In 2008 the Minnesota State Legislature passed a bill creating the Minnesota Ultra-High Speed Broadband Task Force. But unlike many other laws passed that year, the legislation creating the task force also set a date for its ultimate demise. Known as a “sunset clause” it is a provision in legislation that terminates or repeals all or portions of a law after a specific date, unless further legislative action is taken to extend it. So on March 31, 2010 (our sunset date), a congratulatory set of emails were circulated by all task force members celebrating a job well done and our ride into the legislative sunset.
I mention this now that the endorsed candidates for Governor have begun traveling around the state making their case to voters, unions, editorial boards, or just about anyone who will listen. And given Minnesota’s current budgetary mess, they are being pointedly asked what programs need to be cut; what agencies need to be consolidated; and possibly, what agencies need to be abolished. To no one’s surprise, few are volunteering details, but more importantly, none have suggested any structured method to answer these important questions.
It’s not that Minnesota has been unable to occasionally initiate governmental reforms. Remember when we used to have a State Treasurer, a Department of Economic Security, a Department of Employee Relations or the agency known as Minnesota Planning? It’s just that we all know that once a government program, commission or agency is created in law, over time it develops a constituency that advocates for its continuation and growth. As a result, abolishing or consolidating agencies becomes a legislative battle royale. So what would happen if most government programs, commissions and agencies came with a sunset provision; where after a specified period of time the program or agency would simply go away unless further legislative action were initiated to extend its life? Well believe it or not, some states have done just that.
In 1977 the State of Texas established the Texas Sunset Advisory Commission; a group comprised of six state senators, six state representatives and two public members. Along with the creation of the commission came the requirement that most state agencies and boards that are not constitutionally-mandated would be required to be reviewed by the commission every 12 years. So each year approximately 20-30 state agencies, boards and programs are reviewed by the Sunset Commission and their recommendations are provided to the state legislature as to whether to continue, consolidate or abolish the agency.
According to a 2009 report (http://www.sunset.state.tx.us/guide.pdf) since its first set of sunset reviews in 1978, 337 agencies have been recommended for continuation, 35 agencies and their functions have been completely abolished; 23 agencies have been abolished and their functions transferred elsewhere; and an additional 12 agencies have been consolidated with similar state agencies. With that said, it is also important to bear in mind that conducting a thorough review of a state agency and its programs is not cheap. According to the same report, since 1982 the Commission has spent nearly $29 million; or more than $1 million per year. But the report also claims that through its recommendations and associated legislative action, the Commission has saved the State of Texas $784 million. A quick Google search shows that similar sunset commissions are currently active in both Florida and Alabama; and back in 2000 the California State Assembly created a similar Joint Legislative Review Committee, but it apparently no longer exists today.
Here in Minnesota a somewhat similar structure can be found in the Legislative Audit Commission; a bipartisan Commission comprised of 6 House members and 6 Senate members equally divided by Democrats and Republicans. Under the leadership of Legislative Auditor James Nobles, the commission’s work is viewed as nonpartisan, objective and extremely credible. However, the functions of the Legislative Audit Commission are more ad hoc in nature; taking on a handful of specific projects each year at the request of the legislature.
So as the election season gets into full swing there will undoubtedly be more talk about state agencies and programs that should be consolidated or eliminated to help reduce the upcoming budget deficit. For me the establishment of a Minnesota Sunset Commission may seem gimmicky, but if it were structurally positioned with the Legislative Audit Commission, we would likely get an objective, thoughtful approach to a task that is typically far too political.
Tuesday, June 22, 2010
Saturday, June 12, 2010
Looking for a Good Idea
The names are familiar to many Americans: Polaris, Marvin Windows, Arctic Cat, Digi-Key, Christian Brothers and Central Boiler. Others, such as Mattracks are just beginning to brand themselves across the nation. Together, they represent a cluster of businesses in Northwest Minnesota that employ thousands of workers. They are an economic developers dream; just the kind of businesses they want to recruit and develop in their communities. These are businesses that bring high levels of capital investment, thousands of first-earner incomes and substantial tax revenues.
