he had to step in -- he asked me to step in. an emergency event in nevada and he had to return. to step in.ed the sessionar with so i am able to talk a little bit about this particular session. it is called the next generation view of 360 degree changing communities. the reason we put this session in is because it is under the news you can use template. we have been talking about demographics and the aging population and all of these things for years. what it comes down to now is we

are at the beginning of the issue. it is no longer an article in the omaha world herald 10 years ago that says, you had better be worried. the governors association to start the process of thinking about it and certainly being able to assist the governors. that we arexcited doing this and i know that governor sandoval wanted to be here. as many of you know, nevada is seeing this change. they have not only the aging population but they have an explosion in the southern part of the state in the las vegas population.12 many students coming in where english is not their first language. create want to do is to

an understanding in this panel of some of the issues and needs of what is going on with regards to demographics. there are a lot of issues that have come up with the skills gap and other things. demographics has a direct impact on all of these things. on behalf of governor sandoval, i welcome you to this session. let me introduce you to our speakers today. i want to start with tom gillespie. he is the former demographer of the state of minnesota. if you don't have a demographer in your state, you should. you should have a state economist and a state demographer. he is the director for policy and marketing at the bank of america. one thing i am excited about having him here is that he will

talk about not only the downside to the aging population, but the opportunities that you have. , ceo andlillian lowery executive director of future ready columbus. she is the former chief school officer of two states. that is unusual. maryland and delaware. i will briefly say a few words about the budget and fiscal issues under demographics that we should think about. let me mention one thing about my personal experience. in virginia state government, we had an elaborate process that went on for months in which we determine the estimate of the prison population and we did that to determine how much we want to appropriate for prisons and how much to build.

itt was fascinating about was, after going through all of this methodology come out one of our demographers said, i don't know why we spend weeks on this, we just have to look at the demographics and to determine how many young men between 15-25 exist at any given time and we can extrapolate the prison population. it sounds simple, but it demonstrate -- it demonstrates how demographics are such a key factor in one of those budget-driven decisions. i will turn it over to tom. slides that i think you'll find interesting about the aging regulation and in the financial implications of the demographics and the diversity we are starting to see. >> normally, demographic change

proceeds at a glacial pace but we are seeing rapid changes and the impact of demographic change that affect public services, demand economic growth, and state budgets. the biggest one is aging. we're getting older. this is not a normal thing. this is the first time in the history of human society that we have seen something like this happen. it is happening on a global scale. many countries of the world are experiencing this. by 2020, that is only four years away. age 65 and weer have kids in k-12 education.

for the 65 and older population we have more that will continue from the k-12 population and have record numbers from the their socialing security check. in addition to aging, america is growing more racially and ethnically diverse. 2044, we will no longer have majority race. all of our races and ethnic groups will be minorities in some respect. has an age component because our children are much more diverse than our older population. education is a critical element in our future and our future economic growth.

here we see very large-scale differences by rafe and -- race and ethnicity and poverty and non-poverty dimensions. not only are these large differences but they are our highest performing groups. they're not performing as well as we would like to see them perform. we need to ratchet up our performance across all of our groups and society. growing numbers of jobs in our society because of technical ago -- technological changes and other changes require more than a high school diploma. they require an associates degree or the college degree or some kind of training beyond the

high school level and this is increasing over time and the educational requirements are expanding as we move into the future. our children may not actually be prepared for the jobs of the future as we saw. state and revenue growth will suffer if we do not meet the demands of jobs in the future. medicaid is in minis dates the fastest-growing component of the budget and right now, medicaid and k-12 education is beginning to squeeze other components of our budget, this will increase to medically, reticular early after 2025. many of the baby

boom generation will begin to and we will see rapid rises in dementia and chronic health issues related to aging. unless we are prepared for that day, that will squeeze state budgets. to conclusions about the impact of demographic change. it is important to understand that this is not a short run issue. structural so that quick fixes will not solve this issue. runeed to see long structural changes. economic growth is likely to slow if we do not see those

changes and efforts to increase revenue will be met with increasing resistance. spending pressures will continue to increase due to aging and health care costs. dealing with our legacy costs -- also bonding and other legacy costs will be a major challenge for state government budgets going into the future. without fundamental change, the state spending will shift. and committing social services to health care and pension costs with an application for future revenue growth beyond that so if we focus on health care and future costs our economic growth may be diminished as a result.

>> look a dramatic the changes we are seeing are. taco at the implications of the aging population but also the opportunities that states and governments can think about as those changes take place. setom put together a data -- we look at it as an opportunity set. i look at it from a consumer demand perspective. when you think about baby boomers, they are 60% of the total spend. the same spending in terms of health care is 73%.

i look at companies and i say that is demand. at bank of america, we look at this opportunity set and we called it the similar economy. all of, if you add up the demand, how much is it? we think, globally, the size of the super economy will be $15 trillion. bethe u.s. alone that will $7 trillion. for illustration purposes to understand what $7 trillion means, if you would take that segment and look at it, it would be the number three economy in the world. as investors take advantage of this opportunity? we think there are three tracks.

one is through health care and pharma, the second through financial services and the third through consumer -- i can spend a lot of time with charts and graphs but we illustrate them with examples. let's take health care. in that study about health and retirement we asked, what is it that boomers are concerned about in their later years. or disablinge fear condition was alzheimer's. it took us by surprise. we thought cancer or something but alzheimer's, why is this a concern? the number one fear for the disease is the loss of a sense of freedom. taking away my car keys.

the second concern was a fear of loss of dignity. of being fear is that a burden on their family members. 85,cdc says, when we turn the chances of being in steep cognitive decline is one in three. two of three couples will go into steep decline in alzheimer's at age 85. public policy makers have woken up to this. the only disease that got their funding doubled at the nih's alzheimer's. compared tosmall spending on cancer which is $6 billion. for us, alzheimer's is whitespace. if you as a company want to invest in the area and there is increased funding or if you are a state looking for facilities

want to start, alzheimer's would be a great place to go. means dollars. in the financial services base, we see a really transforming world. when we talk to our customers about clients they don't just want to talk about money management. they really want to talk about health and home. and working past 65. live clearly expressed that when they invest their want to focus on doing good for communities and earning a fair return. there are a few of us at this table who have worked on social impact bonds to reduce the .ncidence of prison recidivism

this has governors shifting risks to investors. the nga staff a year and have ago had a discussion about how to take social impact bonds into the various states. goodsird one is consumer and technology. californiacompany in that has an app through which with one click of a button you can get health care services for mom and dad. uber-ization of health care. if you think about the demands, 50% of changes in home renovation is by the boomer set.

