dakota, and it will make good money in that job. over the last two years the state has continued to strengthen an on-line portal for students and parents to research career and academic options. we piloted new programs to remediation to help morse to succeed in post secondary programs, and we organized and promoted career camps and engineering, information technology, healthcare, and the skilled trades to expose students to up nine new career fields. over the past year i focus my attention on the need to offer high-quality ct, career and technical education in our k-12 schools. it is at the intersection of education and economic development. while many of our schools offer good c t e programs, these

expensive programs can be difficult to offer and maintain, especially for smaller school districts. i cannot overstate the importance of these programs. c t e programs are closely aligned with our state's workforce needs from welding and machining to health care and information technology to engineering in biosciences. these programs give students experience so that they understand these are not dirty jobs but opportunities to work with the latest technology hands on an even higher education opportunities are available after high school right here in south dakota and our universities and technical institutes. after the recession ended last year i asked staff from my office and from the department of education to reach out to those who are engaged in ct programs. over the spring, summer, and fall of visit and all for technical restitute as well as high school prayer rooms.

they held a series of meetings to listen to over 40 haskell of ministers and educators, large and small schools and learn about innovation already occurring in our state. fortunately working together to provide c t e is not a new idea for south dakota's schools. northeast technical high school has provided c t e programs for water districts for decades. in northwestern south dakota a consortium of eight school districts uses a fleet of portable c t e land in semitrailers to share pro rims and equipment. in sioux falls the act academy is providing cutting edge programs to students from all districts in that area. we need even more innovation like this. today i am announcing at least $5 million in future funds this year to support a series of governors grants. these grants will help schools join together to strengthen

their current ctc offerings. the department of education issued a request for information disclosed last fall. maybe you heard about it. we receive proposals from 26 districts totaling $20 million in requests. we are working now to narrow down the requests we receive and to sharpen the applications. we can't do it all this year. but i believe these grants are a big step toward creating new opportunities for our young people to learn, work, and live right here in south dakota. this year we are also going to help finance more health care students to take a tool credit courses. more and more high-school c t e programs are a partner in with our technical institutes to provide courses that are worth both high-school credit and post secondary credit. our state universities have also a partner for years with the schools to make dual credit opportunities available. schools cannot typically pay for university or technical

institute credit. and in some cases the cost of the higher ed credits makes these opportunities cost prohibitive for the stephens family. right now a college or tech school credit can be obtained for some courses provided by the high-school if the high school course an instructor are approved by the college or technical. for example, a college dual credit case, a student who passes they're approved high-school course can pay $40 per credit hour and give college credit in addition to the rascal credit. however, with a high-school student taking the course directly from the college such as composition, line, or dual credit, that student pays $300 per credit hour for that business class. the fy15 budget i proposed last december proposed funds to help make these opportunities more affordable. using a combination of state funds and discounts from their

regions and technical a institutes' we propose to buy down the cost of entry level university and technical is two courses. that way students can take these dual credit courses from the universities or from the text was directly at the low $40 per credit hour. tool credit opportunities are a win-win-win-win. students who start college or to schools with some credits already hearing are more likely to complete on time and at less cost. universities and technical institutes get the opportunity to make themselves known to prospective students and to help prepare them for success when they graduate. as schools gain flexibility tougher more opportunities to students at no cost to the district. us tickets more young people who are ready to succeed and live and work here in south dakota. offering training for skilled jobs is the second major area of south dakota.

over the past two years we made major strides in this area. we created and new welding and manufacturing program and mitchell tech. as of this fall 23 of the 24 spots are full. we also expanded the welding program so that more inmates can learn the skills and prepare for a productive life after prison. in the tech schools have created innovative distance based machining involving courses that combined online and hands-on elements. these systems based programs have already served students in seven different south dakota communities. no, our technical institutes tries to teach using cutting edge up today equipment. that can be very expensive. last month as the technical assistance to let me know their highest new equipment upgrades. earlier this month and awarded a reform million dollars in future

fund grants to the technical assistance to fund many of the need of grace and our fourth priority areas. new dynamic monitors use and cardiovascular procedures to computer numerically controlled press brakes and robotics trainers used at manufacturing to telecast projections which is used in satellite communications just to name a few. these are just a few of the funded upgrades which will offer significant improvements to our technical institute programs. in addition today i am announcing that i will be awarding the technical restitute another one-half million dollars , half a million dollars a year for the next three years for scholarships and 29 ypres are various. these scholarships of up to $5,000 for two year programs will be awarded to students who agree to stay in south dakota and work in the high need field for three years. another important work force and

the interstate is rural health care when that is the third area of south dakota. between 2010 and 2020 south dakota will lead over 8,000 new health care workers. this is going to be a challenge because our elderly population is expected to double by 2025. most of our state health professionals are concentrated in the more populated areas. rural areas of the struggling to recruit and retain providers. fifty-three of the state's 66 counties are federally designated as help professional shortage areas, either partially or completely. health care providers who were raised in south dakota, educated and south dakota and on-the-job training and south dakota are more likely to stay in south dakota. we have to work even harder to make that happen for rural areas, and that is where we have been focusing our efforts. we have already made important strides. two years ago we expanded the rural health care facilities recruitment program for fields

such as registered nurses and physical therapists. as a result of this expansion we have 120 health care professionals that were successfully recruited to 49 rural communities, including communities like fall more, stock or, mission and timber like. we also need more capacity in our educational pro grams. in fiscal year 13 we increase the class size of the men school by four students. in my budget this year i am proposing that we add still another 11 students per class. no in five years we will have 60 more than school students being trained in the state that we did before the expansion began. in the future we must work to and residencies to keep these additional medical graduates doing their residency training right here in south dakota. we have also increased the capacity of the physician assistance program a ust from 20 to 25 students and reserve 20 of those spots for south dakota.

for the first time we are now paying preceptors to provide practice experiences for physicians' assistants graduates this has increased the number of willing preceptors and south dakota. my budget proposal for a 415i am encouraging you to provide the same financial incentive for nurse practitioner preceptor. again, if we can keep these graduates doing their on-the-job training after-school and south dakota it is more likely we can keep them working in south dakota. to encourage practice in rural areas the fyi 13 budget included funding to establish the frontier and rural medicine or farm program to give third year medical students a nine months' experience in rural communities. these programs are important because we find that students to have a good girl experiences are more likely to then practice in rural areas. the fourth and final area is our

effort to attract more workers to south dakota. i mentioned in my budget address last month that the new south dakota program designed to recruit workers from other states has worked more slowly than we hoped. conversely, we have seen great success with the decoder rings program which focuses recruiting efforts on inviting former south dakota was to come back no. since it began in 2006 more than 3,000 people have returned to south dakota to accept employment thanks to this program. a small investment and marketing dollars two years ago has led to an 89% increase in annual registrations and a 66% increase in annual job placement in the two-year term. my budget proposal reverts $4 million of the 5 million that was initially appropriated for news of the coast and also proposes to appropriate after million dollars in one time

funds to continue to strengthen the successful dakota program and to lend them the news out the guns program. the issue of work force continues to be a major challenge for our state. our low unemployment rate is a sign of our economic strength, but it also means it is difficult for employers to add more jobs, even if they have the business to justify. over the next several weeks i will be going on the road to carry this message to several communities are of the state. i will address chamber of commerce groups, visit with editorial boards and meet with employers about their work force needs. then after it session ends in the spring and summer we will organize larger work force summits around the state, and i will invite you so that the business and community leaders can come together to review our current efforts to learn about a demographic and workforce trends so that we can learn from them and discuss what we need to do next tests. two years ago south dakota

