Transcript Power Point - Parents United for Public Schools

But What About Tomorrow?
Tom Stinson, State Economist
Tom Gillaspy, State Demographer
January 2009
Minnesota Has Been Very
Successful
(Especially For A Cold Weather State at the
End of the Road)
• Our economic growth rate has exceeded
the national average
• Our population growth rate leads the frost
belt
• We rank with the leaders on many social
and economic indicators
• Education has been a key contributor to
the state’s success
Minnesota’s Economy Has
Changed Since the 1960s
% of GSP
Res Based
Mfg Adj
Const
2001
1963
TCU
Trade
Services
Financial
Govt
0%
5%
10%
15%
20%
25%
Minnesota’s Per Capita Personal
Income Exceeds the U.S. Average
by 6 Percent
• Minnesota ranked 14th in personal income per
capita in 2006- - - In 1960 Minnesota ranked 25th
• Personal income per capita grew at an average
annual rate of 6.8 percent between 1960 and 2005
• Since 1960 per capita personal income has grown
faster in Minnesota than in most states outside
the Southeast
Minnesota Ranks Highly in Many
Social/Economic Indicators
• 2nd percent of 16-64
• 4th lowest rate of disability
•
•
•
•
•
employed (76.9%)
8th lowest poverty rate
1st percent with health
insurance 2004-06 ave
9th median family income
in 2006
1st Kids Count 2007
Updated September 2007
•
•
•
among people age 16-64
1st with at least high school
degree (90.7%)
12th with at least a
bachelor’s degree
1st home ownership
1st United Health
Foundation ranking of state
healthiness 2006 (21%
above the national norm)
Not All Minnesotans Enjoy the
Same Level of Prosperity
•
Regional differences exist in income,
education, and health
•
Racial and ethnic minorities also
experience large differences in income,
education and health
•
Many rural areas continue to experience
long term population decline
Minnesota’s Current Success Is Due
to Decisions Made 50+ Years Ago
•
•
•
•
Private sector and public sector
decisions established the foundation
for growth in Minnesota’s economy
Dealing with challenges brought by the
baby boom was a key to our success
Wise investments were made
Education has been a key contributor to
the state’s success
We have come a long way.
But what about tomorrow?
Past Performance
Does Not Ensure
Future Results
Three Mega-Forces Will Shape
Minnesota’s Economy
• Demography (Today’s Focus)
• Globalization
• Technology
Minnesota Will See a 30 Percent Jump in
Workers Turning Age 62 Beginning 2008
Worked Within Past 5 years
60,000
50,000
40,000
30,000
20,000
10,000
0
7/05 to
7/06
7/06 to
7/07
7/07 to
7/08
7/08 to
7/09
7/09 to
7/10
Year Turning Age 62
2005 ACS
7/10 to
7/11
7/11 to
7/12
Aging Is the Dominant Trend in
Minnesota and the Nation
•
•
It is not normal for a society to age
•
Sharp increase in retirements will
begin in 2008
•
In 2011, the number of 65th birthdays
will increase substantially
Dramatic changes are coming over the
next 4 years
From 2010 to 2020, Minnesota Will
See Large Increases Age 50s and 60s
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
16,500
8,440
41,400
91,370
112,540
102,960
54,240
-42,310
-63,650
-2,680
61,920
47,950
-9,980
-30,680
Source: Minnesota State Demographic Center
Numbers are rounded
5,050
47,330
36,190
20,150
Minnesota’s Boom Generation Begins
Turning 65 in 2011
1,400,000
1,200,000
1,000,000
800,000
18-24
65+
600,000
400,000
200,000
0
1950 1960 1970 1980 1990 2000 2010 2020 2030
Labor Force Growth Is About To
Slow Sharply
Ave Annual Change
