then they moved to knoxville where bill is from. bill was mayor. i got mad at each other and they finally reunited about 15 years ago when i invited kerry to come down. we saw that reunion. good to see terri, and, of course, i sort with lance, others here whom i know. if you've been here in 1984, many perl would have welcomed you. and some of you won't remember many perl. but she was my neighbor. she lived next door. people ran for governor, they live next door to many perl. it had the price tag on a. this is the story she would've told. schuett said i was riding in an elevator minding my own business and this tourist from kentucky gets on and he looks me up and down and says has anybody ever told you, you look a lot like mini pearl? she said, i said yes, sir, they have. and he looked me up and down

again and said, i'll bet it makes you mad, don't get? [laughter] that was such a good start, i told all over iowa. scott, you might be the ones turning it around. [inaudible] >> that's what i did. you probably heard in utah. you are exactly right. let me see if i can do to i wanted to make four points. let me see how quickly i can make it. went i think about my job as united states senator given my background, i think about how can i give bill haslam more tools to be a better governor? because i know if i give them those tools he will do something with them. and i think of the federal government in the internet age as a place where we ought to invest in things that empower states and people to do things for themselves. kind of in the way apple created ipad with that telling you what the app is, you can create an app and a lot of

people can use it. so here are four tools that we worked on, three in a bipartisan way, one is not -- one is partisan in washington by don't think it is so much among governors. so let me mention the spirit one is marketplace fairness. which is the issue for me, does the state have a right to decide for itself what it wants to collect taxes that are already owed. that may come up in the next couple of weeks in the united states senate, and i would say especially to the republican governors, this is a good time to call your republican senator and say, let us make our own decisions about our own tax base. that's our business. that's not your business. i can have a so-called conservative washington tell me they didn't trust states to make those decisions. wait a minute, i don't know anyone in tennessee who trust washington to make attacks decision. that's never one. that's an important tool for you

to a sufficient tax base to make your own decision, to avoid raising income taxes, avoid raising property taxes. that's your business. that's not our business. that's never one. the second is the workforce investment act. that's another bipartisan to a competent. we got that done. it looks like you can get things done even in this united states senate. our committee has gotten a lot done. we have past 20 bills, 18 were passed by the senate, 14 signed into law. that's almost as much as the whole rest of the united states senate did and we have a divided committee. all the liberal democrats over with tom harkin. you've got rand paul india on the right. still we can agree on a lot of things. we get on this. i remember when our former democratic governor came up and talk to me. he said when i came in and i look at the money that came to the workforce investment act, into our 13 local boards, 75,

one stop centers, he said i just threw my hands up and i told the commissioner, do the best you can. i'll bet a lot of you have had that same experience. it's a lot of money. it's $10 billion. but governor haslam, $147 million on his number one issues which is how does he connect job skills with the job seekers. so we tried to make it easy for him and all of you to use that money. we a limited 50 programs, eliminate mandates on the size of the board compositions, restored the proficiency you can take 15% of the money and use it for your own innovation. that's $400 million. local boards can transfer 100% of the two biggest funds between the two funds. took six state plans, took them into one reporting requirement. more simpler. you've got more control. i would've gone for the really

for the state of local control but we got a long ways ahead. so that's the second, in a bipartisan way we been able to get done. here's a third tool. this is 20 million american families fill this out every you. this is what you fill out to get a federal grant for a loan to go to college. it takes three or four hours and you fill it out every year. somebody august if it you probably made a mistake so they don't send you money for the first semester until the second semester. in tennessee i would guess we have about 400,000 tennesseans, families who goes out. hold this opinion he grew. i was at an editorial board meeting in knoxville the other day and the editor of the business manager and the other person any meaning at all fill this out for the own kids. everybody who fills out the application for governor haslam's promise program. is promise you can go to community college free. they all have to fill that out.

everyone who gets a hope a scholarship based on merit in tennessee, they all have to fill that out. the testimony we have had is that all you need to know in order to know 90% of what you need to know to get this money out is the answer to questions. what is what's the size of your family and what was your income last year? senator bennet of colorado, a democratic senator who was a school superintendent in denver, and i proposed legislation that would turn this into this. that would save billions of hours. [applause] will and we also, bill this will make a real difference in your program because they have said about half the sins of a pell grants more are eligible, probably very intimidated by this and don't want to do it. and so we'll take some of the money we save with our subjugation and had year-round pell grants, pell grants you can

move at your own pace. there will be one loan, one grant, and you will be able to apply in your junior year of high school rather than your senior year. right now, and this is, this happened by very well-intentioned people who reauthorize the higher education act they signed it is a good idea, let's put it on the form and your 20 million people filling this out every year. we hope to do that next year. last, all three of those are bipartisan. this next one is partisan. i'll do it quickly. it has to do with elementary and secondary education. the national governors association has a lot to do with it. it's what should the role of washington be in determining standards, curriculum, performance standards, accountability systems, and teacher evaluation in kentucky, nevada, tennessee, what should the role be?

in 1984 when you asked, it was a year after a nation at risk. that's what secretary of education said there's a foreign power, have done, given us the deal for schools we have come we would consider it an act of war. all the governors get busy trying to change the schools and everyone of our state. bill clinton was in arkansas. dick riley was in south carolina. bob grant in florida. we were all doing basically the same thing. in 1985-86 at the nga meeting i was the chairman and bill clinton was the vice chairman, for the first time since the beginning of the nga we focused the entire meeting on a single subject, education. time results was what we agreed to do. for five years we worked on that agenda. president bush had a national summit. kerry was chairman, voluntary national, and i was education

secretary a couple years later and i remember writing president bush, this opinion about i'm not being partisan, i just telling you the way it is, the democratic education bill. i said i recommend you veto it because it creates at least the beginning of a national school board that could make day-to-day school decisions on curriculum, discipline, teacher training, textbooks, classroom materials a federal arrest to be dictating how to operate a local school board that does not make schools better. that was 1992. then moving forward rapidly, 94, states that another summit. 96, again, governors of both parties. we need national standards to work together to create. then in 2002 no child left behind. still states have the ball in the that was a lot of pressure a lot of federally required reporting. and then 43 states agreed and worked on common standards. 34 worked on two sets, rhode

island can pick one, kentucky to pick another, or you could pick something else if you wanted. 44 states in common accountable standards, but he became the problem. the combination of race to the top and waivers for no child left behind have created in my opinion in effect a national school board. the u.s. department of education that you over a barrel. if you need relief from no child left behind, which all of you do, it's not workable today, you have to ask permission and then they require you to do a lot of things. they require you to have certain standards. they require you to have certain performance. they require you certainly do with local performance schools and they require you to do tj valuations a certain way. teacher evaluation requirements. i'm through. i'm going to stop talking here, but here's my point. i went through this teacher

evaluation stuff in 1983, four, five and six. tennessee was the first state to pay teachers more for teaching well. it's not easy to do. we got 10,000 teachers voluntarily to go up the career ladder and be master teachers but if we have a federal government second-guessing is all the way of we would have never gotten anything done. we don't need that advice. they don't want to do any better than we do, and really they don't know how to do it at all. guess we are all pioneering a little bit we would try to find a fairway to reward outstanding teachers, give them 10 months and 11 months contracts, pay them more for being good. good. so there's a 10th of a penny in washington. is it partisan difference right now but i don't think the democratic and republican governors would have the same difference of opinion democratic and republican senators have. so i bring this to your attention, and you may want to talk to your senators between now and the end of the year. we need to fix no child left

behind. we need to get rid of the way, but we don't need to do it in a way that creates more of a national school board. we have two very distinct points of view right now in washington. so on market place fairness we are bipartisan. on this we are partisan. on changing the workforce act, we got that done in a bipartisan way. this we need help on. i believe we can over the last 30 years, governors ought to be in charge. we should fix no child left behind when we do. and when we do we don't need a national school board to replace governors, state school boards, local school boards and classroom teachers. those are my tools. >> senator, thanks very much. we are going to throw the floor open for questions, and i'm going to take the privilege of chair of asking the first one. once again, thank you for

pushing through the full 15% set aside. as you mentioned it was done in a bipartisan fashion. could you give us your insights on the second step, which is paying for it in terms of appropriation. are we going to be able to actually find that 15% in the near future? >> yes, i think you will. $9.5 billion. it's a big number, and in the current appropriation bill, we are hung up and i will get into details about that procedure in the senate, about appropriations, but that's the number that we are working with. if for some reason we didn't get the appropriations process done properly, they would be a continuing resolution and they would be at that number. so once this authorizing law signed by the president, that will change the rules of the

