we will not capitulate to a federal government that refuses to be constrained by its proper and constitutionally limited role. wizard is fighting the federal government on ownership and control, restoring our population, defending multiple use of public land, ending the budget busting drain and medicaid or challenge constitutionality of mandatory nationalize health care in the supreme court, be assured this government is firmly resolved to fortify our state against federal overreach. [applause]

[applause] last october, in a 1-room schoolhouse i met a young boy whose whole me he had been taking piano lessons for one year and two month. he was going to play something for me after we had lunch. asked heston who was named after charlton heston, the actor, he piped up and said he was named after the tractor. after lunch he went to the piano, did he like chopsticks? but instead i got beethoven. dynamic and intricate music emanating from an old upright piano in the town that was two hours from the nearest stop light. after he finished his peace i ask one of his classmates are you sure he has only been

playing for one year and two months? she assured me that was the case. he is what they call a prodigy. this young prodigy was playing for us after my address here. you talk -- utah is a state full of gems like heston. he did this through hard work and the desire to succeed and brilliance to our landscape. in every corner of our state. utah saw the richness and strength of its people. i am optimistic that utah's future and i believe in utah's people. because you talk is willing to put in hard work necessary to be the architect of our own destiny. utah is leading the way and setting the example for the rest of the nation to follow. in the darkest days of the

economic crisis utah stood true to the founding principles of our great nation and we now see the fruits of that determination. i have spoken tonight of my goals and plans for the state. having these goals and plans is important but frankly writing things down on paper is the easy part. making it work, implementation and execution, that is what counts. hard work demands dedication, determination and discipline. everything i do as governor is examined for the lens of whether help grow the economy and help you talk's citizens. that is my commitment to you. i will keep my eye on the ball and i will fight for the sound and correct principles on fiscal prudence, limited government, individual liberty and personal responsibility.

[applause] whether preparing a council budget or a state budget, whether you are the governor or a small-business owner and i have been both, i can tell you the principles are the same. by hearing the sound principles now we will build the teachers of tomorrow. not only will utah -- this stage of our state is strong and uncommitted to making it stronger. i am honored to serve as your governor. may god continue to bless you, our great nation and the great state of utah. thank you. [applause]

[applause] [applause] >> oregon governor john kitzhaber delivered his state of the state address at the portland city club wary discussed reforms happening in the state's health care and education system. following his remarks the governor took questions from the audience. this is 55 minutes. remarks, the governor took questions from the audience.

this is 55 minutes. [applause] >> thank you. >> thank you. thank you very much. thank you. thank you very much for that warm introduction. if i might. i would like to take a moment at the beginning and ask you to join me in acknowledging our friend gail and the tremendous contribution she has made to the city club and our state. she is obviously not able to be here with us today. if anyone is listening and would like to say thank you for you have given to the state of oregon. [applause]

when i was working on my remarks last night at home apparently i was talking out loud and my son apparently overheard me and wandered in, taking the unit on shakespeare and had a quote i think you should put in your speech. so here it is. it is not in the stars to hold our destiny but in ourselves. and you know? that is pretty good. if i had to summarize the message i want to leave you today i probably couldn't do it any better than that. i am proud of what we have accomplished together over the past year and have shied away from difficult challenges in education and health care and budgets and very proud and grateful that we have such tremendous bipartisan leadership in salem and chose to problems ahead of partisanship. those things are tremendous and

i am committed to continuing the spirit of collaboration going forward because we still have a long way to go. for example, i am stuck on this image from an article that came out last october, the image of an extension cord that runs from the house of one president to a neighbor and provides for power because he has been without heat for six months. losing a job and exhausting unemployment benefits and getting pushed to the edge. the extension cord is a fragile lifeline for her but also a harsh reminder that we are at the height point of human need in our state and we're near the low point in public resources to provide public services. the extension cord is also a symbol of our interconnectedness. a symbol that we are all in this together and together we are going to whether this economic

uncertainty and emerge stronger and more united than when we began because this story is also about woman's landlord that keeps her from going home less. it is also about her neighbor sharing power despite the fact that she's two months behind in her mortgage payment because she too has lost her job. my optimism about organ at futures rooted in places like raquel the were despite double-digit unemployment and 3% underemployment, the words ring true that oregon is 8 citadel and is. we are in this together but it is also true that extension cords and good neighbors can only go so far. more and more oregonians are pushed to the margin the more all of us pay the price. the urgency of everything we have undertaken over the past year is rooted in my belief and hopefully a shared belief, a