Yet the reality is that none of these businesses were recruited to northwest Minnesota. Rather, they simply started out with an interesting idea and were encouraged by friends and family. They often started in a garage, pole barn or shack; but their founders had the drive and determination to never give up. They are in reality, a historical artifact of their region the same way that the Mayo Clinic is a historical artifact in southeast Minnesota. The truth is that there was nothing particularly special about Rochester, Minnesota that allowed the Mayo Clinic to grow into the world-renowned organization it is today. Nor was there anything special about Warroad, Minnesota that allowed Marvin Windows & Doors to blossom there. Instead what was truly special were the people who came upon a good idea and didn’t let go of it.
I note this because now that the Minnesota economy has stalled a bit, local and regional economic development organizations are being looked upon to come up with more innovative strategies to move their regional economies forward. For example, in southwest Minnesota some development organizations have identified the renewable fuels and energy industry as their focal point. Blessed with the assets of quality soils and a strong west wind, there’s much to be said for that strategy. Similarly, after a year-long study, the Southern Minnesota Regional Competitiveness Project is mobilizing its resources around its identified assets in healthcare, biosciences, manufacturing, high technology, food and agriculture. And in southeast Minnesota along the Highway 52 corridor, a unique partnership anchored by the University of Minnesota and the Mayo Clinic hope to make the corridor a biotechnology juggernaut. But regardless of the region or the sectors, the approach seems somewhat similar: identify regional assets; examine potential economic opportunities and try to craft a coordinated strategy to maximize the probability of success.
Now contrast that approach with the IDEA Competition in Northwest Minnesota (IDEA stands for Ingenuity Drives Entrepreneur Acceleration). Sponsored by a dozen regional organizations and facilitated by the Northwest Minnesota Foundation, the approach is based upon the observation of what has worked in northwest Minnesota for decades; and that is simply stated: bring us your best ideas. It is not bound by specific industries or service sectors, but rather by two questions: first, is there a promising breakthrough idea; and second, is the entrepreneur truly committed to developing their business in northwest Minnesota? That’s it.
Each year dozens of entrepreneurs and start-ups bring their best ideas to the selection committee comprised of business executives, finance organizations, business professors, foundation executives and economic developers. And through an iterative process they select the entrepreneurs and breakthrough ideas they hope will become the next Marvin Windows & Doors. This past May, five new entrepreneurs were selected, each receiving an initial $10,000 award. But of course, the real prize is not the $10,000, but rather it’s the regional recognition and the connections to financiers and resources to assist in the commercialization and development of these new business start-ups.
As Wade Fauth, Vice President of Grand Rapids-based Blandin Foundation noted, “The type of innovative thinking that drives business creation often comes down to the vision of a single individual. This strategy focuses on uncovering some of the most promising ideas and providing them with the support needed to be successful in the marketplace.”
Finding the next Polaris, Schwans Foods, Taylor Corporation, Digi-Key or Cirrus Design is never easy. In fact, some might argue that it is nearly impossible. But in Northwest Minnesota they appear to be taking a very different approach. Instead of trying to second guess the industries or products of the future, they are using a strategy steeped in the history of their region. Simply put: Invest in those people with the best ideas and have the drive and determination to never give up.
Yet the reality is that none of these businesses were recruited to northwest Minnesota. Rather, they simply started out with an interesting idea and were encouraged by friends and family. They often started in a garage, pole barn or shack; but their founders had the drive and determination to never give up. They are in reality, a historical artifact of their region the same way that the Mayo Clinic is a historical artifact in southeast Minnesota. The truth is that there was nothing particularly special about Rochester, Minnesota that allowed the Mayo Clinic to grow into the world-renowned organization it is today. Nor was there anything special about Warroad, Minnesota that allowed Marvin Windows & Doors to blossom there. Instead what was truly special were the people who came upon a good idea and didn’t let go of it.
I note this because now that the Minnesota economy has stalled a bit, local and regional economic development organizations are being looked upon to come up with more innovative strategies to move their regional economies forward. For example, in southwest Minnesota some development organizations have identified the renewable fuels and energy industry as their focal point. Blessed with the assets of quality soils and a strong west wind, there’s much to be said for that strategy. Similarly, after a year-long study, the Southern Minnesota Regional Competitiveness Project is mobilizing its resources around its identified assets in healthcare, biosciences, manufacturing, high technology, food and agriculture. And in southeast Minnesota along the Highway 52 corridor, a unique partnership anchored by the University of Minnesota and the Mayo Clinic hope to make the corridor a biotechnology juggernaut. But regardless of the region or the sectors, the approach seems somewhat similar: identify regional assets; examine potential economic opportunities and try to craft a coordinated strategy to maximize the probability of success.