1.6%
1.52%
1.4%
1.12%
1.2%
1.0%
0.75%
0.8%
0.6%
0.43%
0.4%
0.27%
0.2%
0.10%
0.13%
0.0%
19902000
2005-10 2010-15 2015-20 2020-25 2025-30 2030-35
Economic Fact of Life #1
Standard of Living depends on output
per resident
Output = Output per Hour * Hours
Worked
Traditional College Age Population Is
Growing Now, But Soon It Will Slow,
Then Decline
14%
13.0%
Percent Change 18-24
12%
10%
8%
6.8%
6%
Mn
US
4.5%
4%
2%
0.7%
0%
-2%
-2.3%
-4%
2000-05
2005-10
-1.6%
2010-15
Census Bureau US Proj, Mn State Demographer Mn Proj
-3.0%
-2.2%
2015-20
Most Future Jobs Are Know-How,
Not Know-What or Know-Why
•
•
•
Transformational – creating products
Transactional – interactions that can be
easily scripted or automated
Tacit – complex interactions requiring
high levels of judgment. Know-How as
opposed to Know-What or Know-Why
– The growth sector of the economy
– 40% of labor market, 70% of jobs created since
1998
Workforce Development Will Be
Crucial To Minnesota’s Economic
Future
• Number of workers
• Quality of workers
Economic Fact of Life #2
• Productivity depends on
– The private capital stock
– The stock of human capital
• Education
• Health status
– The stock of infrastructure
– Advancements in technology
Where Will Minnesota’s
Future Talent Come From?
Migration Will Become the Largest
Source of New Workers in Minnesota
Net Labor Force Growth
500,000
400,000
Total
Natural
Partic. Rate
Migration
300,000
200,000
100,000
0
-100,000
2000-10
2010-20
2020-30
Change In Enrollment 2000-01 to
2007-08
2%
0.6%
0%
-2%
-1.6%
-2.2%
-4%
-6%
-5.8%
-8%
-10%
-12%
-9.9%
-12.0%
-14%
-13.9%
-16%
St. Paul
Anoka
White Bear
Hennepin
Lake
North St
Paul
Mounds
View
Roseville
Twin City
Metro
Grade
In Roseville Schools, Grades 9-12
Are Larger Than 1-4
12
11
10
9
8
7
6
5
4
3
2
1
KG
0
100
200
300
400
Enrollment 2007-08
500
600
700
Minnesota Births 1990 to 2020;
2006 was highest since 1964
80,000
75,000
Actual 2006
70,000
65,000
Births
Actual 2006
Proj Births
60,000
55,000
Source: Mn Dept of Health. State Demographer projections revised 2007
20
20
20
15
20
10
20
05
20
00
19
95
19
90
50,000
Job Growth Contributes To
Increased Diversity
• Minnesota is one of the least diverse
•
•
•
states in the nation—13% minority v US
32%
Over half of total population growth this
decade is minority.
In south east Minnesota, minorities
represent 16% of the population but 38%
of population growth since 2000.
And this is related to age—new, diverse
population is younger
Change Enrollment 2000-01 to 2006-07
Minority Students Are Increasing While
White Students Are Declining
Am Indian
Asian
Hispanic
Black
White
Total
80%
68.0%
70%
60%
50%
40%
34.5%
30%
20%
10%
13.7%
2.7%
0%
-10%
-20%
Mn Dept of Education data
-1.6%
-8.4%
Students Speaking Non-English
Language At Home
State 93-94
State 07-08
National 03
Westbrook
Sleepy Eye
St. James
Pelican Rapids
Columbia Heights
Brooklyn Center
Richfield
Worthington
St. Paul
Roseville
0%
3.0%
11.4%
18.7%
30.6%
30.7%
31.3%
33.2%
34.1%
34.9%
39.7%
41.0%
44.1%
19.5%
10%
20%
30%
40%
50%
Percent of Students in 2007-08
Source: Mn Dept of Education data, Districts of more than 500 enrollment. Roseville students speak
53 different non-English languages, the most common of which are Hmong, Spanish, Burmese, and
Chinese
The Next Generation Economy-Long term issues are quickly becoming
short term challenges
The next four years will be a period of
great social and economic change
Structural imbalances have turned into
