Last Monday, hundreds of Oregon's business captains, political players and community leaders came together in Portland for the 4th annual Oregon Leadership Summit. The daylong agenda showed the significant progress the state has made since the Oregon Business Plan was formed during the depths of the recession. Unfortunately, the event also highlighted the good, the bad and the ugly of Oregon economic development.
Overall, the tone and tenor of the Summit was upbeat, and for good reason. Pulling out of the recession, Oregon ranked 8th in the nation in job growth from September 2004 to 2005, with only Idaho performing better among northwest states (according to the 2006 Competitive Index produced by the OBP). Incomes, too, have started to improve for Oregonians, with gross state product estimated to expand by as much as 5% in 2006.
Perhaps more important that the promising news was the Summit's overwhelming consensus regarding the central role of education in driving future economic success - and higher living standards - in Oregon. Senators Gordon Smith and Ron Wyden echoed the sentiments of new Oregon Business Plan chairman and Pixelworks CEO Allen Alley, who exhorted the audience that "training our children to be prepared for their future responsibilities is not so much a question of civic duty, which it certainly is, but is in fact, a moral obligation."
Governor Kulongoski, too, used the summit stage as a bully pulpit for major education reform. In a preview of what no doubt will be a major theme in his 2006 reelection bid, the Governor spoke of a new "Education Enterprise" that would provide seamless "K20" education encompassing all levels of schooling from primary and secondary through community colleges, universities and graduate study. Seeking to break down current budgetary and bureaucratic fiefdoms, Kulongoski put it simply, "The more we put into education the more we will get out of the economy."
The Oregon Business Plan, and the set of initiatives pursued by its business leadership team, also received general praise from speaker Professor Michael Porter, who heads the Institute for Strategy and Competitiveness at Harvard Business School. Porter, a pioneer in the application of industry clusters to economic development, endorsed Oregon's leverage of its natural endowment, resources and sustainability. He also lauded the state's support of over 40 economic clusters old and new, whether fisheries or timber, biotech or software. "All clusters are good," Porter noted, adding that there is "no such thing as high-tech clusters or low-tech clusters, only high-tech firms and low-tech firms."
But it was Porter who also provided some of the more sobering assessments of Oregon's economic competitiveness. Oregon, he noted, trailed the national average for state income per capita, in part due to a much lower work force participation rate (61%) than the country as a whole (66%). Worse still, while Oregon overall ranks in the top 10 in patents awarded per 1000 residents on the strength of firms such as Intel, HP and Tektronix, its universities lag badly, with OHSU ranked 75th, Oregon State 135th, U of O at 206 and Portland State almost off the charts at 422nd. "Oregon is lacking a research-based university system," Porter intoned, and has "not yet risen to the level where it is competitive."
Which brings us to the 800 pound elephant in the room. Despite the overwhelming support of the Summit audience for education reform (as evidenced by a less-than-scientific vote among attendees), no one addressed Oregon's self-imposed budgetary strait-jacket that will make major improvements at all levels of education difficult at best.
Defying credibility after last session's $200 million stalemate House Speaker Karen Minnis said last Monday "I don't know one Democrat or one Republican who wouldn't want to give as much to education, not just dollars but policy." Ranked 27th in per student K12 spending, 43rd in the ratio of students to online computers, and below average in per capita R&D expenditures at its colleges and universities, Oregon simply will have to provide more resources for future market results to match last Monday's rhetoric.
But on that point, the Oregon Leadership Summit was largely silent. There were no calls to undo Oregon's income tax "kicker", which enshrines recession in the state's tax and budget policies. There were no calls for Oregon, with among the highest personal income tax burdens in the country, to seek more from its corporations, which benefit from one of the lowest tax rates in the nation. Ballot measures previously approved by voters only tighten the handcuffs. Across the state, Oregon's business community has the clout - and the money - to be perhaps the only force capable of driving reform of that magnitude.
Perhaps that will be the agenda for the Leadership Summit in 2007.