profound opportunity for change. the kind of change is absolutely essential to secure our future and based on our spirit in this state and shared commitment to one another and i am here to tell you that vision still stands. organ's best days are still ahead of us and many things we need to move forward are already underway. i spoke to you last time ten months ago. i focused on two things. the first one was trying to insure we get the private sector economy going again and the second was the importance of transforming the way we provide public service starting with health care and education and we made significant progress on both of those friends. when i spoke to the oregon business alive focus on what the state is trying to do to be a good partner with the private sector to get the economy going again for large business and small entrepreneurs as well. we still have a long way to go

but we are definitely making progress on that front. the treasurer was here in september talking about invest or again act which will bring to the legislature in february that i think is important to help shore up the fiscal health of our state but providing access to capital for the business community. if it's will be futile unless we can convince form public education and health care. public education because none of us should be willing to accept a high school graduation rate of 65% and 40% of our kids arrive at school not ready to learn or the fact that this generation of oregon children is the first to be one less well-educated than their parents or their peers around the united states. healthcare because we can no longer simply stand by and pay more and more to a hyperinflationary system that is

not making a healthier population. dollars and businesses could be using to create jobs and families could be using to pay down their mortgage to get out of debt and the state could be using to invest in education and in children. last session with strong leadership the legislature sets the stage for fundamental changes in public education and health care. changes that i think are absolutely crucial to follow through on to secure the long-term economic future. education was the creation of the oregon education investment board and with education that promotes professional development for teachers and more learning opportunities for children. the legislature took the first step in creating a unified education system that shifts the focus from funding institutions based on enrollment and students based on success. for the first time funding and

governance will be aligned across the entire continuum from early childhood to post secondary education to achieve the occasional and social economic objectives. the legislature also created an early learning council that focused on changing and restructuring the fragmented and inefficient system for early childhood services. each two years we spent $800 million on programs for children zero through 5 to six day agencies and dozens of local programs but these are not coordinated. in many cases they don't consistently measure outcomes and have nothing to do with the k-12 system or health care services. the average cost for a child is $15,000 every two years but less than half of the average service they're getting. only 25%, 30% at best of these kids will need reading benchmarks in the next two years. there are good programs out

there. but to continue to support a system that spend that much money and produces these kinds of outcomes will no longer be acceptable in oregon. in health care we laid the foundation for the state's first health insurance exchange that will provide easy to compare education and the affordability and quality of various health insurance products. the new public corporation was pointed and confirmed on a monthly basis. there is bipartisan leadership that the legislature committed to reforming the models at which we deliver health care services to reduce year after year cost increases while improving health outcomes. the business plan for our new court unaided care organization which is the primary tool for which this will take place shifts the focus on the financial incentive from the emergency room and after the fact to wellness and prevention, in the community based

management. like diabetes and congestive heart failure. potential savings of this plan are enormous. $3 billion over the next five years. that will allow us to insure our most vulnerable citizens continue to have coverage and we have more resources to invest in areas like education and provide a model with private commercial health-insurance market. in both education and health care our success has been based on setting the stage for a change. now comes the hard work of implementation. ongoing success depends on working together in the next year the same way we work with each other in the last year in bringing to the legislature next month the tools to implement and move forward the work we have already started. before i turn to those legislative measures i want to remind you that change is always difficult and always makes

somebody uncomfortable. last time i was here are offered an analogy by comparing the development of a successful business through which we provide public education and health care, we had a little hard exercise around that. let me refresh you because it is very relevant. successful business, investment pushes growth and as the circumstances the business climate changes. the business doesn't just designing new business plan to reflect new circumstances rather than the old ones the growth flattens off and begins to decline but a successful business that sees the world changing redesigned its business model to take advantage of new circumstances rather than the old and building new growth curve. the challenge is the old growth model and new growth model, exist at the area between them has been called the area of

paradox. the area of anxiety and concern because people know that what they're doing isn't working but they don't know what the alternative is so they cling to the status quo even though it is taking them overhead. the -- i believe that is exactly where we find ourselves in oregon particularly with health care and education in this area of paradox. we are well down the road to creating transformational change. to build new business models for both of these services based on today's reality. we have reached a critical moment in time. some have suggested we have come too far too fast. what i hear is we have not come far enough. we are not going to lose our nerve at this critical moment. we are going to forge ahead with these reform efforts with an urgency driven by the precarious situation that faces citizens and communities throughout the state. 21 oregon counties still face double digit unemployment.

