CA FWD: Working to elevate California

California Forward and the California Economic Summit have ambitious goals to create one million more middle-class jobs, one million more homes, and one million more acre-feet of water

California Forward is a nonprofit, nonpartisan organization that is working to make the promise of the California dream attainable for all. Its mission is to inspire better decision-making by governments at all levels in order to grow middle-class jobs, promote cost-effective public services, and create accountability for results.  California Forward is working to develop a public strategy for reviving economic opportunity and resiliency in urban and rural, north and south, inland and coastal California.  At the Kern County Water Summit held in March, California Forward President and CEO Jim Mayer outlined what his organization is doing to achieve their ambitious goals.

Jim Mayer began by saying he really likes the picture on his opening slide because it either shows the reality of the leadership that California can and does provide to the rest of the nation and the world – or our ambition to do so.

There are some times when I think our ego gets caught up between the reality and the ambition, but we don’t think small thoughts in this state,” he said.  “We are ambitious, we desire to be leaders, and I think history has shown that when we put our best selves together and find ways to work together and be innovative, we can accomplish much of what we want to do.

As we think about the great big world, we embrace especially the water part of it, and we recognize that water is essential to life,” he said.  “Without water, soil is just minerals and air is just gas.  Water – on earth, anyway – is the instigator of life.  The people in this room recognize that, but certainly most of the people that I work with don’t.  It’s two-thirds of the earth’s surface and 60% of the human body.”

As with most things in California, we think our water is even more special than anybody else’s, and that we treasure as if it is the most valuable thing – it is the real El Dorado, and it’s our water, and I think we do strive to make the very best of it.  And while we measure it by acre-feet or million acre-feet, those of us who work in and around water value it drop by drop, whether we’re an environmentalist or whether we’re an engineer or whether we’re a farmer – we think of it as that important.”

While we need to be very efficient in everything we do with water, and we’re going to need to make some hard choices as time goes by about when and where we grow what we grow, I think oftentimes we allow the fact that water and sunshine consolidates into our food to give us calories and to make us healthy and to bring us pleasure to be demonized, rather than recognizing just how vitally important it is.  That’s a message that I think we need to continue to share as that it really is so much of what life is about.”

Water is more than an accidental or convenient marriage between hydrogen and oxygen, atoms and molecules.  It really is something special,” Mr. Mayer said.  “A river itself is more than just water flowing downhill.”

But that doesn’t stop us from fighting about water, and sometimes, water seems to be the problem that can’t be solved.  “Peace appears to be more likely in the Middle East than it does at times over the San Joaquin Sacramento River Delta, and as the chairman on my board, the former chairman of the public sector group from Mackenzie Global likes to say, ‘we’re not in any danger of solving this problem.’”

But that’s not what I believe,” said Mr. Mayer.  “I want to encourage us to take a step back, and remember that water, whether it’s falling from the sky or whether we’re pumping it from the ground, it’s really connected to everything else.  And as business and civic and government leaders, we have to remember how the big challenges in our community are connected to everything else, and that as we advocate for this project or that project and this initiative, that we are also aware of and support efforts to improve how we govern ourselves, because how well we govern ourselves will really determine our ability to solve some of these big challenges.”

The California dream for many and an increasing number of Californians is simply that – just a dream, and in fact, we’re facing some pretty stiff headwinds.  But the good news is that we’re making significant progress in both governance and policy.  And I want to share with you some context and some activities that we’ve been involved with at California Forward and more broadly through a project we call the California Economic Summit that I think will leave you with some of the optimism that we have, and perhaps provide an opportunity for you to engage in all of those efforts as well.

Mr. Mayer noted that just about a decade ago, California was getting national and international attention as perhaps the first failed state.  “It’s one thing for a Banana Republic to cycle through governance, but people thought it was another thing if California couldn’t pull out of its death spiral.  We went through more than a decade of intense political gridlock in the capital.  It wasn’t just Democrats vs. Republicans – the Assembly wasn’t talking to the Senate, the Legislature wasn’t talking to the Governor, and people couldn’t do the ordinary business let alone solve the big problems.”

