COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES
APPROPRIATIONS COMMITTEE HEARING
STATE CAPITOL MAJORITY CAUCUS ROOM ROOM 140 HARRISBURG, PENNSYLVANIA
THURSDAY, FEBRUARY 3, 2011 10:00 A.M.
BEFORE: HONORABLE WILLIAM ADOLPH, MAJORITY CHAIRMAN HONORABLE JOHN BEAR HONORABLE MARTIN CAUSER HONORABLE JIM CHRISTIANA HONORABLE MAUREE GINGRICH HONORABLE GLEN GRELL HONORABLE DAVID MILLARD HONORABLE MARK MUSTIO HONORABLE SCOTT PERRY HONORABLE SCOTT PETRI HONORABLE TINA PICKETT HONORABLE JEFFREY PYLE HONORABLE MARIO SCAVELLO HONORABLE CURTIS SONNEY HONORABLE JOSEPH MARKOSEK, MINORITY CHAIRMAN HONORABLE MATTHEW BRADFORD HONORABLE PAUL COSTA HONORABLE DEBERAH KULA HONORABLE TIMOTHY MAHONEY
————————— JEAN DAVIS REPORTING 7786 Hanoverdale Drive • Harrisburg, PA 17112 Phone (717)503-6568 • Fax (717)566-7760 1 BEFORE (cont.'d):
2 HONORABLE MICHAEL O'BRIEN HONORABLE JOHN SABATINA 3 HONORABLE STEVE SAMUELSON HONORABLE GREG VITALI 4 RONALD WATERS
5 ALSO IN ATTENDANCE: 6 HONORABLE MARK COHEN 7 HONORABLE PHYLLIS MUNDY MIRIAM FOX 8 EDWARD NOLAN
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11 JEAN M. DAVIS, REPORTER 12 NOTARY PUBLIC
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3 NAME PAGE 4 DAVID THORNBURG 7 5 SALLIE GLICKMAN 13 WILLIAM STRICKLAND, JR. 77 6
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3 1 P R O C E E D I N G S
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3 MAJORITY CHAIRMAN ADOLPH: Good morning,
4 everyone. The hour of 10 o'clock having arrived, I would
5 like to call to order the Appropriations Committee
6 Informational Meeting.
7 This morning we have David Thornburgh. David is
8 the Executive Director of the University of PA Fels
9 Institute of Government.
10 Obviously, the name Thornburgh is not strange to
11 any of us. David is the oldest son of our former Governor.
12 Prior to his appointment, he served as a senior advisor to
13 the Econsult Corporation, a Philadelphia-based economic
14 consulting firm.
15 David is here today, along with his colleague, to
16 discuss economic development throughout the Commonwealth of
17 PA.
18 Without further adieu, before we hear from David,
19 once again, Chairman Markosek, if you'd introduce yourself
20 and allow our committee members to introduce themselves and
21 identify what districts they represent in the Commonwealth.
22 MINORITY CHAIRMAN MARKOSEK: Thank you,
23 Mr. Chairman. Good morning, everybody. I'm State Rep.
24 Joe Markosek. I represent Allegheny and Westmoreland
25 Counties.
4 1 To my immediate right is Miriam Fox, who is the
2 Executive Director -- Minority Executive Director for the
3 Appropriations Committee.
4 To her right is Rep. Ron Waters from Philadelphia
5 and Delaware Counties. Behind us is Rep. Greg Vitali from
6 Delaware County. We have Rep. Steve Samuelson, Lehigh
7 County; Rep. Paul Costa from Allegheny County; Rep. Tim
8 Mahoney from Fayette County; Rep. Mike O'Brien from
9 Philadelphia County; Rep. Deb Kula from Westmoreland and
10 Fayette Counties.
11 We have Rep. John Sabatina from Philadelphia
12 County and a special guest, Rep. Phyllis Mundy from Luzerne
13 County, who is our Minority Chair of the House Finance
14 Committee.
15 Welcome, all. Thank you, Mr. Chairman.
16 MAJORITY CHAIRMAN ADOLPH: Thank you,
17 Mr. Chairman.
18 REP. GINGRICH: Good morning. Thanks for being
19 here. Rep. Mauree Gingrich, 101st District. That's
20 Lebanon County.
21 REP. SCAVELLO: Good morning. Rep. Mario
22 Scavello of Monroe County.
23 REP. PICKETT: Rep. Tina Pickett, Bradford,
24 Sullivan, and Susquehanna Counties.
25 REP. GRELL: Good morning. I'm Rep. Glen Grell,
5 1 87th District, which is Cumberland County.
2 REP. CAUSER: Good morning. Rep. Marty Causer,
3 67th District, McKean, Potter, Cameron Counties.
4 REP. PERRY: Good morning. Rep. Scott Perry from
5 the great 92nd, which is Northern York and Southern
6 Cumberland Counties.
7 REP. MILLARD: Good morning. David Millard,
8 Columbia County, 109th District.
9 REP. PYLE: Good morning. Jeffrey Pyle, 60th
10 Legislative District, Armstrong and Indiana Counties, the
11 heart of Steeler Country.
12 REP. PETRI: Scott Petri, 178th District located
13 in Bucks County, PA.
14 REP. QUIGLEY: Rep. Tom Quigley, 146th District,
15 Montgomery County.
16 REP. MUSTIO: Rep. Mark Mustio, 44th District,
17 Allegheny County.
18 REP. CHRISTIANA: Jim Christiana, 15th District,
19 Beaver County.
20 REP. SONNEY: Good morning. Rep. Curt Sonney,
21 4th Legislative District, Erie County.
22 REP. BEAR: Rep. John Bear from Lancaster County.
23 MAJORITY CHAIRMAN ADOLPH: Thank you, ladies and
24 gentlemen. And to my left is Executive Director of the
25 House Republican Appropriations Committee, Dr. Ed Nolan.
6 1 Without further adieu, David, if you would like
2 to add anything to your introduction and identify your
3 colleague, we would appreciate it. Thank you.
4 MR. THORNBURGH: Great. Thank you very much,
5 Mr. Chairman. It's a delight to be with you here today to
6 see if we can get a good conversation going about some
7 critical issues facing the Commonwealth right now.
8 I wanted to introduce my colleague, Sallie
9 Glickman, who is a senior advisor with the Fels Institute.
10 I think on your handouts and up on the screen we have sort
11 of a very compressed career path for both of us.
12 Suffice it to say, Sallie is an extremely
13 knowledgeable person around workforce development and job
14 training issues. And I suspect there may be some questions
15 that come up around those issues.
16 Most recently before she joined Fels as a senior
17 advisor, she was CEO of the Workforce Investment Board in
18 Philadelphia and has worked at the national level in PA
19 around those issues. I appreciate her ability to be here,
20 too.
21 I think since we're solidly in sports lingo these
22 days for good reason -- at least those of us -- well, we're
23 all in PA, so we can all root for the Steelers at this
24 point. But for those of us who hail from the West, it may
25 be particularly significant.
7 1 I may essentially do the play-by-play on this
2 presentation. And Sallie is going to jump in with some
3 commentary particularly around workforce issues and human
4 capital issues.
5 A quick note about the Fels Institute for those
6 of you who are not familiar with us. We have been, for
7 almost 75 years, one of the mainstays of the
8 university-based programs educating people, young people,
9 for public leadership roles in this state and around the
10 nation.
11 We also have a research and consulting group that
12 has helped local government, State government, non-profit
13 organizations over the years with a variety of different
14 policies and management issues.
15 My remarks today are going to be derived from a
16 lot of my own experiences in the development world. And we
17 recently took a look at particularly entrepreneurial
18 development and entrepreneurship in PA and put out a report
19 that I will make reference to along the way.
20 This is what I hope is some useful and fairly
21 concrete thoughts on what I think of as investment
22 guidelines as you and your colleagues and obviously the
23 Governor's Office try to think through what the State can
24 do to help us pull out of this great recession that we're
25 in. Let me proceed.
8 1 Probably just kind of as a basic statement, you
2 know, we think about a highly functioning economy around a
3 particular set of issues. One is the state of the
4 workforce. And at the end of the day, our ability to
5 compete as a State and as local communities is highly
6 contingent on the education and literacy level and the
7 spirit of enterprise that is vested in our people.
8 Infrastructure certainly in a State like PA --
9 infrastructure meaning everything from roads, bridges,
10 ports, transits, and the softer maybe of colleges and
11 universities and community colleges are all critically
12 important.
13 In this global economy, putting smart people and
14 good ideas together and making sure that we have access to
15 opportunities and to markets and new products and services.
16 And then finally -- and this is obviously sort of
17 what brings us here -- maintaining a productive
18 relationship between government and business and making
19 sure that there's a lot of communication going back and
20 forth and that both sides sort of understand where the
21 other one is coming from.
22 In a more focused way, here's basically the gist
23 of my presentation, which again, I set out as investment
24 guidelines.
25 First, I'm going to talk about creating and
9 1 sustaining a competitive platform. This is kind of a
2 business environment and competition issue.
3 Second is to think and invest regionally, I think
4 particularly important in a State as big and diverse as PA.
5 Third is to maybe go off season with my sports
6 reference to talk a little bit about playing small ball.
7 For those of you baseball fans, maybe that resonates and we
8 can talk a little bit about that.
9 The fourth thing is to pick a few spots in terms
10 of capital investment that really have some leverage.
11 Also, talking about the rural -- how I see State government
12 working with local governments, business communities,
13 Federal Government, and particular thoughts there.
14 And then finally maybe what I described as some
15 caveats and snakes in the grass, things that if we're not
16 careful can bite us and can really hold back the
17 competitive profile of the Commonwealth.
18 So let me start with some thoughts on this
19 competitive platform. I really do believe that the first
20 role of government is to provide for a predictable,
21 thorough, and fair environment for businesses to operate.
22 And that goes to taxes and regulation, which is obviously a
23 principal activity of what goes on here and elsewhere in
24 the Commonwealth.
25 My view on tax rates is, the first rule is you
10 1 got to keep your head below the foxhole. And frankly when
2 I see either the Commonwealth on average or markets, you
3 know, regions within the Commonwealth that are grossly
4 uncompetitive from a tax standpoint, I do think that that
5 harms our overall business environment.
6 The second is I do believe also that not only the
7 tax rates but also the way we administer our tax collection
8 is critically important. That can also add to the burden
9 in very unhelpful ways. And again, in a world that
10 increasingly gets sort of bigger and smaller, being able to
11 present a fair and efficient platform to businesses is
12 really important.
13 And it's also important when we look at tax rates
14 to understand and see the whole field, as it were, that
15 businesses -- you know, they have to pay Federal taxes,
16 State taxes, local taxes. And they don't easily
17 differentiate one from the other.
18 So whenever we do tax rate comparisons, in my
19 view, we have to put them all together and see that
20 coordinated picture and not just one single piece of it.
21 You can't just look at local tax rates or State tax rates
22 or Federal tax rates in isolation.
23 The final thing on the taxes is that as big and
24 diverse as the State of PA is, averages can be misleading.
25 I know unfortunately from living in Philadelphia for the
11 1 last 25 years, that's one part of the Commonwealth that's,
2 I think, very uncompetitive from a tax standpoint.
3 There are places in the Commonwealth that are
4 quite competitive from a tax standpoint. So there's an
5 enormous variation. But it's important to match up those
6 local jurisdictions with the type of business that we are
7 focused on or interested in building and really, you know,
8 cut through that somewhat misleading cloud of averages.
9 I talked about infrastructure in my opening
10 remarks. I do believe that -- and I would throw airports
11 in here, too, the transit airports, roads -- logistics will
12 need to be able to move products and people and ideas
13 swiftly and efficiently.
14 And more and more, again, I think that's a
15 critical consideration. It's just astounding how quickly
16 now you order something from your favorite on-line retailer
17 and it shows up at your door. We come to depend on that.
18 Businesses come to depend on that. So this whole area of
19 logistics, I think, is really important.
20 Human capital -- I'll say a little bit and then
21 maybe ask Sallie to say a few things since this is sort of
22 her sweet spot.
23 We're not going to talk much about K-12 today. I
24 think we all take for granted that unless we do a good job
25 there, that the rest of this becomes much more difficult
12 1 downstream. So we'll leave that for others on maybe
2 another day.
3 I would only say -- and then again I'll ask
4 Sallie to jump in -- PA, despite the wealth of colleges and
5 universities we have in this Commonwealth, has not done a
6 competitive job of educating people through a college
7 degree and retaining those folks afterwards.
8 This is something that I did a lot of work with
9 when I was at the PA Economy League. It remains a
10 challenge. It is a remarkable set of assets that we have
11 in our higher education community. But linking those with
12 the economy and really positioning the Commonwealth
13 internationally, I think, is a critical thing.
14 But here I'll ask Sallie to jump in and say a
15 little bit that draws on her experience.
16 MS. GLICKMAN: So there's much to be said about
17 what's going on with human capital right now. Obviously,
18 it's a big deal. We have in the U.S. close to 3 million
19 people who have been unemployed for a year or more. That
20 is up six times over what it was two years ago.
21 We also have another alarming trend for the share
22 of young people who are working. Ten years ago, 50 percent
23 of young people were working. Now it's down to 25 percent.
24 A lot of those young people are being pushed into the
25 college market.
13 1 The implications for the work force in PA and
2 elsewhere around the country are huge for both of those
3 things. We have hundreds of thousands of people in the
4 greater Philadelphia region, for example, that are becoming
5 increasingly discouraged with skills being increasingly
6 outdated because they're just outside of the workforce.
7 So the challenge that's going to come down the
8 pike, I think, for PA and obviously not unique to PA is,
9 you know, what do you do with these people?
10 As you're trying to grow businesses, as we're
11 trying to grow jobs, this is a function of whether you've
12 got all of the things lined up so you can do
13 infrastructure. But if you don't have the people to fill
14 those jobs and you have less mobility, you can't always
15 import any more. That's a growing concern.
16 And the other thing is at the other end of this,
17 the kinds of businesses that we're starting are far more
18 knowledge based than ever before. So the job content of
19 the economics are coming out of the recession.
20 Stuff is very different than the economy that we
21 had. And we've seen this happen in PA. The report that
22 Fels just did talked about, you know, we really hit it in
23 the '80s, you know, sort of when we went through this
24 revolution where we moved away from sort of the steel
25 industry and manufacturing. But we're seeing it again.
14 1 And our people, our adults, just aren't ready for it.
2 And so the vast majority of Pennsylvanians who
3 need to work are outside of the K-12 system and really have
4 outmoded basic skills and outmoded technical skills for
5 what we see in the new economy.
6 That's going to be a huge issue for us and a huge
7 opportunity for PA. Because if we can get in front of that
8 maybe in a way that some other states don't, we create a
9 competitive boost that can take us, you know, kind of
10 decades and really, really push us ahead for decades.
11 MR. THORNBURGH: I'll say one more thing on the
12 higher education fund. Sallie and I have actually worked
13 together for the last four or five years on a really
14 exciting and promising initiative called Graduating
15 Philadelphia, which is focused on those people who have
16 gone to college but not finished their degrees.
17 There are a lot more of them than we're led to
18 believe. I think this is partly due to the fact that
19 colleges haven't necessarily succeeded in graduating people
20 on time and with a degree as much as they could have been.
21 In Philadelphia alone, there are about 80,000
22 people who have some college but not a college degree. I
23 guess our thought is we should -- we could and should and
24 maybe even have to find ways to bring those folks back to
25 complete their degree, which significantly improves their
15 1 earning potential and their ability to provide for their
2 families.
3 Over a lifetime, the earning differential between
4 someone with a high school degree and a college degree is
5 about a million dollars. So this is a million dollar
6 proposition for those 80,000 people. I think there's about
7 300,000 in the Philadelphia region.
8 There's now a network of graduate programs.
9 There's a Graduate Saint Louis, Graduate Chicago, and
10 Graduate Connecticut, and an interest in Graduate New York.
11 We would love to find a way to make this graduate
12 platform also spread around the Commonwealth. Again, it
13 feels to us like an efficient way to really do something
14 quite significant for the quality of workforce and the
15 platform that businesses have.
16 The second point is the need to invest and
17 deliver regionally. I put up here, just as a reminder, the
18 regions that really drive about three-quarters of the PA
19 economy. That's greater Philadelphia, greater Pittsburgh,
20 Southeastern PA, and the Lehigh Valley.
21 It's really important to think regionally, not
22 just by, you know, townships and boroughs and even
23 counties, because businesses operate across jurisdictions
24 and serve markets and draw on markets for employees.
25 You know, just because you're in McKeesport
16 1 doesn't mean you have to hire everybody from McKeesport.
2 In fact, you'd really be quite limited if -- wonderful
3 people in McKeesport, but there just aren't quite enough of
4 them -- you need to build company.
5 Just a reminder of that. And in the words of a
6 former colleague of mine, you have to think of the region
7 -- from the relationship between business and government,
8 the region is the product that we're selling.
9 When we're looking to attract businesses or grow
10 businesses, we're really talking to them about the assets
11 of the region. So that's the product we're selling to
12 companies, investors, entrepreneurs, and employees. Our
13 job is to market that region and that product and also to
14 keep improving that. I think that's always struck me as a
15 useful way to think about that.
