President Saunders and members of the Senate; Speaker Richards and members of the House; Chief Justice Stephens and members of the Judiciary; Lt. Governor Henry and members of the Executive Branch; my fellow Kentuckians, I've called the General Assembly to Frankfort in extraordinary session to consider how we as a people should prepare ourselves to approach a new century.

How can we meet the increasing competitiveness of a global economy? How can we make ourselves more productive? How can we increase our standard of living?

For most of my adult life, I've pondered the economic problems which have faced Kentuckians. As I've studied the history of Kentucky, I've learned that before the Civil War, Kentucky was one of the most progressive states in the union, a leader in education, medicine, transportation and commerce, a center of religion and culture, the most developed state on the frontier of the rapidly developing Midwest, producing such great leaders as Henry Clay, Cassius Marcellus Clay, Abraham Lincoln, and Jefferson Davis.

I've often wondered how, after starting so far ahead, did we fall so far behind. I've concluded that after the civil war, we as a people failed to invest in the future. We didn't invest in infrastructure and we didn't invest in education. Our leaders failed us. They ignored the needs of the next generation. They had no vision, no courage and no passion for excellence.

The result is a Kentucky which ranks 42nd in per capita income. 46th in the number of children in poverty, 42nd in population without a high school education and 39th in college graduates. I could go on and on citing statistics that are not flattering.

We're a state with limited economic opportunity: limited economic opportunity because our population has limited levels of educational attainment.

Allow me to illustrate my point with a few charts. According to a recent University of Kentucky report, as this chart shows, 57 percent of our low per capita income is directly caused by our low level of education. Another 29 percent of our low per capita income is indirectly caused by our low level of education.

In fact, as this next chart shows, a person's income is directly related to their education. A person with a high school education will, on average, earn almost 50 percent more than a person without one. A person with a bachelor's degree will earn almost twice as much as a person with a high school diploma. A professional degree is worth more than twice as much as a bachelor's degree.

In this day and age, every Kentuckian needs an education beyond high school, if they're going to have a decent chance of earning a good living. Only the lowest paid jobs can be assured with a high school education. Less than a high school education can be a sentence to a life of poverty.

This next chart shows that 22 percent of the jobs in the future will require a bachelor's degree or more, and yet only 13 percent of Kentuckians have a bachelor's degree. The national average is 20 percent. 56 percent of the jobs in the future will require a postsecondary skills development course of study of 2 years or less and yet our production of these types of skills would have to be increased by over 50 per cent if we're to reach the national average.

Only 22 percent of the new jobs of the future can be performed with a high school education or less and that number will continue to decline.

If we're going to catch up with the rest of the nation, we have to dramatically increase the output of our various postsecondary educational institutions.

This chart shows that we must increase associate degrees by 31 percent, bachelors degrees by 20 percent, and masters degrees by 41 percent to compete with the rest of the nation.

Increasing the production of this kind of education will be a tremendous challenge but the real problems are at the opposite ends of the educational spectrum. We'd have to increase our production of doctorate degrees by 69 percent to reach the national average and increase our production of courses of study of less than 2 years and credentialed by a certificate by 64 percent.

We need to improve our educational institutions at all levels but we really need to concentrate on our doctoral universities, the University of Kentucky and the University of Louisville, and our community based schools, Kentucky Tech and the Community Colleges.

The problem with our doctoral schools is a lack of focus and a lack of money. The problem with our community based schools is a lack of coordination and a lack of money.

Yes, we need to spend more money on postsecondary education but we also need to make it more focused and more efficient. To those who say, "if it ain't broke, don't fix it", I say it is broken, we must fix it and fund it.

I'm prepared to recommend that we as a people invest another $100 million in postsecondary education, an increase of over 20 percent for non-medical education and research. But to spend this much more money without fixing the system would be wasting taxpayer's money.

Why do we need to spend more money on colleges and universities? The percent of the General Fund spent on higher education declined from 17 percent in 1987 to 14 percent in 1997. During the four years prior to my taking office, higher education spending, adjusted for inflation, declined by 11 percent.

In the past, when times got tough and money was short, it was higher education that got cut. University budgets were cut 5 percent in '92, 7 percent in '93 and 2 percent in '94 to cover state revenue shortfalls.

Not unpredictably, the biggest problems with under funding are at the opposite ends of the spectrum, community education and doctoral research universities. We've never adequately funded our research universities and we've pitifully neglected our community colleges.

In the eight years before I took office, funding for community colleges went down 17 percent relative to similar institutions in surrounding states. When I assumed this office, they were funded at only 75 percent of their benchmark institutions. This decline in relative funding occurred while enrollment was increasing 46.5 percent. As I began to prepare my first budget, it wasn't difficult to see that our community colleges were in a crisis. That's why the first budget I submitted to you had a 9.5 percent increase for Community Colleges in the first year and a 6.7 percent increase the second year.

