Elected officials, justices of our court systems, tribal representatives and people of Oklahoma, it is a great pleasure to be here with you today and I thank you for the honor of being able to serve as the governor of the state of Oklahoma and to deliver our state of the state address.
Now, before I begin, I am pleased to have joining me today my husband, the first gentleman of the state of Oklahoma, Wade Christensen. And also, my daughter, Christina Fallin.
The elected officials here today have a solemn duty to represent the people of Oklahoma, their constituents and to work to make this state a better place to live, work, invest and raise a family.
I know all of us, Republicans and Democrats alike, take that responsibility very seriously. I want to thank you for your hard work and thank you for your service to the state of Oklahoma.
Because the actions taken by this legislature and, of course, because of the hard-working innovative, resilient people, our state of our state is strong.
And everyone here today should be very proud of all that we have accomplished.
Together we have overcome adversity.
In 2011, the American dream in Oklahoma was threatened. Middle class families and small businesses were hit hard by the national recession. And it seemed possible even likely that we would leave our children a less prosperous state than the one we inherited.
Unemployment rate stood at 7.2%, leaving tens of thousands of Oklahomans out of work.
The state faced a budget shortfall of $500 million and just like the bank accounts of many Oklahoma families, our state savings account had dried up. In fact, our state was broke. We only had $2.03 in a rainy day savings account.
So, we responded. This legislature acted quickly and decisively, passing series of measures to help jump start the economy, help our working families and realign our spending with our fiscal realities of our state.
We balanced the budget the old-fashioned way. We prioritized our spending and when necessary made tough cuts, just like those that are being made by Oklahoma families.
We also eliminated red tape and bureaucracy choking small businesses. We improved government services and we eliminated waste. We retooled our state agencies, consolidating duplicate boards and commissions, and we made government run more like a business, effective, efficient and customer friendly.
We passed comprehensive legal reform, minimizing frivolous lawsuits and creating an atmosphere conducive to job growth and job retention.
And we were finally able to overhaul our workers' compensation system, moving from a contentious legal process to more efficient administrative structure, a goal we had worked on for decades, and today the new workers' compensation commission is open for business.
We focused on education and workforce training, making sure that Oklahoma schools have high standards they need to produce students who are college, career and citizen ready.
We have also shown compassion and care for those who have served our country and those that have faced unique challenges. We offered a hand up, not just a handout.
We have worked with the legislature to increase oversight over our department of veterans' affairs and tasked our new board with investigating and eliminating instances of abuse and neglect of our state's veterans and their facilities. And so I want to thank the legislature for taking care of our veterans this past year. Thank you very, very much.
At the department of human services, we implemented the Pinnacle plan, a comprehensive strategy to better protect and serve the children in state custody and to place them in loving foster families.
And we have offered increased resources to programs assisting those suffering from mental health issues including drug abuse and addiction, helping people get the treatment they need to rejoin their families and their communities as productive, happy members of society.
For nonviolent offenders in our prison population, we are working hard to offer treatment and rehabilitation. So we can be smart on crime as we are tough on crime. So I'm looking forward to renewed partnership between the Department of Corrections, this legislature, my office as we work with the agency and our new director to evaluate and improve our smart on crime initiatives, including the Justice Reinvestment Act.
All of these actions along with the priorities I will outline today are aimed at improving the quality of life, creating jobs and building a more prosperous state.
Now, we know we're on the right track because the policies we have implemented over the last three years are working. Oklahomans are getting back to work and they're earning more. That 7.2% unemployment rate is now down to 5.4%.
Oklahoma families have seen their income rise by 6.3% since January of 2011. That's 44% higher than the national average and second only to North Dakota, and by the way I'm not ready to concede bragging rights to North Dakota because they wouldn't be number one in the nation if it weren't for an Oklahoma company, another Oklahoma company, but in particular Continental Oil, who has helped lead the way in the energy revolution and they're working the Balkan shell. That's why North Dakota's number one and we're number two but I'm not going to concede to that.
Our fiscal house is once again in order. Our rainy day savings account has grown from pocket change to over $570 million. It stands today at $530 million because this legislature wisely and compassionately appropriated funds for tornado recovery and reconstruction after last year's storms. With over half a billion dollars remaining in that account, Oklahoma does have a real safety net should we ever face another natural disaster or economic crisis.