16 Another kind of angle on this is regions are the
17 geographic of opportunity. Again, for people looking for a
18 job, you want them to have the whole metropolitan area, the
19 whole market at their disposal and not just one piece of it
20 or another piece.
21 In fact, in PA, we have some longstanding
22 existing models of programs that work regionally. My
23 former -- at one point I spent about six years working for
24 the Small Business Development Centers which has organized
25 18 centers around the Commonwealth regionally.
17 1 The Ben Franklin Partnership also organized
2 regionally. And the Industrial Resource Centers and the
3 Workforce Investment Boards I think are all good examples
4 of entities that get that kind of regional equation. I
5 thing we ought to be thinking more about those and how we
6 can purpose them further.
7 Let me take a quick step into -- we're about to
8 talk about particularly this entrepreneurial economy. I
9 want to get sort of a long-term reflection of where PA has
10 been over the last several decades.
11 As often is the case in PA, there's good news and
12 there's bad news. The good news is that we have moved in a
13 positive direction over the last 30 years or so. We
14 created about 900,000 jobs.
15 And that happened at a time when our population
16 actually didn't grow very much. So what's happened is more
17 people are entering the workforce, particularly women, and
18 people are staying in the workforce longer.
19 Household income has gone up somewhat modestly,
20 about $4,000, over the last three decades. And maybe for
21 those of us that remember the late '70s and early '80s, the
22 best news is that the bottom didn't fall out. For a while
23 there, it looked like it might in terms of the decline of
24 the steel industry in PA so that's the good news.
25 The bad news -- and again this is often a
18 1 statement that's made about PA -- we've not kept pace with
2 the rest of the nation. Our employment growth in that
3 period of time, while it's been about 18 percent in PA,
4 it's been 44 percent in the nation.
5 Jobs gained, similar picture. Median household
6 income, similar picture. And the growth rate of the
7 household income has been about 8 percent and about 10
8 percent on the national level.
9 So all of that suggests that while we have
10 survived and in some ways repositioned ourselves over the
11 last 20 or 30 years, there's still considerable work to do.
12 This takes us to the playbook. I'm going to mix
13 my sports metaphors, as I suggested earlier. This to my
14 mind is how we really ought to be thinking about the
15 economy and how we invest in it.
16 In baseball, there's sort of two ways to think
17 about your offense. One is to parade up a series of
18 sluggers who might hit it out, maybe they're going to hit
19 220 or 230, strike out a lot of times. It's either all or
20 nothing.
21 In my view, we're much better off playing what we
22 think of as small ball, which is a good defense. You can
23 think of that as maybe the competitive platform, taxes and
24 infrastructure. Lots of base hits. Getting people on
25 base, moving the runner along, playing good fundamentals.
19 1 I think that's a reflection on what's driving our
2 economy and really has been for the last 30 years. That's
3 not just small companies, but entrepreneurial small
4 companies. It is, in fact, a white-hot core of new
5 companies that create a lion's share of the growth in PA
6 and elsewhere.
7 Recent numbers from -- about 5 percent of all
8 firms create about two-thirds of all the jobs, all the new
9 jobs in any given period. So it is a very small slice of
10 the overall economy that is innovating and driving
11 entrepreneurship and growth.
12 So it only stands to reason that our efforts
13 ought to be targeted, I think, and focused on that slice of
14 our economy, small company start-ups, as some said, small
15 companies that could be big.
16 When I was working some time ago, we created a
17 project recognizing every year the hundred fastest growing
18 companies in the Philadelphia region called the
19 Philadelphia 100, which is a project that's copied all over
20 the country as well. And those folks really do represent
21 the future of our economy. I believe that. That data
22 suggests that.
23 The problem that PA finds ourselves in -- I'll
24 talk more about that -- is that we have not been very
25 competitive in starting new companies. I'll talk more
20 1 about that.
2 But what this leads us to in a small ball
3 metaphor is that we ought to be thinking about making lots
4 of small bets rather than a few big ones. And I think both
5 the law of averages and the way the economy works suggests
6 that's a good idea.
7 I apologize. This is a little hard to see. This
8 is a quick snapshot of some key metrics about the
9 entrepreneurial economy in PA.
10 We did this just this past summer and fall again,
11 taking stock of what's happened over the 30 years. There's
12 no one metric that tells this story. But there are a
13 couple of things that I think are important.
14 Probably the most significant is the startup
15 formation. Are we creating new companies that are feeding
16 this economy that we're in? And here we tracked PA against
17 the nation and against ten comparable states.
18 And, you know, there's lots of ways to do
19 comparisons. But to my mind, comparing PA to, you know,
20 Nebraska or Iowa is not particularly useful. We want to
21 look at PA against states like Massachusetts and Maryland
22 and Illinois and Ohio and New York that we have a lot in
23 common with.
24 The bad news is here when you do that comparison,
25 looking at the startup rate, PA is 11 out of 11. And
21 1 frankly, it hasn't changed much over time. So I think
2 that's cause for concern and for focusing our efforts going
3 forward.
4 The picture is a little more mixed in other
5 pieces of this. I'd be happy to go into more detail maybe
6 in questions and answers in terms of explaining what some
7 of these things are. But it's a pretty consistent picture.
8 Despite what we have done, we are not where we need to be
9 in terms of starting new companies.
10 And the next line really just puts that in a
11 little more graphic relief. This is just the chart that
12 shows us in this startup environment relative to these ten
13 other states.
14 So the question when we talk about this is people
15 first want to know, why is that so? It's not particularly
16 easy to unravel. At the end of the day, it does strike me
17 that PA's economy, at least into the '50s and '60s, was an
18 economy that was built on big things. It was big coal, big
19 steel, big labor, big agriculture.
20 And from what we know really in terms of
21 companies, big companies have a hard time sometimes
22 adjusting to playing a more decentralized economic game.
23 I think we're working through that. I think
24 that's what's been going on. We still haven't embraced the
25 reality that we need to.
22 1 The second thing is I think we have to treat this
2 whole issue of entrepreneurial development as a human
3 capital issue. It's not necessarily one that, you know,
4 more capital, as in financial capital or tax incentives or
5 other kinds of hard-cash kinds of solutions, can
6 necessarily prompt. They can help.
7 You're never going to find an entrepreneur who
8 says there's too much money around. But there's got to be
9 a pipeline of people that -- literally starting back in,
10 you know, the old junior achievement programs which still
11 exist in some parts of the Commonwealth in reinforcing and
12 supporting that, starting a new company, growing a new
13 company, building a new company is a legitimate and
14 exciting and energizing pursuit. And then providing the
15 support along with that.
16 This is not something where, good luck, kid, let
17 us know how it turns out is necessarily the right response.
18 Obviously that reflects this in my experience in the small
19 business development centers.
20 And then I guess the third thing in terms of
21 State government maybe it's time where if we see this as
22 the challenge, we need to literally go, you know, kind of
23 house to house, as it were, through various aspects of
24 State government.
25 Again, tax administration, regulatory issues, how
23 1 we treat dislocated workers with our job training
2 initiatives and say, does this help or hurt the ability
3 when enterprising PA to start a new company? I think that
4 cumulatively can make quite a difference.
5 So let my conclude with a couple more thoughts.
6 I think there's one way that folks in economic development
7 -- sometimes for better, sometimes for worse -- is we think
8 of capital projects as community centers and sports
9 stadiums, maybe a new subsidized office building for a
10 company here or there.
11 I would say I'm maybe less of a fan of that
12 let's-make-a-deal approach to economic development. I
13 think there are real problems in that, both in terms of the
14 relationship between government and business and our
15 ability to keep track of those investments and understand
16 how they're paid off, etc., etc.
17 When it comes, though, to capital projects,
18 there's a couple of guidelines that seem to make sense to
19 me. One is that it is not just roads and bridges and
20 highways and ports, but anything that we take this
21 fix-it-first model.
22 There's an enormous amount of infrastructure in
23 PA that's been built over 300 years: schools, you know,
24 office buildings, main streets, and so forth. And I think
25 it's both the right thing to do and an efficient way to go
24 1 about it to think about fixing that stuff first.
2 The one defense of capital projects is we're
3 visual creatures. And when we see something happen, that
4 has an impact on us, which suggests if we are going to
5 invest in a capital project, it ought to be highly visible
6 to get the maximum sort of psychological leverage out of
7 it.
8 I told the story to my students at Fels that in
9 Pittsburgh and driving into Parkway East and that steel
10 mill just belching fumes and smoke and creating jobs and
11 sustaining families 24 hours a day, you know, when that
12 closed down, literally shuttered, that was a big blow to
13 that community. Even worse when they sold the steel off
14 for scrap.
15 The other thing that often is problematic about
16 capital projects is that they don't always have a viable
17 revenue stream to support them downstream. Coming back to
18 the Legislature or other sources of public funding I would
19 suggest is not always a viable revenue model. If we're
20 going to invest it, we ought to look for something that can
21 stand on its own two feet.
22 In terms of how we play this game
23 internationally, there have been various attempts the last
24 four or five Administrations to build PA's presence and
25 build PA's presence with our companies and opening up
25 1 markets overseas.
2 To my mind, the two things that are very strong
3 pieces of our economy that we ought to maybe calibrate the
4 investment from an international standpoint is, one, higher
5 education and two is health care.
6 We have world-class institutions of both. These
7 are growing segments. Both health care and higher
8 education in America and in PA are sort of the gold
9 standard internationally. We ought to take advantage of
10 that. And rather than sort of get disbursed in trying to
11 sell and represent everything that PA makes or comes up
12 with internationally, I'd suggest that we concentrate
13 there.
14 Just a general comment on the roles of State
15 government. There was a very influential book that came
16 out in the mid-'90s called Reinventing Government that
17 suggested that in general the government ought to be in the
18 business of steering and not rowing.
19 And then I think to recognize in the economy the
20 folks that are rowing are entrepreneurs and companies and
21 managers and leaders and boards and investors, that, you
22 know, government doesn't create jobs, but at best we're
23 creating a competitive platform.
24 And then what we can do in the State and
25 elsewhere is put good ideas together, whether that's again
26 1 workforce leaders or economic development folks, and really
2 make sure that every piece of PA is connected to every
3 other piece and that we're able to spread good ideas and
4 good practices around to the maximum extent.
5 Just to conclude with some, as I said, caveats
6 and snakes in the grass, those things that are hidden that
7 can bite you, I do get concerned about what I observe as
8 maybe programitis, particularly in DCED and elsewhere in
9 State government, that not every idea needs a new program,
10 that we ought to think carefully about what we've done
11 before.
12 There are 135 different programs in DCED alone
13 that have something to do with obviously economic
14 development. That's bewildering from businesses'
15 standpoint. It makes the job of coordinating that either
16 regionally or locally very difficult.
17 It's a very tough thing to do to make sure that
18 we readjust and that the carryovers from one Administration
19 still makes sense in the realities of today.
20 But if we don't, I don't think we're serving the
21 business community terribly well.
22 MS. GLICKMAN: And we end up starving programs to
23 keep programs moving. I mean, that's been the big trend
24 that I've seen over the last decade or so since I've been
25 working back in the State.
27 1 It's not just that there's all these different
2 programs. It's that not every problem ought to have a
3 program and not every problem needs to be solved.
4 So this idea that, you know, we have a whole slew
5 of problems, all of which are legitimate, that all of them
6 are equal and that there aren't better programs.
7 I mean, we just haven't always thought about sort
8 of, well, if we deal with this, then sort of there's some
9 natural things that happen in the market. After that, we
10 don't maybe need a program for all those other things.
11 If we could just fix a couple of core things, a
12 lot would happen naturally in a market economy and we could
13 get that moving in a much better way.
14 MR. THORNBURGH: Sallie just sort of alluded to
15 the second bullet point there, which is after a while in
16 the economic development or elsewhere, you realize there
17 are relatively new break-through ideas.
18 And, in fact, PA has done a pretty good job over
19 the years of often leading the charge in terms of economic
20 development.
21 We're to the point now where there's a lot of
22 stuff. There's 135 programs at DCED. We ought to be
23 looking carefully at how we make those work better and
24 whether we need them all and whether there's a focus to
25 them. Again, we don't want to bewilder and confuse folks.
28 1 I talked earlier about my concern about, let's
2 say, a deal-based approach to economic development, what
3 other folks have described as the Edifice Complex, is if
4 you don't building something, it doesn't count. I think
5 that's a real concern.
6 Another comment is I've never been a particular
7 fan of tax credits as a way of moving money into various
8 problematic areas to provide incentives for this or that.
9 It may feel a little old school; but -- I'm
10 talking to legislators -- it seems to me that your job is
11 working with the Governor's Office to figure out how we
12 spend money and we do that conscientiously and directly and
13 transparently and openly.
14 My concern about tax credits is they operate in
15 another channel, that they don't meet those same
16 requirements.
17 Finally, and this is a tough thing to say in this
18 environment, but beware of strangers bearing gifts.
19 Oftentimes what the Federal Government decides is what's
20 right for PA doesn't make much sense for PA. And there are
21 strings attached to the Federal dollars. You can draw them
22 down if you do X, Y, and Z.
23 I've always been instead a bigger fan of, you
24 know, maybe we ought to take the initiative of suggesting
25 asking for waivers or sometimes forgiveness and do things
29 1 that we think we ought to leverage and see the Federal
2 Government as an investor on our terms rather than the
3 other way around.
4 Again, given the budget situation, I know that's
5 easier said than done. I think there's lots of examples
6 over the years where we just end up doing things because we
7 leverage a few Federal dollars. But it adds to the clutter
8 and takes away from the focus.
9 So we'll stop there. I hope this has been
10 helpful to you in what lays ahead. There's no greater
11 challenge right now than figuring out how to get our
12 economy moving and rebuild that spirit of enterprise and
13 the execution of entrepreneurship in this Commonwealth.
14 I look forward to your questions.
15 MAJORITY CHAIRMAN ADOLPH: First of all, David,
16 thank you so much for that presentation.
17 Sallie, thank you.
18 Based upon the number of committee members that
19 have questions, I think you sparked their interest in
20 certain areas. I would first like to start with Chairman
21 Markosek.
22 MINORITY CHAIRMAN MARKOSEK: Thank you very much.
23 Very good presentation. I spent my childhood
24 going by those steel mills on Parkway East. I know the
25 situation very vividly.
30 1 And the chairman reminded me that somebody from
2 the southwest ought to say we're Pirate country as well.
3 I'll go along with that. We can throw the Penguins in
4 there, too.
5 But nevertheless, the section you have of capital
6 projects, fix it first, this is really more of a statement
7 than anything else. I agree with that. We have so much
8 deficient infrastructure not only in transportation but all
9 other facets.
10 I think there is a caution there because just
11 fixing it first would be a huge, huge, huge amount of
12 dollars and subsidies in order to just do that.
13 I mean, our problem is so bad and so vast that
14 just to fix things first would take a huge, huge amount of
15 cash. I just thought I'd throw that out. I agree it
16 should be done first. That is a huge, huge problem.
17 The other thing I mentioned and wanted to talk
18 about is a little bit about health care. I think you kind
19 of touched on it here at the end with the beware of
20 strangers bearing gifts and those kinds of things.
21 The current national health care law, which, of
22 course, right now perhaps may be changed, but I know
23 hospitals, for example -- and I know Penn has some pretty
24 good hospitals -- are very interested in whether that does
25 change or not, how that will affect, you know, their
31 1 finances and their ability to provide care and those kinds
2 of things.
3 Can you touch a little bit upon how -- maybe just
4 a general question how the health care, Federal health care
5 law right now may or may not affect the economy of PA
6 overall?
7 MR. THORNBURGH: Right. Well, I'm not an expert
8 on health care and health care policy. I would say that
9 whatever happens at the Federal level, I think we have some
10 -- we have internationally renowned health care
11 institutions.
12 And we ought to see, you know, however the
13 playing field is set, that we look for ways to encourage
14 and support their competition on that playing field so this
15 is not just the hospital or the University of PA system or
16 UPMC in Pittsburgh but also think of places like Geisinger
17 Clinic, which is world renowned.
18 There's no reason that if you think of the
19 Cleveland Clinic or the Mayo Clinic, that these are --
20 health care is an international, exportable service.
21 So when the rules settle down a little bit,
22 whether that's -- and, you know, every time the Federal
23 Government does something it creates an opportunity for
24 somebody. Maybe it pulls an opportunity away for some and
25 opens it up for others.
32 1 I think generally if we look at health care in
2 that entrepreneurial fashion and support the institution we
3 have, we're better off in playing defense, I guess.
4 MINORITY CHAIRMAN MARKOSEK: Thank you.
5 MAJORITY CHAIRMAN ADOLPH: Thank you, Chairman.
6 David, you know, the information that you gave us
7 is kind of astonishing regarding that we're 11 out of 11 as
8 far as starting up formation.
9 And I say that because in just the last two
10 years, just the last two years, the Commonwealth has
11 appropriated over a half a billion dollars in marketing to
12 attract business, business retention and expansion, Ben
13 Franklin Development Authority, customized job training,
14 industrial development assistance.