This $11 million increase brought funding up to 83 percent of benchmark, a major improvement, but still not enough. Our first budget also included major capital construction projects for our community college system at Hazard, Ashland, Hopkinsville, Madisonville, Pikeville and Prestonsburg.

My proposal will increase funding for our Community Colleges by another $11.7 million, raising total funding to 95 percent of benchmark, a 26 percent increase in funding for our Community Colleges in just two years. This past neglect of our Community Colleges must stop!

Kentucky Tech has been similarly neglected. Comparative statistics aren't available so we don't know how much funding for these institutions will need to be increased. But we do know we need to make major investments in equipment and teaching technologies.

As a matter of good faith , we recommend an additional three-million dollars to be appropriated to Kentucky Tech immediately. We'll study the needs of Kentucky Tech during the next six months and provide even more funds in the biennial budget I'll propose in the next regular session of the General Assembly.

Our proposal also includes an immediate appropriation to bring funding for all our regional universities to at least 95 percent of the funding for their benchmark institutions in surrounding states!!!

These appropriations to make our system more equitable will make our distribution of state funds to our postsecondary institutions the fairest it's been in a long time.

Our proposal will also include an immediate appropriation to begin to build excellence and a national reputation for education in Kentucky.

Each regional university will receive a special appropriation to help it become the best in a least one field of study. And, we'll begin the process of building the University of Louisville and the University of Kentucky into nationally respected doctoral research universities.

Our goal is to make every University in Kentucky known for excellence throughout the nation in twenty years. We'll have more than just basketball as a reason to be proud of our eight state supported universities.

And in the budget proposal in January of next year, we'll fund programs to provide more scholarships for Kentucky students, programs to provide community colleges and technical institutions the equipment needed to provide for a quality technical education program.

We'll fund a capital construction program to provide the buildings and the technology we need to create an electronic university and make a four year education available to every Kentuckian in or near their home.

This is an ambitious program, a program to build an efficient and responsive system of schools to educate our people, young and old, for the new millennium. It won't be easy, it won't be quick and it won't be cheap. But we can afford it. To those who say we can't afford this commitment, I say we can't afford not to make this commitment.

The only way we can change the course of this state's future, build a healthy economy and increase our revenue base for the long term, is to invest in education. We can do it, and for the sake of our children, we must do it.

But first, we must change the way our colleges and universities work. The first element of our proposal is to establish six distinct, measurable goals for our colleges and universities to be achieved by the year 2020, a little over 22 years from now.

The first goal is to establish a seamless, integrated system of postsecondary education strategically planned and adequately funded to enhance the economy and the quality of life in Kentucky.

We'll establish at the University of Kentucky a first class comprehensive research university ranking in the top twenty public research universities in the United States.

The University of Louisville will become a nationally recognized metropolitan research university.

Each of the six regional universities will develop a national reputation in at least one area of study.

Our regional universities must provide statewide access to affordable, high quality baccalaureate and masters degree programs. These universities will use the latest electronic means to provide distance learning through a jointly operated virtual university to provide efficient access to a four year bachelor's degree to all Kentuckians, no matter where they live!

We'll develop a comprehensive community and technical college system that ensures reasonable access throughout the Commonwealth to the first two years of a course of general studies designed for transfer to a baccalaureate program. This united system will provide a technical skills training program adequate to develop a workforce to meet the needs of our new or existing businesses and industries. And it'll provide remedial and continuing education programs to improve the quality of life and employability of our people. We must have a community based postsecondary system which can compete effectively with any system in America.

And finally, we'll have an efficient, responsive and coordinated system of autonomous institutions which will deliver educational services to the citizens of the Commonwealth of a quantity and quality comparable to the rest of the nation.

Some would say this kind of an education system in Kentucky is an impossible dream. I say this kind of education system in Kentucky is what we should've committed ourselves to a hundred years ago.

To accomplish these goals, we propose to establish a council on postsecondary education consisting of thirteen outstanding Kentuckians, who'll be fair to every region of Kentucky, and every institution in the system. This council will select the most qualified educator- administrator they can find, who'll lead the Council as they develop a specific plan that we can implement to reach these goals by the year 2020. This plan will be comprehensive and will have specific benchmarks we can use to measure our progress. This council will work with the Governor, the legislature, the various institutions and the people of Kentucky to insure that everyone cooperates and carries their share of the load. This council won't control our universities. It won't be a super board. It won't hire or fire the presidents of our institutions. It will help us stay on course to reach our goals.