plumbing companies, technology companies, all of these organizations looking at the consumer economy as an opportunity. the question is, as investors -- as states, huddy attract these companies that will focus on the consumer economy to -- focus on the super economy to grow the gdp and jobs? >> that's great because that makes us think about things that i know i have the thought about in terms of aging the population. often we see it only in a negative way and it is nice to hear a broader view of what kind of services will be needed and what can of services the private sector can do to deal with and deliver those services. delighted to have you because you have specialized services at all levels of

education. so of the things that is interesting about demographics is these changes have begun taking place at the public school level. you walk into a grocery store and you see people of all ages and you see one set of america, you walk into public school and you see the future. lillian, we would love to hear about your thoughts on education and demographics changing in the u.s.. >> the data you have been presented today are aggregate data but if we diss aggregate we can see some of the challenges that face state i state leaders. i will give an example because we do want to get to the q&a and since i'm bringing up the and of the conversation i what to make sure we allow time for that. i will give you an example of

how the state of ohio in particular is addressing the data and the circumstances that have been delineated for you here. the columbus partnership is an organization of the 52 largest ceo in the central ohio region. a significant number are in the health care field and financial services. looking at these data is something they have been doing overtime. they have taken on every frontier on economic development and how do we grow new businesses on technology. how do we innovate and create some we have the kind of apps they can give families access to elder care. along the way, when we started talking about the aging of america and the kinds of numbers where this gap is growing with

more boomers than people in the innovate,o plan or they realized that education had to be a part of their portfolio and realize that what they do really well is run their businesses and grow job notrtunities, education was in their wheelhouse. me toy stood up and hired come there and advise them on these kinds of discussions and these kinds of data. they can find things working really well from zero to 24 years old as we think about the pipeline that we will have to backfill what is happening in our environment. what is working that we can accelerate or expand and where are there gaps that we can use innovation and creative energy to solve for ask if it is a

deficit in our environment. what we start out with that many of you and the governors have --rd over and over again because of the browning of america, because there is no majority anymore, we are dealing with children who are not just born here but a lot of new americans. in ohio, the second-largest somali population are nepalese. olivet is integrating into the ecosystem. what we are trying to do is look at what happens to them -- all of this is integrating into the ecosystem. what we are trying to do is look at what happens to them when they are integrating. we're looking at what kind of high-quality care is available to our children before they get

to kindergarten because we are that childrens show up to kindergarten not knowing how to hold a book, not knowing numbers, the alphabet, their names or how to spell them. that means the achievement gap does not walk into the door with them. the oness like -- it's one you less example. i will stop. governor kasich -- one last example. then i will stop. governor kasich has the community mentoring program which includes community organizations -- they go into communities.

we would a personal discipline and personal responsibility and the social skills they need to be successful in the work force. he has something called the straight a fund around innovation in creativity where he engages the business community in local jurisdiction to partner with schools, colleges, and universities to look at innovation and creativity around stem. opportunities are not something that would normally happen with a school on its own so the business community, the philanthropic community and organizations that understand their ecosystems far butter -- far better than someone sitting at a distance is benefiting from up to $1 million per year.

-- by end by claiming saying that we are so pleased in public education and the example set each of you can look to. governmental leaders in the schools working together, whether they be public schools, i've it or parochial schools. if we are not all working together to ensure we are developing the pipeline needed to backfill this workforce where we are preparing our students to engage in their future then we miss a great opportunity. this as ann we see exciting opportunity to focus our work in a way that will you -- that will be beneficial for the common good. >> what a great example of innovation to deal with some of these challenges we are seeing right now.

in a moment we will open this up to the governor. i want to say a few things about the budget and financial impact. unlike the federal government, states have to balance their government. standpoint, itl is a zero-sum game. as tom pointed out, i can certainly emphasize what we are seeing is a situation in which the expectation is that revenue will grow slightly below average and not quiteome the same level we had from world war ii until the early 2000's. you have a limited expectation because of our tax systems and the changing economy for a weaker average growth rate of revenue.

side, you have a lack of flexibility. i always say, there are certain things you cannot do at least immediately. there are those expenses that are fixed and often growing. fiscale a difficult situation and what is really interesting, the demographics of such a critical role. we know at the health care leveled her is no question that the aging population has a huge impact. you point out that a state like utah or nevada where they have fairly significant k-12 populations. one of them is this issue of the

pensions. that states will have to put more general fund moneys into their pension systems to ensure they are fully funded or adequately funded. the flipside is not to put the money in and then you put in the pension system or create a risk. there will be more pressure over .ime the actuary say you will need to put the pressure on or put additional funds in the pensions. next 10 to 20 years there will be a huge dramatic issue for states simply because of the additional funds necessary. financeyour budget directors have said this to you,. a budget crowd out. as you have to put more money

into certain things like medicaid, it crowds out the funding available for higher education or other things. politicalome great and financial dilemmas going forward. obviously, food for thought in so many different ways. i would like to take a few minutes to open this up to the governors. we have an incredibly esteemed panel of experts on this issue and it would be great to hear if you have a particular question for them. i cannot tell you how many times in the sunday paper there is always an article about the aging population but now we are seeing them -- that these actually have implications for you in your state. governor herbert, i turn this over to you.

>> we certainly are open to questions. the expense side as you touched on of the changing demographics is impactful in many ways. you mentioned utah. birthratefast-growing so our impact on schools continues to expand where other states are leveling off. so for my budget i am impacted by that higher birth rate. i expect we will follow the national trend and slow down. i've taken the pledge and i will not have more kids. that is just one aspect but i withn aging population more impact and more reliance on medicare, health care, government assistance.

we have immigration coming into the country. undocumented immigration is certainly a cost to the country. concern that we have is, are we adding to the burden of the tax payers by having more and more people on government assistance because of the changing demographics? countries out there have a hard time growing their economy because so much of the gdp goes into supporting. supporting those on government assistance. tell me about the demographics, are we going to be able to support this? >> i am very optimistic about the future.

we will find some solutions for critical issues. one of the things we need to discard is the notion of that once you turn 65 you are ready for the scrap heap are ready to take a long vacation and not do anything. the worst thing we can have is doing nothing. keeping people active, finding ways to keep people in the workforce in ways that they would like to do. the economy and keeps critical skills in our workforce. finding alternatives for retraining and things like that once a persont,

leaves the workforce, opportunities for volunteerism or things that can defer some of the state expenses while keeping people active and make them feel like they are making a contribution to society and in doing so will be healthier and longer lived and less expensive to state government budgets. there are tremendous opportunities. this is not a one-sided thing. we need to think alternatively about how to move forward in the future. >> as we were looking at boomers and surveying boomers, we were surprised that 85% of those surveyed said that they want or need to work past 65. those who said that they want to want to do it on their terms.