15 The last two years, a half a billion dollars, the
16 Commonwealth of PA has appropriated. The Commonwealth of
17 PA, I think, is very competitive when it comes to PA's
18 personal income tax. Most of the small businesses in our
19 State hear that we should promote small business and the
20 tax and regulatory atmosphere.
21 Well, arguably, PA, with the PA income tax,
22 whether you're a Subchapter S Corporation or whether you're
23 a sole proprietorship or a partnership, we offer to new
24 businesses one of the smallest tax rates in the country.
25 Where are we going wrong? While we're
33 1 appropriated -- and I'd love to see what these other states
2 have appropriated to attract businesses and job training
3 and industrial resource centers. These figures are
4 staggering to me to end up 11 out of 11.
5 I know it's embarrassing to say that we have the
6 highest corporate income tax, top three in the nation.
7 Where is the accountability if we're appropriating this
8 type of money and we rank 11 out of 11?
9 I really would appreciate you commenting on that
10 fact. It's not for not trying. The money speaks for
11 itself.
12 MR. THORNBURGH: Well, it is -- sort of to state
13 the obvious, it is a sobering number. Nobody ever wants to
14 be last. You know, I think there are a couple of things
15 going on. There's no short and easy answer to that
16 question.
17 But in terms of what the State is doing, I guess
18 my concern is that over the years, we lost focus on what
19 we're doing and that we're trying to sort of do everything.
20 We've got a real estate focus. We've got a
21 retention, job-safe kind of emphasis. You know, we've got
22 various tax incentives, tax credits.
23 There's a relatively small slice of all that
24 that's really focused on the startup environment. And I
25 would point out, you know, the Ben Franklin folks and the
34 1 small business development centers -- sorry. I feel a
2 sneeze coming.
3 So it's not like that half-billion dollars we've
4 been spending is really focused in on that whole startup
5 equation. So I think that's one thing that's going on.
6 You know, the larger context gets pretty deeply
7 rooted. And there's some things I think the State effects
8 and some things that we're going to have to sort of work
9 through as communities and families and so forth.
10 But I use this metaphor. I think there was a
11 time -- and I have to say going back into the early '80s in
12 my Dad's administration -- I think there really was a very
13 strong focus on investing in the transformation of PA's
14 economy, particularly this small-company, entrepreneur,
15 innovation-based economy.
16 And while we've not abandoned that, we've added
17 to that a whole host of things in the succeeding
18 Administrations that I think have kind of muddied the
19 waters.
20 So I do think, again, given, you know, our budget
21 challenges, it ought to be a time when we try to reel
22 things in a little bit and be very clear about what we're
23 trying to do and then we can get to the matrix and the
24 outcome and the results that you suggested.
25 MAJORITY CHAIRMAN ADOLPH: There's not a member
35 1 of this committee or a member who has been in the
2 Legislature over the last decade that doesn't understand
3 the need to create businesses and to create jobs.
4 Our tax dollars have been spent and sent to
5 various independent business centers and so forth and so
6 on. Obviously -- and I'm not exaggerating -- you can draw
7 a 25-mile radius around where I live and there's over 40
8 universities and colleges of higher education, some of the
9 best in the world.
10 But employment, you know, these graduates,
11 they're not taking courses that help them for their future
12 job employment.
13 I don't have to go any further than my own
14 family. But there should be some type of connection
15 between the hundreds of thousands of dollars that's spent
16 on higher education and their employment.
17 You can only study Greek Philosophy so much. I
18 don't know where it gets you. And there's a lot of money
19 being spent. There's got to be some type of accountability
20 in our line items to the result.
21 And I think this committee is going to be charged
22 to try to see what -- Maryland is less than an hour away --
23 most of these states are doing that we're comparing them
24 with: Maryland, Delaware, North Jersey, New York.
25 You know, where we live, we're two hours away
36 1 from everything. It's embarrassing to be ranked 11th out
2 of 11 with the type of money that we've put into job
3 creation.
4 That's an editorial. Any comments that you can
5 give, we would appreciate it.
6 Rep. Mario Scavello.
7 REP. SCAVELLO: Thank you, Mr. Chairman.
8 Good morning and thank you for your testimony.
9 I'm going to follow up on what the Chairman spoke about and
10 also go back to the comment you made earlier.
11 You did talk about K-12 and said we'd leave that
12 for another day. But I think the mistakes are made at
13 K-12. Not every student is a college-bound student. I
14 think that you need to look at those students and teach
15 them a trade.
16 Like, we have Monroe County Community Technical
17 Institute. Teach them how to fix a car. Teach them how to
18 be a carpenter or a plumber. Not everyone is going to go
19 to college. Am I correct?
20 MR. THORNBURGH: Well, let me say a little bit
21 and then turn this over to Sallie. The job requirements
22 today, as opposed to when I was growing up, have changed
23 enormously.
24 You need both a credential that's past high
25 school and that credential has got to mean something. So I
37 1 think we have to acknowledge that.
2 Now, is that credential a community college
3 degree? Is it a professional certificate that's Microsoft
4 certified? It that a four-year degree? Well, we can kind
5 of argue about that.
6 I would note again that the research, there is a
7 big jump in terms of your earning potential, which is a
8 reflection of what businesses need. Between high school
9 and a college degree, either two year or four year, there's
10 a pretty good jump between a two-year degree and a
11 four-year degree still.
12 So I guess I think we need to maybe soften your
13 statement a little bit to say we need to keep communicating
14 to our kids that they need something past high school and
15 then help them to figure out what that is and get those
16 credentials.
17 Sort of falling back on the PA of old where --
18 you know, Sallie was telling me on the way out, her
19 grandfather never finished the 8th grade and was a pretty
20 successful businessman. By and large, those days are over.
21 So I think we just have to be a little careful about how we
22 communicate that.
23 MS. GLICKMAN: I think this is a great point. I
24 grew up in Stroudsburg. I grew up in Monroe County. I
25 mean, one of the trends in the labor force is that a lot of
38 1 those technical certifications have morphed into associate
2 degrees. So that becomes the new -- I mean, in every
3 occupation and with every employer, there's a new bar. And
4 that bar is past high school.
5 There are models. I think PA has some of the
6 best career and technical schools in some parts of the
7 State. It's very, very uneven, of course. But there are
8 models, for example, out in Washington State that are
9 recognizing that the State has put an investment into the
10 community college or two-year college network to figure out
11 how to articulate from high school through an associate's
12 degree. So things are articulated and you can get a
13 degree.
14 You're not going to be able to tap into the
15 employer base without the degree. But those certifications
16 can actually be credit accumulating.
17 The reality is, though, every job requires the
18 kind of basic knowledge and foundation that we used to
19 think of as the college-track knowledge.
20 I mean, you don't walk into a manufacturing -- I
21 mean, not that we have much manufacturing left -- but you
22 need to be versatile with technology. I mean, these are
23 just sort of a new set of skills.
24 To suggest that -- you need to be at about a
25 10th-grade level, reading level, to be able to join any
39 1 place in the labor force, including in the trades. And to
2 suggest that PA's young people and adults -- because the
3 challenge is, of course, we have to fix K-12. But the
4 people who are floating around and not employed are outside
5 of the K-12 system and that's really where we have to get
6 people employed.
7 To suggest that we can never get them there or
8 that they're not the material, in effect, in this economy
9 is sort of suggesting that they're never going to work in
10 the new economy.
11 I just don't think that that's true. I think we
12 have a huge opportunity and a vast potential that we have
13 not tapped, and our competitiveness as a State is going to
14 rely in part on how well we organize around tapping that
15 potential.
16 REP. SCAVELLO: I was talking about the service
17 industry, the trades industry. And maybe you're right.
18 Some of the technical stuff, you need some community
19 colleges as well.
20 You talked about fix it first. Were you
21 referring to the infrastructure, having, for example, fiber
22 optic, water, sewer, everything is there so when you try to
23 attract a company, they're ready to go? Was that what you
24 were referring to?
25 MR. THORNBURGH: Yeah. I mean, it's a general
40 1 comment in infrastructure. One thing that I was thinking
2 about is transportation. Somehow along the way, we lost
3 the -- we forget why we do transportation investments to
4 begin with. And frankly, it's taken over by the
5 engineering and consultants. And we do environmental
6 assessments and so forth.
7 To my mind, the reason we do transportation
8 investments first and foremost is for economic reasons.
9 You get people, goods, services more efficiently and more
10 effectively here and there.
11 You know, I suppose even in this fix-it-first
12 requirement, that ought to come to the floor when we're
13 considering major capital investments. So in addition to
14 fix it first, that we really understand the economic
15 implications.
16 When I was at the Economy League a few years ago,
17 we were asked by then Congressman Jim Greenwood to help
18 them understand the economic implications of linking I-95
19 and the PA Turnpike, which is probably the biggest
20 unfinished link in the country in the interstate highway
21 network.
22 And we spent massive amounts of money on the
23 environmental impact statement and the engineering and so
24 forth. But we never really came to a conclusion about --
25 we never stopped to think, you know, how would this affect
41 1 the competitive environment, the ability of people to move
2 goods and services? That's stayed with me and again apply
3 to all these infrastructure questions. There have to be
4 economic reasons to do this. You have to be able to see
5 that. And that should help us figure out which ones.
6 REP. SCAVELLO: Unfortunately, we spend more on
7 paper rather than put the shovel in the ground. By the
8 time we get to that point, we spend millions and millions
9 of dollars to study something. And then when it comes down
10 to the project itself, we don't have the money to do the
11 project. It really comes down to that.
12 East Stroudsburg, which Sallie is familiar with,
13 has an incubator program where they take college students,
14 they intern there, and the company grows. It's been pretty
15 successful. I don't know if that model is used elsewhere.
16 MR. THORNBURGH: It is. It's a great idea.
17 There was a time in the mid-'80s, late-'80s, when PA was
18 the national leader in kind of building a network of
19 incubators across the State.
20 And then this is sort of to my point about how we
21 lost focus and stopped doing that.
22 REP. SCAVELLO: It's a shame.
23 MR. THORNBURGH: I was very involved in creating
24 an incubator program in West Philadelphia called the
25 Enterprise Center which has a particular interest in
42 1 helping African-American entrepreneurs start and grow
2 businesses. It's thriving after 20 years. I think, as
3 with yours, it's demonstrating the impact of that kind of
4 initiative. They're hard to do well. But when they work
5 well, they work very well.
6 REP. SCAVELLO: It's amazing when they work well.
7 MS. GLICKMAN: And just a shout-out to East
8 Stroudsburg University since they are a partner to Graduate
9 Philadelphia. Talk about an entrepreneur. They are very
10 entrepreneurial in the way that they approach higher
11 education. And, you know, I think if more of our higher ed
12 institutions would look at their model for being
13 particularly progressive and thinking about where markets
14 are would be very useful.
15 REP. SCAVELLO: Of the State schools, they have
16 the highest personage of students that graduate and stay
17 locally. Because of what I just explained, they have jobs
18 and stay locally. And No. 2 is so far down because of what
19 they do at their university.
20 MS. GLICKMAN: Amazing. Since they became a
21 university. I remember when it was East Stroudsburg State
22 College.
23 REP. SCAVELLO: One last comment. We try to
24 attract companies here. We've been throwing money at them
25 and, you know, they go into business, ten years, you know
43 1 what? They just don't stay. In some cases, they just
2 don't stay. They take advantage of the breaks as long as
3 they can and then they move on.
4 The chairman spoke about it briefly. We spent
5 half a billion dollars in economic development and we're
6 still No. 11.
7 Wouldn't we be better served if we -- you know,
8 our business taxes, reduce our business taxes, you know,
9 look at our regulations to make it easier for a company to
10 do business here in the Commonwealth and try to attract
11 folks to come here because our taxes are low. You can
12 build here. Rather than do the other approach where we're
13 spending money and trying to buy them in and yet when that
14 break goes away, they're going to look for the next candy
15 bar from somewhere else.
16 MR. THORNBURGH: There's an acronym of economic
17 development which is CARE, which sort of describes the
18 approaches you can take. You can create, attract, retain,
19 or expand.
20 In my book, this sort of follows on my investment
21 guidelines. We only focus on creating and expanding.
22 Attracting and retaining is a slippery slope. I'm afraid
23 the incentives, we dole them out with great fanfare. Not
24 just in PA but elsewhere, it's been very hard to keep track
25 of those. Did you pay us back if you didn't do what you
44 1 said you were going to do? Did you create the number of
2 jobs?
3 People change. People go. New CEO. New staff
4 at DCED. And frankly, that works to the advantage of
5 companies who are maybe gaming the system. I'm not sure it
6 pays off for the larger economy.
7 REP. SCAVELLO: Thank you very much.
8 MAJORITY CHAIRMAN ADOLPH: Thank you.
9 A quick comment. I love the give and take. I
10 think it's very good for these informational meetings.
11 Because of the interest of a lot of these members, we have
12 about nine other members that would like to ask questions.
13 I hate to change the rules in the middle of the
14 game. But let's try and get in the practice of asking one
15 question, your most important question, because a lot of
16 times you steal somebody else's thunder by the time it gets
17 around to them. That's the way we're going to be doing the
18 budget hearings in a month or two.
19 I talked to Chairman Markosek and he kind of
20 agrees with me. So if we could ask one and get one answer
21 and then move and then we'll start a second round.
22 Without further adieu, Rep. Samuelson.
23 REP. SAMUELSON: Thank you, Mr. Chairman.
24 And I guess I'm the first member to have to
25 follow the Scavello Rule.
45 1 REP. SCAVELLO: Usually it is the other way
2 around.
3 REP. SAMUELSON: So my second question about
4 Graduate Philadelphia, I will let someone else ask it. My
5 question is about the startup information you talked about
6 and how we're 11th out of the 11.
7 I note that it is a longstanding challenge that
8 PA faces. It was 11 out of 11 back in 1986 under Governor
9 Ridge and 11 out of 11 in 2007 under Governor Rendell.
10 And I share with you -- I'm a big fan of the
11 investment and startup companies. We have one of those Ben
12 Franklin Centers in my district at Lehigh University. It's
13 a very successful program.
14 It started under Governor Thornburgh 27, 28 years
15 ago and continued by every Governor since then and I hope
16 also to be continued by our new Governor.
17 Our Ben Franklin Center recently was in the
18 process of expanding and we did have some State funding
19 involved. But we also got a significant Federal grant, $6
20 million, to help with that expansion related to the
21 stimulus.
22 I want to -- my question is, those 11 states, how
23 did you pick those 11 comparable states? How do we rank
24 among the 50 states? And also in your comparison group, do
25 a lot of those 11 states also invest in the entrepreneurial
46 1 programs like Ben Franklin?
2 MR. THORNBURGH: One question with several parts.
3 REP. SCAVELLO: We can be very tricky up here.
4 MR. THORNBURGH: In terms of picking the
5 comparisons, there's no magic to this. It's more of a
6 science. We try to find the larger, mostly northeastern
7 industrial states.
8 You'll note that California is not there. Texas
9 is not there. These days I think California, they would
10 lead you to believe it's kind of its own planet. It's just
11 a very different environment.
12 Like, if we were competitive with New York,
13 Massachusetts, Ohio, Maryland, Virginia, then we're doing
14 pretty well. Again, there's no magic to it.
15 We didn't do the 50-state comparisons because,
16 frankly, we thought that would be less instructive. Again,
17 when we get to -- when you do the 50-state comparison and
18 you throw in, you know, Nebraska and Iowa and Montana and
19 so forth with fewer people than some of our counties, it
20 kind of loses its focus.
21 Nor did we really go in depth in terms of what
22 other states are doing and investing in entrepreneurship
23 and new business development.
24 We saw maybe this was sort of maybe a Stage 1,
25 how are we doing? And then Stage 2 or 3 is to dig in
47 1 further in terms of the budget and approaches.
2 Just one other comment. You mentioned Lehigh and
3 the Ben Franklin Center. You know, one of the things I
4 think that has been -- they have been recognized as a
5 national model, international even.
6 Having said that, I think they have changed quite
7 significantly from their early inception. They were
8 intended to be more of a kind of gathering point almost
9 like a clubhouse, if you will, for entrepreneurs and
10 investors and folks coming out of universities and to help
11 organize other initiatives and efforts, almost like the hub
12 on a wheel, within those particular regions.
13 And I think that focus has changed somewhat over
14 time and are seen more as a direct investor without playing
15 that kind of an organizing role.
16 And this is to the point about, you know,
17 incubators. I think that's what incubators do. They bring
18 all that stuff together in close proximity and make it
19 easier for those kind of fortunate accidents where somebody
20 runs into somebody else and from that, you know, launches a
21 company. Just a comment on that.
22 REP. SAMUELSON: Thank you.
23 MAJORITY CHAIRMAN ADOLPH: Rep. Grell.
24 REP. GRELL: Thank you very much.
25 I will try to make this one question and at least
48 1 punctuate it with a question mark when I'm done.
2 I believe you said that some regions of PA are
3 not very competitive at all and there are others that are.
4 MR. THORNBURGH: From a tax standpoint, I think I
5 was talking about.