initiated some important efforts to address this challenge. strengthening, addressing health care shortages, trying to bring more workers to our state and other efforts. some of those initiatives have been immediately successful while a few have not worked out as we hoped. we need to recognize that the challenge to work force will not be overcome easily and it will be over, and one-year. i hope to continue to focus on this issue during this legislative session and during the years to come. on another topic, nearly two years ago our state embarked upon a review of the state criminal justice system. the chief justice, legislative and by former the worker to study our prison population and corrections system using a dated german approach. we charge a work group with three clear goals, improve public safety, hold the defenders accountable and save money. the work group recommended and

the legislature passed last session an extensive reform of our system. the public safety improvements act. these reforms included measures to strengthen the fender accountability, offender supervision to ensure sustainability of the reforms and focus prison space on violent and career criminals. i am pleased to report today that over the last ten months the executive and judicial branches have worked tirelessly to ensure diligent, deliberate, and effective implementation. several parts became effective last july. others became operative last fall, and some took effect just two weeks ago in january 1st. now, development teams are still vigorously working on the few remaining issues, but regardless of the difficulty that comes with transformational change, the executive and judicial branches have worked very hard to achieve the goals we set. it is too early to declare victory, but this debt to

charlie created oversight council was receiving a very positive reports on the implementation so far. let me give you an example. holding offenders more accountable requires of focus on those most likely to reaffirm and. one of the policies that took effect last july was current discharge credits. this policy allows comply and parolees to reduce the duration of their parole. thirty days of production every time they complete 30 days upper for compliance. the program has been shown through empirical evidence to reduce recidivism, lower parole violations to reduce caseloads, and allow parole officers to focus on more high-risk offenders. from july through november over 91 percent of eligible parolees of the complaint following all rules and paying their fines and restitution. over 342,000 is a perot credit

has already been turned. that is over 937 cumulative years and equates to about five your parolees supervised by each parole officer. now, experts tell us it will take two or three years to complete implementation. three to five years to see all the results of our combined efforts. however, early data suggests the reforms that you passed will succeed. we continue to closely monitor implementation of the law to ensure that our three goals to increase public safety, offenders accountability, and reduce spending and that. the other major piece of legislation that passed last session was senate bill 235 which greeted the buildings up the code of fund. this important legislation allows the state to partner with local economic development efforts and recognizes the crucial role that housing, infrastructure, and a career in tech had all played in growing our state's economy. they'll already discussed and

effort than i made in some of these areas. building south dakota ensures we continue to focus on these issues in the future. over $4 million in grants have already been awarded since building south dakota took effect last year, and the legislation is also providing extra funding for schools to support endlessly with letters. in the budget address i discussed my proposal to change the funding mechanism, and again by pre funding south dakota with $30 million of onetime dollars, weekend free online dollars for other priorities. many of you wonder what this proposal would mean for the future. in the bill i introduced will ensure those programs are funded for years to come. thanks to your commitment over the past three years to conservative budging south dakota has enjoyed a budget surplus each of the last two years. so long as we stay true to those principles we should expect that to continue more often than not.

under current law budget surpluses are transferred into budget reserves as part of our rainy day fund at the end of the fiscal year. i am proposing to change that in certain circumstances. under my proposal the first priority for surplus funds will be to keep our rainy day funds of 10%, general fund appropriations for the year just ended. once that is that the second priority will be to automatically refund building south dakota said that the program is always fun that at least one year in advance. it is important to remember that $30 million of pre funding have already proposed secures the building south dakota for more than a year into the future. in addition i believe we all agree this program is a very prudent place to invest one time dollars midsession. we are conscientious about investing one time dollars in the years we have them, we automatic funding than i am proposing will never be

necessary. my proposal will guarantee that building south dakota is the first in line for a year in surplus funds when a rainy day funds are adequate. billings of dakota created some important new tools to aid economic development efforts. thanks to our business climate we already seen many businesses expanded and jobs. for example, in the manufacturing sector two texas-based companies and pipeline plastics elsie expanded to take a vintage of the opportunities in the oil and gas fields, especially in north dakota. together they will bring hundred and five jobs in the area. third texas company began production for the new rapid city location last august at 43 jobs. in 2012 a cagey north american operations, a german based company that provides aluminum air cooled heat exchangers added

a new addition to its mature facility to grade space for 215 jobs. last year a tibet based manufacturer of with towers purchased 150,000 square foot building. they are expanding the facility to over 200,000 square feet and will employ up to 250 people this year. we have also seen growth in the financial and professional business services sector over the past three years to cf bank, capital one, and t m1 have all expanded in south dakota. these expenses alone account for about 750 new jobs in south dakota. and we have seen opportunities in agriculture, our state's number one industry, the trestles will cut the ribbon on their new sioux falls plant in april. a processor of edible beans broke crown last october.

in 2012 we announced that programs u.s.a. would build a new cheese processing plant in brookings. construction is on schedule and should open later this year. to ensure a strong build supply invested seven other processing facilities, we initiated a plan to expand our dairy herd through our county site analysis program state officials of work hand-in-hand with local county commissions and landowners to identify the best locations for new livestock operations and that developers. as a result s.d. dairies are in the process of adding 8,000 more counts of they're existing herds. several counties of issued building permits for new areas that could expand our state dairy herd by still another 15,000. by embracing local control and working together with counties to cite these facilities we're capitalizing on the clear economic advantages of livestock

. weather and manufacturing, finance, agriculture, or elsewhere this strong economic growth is due to the hard work of the employers and employees of many companies and the wise decisions you have made to preserve a strong business climate. it is also due to the efforts of local economic developers and their staff of the governor's office. though, before i move on now would like to speak for a moment about the concerns that have arisen surrounding alleged wrongdoing by a former employee of the economic development office. a call for an investigation into this matter less bring, and the release the attorney general findings available to me to the legislature into the public last fall. it could stewardship of public money is very important to me. i know that every legislator in their resolve to cut the shares is concerned. in november faugh by scent every one of your memo explaining that in addition to the attorney

general investigation have ordered three separate independent audits or reviews of the economic development office in response to the situation. one day external auditor is reviewing every disbursement made under several economic develop programs reaching back as far as. this review will verify there was a sign the agreement or approved application and supporting documentation for every person and that each payment was correct and that check or electronic payment was made to the intended recipient to be the second review is being conducted by your department of legislative audit which is independent of the executive branch and reports to you, the state legislature. legislative body is preparing a financial in compliance audit of the fund financial statements for all government funds in the economic development office, again reaching back to 2009. the attorney general has received a court order the

probably read in the paper authorizing him to release records he attained during his investigation to your auditor general stated this on it which will supplement those audits that legislative audit already performs on sound economic development programs. still another third independent auditor is conducting an examination of internal control procedures. this review will look for weaknesses in policies and procedures and will make recommendations to ensure that the economic development programs have adequate internal control procedures in place to safeguard public funds. in addition, members of my team are working closely with the state honors office to improve our internal practices regarding travel reimbursements. proposing rules would require additional justification for travel reimbursement submitted after 60 days and we're implementing new protocols that