the question is, are companies like mine set up to take on senior workers and are the policies at city and state age-friendly? >> i would simply say that one of the things that really enticed me to take on this ohio opportunity is that the is this community is all in. so they are willing to invest with matching funds as long as the plan makes sense to them and they can maintain productivity. >> what you have illustrated and what we have probably all known intuitively is that demographics are changing. the question is, are the policies changing to line up with the demographics?

bush who triedt to say we need to get social security on track with actuary -sound projections and it became a divisive issue and we kicked that down the road. past 65that people don't want to be put out to pasture. they went to find another way to be retooled. when you look at the last 100 years and america, the average an american was 47. and now it is 78. for women it is 82. i don't see a lot of change in policy. are we just going over the cliff saying, we have to change social , push it from 65 to 70,

-- >> one stat that i wanted to add today, theild born chance of that child living to 100 is one in three. we will have a society living up to 100. change.s have to for 35 years i work in state government and was reaching these issue saying in the long run this is going to happen. the response often was inappropriately so that that is the long run but we have more immediate short run issues to deal with. what has happened is the long run has become a short-run issue.

we cannot kick the can down the road anymore. we have to start making some decisions. private of public and partnership is brilliant because many corporations are also very concerned about these issues. that sets up the real possibility for making dramatic changes in the way that we deal with an aging population. >> i hope you have all thought about this. you have a wonderful role in your bully pulpit to ask people and encourage people to save for retirement. statistics, they are terrifying. i'm not doing enough and i'm trying to get prepared with my 401(k). and i am pretty educated. are there ways within your state

to ask your citizens, what are you doing to think about and save for require -- for retirement? terriblee will have a crisis in 15 to 20 years with people getting to that point and who are unable to live on what they have saved, even with a supplement of social security. >> i sometimes feel like demographers, those looking to the future, like paul revere running chemistry trying to tell the people, there is a problem coming. and we are being ignored. as elected officials, i think we need to take it seriously. >> other questions? john. and then confess that i'm in a relatively good position in

south dakota. the governors before me and the legislators in the past have been fairly careful about some of these things. the sum ofding that the things we have shown on the charts and have predicted as coming, we have already started to see in south dakota. are seeing medicaid come in an ever increasing fraction of the state budget and it is crowding some of the other things that the state budget covers and that is true in a state that really has avoided some of the long-term liability issues. marketar with the stock over the last 12 months ending great, 30 it was not so not meeting the investment projection. funded or 93% something like that.

good among the states but certainly a harbinger of what could occur down the road and it is already occurring in states like illinois where the underfunding is severe. what some states are starting to do is within our reach. the pensionging plan for new hires. some states have been doing that, keeping the pension commitments that have made to workers that are on the workforce c-span.org -- workforce. that is a long-term solution. it will take some time for those currently on the workforce to move into retirement age or death and then the new employees

will be offered a more modest plan that is more realistic in terms of what they can afford. that is one thing we have done. i know iowa is very much like us. they have low debt and a well-funded pension plan. i look at the nation-wide averages and compare the other states with significant pension liabilities. i can see that what we have started to experience on a goingl level is probably to occur on a significant level in the not too distant future. we have had to do something's to forestall that will stop -- that. we raised taxes to increase funding for education. medicaid was edging out our ability to do that.

for infrastructure. we had to raise taxes for infrastructure. iowa in thatbehind regard. they raced their tax and we shortly thereafter raised our tax. citizens willhe accept those kinds of things if they feel the dollars are not simply to pay for past sins, but to pay for prospectively better futures. , if we do not move quickly, it's like the me andiser who wants to co raise funding for a building that is already built and they were to raise money to pay down the debt. it is a hard sell.

versus the college advancement officer who says, let's build a new science building. your knowledge will make that brighter future possible. it's not so much a question but a comment that some of the perspective futures that you have shown us through those graphs and slides are even occurring already today. >> governor edwards? edwards: the question i have is for mr. gillespie. governor herbert was talking in terms of the burden of the aging population. a lot of that is progress. there is a cost associated with progress. people are living longer. there was a time when you had a heart attack when you are 50 and you died. now you're living much longer because of medical science and

-- i'meuticals, meaning making this up because i do not remember the exact amount, but you consume 90% of the health care of your life over the last 10 years of your life. that is a tremendous cost. progress, we have to find a way to pay for it. there is a revenue component. if you allow medicaid to squeeze out your investment in education, you will have less revenue with which to pay the cost associated with it that progress. this is all extremely hard and if you focus in on one part to the exclusion of another you will be completely out of balance as well and i ask you to comment on that. in one sense, and i totally

agree, in a large sense we are the deviled by our blessings. we have been richly blessed as a society, we have more opportunities and we live. we are complaining because we are getting older and eventually we will not be as active and it will cost a lot. thing is that we need to be aware of it and plan for it. so while many people listen to the numbers and think of it as depressing, i don't think of it as depressing. something thats it simply is. we simply need to prepare for it, go forward, and recognize that we are living longer, we are living healthier. what a fantastic time to be

alive. i don't think it is a negative thing. thisst need to be aware of and it's and locations for budgets and the able to deal with it. >> one of the things we were working on when i left the state -- i believecy most states have infused financial literacy from kindergarten through twelfth grade. it's about planning for situations where pensions may or may not be there when you have to go away and pay huge amounts ago to college. i would advise states to look at wese curriculum to make sure are starting with these children early on and helping to get their mindset to that

responsibility for living longer and what that means financially for families. >> i didn't get the whole presentation, so i apologize if this was covered, but the reality of your discussion over the last 20 minutes can do nothing but lead us to conclusion that the discussion of entitlement reform that is not income-based is for all intents and purposes an impossibility. when you say in the next 20 years we will have a tidal wave of people who have not saved, there is a certain reality that we are living in an economy where people are not capable of saving. we spend a lot of time and energy in the united states pretending that we will suddenly take people living in poverty, or projected to live in poverty, even with the benefits we are somehowg and we will

reform those in a way that we will save money that is an aching -- anything but income-based becomes an impossibility. i would urge you to take the show on the road and spend time in washington, d.c. cannot act up the difference so it is an important discussion and a reality that we need to confront as a nation. it's fun to talk about, but it is not reality. that is my comment. me that if weo took tom's data, which is national, and made it state-oriented, that would put a layer on top of that that asks state, aion, am i, the net exporter of senior citizens or a net importer of senior citizens? that has an application for gdp.

if you are focused on the expense side, i have a problem. if you are focused on the revenue side, and you are a net importer, you can drive revenue. i would ask, what does the state demographic look like? mi a net importer or net exporter? mi set up to attract those -- am i set up to attract those companies that will focus on this? >> i think we have run out of time. let's give our panel a round of applause. [applause] we will now take about a 10 minute break. we have our last session on cyber security. we invite everyone to stay but hurry back.

