrace Technology Generally speaking, between 8am and 3pm while children are at school they time warp back into a 1950s environment where one teacher instructs a classroom sitting at desks with textbooks and workbooks. If we’re lucky, the textbooks are only two or three years old. Outside of the classroom, many of these same children live a 21st Century lifestyle complete with real-time information, texting and online activity. This generation is the most computer savvy in the history of our nation, yet we do not effectively integrate technology into the way they learn.

Join Me and Imagine Oregon…

Oregon is blessed with an abundance of natural resources and innovative, enterprising people. Our state government, however, is growing unsustainably and threatens to suffocate the next generation with an even higher tax and debt burden.

We know what the problems are. What I want you to do is imagine a better Oregon. Imagine an Oregon that is growing businesses and careers for its citizens that form strong and vibrant communities.

Imagine Oregon where our kids are challenged to achieve world-class excellence in the classroom. Imagine Oregon where farmers, loggers, and ranchers are recognized as the true conservationists they are, and are entrusted with creating food and fiber in harmony with the land they’ve protected for generations.

Imagine Oregon where our best and brightest young minds seek opportunity here at home, not elsewhere. Imagine Oregon where the innovator and the risk-taker are celebrated and encouraged by our elected leaders for their great contributions to career growth, not their contributions to government growth.

It takes innovative ideas and a strong leader to move a state like Oregon. With your help, we can get there together. Thank you for your support.

“Today’s K-12 students are the most technologically savvy ever. Why do we trap them in a 1950s-style

classroom?”

Alley Newspaper Insert 4/22/10 1:14 PM Page 2

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