the agency level. the state auditor is considering processes to ensure the reimbursements are not duplicated. all of the reviews and audits had discussed are expected to be completed by the end of january. it will be shared with you, the legislature, and the general public. the results are known, will work closely to the side of the station respond to the results and to determine the for the reviews are warranted collapse. this is a serious matter and it deserves serious attention from state officials. is important to be thorough and comprehensive, even if doing so takes more time. michaels moving toward a threefold, to continue to cooperate in any way in the federal investigation, to recover misappropriating state funds it possible and to use extensive audits and reviews to improve our processes. another topic i know many of you have heard about is that, and corestates standards adopted by

south dakota in 2010. the common core standards are the product of a state let effort by governors and chief education officers to provide a clear and rigorous set of academic standards for mathematics and language arts. the standards were not written by the federal government, are not required by the federal government, and south dakota receive no federal funds that were contingent on adopting a common core standards. we need to have content standards, and we need standards that are rigorous. we need our students to learn english and math, and we also need them to learn how to think independently and solve problems with real-world situations. these were the goals of those who broke away evaluated, and adopted a common core standards. and i support those goals. for many people there, encore has come to mean much one that. it encapsulates our opposition to federal interference in education, are concerned about

the privacy of individual students and our strong belief in local control of our schools. i share those concerns as well, and i hope you will all work together this year to protect our students without undermining the important goals of rigorous and competitive come to standards. i spoke earlier about finances, and all those out to cut his budget picture is good, there is one area of concern. it was an area of concern when i delivered the budget proposal last month. it was a concern a year ago, and it was concerning two years ago. of talking about big franchise taxes. in 2011 when we struggle to balance the budget we and the repayment liability hangover head. it was a bank franchise tax problem. my budget address in 2012i in no is the possibility we might not receive any revenue from bay franchise texas.

last month i told you that the fm and adjusted bank franchise taxes downward for a 414 and that this revenue source is significantly lower than historical levels. it is a bank franchise tax problem. why is this revenue source so unpredictable and so volatile? well, let's understand how the tax works. first, understand how the bank franchise taxes levied. for community banks, banks that do their business primarily in south dakota, the tax is very straightforward and stable. community banks to virtually all their business in south dakota. most of the tax is calculated of virtually all the business. for large interstate and international banks who do business in many places, both inside and outside south dakota, the bank franchise taxes volatile and problematic. those banks need to identify there share of their business activity which should be apportioned to south dakota and

then calculate the tax on the share. s.d. apportioned in uses three factors, property, payroll, and receipts. the first factor is properly, and it is a straightforward calculation. how much property as an interstate bank had in south dakota verses of your work? if the bank has $5 million of property in south dakota and a hundred million of property everywhere in as 5% of its property in south dakota. as a factor. the second factor is payable. that is also very straightforward. if a bank as 10 million of annual payroll pages of the comes and 100 million paid everywhere, it has 10% of its payroll and south dakota. pretty straightforward. the third factor is the receipt factor. that is where we have this problem. our apportionment law was last amended in 1977.

before congress approved in the state taking immobile for personal computers, before the internet, before mobile computing south dakota's three factors have been unchanged since 1977. think about 1977. in 1977 if i were alone a went into the bank, signed papers, and that paid by interest payment to that bank. it was very easy to determine the location of the receipt. ..

>> we need to modernize our statute but i will say that again. maintain not increase. in a recent study banks in south dakota ranked number two of net income, number three of total assets assets, number three return on assets, number three net loans and total deposits. several interstate banks

located their home offices in south dakota because of their stable of regulatory environment. ever baked franchise tax revenue has fallen in recent years. looking back 20 years if you look to the left of actual date franchise tax collections the state has received through 2013 if you look to the right the first two lines are what we have budgeted. today it if we do nothing in this area that is what we will collect at the state level we will have to adjust expenditure bubble down from the budget that i propose. i will bring forward legislation to address this issue in a way that does not, i repeat, it does not

impact our south dakota community bank. it will impact nine very large interstate banks but it will not increase the tax paid by the banks collectively over historical averages. could space increase the collective tax they have been paid historically. i hope i have your support to address this problem but to preserve what modest taxes we have we agree we have more stability, transparency and south dakota will remain one of the lowest tax environments in the country.

last summer one of our very large daily newspapers ran a series of articles describing how citizens were seriously hurt by insurance carrier doing business in our state. after reading an article i ask the secretary of labor to investigate how we regulate the insurance industry of how this could have happened. few weeks later she issued a report that found the commissioner blacks the statutory authority to protect. although they cannot find carriers unless they agree the division cannot affect consumers of their insurance carrier has remedial action they cannot even complain. both long dash mo states have adopted a national model unfair claims fact that carriers need to follow

with rejecting claims. despite proposals to do so in 1994, 1997, 2006, 2007, 2008 dash inch you know, the common-sense regulatory environment there is ever a vital role for government to play the division of insurance will bring more bills to address the deficiency of our landscape. this is the year to get the bills passed i hope you will join me to support them. beyond protecting consumers of government that served in accessible ways is important to us all. these principles of openness , efficiency and accessibility have a better government initiative i began three years ago that

for a clear compelling reason should be over accessible. since it took office there is more information online every economic development grant is listed on wind inspections now might. department of natural resources all information online. the release the invitation list, a couple of minutes ago we took one step to unveil the state web site where the public contract proposed administrative rules to submit the feedback based upon the website for tracking legislation to make it much easier for the public to be involved with the rulemaking process. also will pull platforms to have excellent apps the department of tourism has

asked visitors to come to restate now with the 511 app to check road conditions. now proposing another package of repeal bills it is the nature of government to add to a body of laws but when running you probably did not ask if evicted one dash elected what will you do? that means all log will be passed or measure productivity by the met with -- the amount of bills but less is better we should not place but necessary hurdles before our entrepreneurs. thinks you we have already got a long way to move unnecessary red tape. during 2012 and 2013 use sessions be repealed 378

rules and 990 and outdated sections of law with more than 148,000 words for almost as long as this speech. [laughter] sorry. now i'm going of script. [laughter] not introducing within 10 bills that repeals even more unnecessary rules that just take up space or create confusion. now for these better government principles that have made a difference in the summer of 2012 we had a problem that driver licensing stations that citizens were experiencing great times of more than two hours some had to play more than three hours. that is unacceptable in july july 2012 i announced a comprehensive plan to make it more efficient we extended hours of operation

and to institute aggressive hiring and training programs and developed a new scheduling system to use the internet to make appointments of self-service kiosk at a number of stations and created a driver's license superstation to handle substantially higher volumes of last year i worked to pass legislation authorizing online driver's license renewals. the steps we have taken have made a real difference only one customer out of 10 was served in ted minutes by last summer for out of denver service into minutes in the last few months we serve eight of 10 customers within 10 minutes of walking in the door. driver's licensing is not the most exciting issue but we have seen real improvement in this area because of changes because a hard-working employees.

