federal g $15 billion over the last 20 years on the oregon health plan and we can save them $20 billion in the next 10 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 help us make this transition and the response was extraordinarily positive. so -- [ applause ] what that means is that we will most likely have the resources necessary to make this transition, but those dollars are not going to come to oregon to prop up the current delivery model. they will only flow through the coordinated care organizations that are actually going to produce those savings over the next ten years. so acting early in february to authorize the full build-out of the health insurance exchange and to authorize the expansion of the coordinated care organizations gives oregon the best and perhaps only chance

we've got to create a health care system that's actually financially sustainable. beyond that we have an opportunity to help inform the national debate and also put us in a position to weather the economic storm that is surely coming our way when congress seeks to raise the debt ceiling again a year from now. the choice is ours. a lot to do in the next month. but a whole lot to gain. we are well down the road to transformational change in both health care and public education and it's important that we lock these changes in and lock that trajectory in in february so we can turn our 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 cycles that have plagued us for decades. adopting a ten-year energy plan that gives us a pathway to meet our rps and carbon reduction goals and maximize our energy resources. improving public safety to protect oregon citizens but also reduce the cost to the state.

developing a more rational timber management policy on both state and federal lands and redesigning our budget to align public investments with the outcomes we seek over the next ten years. moving forward is going to require current to challenge the status quo. but it's also going to require us to actually believe in our ability to shape our own future. i'm not suggesting that there isn't any risk involved with the path we've undertaken here. but there's a lot more risk in the status quo. i think the riskiest thing we can do right now is to continue to do what we've been doing because we know where that's going to take us and it's not taking to us a very good place. teddy roosevelt once said that at 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 oregonians know that delay is not some benign and prudent place holder, it's a choice. it's a choice to embrace the

status quo, it's the choice to abandon thousands of oregon schoolchildren, it's a choice to spend more and more on health care and less and less on education. in short, it's a choice to abandon the responsibility that we have to the next generation. and it's a choice to fail the future. and we are better than that. not here, not now, not in oregon. we are not going to fail the future and we are not going to abandon the responsibility that we have to the next generation. i want to close with the words from alfred lord tennie son's epic poem "ulysses" which i think in a very special way captures the struggle of the oregon people over the last four years. but also captures the resiliency and the spirit and the commitment to the future. come, my friends. 'tis not too late to seek a

newer world. though much is taken, much abides. and though we are not now that strength which in old days moved earth and heaven, that which we are, we are. one equal temper of heroic hearts made weak by time and fate, but strong in will. to strive, to seek, to find, and not to yield. thank you. >> thank you so much, governor, for challenging us to do better and inspiring us. and now if you've written a question on an index card at your table, now is the time to

raise it up, and given how crowded we are in the room today i would advise that you raise it up high so the staff can see it and collect and it bring it up to me. the first question for our speaker, by tradition, comes from our friday forum host who today is city club governor jeannie crouch. jeannie is the director of sustainable growth at charter construction where she focuses on business development, community outreach, and sustainability. jeannie has been a city club member since 2006 and has served with me on the friday forum committee. >> thank you, melody. thank you, governor, for being with us today. we really appreciate it. i reached out to a dozen or more people i know in business, in education, and in government. and asked them what they would want to ask you today. and interestingly, the answers coalesced around one topic, and

that is tax reform. so that we can have that prosperous economy and vibrant community that 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? >> easy ones first. i think that -- two things very briefly. first of all, i think just about everybody recognizes that we have a really dysfunctional tax we obviously disagree on what we need to do about it. but i think the moment of opportunity here, having been a veteran of two wildly unsuccessful efforts to change the tax system, is that the debates we've had in the '80s and '90s were just about a tax.

there wasn't a larger context. i think more and more people are beginning to understand that there is a direct relationship between the depths of the recessions that we have on a cyclical basis, the flight of capital from our state, and our tax structure. so there are three steps. the first step wes have to get the people who are on opposite sides of the table during the '66-'67 campaign in the same room and recognize that we cannot solve the tax problem without all of them pulling in harness. that has begun. we had a meeting in mahoney hall with the leadership of major labor and business organizations that's been followed up with a couple of other meetings and dialogue is taking place. we're planning to do some joint polling to kind of look at various options. then i think we have to decide on the best approach, and obviously there are a number of factors. one has to do with stability, a very key element. one has to do with adequacy. one has to do with equity, which is largely in the mind of the beholder and the more difficult