one out of every four children in this state are those hungry. half of all african-american children in the state of oregon are living in poverty. imagine a 6-year-old showing up for the first day of kindergarten unable to match any spoken or written word, not aware that print is read from left to right, unable to sound out words. imagine that. imagine the incredible disadvantage that child has. imagine trying to do all that when they are hungry and not getting enough to eat. you may not know any of those children personally but you see them every time you drive past an elementary school. your looking at hunger and poverty and thousands of kids. the first time, we have the opportunity to do something

profoundly important about it. all the research demonstrates that children who are ready to read in the first grade and reading at level in the third grade are more likely to graduate from high school and find social and economic success. the fact is early childhood success is the foundation for every one of our economic and educational objectives. five years ago in 2006 the city commission report called early care and education which noted and this is a quote, multiple programs across multiple state agencies with no clear vision. that report called on state officials to strengthen oregon's efforts to coordinate childhood programs. at is what the early learning bill will do. to implement the recommendation of early learning council which you can find on our web site to streamline our system to ensure coordination and accountability and get the program focused on outcomes for children and

families. every day we delay, every year, 46,000 kids are born in the state and 40% will -- over 18,000 are at risk. risk that we're going to pay for down the road for school failure and school dropout and involved in the criminal-justice system and lost opportunity, wasted human potential. you hear people say these changes are happening too fast. for who? certainly not for the 18,000 average kids. for them these changes couldn't happen fast enough. [applause ] vocal and committed support next month for legislation to implement the recommendations of early learning council will allow us to move from diagnosing the problem to actually beginning to solve it and give every child in this state the chance they deserve to be

successful in such state and citizens up for prosperity in the future. the second education bill is necessary to achieve our ambitious objectives of 100% high school graduation. next year's class of kindergarten students is a benchmark. they are the class of 2025. 2025 is the year we said to have 100% high school graduation in the state of oregon. that is a tall order. because just yesterday education -- we ranked oregon 46 of 50 states. our choice in the class of 2025 is very clear. we can continue our decade-long experiment with no child left behind and 1-size-fits-all approach to school accountability or we can adopt our own tailored approach to improve student outcome. we can stick with federal

control with an oregon high school graduation rates stubbornly at 65% or we can take the responsibility upon ourselves as a state to work together with teachers and the personal parents, district, students and the larger community to divide the system that allows more flexibility while pushing every district and every school better student outcome. we can continue to label school and teachers and districts as failures and over rely on standardized testing as a single measurement of student achievement or we can recognize there is no single formula for school improvement and we can set meaningful goals on a small number of.com focus measures like third grade reading and high school graduation and closing the achievement gap we know will accelerate learning and create resources for comprehensive education. choice is clear and the time is now. we have the opportunity to take

a waiver to the no child left behind lot if we can create our own homegrown alternatives that provide smart accountability and better path for student success. the second deal we will submit will achieve -- establish education achievement compacts which are essential to winning that waiver and achieving our goal of 100% high school graduation rate by 2025 so the achievement compacts will replace federal compliance based approach and create partnership agreements between state and educational institutions and universities and community colleges to express the common commitment to improve student outcome to tailor the outcome to the unique circumstances of these educational institutions. also allow us to compare progress and out comes between districts that are comparable and will begin to connect funding to outcomes so that over

time the state can be a smarter invest in education so if we fail to adopt these achievement compacts in february we will be left under the no child left behind a lot. i think everyone agrees that is not a good outcome. if we fail to make this shift we will have funding debate about a big number with no real information about relative difference between different funding levels and student outcome. i want to pause and make a comment about funding. we need to be very cognizant of the fact that we will not achieve our long-term ambitious education attainment goals without a neutral resources. as i said before the system of public education is underfund that will levels. capacity of public universities is going to have to expand dramatically to absorb tens of thousands of new graduates. classifieds -- class sizes need

to come down. classes like vocational and technical training and p e need to be added back. we can't allow it debate about funding to be only debate we have and we can't allow lack of adequate resources to get in the way of a real discussion how to be more effective with the resources that we do have. we need to focus on key leverage points like early learning and third grade reading and college completion we go drive down costs and improve performance. regarding health care, action in next month's legislation is equally important. to fully implement and build out our new health insurance exchange and to allow us to move forward by establishing coordinated care organizations across the state. there are those who can see out there who are understandably concerned how this is going to work out and whether you can realize savings in our budget. i am going to pause and put this

