JANUARY 17, 1997

Thank you John and just let me thank you all for participating and for all of the information that you have given to me, not just during this past year as Governor but for several years, at least during the time that I served as Lt. Governor.

I want you to fully understand that I want to govern for the long term. I want to look at what Kentucky ought to be 20 years from now. What Kentucky can be 20 years from now. The only way we can do that is to carefully analyze where we are, how we got where we are, and try to figure out the fundamental reasons that we have not progressed as the rest of the nation has and what we can do to make systemic changes that will help overcome those problems.

As John said our overall goal is to lay the foundation such that 20 years from now the quality of life, the economic well-being of the people of Kentucky will be somewhere on a par with the national average. We are certainly not there yet. I think Jim sent me Mark's article on per capita income and I think I've already read half of it. Mark you will be pleased to know that I basically agree with it. You are a pretty good economist I guess. You have my stamp of approval.

As you point out, per capita income is a very valid and probably the most valid individual measure of economic well being. There are other things, including the cost of living in Kentucky, which is lower than in most other states. There are also things like the quality of life, the quality of our environment, the safety of our communities. All of those things add to and constitute what I call the quality of life and economic well-being of the people of Kentucky. We want to address all of those issues.

We have been doing some analysis of the revenue picture of the state for the next 7 years. We just picked 7 years. No particular reason. But let me say the opportunity to run for a second term, I guess does alter your thinking just a little bit. But I can tell you that we would be aggressive in trying to develop that plan if we only had the opportunity to do it in four years. Some people have speculated that this opportunity to run for a second term would cause a Governor to be cautious in the first term and then try to make the substantial changes in the second term. I think you see that we are not doing that. We just can't afford to wait four years.

We have attacked some, have and are going to address some fundamental problems. Workers' Compensation was an important subject to address. I think it was the most important thing we needed to do to address the economy in the short run. But I think you also know that I think the most important thing we can do to address the economy in the long run is education, particularly post-secondary education.

Certainly the Kentucky Education Reform Act, in its broad scope, is the most important fundamental change and commitment that the people of Kentucky have made in my lifetime. Doesn't mean it's perfect. Doesn't mean we don't need to continue to work on it and improve it. The fundamental commitment to not only adequately fund education but to try to change the way we deliver education to children based on the science of how children learn is also a fundamental commitment, fundamentally important if we are going to get the efficiency out of our elementary and secondary education dollars that we must have being a relatively poor state. We just can't afford some of the things that the other states can afford.

We need to take that same approach towards higher education. So we are beginning that process. I'll say that we are not that far along. We have been collecting a tremendous amount of data. I just filled up my briefcase with higher education information to take with me to Washington this weekend. As we attend the Inauguration I suspect I should have some down time that I can read a little bit.

So we are just now beginning to analyze the problem and let me concede that we have not yet began to articulate the problem. We are in the process of doing that. We expect in the near future to have documented the answers, or our answers, to perhaps six fundamental questions.

Those questions are: Do we have enough higher education in Kentucky? And I can already tell you the answer is going to be 'No.' How much more we need? We hope to be precise when we finish this document. What is the quality of our higher education? Don't know the answer to that. I think I have seen little data that indicates that our education is either of adequate quality, high quality or low quality. We need to go into that. I think it's fairly evident that we do not have the kind of doctoral programs that we need to build that economy that I envisioned. But we're going to investigate the quality.

Is our education system accessible enough? Does it meet the needs of the economy and the people of Kentucky? Do our people adequately understand the need for higher education? Is it efficient enough? That's probably 6 of those. Those are fundamental questions we are going to be asking and we hope to have that in the near future and then we will move on to a phase of …what is it we need to address the inadequacies and then we will move into a phase of…how do we do what we need to do to solve the problems that we have?

We need to look at it in the long term sense. I think we can conclude that we need to spend more on higher education, but my challenge is to also at the same time improve the system and I am of the opinion that just putting more money into the system is not adequate enough. I hear how hard that's going to be to do. And I don't understand why because almost without exception the business people that I've talked to, the legislative leaders I've talked to, people within education that I've talked to, agree that we need to have fundamental systemic change.