[inaudible]

>> c-span's live coverage of the national governor's association's summer meeting in des moines iowa continues. another discussion will come in about 10 minutes here while the governors take a break. a session on how states can better protect against cybercrime. our live coverage will continue when that session gets underway. address asthe weekly the president discusses efforts by law enforcement to work with community activists. that is followed by the republican address. you will hear from house speaker paul ryan and house republican conference chair cathy mcmorris

rodgers. now the president. pres. obama: it has been a challenging couple of weeks. the shootings in minnesota and baton rouge. the protests. the targeting and murder of police officers in dallas. it has left all of us struggling to make sense of things at times. themany, it can feel like deepest faultlines of our democracy have suddenly been exposed. theamerica that i know, america that i saw this week is not as divided as some insist. i saw it on monday when i met with law enforcement. how too often we ask our police to do too much. to be social workers, teachers, guardians, drug counselors as well. i saw it on monday as a travel to the memorial for the opposition died in a line of duty.

i saw it wednesday when i hosted police chiefs, black lives matter activists, state and local leaders, and others for a discussion that lasted more than four hours. discussion on the steps we can take to support keeping our streets safe and instill confidence that the law applies to everyone equally. i saw it thursday one we talked about how there is no contradiction between honoring police and recognizing the racial disparities that exist within our criminal justice system and trying to fix those discrepancies. these conversations were candid, challenging, even uncomfortable, but that is the point. we have to be able to talk honestly and openly. not just in the comfort of our circles, but with folks who look differently and think differently than we do. that is what america is all about. not just finding policies that

work but forging consensus, fighting cynicism and fighting the political will to keep changing this country for the better. us, is what america gives all of us, the capacity to change. it won't happen overnight. the issues we are grappling with the back decades, even centuries. about whichrry less side has been wronged and worry more about joining sides, and i am confident that together, we will lead out country to a better day. have a great weekend. >> today, people are anxious. we are all anxious. we are on edge. there is a better way to make america the best place to live, to work, to build things, to raise a family. >> last fall, we can together

and made the decision that it was time to go from being an opposition party to being a proposition party. we look at the problems facing our constituents in the country and coming up with solutions. >> for last month, this conference has been coming together to find the legislation to put plan out. this is a better way. ryan: these ideas work in a simple way. we take timeless our timeless p, we apply them to the problems of the day, and we offer people solutions. >> it is based on commonsense principles everyone can agree on, rewarding hard work, stimulating growth, holding the irs in check. can get thes that economy moving again, to make america competitive again. it does not just reach a few. it will reach all -- from

poverty to the lowest rungs of democracy. a better way to get as a military we need. >> at think it is pretty clear notthat people know we do like obamacare as house republicans, but they want to know what we are for. gets ridetter way plan of the mandate killing jobs under obamacare. tothat what people want is be heard. that is why it is so important we restore people's voice in their governments and uphold the constitution. let's reaffirm a government of , by the people, and for the people. >> as we go back to our districts, we will not just talk

about it. we will show a better way for all americans. job is to lookur at the problems facing this country and offer solutions. that is what we are doing. seven out of 10 americans do not think america is headed the right direction. we agree. rather than simply complain. rather than throw bombs, we are offering solutions. >> the american people deserve a better way and that's exactly what this house republican conference is going to deliver. moines, iowain des where the national governors is going.n meeting another discussion coming up, how states can protect against cybercrime. while we go back to this morning where donald trump introduced

governor mike pence of indiana. trump: with that, i would like to introduce a man i truly in everys outstanding way and will be the next vice president of the united states -- governor mike pence. thank you, thank you everybody. thank you -- thank you. governor pence: on behalf of of my family here and looking on, would you join me in thanking donald trump and his entire family for these sacrifices they are making to make america great again?

and i thank donald trump, the confidence you have placed in us , and i accept your invitation to run and serve as vice president of the united states of america. i come to this moment deeply humbled with a grateful heart, grateful to god for his amazing grace, grateful to my wonderful wife karen, and our three incredible kids -- marco, -- michael, charlotte, and audrey -- and grateful to this builder, this fighter, this patriotic american who has set aside a legendary career in business to build a stronger america. donald j. trump.

and let me say -- having had the privilege to spend time with this man and his family out of the limelight, i know what all of america will soon know even better -- these are good people. donald trump is a good man and he will make a great president of the united states of america. donald trump understands the -- event with donald trump and governor mike pence will air in its entirety at 7:10 eastern time on c-span. of course you can watch that at www.c-span.org, and our coverage the republican national convention win donald trump and mike pence are expected to accept the nomination of president and vice president begins wednesday.

you can watch on c-span, listen on the c-span at, and every moment of the republican national convention we will be covering this week. moines, thedes national governors association, a discussion on how states can better protect against cybercrime as our coverage of the nga meeting continues.

>> ladies and gentlemen, please take your seats as the session is about to begin.

>> now it is on. welcome to our closing plenary session. we are honored to have you all here. thank you for your attendance. we have special guests that will be introduced shortly as we have a discussion on cyber security, and again, our guest, our sponsors, we thank you for your participation at this national governors association conference. while i am talking about that, let me just say, as chairman of this great organization, it is an honor. i know terry and i work talking earlier. wereknow terry and i talking earlier.

it has been an honor to serve as your chairman for the past year and having -- looking forward to taking on that opportunity and responsibility this next year. i have come to appreciate in this chairmanship role these significant help we get from our nga staff, kind of the on song heroes behind -- the unsung heroes the hind the scenes. yet they make things run smoothly and on time and help us as governors look better than probably we deserve. i want to thank the national thernors association staff, bipartisan effort, the advice that comes to us from them as we sort through a lot of material is very impressive. this is my seventh year. i have never missed a meeting. i enjoy coming.

