Lt. Governor Cagle, Speaker Ralston, President Pro Tem Shafer, Speaker Pro Tem Jones, members of the General Assembly, constitutional officers, members of the judiciary, members of the consular corps, my fellow Georgians:
Every year during this second week in January, we gather in this chamber of the people to assess the condition of our Ship of State. We review its travel log for the prior year, we inventory its store of resources, we evaluate the effectiveness of its crew, we plan its journey for the coming year, and we attempt to forecast the weather and the condition of the seas it must traverse. Like mariners of old, we consult our charts as we plan how to best avoid the rocky shoals that would damage our vessel and jeopardize the safety of our crew.
But after we conclude our planning and are ready to set sail on our annual journey, what do we do if the wind does not blow, or worse, what if it blows from the wrong direction?
It is in those times that true leadership is required. It is for those occasions that each of us who are elected leaders must step forward. It is how we react to those events and circumstances we did not plan for and over which we have no control that determines the future of our Ship of State and the safety of its cargo. It is said that at such times, the Pessimist simply complains about the wind; the Optimist is content to wait in the harbor because he expects the direction of the wind to change. The true leader, however, gets about the task of adjusting the sails.
When I addressed you for the first time in January 2011, Georgia’s Ship of State had been severely battered for two years by the storms of the Great Recession. Our reserves, that is our Rainy Day Fund, had been almost completely depleted in an attempt to keep our Ship of State from sinking. Over $1.4 billion from that fund had been used during that two-year period, and yet the waves were still beating against our ship, and the wind was still blowing from the wrong direction. Our revenue had dropped by $2.3 billion from 2007 to 2011. Our unemployment rate was 10.4 percent. Our prison population was the fourth-largest in the country and was projected to grow by eight percent over the next five years. Our high school graduation rate was an unacceptable 67.5 percent.
Georgia was losing tens of thousands of jobs, especially in the construction sector. Our manufacturing sector was at a disadvantage compared with other states because we were imposing sales tax on energy purchases. The Savannah Harbor deepening project, which was authorized by Congress 12 years earlier, was at a standstill with the real prospect that the larger vessels coming through the enlarged Panama Canal would not be coming to Georgia.
Many Georgians had seen their savings wiped out, business owners were in bankruptcy court, and families were losing their homes to foreclosure. Our revered HOPE Program was rapidly approaching the point of being unable to fulfill its promises to our best students.
Simply put, the Economic Winds were blowing in the wrong direction with an intensity and duration not experienced since the Great Depression. As leaders of our state, we could have been pessimistic and simply railed against the bitter wind and made excuses for our situation. Or, we could have been optimists and told our citizens just to be patient because it wouldn’t last much longer. We watched some of our sister states take both approaches and conclude that until the Economic Winds shifted, their state governments could not operate on less revenue and therefore their citizens must pay more taxes.
Fortunately, with your support, we did not follow that pattern. Instead, we began the difficult, and sometimes painful, process of adjusting our sails. As a result, we grew our way out of hard times. By passing conservative budgets, coupled with the economic growth that was spurred by our reforms, our Rainy Day Fund that was almost gone five years ago has now grown to over $1.43 billion.
By cutting taxes and removing regulatory burdens on businesses, our unemployment rate has been cut almost in half and now stands at 5.6 percent. And, the construction industry that was hit so hard by the waves of the Great Recession now has the third lowest unemployment rate in the country at just 4 percent. By removing sales tax on energy for manufacturing, there have been over 22,000 new manufacturing jobs, a 6.4 percent increase that is more than double the growth rate of the United States. These jobs represent over $900 million in added wages.
The next step was addressing the jobs skills gap employers continued encountering. As we looked at job openings around the state, we found that almost all of them could be filled if our citizens would attend one of our Technical Colleges and receive the necessary training. With your support over the past three years, we have identified eleven areas where a student will receive a 100 percent tuition HOPE Grant to obtain that training. These Strategic Industries Workforce Development Grants cover 140 programs, and I am recommending that we add industrial maintenance this year to that important list. I am proposing to devote $17.1 million in 2017 for all of these programs.
As our colleges and universities examine their degree programs and focus more of their resources on those that lead to employment, we will rapidly close the skills gap in our workforce. I am pleased that Georgia Southern University, for instance, is one of the only universities in the country and the only one in the Southeast to offer a degree program for precision engineering, yet another example of a high demand area.