This isn't a program laced with new bureaucracies, or requiring more administration. This proposal is designed to eliminate red tape, provide flexibility, responsiveness, and insure the efficient use of the taxpayer dollar. We've designed a new vehicle to deliver educational services to Kentuckians in a new century.

This major change is supported by seven of the eight state supported universities in Kentucky and all eight of the student body presidents of our universities, including Ms Melanie Cruz, the president of the University of Kentucky student body.

This proposal has the support of all nineteen independent colleges and universities in Kentucky; the Prichard Committee on Academic Excellence; the Kentucky Advocates for Higher Education and almost every major newspaper in the state including the Kentucky Kernel, the University of Kentucky student newspaper. We're also supported by newspapers in the community college towns of Ashland, Harlan and Owensboro.

Business organizations like the State Chamber of Commerce, dozens of local chambers and local economic development organizations know these changes must be made. Kentucky's major employers like UPS, Toyota, and G.E. use the product of our system and they can compare our results to those in other states . They support these improvements. Other organizations like the Kentucky Education Association; the NAACP; the Louisville Urban League; the Taxpayers Action Group; the Kentucky League of Cities; the Kentucky County Judges' Association; the Kentucky Association of Counties and many labor organizations are for these progressive changes and the list goes on and on.

This is a vital step we must take if we're going to move this state forward.

Almost everybody in Kentucky who's taken the time to study our proposal has concluded it's needed. Almost everybody except the administration of the University of Kentucky.

Let me remind you that UK is my alma mater, the institution where I received the education which allowed me to become the person I am, the institution to which I entrusted the education of two of my children, the institution to which I've been a consistent contributor over the past twenty or so years, the school I'm as devoted to as any other Kentuckian. I'm determined to make UK a great center of academic excellence.

There's one part of our proposal that's caused a lot of debate and, fueled primarily by misinformation, has created divisiveness and opposition. The issue of creating a united and independent community based postsecondary education system is, in the big picture, a detail, but a very important, in fact vital detail.

This part of the proposal is about like the left rear wheel of this new vehicle we've designed to take us into the next century. In the big picture, the left rear wheel is a detail, but the vehicle won't work without its left rear wheel.

Every expert I've talked to, all the information I've read and my good common sense tells me that if we're going to have an efficient, responsive, comprehensive system of community based educational services, then the institutions we depend on to provide those services must be, as a minimum, united and independent enough to pursue their own destiny. They can't compete with each other and they can't be dominated by a huge bureaucracy with a different mission.

That's exactly what we have right now. Kentucky Tech is a part of state government and it's hide-bound by bureaucratic red tape. The community college system is administered by and dominated by the huge bureaucracy of the University of Kentucky.

KY Tech and the Community Colleges are generally located very close together, most of the time in the same town and in some cases, on the same campus. In many ways, they compete against each other and they're definitely not free to pursue their own agenda.

If we're going to change things for the better, sometimes we have to think outside of the box, think the unthinkable thoughts. Some people in Kentucky believe I've not only thought the unthinkable thought, I've been brash enough to utter it out loud. I suggested a proposal to separate the community colleges from the University of Kentucky and put them under an independent board along with Kentucky Tech. This proposal was not to merge the two systems but rather to place them under a common source of authority to make them cooperate and stop their wasteful competition. After all, they are spending your tax dollars and it's my responsibility to see that your taxes aren't wasted.

I'm convinced that this separation would allow UK to put more focus on its efforts to become a great research university, something we must have, if we're going to be the great state that I envision. But my proposal hasn't had a fair discussion based on the merits of the case.

Some people believe that we're going to close the community colleges, or turn them into high school vocational schools or lower their academic standards, or raise tuition or cause students to lose scholarships or cause the colleges to lose their accreditation and a lot of other false impressions. None of these allegations is true but I realize how much pressure this issue has put on the legislature. I understand the fear this misinformation has placed in the minds of students and their parents. I'm not insensitive to you or the supporters of UK and the community colleges.

I repeat again that my proposal will have increased funding for community colleges by 26 percent in my first two years in office.

After eight years of a decline in relative funding and a dramatic increase in enrollment, our Community Colleges were in crisis when I became Governor. I have and will continue to insure that they're adequately funded.

I've listened at community college campuses, I've met with UK faculty and administrators, I've consulted with you, the elected representatives of our people, and I've talked with the students who want a good education, and the opportunity to find a good job, and create a better life for themselves in Kentucky.

