Issues
Oregon’s once proud education system is sorely in need of repair
The erosion of efficient, effective education in our public schools concerns me greatly because it means there are fewer skilled workers entering into the workforce. As a small business owner, this tells me that I will have fewer and fewer of the skilled workers I depend upon to build my company.
The perceived decline in education throughout the United States has resulted in record numbers of parents opting to educate their children in private or charter schools, and in many cases, homeschools.
These refugees from traditional education fear that, despite the presence of many dedicated, concerned teachers, their children might not even graduate from high school. And their fears are justified. Recent statistics tell us that the percentage of students who earn their high school diplomas in four years is just 66.4% and in five years only 69.1%. For non-Asian minorities this figure is a pitiful 49.8% to 55.2%. For students with disabilities, the graduation rate is an even more dismal 41.8%. (1)
Many in our State Legislature advocate increased funding for Oregon’s schools without addressing serious structural issues imbedded in the system itself. Instead of searching for ways to set the bar higher and challenge students and educators to perform at the peak of their capabilities, these legislators have opted to lower the bar so that more children can clear it by any means possible.
Looking forward, I fear that the result of a lowered bar will be an endless cycle of diminishing returns wherein each successive generation will perform at a level at or, more likely, below the previous generation.
What to do? Let’s begin by asking the right questions. First let’s look at how we’re using the resources already in the system. With a current budget of approximately $10,000 per student per school year, we need to look carefully at how these funds are allocated. With a classroom of 25 students, what competent administrator could not provide an effective and efficient learning environment with $250,000 per classroom? This leads us to ask if the right people are controlling the allocation of funds.
If Federal and State control of our local education systems were significantly reduced and authority restored to local school boards and educators, more money could be given directly to schools and administrators, enabling them to use their judgment, based on their knowledge of local conditions, to hire the very best instructors and provide the very best educational resources for our children, who must be prepared to face an ever more complex and competition driven economy.
As the system is set up now, the stakeholders – educators, parents and children – have minimal control over the education system for which they are nominally responsible. As the system is set up now, a distant, detached bureaucracy makes life-shaping decisions for countless educators and children to whom they are not accountable. As the system is set up now, it will continue to erode the foundation of our free market economy.
The education crisis currently facing Oregon is not terminal if the challenges we face are addressed immediately. However, it will take organized and strategic efforts to unclench the fist of an increasingly sclerotic education system and return to local communities the responsibility, authority and resources required to provide educational excellence.
Chris Gergen is a Springfield based financial advisor and is the author of The Quality Paradigm: Why You and Your Business Need it to Succeed. He blogs at Be Epic.Daily. He can be reached via email at [email protected].
(1) Source: http://www.ode.state.or.us/news/announcements/announcement.aspx?ID=7273&TypeID=5
VanGordon: Four Ways to Turn Land Into Lane County Jobs
Lane County has lived with terrible economic news for the past three years. This recession has been deep, devastating, and personal. The recession exposed some serious, local economic flaws, but they are not new. They were already there. During the housing boom making money was easy, and it created strong economic growth. Either the economic boom hid our problems or we chose not to do anything about them.
We can’t fix the national economy, but we can make Lane County more competitive. Our economy is in the process of changing. Goods, services, and capital can move almost seamlessly between markets and regions. We are in a competition, and we have to make Lane County more competitive to succeed. Lane County is at a cross-roads. If we don’t do anything, then eventually the economy may grow enough to create low-wage jobs and the unemployment rate will go down. Our other choice is to work on creating smart economic policy that allows our private sector to be competitive for family wage jobs.
Jobs are created in the private sector. However, government policy impacts a community’s ability to create jobs and attract new businesses. In a series of articles I will share my thoughts on how to transform Lane County into an export-focused economy. I want to focus on manufacturing goods and providing services outside of Lane County. If we sell more goods outside the area, we create jobs.