In addition to directing more resources into post-secondary education programs that lead to employability, we have also moved our focus further down the education line. Our Move On When Ready legislation from last year, coupled with additional funding for Dual Enrollment, has greatly accelerated the pace of many students’ educational journeys. This allows high school students to attend postsecondary institutions at no cost to them or their parents. Currently, there are approximately 22,059 students participating in this program. My FY2017 budget contains over $58.3 million dollars to cover the cost of Move On When Ready, a 654 percent increase over FY2011.
In order to further modernize our K-12 education system, I asked the State Board of Education and the University System of Georgia to allow certain high school computer science courses to count as core courses in high school and for purposes of college admission. Both entities have agreed, and there are currently nine computer science courses that count towards a science or foreign language requirement. This will give us more early learners in a field that is and will continue to be in high demand by employers.
Addressing workforce development needs extends into another area we’ve made a priority: criminal justice reform. In order to curb the growth in our prison population, we created the Georgia Council on Criminal Justice Reform, which has been chaired by Judge Michael Boggs and Thomas Worthy. I want to express publically my thanks to these two gentlemen and the other dedicated members of that Council. Please join me in expressing our appreciation for their work.
As a result of your passing legislation to implement the recommendations of the Council in prior years, we have seen a substantial drop in our prison population as thousands of non-violent offenders are being diverted into accountability courts where they are given a second chance to receive treatments for their addictions. By converting inmates into taxpayers, and by educating and giving paroled inmates marketable skills, we will begin to reduce our rates of recidivism, which will in turn make our state safer.
The same diversion is occurring in the juvenile justice system. In short, Georgia is recognized as the leading state for meaningful criminal justice reform.
There will be more recommendations from the Council this year which I ask you to consider and approve.
As you can see, we have made great progress over the past five years in improving and expanding the skills of our present and future workforce. But these successes are not enough. My administration has spent more of the state budget on K-12 education than any administration in the past 50 years, which included over 1 billion additional dollars for the past two years and an additional $416 million for FY2017. However, our Education Boat is still leaking and needs some repairs.
As we contemplate modernizing our education system, it is important to acknowledge the progress we have made over the past five years. Our graduation rate from high school has increased by over 11 percent to 78.8 percent, an average change of 2.83 percent each year. As significant as that increase is, during that same five years, our dropout rate has remained unyieldingly stagnant at an average of 3.66 percent. To put it more bluntly, 96,660 students dropped out of school between 2011 and this school year. That is over 4,000 more than are currently enrolled in our entire Technical College system. That is a wind that is blowing in the wrong direction, and we must continue to trim our sails to bring that dropout number down.
Based on the success of our criminal justice reforms, we sought to improve and transform education in Georgia. I appointed the Education Reform Commission last January and tasked them with examining our entire education system and reporting back to me and the General Assembly with bold recommendations as to how we could better prepare our students for the 21st century.
That report has now been submitted, and I want to thank Dr. Charles Knapp who served as Chairman of the Commission as well as the other 33 members of the Commission and their support staff. Please join me in thanking them for their service.
Because of the magnitude of the recommendations contained in the report, some statutory changes will be necessary to implement them fully. Other recommendations can be achieved through the budgetary process. As an example, my proposed budget provides funds to implement a new compensation model for our Pre-K programs in order to retain lead teachers, increase assistant teacher salaries and maintain classroom quality. The Pre-K budget recommendation is in excess of $358 million, which includes $26.2 million for salary increases and an additional $7.9 million for a 3 percent merit pay increase.
As the Education Funding Subcommittee was meeting this past year, I received a letter from the four legislators on that Committee expressing their desire that the reporting deadline be extended for one additional year, that is, until August 2016. My letter response dated June 3, 2015, extended the general reporting deadline to December 18, 2015. It further stated that during the 2016 session of the General Assembly, I wanted this legislative body to conduct a full review of the Commission’s recommendations. That is what I ask you to do. My budget next year will include funding to implement my recommendations and those of the Education Reform Commission. This will provide ample time to vet the full report. It is important that we get this right. It is also important that in the meantime, the debate be conducted in good faith and that your recommendations be based on facts and not rhetoric.
In order to assist you in your deliberations, I will be creating by Executive Order a Teacher Advisory Committee similar to the Governor’s Education Advisory Board which I have had for the past 5 years.