The state was in a fiscal mess, going through a business cycle without balancing the budget once.  “The budget was being passed increasingly late and was increasingly out of balance or balanced with gimmicks when it finally did pass.  It’s one thing for us to have conflicts among state governments and local governments, but we really reached what many observers thought was an all-time low in terms of the conflict between state and local governments.”

Mr. Mayer pointed out that a lot of things have changed in the last decade, due to the economic recovery and experienced leadership in Sacramento, but also the series of reforms put in place, many of them by California voters through the initiative process.  These political reforms have had the fundamental benefit of easing the partisan gridlock within the capital, he said.

Citizens redistricting, top two primary, term limit reform – these are things you may not think very much about, but let me tell you that the people who study this think it has made enough difference that now we have the attention of the other states, red and blue, that are trying to figure out how to address their governance issues.  We don’t have it all figured out, I haven’t heard Kum-by-yah in the Capitol yet, we have plenty of conflicts and problems, but we’re making progress.  These are things that have made a difference and we’re making progress.

Fiscal reforms have made a difference, such as the voter-approved Rainy Day Fund, a significant measure that has balanced the spending to match our volatile revenue, he said, noting that the fund will reach the legislative cap next year.  “That’s how much money has been set aside to buffer the next recession, but more importantly that without that measure, the legislature would have spent it, they would have put it in the budgets, and the base budgets would have been bigger, and we’d be going into this recession with a bloated a budget and without any reserves.  So yes, the budget has grown but it’s not nearly as big as it would have been without that.”

Mr. Mayer pointed out that there has been a relatively subtle but significant shift of moving authority from the state to local governments, a trend that’s demonstrated somewhat in SGMA.  “What we’re really doing is evolving governance to take into consideration just how big and complex the state of California is,” he said.  “You put all of these together, and from our viewpoint, we think California is better prepared for some of the big challenges that are in front of us.”

There’s been a lot of talk and analysis about acceleration of ‘big disruptions’; advanced technologies are radically changing what will happen in work places.  Jobs are going to be replaced by AI or machine learning or other forms of automation, and global markets for agriculture has created all kinds of opportunities, but also has created all kinds of complexities, challenges, and vulnerabilities, he said.

Most people are tracking what changing demographics are going to mean to this state as us baby boomers retire,” he said.  “Not only are the millennials going to take over but there are fewer of them and economists are worried that there’s not going to be enough people to take these jobs, that’s going to slow economic growth.  What does that mean for all of our businesses if there is downward pressure on growth because of changing demographics? It’s a very significant issue that they are working on in a number of our universities.”

There is a growing inequality, and this is an issue that vexes economists, as while it may be a moral issue or a social issue, it’s a profound economic issue if in fact we don’t reverse the trend of where currently we have the greatest inequality in the country since the Gilded Age, he said.

Mr. Mayer then ran through some statistics.  There are 8 million Californians that live in poverty and another 10 million who are considered ‘economically fragile’ meaning they are one recession, one layoff, one medical emergency away from poverty, he said.

Our problem is worse in this state and it’s primarily because of our high costs, and so as long as housing prices are moving up faster in California than wages, we’re going to lose ground to poverty even in a growing economy,” he said.  “That’s a message that hasn’t resonated in Sacramento.  They don’t really understand what the cost of living and the cost of government and the cost of regulation in California really means and that this is driving the poverty rate.  It’s not because of demographics, it’s because of our cost structures.”

Mr. Mayer said that they are finally getting some traction to understand that there are in fact two Californias and we need to have strategies that work for the regions that have higher concentrations of poverty.

The California Economic Summit has done the analysis that says in fact, we need more good high paying jobs,” he said.  “You would think in the state capital that this would be an imperative, but there is still a general meme in the capital that jobs just happen and that government doesn’t impact where private capital invests to create jobs.  I think we’re breaking through that meme with both sides of the aisle.