6 REP. GRELL: Well, that's what I'm sort of
7 getting at. Which regions of the State are most
8 competitive and what characteristics are there that cause
9 those regions to be competitive? Is it workforce or
10 location or natural resources?
11 What I'm sort of getting at is, do State programs
12 or policies have any direct bearing on which regions of the
13 State are competitive, question mark.
14 MR. THORNBURGH: That's a big question. Let me
15 at least try to walk around a couple of the pieces of it.
16 I mean, my sense is, without having the numbers
17 in front of me, if you looked at just employment growth,
18 probably in the last ten years, the Lehigh Valley, South
19 Central, Southeastern PA, not including Philadelphia, have
20 been at the forefront of PA's economy. They're sort of the
21 leading competitive edge.
22 All the Pittsburgh region, in comparison to the
23 rest of the nation, has actually held its own pretty well
24 in terms of -- partly because, you know, if you look at
25 Southern California or Arizona or parts of Florida where
49 1 the bottom fell out of the real estate market in the
2 investment community, we've done well by comparison.
3 The best way you have to think about the impact
4 of State investments is over the long term. Very few
5 things are going to make a turnaround difference two or
6 three years. It's just the nature of the economy.
7 And I think that in my view, the proper role --
8 the investment guidelines, you think of the long-term
9 plays. And that's what we were trying to get at in looking
10 at the entrepreneurial indicators.
11 And in that respect, I think -- and we didn't
12 drop down to the regional level on those indicators. But
13 my guess is that the State investments over time in the
14 Pittsburgh area and maybe parts of Southeastern PA, the
15 Lehigh Valley have made a difference. It's hard to parse
16 that out exactly.
17 But in terms of the transformation of the
18 economy, the makeup of the economy, and looking forward and
19 not looking back, it's a very difficult, maybe impossible,
20 question to ask on a short-term basis, like, is there
21 something we did five years ago to turn the corner for a
22 particular community?
23 And I do think, you know, again, the nature of
24 PA, whenever you see a statewide number for just about
25 anything in PA, you really ought to drop down to the
50 1 regional scale and try to figure out, you know, where those
2 differences might be, because they can be deceptive.
3 I did my best on that question.
4 REP. GRELL: Thank you.
5 MR. THORNBURGH: Sure.
6 REP. GRELL: Thank you, Mr. Chairman.
7 MAJORITY CHAIRMAN ADOLPH: Rep. Waters.
8
9 REP. WATERS: Thank you, Mr. Chairman.
10 Thank you for coming to the hearing. You touched
11 on something earlier which I think is very important, human
12 capital and the events of human capital.
13 I just want to talk about, where are we going in
14 terms of our strategy when it comes to education to make
15 sure that we're preparing students for the job of the
16 future?
17 When I say that, I'm talking about something that
18 can't be outsourced, which is the construction activity.
19 There's a lot of construction that takes place.
20 I talked to the workforce. They said a lot of
21 students aren't even looking at that as a career goal
22 anymore. The counselors all direct children to go to
23 college. They don't even talk to the students about
24 preparing themselves for these types of jobs. Technology,
25 many of the companies are bringing people in outside of our
51 1 State to do the jobs.
2 So the human capital, I believe, is where we
3 really have to focus on. I believe it's going to be
4 important to us as legislators to make sure that we invest
5 in that K-12 that we're talking about.
6 The Enterprise Center we talked about earlier,
7 which is good. But a lot of people who want to do well
8 haven't really been groomed to know how to take advantage
9 of those programs so that they could be utilized.
10 I think it's great. But I think if we're not
11 preparing our children early enough to see a career path,
12 then that's where the human capital really falls short.
13 MR. THORNBURGH: Well, no argument here. I guess
14 I have a couple of comments and maybe Sallie wants to weigh
15 in.
16 You mentioned the construction industry. I don't
17 know if you know Angelo Perryman and Perryman Construction
18 in Philadelphia. He's been one of the great success
19 stories out of our West Philadelphia Enterprise Center,
20 probably one of the leading African-American-owned
21 constructions firms in the Philadelphia area.
22 In fact, there was an article about him in our
23 Business Journal the other day making some of the points
24 you just made.
25 I know that one of the challenges of the trades
52 1 in Philadelphia has been the apprentice system for our
2 students in Philadelphia schools, which I think is really
3 critically important. And your point about exposing kids
4 early and often to careers and to the possibilities of
5 various industries is really vital.
6 Something else that's been very successful for
7 probably 15 years now is the summer youth entrepreneurial
8 program where they might have a couple hundred kids spend a
9 couple of weeks learning how to build and grow a business.
10 I think that is important to just open up those
11 possibilities. So no argument with your emphasis on the
12 human capital piece.
13 And, you know, when we do look at K-12, I think
14 -- and certainly I'm most familiar with Philadelphia -- the
15 numbers and going up in terms of test scores and so forth
16 are just not near fast enough as to where they need to be.
17 It's kind of a limited good news story, but at least we're
18 headed in the right direction.
19 Sallie, I don't know if you have further comments
20 on how to fix K-12.
21 MS. GLICKMAN: Well, I think one of the
22 challenges that we have with K-12 -- well, there's several.
23 I mean, when you talk about kids, young people, one of the
24 best complements to K-12 education, particularly for older
25 youth, is access to the labor market.
53 1 There's nothing to help you make a career choice
2 than to decide whether you like the job that you can get as
3 sort of in the high school or non-educated labor market and
4 whether there's a career path. And there's nothing that
5 replaces the premium for long-term employment than starting
6 work young. There's all kinds of wage opportunities and
7 other things.
8 So one of the things that we haven't focused on
9 and the Federal Government has substantially disinvested in
10 is creating opportunities for young people, particularly
11 lower-income young people, who don't have access to the
12 labor market in the same way that some of their peers from
13 higher income families have. And that's a huge gap.
14 And when a kid works in high school, irrespective
15 of any other factors, their grades go up. They're more
16 likely to graduate and they will outearn their peers over a
17 lifetime. Those are important factors and a place of
18 investment potentially that could complement the regular
19 academic reforms in K-12.
20 The other thing I would say is that even if we
21 don't get it right for K-12 every year, we graduate
22 probably hundreds of thousands. At least probably close to
23 100,000 students across the Commonwealth every year are
24 without the requisite skills that they need.
25 And those folks are not fitting as productively
54 1 as they could be into their -- sort of as older young
2 people and then into adulthood without real earning
3 potential and without sort of turning on the ingenuity that
4 they may have.
5 One of the things that the Enterprise Center
6 does, in addition to working with you, is remember that
7 there are adults out there who, too, you know, didn't have
8 the opportunity to acquire those skills. But now they're
9 out in the real world and maybe a little bit more motivated
10 to do that and not forgetting that that's the vast majority
11 of our labor market and we have an opportunity to develop
12 them as well to become economic assets for growth and
13 development.
14 REP. WATERS: Thank you.
15 MAJORITY CHAIRMAN ADOLPH: Thank you.
16 Rep. Pickett.
17 REP. PICKETT: Thank you, Mr. Chairman.
18 Thank you, Mr. Thornburgh. When you mentioned
19 the regions in PA that are economically important, I would
20 be remiss if I didn't ask you to start looking at Northeast
21 PA. There are a lot of opportunities developing up there.
22 Bradford County led the State last year in new
23 jobs. And one of the surprising parts of the opportunities
24 up there for me has been the amount of small ball that
25 there is.
55 1 Big gas companies, no question about it. But a
2 tremendous number of small businesses developing around it
3 that are related to the industry, are related to serving
4 the people that are related to the industry. So there's
5 both trades and service jobs and businesses that are
6 developing. It really is amazing to see.
7 A lot of times in assisting and talking about
8 that 11 out of 11 in startups, a lot of times I think in
9 assisting somebody who is trying to start up a small
10 business is that bridge loan, that little bit of money.
11 A lot of times where can you go to find $25,000
12 to bridge what the bank is willing to help you start up
13 with when you need equipment and whatever to get your
14 business going?
15 Also, I think one of the things we lack -- and I
16 owned three small businesses, started them, grew them over
17 the years, and made it. But I'm going to tell you, there
18 were a lot of School of Hard Knocks in that.
19 And I think in a lot of cases, we don't do a good
20 job of teaching entrepreneurship. You have an idea. You
21 have a skill. But how do you run a business? And I think
22 that's missing in a lot of cases.
23 I don't know how to fit it in. But I thought
24 maybe you would see some ways that we could project that in
25 a better way into our early teaching mainly to the people
56 1 who want to make career changes.
2 If you've been working for a manufacturing firm
3 for several years -- you know, you're 30 to 50 -- your
4 company is gone. You lost that job. You have great work
5 ethic and skills but you need to change them a little bit.
6 Maybe you need some training in a trade that will put you
7 back into one of these industries that's growing or maybe
8 you want to start your own business.
9 What do you need to know?
10 MR. THORNBURGH: Great points. I always
11 emphasize that entrepreneurship is a craft onto itself
12 irrespective of whether it's this kind of business or that
13 kind of business or whatever.
14 There's a set of things that you need to learn.
15 You'll learn them one way or the other, School of Hard
16 Knocks or otherwise. I mean, that is really the sweet spot
17 of the Small Business Development Center program, which
18 operates 18 centers around the Commonwealth.
19 In any given year when I was doing that, we
20 worked with a thousand different people through not only
21 one-on-one counseling but small seminars, marketing, cash
22 flow management, financial management, raising money, over
23 and over and over again.
24 The School of Hard Knocks can be pretty painful
25 and a lot of times financially damaging and sometimes you
57 1 talk people out of it. I think we felt we were doing just
2 as good a job when somebody came to us ready to bet the
3 farm on something that they shouldn't bet the farm on as we
4 did when we had a more traditional path.
5 But, you know, to go sort of further upstream on
6 this and in passing earlier, I've really always believed in
7 the value of the good old-fashioned junior achievement kind
8 of model, which is, you know, when I was in third grade, my
9 teacher had us start a candy store, which she stopped
10 because it started to overwhelm the rest of what was going
11 on in third grade but, you know, life lessons about buying
12 and selling and margins and keeping track of books and, you
13 know, negotiating all kinds of different things.
14 Those sound like -- you know, sometimes the best
15 approach to an issue, particularly a long-term one, is a
16 pretty straightforward one and we want to kind of
17 overcomplicate things.
18 You know, that model has always appealed to me
19 just because at an early -- to Sallie's point, it teaches
20 at an early age a bit of that craft which is going to serve
21 you well in this very volatile economy.
22 I do think we have some vehicles in this
23 Commonwealth to support and to encourage but probably, you
24 know, we're looking to do more.
25 REP. PICKETT: Thank you.
58 1 MINORITY CHAIRMAN MARKOSEK: Rep. Paul Costa.
2 REP. COSTA: Thank you, Mr. Chairman.
3 Mr. Thornburgh, actually, we grew up in the same
4 neighborhood. I remember as a kid seeing the state police
5 cars at your house.
6 MR. THORNBURGH: There were circumstances.
7 REP. COSTA: I understood. It was pretty cool in
8 the neighborhood.
9 Actually, I wanted to talk to you about you
10 mentioned snakes in the grass. I apologize for being from
11 the same neighborhood and contradicting you.
12 One of the things I've been a huge proponent of
13 ever since I've been here is the film tax credit. And the
14 film tax credit is making a huge impact in developing an
15 incredible workforce.
16 We have a great reputation now. And the
17 accountability end of it, there has to be an audit that's
18 done after the fact. But all the work is done and
19 everything is turned in and then the audit is done by DCED.
20 And then, and only then, do they meet all the requirements
21 and are given the money. So it's actually working.
22 I don't know if you saw this past month the
23 Pittsburgh Magazine article. Actually, the cover of the
24 magazine has Pittsburgh just like Hollywood. And it says,
25 is Pittsburgh the Next Hollywood?
59 1 I'll forward that article to you if you didn't
2 see it. It's really cool. It talks about not only the
3 impact that it has for the film industry, but all the other
4 things that go with it, how many hotel rooms that have been
5 rented, how many cars have been rented, and all the work in
6 all the restaurants and things along that line.
7 So this is one of those items where a tax credit
8 actually did help our area. When it was implemented, we
9 tripled our workforce four or five years ago.
10 Again, I hate to contradict you. I don't know
11 about Philadelphia. Rep. Pickett mentioned Bradford. I
12 know last year there was a movie that was made up in
13 Bradford.
14 MR. THORNBURGH: I guess I don't have a depth of
15 knowledge in the film business of subsidizing film
16 production, let's say. So I'll leave that field to you.
17 I would literally point out that any one of these
18 kinds of -- you always want to build on the assets that you
19 have.
20 And I think Pittsburgh is very photogenic. There
21 are lots of parts of PA that are really photogenic and also
22 have the labor force and access and so forth.
23 But I guess my comment more on tax credits was
24 this is kind of a good government on a one-on-one thing
25 that if we're going to do something like that, I would
60 1 prefer to see them as part of the mainstream budget rather
2 than delve into those tax credits.
3 I just think they ought to look at them on the
4 same plane as everything else in the budget, investment and
5 spending and so forth. That's a common device of credits
6 versus appropriations, I guess.
7 The only other thing I would say about the film
8 business is it feels like tangentially there's quite an
9 arm's race out there amongst states to compete for films
10 and therefore put forward film incentives like this.
11 I just think we need to be careful that we don't
12 get swept up in the arm's race.
13 REP. COSTA: I agree with you. We've been very
14 careful in the state. There are a lot of people that have
15 been opposed to the film tax credit. But there's been
16 studies in the legislative budget and finance that prove
17 that that brings back more money.
18 We have been fortunate enough to create a
19 workforce. And as you said, the Pittsburgh region can look
20 like anywhere in the country or the world. We can look
21 like an urban or rural or the suburban area. We have that
22 advantage, too.
23 MR. THORNBURGH: I have to tell you, over the
24 holiday break, we were visiting with my parents and we
25 pulled out that old classic Witness film that was filmed in
61 1 Lancaster County. And we had to see it to the very end to
2 see, with thanks to Governor Dick Thornburgh. There are
3 other ancillary benefits to film production.
4 REP. COSTA: This past year, last year, one of
5 the movies was the Denzel Washington move Unstoppable.
6 But, PennDOT, for instance, did a lot of work with us
7 moving trains from one place to another. So there are a
8 lot of intergovernmental activities that are going on in
9 helping each other out. As I said, PennDOT was huge in
10 helping us. And at the end of the movie, they did give
11 credits.
12 Thank you very much.
13 MR. THORNBURGH: Sure.
14 MAJORITY CHAIRMAN ADOLPH: Thank you.
15 Rep. Gingrich.
16 REP. GINGRICH: Thank you, Mr. Chairman.
17 Thank you both for your testimony. It was very
18 enlightening. We're not doing very well on moving this
19 thing along, are we? I'll do my best.
20 I want to thank you, David, for mentioning the
21 junior achievement model. I agree with you on its value
22 and its success. I've been involved with junior
23 achievement for the past 20 years.
24 Rather than third grade, I have taught and
25 continued to visit with the 8th grade classroom, a terrific
62 1 age. There's an ability level they have reached at that
2 point and they were doing some minimal decision-making at
3 the same time.
4 I think that program, of course, gives them a
5 good grid to operate off of. And it actually gives them
6 real life exposure. In fact, you talked about a candy
7 business in third grade.
8 MR. THORNBURGH: Goodies Galore, for the record.
9 REP. GINGRICH: I'm getting hungry just thinking
10 about it. I actually have two success stories that come
11 out of my junior achievement, at least two experiences.
12 But we had one jewelry shop called Jazzy Jewelry.
13 In fruition, it is now a successful jewelry store in
14 Hershey, PA. It grew out of our marketing plan and the
15 plans that we put together.
16 Another one was a bakery. A young woman in the
17 class, her mother, who just always had that dream, she used
18 the marketing plan we wrote and the business plan that we
19 wrote. And she now has her own custom bakery. It can
20 happen.
21 I'm following and continuing to mentor at least
22 four of those students over the years who are working on
23 their master's and doctorate degrees.
24 Maybe we should just subsidize the junior
25 achievement program in every single school. I admire
63 1 everyone that's doing it.
2 So I lead into my question which is on education,
3 higher education specifically. You've talked about it.
4 We've talked about it. A large number of people returning
5 to school for various reasons, many of whom are without a
6 job and without skills.
7 Whatever their career path was didn't keep them
8 up with the social networking and the technologies and the
9 new way of doing things. So they need to go back to
10 school. It's like they need Graduate PA, not to do it on a
11 fluke and something to do to fill your time.
12 We're dealing with a really challenging budget.
13 Over these past few days, we've heard from a lot of people
14 about what's going on in other states, what are
15 possibilities we need to look at.
16 Education has to be one of them. That's a big,
17 big chunk of our budget. People have talked about making
18 cuts, cuts in grants, scholarships, all those things, loans
19 that students are counting on.
20 Do you agree that we need somehow to be very
21 sensitive to that when we look at economic development?
22 because economic development is jobs and we don't have an
23 economy without the jobs. We need to get these people
24 either back into the workforce or trained.
25 I want us to pay as close enough attention as we
64 1 can to those types of cuts. You certainly have been
2 watching all along with us.