concern into a larger context and that context is what is going on in the nation's capital regarding the national debt and the implications for health care in the state of oregon. you will have a personal credit card and your credit card has a credit limit and if you don't pay your bill your credit limit is reduced or your card is of interest. the federal government also has a credit limit called the debt ceiling set by congress and congress has to raise that periodically to continue to borrow. if congress doesn't raise the debt ceiling the credit card is canceled we default on our national debt. that is playing out today in royce and -- in greece and italy and other countries. not something we want in our country. your credit limit is based on what your bank thinks you can repay. unfortunately the debt ceiling is not based on a thoughtful a

session of what the united states can pay but increasingly on politics of trying to maintain current programs without raising the taxes to pay for them because it is deemed politically risky to cut things like medicare and medicaid and defense spending in an election year so we roll those up under our kids's credit card. that is the political dynamic we saw a plane out last august in the high-stakes game of chicken about whether to raise the debt ceiling to keep this in default on the national debt. congress kicked the can down the road to 2013 legal past the election by raising the debt ceiling $2.1 trillion but that did almost nothing to address the real underlying driver of the u.s. national debt which is the intersection of an aging population with piperinflationary medical system. they created a supercommittee which failed in its charge and triggered $1.2 trillion of debt reduction over a decade.

$1.2 trillion is a drop in the bucket compared to what we need. the $1.2 trillion in debt reduction leader of the we are going to increase our national debt by two times almost that much by next january. meanwhile year-ago this month the first of seventy-eight million baby boomers started come down the baby boom in program and renton thousand a day for the next 20 years. the average medicare recipient will take $3 out of medicare for every dollar they paid during their lifetime. my point is regardless who wins the presidential election or which party is in control of congress a year from now there is no way to get our arms around the national-unless we take on medicare and medicaid. absent any rational path led to a new delivery model congress is going to turn off the tap and that is really bad news for a

health-care industry built on a business model that assumes the public sector and private employers are going to continue to finance an inflation rate several times higher than the cpi. those days are gone forever. that leads us back to oregon where people are concerned whether we can realize these costs savings. but think about the shortfall in the billions of dollars which is exactly what we are going to face if we cling to the status quo. there are people still in denial. people who think if we could just fall about the health care reform the problem will go away. it won't. because health care reform is not just about politics. it is about economics. and the laws of economics are as immutable as the laws of physics. the reaction time is just a little longer. the fact is we're rapidly approaching the end of a runway for healthcare financing as we know it. here is the good news. you may know that for every

dollar we spend on medicaid the federal government gives us two dollars. by the same token every dollar we saving medicaid saves the federal government $2. i was in washington the day before yesterday at the white house with the president's health policy adviser and deputy chief of staff and the head of cms, the agency that oversees medicare and medicaid and we took documentation and ran through the omb and showed that oregon saved $15 billion over the last 20 years on the oregon health plan and we can save $20 billion in the next ten years with our new health care reform and we asked them for several hundred million dollars a year each year for the next five years to make this transition and response was extraordinarily positive. [applause]

that means we will have the resources necessary to make this transition. those dollars are not going to come to oregon to prop up the delivery model. they will flow through the coordinated care organization that will actually produce those savings over the next ten years. acting early in february to authorize the bill out of the health insurance exchange and authorize the expansion of coordinated care organization gives oregon the best and perhaps only chance we have got to create health care system that is sustainable. beyond that we have an opportunity to help reform the national debate and put us in position to weather the economic storm that is surely coming away when congress raises the debt ceiling again year from now. the choice is ours. a lot to do in the next month a lot to gain. we are well down the road to transformational change in health care and public education that is important that we lock

these changes in and lock the trajectory in february to bring attention to other pressing matters facing the state. developing a revenue system that can actually adequately fund education and shelter us from the boom/bust economic cycle and adopting a ten year energy plan that gives us a pathway to meet our carbon reduction goals and maximize energy resources. improving public safety to protect oregon's citizens but also reduce the costs. developing a more rational management policy on state and federal lands and redesigning our budget to a line public assessments that we seek over the next ten years. moving forward is going to require courage to challenge the status quo. it will also require us to believe in our ability to shape our own future. i am not suggesting there isn't any risk involved with the path we have undertaken here but there's a lot more risk in the status quo. i think the riskiest thing we can do right now is continue to

do what we have been doing because we know where that will take us and not too a very good place. teddy roosevelt once said it any time of decision the best thing you can do is the right thing. the worst thing you can do is nothing. i think you know and i know and oregon knows that delay is not a benign place holder. it is a choice. it is a choice to embrace the status quo. it is a choice to abandon thousands of oregon schoolchildren. we spend more and more on health care and less and less on education. in short it is the choice to abandon the responsibility we have to the next generation and to build a future and we are better for that. not here, not now, not in oregon. we will not fail the future and we will not abandon the responsibility that we have to the next generation.