The California Economic Summit started about 7 years ago from this awareness that the state was several years into economic recovery but many regions of the state didn’t feel like they were recovering.  Home prices hadn’t rebounded, unemployment and wages hadn’t recovered, so business organizations got together to work to communicate with the state what is needed in order to grow equitable, sustainable, prosperous communities.

This group of leaders of business organizations, mostly chambers of commerce or economic development corporations or business councils adopted the triple bottom line,” he said.  “These were people that recognized that sometimes in California, our preferences had gone too far towards the environment without recognizing the impact on equity or on business, so this was a group that came together that said no, let’s advance policies that if we’re going to do something, we know what its going to do to the economy, we know what it’s going to do for equity, and we know what it’s going to do for the environment and we only want to pursue policies that are going to advance all three.”

We’re going to ground it in the regions so the state isn’t biasing its actions based on a portion of the state and it really understood what was needed in all of the regions,” he continued. “We explicitly engaged government, business, and civic leaders to work across these sectors because that’s what we knew would make a difference, that’s what would be valuable.  We came up with principles.  400 people working over multiple years, what values do we have, what brings us to this table, why are we going to work on this.  You can go to CAEconomy.org/endorse and see the principles.”

We developed a specific road map, an action plan.  Every year, we come together, we look at what we’ve gotten done, we decide what else we want to do, and then we go do it.  It’s not a conference, it is a summit where we come together, decide what actions we’re going to work on, and then we go away and work on them.

About four years ago, they began focusing their efforts on three ‘1 million challenges’.  The first million challenge is one million more skilled workers in California.   “We have a gap of one million between the skilled jobs that are available and skilled people that are capable of getting those jobs,” he said.  “We partnered with the community college chancellor’s office and with our regional organizations and over the course of three years, we developed the Strong Workforce Program.  This was $200 million more into the $2 billion career technical education system.”

But it wasn’t about more money, but about money spent more effectively, he said.  “We worked through an elaborate process that had external stakeholders, internal stakeholders, and government partners to help develop this program that was enacted two years ago.  This $200 million comes down to community colleges, they have to partner with business to identify needs, they have to create curricula and programs that’s going to result in a job, students are tracked through that and there’s a financial incentive for the colleges where people actually complete in time, get a job, and get a raise in the place that they professed.  I’ve been in meetings where it’s clear that $200 million investment is steering the $2 billion investment, so whether you’re interested in workforce or not, that’s a method, that’s how we can do this, that’s the kind of progress we’ve been able to make by working very collaboratively.”

California Forward is continuing to work to encourage and create incentives for partnerships between industries and institutions, between employers and educators, because that’s what’s going to really work to make sure that the programs and the curriculum are right and that people are prepared to move into those jobs, he said.

The second challenge is for one million homes.  They have identified everything needed to lower the cost and increase the supply of housing, and developed an ‘all of the above’ framework.  “Last year in January, the Governor included this framework as principles in his budget and this was the negotiation of the measures that passed last year that resulted in a permanent source of funding for farmworker housing and other low income housing,” he said.  “It started us down the road of some regulatory reform, we’re doing work this year on CEQA and a couple of other things where we really think some regulatory reform would make a big difference.”

The third challenge is for one million more acre-feet of water per year, broadly defined as expansion of watershed management solutions that can help regions conserve, capture, and re-use enough water to achieve a sustainable water balance.

Mr. Mayer noted that in the first years, they were working more broadly on infrastructure, and worked to enact a law that created Enhanced Infrastructure Financing Districts where multiple agencies can use multiple funding streams in order to support projects.  “Otay Mesa in San Diego and West Sacramento have used these, “ he said.  “It’s even be used in Los Angeles to figure out how to revitalize the LA River both for flood control and water supply and water quality, and their ambition is to turn the LA River from a racetrack back into a river that meets the water needs of LA.”

The summit has been working with the Department of Water Resources and UC Ag and Natural Resources and through that, they’ve done a number of things, he said.  “We’ve helped to evaluate the economics of working landscapes so those can be potential funding streams for people who own and manage lands. … From the forest to the sea, this is where that work fits in, because if we know what the benefits are of effective forest management, then they become candidates for cap and trade funds and other things where we can better manage the forests and use that money to make those investments and increase the water supply benefits.”