i enjoy associating with the great governors and leaders of our country. they are doing great things. we have guests that come from time to time and give expertise and counsel. i'm a big believer in this organization. i would like to thank scott patterson -- where did scott go? our new executive director, who has come with a mandate to raise the awareness of this organization around the country and help us having more impactful profile. i'm a big believer in state and the roles that they play and frankly, i believe the states are -- many times, the states are the best part -- hope for , have america sting the right direction for the people of this great country. i know that governor mcauliffe will continue that same legacy.

he understands the significant, important role that states play and i know we will turn the reins over to him in good hands. with that, i would like to call on larry hogan, who is our nominating committee chair to come and report on the nominating committee. so, larry? governor hogan: thank you, mr. chairman. on behalf of the nominations committee which includes governors baker, hutchison, pleasedand tomlin, i am to present the slate of nj officers and executive committee members for 2016-2017. for membership on the executive committee, governor malloy of connecticut, governor bullock of montana, governor nixon of missouri, governor branstad of ohio -- i mean iowa. what a big blunder that was, huh? post your today.

governor mccrory of north carolina, the governor of tennessee, have herbert of utah, and as the vice chair, governor brian sandoval, and for our next nga chair, my good friend and neighbor to the south, governor terry mcauliffe of virginia. chairman herbert, on behalf of the nominations committee, i moved to have this outstanding slate adopted. well, thankbert: you. we have a motion on the floor. is there a second? second. any discussion? hearing on, all those in favor say aye. motion carries. thank you, larry. appreciate your good work. before we turn the gavel over to our new chair, i ought to make some recognitions of those leaving their service with us

here. am just trying to check to see who is here. those who are not with us -- this is their last meeting as they exit office -- we have governor jack markell, peter shumlin, jay nixon -- i see maggie hassan. she is leaving, 20. i think she is running for the senate as i recall. earl rate -- is earl rate year? here?earl ray ray,rate tomlin -- earl one of west virginia. come on up.

, we have adilla plaque for you. we appreciate your service. governor padilla has been involved in a lot of great things in puerto rico, and we all of the challenges you face, governor. really, one of the reasons he is not going to be with us is he is stepping down voluntarily, not running again, to see if can concentrate on helping get puerto rico's economy back into a healthy condition. that is a true sacrifice and that is true service. and we are honored to have you as part of our colleagues here in the national governors association. we wish you well. you have done great work there in puerto rico, not only as governor, but prior work in transportation and utilities and things important to go. we are going to miss you being your, buddy. governor padilla: thank you. thisnor herbert: we offer in recognition of you, so -- [applause]

governor herbert: ok. i think we have the opportunity -- i don't know if this plaque is supposed to head to you or the gavel? [laughter] governor herbert: terry, you are in jar. -- you are in charge. [applause] governor mcauliffe: i would like to -- on behalf of all of the governors -- presented this to recognize the service of gary herbert who has been an outstanding share of the national governors association. i can tell you personally serving alongside gary, we have built a strong, strong friendship. it shows bipartisanship works. he has been a gentleman to all. he has listened to all of our ideas.

i've got to tell you, he has been a great leader. governor, on behalf of all of nationalnors of the averages association, i would like to present to you this gavel in recognition of all of your outstanding work for the nation's governors area [applause] -- nation's governors. [applause] governor herbert: thank you very much. terri is going to do a great job. you all do great jobs. state are the best hope for america. keep up the good work. thank you. governor mcauliffe: well, thank l, today. i cannot tell you how honored i am. i am honored that governor brian sandoval will serve as vice chair with me. we will make quite a team. brian and i are committed to making sure the role of the nga influence isga's

recognized. as we embark with a new administration coming in, we want to make sure the governors are at the forefront to talk over the joint concerns of all of us. one of the ways i do plan to move the national governors association forward is through my initiative, which is to meet the threat -- states confront the cyber challenge. this will highlight an issue i have been focused on since my first day as governor, cyber security. in addition to providing states they need torces meet this threat, my initiative will build on the strong work of resource center, an effort i have chaired for the last year and a half with governor rick snyder of michigan. i know firsthand my work in virginia, i hit this issue as soon as i took over in the commonwealth of virginia.

just to give you an example, so , virginia has had 53 million cyber attacks this year. that is every four seconds. that is 300,000 cyber attacks a day. we have successfully blacked 4422 malwareed attacks. we know it is both domestic and foreign actors continually probing and infiltrating critical infrastructure to access sensitive information and our systems and if they are compromised, they can have significant consequences to our citizens. and are looking to encrypt attack our systems for data.

financially, it has cost the united states economy over $300 billion annually. yet our ability to confront these threats is hindered by not investing in our education system and our workforce development programs. we need to grow, train, and retain the best cyber security personnel in our states. as a result, we are missing out due to our inability to meet cyber security demands in the private sector. has 17,000 jobs open in cyber security. be starting pay -- $88,000. that is $3 billion of annual payroll we are forfeiting. that is why in virginia today, we are making sure that we are adapting to be growing need for cyber warriors. one of my very first executive

orders as governor, i created these cyber security commission. it led to 29 recommendations on ,ducation and workforce economic development, cyber crime, cyber infrastructure, network protection, and most importantly, public awareness. i am proud to say since establishing the commission, or genia has become the first state in the nation to adopt a standard for cyber security framework. we passed legislation protecting identities,igital establishing accountability and older state agencies, developed and enhanced cyber security standards, and increased our ability to prosecute cyber crimes. we adopted in advanced credit card standard for security. and we introduced several cyber

2017-2018s in the budget, including a scholarship for service program. if you give us two years of state government, we will pay for your cyber degree. we put a program together for returning veterans. i'm very proud and virginia that per capita we have the most veterans of any state in the united states. more female veterans. more veterans under the age of 25 than any other state. we want to make sure when they come back, we can roll them right through cyber training and put them back to work. we already have a very strong base, and we are positioning virginia as an international leader in cyber. four days ago, i was in israel investmentll make an

in the cyber education system. this is going over all -- this is going on all over the globe. all of these have constant cyber attacks. our partnership with the federal government is to make sure we so thoseederal assets assets day and continue to grow. 650 cybers home to companies. that represents an increase from 450 in 2011. i am proud to say virginia was which for a new squadron will be served at langley air force base. virginians work in the cyber sector and that number is expected to grow by 25% through 2022.