Proper land use planning is the basis for solid economic growth. In the metro area there is a shortage of land to site businesses and residences on. Even if we attracted an employer requiring a large lot of land the metro area would have a tough time finding a location for that business. Lane County is less competitive in attracting new businesses because we don’t have locations that are ready for businesses to locate to. This is a serious disadvantage. Local governments have a variety of land use plans and procedures which can be used to address these problems.
Here are land-use issues that I believe will have an impact on our ability to build new businesses in the area, and my thoughts on them. These are all in the process of being completed. In the short term, effective land use planning provides certainty to the business community that there is space to locate or expand in the area.
- Springfield’s expansion of its Urban Growth Boundary to add 600 acres of commercial land to the city
By developing along I-5 Springfield businesses will be able to move goods to markets cheaply, which translates into a competitive advantage. From an economics perspective it makes no sense to continue to add larger industrial lots farther east. In the long term, I would like to see Springfield include part of Seavey Loop. If Springfield expands towards Seavey Loop it may make more sense for Springfield to also serve the Lane Community College (LCC) basin. Springfield may serve LCC cost effictively, and in the long term the LCC area may offer flat land for the city. A major challenge to growth in Springfield is the availability of flat land that isn’t farming land. Ideally, we would choose to expand in such a way so as to protect agricultural interests.
- Springfield’s completion of the Glenwood Refinement Plan including the Franklin Blvd. Expansion
The Glenwood Refinement Plan is the land use plan that outlines development guidelines for Glenwood. Without completing the plan extensive development of the Glenwood riverfront is impossible. While currently underdeveloped, it is centrally located in the metro area between downtown Springfield and the University of Oregon. It will provide an ideal multi-use location to live, work, and shop. It also provides a natural freeway entrance to the University of Oregon. As the University of Oregon continues to expand I hope it takes advantage of the opportunities that Glenwood provides.
- Eugene’s completion of the Envision Eugene Project
The Envision Eugene Project is Eugene’s review of its urban growth boundary. My opinion is that Eugene should expand toward the airport. I want Lane County to be able to compete for aviation and export businesses. Additional commercial land near the airport could open Lane County up to those type of businesses.
- Lane County’s work to develop Goshen
Could a freight-rail terminal be built in Goshen? Imagine moving our goods from trucks onto trains or vice versa. Freight rail isn’t as politically popular as passenger high speed rail, but it makes sense. Rail is a very cost efficient way to move commercial goods to the market. When businesses have more options for moving heavy freight it will lower the impact on our road system.
For local governments, completing these land use planning projects is a critical economic policy. It is the first step toward re-inventing our local economy. We will have available land to expand our business and commercial base. We will have the room to attract the types of businesses that create family wage jobs, provide benefits, and protect the middle class. Like I said, this is the first step.
In future articles for Lane Solutions I will discuss the importance of education, the University of Oregon, Health Care, and international trade in creating Lane County jobs.
Sean VanGordon
Springfield City Council, Ward 1
PERS REFORM ONLY WORKS WITH A FIREWALL AGAINST LEGAL CHALLENGES
Voters are ready for PERS reform. Essential services such as prison beds, law enforcement, and school days, are being sacrificed while PERS expenditures skyrocket. During 2009-2011, PERS spending will amount to approximately $825 million. That spending is set to increase by $495 million to $1.3 billion in 2011-2013.[i] It is clear that the system is broken. We must introduce legislation to fix the growing problems pertaining to the overall “PERS machinery.” We must eradicate wasteful spending while ensuring that public workers receive retirement benefits as promised.
Passing PERS reform is only half the battle. In the past, Oregon courts have overturned PERS reforms by invoking the Contract Clauses of both the Federal and Oregon Constitutions. To paraphrase, the Contract Clauses say that the state can’t pass laws that impair the obligations of existing contracts.[ii] The Oregon Supreme Court has consistently held that PERS members have “vested contractual rights in pension benefits.”[iii] Accordingly, the Federal and Oregon Contract Clauses serve as substantial barriers to PERS reform.