projected budget deficits
Rapid aging and the related surge in
entitlements are upon us
Economic growth will depend increasingly
on productivity growth
Once again, wise decisions are needed
Aging Of Society Will Impact Private
and Public Spending
•
•
•
•
•
Health care spending will increase
Retirement concerns will affect
household finances & housing choices
Shift in government priorities to issues
of aging and health
Older voters often more fiscally
conservative
State tax base will be affected as baby
boom reaches retirement age
Spending Priorities Will Change
The Three Largest Cost Drivers In The State Budget
1,400,000
1,200,000
1,000,000
18-24
65+
5-17
800,000
600,000
400,000
200,000
0
1950 1960 1970 1980 1990 2000 2010 2020 2030
Census counts & State Demographer projection
Phases in the Household Life Cycle
Dollars
Borrower
Dissaver
Saver
Income
20
30
40
Consumption
50
Age
60
70
80
State/Local Government’s Share of
Personal Income Has Declined Slightly
Price of Government
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
1990
1992
1994
1996
1998
2000
2002
Minnesota’s Economy Will Grow
Next 25 Years--State Revenue
Growth Rate Projected To Slow
5 Year Compund Growth Rate
8%
7%
6%
Total
Per Capita
Real Per Capita
6.8%
5.5%
5%
3.9%
4%
3.4%
2.8%
3%
2%
1.2%
1%
0%
2001
Budget Trends Commission, 2009
2033
If State Health Care Costs Continue
Their Current Trend, State Spending
On Other Services Can’t Grow
8.5%
Annual Ave Growth 2008-2033
9%
8%
7%
6%
5%
4%
3.9%
3%
2%
1%
0.2%
0%
Revenue
Health Care
Education & All
Other
General Fund Spending Outlook, presentation to the Budget Trends Commission,
August 2008, Dybdal, Reitan and Broat
Health Care Spending Jumps After 55
U.S. Health Care Spending By Age, 2004
$12,000
$9,914
$10,000
$9,017
$8,000
$6,694
$6,000
$2,000
$3,571
$3,496
$4,000
$1,855
$2,165
$2,747
$1,074 $1,445
ra
ge
A
ve
75
+
4
65
-7
4
55
-6
4
45
-5
4
35
-4
4
25
-3
4
15
-2
14
5-
<5
$0
Source: Agency for HealthCare Research and Quality, Medical Expenditure Panel Survey,
data for per capita spending by age group in the Midwest. Excludes spending for long-term care institutions.
The Most Rapidly Growing Segments Of
Minnesota Are People In The Highest
Health Care Cost Ages
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
16,500
8,440
41,400
91,370
112,540
102,960
-42,310
-63,650
54,240
-2,680
61,920
47,950
-9,980
-30,680
5,050
47,330
36,190
20,150
Change 2010-20
Source: Minnesota State Demographic Center
Numbers are rounded
Can we afford the future?
Can we afford to not
afford the future?
High School Graduation Rates In Minnesota
Have Drifted Downward And Are Lower For
Males And Minorities
100%
95%
90%
92%
89%
92%
87%
85%
78%
80%
75%
72%
70%
67%
65%
62%
60%
55%
50%
White Male
White Female
Minority Male
Three year averages of 10th grade graduation rate.
Minority
Female
1990-93
2003-06
Education Is The Key To
Productivity
Minnesota High School Graduation Ratio
100%
89%
85%
90%
85%
2 Yr Ave Rate
80%
70%
60%
57%
60%
62%
Hispanic
Black
50%
40%
30%
20%
10%
0%
American
Indian
Asian
White
Total
2004-05 through 2005-06 graduates. Based on 10th grade enrollment three years earlier.
Big Opportunities
• The current situation is not sustainable
• The challenge--building the foundation
for future success
– Economic prosperity
– Environmental quality
– Social justice
– Quality of life
• Wise decisions will again be needed
How will Minnesotans 50
years from now view our
generation’s stewardship?