game and you'll be able to spend the money that is a fable according to the new rules which give you a lot more flexibility. >> great. brian, do you have a question? >> thank you. senator, thank you for your presentation. i don't know if you the opportunity listen to the vice president but he talked about career and college readiness. there has been a big emphasis as you pointed out today with regard to college but perhaps the career part gets left behind. what can congress do to help the states to raise the awareness and visibility importance of career readiness in our schools speak with you will see a great example of it in a few minutes here in the nashville schools. and that's what has to come from. see, i don't think, what purpose can do is what i care. we need to be thinking not as governors in washington but we need to be thinking of senators who are spending federal dollars in a way that empowers you to figure that out. and figures out a national

school district figures out. so what i've introduced, for example, is a piece of legislation that would permit you to take 80 of the federal programs that have federal education dollars right now and great a $2100 scholarship for every low income child in your state. that would probably be about one-fifth of them. that's a lot of money, and map-21 hundred dollars would follow that child to the school the child attends. we're not going to tell you that shut to put in a school choice plan or do this or do that. that's your decision. that money will follow the low income child to school the child attends, then the school can follow your innovation and your leadership and figure out how to solve the problem. that's what i mean by giving you a tool. we sit through this all the time in our -- is a good idea. let's make everybody do it.

the are one of thousand public schools in 14,000 school districts? we have governors. we of school boards. you don't get smarter flying an hour to washington. so that's the we should do. we should let you figure it out and give you the tools. >> thank you. senator, it's great to have you here. and i do recall when you in utah running for president, and you were very well received, and part of your appeal was your proficiency on the panel. and as i'm here in tennessee and see the great talents in national, i see where you fit in so good so we need to your plan and we want to hear bill saying. make us feel right at home. >> the most musical state based on my precinct evaluation are utah and iowa. really, because people learn to sing in their churches and in the energies in both states.

>> well, we appreciate your being here today and talk about wrote an important issue that is affecting us all. let me just say we have a little discussion or debate about this very thing, and congress hasn't reauthorized the elementary and secondary education act, ea, for seven years. part of the challenge that we have is states are frustrated with no child left behind and kind of by default have been embracing this waiver you talk about. i guess there is a question. one, can the president even grant a waiver? constitutional ago are we going around the law and saying congress is not in what they should be doing to fix the problem so i'll just grant you a way for out of the law. that's one issue. the second issue is why don't we just block grant the money? i agree with you tha but everyby has a great ideas and next thing you know we christmas tree

ornament all these bills and it gets unwieldy. we have different demographics in utah than tennessee and around the country so we got to have our own program. and why can we not get back to we have done at least previously where the federal government says look, we will help you, gather money, push it out there to equalize particularly help those who are maybe rural or poor areas of our country so everybody has an opportunity of a good education. give us the money without any strength. when you talk about the federalization, national program, it's the money with the strings that nationalizes the programs. >> that would require an election, and maybe do. to do. i agree with you, but that's the difference of opinion we have in washington. take the worst forced grant to the house passed a jobs bill which moved a long way further

toward what you just described, with $10 billion of workforce money. but when he came to the senate which has a different political composition, there were a lot more washington rules. our compromise moved a lot closer to the house. so the difference on the elementary secondary education act of you got a bill that was passed by the committee that i'm the ranking republican on, senator harkin is the chairman. 1150 pages, 150 more rules and regulations, much more of a national school board, 12 senators voted for all of one party. 10 senators voted for the one that i offered which was 200 pages which moves all those decisions back to states and to local governments. so it's a political difference of opinion about, and it's not always, some republicans get carried away and they also want mandates from washington to i've seen plenty of examples of that but fundamentally democrats feel a responsibility to have more

rules and regulations with the money they send back and republicans agree with what you just said. >> again, i think maybe there's a difference between government and the partisanship you see in washington, d.c. for maybe a variety of reasons. i think most governors say look, let us spend the money as we see fit -- >> oh, i know. >> democrat or republican alike say hey, listen to us. we are probably pretty smart people with her own unique demographics but we don't need a one size fits all solution to give us the money it made we can't put it in the public safety, we can't put it in building roads. it's got to put into education so i can see some general parameters but let us work out the details in our own responsibility. >> i completely agree. >> senator, secretary, governor alexander -- [laughter] piano player. those for other topics come you

crazy, pay teachers more for teaching well, appropriate criticisms or however you going to phrase that. dig a little deeper about where those future lines are because i think you will find us very interested -- is your lines. first of all a tracking the best and most capable people to take public educators agree. since 1984 to know one of the faults that has occurred in this country has been this shift away. when i was chair of years ago we brought in education advisers from countries that at much higher scores than us in math and science, and kind of went through with them what, why. one of the reasons was the point of teachers and they pay them more and it was held in higher esteem in the public view as a career and whatnot. i know you talked about the no child left behind in that sense and the waivers and whatnot. carry that discussion, define deeper into it because i think

you will find us as governors very willing to get more, much more involved. weekly want to get as much productivity out of our schools as possible. we are all looking for positive reform agendas on public education. to find that a little more of and how you, what you see the hangups are as far as getting to moving in that area at the state level. >> the most difficult thing to do is to relate students achievement to teacher performance in a fair way. that's not easy to do. and it's obviously should be done. everyone knows that. that's common sense but it's not easy to do. so the question is should washington try to say, not there anymore, but the seven things that you need to do in order to achieve that, or should we try to -- that they are.

or should we try -- [inaudible] all right. or should we give, shui make it easy for you to use federal dollars to figure that out for yourselves? i think the latter. i thought we did a good job 30 years ago. i think governor haslam has done a better job, but one thing we could do is take a title ii money, title i you have a plan. title ii is really for helping teachers, teacher personnel development. and say, you can use that money however you want to develop your own system of teacher evaluation and principled evaluation and performance. that's quite a bit of money. right now it really goes in to reducing class size in most states. you could use it if you choose to for the purpose but i'm reluctant for washington to try to tell you how to do that when nobody really knows how to do that. i just think it's much more

likely to come out of wisconsin or iowa or tennessee or missouri than it is out of the department of education. and the problem is, let's be blunt about it. you got this big pushback right now on, there's the perception which is a fact that washington is in affect requiring states to adopt certain standards and certain performance levels and certain teacher evaluation systems, and people in tennessee don't like that. almost all the problems you about common core are related to the perception that washington is making you do it. if the thought was if i don't like the academic standards, i can go to governor haslam or governor walker and they can fix it, but i think most of us would relax. and then on the other side the teachers unions get very upset about the evaluation as it's coming down from anywhere, really. that it's better on a precinct

by precinct, school district by school district basis. >> i agree with you, but the way to get through this is by carrots, sticks. i think the dialogue around this about either underperforming schools or teachers that are doing a good job and it's a much easier dialogue if we are aiming higher and putting targets and move them up. i think it shifts the frame of the discussion. so we are looking for ways in which exactly what you said, pay teachers more for teaching well. interesting, your phraseology because that way you have carrots. positive places. >> our first was voluntary, you didn't have to do. so we at 10,000 teachers who did it. you're right, no child left behind got to be like catching people doing things wrong instead of catching people doing things right. >> of course the math problem guaranteed in the end the math problem is you fail. you run out of time.