3 MR. THORNBURGH: Yes.
4 REP. GINGRICH: What is your perspective on that,
5 please?
6 MR. THORNBURGH: Well, I think throughout this
7 conversation, we have been weaving together the human
8 capital and the workforce development and economic
9 development themes and particularly talking about higher
10 education.
11 This is probably the thinking that lies behind
12 the reason that we created Graduate Philadelphia. I'm very
13 concerned about the future of, you know, the 35 year old
14 with a family who maybe took a couple of college courses or
15 went through a year and a half and things didn't work out.
16 That person is just extremely vulnerable in this economy.
17 And to Sallie's point, we should remember that
18 the human capital equation, it doesn't stop at 12th grade.
19 We have to look to continue to support people in an ongoing
20 fashion when you have to pull back and make some harder
21 choices than when times are flush.
22 I can even argue that -- you're looking at higher
23 education investment -- maybe we ought to be more focused
24 and more concerned about that 35-year-old trying to figure
25 out what happens if he or she gets laid off. Where do you
65 1 find the next job? Then maybe the 18-year-old, you know,
2 the picture we have in our mind of the 18-year-old headed
3 off to college particularly, realizing that, you know, we
4 continue to have a huge graduation problem in most of our
5 colleges and universities.
6 Nationwide we only graduate about two-thirds of
7 the people who come in. We have to fix that. But in the
8 meanwhile, each and every year, there are people spilling
9 into the system who have shaky job and career prospects.
10 So something like other initiatives as the
11 targets, people who are working but who are very
12 vulnerable, you know, sort of first fired/last hired, I
13 think ought to be a particular concern in this kind of an
14 economy.
15 REP. GINGRICH: Thank you.
16 And to my point, if we have to make these cuts
17 and they result in increased tuitions and less opportunity
18 for grants and loans, we have complicated that problem that
19 you just described a great deal.
20 And I see the look on Sallie's face. Thank you.
21 MS. GLICKMAN: I would just add -- I mean,
22 because this is a hard one -- this is where it's about
23 making priorities. No, not all degrees are equal.
24 Somebody talked about that. We don't have equal demand for
25 every skill that every one of our colleges and universities
66 1 puts out.
2 We give money -- the whole college financing
3 model doesn't necessarily focus on completion. I mean,
4 there's a couple of things. If you want -- instead of
5 across-the-board thinking -- we should think about grants
6 that go up as somebody moves further along in the
7 educational continuum.
8 We could think about money like we did when there
9 was a lot of talk about our moon race. I mean, part of
10 what the country did during that time -- they didn't say it
11 -- it wasn't a bad idea if you wanted to go to college and
12 study English. It's just that the government is not going
13 to pay you to go to college because right now we need
14 engineers and scientists and people that are going to get
15 us to the moon.
16 And I think thinking about higher ed not as one
17 big thing but as something that has a lot of facets and a
18 lot of clusters and produces a lot of different kinds of
19 outcomes might be a way in these tough economic times to
20 think about the kind of tough decisions that need to be
21 made.
22 REP. GINGRICH: Thank you, both.
23 MAJORITY CHAIRMAN ADOLPH: Rep. Perry.
24 REP. PERRY: Thank you, Mr. Chairman.
25 Thank you, David and Sallie, for your time today.
67 1 I'm looking at the bad news slot. I really don't only want
2 to focus on that but I can't help it. I'm trying not to be
3 a pessimist but as a person who loathes mediocrity and
4 doesn't want to see my State or any of the citizens,
5 including myself, marred in it, it seems to me that our
6 government over the past 30 years, based on these
7 statistics, failed miserably at ensuring our citizens --
8 I'm wondering. I'm looking at New Jersey, Ohio,
9 Maryland, Virginia, New York. They're all our neighbors.
10 Jobs and all these other things you listed here, for me, I
11 don't know if I'm wrong but I'm -- and I'm certainly
12 interested in changing my opinion if I'm wrong. But I'm
13 thinking in PA, it's our taxes, it's our regulation, and
14 it's our labor situation that's gotten us to where we are.
15 Maybe I'm wrong.
16 If you could put it into three -- if you could
17 name three things that these few neighboring states, direct
18 neighbors of PA, that are doing differently than us that
19 gets them to these percentages and numbers that are much
20 higher than ours, what are those three things, Mr.
21 Chairman? Thank you.
22 MR. THORNBURGH: Well, let me just offer a side
23 comment on the question. Actually, my background in
24 economic development, particularly when I was working at
25 Wharton, you have to remember most of what happens in the
68 1 economy is really only indirectly touched by government.
2 Most people out there -- somebody said they're just going
3 to work every day trying to keep the doors open and make a
4 little money and provide for their family.
5 They're really only touched by government when it
6 comes time to pay taxes or maybe an occasional permit for
7 this, that, or the other thing.
8 So I think we have to be careful not to overplay
9 the role to the extreme. I think we've gotten ourselves in
10 a bit of a fix. Maybe in your election campaign or any
11 election campaign, one seems to be, how many jobs did you
12 create? Well, it's actually not what I do. So, you know,
13 I would say that.
14 And the job creation machine, also recognizing
15 that the companies aren't in business to create jobs.
16 They're in business to make money and build equity and
17 sometimes it's just to realize dreams.
18 REP. PERRY: But it seems to me, based on that,
19 that those states have created the environment for those
20 other things to happen better than our environment in PA.
21 MR. THORNBURGH: It could be. I think you have
22 to -- but it's hard to tell in a very broad-brush sense. I
23 would go back to -- and I just simply haven't lined up the
24 states that you suggested in any kind of a disciplined way.
25 I would go back to the competitive platform
69 1 issues. I think those are the most broad-reaching, the tax
2 environment, regulatory environment, infrastructure kinds
3 of things.
4 I mean, we talked a lot about college attainment
5 rates in higher education. And I think there's a case --
6 and I can't cite the numbers offhand. That would be one of
7 the places I would look.
8 Say, do you have a markedly higher-achieving
9 workforce -- measure it in that way -- that's making you
10 more attractive to, you know, the kinds of companies that
11 are growing and building out?
12 REP. PERRY: Thank you. Just having you here I
13 think helps us validate what our beliefs are and what
14 direction we think we ought to head or what direction we
15 are heading in. That's what you've just done.
16 Thank you.
17 MAJORITY CHAIRMAN ADOLPH: Rep. Sabatina.
18 REP. SABATINA: Thank you, Mr. Chairman.
19 And thank you, Mr. Thornburgh, for your testimony
20 today. It's been so long since your initial testimony that
21 I hope that I remember what you said directly.
22 What I believe you said was that Greater
23 Philadelphia has been performing well in the creation of
24 jobs and new businesses. Being from Philadelphia, that
25 leads me to believe that the city proper has not been doing
70 1 a good job at this.
2 What do you attribute that to? Was it the tax
3 rate? Is it the business policies? And what can someone
4 do to change that?
5 MR. THORNBURGH: Well, I wandered around those
6 questions for a good while. I came to two pretty
7 straightforward conclusions. Tax rate and tax structure is
8 one. Even to the point where, you know -- and this caused
9 some controversy this past couple years.
10 Philadelphia is one of the few places in the
11 country where you have to pay for the privilege of starting
12 a business. And when the bloggers got ahold of that, they
13 went nuts. Blogging is a business, if you will, you can do
14 anywhere, I think, pointing out that simple thing.
15 Now, that news flooded all over the world. It's
16 a statement about Philadelphia.
17 Anyway, tax rates and tax structures. You know,
18 the estimates, best estimates coming from one of the best
19 at the Wharton School was the wage tax alone cost the city
20 about 200,000 jobs in about a 30-year period. So that's
21 one.
22 And then the second is the educational attainment
23 piece. You just can't build an economy on a school system
24 where maybe half the kids graduate, where college
25 attainment is the 92nd lowest out of the 100 largest cities
71 1 in the country. And that's why we got really interested in
2 this Graduate Philadelphia model. That's imperative.
3 Unless Philadelphia fixes -- unless that number moves in a
4 relatively short period of time, it's just not going to be
5 a competitive environment in which to build a building.
6 REP. SABATINA: Thank you.
7 MAJORITY CHAIRMAN ADOLPH: Rep. Petri.
8 REP. PETRI: Thank you, Mr. Chairman.
9 And in the interest of time, I'll try to be as
10 direct as I can. Sometimes I'm told I'm a little overly
11 direct, but here goes anyway.
12 Since Global Insight, which is the State's
13 forecaster, failed to appear for the kick-off of these
14 hearings, I thought I'd try and ask you this question.
15 What areas would you perceive, if you know, might
16 be attractive industries for PA in the short term? And,
17 you know, with the understanding that we don't have enough
18 money to do everything and money is very scarce in these
19 budgets, where do you think in the next year or two, if we
20 do a two-year budget cycle, we should be looking at to
21 place our monies? That's Part A.
22 Part B is, should we, in your opinion, balancing
23 the need to have a balanced budget against the needs of
24 small business that should be adequately identified, should
25 we be repeating what we did last year? Is that a good idea
72 1 or a mistake where we basically cut 20 to 30 million out of
2 the incentives for biotech industry, for small start-ups,
3 the Franklins? Is that a good idea or a bad idea?
4 MR. THORNBURGH: Let me answer the first question
5 first. You know, broadly I think, you know, PA's kind of
6 economic assets, looking forward, are going to center
7 around -- we talked a lot about these -- health care,
8 higher education.
9 Again, not just thinking of them as businesses
10 that serve our residents or institutions that serve our
11 residents. These things are exportable. There's a huge
12 demand for high-quality American higher education abroad.
13 The applications to my own program at Fels, about
14 a third of our students' applications are now from China.
15 That, A, is literally a short-term revenue opportunity and
16 has long-term, I think, positive consequences for higher
17 education.
18 Health care, same kind of thing. These are
19 exportable businesses that you can build.
20 If any of you have been to Florida recently,
21 you're driving along I-95 in Miami and there's the
22 Cleveland Clinic. Well, why is that the Cleveland Clinic
23 and not UPMC or Geisinger or the Hospital of the University
24 of PA?
25 Not only exportable there, but, you know, Dubai
73 1 or Singapore or what have you. I mean, there's just
2 enormous opportunities out there. That's the way you build
3 that business over time.
4 The third piece of that I would say, is one of
5 the classics of business strategies, which is a book called
6 the Innovator's Dilemma that I just revisited. It's
7 probably one of the best business books of all time.
8 And it says that the name of the game -- and I
9 would apply this to companies and to economies -- is
10 essentially to figure out ways to invest in really your own
11 transformation before someone else does it to you.
12 It's a competitive world. We're not the only
13 ones thinking about anything we've talked about right now.
14 So the question is, how can you put out -- again, this gets
15 to my -- put a little money out in a lot of different ways?
16 And whether this is, you know, solar film
17 technology or new energy saving, energy producing,
18 anything, electric vehicles, anything that's out there.
19 Put a lot of little bets around on something that's going
20 to disrupt an industry and create opportunity is
21 conceptually the way we ought to be thinking.
22 And you've got to get past the let's bet on this
23 industry or that industry. That can lead you astray. It's
24 more like, what types of investments do you want to make?
25 Now, I apologize. But in all of that, I have
74 1 forgotten your second question. Maybe because it was a
2 tough one.
3 REP. PETRI: Should we repeat the cuts that we
4 made to some of the Ben Franklins and biotechs and the like
5 which in the size of a budget might be 50 or 60 million,
6 which is a lot of money to Mom and Dad and the like at
7 home. But for people up here, that's rounding.
8 MR. THORNBURGH: Well, I'll go back to maybe the
9 overall theme of my presentation. Whatever it is that we
10 spent and whether we need 135 programs or maybe it's time
11 for 85, it seems to me that, A, there ought to be a clear
12 focus period and, B, I would suggest a clear focus on
13 entrepreneurship, innovation, starting companies.
14 Again, that creation and expansion piece of that
15 CARE acronym.
16 I think I said this earlier. I'm not much of a
17 fan of the let's-make-a-deal environment of subsidizing
18 companies to come here or come there for a few years and
19 then once the subsidies run out, they go somewhere else.
20 That's not a long-term competitive proposition.
21 REP. PETRI: Thank you, Mr. Chairman.
22 MAJORITY CHAIRMAN ADOLPH: David and Sallie, I
23 want to thank you for your very informative presentation.
24 You certainly provoked an awful lot of conversation. This
25 committee is certainly challenged by it. We're going to
75 1 try to put together a budget that certainly and hopefully
2 brings business and job creation to the Commonwealth.
3 I can tell you that those folks and organizations
4 that received money, they are certainly going to be
5 challenged by this committee for accountability of how
6 their tax dollars have been spent over the last couple of
7 years and the last decade.
8 Hopefully, maybe in a year or two, we'll invite
9 you back and we're going to be 1 out of 11 instead of 11
10 out of 11.
11 MR. THORNBURGH: That's what we're after.
12 MS. GLICKMAN: That would be great.
13 MAJORITY CHAIRMAN ADOLPH: Thank you.
14 MR. THORNBURGH: It was our pleasure. Thank you.
15 MAJORITY CHAIRMAN ADOLPH: Just for the members,
16 the committee will reconvene at 1 o'clock.
17 (Recess taken.)
18 MAJORITY CHAIRMAN ADOLPH: Good afternoon,
19 everyone. I would like to reconvene the House
20 Appropriations Committee. This will be the last of our
21 meetings regarding the information on innovative ways to
22 balance the budget.
23 I think this next presenter will also explain to
24 us what organizations are working out there on behalf of
25 our PA residents.
76 1 And without further adieu, I'd like to introduce
2 Bill Strickland, Jr. Bill is the founder and president of
3 the Bidwell Training Center.
4 Welcome, Mr. Strickland. I won't take away any
5 of your thunder. You can introduce your associate to the
6 committee and also tell us a little bit about your
7 non-profit organization.
8 MR. STRICKLAND: Yes, sir. This is Joanna
9 Papada. She works for government. She's been with us for
10 20 years. She does a lot of our education work
11 particularly around training.
12 Obviously, I'm Bill Strickland. And I've been at
13 this for 40 years at the Center. We basically built it in
14 the '60s to work with people that most people don't want to
15 work with.
16 And that makes us, we think, in some respects
17 fairly unique because we're working with a population of
18 welfare folks, single parents, people who lost their job or
19 never had a job. So we specialize in a very specific
20 constituency.
21 I would like to continue.
22 MAJORITY CHAIRMAN ADOLPH: Please do.
23 MR. STRICKLAND: Basically, I want to show you
24 some pictures of the Center that we built in Pittsburgh. I
25 think a couple of the talking points that are worth the
77 1 committee's understanding is, we built this Center probably
2 in the most distressed neighborhood in Pittsburgh with the
3 highest crime rate.
4 Many of the people that we work with either have
5 not graduated from high school or if they have, they're not
6 working. These are people who tend to be chronically
7 unemployed, a generation of welfare people who cost the
8 Commonwealth and the community extraordinary amounts of
9 money to keep them in the condition that they're in.
10 The Bidwell Training Center grew out of the riots
11 in the '60s and '70s. It was an attempt on the part of
12 their church to address some of these concerns. And it had
13 mixed success.
14 I took the Center over in 1972 and with the help
15 of many legislative leaders was able to build what we
16 consider to be a world-class training center on behalf of
17 people that have never been exposed in a meaningful way to
18 world-class education.
19 I think it's also fair to say that if you looked
20 at the matrix of who we deal with and the cost of their
21 welfare, incarceration, anti-drug programs, and spousal and
22 domestic abuse, the numbers are literally in the millions
23 just in PA.
24 The people that we work with are not involved
25 with drugs or abuse. They actually go to work. They make
78 1 a living and they do contribute to the Commonwealth in very
2 measurable and specific ways.
3 So a big part of our focus is to get people from
4 the public assistance roles into tax-paying-citizen roles.
5 And we have done that with a fair amount of success which I
6 will share with you as we go forward.
7 One of the other direct outcomes of this program,
8 the people who go to work in industry also become
9 productive and stabilizing elements in communities.
10 And one of the things that I am proudest of in
11 our Center, which immeasurably has the highest crime rate
12 in Pittsburgh, we have never had one act of vandalism,
13 drugs, alcohol, or theft in 26 years of operation.
14 If you come visit our Center, and we hope you
15 will, what you will not see is a metal detector or any
16 cameras because there aren't any in the building.
17 We are racially diverse. And we have been
18 enjoying this kind of status for the 26 years literally of
19 the operation that we've been in the Center on the north
20 side of Pittsburgh.
21 One of the highest compliments that we were paid
22 recently was from the police commander in Pittsburgh. He
23 said that in his view, many of the answers to crime were
24 located in our training center. By taking people who have
25 traditionally been involved with crime and providing them
79 1 with a decent industry-specific education, we were able to
2 get them out of the criminal roles, put them in productive
3 roles. And that's going on pretty well.
4 We'll also touch on one of the trademarks, one of
5 the characteristics of our Center that we're very good at.