i want citizens to interact with all government in a way that is convenient to you deficient and i am proud of the progress made in this area. is south dakota we have a high quality of life because of our great outdoors basis people travel from around the world to share that with us we try to be good stewards of these important resources. 2012 we began the black hills force initiative to address the mountain pine beetle epidemic. legislature appropriated 6.$2 million together we've made tremendous progress. the kasher program provided direct assistance to more than 3800 private landowners cruz have surveyed 189,000 acres almost 300 square miles of forest land and we have

treated 417,000 infested trees for our aggressive action berndt the it operations support from the coastal state governments. there is more to do but we can be proud of progress we've made. even as we seek to protect our natural resources we look forward to a exciting future. i signed a bill to have our first new state parks in 40 years. since its dedication, 12,000 visitors have experienced the scenic vista and walk the trails. last month i had as summit to seek ideas for confronting the recent decline of numbers as we fight the beatles we can identify and have solutions as the world's best doesn't hunting destination. -- doesn't hunting

destination our climate is challenging i would like to talk about the governor's house this program build affordable homes using labor from the prison the inmates gained pliable skills for when they leave prison and they help those to have an opportunity to own their home i ask the department of corrections to explore the options to make the governor's house more efficient they had to meet a prototype that passed the passive house standard that requires heavy insulation and it airtight around the house high the efficient windows in the energy recovery air exchanger.

and then have period the utility bills enough heat to provide survivability even extreme cold weather without power. the demonstration house was built in a few months applying techniques that builders have learned only that year but in spite of these it met the passive house standard it was put on display at the state fair to educate their doors about cutting edge technology. building every governor's house has tough standards we make it too expensive. but we have redesigned it to apply the principles better insulation, windows, is an energy recovery air exchanger. these will now be the energy star standard's that makes us eligible for federally insured mortgages.

the increased cost is offset by the decrease cost and hold it all -- homeowners will see in their utility bills. the last two weeks uncovering of the potential sale of the real way that paul's more than 80 million bushels of grain cover 13,000 cars of clay in hundreds of thousands of tons of cement every year. i became a fault in this issue december 2012 as a canadian subjects announced four short years after purchasing it promising to invest more than 400 million of improvements. my first concern wanted to be certain any buyer would continue to operate the entire line. second, to determine if canadian pacific had failed its promises of upgrades. i believe our efforts have been a success. last month the

transportation board granted the petition to get the information we need from canadian pacific to verify the upgrades have been made. reported by u.s. secretary of transportation and u.s. secretary of agriculture as well as the congressional delegation. union pacific has now announced its intention to sell the line to the nation's largest short one operator in wyoming. they came to appear last week i am optimistic they will operate the wine in the way that benefits our state as they have similar short lines and other parts of the country. another piece of legislation we passed one year ago dealt with us caribbean and to online registry, a donor registry to make it easier for south dakotans to register as an organ donor. that already began and south

dakotans have shown their generosity for others in 2013 we have more than doubled to registered donors and 2012 and that is more than 2011 i encourage everybody to register as a donor. those waiting for transplants are our friends and neighbors and in this room today and bitterly. you know, them. we can give no better gift them the gift of life. i was encouraged to promote this legislation by my senior adviser. dab would not be with us today and she had not received a kidney transplant more than one decade ago. she is planning to retire at the end of this session after 22 years with the state government has been a friend and adviser to me as well as governors nicholson

and reynolds. she is also worked with many of you in the legislature libri although how passionate and compassionate she can be. please join me to thank her. [applause] [applause] [applause] >> they key you for that. everyone of us is here today because of the support that love us families and friends

i would not be standing here today without my wife linda. [applause] wait a minute. there will be to live for that. she has worked tirelessly as our first lady in in addition to hosting thousands of people to would tour at the governors' mansions but focus on the state's children the first-aid of the state address i talk to infant mortality and linda has also worked hard to maturity into mortality task force and has spoken around the state to promote practices and raise money for the cribs for kids' programs of has distributed 3,000 troops to providers and domestic abuse shelters this is a tough issue that states and private health care partners

are in is for the long haul. in 2012 we had the lowest number of sudden infant death syndrome deaths we ever had an overall mortality wind up. the numbers 2013 indicate the rate has dropped but we need to continue to work on this important issue. shortly after it took office linda began to travel the state reading in elementary schools and so far she has visited third in fourth and fifth graders in over half of the elementary schools in our state and as part of the boston one campaign she travelled across the state to talk to martin 500 people of the importance of foster care in and the positive impact foster parenting has on children who hops on dash hour support she asked people learn about it in just the last six months the number of people interested

in becoming a foster parent has doubled more than one-third have already taken the next step to become a foster family now to be a big favor to give thanks to our first lady. [applause] that will pay dividends later. [laughter] just days before christmas i join soldiers and famine members to send of the transportation company

holiday or not 162 soldiers answer the call to duty leaving homes for their yearlong tour in afghanistan. since an 11 we have deployed more than 7,200 soldiers and aaron and overseas. i am happy to report according to the general be believe they will be the last south dakota national guard unit called to support the war is over iraq and afghanistan. [applause] these brave men and women represent the finest hour stay has to offer to serve a sacrifice in defense of our state and nation returning also creates a new generation since out the kodak gained statehood 89

hours a has provided a whole for veterans. i read the initial stage of the state and he talked about at home as a reporter last month our plan to build a new veterans' home is on track a and under budget. contractors have been busy moving earth than blasting rock underground utilities are being installed in one building is being demolished it is scheduled to open late to next year to provide a place for 18 veterans. those who live and hot springs are a small portion of the 75,000 veterans living in south dakota -- to cover every teenage rolled for to add to those returning from afghanistan. this year department of veterans affairs is launching operation reach all veterans to reach every

veteran to offer assistance of federal or state local benefits involve more than 130 open houses with at least one in every single county to reach out to veterans and later today and will sign a proclamation declaring today operation reached all veterans day to kickoff this effort. please join me with a roundup of supplies for our service veterans and active military. [applause]

as cyclos, i thought that would bring a smile. [laughter] five like to return to the topic of the workforce with the employment work task force to focus on opportunities for a very specific group of south dakotans those with disabilities. those with job openings overlook those with disabilities according to the 2011 estimate only 41 percent of working age individuals with a disability were employed less than half the rate cannot pretend i understand all the obstacles that confront a disability but i do feel a special appreciation for the disabled worker both my parents were born deaf by

witness the challenges they faced as the job punted my father was a former but it was not big enough to support our family so dad always had another job off the farm i believe in this world people with disabilities often develop higher levels of determination and accomplishment. they worked harder. they had to and employers know the most valuable worker is one who works hard disloyal, honorable gives the honest day's work for the august days pay if they are disabled or not. they no hiring people with disabilities is good business. it builds character in people with character are good employees. for too long some had seen employment of disabilities as a favor but i agree with the task force it needs to end in south dakota we need to connect employers with

employees because it makes good business sense. we need to start today. we can begin by making the state as an employer that sets the example there are many examples of ready that state agencies work together to provide employment opportunities for those with disabilities. your human-resources and department of human services working together to increase those opportunities in the state workforce. the division of vocational rehabilitation assisted over nine to two people to reach their employment goals and i support the task force report to make the department of human services a single point of contact to educate employers then provide technical assistance for those with disabilities.

and is the opportunity to enjoy the rewards. i am not talking about financial but the sense of self-worth that we all need from the personal effort and hard work. south dakota works in so many ways through blizzards blizzards, drought, tornado blizzards, drought, tornado, a fire, floods we come together to overcome adversity. as loraine goals while there recalls the long winter of eight to 81 it has got to quit some time in we don't. we want to give up. south dakotans don't give up we saw that prove to us again last fall the early winter storm at the worst time for ranchers they lost

tens of thousands of sheep and cattle and sod decades of work wiped out in a few days. as a friend from union center said yesterday the next reinjured judiciary and a government handout a work hard and brave the elements in did what they did neighbors cave in to gather state and local governments cleared carcasses in the richer relief fund has reached $4 billion to help those to get back on their feet $4 million is a lot but compared to the value of life -- lost livestock this small but it is important what it says that we care into what we can to help. that is what we do in south

dakota to pull together when times get tough. take care of ourselves, help our neighbors as south dakota celebrates 125 years of statehood we can be proud we are strong because we have not forgotten those values. what is the status of our state today? the status of the code is strong and the best is yet to come. let's work hard this year. [applause] [applause]

appointee to the governor's own comments reportedly not wanting to be too aggressive to push for alternatives for medicaid expansion.