Today, Oklahoma is a top ten state for net migration, meaning people and businesses and jobs from around the country are moving to Oklahoma.
Today, we have achieved great success in the face of considerable challenges. I'm proud of the way Oklahoma responded to unexpected challenges, sometimes even hardships and, of course, we saw our share of that last year.
There was no greater challenge or hardship than the one we experienced last May when a series of tornadoes swept across Oklahoma. The loss of life, especially the loss of children, was devastating.
I will never forget the unbearable grief when I met with the mothers and fathers who lost a child or even the scream of a woman who had just found out that her husband was killed. And we must all keep them in our continued prayers.
I've also never forget the brave and compassionate actions of so many of our citizens, men and women, taking complete strangers into their homes and offering them a place to sleep or a warm meal. Oklahoma's -- even people from across the United States dropping everything to volunteer their time and offer the resources to help in the recovery effort.
And I can still remember walking through the rubble at Plaza Towers Elementary School with the first responders who worked desperately through the night risking their own safety to clear the rubble, to cut through the concrete in hopes of uncovering just one more survivor.
And some of those first responders are here today and I want to recognize them for their hard work, their bravery and their service to the state. So will you please join me in applauding them for their work, applauding all the first responders and workers who helped last May and will continue to help us in a time of crists. Will our first responders please stand up? Thank you for coming.
Because of the efforts of men and women like these, we are rebuilding and we are on our way to recovery. Communities like Moore, El Reno and Bethel Acres are open for business again. Main streets across central Oklahoma struck by the tornadoes are once again thriving. And we owe that success to our resilient, hard-working people. They are, as we say, Oklahoma strong.
Our schools are also being made stronger and safer. Briarwood and Plaza Towers elementary schools are being rebuilt with safe rooms.
Our challenge moving forward is to improve safety in all of our schools. And that process has begun by identifying our current needs.
To help with that, the Office of Emergency Management is conducting voluntary safety assessments for districts that request them, helping evaluate the safety of our schools and making recommendations for possible safety upgrades.
Next, we need to act to ensure that our schools have the means to pay for those upgrades. Last week I announced my support of HJR 1092, authored by Representatives McBride and Echols. HJR 1092 is a constitutional amendment allowing every school district to pursue a one-time increase in bonding capacity to fund upgrades like storm shelters, safe rooms and protections from dangerous intruders.
Oklahoma has approximately 1,800 schools, each built differently, each with its own unique needs. This measure preserves local control, allowing each school district and community to make their own decisions about how to address their own needs. Some schools will wish to build safe rooms, while others will retro fit existing structures to withstand tornadoes. Schools that already have safe rooms or storm shelters may choose to focus on security precautions to protect their children from intruders.
This is a responsible plan for improving safety and security at our schools. We aren't forcing new taxes on Oklahoma families or businesses. We aren't passing new mandates. But most importantly, we are making our schools safer.
I want to applaud our legislators and our citizens who engaged on this issue in exploring policies to help protect our children to improve our school safety. Thank you for that. I appreciate that.
I believe our plan offers the best and most realistic way to fund storm shelters and other safety and security upgrades. Others may disagree but we should remember we share a common goal and that is to protect our children and to save lives.
Now, not only do we want our schools to be safe, but we also want to provide each child in Oklahoma with a world class education. In fact, improving the quality and the outcomes of education is the single most important thing we can do to attract and retain jobs in our state, to alleviate poverty, and to help Oklahomans have fulfilling and productive lives.
But here's a fact. The best indicator of personal income is educational attainment. The best indicator of personal income is educational attainment. Similarly, the best predictor of societal problems like drug use, teen pregnancy and crime is educational attainment.
For many, education is the best and the only way out of poverty. Our job as a state is to empower our students, our parents, our teachers to succeed in setting the bar high and challenging each other to succeed. And I believe every child can learn.
No child should ever fail to get a world class education because our policymakers believe success is too difficult. A majority of you don't believe that. But on occasion there are some people in our state that believe children can't learn.
