Plenary Session Transcripts

Governors Attending:

Guests:

Discussion Subjects:

• Economic Development and Commerce (EDC) – implementing the Transportation Equity Act for the 21st Century (TEA 21); promoting electronic commerce; and improving the federal-state trade partnership
• Human Resources (HR) – Mentoring: Changing the Outcome
• Natural Resources (NR) – Enlibra: A New Doctrine for Shared Decisions; Governors' roundtable discussion on open space and smart growth; and Governors' roundtable discussion on economic and strategic implications of America's enduring oil crisis
• Other Governors' Sessions – Task Force on Information Technology
• Plenary Session Discussion Subjects - Restructuring of the U.S. economy and the implications for states; and education

Points of Interest:

Harvard professor Michael Porter told Governors that the now-global economy would require states to set new competitiveness agendas, to seek to extend prosperity to economically distressed areas of their states, and to address what he believed to be an illusory conflict between economic and social progress. Prosperity, he went on to point out, was no longer driven by access to resources, labor, or capital. Instead, it was based on how those resources, labor, and capital were used. In short, a state that created an environment conducive to productivity would attract the capital required to produce high-value goods and services.

Porter went on to say that to become competitive required sound infrastructures and communication networks, a technological base in universities, a skilled labor force, and innovative capacity that he argued was best achieved by the establishment of "clusters"—meaning a critical mass of companies working in the same field. He used the example of California wine country, where "clusters" were made up of wineries, grape growers, fertilizer and pesticide producers, irrigation technology, and the like.

He argued that to assist distressed communities, efforts should be shifted away from reducing poverty (i.e., viewing the issue as social) and toward increasing jobs, income, and wealth (i.e., viewing the issue as economic).

Rob Atkinson of the Progressive Policy Institute told Governors that job creation was no longer the number one focus for states. Instead, their real challenge was to raise wages and incomes, which he agreed with Michael Porter would be achieved through innovation. He recommended greater investment in science and engineering programs and the institution of research and development tax credits. And he noted that lifelong learning needed to be emphasized in view of the fact that the average job tenure of an American was now only four years.

Jeffrey Eisenach of the Progress and Freedom Foundation suggested four ways for states to be competitive: (1) do business the way it was done in the private sector; (2) update the legal infrastructure to conform to the digital age; (3) update telecommunications and other physical infrastructures, in part through deregulation; and (4) remove discriminatory taxes on telecommunications. He noted that 45 states had special sales tax exemptions for manufacturing firms doing business in their states, while only 11 applied the same exemption for telecommunications.

Opening a discussion on education, Governor Don Sundquist of Tennessee said that he and Governor Paul Patton of Kentucky were about to co-host a conference that would focus on examples of good educational technology in the states and on how to make it widely available and effectively used. Governors also talked about the importance of accountability in the American educational system. Data indicated that 48 states tested student achievement; 36 published annual school-based report cards; 19 rated the performance of schools or identified low-performing schools; 16 were empowered to close, take over, or overhaul chronically failing schools, 14 provided monetary rewards for performance; and 19 administered exit exams.

A critical concern related to accountability was how to achieve it while ensuring the maintenance of local control. Paul Vallas, CEO of the Chicago School System, told Governors that in the three years after the Mayor of Chicago took over the system in 1995, test scores, attendance, and graduation rates rose. After 20 years of declining enrollment, the number of new students had risen. Negotiations had just been completed on a new teacher contract, and $2 billion was being spent on school construction after 20 years of no building repairs at all. He attributed these successes to:

• a mayoral-appointed school board, which had in turn hired him as CEO, eliminating the divide-and-conquer game of a school superintendent being circumvented by special interests going directly to the school board;
• provision by the state legislature for complete mayoral control over resources; and
• comprehensive standards of accountability for staff as well as students.