>> i was in a car wreck that i write specifically about in my book. the whole time i was in hospital, not injured really. i had a broken a goal, i was praying that the other person would be okay. the other person was one of my best friends which i did not know. i did not recognize that at the site of the crash.

because i prayed over and over for him to be okay and he wasn't i thought god was not listening because my prayer was not answered so i went a very long time not believe the and not be leaving peppers would be answered. it took me a long time to come back to faith.

>> good morning we have an agenda of two panels comprised of experts, at the kids coming economists looks to are invested of the future of housing finance the first panel can we afford to create a secondary mortgage market that lacks the obligation to serve the full spectrum of creditworthy borrowers is clearly in the news as we speak today. whether senator warren issue of affordability and access getting renewed attention as the discussion of the future of fannie and freddie in the entire housing finance market will look like. our two panels today will be full and have a robust discussion we have designed the program to facilitate engagement as the

stakeholders in the entire process. so they would be picked up we will have a of a brief reception panels number one and two. we would ask very quickly if you have to use the facilities or to get a snack to be prepared this will move very quickly due to the attention of the presence of photographers and c-span in the room it will close at 1130 so we will be on task. it is my pleasure to act as the informal facilitator to queue up each discussion and introduce our moderator is a catalyst first i will introduce the senior

director of of the economic department of financial freedom center of the naacp. he is extremely well known as an advocate as a voice for social change during a at this time at the national action network at co-founder with regard the state of the dree report that many advocates relied upon every year as well the colleague from legislative policy advocacy is a published author with regards to banks to serve communities and has become our voice on reform issues of affordability and access and if you are a member organization of ncrc

also a member to the hill also i take every one knows mark zandi with moody analytics has analyzed the economic impact of government spending and is viewed as an expert on capitol hill to testify before many trade associations on these issues very frequently. also aaron smith and his voice is critical and is affiliated with his co-founder of young indefensible said well go for discussing issues that impact young americans and frequently testified meeting with the obama administration on issues but the next generation of home owners are facing. then moderating the panel we

are deleted -- delighted to have kate for her coverage over the years with this issue of the dodd/frank legislation, the gsa reform cover every furs came to new year as the american banker there you are at "politico" and will be sharing the discussion in today this will be a robust discussion and i will turn it over to you. >> we will kick off with the basic question is talking about what are the affordable all housing goals if we have good duty two's serve? >>. >> it is a requirement imposed on fannie mae and freddie mac to major to target certain communities.

there are three categories one is an account based one is geographic then there is philosophical that fits with those categories. these make up the obligation for fannie and freddie to ensure the of liquidity they provide those into a community's of color as well as rural areas as well as working class communities across the country. the juxtaposition of but the affordable housing goals are a ambit to b-2's served based on fannie and freddie for technical reasons that it says we will show low or moderate income communities it does not require any targeted activity is says it is a good idea to look and

it says we want to focus on manufactured housing, rural areas and affordable housing preservation. but really we talk about preserving or saving existing affordable housing. they has been based on the portfolio of paul motorship single-family but with the duty to serve we have rental housing stock as well as manufactured homes. >> who are the people that benefit from this and how many people? >> that is one of the big conversations people have drawbacks of this. what are the numbers? will re-elect that fannie and freddie what they record every year as a result of

their obligations to progress over the past decade it could be between 6 billion or 12 billion it is an important fact that a particular purchase could count under all three categories a new flood be counted. so ncrc has looked at that analysis assuming it is true can we still get a number that makes sense that accounts for that issue? we took the largest pools in if you just control for that in itself so no double counting still looking at a number between 2.5 33 billion in for your -- million every year. >> to put a value of the goals what is the financial

benefit? how does that compare to the benefits the innate in freddie receive? recalls so they q for the opportunity to be here in this forum. but forsaken of disclosure i am on the board of a large mortgage insurer mgrc in many of you know, it is a great organization. pilot get this from different perspectives. based on my calculations the value of the subsidy of fannie mae and freddie mac before conservatorship to the affordable housing goals

was no more than $5 billion per year. that is the subsidy they provided for affordability and access to the affordable housing goals. to get to that number the promise they musing fannie mae and freddie mac would not provide a bigger subsidy in that they would receive from the government. they receive a subsidy and would pass no more of that to home owners. they'd receive subsidies and a couple of different ways. obviously the implicit guarantee or borrowing cost also to estimate the benefit of that there was a study estimating they save 40

basis points on their debt because of the implicit guarantee about 1.2 trillion dollars of debt. you can do arithmetic coming about $5 billion per year they received subsidies and a low capital standards here in a that was a benefit but that was largely washed out by the fact they certainly did not pass along the benefit being backed by the government to homeowners some of that wit shoe shareholders and employees there very profitable companies with a high return on equity and homeowners benefited from lower housing rates. i give a back of the envelope calculation but roughly speaking the the

outside estimate of the value of the subsidy through the affordable housing goals was $5 million per year is a pretty good guesstimate. >> given that what is the implications of communities of color? >> clearly the implication is to make a bad situation worse that affordable housing goals with the naacp we are supportive of but have to recognize even pre-recession we were still not seen the growth of home ownership will apply to see particularly african-americans and latinos. we do believe the naacp of motorship is essential to help create more economic equality to get more press

around the wealth inequality that is the basis today so the fact we talk about cutting back has helped to keep that mitt 40% and how will we experience that to get them closer to rout over 70? we are looking at talking about reform, and not just the worst parts of the recession and the country has been going in a negative direction for a long time with racial inequality in particular as we make reform we have to address the longstanding issues. >> to piggyback off of that part of this conversation conversation, we just had a "state of the union" speech by the president that talked

about in the quality the most important part is housing and housing policy has a direct impact on wealth inequality so plan dedrick muhammad talks about color the wealth that they hold have to do with home ownership sova ed we talk about providing accessibility it we talk about so it's peopled can gave or generate wealth in the united states that is why this issue is so important. it goes beyond the affordable housing goals that people have the opportunity to gave wealth and achieve the american dream. >> was going to rue bring up that "state of the union" there are other ways to address that but promoting home ownership not dealing

with the equality issue. >> home ownership is not enough you cannot do it with home ownership either. if you have stagnant wages, an economy that you have now or have had for decades with economic growth occurs for the richest americans or the economy where retirement is more and more difficult, you will not bridge economic inequality but housing is the number one source of wealth. is the greatest opportunity for moderate income americans to grow their wealth. is that the court the you cannot solve that just through home ownership.