That's why we need to work on two fronts.
First, we need to continue to improve k-12 public school results. We know that we are graduating high school seniors who aren't ready to enter into the workforce or college, and that has to change in Oklahoma.
Second, we have to increase the number of Oklahomans who continue their education beyond high school, either by attending college or a career technology center. A high school diploma is no longer enough to reach the American dream.
Today, in Oklahoma, only one third of jobs available to those with just a high school diploma or less are in our state's economy. And the majority of those jobs pay less than $25,000 a year.
The new minimum for success is education beyond high school. Many Oklahomans are falling short of the new minimum. And that's just not a problem. It's a crisis.
We are taking active steps to address this crisis and it is essential that we continue to move forward.
For instance, too often we set children up for failure by sending them on to higher grades without the reading skills they need. But we have changed course, by requiring that third graders have to read before moving on to the fourth grade. Thank you for doing that.
We have also implemented the A-F grading system that lets parents, teachers, students and administrators know how their school is performing, so if it is underperforming we can fix it.
And to those who say that that system is unfair or can't work, I say let's look at U.S. Grant High School here in Oklahoma City. This is an urban, inner-city school. It faces all the challenge that is we associate with a school in that category, both here and throughout the country. And four years ago, it would have been a "F" school. It was failing our children and it was producing outcomes that were embarrassing for our students, our parents and the faculty.
And they decided enough was enough. And they made changes. They engaged the parents and the students and revamped their teaching models and reset expectations and today U.S. Grant is a B-plus school and I'll bet it's well on its way to being an "A" school.
We have with us U.S. Grant principal Clay Vinyard with some of the students and teachers so I would like for you to help me in thanking them for their great work they're doing in the school. Let's give them a round of applause.
And while we're at it, let's give every student working hard to better themselves and every teacher and administrator in the state working to give our children a better future also the credit that they deserve, and we appreciate them.
To support teachers and students like these, we are also working on increasing rigor in the classroom and raising standards to levels required by college and employers.
In the 2010 legislative session, you voted to adopt new higher standards in English and math and these new Oklahoma standards will be fully implemented this year. The standards focus on critical thinking, the kind of skills our children need to get a job or to succeed in higher levels of education.
And while we are raising those standards, we aren't telling our teachers how to teach a lesson or what books to use. These are decisions that will always be made at the local level.
Here's the payoff. We will start graduating seniors that are are truly ready for the workforce and for college or a career technology education. That's a great payoff. Thank you.
To continue to inspire innovation at the local level, CareerTech is introducing performance-based funding strategy to increase the number of Oklahomans earning certificates and gaining wealth-building jobs. We've already begun to see more Oklahomans with college degrees or career technology certificates, thanks in large part to a program we have implemented called Complete College America.
When I launched Complete College America with Oklahoma's higher education system and our career technology communities two years ago, we set a goal of increasing the number of career certificates and college degrees by 1,700 a year.
Well, we didn't just meet that goal. We vastly exceeded it, awarding over 2,900 new degrees and certificates in the first year of implementation. That's 2,900 more men and women on a path to pursue their dreams and enter into the workforce as teachers, as engineers, as civil servants or even as entrepreneurs. Thank you for your great work in that area. We appreciate higher ed and career technology and your dedication for providing a higher level of education attainment. Let's give them a round of applause.
Our goal is to continue the momentum for greater educational achievement in Oklahoma.
Now, as you know, our general revenue fund is lower this year than was estimated. We're on a tight budget, as we should be. But good education requires appropriate funding. That's why I'm proposing a $50 million increase to help our students in k-12.
I have, however, proposed targeted cuts to most agencies. Those cuts are necessary. For decades, policymakers skimmed off the top of our general revenue fund, apportioning money to programs supporting education, road and bridge construction and other priorities. Over time, that has reduced the general fund, leaving the legislature less money to appropriate.
Even as our total gross revenue collections continued to rise, you as a legislature will have direct control of less than 50% of state dollars. That's your challenge and that's our challenge.
The dip in general revenue also reflects the uncertainty coming from Washington, where there's been from sequestration, government shutdown, tax increases and the frankly, financial chaos that created by Obamacare.