hi want to close with the words from alfred lord tennyson's epic:ulysses' which i think is a very special way captors the struggle of the oregon people over the last four years but also captures the resiliency and spirit and commitment to the future. come, my friends, it is not too late to see the world. much is taken and much abides and though we are not out at strength in old days to movers's have an, that which we are we are, and temperature or carts may leap by time but strong in will. strive to seek and find and not to yield. thank you.

[applause] >> thank you. [applause] >> thank you, governor, for challenging us to do better and inspiring us. if you have written a question on an index card at your table now is the time to raise it up and given how crowded we are i advise you raise it up high so the staff can see it and collect it and bring it up to me. first question for our speaker by tradition comes from our host who today is city club governor jamie cross. she is director sustainable growth at charter construction where she focuses on business development leader to a community outreach and sustainability. genie has been city club member since 2006 and has served with

me on the friday forum committee. [applause] >> thank you, governor, for being with us today. we appreciate it. i reach out to more people i know in business and education and in government and ask them what they would want to ask you today. interestingly the answers coalesce around one topic and that is tax reform. so that we can have that prosperous economy and vibrant community you alluded to. so the question is what do we need to do? is it doable? how do we do it? and what specifically will you do to make that happen? [laughter and applause]

>> easy one first. two things very briefly. first of all i think everybody recognizess that we have a dysfunctional tax system in the state of oregon. we obviously disagree on what to do about it but the opportunity having been a veteran of two while the unsuccessful efforts to change the tax system is the debate we have had in the 80s and 90's were just about the tax. there wasn't a larger context. more people are beginning to understand there is a direct relationship between the depths of the recession on a cyclical basis, flight of capital from our state and our tax structure. there are three steps. the first is we have to get the people who are on opposite sides of the table during the 66-67 campaign in the same room and recognize we cannot solve the tax problem without all of them will depart.

that has begun. we had a meeting several months ago with leadership over labor and business organization that followed up with a couple of meetings. a dialog is taking place. we plan to do joint polling and look at various options and we have to decide on the best approach and there are a number of factors. one has to do with stability. a key element and adequacy and equity which is largely in the minds of the older and most difficult one to address but we have to get it on the table and we have to make sure the relationship between long-term economic objective and tax code is not random but intentional. then we need to educate oregon how to do this. i am optimistic we will pull off. [applause] >> we will now take questions from the floor. members are invited to the

microphone to ask their question. asking questions at the microphone is a privilege of membership. please identify yourself as the city club member and ask your question in under 30 seconds or you will see the infamous city club?. i will read one index card. >> good afternoon. lisa, city club member. thank you for your focus on education which is key to ensuring the regional economy continues to flourish. what i would like to ask is a two part -- what are our chances for getting a waiver on the child left behind and how dependent is the waiver on the legislation that you describe in second, if we actually get the labor how long before we move forward on an oregon specific approach. >> the chances of getting a waiver are very high. i talked to secretary duncan when he was at the bank would. the key is we need to demonstrate that if we are going

to get rid of a punitive position of that wall we need to have our own real accountability system and we are capable of doing that and that will be part of legislation that goes forward in february. the idea is to have the achievement compact set up in the next school year to begin to collect baseline data so we can have a benchmark from which to measure progress. it is important. this is not about standardized testing but taking the challenge where there aren't making movement forward and using testing out as a blunt instrument but diagnostic tool so you can turn around and help the child the next week. report card in august telling you how your kid did. >> good afternoon. i am general sorensen, city club member. i'm one of those people who is concerned about health care you mentioned earlier. many of us who deal with seniors and disability are concerned

about the severity of cuts to programs especially home health care which affect our seniors. $100 million and far less damaging cuts on the web site. and i am wondering if you would consider those changes while making further cuts. >> i can't argue with anything you have said. having taken care of both of my parents in the last few months of their lives, i understand the important role home health workers play in our system. i also believe home health workers and community health workers will be the backbone of a new delivery model that keeps people in their home and not in a hospital. the reality is we have a difficult budget with chronic unemployment at 9%. we have got $310 million less