one to address but we have to get it on the table. we have to make sure that the rip between our long-term economic objectives and our tax code is not random but is intentional. and then we have to have a campaign to engage and educate oregonians about the need to do this. so we're moving in that direction. and i am optimistic that we will be able to pull it off. >> we'll now take questions from the floor. as always, members are invited to the microphone to ask their questions. asking questions at the friday forum microphone is a privilege of membership. so please identify yourself as a city club member and ask your question in under 30 seconds or you will see the infamous city club question mark. also, i'll be sure to read at least one index card from the floor. >> good afternoon, governor. lisa desano, city club member. thank you for your strong focus on education, which those of us in business know is key to ensuring that the regional

economy continues to flourish. what i'd like to ask you is in two parts. one, what are our chances for getting awaiver on no child left behind? and how dependent is that waiver on the legislation that you described. then second, if we get the waiver, how long before you see us moving forward on an oregon-specific approach? >> so i think the chances of getting the waiver are very high. i talked to secretary duncan when he was here for the oba statesman banquet and i think the key is we need to be able to demonstrate if we are going to get rid of the punitive provisions we have to have our own real accountability system. i think we're perfectly capable of doing that and that will be part of the legislation that goes forward in february. the idea is to have the achievement compact set up in the next cool year, the 2012-13 school year, to begin to collect baseline data so that we can then have a benchmark from which

to measure our progress. it's important this isn't about standardized testing, it's about taking a child from where they are and making movement forward and using testing not as a blunt instrument but as a diagnostic tool so that you can then turn around and help that child the next week, not simply get a report card in august telling you how your kid did. >> good afternoon, i'm janelle sorensen, city club member. i'm one of those many people who's concerned about health care that you mentioned earlier. many of us who deal with seniors and people with disabilities are concerned about the severity of proposed cuts to programs, especially home health care, which would drastically affect our seniors and people with disabilities. aarp oregon suggested $100 million and far less damaging cuts on its website saveoregonseniors.org. i'm wondering if you would consider those changes. >> well, the -- i can't argue with anything you've said. having taken care of both of my

parents in the last few months of their lives, bathing them, feeding them, i understand the important role that home health workers play in our system. i also believe that home health workers and community health workers will be the backbone of a new delivery model that keeps people with chronic illnesses in their home and not in the hospital. the reality is, we have a very difficult budget and we have chronic unemployment at 9%. we've got $310 million less money now than we did when we ended the budget. we're going to have to make some difficult choices. i met yesterday with the legislative leadership, coat-chairs, co-speakers, and senate president to figure a process to do this. there will be some cuts in this next session. and i'm not going to defend the budget or all the results. we'll do the very best we can to set priorities. i also think we need to keep our eye on the long haul and make sure that we -- the choices we

make in this buy enuplook to the impacts those are going to have on 28 then and '15, continue to seek waivers to allow to us use the dollars we have efficiently, try to get those new dollars of federal resources into this state, to help mitigate some of those cuts. i can't tell you though that some of those cuts aren't going to take place. >> good afternoon, governor. i want to thank you on behalf of oregon league for minority voters. initially ten months ago we accused you of not doing anything around equity and inclusion and diversity. ten months after, you are doing a great job. >> my work is done here. >> this is not mission accomplished, governor. the 40% african-american kids you eloquently stated in your spee speech. when the resources of oregon is

standing up in abundance and minority contractors can have answers, what we have is poverty in communities of color. what are you doing, at least now, to mitigate and to create access to opportunity around communities of color? >> so yesterday afternoon, i met with representatives of minority contractors from around the state in my confront room, our conference room. your conference room, actually. to talk just about that. i think there are some significant -- and actually, two weeks ago we had a meeting with ceos around the state to talk about a variety of issues about minority contracting and minority businesses and emerging businesses and women-owned businesses. i think there's a couple of robust opportunities coming up. one is the crc which will move forward. and there will be a lot of contracts let with the crc. and one of the things we want to

do is try to get some of the major contractors that we know are going to be involved in a room with some of our minority contractors and see if we can do some mentoring, see if we can figure out opportunities embedded in that construction project to really make some progress down the road for creating opportunities, not just for contracting but for growth of some of those minority business enterprises. another one is the cool schools program that begins to ramp up. this is on the radar screen, met just yesterday with a group of people focused on this, we'll continue to lean into this. >> anthony petshall, city club member. thank you for your innovation and candidness in the state right now. my question is around communication and i preface it with, given the tense political climate that we have right now and oregon's unique ballot initiative within our constitution that could undermine some of the things that you're planning on doing, what do you plan on