>> just following up on that point. on the fourth of your legislation, the partisan one, is there an actual bill and does the bill repealing no child left behind? >> they aren't competing bills. in the help committee, we had a good discussion about it, and i support moving old bills to the floor and was having a debate and try to a minute of put together with the house. democrats have ago, about 1150 pages long, a lot of -- a lot of new regulations and new programs and new mandate. >> how about your build? >> 200 pages long and is all the responsibility for measuring whether teachers and schools are succeeding or failing back to states but it does keep the reporting requirements where you'd disaggregate whether in des moines or milwaukee the african-american kids, et cetera, how are they doing, because i think we need to know

that. but it's what you get above that is your business. that's a big difference of opinion. >> is the support from teachers union for that? >> the teachers union, you'll have to ask them, but they like our bill in one respect better because it doesn't mandate teacher evaluation. it allows it, it allows you to use title ii money for the purpose but it doesn't do this. arne duncan is a very good man. he cares about schools and he is i think, governor george w. bush tried to be a little too much of a governor of the united states when he came with no child left behind. i think arne duncan is trying to be a school superintendent of the united states. these are things you should do as governor or school superintendent but not from washington. but the answer is yes, we have bills in the house is a bill that's a lot the senate republican bill. >> and to follow up, i had the

same feeling before washing hands things down to the state and local communities they should fulfill what they promised back in the '70s, and that's to get the funding promised 40%. i've been beating on that drum since -- >> that's right. >> the new mandate, so give any discussion about that? >> well, i would relieve some of the mandates, but senator harkin of course that's been his pride and joy, so he has really allowed that. senator tim scott has introduced a bill that i'm a cosponsor of which would allow the considerable federal dollars that go to children with disabilities to follow the child to school. if you have a down syndrome child in first grade and you're happy with that school because that school seems to meet the needs of a child, then they federal dollars, your share of the federal dollars would go to that school, giving the parent a

choice. so that would be one way to assist this bill. >> thank you. >> other questions? how about one more? [laughter] >> go for it. >> you talked about the forms, and consolidating it down to the simple science. money is also important for these pell grants. are we keeping up with the rising tuition and the percentage that pell grants used to contribute to a person's college aid? >> i'm glad you brought that up, link. i think yes. i mean, there's a lot of misinformation out about a much it cost to go to college. i think governor haslam will tell you that it's already almost -- community college is almost already free.

people just don't know it. >> if you can figure out that form. if you figure out that form, the gap is lots more than most people know. >> right. and so he was shrewd enough to say we want to change the perception. he's saying, i'm speaking for them, if i want to increase the graduation rate and the job skills, i want more people in college. i just checked, half the students of all states have a pell grants and half don't. that's probably the. there are probably a lot more eligible, but the community college tuition is only $3600. that's the average in the country. that pell grants can go up to $5600. and the average student loan is $27,000 for a four year degree. the average car loan is $27,000. i don't hear people saying the economy is going to fall because everybody else 27,000 out on the corner. a card appreciate and you get $1 million more in your lifetime if you go to a four-year school.

so we spend 100 billion a year in loans, which is to be paid back, at 33 or 34 billion in pell grants, up to $5600. even student athletes, this is one of the to the ncaa, you may not know this but the university of tennessee and vanderbilt student athletes who were eligible to get a pell grants up to $5600 on top of their athletic scholarship. so there's a lot of money out there. and in our plan, link, what with going to do we will get rid of the subsidized loan as our proposal because most students have them both. that will save $41 billion. so they will spend $41 billion on funding the cost of larger number of students who we think will apply for pell grants because of this, and a year-round pell grant which you will find your community college folks really like. it's pretty expensive.

>> thank you. >> anybody else? if not, senator, thank you very much. [applause] ..

she is the vice president of public affairs at country music television where she leads the corporate social responsibility initiatives and oversees government affairs. she's garnered national attention and industry for the power of one campaign and the motivating a million volunteers across the u.s. and the network support of education and initiatives including cmt and involvement with the academies of nashville. we are also going to invite robin who has been the executive principle of nashville's high school since 2009 and has received national recognition for its transformational leadership of the academies of nashville including obtaining national status from the national career academy collection. thanks for coming and taking the

time to come and speak. you've got the floor. >> thank you governor. i never thought when i took my job at country music television years ago i would be addressing this esteemed panel and i'm usually more laid-back than this so bear with me. we are so excited to be here to showcase what true public and private partnerships can do to have the business community help support the most important part of the community which is educating our children. when the academies were launched here it was a pretty amazing piece of organization if you will between the metro national school, the national chamber of commerce and the nonprofit partners. basically nine principles came and said the high schools are

failing and we need help. we study the academies of nashville. so this is a way to make sure that every single child in high school and nashville is afforded the same opportunity for advancement, no matter who they are, where they live, what their circumstances are and it's pretty transformative and i think it's been pretty amazing for us because as people that work in the corporate sector were told all the time how the schools are failing, we need your help and all we've ever been asked is for contribution money wise how can we do this. and the academies, the beauty of it is systemic integration into partnership with differences throughout the school and the lending of expertise.

they have open conversations and the transparency they are so that we can help support the work for the students. they are approximately 82,000 students. 56 on free and reduced lunch. they have 15,000 students per the school employees. that may be surprising to a lot of you, but the snapshot of the high school in 2009 when we started their the year prior to the tenure first of all is a 500,000 square-foot building. it took me two years to figure out how to get around it. it's all very confusing. that's one thing.

number two, prior to the tenure they had five principles in one year. five. to say that it was chaos was an understatement. so, our smart school system and chamber went down and recruited at this lovely gentle man who is going to go through retirement in his home state of texas. if you've had experience in the academies there, then obviously we need great leadership for any change to be taking place. and this is what robin was given when he started. 2500 students, title i, high-priority 61% of free and reduced lunch. lunch. look at the demographics. 68% graduation rate and 2.7 from outside the zone and 41% with an eight ct composite of 19 or above which the 19 is the requirement for the minimum

promised scholarship is that why? so what this group of private partnerships between the chamber came up with is they looked for the partnership in the advancement of learning and i think this is the brilliance of the model and i think it can be scaled into any of your communities and has been successful. i'm proud of nashville because we are the first city in the country that has taken it to scale in all high schools but one. maybe we are a little crazy but it looks like it's working out pretty well. so redesign the high schools so what you have been speaking about not just about college but career ready and giving children exposure to careers they might not have thought about before. transforming, teaching and learning is project-based learning in the classroom and

the business leadership so this is where we come in and i think that's a pretty great part of the process so redesigning high schools, what does that mean blacks your freshman year you go to freshman academy. can you imagine walking into that 500,000 square-foot building and seeing that? you are put together with your freshman colleagues and learn everything from how to approach an adult, how to learn the soft skills of how to behave and they already start talking about college and career as soon as possible to let in the door. ten through 12 grade of the best part of the presentation will be after we stopped talking. what lovely students in the back row. there are four different academies of a different focus

so if you are interested in broadcast journalism you can go into that academy in all of your academic classes -- the beauty of the career technical education is it blends in with your academic classes so that isn't a separate entity it is altogether. the teachers teach a common planning time. it was new to me they didn't plan together prior to this and as people that work in business you have to know what everyone is doing. there were some teachers when we started that didn't eve didn't h other's names in the building. creating assistant principals over each academy and an academy coach i like to call the axle in the middle of the field who partners with the business community to engage them and filin tofill the needs there and sometimes translate the japanese to english of business speak versus education speak and then

offering the workforce so we work with the chamber to identify with the work needs are so that we are preparing the kids in our schools for real high wage jobs in nashville and there are ten areas of practice which we are very proud we are the first model academy. we are proud of ourselves so the transforming, teaching and learning you will see here this is our friend but part of this is we bring the teachers into our business to learn about what we do for a living making tv. teachers have been in the classroom their entire careers have been about teaching but they don't understand production of television. this i is any postproduction ara where you edit content and make sure the audio looks good, sounds good, excuse me.