money now in the budget. we have to make some difficult choices. i met yesterday with legislative leadership and co speakers to begin a process to figure out how we can do this. there will be some cuts in this next session and i am not going to extend the budget or older results to set priorities. but i also think we need to keep our eye on the long bowl and make sure the choices we make will be the impact on 2013-15 to seek waivers and allow us to use the dollars more efficiently and get those hundreds of millions of dollars in federal resources into this state and hopefully mitigate some of those cuts. i can't tell you that those cuts won't take place. >> good afternoon, governor. i want to thank you on behalf of minority voters.

ten months ago we accused you of not doing anything around equity. ten months after that you are doing a great job. >> my work is done here. >> this is not mission accomplished. 50% african-american -- the mandate were a resources, in abundance that minority contractors have access. what we have is poverty. what are you doing at least now to mitigate and create opportunity among communities of color. >> representatives of minority contractors around the state in

your conference room to talk about that. there is significant -- two weeks ago we had a meeting with e e os to talk about a variety of issues in minority contracting and businesses and the emerging businesses. there are a couple robust opportunities coming up. there will be a lot of contracts with the icrc and one thing we want to do is get major contractors that will be involved in the rome with minority contractors to see if we can do some mentoringing and figure out opportunities embedded in the construction contract to create opportunities not just for contacting the growth of those minority business enterprises not as the cool schools programs. on the radar screen, a group of people focused on this will

continue to lean into this. >> thank you for your innovation and candid this. my question is around communication. i preface this with the tense political climate we have in oregon's you make initiative within the constitution that could undermine what you plan on doing. what do you planned on communicating to the general public and how the plan to communicate changes? change can be difficult. >> my communications director -- we have very active social media operation out of the office and trying to use the network of various partners we are working with to bring about these changes.

obviously the oregon education association is tremendously robust network as is the oregon school board association. our university system. i happen to have first hand experience with the effectiveness of the university of oregon the outrage network. the business association. essentially we're trying to engage the party to design the change to use their network to reach out and communicate. finally, we are heading a series of community meetings around the work of the oregon education including early learning council so we are attempting to have a very aggressive community outreach aspect as well. >> one question from the floor. teach for america and other programs have a place in the future of transforming k-12

education? >> any program that helps professional development of teaching staff and give them opportunities to teach in different venues is a plus and we are looking for partners and ideas and concepts around the country in oregon. >> bill dickey, city club member. thank you for ending your talk early enough for members to ask questions. time-honored tradition and the members respect speakers who monitor the time limit and give us a chance to answer questions. i am a business owner who is suffering. i own a printing company. we had a double whammy of the digital revolution that hurt the

printing industry in general. we have been suffering for really difficult times to figure out how to finance our company. i have ridden my question down. >> staying within your time limit. >> you touched on this briefly in your top. one of the dialect in 2010 was state bank idea. in any event here is my question for you. what you doing to support oregon businesses who want to expand and innovate but don't have the capital to do it? >> the effort we're undertaking -- the idea is to leverage public resources to increase private sector investment and to free up private credit for

guarantee program or other mechanisms. the idea is to leverage public resources. we should have a draft of legislation and i happen to know the operation, take a look at it. i would urge you to come is a long one legislature is considering this. the other thing that is not directly related but i was fortunate enough to participate in a playhouse conference wednesday based on how we can bring manufacturing back into the state of oregon and in to the united states. it is very interesting how many people are thinking about that. folks make the elevators and manufacturing that separated manufacturing from r&b and transportation costs and other issues and no longer penciling out as well. there's a real opportunity on access to capital but also to be

intentional and aggressive about bringing manufacturing offshore back to the united states, particularly the state of oregon. >> good afternoon. a lot of people were concerned about the elliott state forced decision. who has a biting questions -- funding for schools? some people -- 90% of our forests. that law came into effect with the situation rapidly reversed although over a century or so that we lived with this. what would you do to address the

problem of funding schools but not at the expense of the last few? one quick comment? a manage forest? >> i will not agree entirely with your last statement. adducing there are vast reaches of federal forest that will burn down and i would say a forest that burns down is charcoal. release a huge amount of carbon into the atmosphere. those real damage to sensitive habitats. i do think we have to find a place where we can have a conversation about this. i don't think anyone wants to log over a forest but we have interrupted the natural cycle particularly in the northeast of our forest. we have hydrated the big fires