>> i agree it is not sufficient one way to look at welfare and in the quality is from a generational perspective a lot of the data shows the least wealth of relative transfer of wealth away from young people it is helpful to think about young people because these are the future consumers those to get a four year college degree of about one-third another third maybe they go to college or drop out and then another third with has no post secondary we are struggling to get this population of the education

they need to succeed. talking challenges of results like student loan debt now over 29,000 you talk about that top one-third who have a four year degree with strong economic prospects should be the easiest customers in the day are struggling to even think about buying a house. looking at the debt to income ratio for student borrowers betty would not qualify for the fha loan. these are young people with the four year degree so we cannot even get them to appoint to afford a house house, how do we address that middle third?

that should be the future of middle-class or the lower third that makes tremendous stagnation. we need to do a lot more there promote affordable housing. >> i a agree with the perspective that housing is the key part of wealth creation historically that is true and i the that is key going forward. but not a particularly good way to improve increase wealth. think about housing, it has a lot of risk that has become very clear in the last few years as prices go up and especially with those communities we are worried about there is volatility with those houses.

you are concentrating your risk because you put everything into your home a place where you work so you are not practicing good investment one no one if you over invested your home because you do not diversify your risk. it is not a particularly good way to create wealth so from my perspective, we should think about other ways to help lower middle income households to save and create wealth. that is one of the most interesting game things that came out of the state of union my retirement account there are things that people don't like but in general that is the right approach to think about other ways to

have lower middle income groups the ability to save and prepare for retirement. not that it should not be a part of it and it always will be but we have to recognize there is a lot of risk which that. >> one of the things i would say is i was very intrigued about the president's talk about retirement because i say there is a huge connection between housing policy and retirement. i did research and it turns out outside of the top 20% of the wealthiest population americans own 3.1% of their assets are tied to the stock market so people don't have the opportunity to generate wealth except the people at the top of the podium than looking at retirement

accounts. latinos less the a 38% actually work for an employer that gives the opportunity to have access to retirement. when wage talk about home ownership out of the equation there is nothing else for a lot of committees where they can generate savings you'd wealth that is part of the reason why organizations like ncrc have been so concerned about the housing ideas conversation. you cannot talk about removing homeownership without making sure there is a viable alternative then it is a fixed expense it echoes every month i have got to do it. what people have with a stagnant wage society, when they have something left

over it will palin comparison to what they need to have to generate real savings. and it makes it difficult to walk away from home with russia up the only real way to generate savings for the long term. >> looking for alternatives but what other wells building mechanisms can be created? the naacp talks about the latter. now clearly it is better to have a diversified portfolio but you have to have enough money to pay your rent, the basic savings come and pay bills then have additional money to have diversified portfolio. but most americans are not at that point. but the alternatives but what is the addition like

the i.r.a. peace is important. our economy although it is recovered it is a cover to the inequality economy we had pre-recession that was fundamentally problematic. >> i would love to hear the thoughts on generational attitudes are shifting to home ownership. is that still the ultimate goal? what does that mean? >> if has been impacted quite a bit. we did a poll that shows a blond young adults less than half said dave would delay buying a home because of the economy. one-third said they would because of the economy to move out. [laughter] you have the intermediate

step the economies had a pretty is substantial impact of the way we hear young people talk about if you are at a point you debate if you can afford to buy a car or you still live that the cheapest possible rent you are quite a bit away the young people will say that as a goal to understand there is the ideal a round hole motorship but it feels increasingly distant like it will not ever happen for me or my generation. that is a scary idea.

we have so much work to do but it is twice the national average the young people of color, incredibly high unemployment rates, wages are not improving for this population and gains we have seen in recent months and has not benefited young adults very much. we have support we have to build before we have that conversation about being in a position to buy a home. >> we heard from the treasury department endorsed the idea to replace the affordable housing goals with a special fund. is that a viable alternative? >>. [laughter]

>> explain to me. >> i think it is an interesting speech be coz may want affordable housing in multifamily housing but what is interesting is how do you do that? and how do you do that without the goals? people have made a lot of valid points. the goals could be better but our position is simply the access required to all legislation we have seen put forward by the senate in the house there has not the end a requirement there has not been the access requirement we should serve the whole scope of credit were the buyers through the secondary barquette. you have to have the obligation. that is important for what else is happening on the

financial landscape. for example,, look at capital ratios. now for a bank the risk wait to holding a mortgage where you have not put down 20% is insane. so if you are a bank in you do the business to make mortgages you will live keep it you have to sell it on the secondary market. this conversation ultimately will be about to who has access to the secondary market in what kind of loans are okay? if you have the access requirement can we still have a market where young adults who don't have $30,000 to cut down on the house can put down 5% issue that won't will be okay am be sold on the secondary

market because we have underwriting criteria you can make the loan with less than 10 percent of people can't pay that loan investors can benefit with the security. that is what this conversation is ultimately about to read to the requirement then to make sure we have a way to enforce in to look at what ever secondary market is out there to say are you doing that or surveying this community? >> is it just to maintain the required debt or push stronger requirements? >> that is exactly the point. [applause] . .

the middle class people have the opportunity for and can really help rebuild in the american middle class economy and build for the first time are racial the inclusive american middle-class. >> and i say something? i mean, in terms of the dollar amounts, it is comparable. if you buy into my 5 billion a subsidy per annum, if you look at corker warner, the last of my side they had a market access fund of five to ten basis points . there are 10 trillion mortgage

-- mortgage debt outstanding, a trade is securitized, so if you multiplied 5 trillion * ten basis points to get $5 billion. ten basis market access on fannie freddie or future guarantors' that have the government backstop, we did you 5 billion brenham. the dollar amounts are comparable. you could charge less in market access fund if you put it on and all in bs. not only the envious that is guaranteed, but all in bs. the 8 trillion times six basis points is almost 5 billion. you get the same amount. you can generate the same amount of cash that is now being -- being used to subsidize the access and affordability through the housing affordability goals. so then the question is what is the best way of doing it, meaning, you know, alcoa we most effectively use that money to meet the goals that i certainly agree with you.

i am all on board. we won any housing command system to have equitable access and affordability. you know, i am fully on board. the question is how we do that most effectively, and i would, you know, it is a matter a reasonable debate. we have to think about this more carefully. no strong conclusions, but i would argue that a fund that has direct subsidy would be much more effective in accomplishing what we want to accomplish then housing affordability goals. the housing for illegals, once you make calls like that the gate. these guys will be met, and they're not going to give you an effective result. and so if you -- if we have direct control of the subsidy we are providing for manufactured housing, rousing, rental, all the things that we want to do, that we will be able to do it much more effectively. the final thing i'll say is in the future housing finance system undermost, strikes, the

only exception being nothing changes and we have fannie mae and freddie mac as is, but let's assume we are trying to get to a system where we have an explicit government backstop india private guarantors, affordable housing will be very difficult to incorporate into that system effectively because what will happen is it will raise the cost so much that it will actually help fewer people because the size of the market is guaranteed by the government and will be significantly smaller. so i think the fund, appropriately designed actually will be more effective in achieving the goals that everyone in this room once a to achieve. >> actually -- >> go ahead. >> there we go. so, mark, i actually take the opposite view. this is actually to file that