we learned something from the teachers using project-based learning basically yo you have o make had tomake a plate of lotty using chopsticks because that is how precise you have to be with everything just so the teachers could remember it and then he would throw in the weird things so you're editing and then you have a sponsor that wants to be part of your program and all of a sudden you are put with something different so transforming, teaching and learning that is one of the examples we had heads of all of the different departments talks to the teachers and it kicked off the interdisciplinary project for the year are the teachers and their students so back to the transforming, teaching and learning they take it back to the school and we have eight cmt music awards program that was in june each year. the teachers work with the students to model their own

digital design communication show with the students. that sounds fun but if you look at it what they do is they take a central question that informs all of the classroom studies so whether you are math or in your english class or your own broadcasting class you're talking about the same thing so it's reinforced so the question is how should excellence be determined? they look between the popular vote and electora the electoralr the popular vote and the judging and see the difference between data. if you look behind these gentlemen you will see the design of a logo that was done in their geometr geometry class. we had the art designers creative team talk to them about spatial design and how you have to figure out all that and apply that to geometry and they use their geometry computer program to do that. then i finally getting kids into

our office is we try to treat cmt as an extension of the campus. these are some students that came in with job shadow experiences so they get to identify what pathways so whether they want to be on the creative pathway or broadcasting the shadow people within our office and then this is the part that is important about it especially with our upcoming mayor and the head of schools is going to move on at this point and we want this to not be just the education thing that happens every two years. we want to ensure that it's there. there are 200 plus business partners all over nashville that are this intrinsically intertwined into the different academies based on their

business needs so it's hard to read but it is a pretty amazing structure. first there's the advisory boards of every academy has an advisory board made up of business partners, students, teachers by the administrators e administrators identify with the needs of the students are and they reported into the partnership councils which are organized by business areas and the national chamber of commerce oversees that so we are part of ththe council into pairs and engineering council etc. so any issues are elevated up to that level so we can identify things that he might need to help and also make sure we are keeping the pathways involving according to what the work force development is and to advocate on behalf of the schools the ceo champions for example every single state has an issue with transportation and a students at

the academie academy's and next6 will have the choice to go to an academy outside of your zone and choice transportation and an ability to get there by working with our partners and metro transit authority so we have been trying to advocate legislation to make it easier for career and technical teachers for example a nurse isn't going to leave his or her job to teach part-time in a school so ill be beating back so they can get in. this is a snapshot in 2013. there are a few less students but not much. we are still title i that we are in good standing based on the scores. it's a level five school which is the highest on the evaluation standards into the highest possible score is at 60% free and reduced lunch but as of last

year because we don't have the data from this year 73% graduation rate was 6.4 students so this used to be the high school that you are embarrassed you went to. now everyone in the town is tired of hearing about it because we are all over the place. we had the president of the united states coming to visit that is when we knew we had to be something right. when people wanted to come back into children were coming back from private schools to experience this great stuff and we have increased our hct scores by 8% so this is why we do it and i have to turn over to robin. but sarah was honored by the president in a speech when he came. she's the first to graduate from her family and it's because of her contact with one of our amazing producers she was in the

principals office the entire freshman year with a bad attitude but he wanted to be part of the show. he bonded with the teacher, graduated and went on to postsecondary. jack is an example of a candidate has done fine either way it wanted to do an internship at cmt so we said we have to get your grades up and stop slacking off and he graduated with all a's and they are all in school right now so without further ado i will introduce this man who is the one on the ground making it happen with our awesome students and yointo you were going to ben away by them. >> this is what it's about us to see what the students are doingg but first, governor, thank you very much for adding us present. i want to take this time to thank the governor he and his wife both took time to visit the campus at the high school to see -- nanay has been interviewed by the students. students. >> he was interviewed when he came to visit.

if you want to learn to fly planes, be a master chef, investigate a crime scene, come to the high school because we can teach you. students are doing all kinds of things tied to the business world. one of the things key to education today's students want it to be relevant. why am i learning? would never ask the question why. we did what we were told. that is in today's students. today's student wants to know why we are doing what we are doing and you have to be able to so that to whatever opportunities lie for them after they graduate school. i'm not going to spend a lot of time talking -- that the first. [laughter] >> i could talk for a couple of hours of the things we have going on but i won't do that. i will tell you the time the academy has had to the business in nashville and the representation and support that we get from the businesses in our community is one of the

things that has made us turn the corner. they come to the schools and classrooms and told the students that it's going to take to be successful. it's not just hearing it from the principal or the teacher, they are hearing from people coming in from the real world and that's the type you have to make. the education has to be tied to the real world experience and that is for the relative comes back in. with the support of the school board and i have a school board member right here other things are going on and the support we get from the governor and the mayor, things are going up every year. academic standards are unbelievable in the years i've been a part of it. when i came here we were under restructuring and we were a little one school. we were about to be taken over by the state. five years later we are now a recognized school for the progress that we have made and we are in good standing with the state and we are the only high school for four years in a row to reach that level five

standard being a top school according to the state standards in tennessee so it is a great teaching staff, unbelievable teachers in the building and the students that are willing to put the time and effort to make a change for what's good and i'm going to introduce to you the students but i want to make sure the governors are still here. take the time to go back and see what they have to show you. first a hospitality finance academy we have abigail, we have clarence, brady and bernice that will be back there with the hospitality and science. health science and law i have jordan, emily. then from the science communication -- >> the cmt academy -- >> mohammed, gordon brown and

jackson and finally from the academy aviation transportation i have ronald elliott you had the honor of introducing the president. [applause] i'm proud of our students and i hope that you will take a few minutes to see what kind of things these students are doing in our high school. let's give a big round of applause. [applause] now comes the fun part. all of the governors are invited to the first to go back and visit with these students and listen to them about these demonstration projects that they are doing because this is exciting and this is what all of

these efforts are all about. so, we will stand officially adjourned and the governors, please join me in the back and the audience can come in behind use. after that a national governor's association on the role of education and economic development. >> we are at the henry a. wallace country life center which is 50 miles south and west of des moines. and this is the birth place home of henry a. wallace. the wallaces of iowa consist of three generations of wallaces. the patriarch was known as fondly as uncle henry and he was the founder of wallace's farmer magazine. his son henry, c. wallace, was

u.s. secretary of agriculture under woodrow wilson. and henry c.'s son was born on this farm in 1888. he went on to become editor of wallace's farmer magazine. he was then asked by franklin roosevelt to serve as secretary of agriculture which he did for eight years. then he was roosevelt's vice president. as u.s. secretary of agriculture he is known for the agricultural adjustment act, which was the first time that farmers were asked not to produce. at first people couldn't believe the things that he was proposing regarding that, but then as prices went up they started to listen to him. and people still refer to him today as the genius secretary of agriculture. >> explore the history and

literary life of des moines, iowa saturday at noon eastern on c-span's 2 book tv and on c-span3 on sunday. janet yellen told congress again on wednesday that the economy sim proving but the recovery is not complete. in testimony before the house financial services committee, she said the housing sector is sluggish and that short term interest rates could be increased late next year. this is three hours. >> the committee will come to order. without objection the chair is authorized to declare a recess at any time. the hearing is for the purpose of receiving testimony on monetary policy in the state of the committee. i now recognize myself for five minutes to give an opening

statement. we welcome chair yellen here. not surprisingly it's introduction was met with howling protests in apocalyptic versions from my democratic colleagues. regrettably such reaction has become commonplace on our committee with few exceptions my democratic colleagues show they don't wish to legislate or conduct oversight. it makes me wonder why they ran for congress in the first place in the answer they wish to in defenders and apologists of the status quo. with 46 million americans dependent on food stamps, real

median income having fallen every year of the obama administration the status quo is unacceptable. when the federal reserve helps facility the financial crisis selectively intervenes in the credit markets, facilitates our unsustainable national debt blurs the lines between fiscal and monetary policy and has its power vastly expanded the status quo is unacceptable. a dramatic increase in power calls for a koergd increase in accountability in transparency and that's precisely what the act does. the overwhelming weight of evidence is monetary policy is at its best in maintaining stable prices in maximum employment when it follows a clear, predictable monetary policy rule. i believe the period of great moderation attest to this proposition. had a clear predictable monetary

policy rule like the taylor rule been in place throughout the last decade it is likely the financial crisis would have been avoided in the first place or at least downgraded to a garden variety recession. after the passage of the act if the fed wants to conduct monetary policy based upon viewer text messages from the "american idol" television show it will retain the unfettered discretion to do so. if the fed wishes to conduct monetary policy based on a rousing game of rock, paper and scissors on odd tuesdays at the fomc it will retain the unfettered discretion to do so. the fed can set any rule it wishes. it can change the rule any time it wishes. it can deviate from the rule any

time it wishes. it simply has to report and explain this to the rest of us. that's what transparency and accountability are all about. for those who claim this somehow imposes upon the fed's independence i note that the fed chair was the before our committee and our senate counterpart twice a year. the fed chair meets with treasury secretary once a week. and dare i mention the continuing revolving door between federal officials and treasury officials. the threat to the fed's independence does not come from the legislative branch it comes from the executive branch. again, i reiterate, this has nothing to do with the fomc deliberations or micromanagement of daily federal reserve operations. the fed just wants to keep the curtains closed and keep any outside eyes from reviewing how well or how bad its biggest policies are implemented. who knows whether the fed's engine needs a tune up if no one will let the mechanics look