Vallas said that when a school was not performing well, a top principal in the Chicago system was assigned the job of ‘probation manager' and provided with a support team of top teachers to help raise performance levels. If performance did not improve, a school could be closed and restructured if necessary. High schools were identifying pregnant teens and placing them in parent-advocacy programs designed to keep them in school and teach them about prenatal and perinatal care. Parent advocates identified parents at home who had themselves dropped out of school in order to teach them about preschooling their children. Any child identified as academically at risk was placed in an extended-day program that added two hours to their school day. The "Lighthouse Program" started by Vallas fed nearly 180,000 children in the school system three meals a day, which had resulted in improved academic performance. And any student not meeting minimum promotion standards was placed in mandatory summer school, extending the school year from 180 days to between 220 and 230 days.

Governor Michael Leavitt of Utah announced that 18 Governors had formed the Western Governors' University (WGU) to provide on-line educational access to citizens who could not otherwise afford the costs of higher education. WGU was linked to 35 participating schools offering 11 degrees to on-line students. During the meeting, an AT&T Foundation representative presented WGU with a check for $500,000, bringing its total contribution to the school to $1.25 million.

Congressional leaders spoke to Governors about issues being addressed in both the House and Senate. One piece of legislation that had bipartisan support was "Ed-Flex," a bill designed to give states flexibility with respect to the methods used to raise student achievement. More controversial issues included: (1) Internet taxation, on which Congress had imposed a moratorium pending further study; (2) the tobacco settlement, which states argued should be completely within their control; and (3) the federal government's underfunding of the Individuals with Disabilities Education Act (IDEA). With respect to the tobacco settlement, House Speaker Dennis Hastert said that the federal government's legislative branch had no designs on the settlement money, but he cautioned that trial lawyers could well bring other suits that might or might not benefit the states. Both Democratic Senate Leader Tom Daschle and Majority Leader Trent Lott expressed support for state control of tobacco settlement monies. As for IDEA, Governor Tommy Thompson of Wisconsin noted that the federal government's share of funding had only reached 10 percent, even though its original commitment was up to 40 percent. Senator Lott assured Governors that Congress was planning to increase the President's budget request for special education.

Memorable Quotes:

Harvard professor Michael Porter said: "…I believe that in the modern global economy, states are actually the core economic unit. It is not the nation. In an economy that is clustered [i.e., where businesses in the same field are clustered together], in an economy that is specialized, the state is the economic unit. States are in the lead in many of these areas of economic policy, and you have to stay that way."

With respect to his work on NGA's Smart Kids Task Force, Governor Tony Knowles of Alaska commented: "Irish poet William Butler Yeats…said that education was not the filling of a pail, but the lighting of a fire. As we all know, the fire for education has been lit in America. With our continued support and work, we will light the way into the next century."

Selected Policy Positions Adopted:
(1) Calling on Congress and the Administration to amend the Social Security Act to prevent federal seizure of state tobacco settlement funds; (2) calling for a moratorium on new rounds of military base closures; (3) supporting expanded trade with Vietnam once full cooperation in accounting for POW/MIAs was ensured, and calling for a more effective state-federal partnership in export promotion; (4) supporting housing programs that helped people with AIDS and programs that addressed affordable housing and community development in rural America; (5) outlining the Governors' support for a strong and efficient passenger and freight rail transportation network, and supporting existing federal programs to develop and improve high-speed rail corridors and improve safety of rail grade crossings; (6) supporting federal efforts to prevent debtors with the ability to pay part or all of their debts from using Chapter 7 bankruptcy filings to escape their responsibilities, and calling for state claims to be given parity with federal claims; (7) outlining challenges for states with respect to the development of a national domestic terrorism strategy, including handling information needs, managing consequences, clarifying the role of the National Guard, and supporting public-private cooperation, and suggesting that the federal government work with state and local governments to develop capabilities for handling incidents; (8) expressing support for maintaining a strong federal financial commitment for the child support system; (9) with respect to Medicaid, expressing continuing support for state flexibility and opposition to unfunded mandates, to prescriptive regulations, and to cuts in administrative funding; (10) calling for increased coordination and integration of Medicaid, Medicare, and other health programs to help ensure improved health outcomes but also sound financing in the face of an aging baby boom generation; and (11) calling for federal HIV/AIDS resources to be awarded through states to ensure coordination of efforts at the state and local levels.