we are building the new virginia of withstanding sequestration and budget cuts. the aim is to replicate work we have done in virginia across all of the other states in the country so everybody is best positioned. if for genia is out for the lead in these issues, it really does -- if for jing is out of the lead in these issues, it really does -- it virginia is out of the lead in these issues, it really doesn't matter. our goal is to make sure all 50 states are doing the protections they need to go forward. we will provide governors resources and recommendations. we will focus on how cyber security affects all sectors of state government including health care, education, workforce development, economic development, infrastructure, public safety. there will be a series of regional summits designed to educate state policy makers on

how cyber security interacts with state government. the idea is to provide you with thatfic takeaways policymakers can implement immediately in their states. we will develop an online and, working on creating, improving, and fostering strong cyber security states. there will be templates for our policymakers that you can use as a cyber security strategy. we will have checklist for issues, and a compendium of cyber security executive orders, many we have already done in virginia. and bring them to your own state and push them through executive orders, and sample documents and legislation that we have already had approved that you need to approve immediately to begin yourselves. finally, i am excited to announce that through this

initiative, we will launch continuous podcast featuring leading security practitioners discussing issues of particular importance to our state government. hosted on the initiative website and through multiple podcast platforms that we have. in front of each of you is a here,ist as you can see that you can use to begin to assess your states readiness to assess cyber threat and the opportunities that exist in the new economy. we will not single out states, but we have been working very hard at the nga. five states have taken innovative leadership, 20 to 25 states have made very good progress. 25 states have a very, very long way to go. my point as i said earlier, if there is a weak link in the chain, it affects everybody along that chain-link. that at, it is my goal year from now, everyone in this room along with your colleagues,

will be equipped with answers to each one of these checklist items. promoting cyber security within our state not only protects our critical infrastructure, it creates economic opportunities. as leader pelosi said, this is a issue the federal government will spend billions and billions of dollars on. as a governor, if they are spending that kind of money, i want to make sure we are getting our fair share to the commonwealth of virginia. we cannot protect our citizens , andut hiring, training the skill sets to protect them. that is why we need to think about what we are doing in our k-12, and those critical high school years. greate with us today two leaders to help us frame the issue, understand the role of governors as they work with the private sector. they are chief executives in their own right, they play a very important role in protecting their companies. we have two outstanding

corporate leaders with us today, susan story, the president and ceo of american water. they are in 47 states. joe swedish, the president of anthem incorporated. anthem has nearly 100 million folks involved with that company. both of these individuals deal with cyber threats each and every day. is morenow, nothing important for human health and then clean, fresh water. and millions of americans depend on utilities to provide it. not much attention has been paid security withyber the electric grid. we'll discuss how cyber security affects the broader infrastructure sector. and as you know in the health care sector, the entire industry is transforming how it handles chant -- information and data. toper measures are needed

safeguard patient information and guarantee the delivery of life-saving medical services. not sectors face challenges dissimilar from what we face in our respective states. who did notceos have a cyber security background. yet, they had to very quickly learn about this complex issue and spearhead new policies for their companies. they will offer us insights as to how we should address the issue as the ceos of our states. so let's start off first with susan. and she will provide us a little background on her company, and what she has had to do to deal with these cyber security issues. >> thank you, governor. i would like to thank the nga, governor mcauliffe, for making it your chairs initiative. it isnot them -- important for health care leaders and every citizen in this country. this is very timely and very

important. they give for the opportunity to participate in this. also, i want to thank you for hosting us in this beautiful city. servederican water has areas for 130 years. so thank you very much. eut want to do, as governors all know this, and every speaker says this, you are chief executive. but you are chief executive with thousands of responsibilities every day. probably nothing is critical as your responsibility to help the people in your state, protect them from any of the critical services you have to divide. things like fire, police, health and human services. these are things people take for granted every day, but you have to think about every day. and utility leaders, i spent years in that industry before

water, we also have to face these critical service challenges. sure that after hurricanes, ice storms, flooding, drought, that people have the critical services they need. and we work with you and your state, and other agencies to do this. we are in this together. as governor mcauliffe said, water has regulated in 16 states. we take 12 million people through our operations. we have market-based operations, and military bases. we also run 41 different municipal systems in municipalities across the country. all in all, we are in 47 states. your statepens in matters to us, and we want to be part of the solution that you on, part of the answer. so what i want to do for a few minutes is talk about cyber. from my standpoint in utilities

and critical infrastructure, you cannot separate physical and cyber security. everyone here is about the internet of things, and all the indifferent definitions. let me tell you what it means if you are in an electric, water, gas, or telecom. not justour cyber is our systems that have customer information and employee information. it is the systems that run the grid. it is the systems that make sure the water treatment plants are operating. the systems that make sure the environmental challenges are met. and the systems make sure the water gets through the pike and we do not have water contamination again. you cannot separate physical and cyber security in a world of infrastructure, especially with utilities. whether it is a municipal utility or investor-owned utility like american water. so what? do we need to do when you look at the challenges, what do need to do?

i want to provide a definition. i want to talk about a specific preparation that is being done in this country today that the nga is getting involved in, the black skies initiative. it was headed up by the department of defense, homeland security, and electric utilities industries. second 2013, they started looking at a black skies event. what if there is an electromagnetic pulse that takes a great, and you have a population center greater than one million people who are out of electricity for 25 days? how do we withstand that? they went through that year and said we realized that the number one problem, the number one threat, would be water and sanitation services. evacuationsu have

of a major urban center with no drinkable water and no sanitation services, so you have issues around diseases. we spoke to the group, and they said we want phase two, which will be released this summer. it is the water sector and fuel resources during these times. ,hat is important about this the u.k. and israel were part of this effort. it was headed up by a consultant from the department of defense, but they very much want to get involved. when the report is issued this summer, they want to have a checklist for public service commissions in every state in terms of what they need to make sure is happening with utilities and their state. water, electric, whatever. it is a big effort. i want to talk a little bit about how you approach the black skies initiative.

doing, the things we're technology. our systems -- cyber security cannot be an add-on, it has to be part of the fiber. as we develop an intelligent water system, a corollary to the electric smart grid, we have to make sure we build that protocol into every part of that technology, not something on top of it to make sure we monitor it. it has to be part of the resiliency of doing that so that the investment and technology is critical, but it has to include everything around physical and cyber security from the beginning, so we can make that the fabric of the system. the second thing is, just like the state of virginia, we voluntarily adopted the standard that the electric industry adopted. we hold ourselves to strict standards. it is voluntary for the water sector because we move forward,

it would not be advised for a not to become something that every water provider becomes a part of in terms of standards. the third thing is, as we look at what we need to do in partnership, if you do not remember anything else from the comments i make today, we all have to work in this together. at american water, we partner the environmental organizations, the infusion centers that we you have. we partner with public service commissions, and the emergency planners. from a federal standpoint, we are able to help states because we partner with homeland security because of critical infrastructures, they are a huge partner of ours. in fact, homeland security comes in every week to our company and test symptoms -- systems. they go to our website to see, how can somebody get in? comments andhose make sure we keep our system from people being able to get into it. we also part of -- partner with