under the hood. oh, by the way that's not my quote. it is from former chairman of this committee, henry b. gonzalez whose portrait sits to my right and who very well may have been the single most liberal democrat to ever chair this committee. my how have the times have changed. as our witness from the cato institute testified last week the reason it's important for the fed to reveal its rule or operating model quote so that it can be examined and tested by those outside fed. only under such examination can we learn how the model captures the real world unquote. the fed is yet to corner the market on ph.d. economists or monetary policy experts. quite simply the fed's work should bear the scrutiny and critical examination of others. with respect to the other portions of the act it remains an open question whether the fed should serve any role as a

prudential regulator, regardless of the answer to that question the fed should no longer be permitted to hide its actions behind its monetary policy independence cloak. this is true when we consider the fed's sweeping powers under dodd-frank to control an increasing share of the american economy. when it comes to prudential regulations it's time to hold the fed to the same openness and transparency that we require of other federal agencies. this includes mandatory cost benefit analysis, also known as common sense. finally many have wonder about the fed's view of the act. i have not. during my congressional tenure i have yet to encounter one federal agency that has requested less power, fewer resources or more accountability. i doubt that the fed will be first. i yield to the ranking member for an opening statement. >> thank you, mr. chairman and

welcome back chair yellen. chair yellen, it's been five months since you last appeared before this committee and in that time you has changed. the federal reserve's program of large scale asset purchases known as quantitative easing is set to end in october. and many are looking to see what the fed will do once the program subsides. the challenges are significant. although employment levels for many sectors have continued to rise, stable and consistent growth is uneven and not a given. in a surprise turn, gdp dropped stantly in the first quarter. african-americans face an unemployment rate of 10.7%, 7.8% for latinos. so let's be clear. while we've made much progress,

the long term effects of the financial crisis, the worst since the great depression can still be felt by working people and people still looking for work. in every one of our communities across the country. of course the problem of unemployment has only been made worse by republican intransigents on any number of measures from refusing to invest in our country's job creating infrastructure, to cutting investments in education that will fuel the next generation of american leaders. to their refusal to extend benefits for our friends and neighbors suffering from long term unemployment. and other important programs that create jobs and economic growth such as the export/import bank and the terrorism risk insurance act remain needlessly tied up in a republican

ideological war creating widespread uncertainty for our nation's job creators. in the wake of legislative uncertainty, and fiscal recklessness, some of my colleagues on the other side of the aisle are likewise attempting to stop the fed from taking action to jump start our economy and preserve economic stability. they recently proposed harmful legislation that would take unprecedented steps to virtually eliminate the federal open markets committee's role in shaping monetary policy. instead, republicans refer to put decisions related to inflation and employment on auto pilot. determined arbitrarily based upon a rigid set of factors. if enacted this proposal would undercut the fed's ability to respond to emerging threats

through rules and requirements designed to paralyze fed rulemaking and curtail monetary policy discretion. this would include concerns emanating from areas like social media, which the fed noted just yesterday appears to be substantially stretched. quite simply, the straight jacket approach taken in the republican bill would leave the fed with few options, powerless to deal with such as an emerging area of concern even if it were to pose a danger to our economy. whether emerging threats to financial stability come from social media or elsewhere, this short sighted legislation would be a recipe for disaster. chairman yellen i'm eager to hear your views on 0-hour economy who have fared during the crisis and in the future with such a regime in place.

finally, i'm very interested to hear about the fed's progress in meeting the heightened regulatory policy mandate entrusted to the institution under the wall street reform act. in particular it to urge the fed to expeditiously implement the unfinished provisions of the act and to faithfully enforce the provisions of the law, provisions like robust, living wills and a strong volcker rule that provide the rules that prevents the next 2008 crisis. thank you, mr. chairman and i yield back the balance of my time. >> the chair recognizes the gentleman from michigan, the vice chairman of our monetary policy subcommittee and co-author of the federal reserve accountability and transparency act for three minutes. >> thank you, mr. chairman. as predicted the apocalyptic view has emerged already here in

regards to my particular bill, but i do have to say that, chair, i give you credit. i watched some of your testimony last evening on tv of what you did in the senate. i give you credit for coming before this committee and giving us time that you've been very generous with that. we both know over the past several years the federal reserve has gained unprecedented power, influence and control over the financial system while remaining shrouded in mystery to the american people. this standard operating procedure i believe can't continue. we must thrift vail of secrecy and ensure the fed is accountable. this is not about your independence or independence of the federal reserve but about accountability and transparency. i won't go on my oversight rant that i did back at our hearing on the bill where i'm just don't understand why many of my colleagues are interested in embracing the responsibility of their job to go and exercise

oversight and have a lack of interest in doing that. but last week my colleague scott garrett and i introducesed hr 5018 and this legislation will pull back the curtain at the fed. the dodd-frank act bestowed massive regulatory upon the federal reserve yet the fed is not required to conduct cost benefit analysis when it considers new regulations such as the sec and ftec. additionally this legislation urges the fed to adopt a rules based approach as the chairman talked about to the monetary policy instead of the continued ad hoc strategy currently being employed. should the fed fail to adopt a rules based approach it would trigger an audit of the books. unlike the view this will chill this many people believe this doesn't go far enough. i never thought i would agree with the former chairman henry gonzalez of doing an audit of the fed.

if it was good enough for him in 1993 it's good enough for us. this legislation urges -- economists across the ideological spectrum called on the fed to set this policy that uses economic data such as rates of inflation and unemployment and to share that rule with public. we cannot have a power entity within the federal government without just operating on a whim. this legislation cod guys the common sense principle of using rules based approach when determining monetary policy. i believe it's time to bring the federal reserve out of the shadows and give hard-working taxpayers with a more open and transparent government. my bill last week was labelled spanish inquisition. it was all kind of other things thrown around. again, i believe it's our job, our constitutional duty, our constitutional responsibility to work with you and to have oversight of what the operations are and with that, mr. chairman,

i yield back. thank you. >> time of the gentleman has expired. the chair now recognizes the gentleman from new york, mr. meeks for a minute-and-a-half. >> thank you, mr. chairman. thank you, madam chair. chair yellen it's with great pleasure we welcome you here again this morning. i want to extend my deep appreciation to you and your staff for the significant amount of time you have spent on the hill and welcoming congressional staffers at the federal reserve. that's tremendously important. i too was listening to some of your testimony yesterday before the senate banking committee. and you mentioned that the united states labor markets are far from healthy. i applaud your remarks and i think that you're absolutely right. the latest data from the bureau of economic analysis show americans personal income is barely growing at a tepid rate of only 0.3%. in fact other reports indicate that the american real wages are still lower than before the crisis.

members of this chamber are closest to the american people who we represent in congress. i can assure you we hear loudly and clearly from them they are not feeling this recovery. in fact, when preparing for this hearing i took to social media just asking them to ask, well what questions they would like me to ask you and what were their current conditions. and they said too many said especially the younger americans are struggling to get jobs. when they do get jobs the wages are barely sufficient to make end meet. too many have been unemployed for more than two years, three years or more. they have exited the job market out of frustration. too many are concerned about their job security and their ability to save or invest in their future. thank you and i wait to hear your testimony. >> the time for the gentleman has expired. the chair recognizes the gentlelady from alabama. >> mr. chairman and ranking member i want to add to the voice, add my voice to the choir of those welcoming chair yellen

here today. today's hearing is critically important as we receive an update on the state of the economy and federal reserve's central role in our economic recovery. i want to applaud the chair lady and entire federal reserve for their diligent work towards fulfilling its congressional mandate to help maximize employment, stabilize price. thanks in part to the federal reserve's insight and pragmatic monetary policies our economy continues to experience positive and steady economic growth. i also want to encourage the federal reserve to work as quickly as possible to enact rules that fulfill the promifs strengthening our financial system and protect our consumers. as this committee continues to engaging conversation with key individuals surrounding the state of our national economy we must be ever vigilante to work to ensure we avoid any economic set backs. it's important we hear from chair yellen and work to pass legislation that fosters a stronger and more resilient

financial system rather than enacting strict policy rules that would impair the federal reserve's ability to do its job. we must develop and promote fair and balanced monday taxpayer economic policies that ensure the long term growth and vitality of our economy. the american people deserve nothing less. thank you. >> gentlelady yields back. before introducing our witness i wish to make a scheduling announcement. contrary to the chair's last appearance, where she stayed to answer all member questions, she's requested to be excused at 1:00 p.m. for today's hearing and for future hearings, wish to alert members of that. i have neither the desire nor the ability to hold the chair against her will. but i ham disappointed in the change of heart. not with standing my disappointment, chair, you're nonetheless welcomed. we welcome your testimony today. chair yellen has previously testified before our committee, so i believe she needs no