communicating to the general public and how do you plan on communicating a lot of your changes which as you mentioned, change can be difficult. >> well, we have -- tim rafael, you'll love this, my communications director. we have, obviously, a very active social media operation out of the office. but we're also trying to use the networks of various partners that we're working with to bring about these changes. so obviously the oregon education association, the american federation of teachers has a tremendous and robust network, as does the oregon school boards association, our university system. i happen to have firsthand experience with the depth, breadth and effectiveness of the university of oregon outreach network. the business association. so essentially we're trying to engage the major stake hold hoarse have been a party to designing this change to use their networks to reach out and

communicate. i will just say finally that we're having a series of community meetings around the state this month around the work of the oregon education investment board, including the early learning council. so we're attempting to have a very aggressive community outreach aspect of this as well. >> if i could just insert one question from the floor, from the tables. do teach from america and other programs like it have a place in the future of transforming k-12 education in the state? >> i think anything, any program that helps the professional development of our teaching staff and gives them opportunities to teach in different venues, is a net plus. i think we're obviously looking for partners and idea ideas and concepts that have been proven around the country that we can use in oregon to bolster and accelerate our efforts. >> bill dickey, city club

member. first of all, i want to thank you for ending your talk early enough for the members to ask their questions. it's a time-honored tradition and i think the members of the city club really respect their speakers who monitor the time limit and give us a chance to ask our questions. i'm also a business owner who has been suffering -- i own a printing company. we had the double whammy of the recession and the digital revolution that has sort of high pressure the printing industry in general. and we have been suffering through really difficult times trying to figure out how to finance our company. and so my question is -- i've written it down so i get it out. >> stay within the time limit, right? >> actually, bill bradbury -- you touched on this briefly in your talk. one of the things i liked about bradbury in "2010" was his state

bank idea. in any event. here's my question for you. what are you doing to support oregon businesses who want to expand and innovate but don't have the capital to do it? >> so the effort that we're undertaking with the treasurer really is the invest in oregon act. the idea is to try to leverage the public resources we have to increase private sector investment and to try to free up a lot of the private credit that's sitting in the capital, whether that's through guaranty programs or other mechanisms. the idea is to essentially try to leverage those public resources. we should have actually a draft of the legislation fairly soon. actually, we probably have one out of lc. i happen to know you and your printing operation so i'll make sure you get a copy of the bill draft and you can take a look at it. i would urge you to come to salem when the legislature's considering this. the other thing that's not directly related but i was fortunate enough to participate in a white house conference on

wednesday on insourcing, on basically how and can we bring manufacturing back into the state of oregon and into the united states. and it is very, very interesting how many people are thinking about that. folks from -- folks that make the otis elevators that had manufacturing in mexico that brought it back because it separated manufacturing from r&d. when you figure transportation costs and other issues it's no longer pencilling out quite as well. the access to capital side, but also to be intentional and aggressive trying to bring some of the manufacturing that's gone offsore back to the united states, particularly to the state of oregon. >> good afternoon, chris andrea, city club member. a lot of the people that i listen to were concerned about the elliot state forest decision and do have abiding questions about the way that we have tied

funding for rural schools to oregon's forests. i understand that some people have -- 90% of our forests are gone. that law came into effect when we had more trees and fewer people. the situation is radically reversed over the century or so that we've lived with this. what would you be able -- what would you do to address the problem of funding rural schools but not at the expense of the last few trees? and also, one quick comment. a managed forest is a tree farm. thank you. >> i will not agree entirely with your last statement. i do think that there are vast reaches of federal forest, particularly in the northeast part of the state, that are going to burn down and i would

say a forest that burns down is night area tree farm nor a forest. it is charcoal. releases huge amount of carbon into the atmosphere, does real damage i think to sensitive habitat. so i do think we have to find a place where we can actually have a conversation about this. i don't think anyone wants to go in and intensively log old growth forest but i do think we have interrupted the natural cycle, particularly in the northeast, of our forests. we've suppressed fires. we have high grade the some of the big old fire resistant trees. this is not a natural habitat. i do think some management to thin forests out, make them healthier, than produce fiber that can be used for a rural bio mass industry and putting people back to work. that's on the east side. in southern oregon, we have a very strange set of laws that were enacted piecemeal over time. they had to do with railroads, they had to do with defaulting on land, they have to do with a

patchwork of forests. and we have a i think perverse financing mechanism that's tied the health of county government, in tillamook to some extent, with cutting trees. i think that's an artificial connection and i don't think we have to continue that. we are working very, very hard. we have counties facing very serious financial issues down there, regardless of what happens with the forest down there. so we have a short-term challenge of trying to figure out how to maintain the financial integrity of our counties, particularly in southwest oregon. we have a longer term challenge of figuring out how to manage those lands in a way that makes sense. i feel if those lands were bundled, and there are parts of those lands that are plantations that have been operated as plantations. 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 them up around ecosystems, around watersheds, that we can tweet a big conservation gain as well.