Nevertheless, courts have recognized a legal distinction between legislation that “impairs” a contract and legislation that merely “breaches” a contract between public employees and the State.[iv] The Oregon Supreme Court will allow legislation that breaches contracts, but will invalidate laws that impair contracts.[v] The Oregon Supreme Court has determined that legislation that impairs existing contracts are “statutes that prevent both performance of the contract and compensation to the nonbreaching party.”[vi] Well-drafted legislation can get around this distinction and merely result in a “breach” of contract, rather than unlawful “impairment” of the obligations of the contract.
As we move forward in our effort to curtail inefficient government spending, we must introduce reforms with this legal distinction in mind. There is no doubt that opponents of reform will bring legal challenges, but well-drafted legislation can and will survive.
[i] 2011-13 Estimated State Agency Payroll
2009-11 Salaries and Wages = $5,850,731,907 ($825,251,701 = Total PERS expenses, 2009-11)
(Source: Legislative Fiscal Office)
Assumed growth in State payroll expense = 3.75% (Assumptions: 2.75% inflation + 1% Real Wage Growth)
(Source: PERS Actuary)
$5,850,731,907 X .0375 = $219,402,446.51 (Assumed increase in State payroll for 2011-13.)
$5,850,731,907 + 219,402,446.51 = $6,070,134,353.51 (Total anticipated State payroll for 2011-13.)
2011-13 Estimated State Agency PERS Calculations
$6,070,134,353.51 x .098 = $ 594,873,167 (9.8% for 2011-13 State’s employer contribution rate)
$6,070,134,353.51 x .06 = $ 364,208,061 (6% Employee’s IAP paid by State for State employees.)
$6,070,134,353.51 x .0595 = $ 361,172,994 (5.95% paid by State on Pension Obligation Bonds.)
(9.8% + 6% + 5.95% = 21.75%) = $1,320,254,222 (Total anticipated PERS costs for 2011-13 )
$1,320,254,222 – 825,251,701 = $495,002,251 (Additional PERS costs for 2011-13 State Budget)
Note: “The rate components are as follows: 9.8% (2011-13 employer contribution rate) + 6.0% (member
IAP contribution) + 5.95% (POB service cost).” ”… a 21.75% total cost basis.”
(Source: PERS Administration—3-11-2010 Email to Rep. Richardson—emphasis added.)
[ii] Hughes v. State, 314 Ore. 1, 33 (1992) (citing Taylor v. Multnomah County Deputy Sherriff’s Retirement Board, 265 Ore. 445, 450 (1973)).
[iii] Hughes v. State, 314 Ore. 1, 33 (1992) (citing Taylor v. Multnomah County Deputy Sherriff’s Retirement Board, 265 Ore. 445, 450 (1973)).
[iv] Kopilak, David, Hughes v. State: Breaching Statutory Contracts Without Violating Oregon’s Contract Clause, 72 Or. L. Rev. 487, 488 (1993).
[v] Ibid.
[vi] 72 Or. L Rev. at 500 (citing Hughes, 314 Ore. at 31).
Two Paths for Oregon’s Economy: Innovation and Creative Leadership or Sustained Mediocrity and Lack of Will Power
Oregon stands at an economic crossroads. Changes sweeping the global marketplace and a disturbing set of economic and fiscal trends at home offer us a choice between two futures.
One path presents an Oregon defined by thriving businesses that lead their industries in ideas, innovation and design, market reach, and staying power. This path heralds a future of good paying jobs that resist migration and sustain local economies and communities.
On the other path, Oregon becomes strictly a regional consumer market and a branch-office outpost for industries whose key ideas, research, decisions, innovations, and initiatives occur elsewhere. It becomes a commodity producer whose industries pay average or lower wages and are always vulnerable to cheaper sources of labor and supply elsewhere.
Healthy Communities Initiative envisions the growth and success of leading edge, traded sector industries – clusters of allied businesses that ring up sales outside Oregon and create good paying jobs that buoy local communities. While all Oregon companies improve the state’s economic well-being and quality of life, we stress traded-sector industries because they pay high wages; and by selling their products and services outside Oregon they bring in fresh dollars that fuel local businesses and tax revenues.