the fbi and department of defense. we partner with the centers for disease control. we worked with them two or three years ago about dealing with waste. about potential water contamination. we have to find intersections where we force conversations among all of us. it is critical that what one person knows, the other knows. that we have open communication on things that are happening out there. another thing i am proud of, at american water it is not the job of our i.t. department or operations department. every level of employee including myself and my board of directors gets involved with cyber security. had an, every state exercise with information technology. then, the executive leadership

team that i lead, we took an session, and only i and the head of fiscal security, we spent all day seeing how the senior executives would react sd the head of fiscal to a ransom with malware intrusion into our system. and we took it to our board of directors and said we will walk this through with you so you can see how we handle this. and you will hear from joe in a few minutes about actually going through this and how they did the magnificent job they did dealing with an intrusion. did, there is a simulation game of cyber hacking. the most incredible thing i have been through because it is real life. groups,de up into two one is the hacker and the other is the company. what one side wants to do, you have to decide in real-time have to -- how to deal with that intrusion. it is a lot easier to be a

hacker than it is to be the people protecting the system. whether it is companies or states or local agencies, it was incredible how difficult it was. but it was a really great exercise to go into. that ati will tell you the end of the day, we have to look at physical and cyber security, and the integration of of those for the critical infrastructure in your state and our companies. enough to, it is not keep people from getting into your system. someone will find a way to get in. how will you handle it when it happens? part, ifnot have that we did them 100 million times but they get in once, then at least an hour business in water and by the way, you have to make sure you have a fire hydrants. so it is fire protection also -- get in.et that one

we have to make sure that when they get in we find a way to stop them. action for call to the states governors. i think there are four things we need to do together. number one, please promote communication and teamwork. make sure your agencies are working with all the utilities. make sure the utilities commission, electric, gas, water, we are doing it together. the federal in department of homeland security. it is really important that people are talking and sharing information. the second thing, we have to make sure we also have resiliency in our assets and infrastructure. this is not easy. from a water industry standpoint, we have in many of our states the ability to get capital investments in real-time in terms of every year, in terms of replacing pipes. but to get approval for resiliency that you hope never you as a, and for

stately or to invest in things you do not know you will ever use or not but is there if you need it, we have to figure out how to deal with that. that is not an easy task. the third thing to look at is -public partnership. nobody can do this on their own, and we all have to share best practices. and we are after the same objective. you,ast thing i would tell we need to head up simulation exercises in our state. six weeks ago, the commonwealth of pennsylvania did a black skies simulation. 100 30 people, federal agencies, the military, homeland security, state agencies, all the utilities -- they all came -- they all came together for a full day for a black skies simulation. if there is an extended outage where we cannot get power for 25 is, how do we keep the water and

sanitation services going? if we all work on these together, we can ensure that your citizens, our customers, have a vibrant, and can feel more peaceful knowing that we can handle whatever comes on. [applause] >> thank you, susan. joe, i think people think of health, they do not think of it as critical infrastructure, but it is clear that cyber terrorists out there clearly are targeting health information. in fact, it is one of their chief targets. of them, as you know had one the largest attacks in our nations history. there is a proposed merger going probably every american will be touched if the anthem merger goes through. it is a big deal, i have five children. some of them had information taken. what did you do to respond to

that breach? >> thank you, it is an honor to be here. we served 26 states, we are involved in a variety of health benefits engagements, whether it is state employees, medicaid, medicaid beneficiaries of a variety of sorts, we have a very deep engagement in many, many states. we take our responsibility to protect data, protect the very nature of how our members engage in the marketplace with respect to monitoring and managing their health status, true personal health information has to be guarded. it was for me as ceo, incredibly , and quite frankly, mind-boggling that we could experience a breach of the scale that you mentioned. so what i first want to say is governor,te the

working the commonwealth of virginia with respect to this bead with which you took it on as a priority for the commonwealth. the leadership that has been exhibited, and now the state resources of that hopefully you can take a lot of information in terms of your learned experience out of the marketplace. it is a phenomenal gift to all of the states. so let me share with you what we experience. and again, in terms of understanding our company, we touch 72 million lives. in a variety of ways. the majority are related to health benefits, balance of the millions related to a lot of specialty services around life, health, and dental services. we have a very sophisticated i.t. infrastructure. that regard, we invest

tremendous sums of money in order to protect the data. what happened is, about 18 months ago, we learned of the and it touched 80 million records. as you pointed out, the largest breach in the nation's history. we do know it was a state-sanctioned breach. and we do now at least by virtue of our relationship now which is very close with the fbi, the we have been assured that none of that data has gone to the black market. and that is an amazing where itn because typically ends up is in the hands of people that use it for commercialized purposes, from a criminal perspective. that did not happen. so we are very pleased with that outcome. notwithstanding, we are very concerned with respect to the intrusion in our system, how it

happened, and how we can manage our way out of it. facte first talk about the that the growth in technology as we know is unprecedented. and now it is escalating at an even greater pace, greater depth with respect to social media, with respect to tracking technology, with respect to isputing technology, it ballooning at an exponential rate. bothwe are mindful of is regulation and policy with create -- respect to creating privacy and security. we are focusing on understanding vulnerabilities, and the levels of risk that it presents. and finally, we want to make absolutely certain that in terms wemanaging the threats, still have as an end game, the use of data that is effective for the individuals, the services the need our toormation, with respect

health information used for the betterment of care delivery and health status of all of our members. learned three core elements that hopefully we get a chance to talk about with respect to the depth of q&a. number one, absolutely essential we target advancements and strengthening of our culture as a company. the culture is what i think it differentiates the winners from the losers in this state. because if you have a culture that is totally 100% committed to protecting every member, every customer, every citizen, you have a running head start against vulnerability. number two, collaboration. i want to talk more about this a little later, but what i have witnessed once our breach occurred, trying to engage with my peers in the industry, i

detected a sense of competitiveness. a sense of competitiveness where you got breached, but we are ok. we do not need to share information. but what you are creating with respect to your work in the commonwealth and the connectedness to the state is representative of the that is necessary to get traction and achieve respect to the controls that are necessary to protect our society. third, i want to make certain that we talk about commitment. commitment is absolutely essential with respect to resources. you mentioned resourcing as one of the core elements of your effort. i cannot tell you how many times i have heard that i have a budget problem, gee, i do not know i can get the type of commitment i need from a superior. the data, data that we now monitor very carefully,

every month we have 19 million hits that we would consider a threat. now thatnteresting is, we have on staff 250 individuals that are totally dedicated to nothing but managing the risk of cyber attacks, we have many others, 55,000 employees, every one of those by way of training and the engagement that we expect of those individuals is monitoring their individual workspace. individualsunder 50 were looking carefully at the 19 million. hitsdistills down to 5000 that we believe are nefarious in nature. and we have identified -- it does not sound like a lot, but it only takes one. -- hits that are truly hit threats, and intrusion that can create another breach on the

scale that occurred to begin with. those three core elements really make up the difference with respect to whether you succeed or fail in the world that we have come upon with respect to the threat that has been presented to us. what i would like to do is pause there and begin opening up for questions. when go ahead and open up for questions. >> thank you both for being here, we appreciate your window into this issue. certainly, resources are not being fully allocated. questions, one, how did you change culture in your own organizations? we are in a similar situation to , a million situations, finding the time and space for that to happen.