Since I have been governor, my wife and I have visited many schools throughout our state. We have been impressed with the progress our students are making and by the dedication of their teachers, principals and staff. Since both of us grew up with parents who were teachers in the Georgia public school system in different parts of the state, we know that it takes a special kind of person to be a teacher. As society has changed and technology has advanced, many of the challenges our teachers face have become more difficult. As a classroom teacher herself, Sandra was particularly aware of the evolving demands placed on our teachers.
As we continue to discuss the recommendations of the Education Reform Commission, it is important for teachers and administrators to know that just because we are examining ways to more appropriately allocate taxpayer dollars and put in place different models to achieve better education results, it does not mean that you are not appreciated. Just as a sailor should not be insulted when someone repairs a leak in his boat and replaces his oars with a motor, neither should our teachers take offense when we try to do the metaphorical equivalent for them.
I fully understand that there are many factors that impact test scores and graduation rates, and many of these are not within the control of our teachers. A good parent that is dedicated to seeing his or her child succeed in school is the best ally a teacher can have. It really doesn’t matter what the financial circumstances of those parents might be, if they insist that their children go to school every day and arrive on time, that they do their homework and that they not disrupt the classroom, they will be rewarded by the teachers who welcome the opportunity to work with students who do those things. So, parents, I know you love your children and want them to succeed in life, so please do those things and you and your family will be richly rewarded.
Over the past five years, members of this General Assembly and I have shown our appreciation for our teachers by making public education a priority, and we will do so again this year by appropriating an additional $300 million for k-12 education, which is more than is required to give teachers a three percent pay raise.
We will distribute this money to your local school system under the existing QBE formula, but it is our intention that your local school system pass the three percent pay raise along to you. If that does not happen, it will make it more difficult next year for the state to grant local systems more flexibility in the expenditure of state education dollars, as recommended by the Education Reform Commission.
We have given local school systems large increases in funding for the past three years and given them the flexibility to decide how to spend it. Based on a survey by the State Department of Education, 94 percent of school systems used those funds to reduce or eliminate furlough days. With the additional funding this year, furloughs should be a thing of the past and teachers should receive that three percent pay raise.
Now that the federal government has given states greater latitude regarding testing of students, I call on our State Department of Education and local school systems to evaluate their testing requirements. If a test is not necessary to advance and tailor instruction, it should be eliminated. I do not suggest that tests should be abolished simply because the results might be embarrassing. In fact, it is those tests that pinpoint areas in need of remediation. But tests that are duplicative and do not enhance educational achievement should be abolished.
Last year, this General Assembly did just that when it abolished the mandated graduation exam. It was decided that if students had successfully passed all of the required courses for graduation, they should not be denied a high school diploma based on one final test. As a result of that change, thousands of students have been able to enter the workforce, the military or post-secondary education without the stigma of not having a high school diploma.
The Education Reform Commission has recommended a student based funding formula to replace QBE, which is over 30 years old. Instead of spending money based on rigid, impersonal criteria, they recommend that we move to funding based on the characteristics of each student. For the first time, poverty will be one of those characteristics to be considered. They also recommend that school systems have the flexibility to utilize the talents of their teachers in expanded ways and be able to reward them accordingly.
The Gwinnett County School System, the largest and one of the most diverse systems in the state, has taken on many of the initiatives recommended by the Education Reform Commission. Under the leadership of Alvin Wilbanks, system superintendent and CEO, Gwinnett County is embracing innovation and is developing a teacher compensation model that rewards effectiveness, promotes flexibility and requires accountability. Superintendent Wilbanks, thank you for being a pioneer and doing what some are calling “impossible.” Your example, and that of other great superintendents, administrators and teachers throughout our State working together, will be invaluable in removing the fear associated with change.
There will be those who will resist change, preferring to defend the status quo. For after all, the status quo as embodied in QBE has been in place for the entire tenure of most teachers in our schools.
To those who are either inflexible or cynical, I would ask them to consider the words of former Prime Minister of Great Britain Tony Blair, who made the following observation, and I quote: “The scope, speed and scale of change demands that we educate students for a future vastly different from our past.”
The education of Georgia’s children is too important to be held hostage to a status quo that may feel comfortable to certain adults but is a disservice to our students. The method whereby we educate our children must be as modern and adaptive to the changes in the world as our cell phones, our computers, our televisions and our automobiles. If it is not, our children will stumble and fall when they step onto the escalator of life outside the schoolhouse door.