you brought it up. it is a wonderful conversation. think the market fund is an incredibly important component. we do need innovation, but i think innovation around the market access fund is simply very different from what the a formal housing goals do. the reason why i am sensitive when i hear you said were subsidy because we talk about the affordable housing goals we're talking about conventional loans to people who are good credit. the difference is that of have the ability to put 20 percent down. so we are not talking about people that we necessarily need to subsidize. we're talking about people that can perform responsibly in the market, and we just need to make sure that they have service. or not talking about people in need a helping hand. and so when you create this notion that they were automatically going to be subsidized, what are we telling the market about them? we're telling the market to unfairly viewed as risky. and then the notion behind the market access fund is that if we do this and provide these credit

enhancements that at some point the market is going to look at them and sale, you know what, yeah, this is good business. rita of the the credit enhancement. that is just not logical. as an investor you giving this subsidy have told me that these loans are inherently risky. and going to go, great, and happy to do them as long as you continue to enhance the credit. the notion behind with the credit enhancement is supposed to do the wrigley does not work. and then when you look at that model for you realize that the market access fund is actually something that we did before. self-help actually did it in north carolina with the foundation grant. the theory behind that then was that if we give this -- give these credit enhancements and show the market that these are save the we will be able to take this project to scale. guess what? they actually did that in the early 1990's and now wanted to scale. they're happy to do is lindsay still have the foundation money.

so the very concept behind what the market access fund is intended to do in terms of bringing it to scale just doesn't seem viable. but that doesn't say that it is that important to have that and have that innovation. but that is but a substitute for the requirements are treated as a substitute from the requirement that the broad market, private financial institutions, private as an obligation to make sure that they serve rural america disliked his serve, you know, chicago or washington d.c. i think that would be a fundamental mistake. >> okay. i don't want to interrupt. subsidies, -- you're right. let's call it a benefit. every homeowner in america gets tremendous benefit from government one way and the other. if you have a mortgage, you know, you are in the upper income group and getting a mortgage interest deduction. just to give you a context of the mortgage interest deduction if you look at the tax cost of

that is a hundred billion the year. you is that going to? it's going to meet. it should be going to lower income groups, but it's not. i mean everyone is getting a benefit. my -- run use of the word subsidy, but everyone is getting a benefit. there is nothing inherently wrong. as is the way it is. we have decided as a society that we think all of the ship is good for our communities, for wealth building for all the things that we discussed. the question is what is the most effective way of accomplishing that. is subsidy okay? i agree. that will use that word. it's a benefit. >> but think about what you're saying when you talk about that. the mortgage interest deduction. we are putting affordable housing and limiting it to this little assessment, five to ten basis points, segregating it out and that we have a telemarketer we have a government guaranteed backs up the heat. that's a huge subsidy.

housing. >> it should be. because it should be explicitly priced and press for. >> and we can believe that the government can actually figure out exactly the right cost to back the guarantee. the reality is that you're never going to get the exact right price for the costs of the government guarantee. maybe you think we will. >> we will. particularly the system capitalist to a certain level. you will get there. >> you bring up an important point about benefits that are given for home ownership and how we need sent redo this. the income of the benefits go to the richest americans. is the sum much whether there will be a homeowner not put public on the will get and how much we want to give a subsidy or benefit to that versus subsidy your benefit to working-class americans, middle-class americans so that they can be homeowners. that clearly is that the direct

part of the discussion. it's back to have a new studio more holistic conversation tsk. major benefits accruing to the right people. >> you think that repealing the goals is a necessary part of fixing the system or is it more of a political question about the role of the government? >> in my mind it is a question of what is the most effective way of achieving the goals that the focus on this podium agree with. i am completely on board. that is the debate. and i am open. still, i think -- i don't know for sure, but you can sense where my privileges like just based on the work that i have done. you know, i just feel like the affordable housing goals and not nearly as effective as they should be. and we can make them work so much better at the same cost to taxpayers. and that is where the future -- since right now this is our

theory anyway, let's make the theory worked in the best way we possibly can. one other thing, we provide tremendous -- of is going to use that word again, benefit for home ownership. not nearly as much benefit for rental housing. and that think we really need to think about that carefully because if we're really trying to bring down the cost of living fur of lower and middle income groups, the reality is the vast majority rent, and that will always be the case. even though we're trying to promote home ownership. we really have to think about how wheezing those tax dollars effectively to help those groups. i think rental housing is something we need to focus on. >> i think that actually segues into why i think the goals are important because the goals with

respect to multi family, i don't think anybody disputes number one that the portfolio performed extraordinarily well. a number two, how difficult it is to actually get the market to get long-term affordable housing finance outside of the google requirement that they actually serve those communities into affordable there is not allowed a profit there. sunday do that without having any obligation to actually do that? >> 90% of multifamily meets the affordable housing goals by definition because 90 percent of the multifamily housing stock of 14 million in the housing stock coast to people with incomes of less than 100 percent of the emirate. the vast majority, 67 percent cut tiles holds with 60 percent of a.m. night. almost literally by definition if you're doing multifamily you're going to be achieving the

housing affordability goals. you make a good point. was strongly advocate that in the future housing finance system that there would also be an explicit government backstop. we need -- i think we need that because you can see that in the crisis. in the crisis the only lenders to the multifamily market in 2000 and 2009 and 2010 was fannie mae and freddie mac. there were no lenders. we can't live with that. does not work. at think we should have an appropriately priced explicit government backstop with private first loss capital. that is a way multifamily works in fannie mae and freddie mac. the delinquency rates were so low because you have so much private first loss from. literally by definition there will be doing -- achieving the affordable housing goals because of the nature of the stock. >> i think that is an interesting point.

i think the real message here is that it should not be a bad word to say that we want to promote affordable housing or to say that the government is not in the business of housing but in the business of affordable and housing and it does segue into providing assistance. think when you talk about the secondary market the government guarantee, it should not be a bad word to say that we are giving you this government guarantee because we believe that you should engage in providing affordable housing. so when we talk about the multifamily portfolio versus single family, either way putting in affordability requirement there, saying we're doing it because we believe that is what the market should do, it makes sense. and i think we're also really concerned over talk about the affordable housing goals. [laughter] the thing that think is interesting is the interconnection between not just the girls themselves, but the other it rich in federal programs of we have. for example, i am thinking about

state housing finance agencies. that is my background. will we had this conversation on capitol hill nobody talked about the fact that fannie and freddie have this huge relationship in relation to what mortgage finance companies to. that is where they get there credit enhancements. that is where they actually get a lot of their portfolio purchases. >> the access fund could be incredibly effective. i could use those benefits -- just a. >> site. birds is not here. i am getting too old. but, you know, housing finance agencies, it's a beautiful example of how we can help them more effectively and directly where those funds sitting in a market access fund, whenever you want to college, and we directed to those agencies for the purposes of what we want them to accomplish. >> you will have to really

redesign the market access fund. let's look at how the money is allocated, third of it comes to credit enhancement, and the credit enhancements were actually treacly to the consumer. there is another pie that goes to research and development. research and development is no money for consumers but institutions to design projects. >> we're making great progress. >> no. >> i am challenging you. [laughter] and challenging you to say that what you're talking about is not what the fund itself actually does right now or at least as proposed. some will be talking about the market access fund. >> i am all on board with that. i agree. we should be thinking carefully about how that market access fund is designed. >> have access requirement is designed. >> okay. [laughter]