secondly, what places d.c. the states can provide you unique and critical support? the interesting thing about changing the culture is, the great thing about being in the water company is, our employees get the importance of what we do. what we deliver. we are in some ways a health agency because of what we do. what we had to do was, at some point cyber security was considered an i.t. function. that is the biggest cultural issue. computer guysthe will take care of it. so what we had to do was show the number one, the weakest part of our company, will come through an employee who mistakenly clicks on something. so once we started communicating that, and i have to tell you, one thing we do once a month, we have out -- our physical cyber

security a separate function from i.t.. every employee, we send something to see who will click on it. then we debrief. and another thing that came out of that, it may sound like a small thing, but i tell you, it is sometimes not the big things that have the impact. we would find something where my an e-mail, with an extra letter r in the e-mail, and they would look on it. but every single e-mail from outside our company has a red banner right after the subject that says this e-mail is from external sources, make sure you know the sender before you click on anything. thought, our employees what a waste, i have to read this before i read the e-mail? we found, from some of the fake issues they put up, it reduced 50% after we stopped -- started

putting the header on anything from an external domain. it sounds like a small thing, but it is changing the culture. with our 6700d employees across the country, they are thinking about it now. they are thinking, what should i do? and the helpdesk is getting more calls. another thing, and i think this is important, we have had a andf information officer, one question is, how do you deal with the big stuff and the little stuff? research, and i.t. officer, and his whole role is integration of all the technology. it is operational technology, not just systems for e-mail, but the people running water treatment at the plant, connecting all of it together and saying, technology is not separate from our business anymore. it is a business. and i think the cultural shift of getting people to understand,

it is every single employee's job. cyber security is every single employee's job. we're not where we need to be, but we are continuing to put that out there. mr. swedish: maybe i can go back to the successful driving force, leadership. they say three things, leadership, leadership, leadership. when i learned of the breach with my team, the realization was that we needed to send a very clear message to our 55,000 associates, the importance of what we ran up against, and they certainly appreciated it that they did not know what they did not know about its significance. we made a commitment to our associates to bring them on board so they were fully aware of our responsibility as a company, but also a commitment to our members so that we gave

to them a sense of security, notwithstanding the breach occurred on our watch. we were going to take care of them. and we were going to take care of them with the kind of support and security that at least gave them some he's of mind that in spite of the breach, that we would take care of their situation the matter what it might be. and in terms of how someone might use that data. that, for our company, i immediately informed the board. they now hold us accountable routinely with respect to audit insights, regular reports with respect to management. are they managing the affairs in terms of security? internally, we now have a very riskted, highly expert anagement process through

i.t. security officer. a security officer has been given tremendous amounts of responsibility and authority. internally, but we now encourage them to getting gauged on their areas levels of national policy engagement, state relationships, and other societies like you may have heard of. high trust is an organization we have been part of the since 2003. we have a variety of certifications and brought them on in terms of a total engagement to get the kind of routine inspections that are necessary for us to be assured we are actually protected as an organization. another company is assessing our performance on a routine basis. so we have multiple sources of certification that we are

secure. all that means is, our engagement in terms of having built a culture that is protecting our membership, because at the end of the day, we have incredibly sensitive, vital, personal health information. and the good news with respect to the breach, no personal health information was really -- revealed. a demographic, unfortunately, social security addresses and e-mails, but we were very blessed that he did not involve personal health information. notwithstanding that, we now have a culture in our company that is highly protective of associate isry expected to be engaged and committed to securing the organization so that they are monitoring in their space and on a collective basis. so it is cultural, driven by areers that get it, and

totally committed to the safety of information for our members. without that, you are literally treading water. we canry: u.s. to what do with of the states. we have to start communicating between federal, state, local utilities, at least from the critical infrastructure i was talking about. but also key companies there that are part of this. simple things like having annexed or size once a year. a great trial run, hopefully we do not have this, but we found during natural result -- disaster recovery, we have learned how we are not talking to each other. after storm sandy in the northeast, we had plenty of fuel because 90% of our critical that served water to 90% of our customers has backed up so that we can still have water

that served water to 90% of our customersand sanitation . we have fuel but no way to use it. some of the areas in new york and new jersey needed fuels so we worked out a deal to provide them fuel if they would give us space to keep the fuel. the problem is we did that during the recovery. but it is built into our emergency plan. each time these cyber incidents, the convergence between physical and cyber, do not necessarily have to have separate plans. emergency planning, there is a broad brush of that whether it is man-made or natural when you talk about critical assets. it is a little different when it is just the information system. i think the best thing is, we know each other, we share information with each other, and we make that a physical exercise one day a year. is a best practice that we should be able to target and all of our states. >> first of all, i want to congratulate and thank governor

mcauliffe for his leadership on this issue. as most of you know, our states, 'st -- maryland and virginia around the nation's capital, and we are home to most of the federal government's intelligence and cyber assets. privatemany of the top sector and private and are prizes and our two states. is the cyber capital of america, if not the world. i want to thank you for your leadership. and it want to thank both of you for this discussion. it has been fascinating. i think this is one of the most critically important discussions at thishave had conference, something each of us needs to focus on. , inve a simple question implementing cyber security, efforts within your organizations, can you give of thec examples of some

internal resistance you may have come up against and how you were able to overcome it? fascinating question. and getting out of the gate, one of the most painful experiences i have had. in the sense of coming to the realization that people do not know what they do not know. that is a herculean effort,thats because you are starting with bare-bones basics of getting information out and getting people on board. and you realize you have to establish educational models they get folks on board and develop that sense of responsibility. there is a resistance to transparency.