Now contrast that approach with the IDEA Competition in Northwest Minnesota (IDEA stands for Ingenuity Drives Entrepreneur Acceleration). Sponsored by a dozen regional organizations and facilitated by the Northwest Minnesota Foundation, the approach is based upon the observation of what has worked in northwest Minnesota for decades; and that is simply stated: bring us your best ideas. It is not bound by specific industries or service sectors, but rather by two questions: first, is there a promising breakthrough idea; and second, is the entrepreneur truly committed to developing their business in northwest Minnesota? That’s it.
Each year dozens of entrepreneurs and start-ups bring their best ideas to the selection committee comprised of business executives, finance organizations, business professors, foundation executives and economic developers. And through an iterative process they select the entrepreneurs and breakthrough ideas they hope will become the next Marvin Windows & Doors. This past May, five new entrepreneurs were selected, each receiving an initial $10,000 award. But of course, the real prize is not the $10,000, but rather it’s the regional recognition and the connections to financiers and resources to assist in the commercialization and development of these new business start-ups.
As Wade Fauth, Vice President of Grand Rapids-based Blandin Foundation noted, “The type of innovative thinking that drives business creation often comes down to the vision of a single individual. This strategy focuses on uncovering some of the most promising ideas and providing them with the support needed to be successful in the marketplace.”
Finding the next Polaris, Schwans Foods, Taylor Corporation, Digi-Key or Cirrus Design is never easy. In fact, some might argue that it is nearly impossible. But in Northwest Minnesota they appear to be taking a very different approach. Instead of trying to second guess the industries or products of the future, they are using a strategy steeped in the history of their region. Simply put: Invest in those people with the best ideas and have the drive and determination to never give up.
The Boomers are Getting Tired
In 1998 Tom Brokaw authored a book chronicling the accomplishments of the American cohort known as “The Greatest Generation.” These children of the Great Depression, World War II soldiers and liberators were clearly remarkable not only in their accomplishments, but in their passion for chasing the American dream. This generation raised our collective standard of living, established the American suburbs and left an unmistakable mark on both American and world history. But in spite of their achievements, it may turn out that it will be their children, the “Baby Boomers” who will leave a longer lasting impact on American society.
These boomers, who were born between 1946-1964, represent the largest demographic cohort in American history. Often characterized as the “pig in the python,” the boomers have owned this country for a generation now. Reared in the turbulent 1960’s with a disdain for the status quo, they are not only the largest, but the best-educated, healthiest and wealthiest in American history. Collectively, they represent a truly remarkable and successful professional class. But time does not stop for anyone; and the leading edge of the boomers who were born in 1946 know all too well that they will begin turning 65 in 2011. Over the next three decades these boomers will redefine what it means to a senior citizen in America. Unfortunately, regardless of their efforts to redefine retirement and senior citizenship, the sheer size of this cohort transitioning into their senior years will greatly tax our current health care system and have a serious impact on the Minnesota workplace.
For years now the largest demographic cohort in Minnesota has been school-aged children; i.e., those between the ages of 5-17. This demographic group is not only large, but they demand a great deal of public services; and as a result, the financing of our public K-12 education system has been the largest single expense category in our state budget. But according to our state demographer, within 10 years there will actually be more residents in Minnesota aged 65 and over than there are children between the ages of 5-17. The impact of such a large cohort transitioning their heath care needs from private insurance to public insurance (through Medicare and Medicaid) will challenge our state and federal budgets.
According to our state economist and the most recent state budget projections, Minnesota’s economy grows on average 3.9% per year, while its state expenditures on health and human services has been annually growing on average 8.5%. As a result, over the past 10 years the health and human services budget has ballooned and has overtaken higher education spending and the majority of other expenditure categories. Further, this growth has occurred without the influence of boomers transitioning to senior citizenship. So the question is, as the number of boomers overtakes the number of school children in Minnesota, will the health and human service budget become the single largest expenditure category in the budget? Left alone, will there be adequate future funding for K-12 education, roads and bridges, economic development, etc., or will health care expenditures overtake everything?