and for that to happen, though, we have to basically find a table and a space where we can sit down and have a conversation about that. i'll just close this by saying that we are essentially creating a spot in my office to have a person working full-time on forestry issues and at the top of the list is trying to address this growing crisis down in the southwest oregon. >> hi. mary vogel. i'm a regular at city club lunches. and i wanted to ask about an issue that seems to have almost 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. but so what about climate change? what is the state doing to show leadership in the absence of the federal government's role in this? >> well, a couple of things.

if -- in my remarks to the oregon business summit, i talked a little bit about beginning to add and integrate into the oregon business plan elements what was i call a sustainable clean economy. that is, an economy that seeks to create economic development and jobs by actually replenishing our natural environment. i think there is a -- i think what we're talking about in terms of active management of some of these forest is is an element of a conservation economy. i think there is a restoration economy out there as well. with the fresh water trust here in oregon, has done a whole lot of work on developing a real market for ecosystem services. so the three biggest elements that contribute to greenhouse gases are power generation, transportation, and the built environment. our cool schools initiative is essentially trying to prove the roi on investing in large-scale retrofits of our built

environment. hopefully move from a debt financed mechanism to an equity financed mechanism. i think we are developing a ten-year energy plan to try to give us a pathway forward on both renewables, how to meet our rps, how to meet our carbon reduction goals. i think the difficult nut to crack long-term is going to be our transportation sector. we are making steps with washington and california towards creating a green highway. putting in eb recharge stations around the state. we are taking steps and i do think that if we can develop a common set of policies on the west coast, we can move the national debate forward. i think that debate at the national level is stalled out, as is the responsible debate about health care and a number of other things. but there are things we can do here on the west coast and we're definitely doing some of them here in the state of oregon. >> susan stalltenburg, member of, executive director of imimpact northwest, a social

service organization in the metro area which serves thousands of folks who will be positively hopefully affected by your vision with regard to health care education and early learning. my question is three-fold and you've partially answered one of them. most of the families we serve need housing. second thing, a lot of folks we serve need is most of the children we serve have parents who need jobs. they're underemployed and unemployed. until we can stabilize them all the early childhood programs in the world, all the best education in the world, are not going to be able to be received by those children. and so -- and the third part of that is mental health. so let me give you that you've talked about jobs. not to my satisfaction maybe but -- so if you could extrapolate a little on that. also add, what about the immediate need for basic needs

like housing and mental health? >> okay. so i didn't talk about jobs intentionally. i wanted to talk about the issues that we have to move forward with in the 2012 february session. did talk quite a bit about jobs last month at the oregon business summit. your point's very well taken. that there are services that are absolutely essential for children and families and housing is one of them. hunger is obviously another one. what we're attempting to do with the early learning council, if you actually want to go on the website and take a look at at least we envision it is organized around elementary school and catchment areas. where a family resource manager would work to try to connect those families with whatever those services happen to be. whether that be a housing challenge, mental health issues. there's no question that a whole lot of the investment we need to make on the front end are mental health and dependency services.

you can't treat the child, you have to treat the family. we know there are services and interventions that actually work. the problem is that they're not connected, they're not integrated, and many of these contracts with the state to provide these services are not performance-based contracts. their success is built around how many people they serve, not whether those people actually benefit from the service. so we're trying to fundamentally change that and that's where a lot of the the resistance is. everyone will argue the program needs to be changed, as long as that revenue stream doesn't go to somebody else, as long as i don't have to change what i'm doing. we do need to change the entire system. the first lady is leading, in a very's aggressive initiative to focus on poverty in the state of oregon, to actually try to develop a poverty policy. in other words, we have a lot of disparate programs that address poverty, but poverty is an underlying contributing factor to just about all the other ills we've got in this nation. part it is a social service issue, part of it is a housing issue, part of it is a jobs

issue. we've got to be very intentional about community workforce agreements, trying to create opportunities, entry level opportunities, and pathway opportunities for people who are living in poverty to get back into the workforce. [ applause ] >> thank you so much. i suspect this group could chat with you all afternoon but we've run out of time for further questions and we'll have to stop for today. please, i hope to find all of you back here next friday for discussion about the landmark supreme court ruling in citizens united. as well as impact on political campaigning and elections. as we close for today, please join me in giving our sincere thanks to governor kitzhaber for his time with us today. and we are adjourned. the nation's governors are headed to washington, d.c.