>> that's great. so how do we -- he mentioned capitol hill. a big question, how do you follow affordable housing goals such. [laughter] >> anyone? well, let's talk about. go ahead. >> number one, i think that there is -- what we think about where we think about the affordable housing goals and who we think about, who we think teefor will housing bill serve is something very different than what reality is. you're talking about a working-class white americans who are the people in the individuals to benefit from the affordable a housing goals. yet they did that image to that idea does not actually translate to, you know, to the house or to other individuals. people who are really benefiting

-- and that is by and large i think the goals could be better. because they don't always go, just, you know, to minorities. we are talking about a working-class white america and a whole lot of rural america. that tape that we as advocates have not done the best job of exploiting the fact. we should do so. >> with that, for one house and is a pathway to a larger goal. i think we need to be focused on that larger goal of kind of reaffirming that, yes, home ownership is central to having a stable financial situation in the american economy as a whole, the basis of the american middle-class. so you can debate the housing bill or you can debate having both are what have you, but there will be serious commitment the matter what you have, no matter what patty to a to ensuring that americans can be homeowners and that those

americans historically have never been able to beat majority homeowners. whatever system you are designing to best to short. and then let's debate. which pathway is most effective in getting to that gold. i do think optimistically most of congress should be on board with that type of argument. too optimistic, but congress is going to rationally to what is best for the country. was to put much optimism for right now. >> i heard a couple people at the election. maybe that is what we have to wait for. a bigger question, what would you consider to be a success in terms of dealing with housing finance reform this year. if it is not point to get done what is the measure for good progress? >> go ahead. >> i keep using that. >> it works every time. >> i like it.

a responsible bill. i mean, i think that is the people looking for. when you say responsible, responsible. to think that number one it includes a government guarantee. both sides, the family in single-family. but it's something that is adamant in making sure that it is a priority in requirement for any of the entities that engage. >> i actually think it is frustrating but here we are five, six years later. does the seem like anything is changed. prospects of low at least from where we said today it will change anytime in the near future. that is frustrating, but on the other and this is a pretty difficult problem. we can't mess this up. freeman is the sub a lot of

people will get hurt. it's a global issue because $10 trillion in mortgage debt and standing says is a big chunk of the global financial system. we have to get this right. and success for me is continuing to go down every single path. we need to look it every -- all these issues from lots of different emil's and release updated, think about it, debated like we are on and off stage, on capitol hill, at the trade group's. really think these things through. and i think actually what is happening is it is actually quite therapeutic because earlier this year really taking this down lots of different avenues. we're all learning. so i think we will actually get a better system of this process. we have to take our time and do right. >> i just want to say, success for me is love so much just what

is going to happen within congress, what have you. but housing for our local unions throughout the country and state congresses, but people on the ground are more involved in thinking about this discussion. a serious impact. it is just left -- you know a lot of my friends a policy hawks to wear not going to have that kind that we need to really get -- to register table we have had, but to create housing regulations that does a better job because really the last 30 years we have not seen the growth in home ownership that we need. the country will be majority minority by 2040. if we keep the majority of african-americans, latinos, not all homeowners it is going to be a very strong blow to the idea of america as a middle-class economy bus charter boat to the reality of the economy today. >> we have a very prolific audience who is a very

thoughtfully placed over 50 questions in writing for the panel. and if you don't mind, rather than ending you these cards because the majority of our questions have very small handwriting that is hard to read, and going to summarize. i think that would be more effective. what is interesting is that the audience comes from diverse areas and are really focused on how this is killing to be impacting the average american family, working families as well as access to credit and of the affordability goals in particular -- if there are changes to the current system what that will mean to of ownership. so forgive me, of going to summarize, as i said. a series of questions. the first is a comment made by marks in the with regard to access to credit with those who have very good credit scores, 80 percent of payment of 80 percent ltv and so on.

what about consumers who are more constricted to that. problematic credit, how will they gain access? seniors, seniors, several differ questions with regard to older americans. we have right no a very large group of investors from wall street investing in properties, the impact on communities. so many seniors are homeowners to date. how will the option of affordable housing goals and the impact on investors affect their ability to retire or sell their home? the next generation of homeowners who are also credited because they are in lower wage positions was a question that was shared from the audience members. in addition, the impact of housing in rural or smaller communities, the absence of affordable housing goals, how will that be impacted? other questions had to do more with the policy side of issues. now that we have an fha fake, how will that impact the

entire debate with regard to affordable housing goals to make it is there so much friction versus fact in the current political climate? now, there are many, many other questions that were submitted. the role of csi working with lenders, how will absence of affordable housing goals impact those groups? impossible for me to summarize all of them, but think there's enough there for 15 minutes to carry of the conversation. >> thanks, david. what do you guys want to start with? of like the questions. i mean, we really did not talk and all about older americans. that's a good point. what does this mean for them? >> that's why it's so important to get housing finance reform right. we do have this baby boomer generation that is coming up,

and their home owners. so part of their notion that they're going to be able to cash out of lesser importance of their home, take the equity they have received and count on it as part of their retirement. the point is they have to offer some buyers who will be able to buy the homes and get in the market. and so this conversation, the conversation about assets, the conversation about what happens even with fha is highly connected to what happens to them as well. fest will control. >> and the point above sea bfi is a good one. that is not my area of expertise a laundry list of things, the implications here, here, here. how does that play into it? >> well, on the border the sea bfi, i think one very attractive

thing about -- was having a discussion around market access fund, it would fund the capitol magnet fund. you know, we have a capitol magnet fund and we have the housing trust fund was we are putting back in 2009 and have not received funding. and the new fund is designed to support it and promote the activities. so i think there's a lot of excitement in the community that if we can find the capitol magnet fund that would be very productive and important. see bfi, again, from my perspective, is small. you know, the problem -- they're very effective, but in helping communities, health care centers , grocery stores, small businesses, in some cases terror

schools. energy-efficient commercial real estate development all within underserved communities core urban centers and rural areas. so i think the mission and the idea, the theory behind it is quite compelling. a problem with the cds five model is that it is very difficult to scale. one of the biggest in the country, we are small. we do work in philadelphia, baltimore, new jersey, washington d.c. on a very limited scale, and is difficult for us to scale and gain -- have impact because we're just not big. that is the problem with this etf file to this point. that may change. creative people need to think about how to make the model work better. again, in theory it is an interesting idea. it's a very public resource and benefit with private capitol,

and private capital is directing the investment, will probably be more effective and efficient. it is really quite interesting. we need to figure out how to scale it up pretty penny that capitol magnify of. >> i was going to say that actually touches of the third question. what can you do now. one of the things you can do right now is fund the housing trust fund in the capitol magnet fund. thirty-three senators asked it to do just that upon him actually assuming his new position. think that we can actually get those funds into csi right now, and hopefully that is exactly what he will do. >> one thought that i -- you know, this debate -- this question of what is the perception of the affordable housing debate commute has brought that point up. it is interesting. before i worked my was working

for the city council in yonkers, new york. rework done in the ford was an initiative. i am supposed to. and i did not know that much about affordable housing when started. i was stunned when i started -- in know, creating a proportion of the developments. i was stunned when i looked at with the incomes of the folks that they were considering for affordable housing war. it was so much higher than my perception. this debate has become one key and, you know, a lot of this is nuts. my big question for the panel in the group is that we create more of the movement around affordable housing so that folks to have a bigger understanding of