Of course the other concern is the issue of replacing this well-educated and talented group of boomers as they transition out of the work force and into retirement. Clearly, the departure of boomers from the active workforce will leave a very large hole to fill and worker shortages will once again become evident. And while that may be good for future job-seekers, there is a real question as to whether this future workforce will be qualified to fill many of the highly-skilled jobs that these boomers are exiting. Unfortunately, the prospects are not good.
Current demographic projections suggest a dramatic slowing of the growth of our future workforce, with migration becoming the single largest source of future workers in Minnesota. But unlike Minnesota’s economic immigrants of the past who came from Iowa, Wisconsin and the Dakotas, the majority of our current immigrants come from East Africa, Southeast Asia, Mexico and Eastern Europe. Unfortunately, these new Minnesotans are not currently experiencing the academic success needed to fill these higher-skilled jobs being exited by the boomers; and that may have a critical impact on the types of future businesses that we will develop and grow in Minnesota.
Just as the baby boomers take on the task of redefining senior citizenship in America, their demographic transition may collaterally redefine the future of Minnesota.
These boomers, who were born between 1946-1964, represent the largest demographic cohort in American history. Often characterized as the “pig in the python,” the boomers have owned this country for a generation now. Reared in the turbulent 1960’s with a disdain for the status quo, they are not only the largest, but the best-educated, healthiest and wealthiest in American history. Collectively, they represent a truly remarkable and successful professional class. But time does not stop for anyone; and the leading edge of the boomers who were born in 1946 know all too well that they will begin turning 65 in 2011. Over the next three decades these boomers will redefine what it means to a senior citizen in America. Unfortunately, regardless of their efforts to redefine retirement and senior citizenship, the sheer size of this cohort transitioning into their senior years will greatly tax our current health care system and have a serious impact on the Minnesota workplace.
For years now the largest demographic cohort in Minnesota has been school-aged children; i.e., those between the ages of 5-17. This demographic group is not only large, but they demand a great deal of public services; and as a result, the financing of our public K-12 education system has been the largest single expense category in our state budget. But according to our state demographer, within 10 years there will actually be more residents in Minnesota aged 65 and over than there are children between the ages of 5-17. The impact of such a large cohort transitioning their heath care needs from private insurance to public insurance (through Medicare and Medicaid) will challenge our state and federal budgets.
According to our state economist and the most recent state budget projections, Minnesota’s economy grows on average 3.9% per year, while its state expenditures on health and human services has been annually growing on average 8.5%. As a result, over the past 10 years the health and human services budget has ballooned and has overtaken higher education spending and the majority of other expenditure categories. Further, this growth has occurred without the influence of boomers transitioning to senior citizenship. So the question is, as the number of boomers overtakes the number of school children in Minnesota, will the health and human service budget become the single largest expenditure category in the budget? Left alone, will there be adequate future funding for K-12 education, roads and bridges, economic development, etc., or will health care expenditures overtake everything?
Of course the other concern is the issue of replacing this well-educated and talented group of boomers as they transition out of the work force and into retirement. Clearly, the departure of boomers from the active workforce will leave a very large hole to fill and worker shortages will once again become evident. And while that may be good for future job-seekers, there is a real question as to whether this future workforce will be qualified to fill many of the highly-skilled jobs that these boomers are exiting. Unfortunately, the prospects are not good.
Current demographic projections suggest a dramatic slowing of the growth of our future workforce, with migration becoming the single largest source of future workers in Minnesota. But unlike Minnesota’s economic immigrants of the past who came from Iowa, Wisconsin and the Dakotas, the majority of our current immigrants come from East Africa, Southeast Asia, Mexico and Eastern Europe. Unfortunately, these new Minnesotans are not currently experiencing the academic success needed to fill these higher-skilled jobs being exited by the boomers; and that may have a critical impact on the types of future businesses that we will develop and grow in Minnesota.
Just as the baby boomers take on the task of redefining senior citizenship in America, their demographic transition may collaterally redefine the future of Minnesota.
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