further introduction. without objection chair yellen's written statement will be inincluded in the record. chair yellen, you're now recognized for your oral presentation of your testimony. >> chairman, ranking member whatters and members of the committee, i'm pleased to present the federal reserve's semiannual monetary policy report to the congress. in my remarks today i will discuss the current economic situation and outlook before turning to monetary policy. i'll conclude with a few words about financial stability. the economy is continuing to make progress towards the federal reserve's objectives of maximum employment and price stability. in the labor market gains in total nonfarm payroll employment averaged about to 230,000

employment in the first half of this year. and brought the total increase of jobs in the economic recovery thus far to more than 9 million. the unemployment rate has fallen nearly 1.5 percentage points over the past year. and stood at 6.1% in june. down about 4 percentage points from its peak. there's notable improvements over the past year. real gross domestic product is estimated to have declined sharply in the first quarter. the decline appears to have resulted mostly from transitory factors and a number of recent indicators of production and spending suggests the growth rebounded in the second quarter. but this bears close watching. the housing sector, however, has

shown little recent progress. the sector has recovered from it's earlier trough, housing activity levelled off in the wake of last year's increase in mortgage rates. in readings this year have overall continued to be disappointing. although the economy continues to improve, the recovery is not yet complete. even with recent declines, the unemployment rate remains above federal open market committee participants estimates of its longer run normal level. labor force participation appears weaker than one would expect based on the ageing of the population and the level of unemployment. these and other indications, the significant slack remains in labor markets are corroborated by the continued slow pace of growth in most measures of

hourly compensation. inflation has moved up in recent months but remains below the fomc's 2% objective for inflation over the longer run. the personal consumption expenditures or pce price index increased 1.1% over the past 12 months. increases in food has accounted for some of that. core inflation which excludes food and energy prices rose 1.5%. most committee participants project that both total and core inflation will be between 1.5 and 1.75% for this year as a whole. although the decline in gdp in the first quarter led to some downgrading of our growth projections for this year, i and

other fomc participants continue to anticipate the economic activity will expand at a moderate pace over the next several years, support by accommodating monetary policy, waning drag from fiscal policy, the lag effects of housing values and strengthening foreign growth. the committee sees the projected pace of economic growth as sufficient to support ongoing improvement in the labor market with further job gains and the unemployment rate is anticipated to decline towards its longer run sustainable level. consistent with the anticipated further recovery in the labor market, and given that longer term inflation expectations appear to be well anchored, we expect inflation to move back towards our 2% objective over

the coming years. as always, considerable uncertainty surrounds our projections for economic growth on employment and inflation. fomc participants currently judge these risks to be nearly balanced. but to warrant monitoring in the months ahead. i will now turn to monetary policy. the fomc is committed to policies that promote maximum employment and price stability consistent with our dual mandate from congress. given the economic situation that i just described, we judged that a high degree of monetary policy accommodation remains appropriate. consistent with that assessment, we have maintained the target range for the federal funds rate at 0 to .25% and continue to rely on large scale asset

purchases and forward guidance about the future path of the federal funds rate to provide the appropriate level of support for the economy. in light of the cumulative progress towards maximum employment that's occurred since the inception of the federal reserve's asset purchase program in september 2012, and the fomc's assessment that labor market conditions would continue to improve, the committee has made measured reductions in the monthly pace of our asset purchases at each of our regular meeting this year. if incoming data continues to support our expectation of ongoing improvement in labor market conditions, and inflation moving back towards 2%, the committee likely will make further measured reductions in the pace of asset purchases at upcoming meetings with purchases

concluding after the october meeting. even after the committee end these purchases the federal reserve sizable holdings of longer term securities will help maintain accommodative financial conditions thus supporting further progress in returning employment and inflation to mandate consistent levels. the committee is also fostering accommodative financial conditions through forward guidance that provides greater clarity about our policy outlook and expectations for the future path of the federal funds rate. since march our post-meeting statements have included a description of the framework that is guiding our monetary policy decisions. specifically our decisions are and will be based on an assessment of the progress both

realized and expected towards our objectives of maximum employment and 2% inflation. our evaluation will not hinge on one or two factors but will take into account a wide range of information including measures of labor market conditions, indicators of inflation, and long term inflation expectations, and readings on financial developments. based on the assessment of these factor, in june the committee reiterated its expectation that the current target range for the federal funds rate likely will be appropriate for a considerable period after the asset purchase program ends, especially if projected if affiliation continues to run below the committee's 2% longer run goal and provided that inflation expectations remain well anchored.

in addition, we currently anticipate that even after employment and inflation are near mandate consistent levels, economic conditions may, for some time, warrant keeping the federal funds rate below levels that the committee views as normal in the longer run. of course, the outlook for the economy in financial markets is never certain and now is no exception. therefore, the committee's decisions about the path of the federal funds rate remains dependent on our assessment of incoming information and the implications for the economic outlook. if the labor market continues to improve more quickly than anticipated by the committee, resulting in faster convergence towards our dual objectives, then increase in the federal funds rate target likely would

occur sooner and be more rapid than currently envisioned. conversely, if economic performance is disappointing, then the future path of interest rates likely would be more accommodative than currently anticipated. the committee remains confident that it has the tools it needs to raise short term interest rates when the time is right and to achieve the desired level of short term interest rates thereafter even with the federal reserve's elevated balance sheet. at our meetings this spring, we have been constructively working through the many issues associated with the eventual normalization of this dance of conduct of monetary policy. these ongoing discussions are a matter of prudent planning and doesn't imply of any imminent change in the stance of monetary policy. the committee will continue its discussions in upcoming meetings and we expect to provide

additional information later this year. the committee recognizes that low interest rates may provide incentives for some investors to reach for yield. in those actions could increase vulnerabilities in the financial system to adverse events. while prices of real estate, equities and corporate bonds have risen appreciably and valuation metrics increased they remain generally in line with historical norms. in such sectors such as lower rated corporate debt valuations appear stretched and issuance has been brisk. accordingly we're closely monitoring developments in the leverage loan market and are working to enhance the effectiveness of our supervisory guidance. more broadly the financial sector has continued to become

more resilient as banks have continued to boost their capital and liquidity position and growth in wholesale and short term funding in financial markets have been modest. in sum, since the february monetary policy report, further important progress has been made in restoring the economy to health and in strengthening the financial system. yet too many americans remain unemployed. inflation remains below our longer run objective and not all of the necessary financial reform initiatives have been completed. the federal reserve remains committed to employing all of its resources and tools to achieve its macro economic objectives and to foster a stronger and more resilient financial system. thank you, i would be pleased to take your questions. >> chair now recognizes himself

for questions. chair yellen my inquires question has to do with the legislation. on the one hand it's only been in the public domain over a week. it's only 31 pages long. have you had a chance to read and review this legislation? >> i have had a chance to less view the legislation, yes. >> yesterday, before senate banking, you opined that under this legislation the fed would not have had flexibility to take the actions that it took during the financial crisis. i would commend for your review section 2e, subsection c of page 7 of the legislation entitled changing market conditions which reads in part nothing in this act should be construed that the plans with respect to the systematic quantitative adjustment of the target be implemented if the federal open

market committee determines that such plans cannot or should not be achieved due to changing market conditions. i personally don't believe the language could have been any clearer. it is not the intent of the legislation and would certainly welcome any policy feedback from your experts to assure that it achieves that purpose. but i believe the language is about as clear as the language could possibly be. chairman yellen, let's talk a little bit about independence. larry summers in a famous paper in the journal of money credit and banking on central bank independence measures independence as quote, the institutional relationship between the central bank and the executive. the procedure to nominate and

dismiss the head of the central bank. petroleum of government officials on the central bank board and the frequency of contacts between the executive and the bank. do you agree or disagree with his characterization of federal reserve independence? >> i see federal reserve independence -- of course, i mean we are a creature of congress. we have responsibility to report to congress, and you use the term executive branch, i any in the material. >> i use the term that larry summers used in his paper, yes. >> so i see us as needing to report regularly to congress about our conduct of monetary policy in the economy. >> let me ask you this question, chair yellen. i think it's well established -- i'm under the impression again you're required to appear before

our committee and senate banking on a semiannual basis. is it true that there's a weekly meeting between you and the secretary of treasury? >> many weeks. >> most weeks. >> many weeks we get together and confer about matters of mutual concern, but we're completely independent from the executive branch -- >> speak being of matters of mutual concern and independence, i'm certainly not interested in a transcript of a private luncheon, but would you be willing to report to this committee on the matters of mutual concern that were discussed in any agreements reached between treasury and the federal reserve? >> i'm not willing to report on a regular basis on private conversations that i have. but any agreements that were reached certainly would be in the public domain.