As a result of these discussions, I've modified my proposal , without compromising my principles, and I'm now suggesting the Community Colleges maintain an affiliation with the University of Kentucky, shifting administrative responsibility to the new Board of Regents of the Kentucky Community and Technical College System. Kentucky Tech in its entirety will also be transferred to the new board which will have responsibility for budget, personnel and other administrative functions of the community colleges. This will insure a structurally joined system that will have the independence and flexibility necessary to be responsive to regional workforce needs.

Degrees which have been previously authorized by the University of Kentucky Board of Trustees will continue to be issued in the name of the University of Kentucky Community College System. UK will continue to provide administrative support to the Community College System. UK will have academic oversight to insure the quality of programs affiliated with its name. UK will nominate candidates to fill four positions on the new Kentucky Community and Technical College System Board and students at the Community Colleges will retain access to UK student activities. The students are and will continue to be the central focus of our concern. I realize that many of them have been misled. Many have no outside point of reference for comparison of our proposal. I make one promise to the students of Kentucky Tech and the community colleges. One year after this program takes effect, your schools will be better funded, more responsive and providing you with a high quality, more varied education with more access in Kentucky than ever before.

The same promise is made to the staff and faculty of Kentucky Tech and the community colleges. The faculty and staff are our greatest asset in community based education. All existing rights of these employees will be protected and benefits will be expanded. Not only will the additional funding allow the colleges to pay fair wages, the tuition free educational advancement program of six hours a year for community college faculty at the University of Kentucky will be extended to the faculty of Kentucky Tech and the courses can be taken at any of our eight state supported universities.

A major focus of this program is to increase the responsiveness of our community based educational system. Removing Kentucky Tech from state government is an important part of this effort. Some people have accused me of wanting to increase the Governor's political power. The fact is, this proposal will move two thousand state employees of Kentucky Tech from the Governor's direct line of control into an autonomous body, one over which the Governor will have no administrative control. This proposal will reduce the Governor's political power by two thousand state employees.

Our proposal will give real authority to the Community College Advisory Boards . These boards would be renamed boards of directors. They will participate in the search for new presidents, should openings occur, and will make the final recommendation of a president from a list of three candidates suggested by the chancellor of the community college system. The money appropriated to the Community Colleges will be allocated to each college fairly and the local board will administer the budget of the college and keep any money they save to be used as they see fit. These community colleges will use this increased independence to develop their own strategic plans so they can better serve their students and the businesses of their service regions.

Again, the objective of these changes is to enable these colleges to respond to the needs of the communities they serve. Our local communities must have a voice in determining their own destiny!

This same self governing authority will be extended to the KY Tech institutions as their administrative structure is changed to become more like a postsecondary educational institution and as they shake off the bureaucratic constraints imposed by state government.

Various elements of this proposal have been suggested to us by members of the general assembly, Democrat and Republican. I want to thank the Republican Party for, at least up to now, keeping this issue non-partisan. The education of our children is too important to be used as a pawn in the struggle of partisan politics.

I believe this proposal satisfies the basic concerns of the students and the communities in which the community colleges are located. The community colleges will retain a meaningful affiliation with the University of Kentucky, which will insure the maintenance of University of Kentucky quality in the academic courses, allow the students to earn the same University of Kentucky Community College degree they now earn, and maintain a University of Kentucky presence in their communities.

I believe this proposal will substantially increase the efficiency and responsiveness of the Community Colleges and KY Tech and will insure the best expenditure of the taxpayer's dollar.

I've reached out to satisfy the concerns of those who care about the University of Kentucky and the community colleges.

It now becomes the responsibility of this General Assembly to do what you know is right.

This is a comprehensive proposal, a progressive move forward which has been applauded by just about every group interested in improving postsecondary education in Kentucky. It's not that complicated.

It's not the solution to all our education problems. In fact, it's just the first installment of a long-term investment to regain the ground we lost during 100 years of neglect of higher education in Kentucky.

I want to make one point very clear, I'm not just asking the legislature of Kentucky to pass a law, I'm asking the people of Kentucky to make a long term commitment, a commitment to excellence, a commitment to access for every Kentuckian, a commitment to our children and grandchildren.

This is a time for leadership, a time for you to study the facts, ignore the false and misleading rhetoric, make a judgment on behalf of the people who elected you to do what's best for them in the long run.

We're the leaders of Kentucky. If we're to have the Kentucky our people envision then we must have leaders who can think the unthinkable thoughts, dream the impossible dream, and have vision which reaches far beyond the horizon.

If we can be those leaders, then Kentucky can be the state that can hold the same kind of promise for our descendants that it held for our ancestors 200 years ago.

I know how hard it is for some of you, I've received the same kind of uninformed calls and letters as you. But I came here to make a difference, not just to hold an office. This time will not come our way again. The future of Kentucky is in our hands.

Good night, God bless you and God bless Kentucky.