in the trees. we have the livestock grazing. this is not a natural habitat. some management makes them healthier and can also produce fiber that could be used for the biomass industry and put people back to work. that is on the east side. in southern oregon we have a strange set of laws that were enacted piecemeal over time. the faulting on land and have to do with a patchwork of forests and we have a perverse financing mechanism tied -- with cutting trees. that is an artificial connection and we don't have to continue that. we're working very hard. we have counties facing serious financial issues regardless of what happens with the forced down there. we have a short-term challenge of trying to figure out how to maintain the national integrity of our counties particularly in

southwest oregon and longer-term challenge of figuring out how to manage those in a way that makes sense. i personally feel if those lands were bundled and there are parts of those lands that are plantations and if we use those going forward as an opportunity to provide a responsible production capacity in that part of the state there are a lot of other lands if we can bundle the law around ecosystems and watersheds that we can create a big conservation gains as well and for that happen we have to find a space to have a conversation about that. of will close this by saying we are essentially creating a spot in my office. a person working full time on forestry issues and at the top of the list is trying to address this growing crisis in southwest oregon. >> i am a regular at city club

lunches. want to ask about an issue that seems to have disappeared from the mainstream media these days unless you listen to democracy now you heard almost nothing about the durbin conference on climate change for example so what about climate change? what is the state doing to show leadership in the absence of the federal government's role in this? >> a couple of things. in my remarks to the oregon business summit i talked a little bit about beginning to ed and integrate into the oregon business plan elements of what i call a sustainable queen economy. and economy that seeks to create economic development in jobs by actually replenishing our natural environment. we're talking about in terms of active management is an element

of a conservation economy and there's a restoration economy out there as well. the fresh water trust in oregon has done a lot of work in developing a very real market services so that the three biggest elements that contribute to greenhouse gases a power generation, transportation will be school initiative is essentially trying to improve the r o i and investing in our build environment and move from debt-financed to equity finance mechanism. we're developing a ten year energy plan to try to give us a half way forward on both renewables, how to meet our carbon reduction goals. big difficult nut to crack is our transportation sector. we are making some steps towards creating a green highway around the state so we're taking steps and i do think if we can develop

a common set of policies on the west coast we can move the national debate forward. the debate and the national level has stalled out as is a responsible debate about health care and other things. there are things we can do and we are doing some of them. >> i am executive director of impact northwest which is a social service organization that serves thousands of folks who will be positively impacted by your vision with regard to health care, education and early learning. my question is threefold that you partially answered one of them. most of the families need housing. a lot of folks we serve -- the children we serve have parents who need jobs. they're underemployed and unemployed. and and so we can stabilize them

all the early childhood programs in the world, domestication in the world will not be received by those children. so the first part of that is mental health. let me give you that you talked about jobs, not to my satisfaction that you extrapolate a little bit on that but also had what about the immediate need for basic needs like housing and mental health? >> i didn't talk about jobs intentionally. i want to talk about issues to move forward with the 2012 february session. we talked about jobs at the oregon business summit. your point is well taken that there are a services that are essential for children and families and housing is one of them and hunger is another one. what we are attempting to do with the early learning council if you want to go on the web

site and take a look at the delivery mechanism as we envision them to organize around elementary school where a family resource manager woodwork to connect those families with whatever those services happen to be, housing challenges or mental health issues. no question a lot of investments we need to make, you can't treat the child. you have to treat the entire family. we also know there are services and interventions that actually work but they are not connected or integrated and many of these contracts are not state contracts. the success is not based on whether those people benefit from the service. we're trying to fundamentally change that and that is where the resistance is. everyone agrees it needs to be changed but it doesn't go to somebody else or i don't care of to change what i am doing and we do have to change the entire system. the other thing i want to make

reference to is the first lady is leading a very aggressive initiative on poverty to develop a poverty policy. we have a lot of disparate programs that address poverty but poverty is an underlying contributing factor to all the other ills in this nation. part of the social-service issue and part is the housing issue and part is the job dishes so as the economy begins to recover we have to be very intentional about community work force agreements and trying to create opportunities and halfway opportunities for people living in poverty to get back to the work force. [applause] >> thank you so much. i suspect this group could chat with you all afternoon but we have run out of time for further questions and we have to stop fo