Traded sector industries tend to cluster. They draw competitive advantage from their proximity to competitors, skilled workforces, specialized suppliers and a shared base of sophisticated knowledge about their industry. In the 1970s Oregon’s largest industry cluster was forestry and wood products. Oregonians, urban and rural, enjoyed high wage jobs in this industry. Today, while still a world leader in timber and agriculture, Oregon has an array of innovative industry clusters. These include natural resource industries, advanced manufacturing, high tech, footwear and sports apparel, and clean technology.
While the destiny of these industries is in their own hands, it is critical that Oregon’s leaders pursue initiatives to create the environment that helps our traded sector industries succeed. The initiatives we recommend and support can improve the culture of innovation. They can enhance the work skills of our people, boost the quality of life that drives talented people to Oregon, and strengthen business infrastructure needed for productivity and competitiveness.
Despite the remarkable economic diversification described above, in recent years Oregon has fallen off course. After a surge in the 1990s, Oregon’s per capita income has been declining compared to the national average for the past twelve years. Per capita income is the total income earned in the state divided by the population. It is a key measure of economic well-being and determines how much money is available to spend on schools and other public services.
In recent years Oregon’s unemployment rate has tracked well above the national average. Moreover, the boom and bust economic cycles have been particularly hard on Oregon companies and workers.
Declining per capita income, combined with exploding costs for health services and prisons, has crowded out investments in education – especially higher education. Because education and income are inextricably linked, this trend could push down personal incomes even further.
Looking forward, Oregon’s challenges are greater. An aging population will continue to put upward pressure on spending for human services. The legacy costs of a poorly conceived public pension system have come due. And the continued rise in health care costs is unsustainable for both the private and public sectors.
Our unbalanced and unstable tax system continues to be a drag on high-wage job growth. With the passage of Measure 66, Oregon has the dubious distinction of having the highest capital gains tax and second highest income taxes in the nation. This policy discourages investors and high wage earners from locating here. Yet without a sales tax or an adequate reserve fund Oregon still lacks the ability to provide stable funding for public services.
Oregon is trapped in a “Circle of Scarcity.” Breaking this circle is the single most important task for Oregon’s business, elected, and community leaders to tackle together.
The challenges Oregon faces are immense. They can only be addressed if Oregon’s business, elected, labor and community leaders work together.
Eliminating PERS for Legislators and Judges Takes Away Conflict of Interest
PERS was created in 1945 to provide retirement benefits to Oregon’s public employees. Legislators and judges were not eligible to join PERS. Everyone affected by PERS was fairly represented when PERS laws were made and PERS disputes were decided by neutral judges. That, however, began to change in the 1970’s. By 1984, the legislators had changed the law so that they could retroactively join PERS and judges automatically became PERS members. Thereafter, PERS members have made all of the PERS laws and they have decided every PERS lawsuit. That is the problem with PERS.
Oregon will have $3 billion less to spend in 2011 – 2013 then it had in 2009 – 2011. But laws passed by PERS legislators guarantee that this shortfall will not reduce the money paid to PERS. The PERS budget for 2011 – 2013 has been increased by $1.1 billion, to $7.5 billion. PERS members have also decided that during the 2011 – 2013 biennium the people of Oregon will pay over $870 million to pick up employee PERS contributions for PERS members. That money could have been used to provide services to all Oregonians but instead it will be used for PERS members only. This is what happens when PERS members have total control over the PERS decision making process and it is a serious problem.
The solution to the PERS problem is to remove legislators and judges from PERS. Legislators are the elected representatives of the people, not hired employees, and they should not receive employee benefits. Judges should have their own independent retirement plan, just like they did prior to 1984. These changes would restore the fairness that existed when PERS was established in 1945 and they would end decades of financial abuse that has cost the people of Oregon billions of dollars.