Last year, this General Assembly took a major step in that direction by voting to put the Opportunity School District Constitutional Amendment on the ballot this November. Currently, there are approximately 74,000 students who are required to attend chronically failing schools, that is, schools that for three consecutive years have failed to achieve a score above a D or an F on our standard evaluation system. To put that number in perspective, that is about the same number of students currently enrolled at the University of Georgia, Georgia Tech and the University of North Georgia combined. I believe that in November, the voters of our state will help us trim our sails in order to overcome this vicious wind of chronic failure.
There are other items in my proposed budget that I wish to call to your attention, and I will do so quickly.
As you know our mandatory entitlement spending continues to grow through no fault of our own. Although we have seen our revenue grow, we have also seen mandated expenditures grow in the areas of health care and education, taking up ever larger segments of our overall annual budgets. In fact, the discretionary portion of the budget, which is now roughly 17 percent, continues to shrink.
Rising health care costs continue to be a major factor. Consider our State Health Benefit Plan. The state currently contributes $842 million for health care coverage for state employees while also paying over $1 billion for the employer share of health insurance for teachers in FY2015.
On top of that, we must also fund the state’s Medicaid program and its growing rolls. The cost of this program has grown from $2.6 billion in FY2013 to $3.1 billion in FY2017, an increase of 15.7 percent. Medicaid and PeachCare spending per Georgia family amounts to $1,258 per annum. And when federal and other costs are added to this number, it amounts to at least $4,365 each year. And that’s without expansion. Had we elected to expand Medicaid, it would have required us to include approximately $209 million in this upcoming year’s budget alone to cover the added cost. That number would only continue to grow exponentially.
Those numbers don’t even account for the reporting requirements levied by the Affordable Care Act on the state. To demonstrate our compliance with the mandates of the law, we must devote $2.1 million in FY2017 budget just to turn in the paper work. When you combine the cost of federal dollars to that total, it is $4.4 million. In other words, this is just what it costs to tell the IRS that everyone in our State Health Benefit Plan and Medicaid program is covered. I can assure you that those funds could have been put to better use than on bureaucratic paperwork.
If we want to talk about something we could throw overboard, there’s a good place to start.
Once we have met our mandatory budget requirements, we must ensure that our crew is appropriately provided for, and so we have prioritized rewarding state employees for their hard work. Just as we are budgeting for a three percent pay raise for teachers, we are also including a three percent pay raise for all other state employees. Many of them have worked very hard as the Great Recession required the state to significantly cut the budgets of the agencies for which they work. In addition, they are seeing the number of fellow workers drop. There are four agencies that had over a 20 percent annual turnover rate, with the Department of Behavioral Health and Developmental Disabilities losing almost one third of their employees last year. System wide, the turnover rate last year was 18.4 percent. For those agencies with the highest turnover rate, the budget allocates additional funds to be used to raise pay scales in addition to the overall three percent increase.
One of the highlights of last year’s legislative session was the passage of House Bill 170. Yesterday, many of you attended a roll out of the most comprehensive plans for sustainable infrastructure improvement in the history of our state. That would not have been possible without the support of those who voted for H.B. 170. Over the next 18 months, approximately 60 percent of the user fees from H.B. 170 will be used to repair and maintain our existing infrastructure. The remaining 40 percent will be used for new infrastructure investments.
Last year, I told you that with the revenue that was available at that time, a road that was paved when you graduated from high school would not be paved again until you were eligible for Social Security. With the new user fees generated, we have brought that frequency down to every 12 to 15 years, with regular maintenance in between. In other words, if your road is paved the same year you graduate from high school, it will be paved at least three times before you are eligible for Social Security and will further benefit from maintenance in the interim.
Another important agency of State Government that is often overlooked is the Georgia National Guard. In addition to being recognized as the nation’s No. 1 Army Guard unit in 2013, more than 18,000 of our guardsmen and women have been deployed since 9/11, some 964 of them last year alone. They serve our state both at home and abroad with distinction, and they deserve our unfailing gratitude for their valor.
Although the vicious winds of the Great Recession have battered our Ship of State over the past five years, those winds have almost subsided and are now blowing in the right direction. To the members of this General Assembly, thank you for helping me trim our sails without a mutiny. And to the state employees and teachers, thank you for your labors as you “battened down the hatches” and kept us afloat. To our fellow citizens, thank you for your patience, your support and your hard work as we battled the storms together.
Now we are ready to unfurl our sails and set forth on the Ocean of Opportunity that lies before us as we lead the way for others to follow, with No. 1 proudly emblazoned on our mast.
To the members of the General Assembly, may God grant you wisdom as you deliberate during this legislative session, and may He continue to bless our great State of Georgia.