So for all those reasons, my budget proposes targeted spending cuts and asks our agencies to continue to find ways to operate more efficiently and effectively and to cut waste.
In the coming days and weeks, I know what we're going to hear. Those who like bigger government and higher taxes will say the sky's falling. Entrenched interest groups and even possibly some agency heads may say the same thing. But guess what. It's not.
The cuts we propose this year amount to 5% or less in our agency's budget and the total amount is about 1% of state spending.
Now, any business worth its weight in salt can find 5% of cost savings without crippling services it provides. Families have to make the same decisions and same choices all the time.
When I was a single mother, I had to take care of my children while cutting a whole lot more than 5% from my family budget. So I know most Oklahomans have had to make the same kind of tough decisions, same type of tough budget cuts and choices, and we'll manage.
And here's what Oklahoma state agencies have that most families in Oklahoma don't.
On the average, state government has a combined $830 million every year in accounts called revolving funds. Many agencies can support critical programs and operations by tapping into these funds.
State government must be more transparent and accountable in its budgeting. Shedding light on revolving funds will help achieve that goal.
And of course, ultimately, what makes state government work is our people.
My mother was a social worker for the Department of Human Services. My father worked with the unemployed at the Employment Security Commission. State government needs to attract and retain hard-working, dedicated Oklahomans like them. And to do that, it needs to compensate its employees fairly.
Last year, we commissioned a state employee salary and benefits study. The study showed that the total salary and benefits package that we give to the average state employee is roughly equivalent to those given out in other states. On the average, we spend about the same amount of money per employee.
But the way we spend that money is lopsided. Many employees working for the state of Oklahoma have salaries far below the private sector and other states. Meanwhile, their healthcare and benefits are far more generous. That may be a good model to attract qualified workers in the 1970s, but it's not today.
So to fix that problem, I am proposing a number of reforms.
First of all, we should begin by targeting salary increases to some state employees paid below the market value, and I have included money in my budget to do that.
Second, we should reform our current pay system to one that rewards performance over time served. Doing so will encourage better productivity and services.
Finally, new hires within the Oklahoma Public Employees Retirement System should be moved from the outdated, mid-20th century pension system to a more portable and flexible 401(k)-style benefits used in the private sector.
Businesses made this change a long time ago, recognizing that the old pension model didn't appeal to a more mobile workforce in today's modern economy, and it is time for the state government to stop playing catch up.
Moving to a defined contribution model helps us to modernize and accomplishes two important goals.
First, it allows flexibility for future public employees to take the money they have accrued with them if they change careers. That helps to make state employment more attractive and also aids in recruitment.
Second, it stabilizes the system for current public employees and retirees. Oklahoma's pension system currently has $11 billion in unfunded liabilities. The system as it stands today is not financially sound or sustainable. It's important that we shore up our pension systems so we can pay out the benefits that we have promised to our retirees.
Just as it's our responsibility to help maintain a motivated and skilled workforce in state government, it is also our responsibility to maintain and preserve our state buildings and assets.
In the case of the state Capitol, we are failing that goal. In fact, this building has become a safety hazard.
We're doing a great disservice to our state and our citizens by allowing the Capitol to crumble around us. The exterior is falling apart to the point where we must actually worry about our state employees and our visitors like teachers and students who take field trips. We will have to worry about them being hit by falling pieces of the facade outside.
The yellow barriers outside are an eyesore and its an embarrassment. And the electrical system is dangerously outdated. And you guys, the water stains that is you see on the walls downstairs – I have bad news for you. That's not just water. It's raw sewage. It's literally leaking down into our basement. And on the good days when our visitors and our employees can only see the disrepair in our Capitol, on the bad days you actually smell it.
So we must begin repairing the People's House now. The best and the most realistic way to accomplish this is through a bond issue.
The bond issue cannot come at a better time. Interest rates are low and most importantly – I want you to listen to this – most importantly, 41% of the state's bond indebtedness will come off the books by 2018. And over 86% will be eliminated over the next 13 budget years – 86%.
And July of this year will represent the 100th anniversary of the groundbreaking of this building, of the Capitol. Let's make sure that we celebrate that historic landmark knowing that we have taken the action to improve the condition of this building while it crumbles and falls apart, and not sit idly by.