but our conversations -- >> how would they get into the public domain? >> well -- >> if you don't report them how do they get in the public domain? agreements between the federal reserve and treasury. >> i mean there was, for example, during the financial crisis a question as to what is the appropriate role of the federal reserve in lending programs and when does the treasury need to be involved, when is there a fiscal component and those discussions led to a formal agreement between the treasury and the federal reserve. >> my time starting to wind down. if i corks another matter on page 3 of your testimony, it reads quote, even after the committee ends these purchases, so we're speaking of tapering, quote the federal reserve's sizable holdings of longer term

will help maintain conditions. and thus returning employment and inaffiliation to mandate consistent levels. is there any current plan or any current commitment to reduce the fed's balance sheets to historic levels and i'm not speaking of what you may want to do or what you might do, but is there any current commitment or plan to reduce the fed's balance sheet to historic levels? >> well the fomc stated in 2012, i believe, we issued a set of exit principles in which one of the principles was that over time we sought to normalize the size of our balance sheet and to bring it down to the smallest level consistent with the efficient and effective conduct of monetary policy. >> chair yellen, would you

characterize that then as a current plan or current commitment to reduce the fed's balance sheet to historic levels? >> i would characterize it as a current plan. we're discussing our principles for normalization of policy and as i indicated in my testimony, i expect we will be able to give more complete guidance later this year when those discussions are complete and i fully expect that we would reiterate an intention over time to reduce the size of our balance sheet. >> thank you. the chair now recognizes the ranking member. >> thank you very much. legislation that was offered by the republicans in our committee last week would require the federal reserve's federal open market committee to issue a rule to dictate the course of

monetary policy. in your view, how feasible would it be to design a rule that would act as an appropriate substitute for independent judgment and discretion in the determination of monetary policy? and do you expect that such a rule could adequately respond to the range of economic data that affect the economy on any given day? >> i feel, congressman, that it would be a grave mistake for the fed to commit to conduct monetary policy according to a mathematical rule. no central bank does that. and i believe although under the legislation we could depart from that rule the label of short term scrutiny that would be brought on the fed in real-time reviews of our policy decisions

would essentially undermine central bank independence in the conduct of monetary policy, and i believe that global experience has shown that we have better macro economic performance when central banks are removed from short term political pressures and given the independence to, within a framework in which their goals are clear and in our case those are specified by congress given operational independence decide how to conduct monetary policy. the federal reserve is the most transparent central bank, to my knowledge, in the world. we have made clear how we interpretty our mandate and our objectives and provide extensive commentary and guidance on how we go about making monetary

policy decisions. we do, i should say routinely consult the recommendations of a whole variety of rules in thinking about monetary policy and i indicated previously in speeches i've made that these can be useful starting places or guides to policy. so i'm not 100% negative on using rules in thinking through what we should do. but i think it's a very important to understand that had we followed in the aftermath of the financial crisis the recommendations of any of the simple rules that are widely discussed, the outcomes would have been even more disappointing than what we experienced. with the federal reserve's conduct of policy departing very substantially from what those rules would have recommended, we

have had a long, slow grind to get this economy recovering. now, we actually could not have fold the recommendations of the simple rule. almost every rule would have called during, for example, 2011 and 2012 for negative interest rates. something that's impossible. and that is one reason that we began to buy asset purchase. we needed a further tool. given the fact that we have had unusual head winds constraining this recovery, i believe it's utterly necessary for us to provide mormon tear policy accommodation than those simple rules would have suggested and i think -- i think history would show that following any of those simple rules would have given us

very much worse performance. so, i feel it would be a mistake, although those rules sometimes do have merit in kind of normal times, during the great moderation when there were relatively few shots and the federal reserve's behavior the did, was very rule like. it corresponded to some of those rules and they can work well. but not always. and we can't be mathematically bound to a simple formula. >> i would like to thank you for that explain acceleration. could you not be clearer. and you could not have explained better to this committee why you certainly could not freight with some cookie cutter rule when, in fact, as you explained the head winds that you were confronted or that feds were confronted

with required discretion. it absolutely required that you have the flexibility to deal with unforeseen circumstances in having to make your decisions. i want to thank you very much. and i yield back the balance of my time. >> chair now recognizes the gentleman from michigan, vice chairman of our monetary policy committee. >> thank you. i have a quick question. have you read my bill? >> i have looked at the bill. >> you have looked at it. okay. well, that's good news. i will then, i guess, just refresh your memory and address my colleague from california, we anticipated that that might be a concern of yours. so on page 8 of the bill, under subsection 2 the gao approval of an update and we won't get into whether there should or shouldn't or shouldn't be the r or does the rule go far enough,

et cetera, et cetera. however, it does say upon determined the plans described in paragraph one cannot be achieved the federal open market committee should submit an explanation for that determination and anidated version of the directive policy rule to the controller of the united states and appropriate congressional committees. it goes on to say that then if they determine that you're not in compliance with the new rule, then you get audited. all right? it does not say that you cannot change the rule. what it says is you have to notify us, and notify them. now, i'm a history buff. so i went back and did a little history. we got to where we are today because of the employment act of 1946, where congress felt it needed to lay out what fed policy was. in the '70s, they felt congress, congress, my colleagues, felt it was too vague and therefore created a bill that would strengthen and clarify the 1946

act. it actually had three goals, not two. it's not a dual mandate. it's actually a trimandate by congress. stable prices, maximize employment, and moderate long-term interest rates. okay? so on page 3 of your testimony, you're talking about, and i'm going to quote, the second par graf down. the federal reserve's sizable holdings of longer term holdings will help accommodate conditions and returning employment to mandate consistent levels. where in the humfry-hawkins act was signed -- i'm sorry, my colleagues, signed by jimmy carter in 1978 after democrats in,and senate passed the bill, where in the humfry-hauwkins ac do we lay out a 2% inflation rate? do we do that? >> you do not make specific in the legislation. >> do we lay out exactly what

employment rates or unemployment rates should be? >> the fomc has -- >> i'm sorry, congress, the bill that was passed by democrats in the house and the senate and signed by jimmy carter. does that mandate what the employment rate should be? >> the bill uses the term as you said maximum employment and price stability. >> okay, so we don't prescriptively say it's going to be a 2% inflation rate target and 5% or 6% unemployment rate. >> it's obviously with language of the type that's in the legislation, we need to -- >> do we lay it out? >> you do not. >> okay, all right, there we go. so i am curious how us requesting a rule, a simple step in most people's view, a simple rule based policy, how is that different than the mandate, the tri mandate that was laid out in humfry-hawkins and defended

every day by others in this committee? how, when we're haasking for wh the rule is, not telling you what the rule is, not being prescriptive or even descriptive but just saying sellt a rule an then let us know so we can have oversight. i hear we'll reference my rant on over sight to my colleagues who can go back and watch it in youtube if they weren't in the committee room. so if we can get as detailed as the humfry-hawkins act or lack of detail, why can't we have a rule and have you all at the fed accept that? and if you're not willing to accept it because you're concerned about your independence, is that one -- i don't want to put words in your mouth. is that one of the reasons why you don't want to sign on to the garrett-huizenga bill? >> i'm not aware of any literature that establishes that adopting a central bank whether

it makes it public or not, adopting a rule is the most desirable way to run monetary policy. and i would say that many -- >> might want to talk to the europeans about that and a lot of other economists as well. >> well, what the europeans do is the ecb has been given a great freedom and they have defined a price stability objective. >> all right, well, here's my last request. if the garrett-huizenga bill isn't good enough, i would like to know when the fed is going to call for a resention of the humfry-hawkins act. >> the time of the gentleman has expired. the chair now recognized the gentlelady from new york, ms. maloney. >> thank you. and welcome. madam chair. i'd like to ask you about the fed's exit from its monetary stimulus. as you testified, the fed is currently on pace to wind down

its qe-3 purchased by the end of october. but right now, the market isn't expecting the fed to start raising interest rates until the third quarter of 2015. so between october of this year and the third quarter of 2015, what are the main tools that the fed anticipates using to exit from its monetary stimulus? >> well, thank you. as i indicated, if the committee continues to see improvement in the labor market and continues to forecast ongoing progress in the labor market over time, and inflation moving back toward 2%, it is our intention to wind down our asset purchases to conclude them after the october meeting.