6 We've learned how to customize technology training for
7 Fortune 100 and Fortune 500 companies quite literally.
8 The companies we work with are Bayer, Calgon
9 Carbon, BASS, PPG, University of Pittsburgh Medical Center.
10 And what makes this Center very innovative is the ability
11 that we have now developed to take almost any technology
12 company, any industry leader, and customize a technical
13 training program specific to their industry within 12
14 months of initiation.
15 So what happens is that we've gotten very smart
16 about how to customize training almost virtually to any
17 industry. That makes us very attractive to established
18 Western PA companies. It also makes us very attractive to
19 companies that we hope someday will locate in Western PA.
20 So we've gotten very smart about how to take
21 people who would traditionally be exempt from industry
22 training and get them to be very competent technicians in
23 12 months or less at a very reasonable cost to the
24 taxpayers of PA.
25 We also believe that because of the way in which
80 1 we've approached this conversation, at some future time,
2 this may be a replicable model that other citizens in other
3 communities in PA may want to look at primarily because of
4 the constituency that we focus in on.
5 We're dealing with all the folks that stand
6 around on corners that are on public assistance, they're
7 into crime. And unfortunately, there are tens of thousands
8 of these people in virtually every community, large and
9 small, in PA.
10 It is my belief that no Commonwealth, no
11 government, can sustain those kinds of numbers for people
12 who are not productive, who are not contributing to the
13 asset pool.
14 And so our unique position in the marketplace,
15 we're going after exactly those folks that most people shy
16 away from because they don't believe that they can actually
17 be re-educated and contribute.
18 Well, we beg to differ. We think they can be
19 educated. They can be productive. They can contribute.
20 So that's our focus. That makes us different than a
21 community college or proprietary school and very different
22 than a public education system.
23 We're working with all the people that
24 traditionally fall in those cracks and recovering them and
25 turning them into productive citizens.
81 1 So with your indulgence, Mr. Chairman, I would
2 like to show you a few pictures. I'm going to spare you
3 the bar graphs because I don't think this is about bar
4 graphs. I really think it's about telling a story visually
5 so that the members of the committee and those that are
6 listening can really appreciate what I'm talking about.
7 MAJORITY CHAIRMAN ADOLPH: Go right ahead.
8 MR. STRICKLAND: Thank you, sir.
9 Just some general numbers. I'm not a
10 statistician, by the way, so let me get the disclaimers out
11 on the table. But these are facts that we're familiar
12 with.
13 Currently, 35 percent of Pennsylvanians live
14 below the poverty line; 13 percent live in 16 counties; by
15 2014, half of the jobs in PA are being described as
16 middle-skills education, more than high school, less than a
17 four-year degree. Currently, 35 percent of PA's population
18 cannot afford the investment in this type of training.
19 I used to fly 727s in a previous life and I can't
20 figure out this slide machine. I flew for Braniff
21 Airlines.
22 Anyway, hitting the wall of hopelessness, this
23 kind of summarizes in many respects what we're talking
24 about. Left, you'll see PA residents in crisis. The
25 middle is kind of the working poor. And with the
82 1 intervention of Arcon strategy, we're able to get people
2 from working poor to viable jobs, sustainable wages, and
3 able to take care of their families both for this
4 generation and future generations.
5 We call ourselves a solution. We've been at this
6 for 40 years in one neighborhood in Pittsburgh. And in
7 that 40 years, as I pointed out, it's been an extraordinary
8 run.
9 We have a waiting list for every program that we
10 offer in the middle of the innercity of Pittsburgh. And
11 one of the things that's fascinating is we have people from
12 all over the region. Steel workers, remember that? Well,
13 they're still around.
14 We recruit deliberately that population,
15 minorities and so forth, single parents. We put them in a
16 world-class training center and we've gotten pretty
17 outstanding results as a result of that experience.
18 Just some numbers. I just happened to look this
19 number up. It costs about $36,000 a year to keep people in
20 jail in PA. One of the jails is Western State
21 Penitentiary, just one block from my building.
22 They reopened the place as sort of some kind of a
23 strategy to get people off the street. We're training
24 students who are going to work in the industry at a blended
25 cost of about $10,000 a person. Those guys aren't going to
83 1 jail. They're going to work.
2 If I had my say in the matter, I'd take a lot of
3 the money that we're investing in jails and put it in
4 training programs and keep people out of jail and save
5 everybody some money.
6 The average cost of high school dropouts, as you
7 can see, is between thirty and forty thousand dollars a
8 student. That's a pretty expensive tag for somebody that
9 becomes a liability and not an asset.
10 One of the things that we're able to do
11 definitively and one of the things that we discovered in
12 the course of our experience, we can take people with
13 relatively low technology skills and we can get them
14 performing at a very high level of technology in about 12
15 months.
16 Those are some of the books that we use in our
17 school. These are very advanced technical curriculums
18 provided to us by industry because we formed a partnership
19 with industry.
20 And I came up with a very revolutionary way to
21 train people. I went out to companies and asked them what
22 they wanted in an employee before I started teaching it.
23 And apparently that's a very unique way in which to
24 customize training.
25 In fact, with the Bayer Chemical Corporation,
84 1 which we started 17 years ago, the executive vice president
2 of Bayer said I was the first educator who had ever stepped
3 foot in a plant to ask them what they wanted in an
4 employee.
5 So my argument is, if we want to get people who
6 are customized to industry, you have to go to industry and
7 ask what them what they want in an employee before you
8 start teaching it.
9 And so that curriculum has gotten incredible
10 results. A perfect fit was Bayer, Calgon Carbon, and Nova
11 Chemical.
12 So we now can say definitively that we can take a
13 person with low academic skills and have them performing at
14 the level of a good biotechnician or chemical technician in
15 12 months using logarithm calculators and doing functional
16 chemistry in about 12 months.
17 And they've been working for Bayer now for 16
18 years. And we've used that template and we're taking it
19 around to other industry opportunities.
20 That's one of the examples of one of our pharm
21 techs. We also got a very good return with the
22 pharmaceutical industry. I took the same principles at
23 Bayer and went to the University of Pittsburgh Medical
24 Center and asked them what they needed in their
25 technicians. The loaned us the head of pharmaceutical
85 1 research with customized curriculums specific to that
2 industry.
3 We never looked back. We have 15 years under our
4 belt now training pharmaceutical technicians for the
5 pharmacy industry, not just for the University of
6 Pittsburgh Medical Center but for most of the retail
7 pharmacies and West Penn Allegheny system.
8 So we're training for the region. And we have
9 done very well with this. And the demographics are that
10 this will be a growing market for at least the next ten
11 years at least in Southwest PA.
12 We also train chemical technicians, as I was
13 mentioning to you. And when you come visit, you will be as
14 amazed as I continue to be at people who supposedly can't
15 learn technology are learning technology big time.
16 And what we decided to do was to set the bar high
17 so people have something to reach for. If you set it low,
18 they walk over it.
19 And so what we've been able to do is to take very
20 advanced chemical technology and bring it down to the level
21 to people where welfare mothers and single parents and
22 unemployed individuals live. And we've got this thing
23 figured out big time.
24 A lot of it's environment. Environment drives
25 behavior. World-class environments create world-class
86 1 students. Prisons create prisoners.
2 We also got very good at culinary. Once upon a
3 time, there was a guy named John Heinz. He happened to be
4 the heir to the Heinz Ketchup and a very good friend of
5 mine.
6 And in the old days when there was Governor
7 Thornburg and Speaker Irvis and John Heinz, they got
8 together and helped us the raise the money to build this
9 training center I'm showing you.
10 And Senator Heinz asked me if I would be
11 interested in training people for the food service
12 industry. I said, yes, sir. That would be of great
13 interest. He said, well, our company and my foundation is
14 really prepared to do this in a big way.
15 So John Heinz built our culinary program and
16 we've never looked back. It's been a heck of a ride.
17 Now, if you ever come to Pittsburgh -- and you're
18 all invited -- you'll feel John Heinz's presence at the
19 front door of that building. He was an extraordinary
20 public servant and very good friend at our Center.
21 So we believe that our culinary program is quite
22 literally a legacy to Senator Heinz.
23 I checked before we came up here. 91 percent of
24 our students from the culinary got work in the last class.
25 That's 91 percent. And we think that we're going to
87 1 continue to get those numbers as far as we can see in the
2 future.
3 This is not fast food. This is gourmet. Our
4 guys go to work in private clubs, country clubs, and
5 institutional cooking. No fast food is ever done at our
6 center quite deliberately, nor do we feed it to the
7 students every day.
8 One of the great benefits the committee will
9 experience when you come to Pittsburgh is you're going to
10 eat pretty good. We have a culinary presentation for every
11 student in the building.
12 We've discovered it's very difficult to teach
13 people when they're hungry, so they actually get something
14 to eat. So we do a gourmet lunch every day. And it's
15 great for nutrition and it's great for psychology. So if
16 people tell you that you can't serve gourmet food to poor
17 people, you send them to Pittsburgh.
18 We also train medical assistants. This is, I
19 think, the first one in the Commonwealth. We created this
20 with the University of Pittsburgh Medical Center. That's a
21 robotic patient.
22 And we created this to both do medical records,
23 medical billing, and physiology all in one curriculum.
24 Everybody that graduates from this program will go to work
25 with the system that it was designed to teach. This is
88 1 literally our first class. This has been certified
2 academically and technically.
3 And I think we have a nice little niche
4 opportunity going right there at the training center that's
5 going to do fine. We filled up the program with students
6 in the first three weeks of its announcement. So we're not
7 looking for students. In fact, we have a waiting list.
8 This is the facility that a number of very
9 important representatives of the Commonwealth helped put
10 together.
11 Speaker Irvis, Governor Thornburgh, Senator
12 Heinz, and a lot of people. If I start naming them all,
13 I'll get in trouble because I wouldn't name everybody.
14 Those were the leaders. And it was a great bipartisan
15 effort and a great demonstration of what the Commonwealth
16 is capable of doing.
17 This, by the way, was the scale modeled for the
18 Pittsburgh Airport. So if you've ever been to the
19 Pittsburgh Airport, that's a blown-up version of our
20 building.
21 This also is my concept of what a training center
22 for poor people is supposed to look like. And what we've
23 learned is that environment drives behavior.
24 In 26 years in this center, what you will not see
25 is a metal detector, a camera, or a guard. There are no
89 1 armed guards in this building. There are no cameras in
2 this building. There are no metal detectors.
3 You come to Pittsburgh, remind me to take you
4 over to the high school that's four blocks away. It has
5 steel doors and metal detectors. Same neighborhood.
6 Now, you tell me. I think it's about
7 environment. It's about attitude. It's about leadership.
8 We can change this conversation, I believe. If you do, you
9 can train people to be world-class technicians and you can
10 do it anywhere in PA very much the way that we're doing it
11 on the north side of Pittsburgh.
12 By the way, I happen to be a big advocate for
13 public education. Thank God for public school teachers
14 that saved my life.
15 But I want our public education system to begin
16 to function by the pictures I'm showing you. If we can do
17 that, we'll solve this problem.
18 That's the entrance to the building. It's called
19 an atmosphere of hope.
20 We also built an office complex. And the
21 University of Pittsburgh Medical Center took the third and
22 forth floors for their billing operation.
23 So I took the lease and went out and borrowed 8
24 million bucks and built the building and the thing actually
25 makes money in the middle of the city of Pittsburgh.
90 1 We haven't had one incident since we've been
2 open. And my real estate buddy said I did okay. I
3 pre-leased the building before I built it.
4 So this now contributes to the bottom line for
5 our training center. And so the training center is now
6 becoming an economic development agent for Southwest, PA,
7 in the middle of the inner-city neighborhood.
8 We also built an amphitheater, as you can see,
9 for our culinary folks. We bring chefs in from all over
10 the industry, Hershey Chocolate, Heinz Ketchup, and so on.
11 And the idea is we put world-class images in
12 front of the students because they'll be like the teachers
13 that they see. It's a very simple idea. People are a
14 function of environment and symbols. So if you bring the
15 best in, they'll want to be like the best.
16 Mentorship is very important to us. We think the
17 one-on-one relationship whenever possible really drives
18 behavior and values.
19 We also have a horticulture training program. We
20 train people for the horticulture industry. And among
21 other things that we do -- we have a 40,000 square foot
22 greenhouse in the middle of the inner-city neighborhood.
23 We train people for the horticulture industry. Phipps
24 Conservatory partnered with us and the Western PA
25 Horticulture Society.
91 1 And 85 percent of our graduates went to work in
2 the horticulture industry, including the daily tree service
3 that I'm told hired the first minority tree climber there
4 yesterday. We're very excited about this young man who now
5 has a profession and is doing fine.
6 By the way, the orchids that you see, those are
7 real. And we sell them to grocery stores. We generate
8 money to support the program through the sale of the
9 orchids. So it's kind of an entrepreneurial venture.
10 There's an outfit called the Giant Eagle Grocery
11 Store chain that I'm sure some of you have heard of. And
12 they sell our orchids in their stores. And Whole Foods
13 does as well.
14 So we're not going to get rich selling orchids,
15 but that's not the point. The point is that it's part of
16 an outgrowth of our horticulture program to generate money
17 so we can provide a very low-cost tuition, which is
18 virtually none for the students who go through our program.
19 We have a very diverse population, as I
20 mentioned. One of the things that we found very
21 interesting about the sociology for the center, we have
22 people from very different races and ethnicity going to
23 school together voluntarily.
24 We have never had one incident of race ethnicity
25 in 26 years of operation. Not one.
92 1 So we think that we discovered a strategy that
2 other communities might find useful. Build world-class
3 training centers, populate them with world-class faculty,
4 and most of the sociology problems will solve themselves.
5 That fellow happens to be one of our graduates
6 with the tie on. He's now a manager for the Bayer Chemical
7 Corporation. He was an unemployed steel worker when we
8 trained him. He's now running the division for Bayer.
9 One of our students in our technology program.
10 And we have a resource center that every
11 technical field that we represented at the training center
12 is represented in that room. It's fascinating to see
13 students oftentimes for the first years in their life not
14 only learning how to read, learning how to read
15 competently.
16 Unfortunately, I can show you people that have
17 the inability to function even at a high school level.
18 Because if they're not functioning at a high school level,
19 they're also not working. We can solve that problem.
20 These are some of the students in our program.
21 On the right-hand side, there's some of the presentations
22 of the students. The point of the story is they get very
23 good very quick. It is a real marquee in signature of the
24 work that we're doing at the center.
25 Again, this is one of our robotic demonstrations.
93 1 We also now have achieved national standards from
2 the Accrediting Commission. This is the Honor Society of
3 students, many of whom used to be on public assistance.
4 Well, they're not on public assistance anymore.
5 They have now met or achieved national academic
6 and technical standards in a training in the middle of the
7 inner-city of Pittsburgh. We think that's pretty exciting.
8 One of our students. And the whole psychology of
9 this program is to change this conversation from poverty to
10 success. I'm not showing you pictures of a poverty
11 program. I'm showing you pictures of a training center
12 that teaches people who are poor.
13 They are not the same. Poverty is as much a
14 state of mind as it is an economic condition. You change
15 the way that people think, you change their performance.
16 You change their performance, you change their outcomes.
17 One of the students who's done very well for
18 himself.
19 And this is graduation. We had to move the
20 graduation out of our center because it only holds 400
21 seats in our auditorium and we had 800 people show up at
22 the last one. There was a great deal of excitement.
23 Success breeds success, as we found.
24 This is one of our students who is now working
25 for a technology company. Many of the outcomes of our
94 1 students in the technology area are multi-industry capable.
2 So a pharmacy tech can really become a biotech or chemical
3 tech. And we think the transferability of those skills is
4 one of the values that we now have associated with what we
5 do.
6 You can't see that real well. But that's a
7 listing of the companies that hire our students. There are
8 hundreds of them. The point of the story is all these
9 companies are clustered around the work that we do at the
10 Bidwell Training Center.
11 So you can see now as we begin to deepen our
12 experience and broaden our opportunity with students, we
13 have literally got the Fortune 100 and the Fortune 500
14 lined up to hire our students.
15 One of the developments in the history of my
16 organization, we now have employers approaching us about
17 customizing training specific to their industries. Why?
18 Because we have been able to demonstrate that we can take
19 people who are considered liabilities and turn them into
20 very competent technicians.
21 The other thing -- and this is a little bit risky
22 -- is we learned some interesting sociology along the way.
23 The best kind of affirmative action program is to train
24 competent people. Train competent students, people hire
25 your students.
95 1 We have a great alumni association now of former
2 graduates. One of the ways that our students pay us back,
3 they come back to be the next role models for the next
4 generation of people.
5 If the committee does come to Pittsburgh, every
6 cab driver will tell you exactly where the Center is, which
7 tells us we're doing a good job.
8 Maybe I ought to stop right there and see if
9 there are any questions that the committee might have.
10 I think that concludes my presentation.
11 MAJORITY CHAIRMAN ADOLPH: Thank you,
12 Mr. Strickland.
13 First of all, very impressed with the history and
14 what you have been able to accomplish. You may have
15 mentioned this in your presentation. But for the record,
16 how many students do you have currently?
17 MR. STRICKLAND: We have 200 vocational students
18 on any given day throughout our program over the course of
19 12 months and up to 400 academic students. So it's both
20 vocational education and academic education.