Passing a bond issue is a right thing to do. And I have put money towards a bond issue and payments in my executive budget so I'm asking this legislature to pass a bond issue and to send it to my desk as soon as possible.
The things I have addressed today – protecting our children, improving education, adequately compensating our state employees, modernizing our pension system, maintaining our state capitol – all fall under the category of responsible government.
If we do these things, Oklahoma can offer a contrast to the government Americans everywhere are so disillusioned with – the kind we see in washington. Washington is leading this country in the wrong direction. But Oklahoma isn't about to follow.
In fact, we can offer a model to the rest of the country of what sound, common-sense, conservative governance looks like.
And that starts with categorically and unequivocally rejecting Obamacare and the drastic expansion of government-funded and government-run health care within it.
Rejecting Obamacare – now listen – rejecting Obamacare does not mean that we are uninterested in the health of our fellow Oklahomans. We have worked hard to improve the health outcomes of our state and we will continue to do so.
For instance, I'm going to continue to push for a waiver making Insure Oklahoma a permanent program. The Insure Oklahoma program helps 20,000 low-income working Oklahomans purchase health insurance, yet the federal government is constantly threatening to end the program despite its proven success, and that must stop.
I'm also committed to working with the legislature to pursue Medicaid reform. There are a lot of great, innovative ideas and policy solutions coming from the men and women in this room and we will continue to explore them.
I'm looking forward to continuing our work with private insurers, our health care industry and businesses to reform our sick care system, one that only helps people after they've fallen ill into one that truly improves the health outcomes by emphasizing preventive care and healthy living.
We also need to encourage access to appropriate levels of care. Far too many people with noncritical health problems are receiving expensive, unnecessary treatment in our emergency rooms. Right, Doctor?
Expanding Medicaid as President Obama has proposed does not solve this problem. In fact, it makes it worse. The cost of Medicaid growth and expansion is astronomical and estimated 850 million to the state of Oklahoma over a number of years and over 1.3 trillion to our nation.
The president's plan is unworkable and unaffordable.
We cannot plunge this nation further into debt or place Oklahoma on a fiscally unsustainable path by expanding Medicaid. Both the president's plan and the alternative proposals that rely on federal dollars in the Affordable Health Care Act amount to the same growth in government spending.
Washington wants to lead this nation in the wrong directions but Oklahoma will not be led that way. We will find our own way forward and we will find a better way.
And that also goes for tax policy, as well. Washington has taken every opportunity to raise your taxes. We should take every opportunity to lower them.
I believe responsibly lowering the income tax is the right thing to do. It's the people's money. It should stay with the people.
It's the people and the private sector, not state government, that are the true economic engines of our state. When we lower taxes, we allow them to invest in their businesses, spend dollars in the economy and help to create Oklahoma jobs. And that's why lowering taxes isn't just the smart thing to do, it's the right thing to do.
So this legislative session I have included in my budget an additional quarter-point income tax reduction that will return $100 million to the state economy once fully recognized.
Let's take this opportunity to show the country that lower taxes and limited government do work. We believe in them for a reason. The Oklahoma way, not the Washington way, is the best way to support economic growth and help the middle class Oklahomans and Americans.
Now what I've outlined today is a plan to build on this state's momentum – to help Oklahoma families find jobs that pay well, protect our children and provide them with the necessary tools in life to succeed and enter into the workforce, and to responsibly manage taxpayer dollars, and to demonstrate that responsible, productive government does exist even if Washington's doing its best to prove it otherwise.
In Oklahoma, we have a long history of working together to solve problems. A long history of resilience, of generosity, of compassion and ultimately success.
Let's work together to write the next chapter of Oklahoma's history and ensure that we're leaving our children a state that is better, stronger and more prosperous than the one we inherited.
Thank you all for your hard work and for letting me have the opportunity to serve as your governor. God bless you and may God bless the state of Oklahoma.
"Oklahoma State of the State Address." C-SPAN video, 45:36, Feb. 3, 2014. https://www.c-span.org/video/?317551-1/oklahoma-state-state-address