Now they don't agree on what that systemic change is. But they agree that we need to have change. Broad agreement on that. I have yet to understand why it's going to be impossible to do. But I can tell you that my commitment is real. My determination is pretty strong. As I said on workers' compensation, "I will not be a party to another patch job." And with workers' comp I think we had to wait until it got so bad that almost everybody understood that something needed to be done. The final vote in the General Assembly indicated that strong support.

And sometimes that's just the way that Government works. I sort of have this theory that government and politicians will ignore a problem as long as they can, just go along and get along, don't make waves. But when it gets so bad that something has to be done, government acts. Sometimes it overreacts, tries to make a very bad situation and make it absolutely perfect.

Government will never make any situation perfect. But if we cannot reach a consensus that we need to do something major in higher education, we might better serve the Commonwealth by not patching up the problem and putting it off a couple of years but rather move on to another subject until we can reach consensus on what we need to do.

Higher education is not the only challenge in this state. Basic infrastructure is also a problem. As I review the history of Kentucky, we have two fundamental failings. The failure to invest in basic infrastructure such as roads and water and sewer and basic community infrastructure and education. It's not unthinkable to think that I would temporarily change my priorities. I may decide to be the infrastructure Governor the first term. Then try to be education governor second term.

I think my message ought to be clear. I believe if the economy holds out and we can solve certain short term cash flow problems, which you all will probably discuss, that we have a reasonable chance of getting about $100,000,000 in the second year of the next biennium, primarily as a result of the Empower Kentucky initiative, to address some new subject in Kentucky. And I think that should be Higher Education.

But that is not the only subject we can address. That money could well be spent on basic infrastructure. It's not unthinkable to think that I would change directions if people try to be selfish, try to be parochial, try to be regional or aren't willing to make the hard decisions that it takes to make the fundamental change. But we have got to do it over the long term and we have to do what is right and I do not know what is right.

I was not an expert on workers' compensation when I started. I paid a lot of it, I understood why businesses were complaining about it. I did not know how the system worked nor what the problems were until we got into it in depth. One of the things that I have concluded is that you can't turn a problem over to the special interests and expect them to solve it for the benefit for the people. They'll take care of the special interests but the overall good of the people won't be well served.

That very well may be the situation with higher education. With some immodesty I believe the secret to success on workers' compensation was that I became knowledgeable about the subject and I served as a neutral point representing the people trying to pull the special interests in, to understand that they all had to give a little. That's the reason we have got the screen saver on the computer in my office that says you've got to take a little bone with the pork chop.

I think that's the attitude that the people are interested in higher education are going to have to understand. We're just not going to have everything everybody's way. So I hope that's the attitude that the higher education community would take towards this subject. Because I do believe that it is going to be necessary, for me as the leader of this Commonwealth, to sort of get the views of all the special interests, try to learn enough about the subject, and come up with a proposal that we believe meets the long term needs of all of the people of the Commonwealth, and all of the regions of the Commonwealth.

One thing that the higher education institutions need to understand is that they are there to serve the people, not themselves, not their internal special interest. I just simply believe that they are not able to recognize that and to come up with the kind of proposal that is good for all of the people of Kentucky. So I think it's going to be my responsibility and our advisors' responsibility to do that, to come up with a starting point and then put it up for public debate and improve on it through the legislative process.

I believe the Workers' Compensation Bill that was passed by the General Assembly was better than the Workers' Compensation Bill that we had introduced. I've become very impressed with the legislative process and the value of public debate. I've learned and I have tried to show flexibility. I've tried to show that when people can prove to me that my ideas aren't the best, that they have a better way of doing something. But I am flexible enough.

Sometimes the press calls that waffling. I think anybody ought to have the right to admit that they were not perfect, that their ideas weren't perfect to start with, that they have learned more since the debate began and they are willing to change their position. Certainly I'm going to take that position because I have no special interest, no preconceived notions. I only have the commitment to lead this state to do what is right for our people, in the long run.

That's the reason I believe that seminars such as this are important. So Michael Middlesmith and I have just received the book from the Long Term Policy Research Center, whatever that thing you all have up there is. I want to take that with me on the trip to Washington to do a little reading along with the report that you have given us today. So I want you to know that in myself and Dr. Henry, and our administration, you have an ally as long as you are working towards what is good for Kentucky 20 years from now and we look forward to working with you as we do that.

Thank you all I appreciate it.