Article written by Daniel Re
Unnecessary Regulations Strangle Job Growth and Business Expansion
Nearly every day in Lane County the unemployed stream into local businesses looking for work. They can’t pay their mortgages. They can’t pay their bills. They can’t feed their families. They don’t have health insurance. Their jobs are being choked off as the manufacturers, industries, farms, ranches, trucking companies and others who employed thousands here with good family-supporting wages, benefits and vacations, are just quitting.
We need good quality of life regulations. But excessive regulations are unnecessarily limiting the use of our best assets: our natural resources and population of willing workers.
The key areas in which we could expand our economic development are private businesses and industries consisting of manufacturing, construction, agriculture, transportation and other industries noted below. Oregon and Lane County are unique in that they possess the natural assets that could pull us out of our economic doldrums. We can grow and make products; we can add to their value; we can sell and ship them across the nation and around the world. Local entrepreneurs and established businesses will create real jobs – if we just get out of their way.
Take agriculture, which has been one of the larger and more stable sources of employment for workers in the region. Before the 2009 recession, Oregon’s agriculture industry was linked to a workforce of 214,511 full or part-time jobs & $25.8 billion in sales. Oregon’s agricultural exports grew 71.6% and comprised one of the top two export industries through the first quarter of 2008 on a year-over-year basis.
Often, private job creation is hobbled by excessive planning processes and resulting regulations. Region 2050 Problem Solving Program, Envision Eugene, LTD’s West Eugene EmX, Lane Livability Consortium and Smart Communities Project just to name a few. Lane Livability Consortium alone proposed 193 scheduled meetings over the next three years as it plans to duplicate and triplicate efforts of local elected governments in an effort to create a spaghetti-like tangle of regulations and processes. The strategy seemed to be to overwhelm citizens with thick reports and paperwork, then burden them with a multitude of monotonous meetings that accomplish little.
The past two decades have generated a record number of rules, regulations, fee increases, taxing districts, overlay zones and additional government controls. We need good regulations that help maintain our high quality of life. Traditional blue-collar workers, who once earned a living wage of about $50,000 per year from manufacturing industries or trades, are losing their jobs in record numbers, in part because their employers – the job providers – simply cannot comply with unnecessary, burdensome regulations and still stay in business. The table below shows the loss of jobs in manufacturing and trades over the last five years here in Lane County.
Since the early ‘80’s, which marked the beginning of spotted owl litigation, our government, state and local agencies and regulators have continued to aggressively restrict and tax the private businesses that create jobs. These private industries and businesses used to purchase millions of dollars of local consumables each year, putting even more people to work. Now they are downsizing, closing or moving out of Oregon. These employers are being forced away because it can be more profitable doing business elsewhere. We need these jobs back. We need to encourage our Job Providers while maintaining reasonable quality of life regulations.
Our Job Providers are not on strike. They simply gave up and sought out more hospitable business environments.
Cindy Land
Eugene, OR
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Business, Not Government, Creates Jobs
How many times have you listened to a politician, whether on TV or in person, and heard him or her say that government will be creating thousands of jobs over the next x number of years? This is where government officials completely miss the point. Did you know that in my 10 years as Mayor of Springfield I never once said we are going to create jobs over the next x number of years?
“Why?” you may ask? Because that is not the role of government. The role of government should begin with the premise that “We want your business to come into our state/county/city. Now, what can we do to make you want to do business here?”
Finally, once we’ve attracted you, government’s role is to get the business its permits in an expedited manner.
My goal was to personally meet with the sitting consultant, or possibly an executive of the firm and invite him or her to do business in Springfield/Lane County. Then I would provide a roadmap for the decision makers showing them how we can quickly and efficiently get them their permits.
My thought was that if we provide this kind of service then jobs and investment will be created. In ten years while I was Mayor, over $1 billion of private sector investment came to Springfield, bringing with it thousands of new jobs.
Business, not government, creates jobs. Government, at its best, makes it easy for business to do so.
Article Written By Sid Leiken, Lane County Commissioner and former Mayor of Springfield