21 So in the course of a year's time, we have up to
22 600 students that will actually go through our doors for
23 one form of education or another.
24 MAJORITY CHAIRMAN ADOLPH: And what is your total
25 budget?
96 1 MR. STRICKLAND: Bidwell is one part of our
2 Center. There's also an after-school arts program of
3 school kids. So Bidwell, the vocational school, is about
4 $7.5 million roughly, closer to 8.
5 MAJORITY CHAIRMAN ADOLPH: What is the tuition
6 that these students, whether they're their vocational or
7 academic students, pay?
8 MR. STRICKLAND: There is no tuition, sir. So
9 far we have been able to raise the money so we can provide
10 a tuition-free education primarily because the students
11 that we work with don't have the ability to pay tuition.
12 These are the kind of folks that are on welfare
13 or are single parents unable to get loans. So we provide
14 them a tuition-free education.
15 But in exchange for that, we require very high
16 standards of performance. And so the public payback, if
17 you will, is we take people who are being subsidized and
18 get them to be unsubsidized and go to work and generate
19 money and pay taxes.
20 MAJORITY CHAIRMAN ADOLPH: The amount of money
21 that the Commonwealth of PA invests in Bidwell, which I
22 believe is about $3 million a year --
23 MR. STRICKLAND: Well, it has been about $5
24 million. But we've experienced some pretty severe cuts in
25 the recent past. We're hoping at least to get it back to
97 1 where it used to be so we can continue to provide a viable
2 education for our students.
3 MAJORITY CHAIRMAN ADOLPH: You're doing a pretty
4 good job selling your product. However, you know, the
5 economic times are what they are. But, you know, we were
6 talking to our presenter from this morning. And bottom
7 line is accountability.
8 MR. STRICKLAND: Yes, sir.
9 MAJORITY CHAIRMAN ADOLPH: Over the years, how
10 many graduates do you think you've had from Bidwell?
11 MR. STRICKLAND: At least a couple thousand.
12 MAJORITY CHAIRMAN ADOLPH: And when they leave,
13 according to what you presented to us today, about 90
14 percent of them find employment.
15 What type of salary do your graduates, whether
16 vocational or academic, receive upon graduation?
17 MR. STRICKLAND: Between $21,000 and $40,000 a
18 year on average. They're somewhere in that range, for the
19 most part.
20 MAJORITY CHAIRMAN ADOLPH: Do most of your
21 graduates stay in PA?
22 MR. STRICKLAND: They stay mainly in Southwest
23 PA. That's how we can build an alumni association. And we
24 have many employers, of course, who are quite satisfied
25 with the quality of the work.
98 1 So we like to argue that the Commonwealth is
2 getting back its investment in spades because they're not
3 on public assistance, they're not in jail, they're not in
4 anti-drug programs, they're not in emergency rooms.
5 We turned them into assets. Over the course of a
6 couple years of paying taxes, they've basically paid back
7 the public investment made.
8 MAJORITY CHAIRMAN ADOLPH: Thank you.
9 MR. STRICKLAND: Yes, sir.
10 MAJORITY CHAIRMAN ADOLPH: Rep. Grell.
11 REP. GRELL: Thank you very much for your
12 testimony. It was very interesting.
13 Because this is an Appropriations Committee, I'm
14 going to follow up a little bit on Chairman Adolph's
15 questioning about your business model.
16 I'm curious. It sounded to me like you have a
17 couple different sources of revenue. But you have some
18 government revenues. I assume you have some revenue coming
19 in from the businesses that you partner with?
20 MR. STRICKLAND: That's correct.
21 REP. GRELL: I saw the orchids and all that. So
22 you have some entrepreneurial things that help you generate
23 some revenues. Can you give us roughly what the proportion
24 is?
25 MR. STRICKLAND: 50/50. We match the
99 1 Commonwealth's money about 75 cents to a dollar for every
2 dollar that's invested. So we generate money through real
3 estate, orchids, we have a jazz record label. We won four
4 Grammys. We sell a few records.
5 So it's kind of a mixed bag of entrepreneurial
6 ventures, all of which come back to support the cost of the
7 tuition. So we get pretty close to matching the
8 Commonwealth dollar for dollar.
9 REP. GRELL: Do you get any other government
10 funds whether it's local government, counties, or any
11 Federal?
12 MR. STRICKLAND: Occasionally we get very
13 targeted Federal support usually from the Federal
14 Department of Education. But for the most part, this is a
15 Commonwealth of PA/Pittsburgh story for the most part.
16 REP. GRELL: Is any part of your compensation,
17 whether it's on the government side or with your business
18 partners, is any of that performance based?
19 In other words, you get paid a certain amount for
20 positive successful performance, placing people. I think
21 that might be more likely with your business partners that
22 if you're training people to go in to work at Bayer, for
23 example, they might support you in one way but support you
24 a little higher once you deliver a finished product?
25 MR. STRICKLAND: Yes, sir. That's a very good
100 1 point. Bayer built us, along with Calgon Carbon, a
2 three-quarters-of-a-million dollar lab, chem lab. It's one
3 of the best chem labs in Southwest, PA.
4 REP. GRELL: Is it a direct tie that you get,
5 like a bonus or something for every person that they end up
6 employing or that stays with them for more than a year or
7 anything like that?
8 MR. STRICKLAND: No, sir. It's not that
9 formalized. All the industry representatives meet at our
10 center every other month. So there's a direct relationship
11 between the companies and what we do. They are in very
12 close. This is not an arm's length relationship.
13 So as we continue to perform, we attract more
14 companies. That's how we've gotten this far.
15 REP. GRELL: If you turn to the government side
16 of your relationship, is any of that performance based?
17 MR. STRICKLAND: No.
18 REP. GRELL: If you show results obviously, but
19 it's not any kind of direct performance?
20 MR. STRICKLAND: No, sir. The reason I think
21 we've gotten this far is that we've been able to show
22 enough evidence each year to the various committees and
23 legislators to have them believe that this is a program
24 worthwhile supporting. That's how.
25 We've been up here every six months for the last
101 1 four years telling our story. I'm very grateful that this
2 finally got to this committee's level to tell our story.
3 Not only do we think it's a good story, we have
4 evidence that the thing not only works but the Commonwealth
5 has accredited our institution as well. So we have State
6 accreditation in addition to Federal accreditation. In
7 order to keep the accreditation, we have to have certain
8 benchmarks. I'm very pleased to tell you so far we have
9 been able to do that quite successfully.
10 REP. GRELL: Well, I really enjoyed hearing your
11 story. I think it might give us some ideas of how we might
12 improve either programs with other private providers or
13 some of our government, direct government programs that may
14 work better under a model like yours.
15 Thank you, Mr. Chairman.
16 MAJORITY CHAIRMAN ADOLPH: Thank you, Rep.
17 Next is Rep. Ron Waters, the Vice Chairman of the
18 Democratic Appropriations Committee.
19 REP WATERS: Well, I'll take that title kind of
20 as a temporary.
21 You don't prepare people for temporary jobs. You
22 prepare them for full-time jobs.
23 I'm happy that you came here today. I was just
24 talking with Chairman Adolph. We were not aware of this.
25 We live in the eastern part of the State. It's a great
102 1 model. It shows -- and I'm happy that you did come up here
2 because you're proud of it, I'm sure. I think it's great
3 that we decide on how we want to invest and you
4 demonstrated that this is an investment.
5 In your remarks, you mentioned that these people
6 are now productive law-abiding citizens, which is great for
7 PA and great for families. Are any of these people prior
8 to entering into your program on the other side?
9 MR. STRICKLAND: Yes, sir. That's one of the
10 reasons why we keep the horticulture program and the
11 culinary program open. We recognize that there are many
12 poor people who have criminal records.
13 Unfortunately, when you get a criminal record,
14 you can't be a pharmaceutical technician. You can't work
15 in a chemical plant. You can't work at a bank. So there's
16 all these industries that are no longer available to these
17 students.
18 But food and horticulture so far will allow
19 students who have had some brush with the law the
20 opportunity to find employment. And that's a good thing.
21 And that's one of the reasons we keep those programs open.
22 REP. WATERS: You demonstrate people can change
23 if they get the right incentive.
24 MR. STRICKLAND: Yes, sir.
25 REP. WATERS: Something else that we talked about
103 1 earlier prior to this meeting is about career paths. So it
2 appears that you have already established that. I saw the
3 whole host of names. There were so many.
4 It was nice to see that so many companies are out
5 there looking for people coming out. And I think it's
6 smart that we train people for the jobs that people want
7 rather than overtrain them for jobs that they may not find.
8 I think that's being very proactive. I think
9 it's smart and it establishes the right relationships. You
10 have a great model. You really do.
11 I wish we could take a tour. I saw where it was
12 and the Chairman told me it's in a very poor neighborhood
13 and has other social problems around there. It seemed like
14 that building was untouched.
15 MR. STRICKLAND: Sir, I'm telling you, as sure as
16 I'm sitting at this table, in 26 years of operation in this
17 multi-million-dollar building, we have never had one act of
18 vandalism, theft, drugs, or alcohol. Not one police car.
19 Zero.
20 Now, you know, the police commander, Commander
21 Harper, made a statement in front of all the police that
22 the answer to the criminal problem, as he defined it, was
23 our training center, not his police force. The police
24 force is there after the fact. Mr. Strickland is there
25 before the fact.
104 1 That's where the answer is. We have to stop kids
2 from going to jail to begin with so you don't have to dig
3 them out of a hole after they come out of incarceration.
4 REP. WATERS: Thank you. I absolutely agree.
5 Can I ask some more?
6 MAJORITY CHAIRMAN ADOLPH: We're still going to
7 stay with Rep. Scavello's rule. One question at a time.
8 Despite your high ranking in the Appropriations Committee,
9 I'm going to move on to Rep. Mustio.
10 REP. MUSTIO: Thank you, Mr. Chairman.
11 So I can ask one question but make a couple
12 comments that he can comment to?
13 Thank you, Mr. Strickland. This is fascinating.
14 I've heard about the training over the years. As I was
15 watching your slide presentation, I noticed several
16 training courses that are offered elsewhere. I want to
17 make sure I understand your point.
18 The point is, as far as I understand it, this
19 training is available to others that pay for it at some
20 other institutions perhaps but the people that you are
21 working with are those that can't afford to get the
22 training or get into these other institutions?
23 MR. STRICKLAND: Yeah. We're working with people
24 that everybody is running away from, to be very blunt. No
25 one basically wants to work with our student population
105 1 because they can't pay tuition. Oftentimes they can't get
2 a loan. They may have poor credit history, etc., etc.,
3 etc.
4 So there's this whole group of people in
5 Pittsburgh and Philadelphia and everywhere in between that
6 are literally standing around the street corners who are
7 not productive. That is the group of people that I go
8 after quite deliberately.
9 And right now I've got the space all to myself.
10 Nobody is trying to push me out of the market. We think
11 that these liabilities are actually assets in disguise.
12 And if you can take people who are standing
13 around on corners, causing trouble, and get them trained so
14 they can go to work and earn a living and take care of a
15 family, you really get -- the Commonwealth gets two
16 pay-backs.
17 One, we get them off of public assistance and,
18 two, we get them paying taxes as productive citizens. So
19 we really get it both ways. And I think that's the story.
20 That's where the investment comes in.
21 REP MUSTIO: Do you have the numbers that we
22 could use to continue to tell that story to our colleagues
23 from the standpoint of you identify people that are on
24 public assistance? Do you have what those dollars are?
25 MR. STRICKLAND: We can get them.
106 1 REP. MUSTIO: So here is the money the State is
2 not paying any longer and here is the tax revenue that is
3 coming in. I think that would really help us.
4 As mentioned earlier, we had some presentations
5 over the last couple days that talked about a lot of
6 programs, hundreds of programs that the taxpayers support
7 in PA. And lot of them we're going to really make some
8 tough decisions on.
9 MR. STRICKLAND: Yes, sir.
10 REP MUSTIO: I think we can do that based on the
11 numbers.
12 MR. STRICKLAND: Well, our case is that in every
13 community -- unfortunately, it's not unique to Pittsburgh
14 -- there's an underclass of citizens that traditionally
15 elude any form of program that can get them to be
16 productive.
17 Over the years we have gotten very good at this.
18 And we have been able to demonstrate to the industry that
19 we can take people that are unproductive and in 12 months
20 we can get them to be very productive.
21 And once you're able to establish that as the
22 operating principle, what we found is that industry wants
23 to talk to you. They don't want to talk to you about
24 coming to meetings. They want to talk to you about hiring
25 people.
107 1 The Bayer Chemical Corporation right now needs
2 injection molding technicians. These guys start at $45,000
3 a year. If I had the funding, I could train these guys for
4 Bayer right now.
5 So what I'm suggesting to you is there are
6 innovative answers to this stuff. This is not a mystery.
7 It's not outside of common sense. There are plenty of jobs
8 unfulfilled because we don't have a system yet in place to
9 work with these folks that are costing these communities a
10 heck of a lot of money and a lot of distress and so forth.
11 That's what I specialize in. That makes me
12 different than all the other education guys. I work with
13 this population that most people want to ignore. I think
14 that that's a big mistake.
15 It's a big mistake from the standpoint of the
16 Commonwealth's money that's being invested in welfare and
17 prisons and so forth. That stuff starts to add up. It
18 costs a lot of money to keep people poor in PA. You can
19 quote me.
20 By the time you add up prisons and policing and
21 drug programs and emergency room visits and this and that,
22 it's tens of thousands of dollars for people who don't
23 contribute anything.
24 What I'm saying is invest in the students and
25 places like my Center. I will make them productive
108 1 citizens and you'll save yourself a lot of money and we'll
2 be a better community that way.
3 REP MUSTIO: Thank you, Mr. Chairman. If there's
4 time at the end, I have about six more.
5 MAJORITY CHAIRMAN ADOLPH: You will have your
6 time.
7 Rep. Gingrich.
8 REP. GINGRICH: Thank you, Mr. Chairman.
9 Mr. Strickland, thank you so much. I'm very
10 impressed with your model in general. I haven't disagreed
11 with one thing you said so far, which is highly unusual for
12 anybody that's presented to us.
13 MR. STRICKLAND: Maybe I should leave right now.
14 REP. GINGRICH: Go while the going is good.
15 No. I'm really impressed by your business
16 partnerships. The way you said they're not that -- I
17 forgot what term you used. But they are certainly defined.
18 They may not be formal but you know what? They're really
19 working. You're really getting what you need with them and
20 from them. So I think that's absolutely great.
21 I agree with everything you said. This needs to
22 be done and it ought to be done. You obviously know how to
23 do it.
24 How do you tap in? We all recognize the societal
25 piece we're talking about. We all recognize that it's
109 1 generation after generation now. And so it's just a
2 psychological mindset.
3 How are you incentivizing or how are you tapping
4 into this population which you profiled for us and
5 successfully brought them to productivity?
6 How do you tap them and how do you get the
7 dynamic going for this group of people? That's the real
8 secret.
9 MR. STRICKLAND: As a community or individual
10 either way, it doesn't matter. One of the things that will
11 strike you is that this is an absolutely spectacular
12 facility. I'm very big on world-class environments,
13 world-class equipment. No malfunctioning equipment.
14 That's a big incentive to get people who have
15 been kind of pushed aside re-engaged. That's the first
16 thing.
17 Secondly, we don't treat our students as poverty
18 program people because they aren't. What they are are
19 students. We treat them that way. You'd be surprised at
20 how big a difference that makes in the way they treat
21 people.
22 We have ex-steel workers from Duquesne, West
23 Mifflin, McKeesport come into an African-American-run
24 center in the middle of a black neighborhood in Pittsburgh
25 and everyone gets along fine.
110 1 REP. GINGRICH: Right.
2 MR. STRICKLAND: It's not because they're
3 liberals. I can assure you of that. It is because we have
4 a record for being able to provide a decent education and
5 get people to work.
6 We think that's such a big part of the sociology
7 in changing the way to think about people. So I'm trying
8 to change this conversation from a poverty conversation to
9 a training conversation. Big difference. And not just a
10 play on words.
11 Thirdly, we now have a reputation in the
12 community for being able to get people to work. And you
13 don't need a lot of public relations when your program
14 works because the students become your calling card.
15 So if I take the next steel worker from
16 McKeesport or an African-American woman from welfare and I
17 train them to be a chemical technician at Bayer, that
18 person is a billboard for our school. They become a living
19 symbol of exactly what it is that we're talking about.
20 The word gets out in the community. So the
21 people now know that in order to sign up at Bidwell, you
22 have to be serious. Our tolerance for foolishness is about
23 that deep, because we went through a whole lot of trouble
24 to provide tuition-free education. So my tolerance for
25 foolishness is very narrow.
111 1 You are only allowed to miss four days during the
2 course of your training. And that's for an excused
3 absence. We don't have fighting in our facility. We don't
4 have people get out of line or we get rid of them so that
5 the students that are really motivated have a chance.
6 You only have to do that once or twice. Once
7 people understand that you're serious about what you do,
8 you set a culture and you set a standard and it works out
9 fine. That's why I have a waiting list right now to train
10 for a training program in the middle of Pittsburgh.