beyond that, we would maintain the zero to quarter percent range for the federal funds rate we have maintained now for many years. and eventually, as the economy makes further progress, would begin to raise our target for short-term interest rates. and while we have not laid out a specific timeline for doing that, we have given a general principle which is, we will be assessing what our actual progress is and then our expected future progress is toward obtaining the two objectives of maximum employment and price stability. so we will be looking at how far are we from our objectives and how rapidly are those gaps closing? now, that's a matter that we can't be certain about. we make forecasts but incoming

data causes us over time to change those forecasts so i can't be specific about what the timing of an ultimate increase in our target for short-term interest rates would be. but we will be assessing incoming information. now, we do give participants in the fomc, these are not fomc policy statements, but we have provided in the monetary policy report and we provide every three months information about each fomc participant's assessment of both the economic outlook and their views on the likely path of monetary policy. so again, this is each individual's view walking into our june meeting as a committee. we have to transform that into a single policy. but it gives some indication, i think, and given their

expectations for progress in the labor market and inflation, at the beginning of our june meeting, fomc participants almost all of them, saw it appropriate to begin raising our target for the federal funds rate some time during 2015. the median participant saw the federal funds rate by the end of that year standing around 1%. so while there's no exact timing of obviously in 2015, it's not -- it's in some sense roughly consistent with what you said, but market expectations are, but again, i want to emphasize that the actual progress we see in the labor market and inflation and our general assessment of the labor market could change that over time so there's no mechanical formula and no clear date. >> okay.

will the fed start changing the interest rate on excess reserves held at the fed during this time? >> when we decide to raise our target for short-term interest rates, a key tool will be to raise the interest rate we pay on excess reserves. so we would only raise the interest rate on excess reserves when we have determined that the time has come to begin raising short-term interest rates more generally that will be a key tool that we will use. >> last week, a federal reserve vice chairman stanley fisher gave a speech in which he suggested that adding a financial stability mandate to the overall mandates of all the u.s. financial regulators could help improve financial stability. can you comment on the effect that adding an explicit financial -- i guess i'll get that in writing, my response.

my time has expired. thank you. >> time of the gentlelady has expires. we recognize mr. backus, the chairman emeritus of our committee. >> cherry allen, let me begin by saying this will be my final federal monetary policy hearing that i'll participate in as a member of congress since i'm retiring at the end of this year. during my 22 years of service on this committee, including my six-year term as ranking member and then chairman, i have heard testimony from the federal reserve chairbernanke, and now yourself. my observation during these times of both prosperity and during times of financial crisis is that we have leaders and a professional staff at the fed who have conducted themselves with honor and who have been true public servants.

so let me thank you as well as your professional staff and as well as your predecessors for serving the people of america in this most important and tremendously demanding position. >> thank you, congressman. i appreciate that. >> thank you. we've seen that f-soc where the fed is a key player exercise the authority granted by dodd-frank to designate institutions as cifis or financially systemically important. this is included asset managers and insurance companies which has been somewhat controversial. my experience is that there is often a greater resistance to a designation or a ruling when the parties feel they hadn't been consulted or the process is not transparent enough. so one of the approaches that is

attracting some interest is to require that companies being considered for a sifi designation be provided with specific reasons why and also a description of steps they could take so they might not be named as sifis. and this would be between the particular company and the fed. it wouldn't be a public discussion. do you agree or would you consider that as a reasonable approach? it would bring greater transparency to the sifi designation process, and i think laying out a clear methodology actually leads to more certainty and confidence in the process, and i think it would be accepted more readily. >> well, this is clearly a very important thing that happens to a company when it's designated. and i believe it utterly has to

be given every opportunity to understand the logic of why the fsoc is thinking that it poses systemic risk and every opportunity to present its own analysis of the issues and to interact with the staff and having a very good and frank dialogue and back and forth. and i believe that that is part of the process. and the firms are given every opportunity to intensively interact with the committee and its staff before any organization has -- is designated as a sifi. that is completely appropriate. now, in that process, there is a great deal of confidential information, so i don't feel it's appropriate for that to

take place in the public domain. >> and i would agree with you. i'm talking about a give and take between the parties. >> i think that is absolutely appropriate. and to the best of my knowledge, i mean, i've not served on fsoc when any institution has been designated, but to the best of my knowledge, when the institution gets into the latter stages of the process, there is a great deal of back and forth. >> thank you. let me talk about some demographic influences on labor force participation because i know that concerns you, it concerns all of us. part of it is the rise in the service sector employment where we have gone to a lot of part-time employment. some good reasons by choice, some not. but also many analysts think that it's being driven in part by aging u.s. population, particularly as retirees exit

the work force. does the fed take that into consideration when they talk, you know, if labor force participation doesn't pick up and growth does, how does that affect your decision to keep rates low? >> a very brief answer, please? >> i fully agree with your point. demographics and an aging population is driving and should be expected to drive the labor force participation rate down. so the question is, has labor force participation fallen more than would be expected based on demographics? and my personal judgment is, yes, it's fallen somewhat more than that, but aging is a very important downward force, and that's what i expect going forward. >> the time of the gentleman has expired. the chair now recognizes the gent gentlelady from new york, ms. velazquez for five minutes. >> thank you.

madam chair, with the prospect of zero percent interest rates coming to an end, some have warned this could unduly hamper economic growth. yet, the low interest rates pose a real threat of creating asset bubbles. what has the fed seen in the markets concerning asset prices and does the threat of a bubble outweigh any slowdown in economic growth? >> so the federal reserve has been increasingly and intensely focused on financial stability and we understand that maintaining interest rates at low levels for a long time can innocent reach for yield or asset bubbles so we are monitoring this very closely, and that's in part why i referenced some of these trends in my opening testimony.

my general assessment at this point is that threats to financial stability are at a moderate level and not a very high level. some of the things that i would look at in assessing threats to financial stability to see if they're broadbased, broad measures of asset prices, of equities, of real estate, of debt, do they seem to be out of line with historical norms? and i think there the answer is no. some things may be on the high side and there may be some pockets where we see valuations becoming very stretched, but not generally. >> thank you. >> the use of leverage is not broadbased. it hasn't increased in critic growth is not, you know, at

alarming levels by any means. >> thank you. although the economy is recovering at an accelerated pace, many experts have warned of the disconnect between start market gains and overall economic growth. what impact are the fed's current monetary policies having on this phenomenon? >> well, low interest rates, an environment of low interest rates. interest rates are one factor that affect asset prices generally including equities, so a low interest-rate policy, i think, partially accounts for why housing prices have rebounded and also is an influence on equity prices, but it's not the only influence. the economy is recovering, and earnings have been -- >> but do you find this to be

concerning to you? is it concerning to you? >> the issue being that monetary policy affects asset prices? >> yes. >> that is one -- >> well, the disconnect between stuck market gains and overall economic growth. >> so i don't have a view. the federal reserve doesn't take a view as to what the right level of equity or asset prices should be. but we do try to monitor to see if they are rising outside of levels consistent with historic norms. and as i indicated in spite of the fact that equity prices broad indices have risen substantially, price equity ratios and other measures are not outside of historical norms. and i don't know what the right level of prices is, but in that sense, i'm not seeing -- >> thank you.

>> -- alarming warning signals. >> as we all know, the economy has been creating jobs at an accelerated pace recently despite fears that tapering the fed's qualitative easing could slow the recovery. in your opinion, is this strong evidence that the economy has turned the corner and now is healthy enough to self-sustain the recovery? >> i am optimistic about the economy, and that's reflected in the forecasts that are included in the monetary policy report. we had a very surprising negative growth in the first quarter, which is a number that in a way doesn't seem consistent with the underlying momentum in the economy and many indicators of spending and production. and i do think the economy is recovering and that growth -- growth is piin