The summit has also worked with regional organizations to better develop tools to help assess agricultural value for economic development planning; this is being done in Sacramento and in the North Bay regions and they are documenting benefits of ecosystem services.

There are some researchers that are based down here in the Tulare-Visalia area that have been doing some really groundbreaking work on how we can value ecosystem services and build them into policies writ large.  We’ve been doing some convenings where the researchers who have really been at the cutting edge of things, including like economic and financial and management models for groundwater recharge, can link up with practitioners, so working with the University of California, we’ve done a set of these convenings and in each one of those, people can make the connections, get the information, and do what they need to do.”

About 2 years ago, the Department of Water Resources recognized they weren’t doing everything they could to support what was happening at a regional or even multi-regional level.  “They recognized the California Forward and the Economic Summit had expertise in governance and finance and regulation, and asked us to work closely with the folks in the Russian River watershed to see if we could capture the innovations that they have in place there, and then backward map that to what they could change in state policy that would enable and make it easier for people in other regions to be just as innovative,” he said.  “We’ve mapped out what governance partnerships they’ve had; it’s amazing some of the things they’ve done between state regulatory agencies and federal regulatory agencies and local water managers.  Mostly what we have found is that with good leadership, some of what were viewed as regulatory barriers could be overcome, so there are some real opportunities there about how do we break down the walls between regulatory entities and water managers, so we’re documenting that and seeing what else we can do.”

We’re mapping out where there are needs to change regulatory barriers where the environmental laws are actually preventing people from doing things that are good for the environment and good for water supply,” he said.  “DWR is very receptive to learning and knowing where those are, as are other state agencies that are involved.  And we’re developing some additional financing models, so people that want to do integrated water projects can blend as many funding streams as you can to access as many sources of financing and capital as you can in order to get those done.  Our objective is to have all of those things done by this September for the next Economic Summit.

Reflecting back on the past seven years, the summit members feel that there is a tremendous value to connecting business, government, and civic leadership.  “You have to have all of them at the table in order to change the dialog from just the set of normal stakeholders that are engaged to that broader set of stakeholders that have a view beyond just the narrow.  They felt like the triple bottom line has really helped them create a platform where they can start having some conversations that weren’t adversarial from the start, and just one side.”

They’ve seen that it’s been very valuable to convene the stakeholders and let everybody have their say, but it’s also important to have some kind of civic organization that can be pointing people towards what do we need to do to really solve the problem and to really push people on what it’s going to take to get to what we want to do,” he said.  “Increasingly they use the word stewardship.  This isn’t a word California Forward came up with, it’s a word that many of these regional organizations did, and many of them were business leaders.”

What we’ve found is that it’s about having purpose, it’s about engaging deeply in partnerships, and it’s about patience,” Mr. Mayer said.  “Not because we have all day … but as we get older, we feel like we can see the long term horizon, we know how long it’s going to take to change things, but that doesn’t mean that we accept that they can’t be changed.  It means we commit to changing them at the fastest pace we possibly can, recognizing based on the wisdom on age, that it’s going to take a little while and we need to be strategic about that.”

When we first started at California Forward, we committed to be a bipartisan organization,” he said.  “It’s a combination of leadership with stewardship and the set of reforms that are going to help us solve these big challenges.  So I want to leave you with some optimism.  I think we’ve made a lot of progress.  I think we have some big challenges in front of us, but I think we’re capable of doing it, so I encourage you to get involved and stay involved in things happening here in Kern County or the San Joaquin Valley.  If there’s anything I’ve said that makes you want to get involved in the California Economic Summit, we’d love to have you involved as a participant in the summit, as a participant in some of our workgroups or any of the convenings that happen in between as it’s based on people who realize that it’s going to be easier to get some of this stuff done if we work together than if we stay in our silos.

Thank you very much.”

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