11 REP. GINGRICH: Thank you. That's what intrigued
12 me. They have to come in the door first. Thank you.
13 MR. STRICKLAND: Yes, ma'am.
14 MAJORITY CHAIRMAN ADOLPH: Thank you.
15 Rep John Sabatina.
16 REP. SABATINA: Thank you, Mr. Chairman.
17 Thank you, Mr. Strickland, for your testimony.
18 Actually, you just answered my question. My questions
19 were, what's your attendance policy? What's your waiting
20 list like? And what's your disciplinary goals and rules?
21 MR. STRICKLAND: Let me touch a little deeper on
22 that. There's an interview. You've got to take the
23 interview. You have to convince us during the interview
24 that you mean what you say.
25 It gives us the opportunity to communicate our
112 1 values and our principles. And after 25 years or 30 years
2 of this stuff -- I've been doing this for 40 years -- you
3 start to get pretty smart. You can kind of figure out who
4 is giving you a story and who means what they say.
5 I can't put it on a piece of paper. You can feel
6 it. And once you sort of establish that concept of "you've
7 got to explain to us why we should provide you with an
8 education to save your life," if you can pass the interview
9 and you have the ability to learn academically, we'll put
10 you in the program but you're on probation.
11 If you don't show up and do what you're supposed
12 to do, you literally don't graduate. Why? Because I'm
13 only as good as my last graduate.
14 People at the Bayer Chemical Company said, quite
15 frankly, we don't believe you can take welfare mothers and
16 make chemical technicians but we'll give you one chance to
17 prove it. I said, I accept.
18 The first class did all right. We put 90 percent
19 of our people to work. Once we met that threshold, it was
20 much easier selling the second and third classes.
21 But you have to mean what you say. This is not
22 just cocktail conversation. If you abuse the personnel
23 policy, if you abuse the attendance policy, you do not
24 perform academically, you don't graduate from the Bidwell
25 Training Center, period.
113 1 I run this place every day and I only hire people
2 that are industry recommended who really know the subject
3 of material that they are talking about.
4 And what we found is the students become the
5 police force for the institution. It's not the guards.
6 It's the students. They decide that we're going to have an
7 acceptable standard of behavior because these people went
8 through a lot of trouble to give us one chance at life and
9 we're not going to allow you to throw it away for us.
10 My argument to the committee is, look at the
11 investment. You give me the same consideration as any
12 other social institution in the Commonwealth, I will meet
13 or exceed your expectations.
14 REP. SABATINA: And how deep is your waiting
15 list?
16 MR. STRICKLAND: Too deep.
17 REP. SABATINA: Thank you, Mr. Strickland.
18 You're doing a great job. Please keep it up.
19 MR. STRICKLAND: Thank you.
20 MAJORITY CHAIRMAN ADOLPH: Rep. Kula.
21 REP. KULA: Thank you so much, Mr. Strickland.
22 I'm just fascinated by the whole program. I just live
23 outside of Pittsburgh and did not know anything about this.
24 This is a great opportunity.
25 Is there an application process?
114 1 MR. STRICKLAND: Yes.
2 REP. KULA: Is there times when there's
3 referrals, say someone coming out of prison or someone may
4 be put in an alternative program or something? Do the
5 courts sometimes refer people to you?
6 MR. STRICKLAND: Absolutely. We're very familiar
7 with the court system. They know us. And one of the
8 alternatives to incarceration oftentimes will be our
9 training center.
10 Now, we're not in the prison rehabilitation
11 business, so don't get me wrong.
12 REP. KULA: I totally understand that.
13 These seem like a lot of questions, but they are
14 really short.
15 MAJORITY CHAIRMAN ADOLPH: We'll see how short
16 they are.
17 REP. KULA: Now, are there certain criteria
18 within that application process in order for them to be
19 eligible?
20 MR. STRICKLAND: Yes, ma'am. Let me put it this
21 way. We will test you in terms of aptitude in reading and
22 math. Those are the two things we want to know about.
23 It's not so much pass/fail as it is assessment. Because we
24 can't make you a chemical technician in 12 months if you're
25 doing third grade math.
115 1 We have a literacy program that can get you a
2 high school equivalent on the premises. So the first thing
3 you have to do is sign up for the literacy program so we
4 can get your math and reading up to high school. Then we
5 will allow you to test into the program.
6 REP. KULA: And do you see this type of program
7 maybe being somewhat effective in our career technical
8 schools through our school districts?
9 MR. STRICKLAND: Absolutely.
10 REP. KULA: This type of let's bring in the
11 community, let's bring in the business leaders and find out
12 what you need and get these students prepared to be out
13 there doing these jobs?
14 MR. STRICKLAND: Yes, ma'am. We could build one
15 of these in every city of the Commonwealth and you can
16 quote me. We can't continue to live like this. One reason
17 we're losing industry is we don't have a qualified
18 workforce. We're certainly losing them from the standpoint
19 of the minority community. The minority community has
20 never left the Depression.
21 REP. KULA: I agree.
22 Mr. Chairman, I would strongly urge all of us to
23 maybe have a sit-down with Mr. Strickland as far as the
24 Commonwealth and things that we can do to kind of learn
25 some lessons from Mr. Strickland.
116 1 We thank you very much.
2 MR. STRICKLAND: Yes, ma'am.
3 I should mention this. I don't know if this is
4 on our website. I end up at the White House the second
5 week in December and I can tell you that the Oval Office is
6 actually oval because I was standing in the place at the
7 invitation of the President who appointed me to some
8 commission. And the commission is called the Commission on
9 Community Solutions. There are 25 of us.
10 And the President basically said, I'm authorizing
11 this group of 25 people because it has come to our
12 attention that you have compassion for our youth. Your
13 country is honored to have you serve. You have 20 months.
14 And I'm not looking for a term paper or a study. What
15 we're looking for are answers.
16 Mr. Strickland, we understand your organization
17 is doing some work in that area and we'd love to have you
18 contribute to that conversation. And this is a bipartisan
19 effort by the way.
20 Secondly, to reveal my ignorance culturally, the
21 President appointed some guy named Jon Bon Jovi to the
22 committee. I don't know Jon Bon Jovi.
23 MAJORITY CHAIRMAN ADOLPH: He's from New Jersey
24 anyway.
25 MR. STRICKLAND: So I asked my kid, who's this
117 1 Jon Bon Jovi guy? She said, he's a big rock star. Well,
2 he's on the committee but he's coming to see our center
3 February 12th because he's playing Pittsburgh. He said, I
4 want to go see that center.
5 So with association with the President, we're
6 starting to make some interesting connections with people
7 that are finding this work intriguing.
8 REP. KULA: Just a little information for you. I
9 believe Mr. Bon Jovi did just donate lots of money.
10 MR. STRICKLAND: That I heard.
11 REP. KULA: It might be something you want to
12 remember.
13 MR. STRICKLAND: Yes, ma'am.
14 MAJORITY CHAIRMAN ADOLPH: For the second time,
15 the temporary Vice Chair, Rep. Walters.
16 REP. WALTERS: Thank you to the Chairman.
17 I really wasn't going to ask another one, but the
18 more you talk, the more I think about something else I'd
19 like to have an answer to.
20 The program that you have, the conversation that
21 Rep. Kula talked about, I think it's important that we
22 really do look into how to set up programs like this within
23 the school districts.
24 Because just like your building is well preserved
25 and taken care of, people respect it. And throughout the
118 1 schools throughout the State and Philadelphia and
2 Pittsburgh and now these school systems have become
3 pipelines to prisons.
4 There are clear examples that people can produce.
5 And if you have an answer and solution to that and it can
6 save our Commonwealth money in the long run, we lead the
7 world in producing a great workforce. You must have heard
8 the earlier conversation we had here. We talked about that
9 same thing. How do we lead the world?
10 If we could do that, produce a world-class
11 workforce, I believe that that will be the path that we
12 want to hang our hats on and shine. So I just say this
13 will be a win-win for all of us. It will make us all
14 shine.
15 MR. STRICKLAND: There are four centers operating
16 outside of PA. Cleveland built one. Cincinnati has one.
17 Grand Rapids has got one. San Francisco has one. They're
18 modeled on Pittsburgh.
19 So we have been able to demonstrate that I would
20 not have to be present in order to have common sense
21 prevail.
22 We have four centers open and operating in four
23 locations in the United States of America. I'm not looking
24 for work. These people found their way to Pittsburgh.
25 So I think the opportunity to partner with public
119 1 education around career and technical education is a huge
2 opportunity.
3 The Commonwealth's whole investment for the thing
4 is about 5 million bucks. We're not talking 50 million or
5 $100 million for giving students a chance at a real life.
6 It's measurable. It's real. It's audited and so forth.
7 So we think we have enough evidence that we could
8 begin to have serious conversations with communities about
9 building models like this. And I'm in this for the rest of
10 my life. I have no intention of changing my mind.
11 I'm telling you, we don't have to live like this.
12 There are ways to get people who have been neglected and
13 forgotten to be a part of this conversation. And we're
14 going to save a heck of a lot of money and create some
15 important symbols of hope in the Commonwealth.
16 Not one time did I say anything about new money.
17 What I am talking about is reallocating some of the money
18 and see if we can get a better outcome than we did in the
19 past. But I'm not the Appropriations Committee. You are.
20 I believe that these folks can be contributing
21 members of the Commonwealth of PA. And I am very excited
22 about the prospect of getting some legislative leaders to
23 join me on this partnership. It's called common sense.
24 I'm telling you, we can really do this but we need
25 leadership to get it done.
120 1 REP. WATERS: How do you work with veterans
2 coming home from war who left young right out of high
3 school and come back?
4 MR. STRICKLAND: Many leaders at the Federal
5 level have asked us that same question. It's not an area
6 that we specialize in but our strategy is encompassing
7 everything.
8 So the answer is, as we become more proficient in
9 the unique needs and circumstances of our veterans, they
10 become a logical place for us to participate with their
11 lives. So the answer is yes.
12 So now we can begin to paint an interesting
13 picture. You go from welfare folks to unemployed people to
14 veterans. And that really becomes a cross-section of the
15 community that oftentimes is left behind.
16 I think that's a great model for the
17 Commonwealth. I will continue to harp on it. One of the
18 things I'm proudest of, when I grew up in my neighborhood
19 where my center is located, there were five foreign
20 languages spoken in my elementary school. We didn't call
21 it cultural diversity. We called it a neighborhood.
22 My point is that one of the things we're proudest
23 of in my training center is everybody gets along fine. I
24 haven't given a speech about how to behave yet. If you
25 build world-class centers, people will see themselves the
121 1 same and you'll solve a lot of sociology problems along the
2 way. Believe me. I'm telling you. I live this every day.
3 REP. WATERS: Thank you.
4 MAJORITY CHAIRMAN ADOLPH: Rep. Mustio.
5 REP. MUSTIO: Thank you, Mr. Chairman.
6 Your Oval Office is on your website. I'm going
7 to ask a question that may come up from some of the viewers
8 watching this.
9 You mentioned earlier that one of your
10 corporations needed some injection mold technicians. One
11 of the responses might be, well, if the company needs
12 injection mold technicians trained, then they should invest
13 the money to train them. Why should the taxpayers do that?
14 MR. STRICKLAND: Well, for two reasons: One,
15 many of these companies say we pay taxes to the
16 Commonwealth so we're not interested in investing twice.
17 That's the first thing.
18 The second is many of these companies say, we're
19 not in the education business. We're in the manufacturing
20 business. We train people. Bayer makes products.
21 That partnership we think, is where the answer
22 lies. They were very clear that we don't want to run
23 training programs for Bayer. We want to sell products.
24 REP. MUSTIO: One followup to your conversation
25 with Rep. Waters. I noticed on your website the other
122 1 locations that you had and you alluded a couple of times,
2 we should do this across PA. How do we start doing that?
3 What's the first step from your perspective?
4 MR. STRICKLAND: Today was the first step, to get
5 this story to be heard by the Appropriations Committee.
6 That's the first step.
7 The second is, I really am quite serious about
8 having some of you or many of you or all of you come visit
9 the Center.
10 REP. MUSTIO: How about on February 12th?
11 MR. STRICKLAND: Oh, yeah. Mr. Bon Jon Jovi.
12 REP. MUSTIO: Jon Bon Jovi.
13 MR. STRICKLAND: It's already a cast of
14 thousands, including my two kids.
15 I think that the next step is for us to get with
16 some of the staffers, many of whom I know, and sit down and
17 begin to craft out a strategy, some words on a piece of
18 paper that can begin to point in the direction.
19 There's a new Administration obviously. The
20 Secretary of Education would be a very important component
21 of a conversation like this. Many of the State Senators
22 and Representatives have expressed interest in this.
23 And Joanna does a lot of our government relation
24 stuff, does a lot of legislative work. We were working on
25 trying to get a Federal piece of legislation passed to do
123 1 this work, by the way. She is pretty knowledgeable at how
2 to work with the staffers and has been successful in
3 translating this stuff into the world that we live in.
4 So the next step is to begin to craft talking
5 points of a strategy that says, here is how we propose to
6 build centers around training for challenged and difficult
7 populations.
8 We can do this. We can do this now. This isn't
9 five years from now. We can do this within this session.
10 That's very possible.
11 Now, I understand government moves slowly and all
12 that. But you at least got to start. Because if we don't
13 start, we're never going to get there.
14 Now, what I have been able to show you, I hope,
15 today is that in spite of every disappointment, we made 40
16 years. I got that thing built. We own that facility.
17 They're not in debt on that facility.
18 So my job now is to keep the lights on and keep
19 the staff paid. We've been able to demonstrate we can
20 train people. We have good statistics. We've got an
21 outcome. We've got a center. You ought to come see it.
22 But there was no government program designed to
23 support what I just showed you. I just was such a bulldog
24 and refused to go out of business, even though all the
25 money was going everywhere else. I believed that some way
124 1 I would get this far and that there would be enough people
2 who believed in what we were trying to do that would give
3 me a hearing. Well, I got that much.
4 And I think that's a very good demonstration of
5 the entrepreneurial spirit. I just would not give up. And
6 now that we've got evidence and other cities want to do
7 this and the President and all that, that's all fine.
8 But you should have been there at the beginning
9 when I took over the Bidwell Center. They had guns at the
10 door, knives in their pockets.
11 So when I tell you that you can go from tragedy
12 to success without a dedicated line item or any visible
13 funding for 40 years tells you what's possible if you had
14 funding. Suppose I really had funding. Think of what this
15 could be.
16 I had to cut and paste. I'm the guy with the tin
17 cup that's always walking up and down the hallway looking
18 sad. People would drop a couple nickels in so I could keep
19 going.
20 I'd like to get to the point where it's more
21 predictable than that, that we could actually normalize
22 this kind of thinking. You do that, we can get something
23 done. Then we can figure out a strategy.
24 I spent most of my time raising money. I would
25 love to be working with companies customizing training for
125 1 people in your district. That's what I'd like to be doing.
2 But I've at least got to get to that point of stability so
3 my board can bring me up to do the work I'm really excited
4 about, which is to replicate this model all over PA.
5 And there's not one person that has convinced me
6 that you can't do it. I'm sorry. I don't believe that.
7 REP. MUSTIO: Thank you.
8 MAJORITY CHAIRMAN ADOLPH: Thank you.
9 Mr. Strickland, I think that's a good sentence to
10 end this meeting. I can't thank you enough for what you've
11 done for the residents of Pittsburgh, for the residents of
12 PA.
13 We have heard an awful lot over these last three
14 days, trying to think out of the box with the dollars that
15 are available to us. I think you're going to hear the word
16 accountability in the next three or four months.
17 And speaking for myself, you certainly are
18 accountable and you make a wonderful presentation. I'm
19 sure you're a fantastic fundraiser. And that tin cup I'm
20 sure is pretty big, especially if you have Bon Jovi coming.
21 You're a remarkable man with a dream. Thank you
22 very much. I think the taxpayers of PA, when they've heard
23 your presentation -- and many will on PCN tonight or
24 live -- this is one program where taxpayers' money is being
25 well spent.
126 1 MR. STRICKLER: Yes, sir.
2 MAJORITY CHAIRMAN ADOLPH: I think whether you're
3 a Republican or Democrat or Liberal or Conservative, we can
4 all agree that your program is working.
5 It's going to be this committee's job to go
6 through this budget process and find out what is working
7 and what is not working and live within our means just like
8 this man and his organization has over the last 40 years.
9 I want to thank the members of the committee for
10 taking these three days from their very business schedule.
11 I know I learned an awful lot.
12 I think we're setting the tone for what the
13 budget season is going to be like. I think if we work
14 together as a committee, we're going to be able to put
15 together a budget that lives within means but still is able
16 to attain goals similar to what Mr. Strickland and his
17 organization does and move PA forward.
18 Thank you very much.
19 MR. STRICKLAND: Thank you.
20 (The hearing concluded at 2:25 p.m.)
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127 1 I hereby certify that the proceedings and
2 evidence are contained fully and accurately in the notes
3 taken by me on the within proceedings and that this is a
4 correct transcript of the same.
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8 Jean M. Davis 9 Notary Public
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