With Minnesota's current and forecast
demographics, we can recognize that a new policy context exists, began
Susan Brower. "In the policy world, demographics are shifting the
ground underneath us. What's changing? We're getting older on average
in Minnesota, across the U.S. and most places across the globe,
particularly in European countries and in many Asian countries. Even
in some developing countries, we're seeing birth rates decrease and
"We can forecast demographics going forward
because there are lots of pieces that are given," she said. "We know
how people age and we know who's living here and what they'll look
like in five, 15 or 20 years."
Minnesotans are also more diverse and
increasingly mobile. With each passing year, movement from and to all
corners of the globe is more of a reality.
There is a mismatch between our current
policies, services and funding mechanisms and today's demographics.
"The problem becomes, not the demographic changes, but the
mismatch between the services we provide, our expectations, our
funding mechanisms, our funding streams and the demographic realities
of today," Brower continued. "The problem is trying to bring into
alignment our demographic realities today with the policies we have in
Both the number and proportion of older
adults and the number of students are growing. The two largest
demographic groups affecting the state's general fund are students
(ages 5 to 24) and older adults (age 65 +), Brower said. However, the
65+ group is growing much more quickly and is anticipated to eclipse
the size of the K-12 (ages 5 to17) population for the first time ever
by 2020. It's important in determining what the costs might be to look
at how those groups will change going forward.
Minnesota's current 700,000 older adults,
who make up 13 percent of the population, will increase to about 20
percent of the population in the next 15 years. There will be a very
rapid increase in that population very soon, as the Baby Boomers
continue to age into the 65+ group. She said state spending is tied to
that age group, with a very large proportion of the health and human
services budget flowing to elderly Medical Assistance and long-term
care, home- and community-based healthcare waiver programs and
In addition, the youth population is
increasing, as well, although much more gradually than with older
adults. This trend has a direct impact upon the state's K-12 and
higher education spending.
Health-care spending could crowd out all
other spending in 25 years. In 2009, Brower said, the Minnesota
Budget Trends Study Commission put out a report that found that
health-care spending is a main budget driver. It said if that spending
continues to increase, as it has in recent years, at 8.5 percent
annually over the next 25 years and revenues continue to increase at
3.5 percent yearly, health-care spending will crowd out all other
state spending. And, she said, that projection does not account for
the increase in enrollment in health programs that will occur as the
Baby Boomers age. She hasn't seen any projections of increased
enrollments due to the aging population worked into future health-care
She reported that a study done in 2010 by
the Minnesota Department of Human Services found that only 45 percent
of Baby Boomers had a long-term care plan, such as long-term care
insurance, savings or home equity. "This is a growing need that more
than half of near-retirees haven't planned for and the numbers of
unprepared retirees will increase going forward," she said.
Minnesota is not keeping up with today's
greater need for a more educated workforce. Close to half of the
state's general fund (49%) is spent on K-12 or higher education. "We
can anticipate that the school-age population (ages five to 24) will
continue to increase. Whether or not education funding will increase
is tied to what we do with health-care costs," Brower said.
She noted that in the past, about 30 percent
of Minnesota job openings required some type of postsecondary
education. Now that figure is close to 70 percent. So there is a
greater need going forward for a more educated, skilled, and aligned
workforce. While historically Minnesota has done very well on that
account, Brower said we're not keeping up with that need today. In
response to a question, she said we are not meeting the needs of all
our students equally. There continue to be poorer outcomes for
students of color.
Among all Minnesota high school students, 77
percent are graduating on time, i.e., in four years. That figure is 50
percent for Latino, Native American and African-American students.
It's closer to 84 percent for white students, followed by 72 percent
for Asian students, although there is great variability among
different groups of Asian students.
She said this is important, because
increasingly our workforce will be made up of people of color. Today
17 percent of the working age population is made up of people of
color; by 2035, it will be 25 percent.
The well-being of our older adults and our
youth and the education we're providing to them are closely linked.
Brower commented, "Jobs in the 21st century are increasingly
mobile. Employers can leave quickly if they can't find the workforce
they need. We need future economic growth fueled by these skilled
workers to fund expenditures for older adults and to maintain thriving
communities that provide a high quality life for all residents."
Responding to a question, Brower noted that,
in Minnesota, the ratio of working adults to older adults is five to
one now and will become three to one in the next 20 years.
A 'silver tsunami' is the reality going
forward. Brower remarked that two mismatches are particularly
concerning. One big mismatch is that of funding vs. needs relative to
aging. The other big mismatch is that of our education system's output
of appropriately skilled workers vs. the current need for such skilled
workers. "The large-scale mismatch in terms of funding is not going
away," she said. "It's here to stay. It's a policy reality brought on
by our demographic changes. It's coming upon us very quickly. The
transition to older adults and the age of entitlement has already
started. This is the reality going forward. It's a silver tsunami."
There are mismatches in funding with what
we've promised in the past and what we expect in the future. There are
mismatches in the whole package of services state government provides,
leading to structural budget deficits. "The largest proportion of the
budget relating to the aging of the population and the biggest crunch
is in the elderly Medical Assistance budget for basic care and
long-term care, home- and community-based elder care waiver programs
and facilities," Brower said. "We will also see increases in
enrollment in education, because that part of the population is
We must innovate in the way we provide and
fund services; that innovation will cause some failures. "We can't
continue to provide all the services we've provided in the past in the
same way we've done it in the past and fund them the same way," she
said. "It's no one's fault; it's just the demographic reality."
Brower said we must ask ourselves three
questions: (1) What are our shared obligations? (2) What are our
priorities? (3) What are our end goals going forward, given this new
"There is heavy-duty policy work to be done
in coming to agreement over our priorities and obligations going
forward," she continued. "The historical demographic context is just
begging for us to make changes to the way we operate. There is plenty
of data to help us guide our decisions and we need to make wise,
high-value investments with the public dollar."
"We can embrace this period of change as a
testing ground," she suggested. "Great changes give a lot more license
to try new things, more flexibility, greater license to fail, perhaps.
I don't know if that's in the state culture right now; it appears to
me that it is not. With innovation there will be some failures. You're
going to have to try things out, but having the courage to do so means
you can identify new avenues that result in greater efficiencies,
savings and service to Minnesotans."
"We must allow more flexibility in
delivering services across the state, because they can be tailored to
specific subpopulations," she suggested. "If we move to a
results-oriented approach, it requires less oversight. Data and
measurement can help us be more definitive in what's working and
what's not working. We must be relatively quick to make those
decisions and to be able to recuperate from our missteps as we move
forward in this uncharted territory."
A data-driven approach, Brower said, lends
itself to a results-oriented kind of governing. "We want to measure
outcomes, how effective we are, how much work we're doing. There are
efficiencies to be gained in government by focusing on outcomes."
Nationally, the retirement age has
increased. In response to a question, she said that nationally the
retirement age has increased long term and particularly since the
recession. But it hasn't increased so much that it changes the picture
in terms of what we can expect in terms of labor force growth. The
retirement age has increased, but it's more along the lines of three
to four years. "There are policies we can put in place to encourage
people to work longer and to make it easier for people to work
longer," she remarked.
Growth rates in exurban and urban counties
are converging in recent years. An interviewer asked about where
population changes are located in the state. Brower responded that for
the last 50 years, Minnesotans have been moving out from metro
counties to exurban counties. During the early 2000s, these exurban
counties (such as Scott, Sherburne and Wright) were some of the
fastest-growing counties in the nation. But during the later 2000s,
there was a convergence of growth rates between those exurban areas
and urban counties, with far less mobility and population growth
across the board during the recession and years following. This
matched what was happening in urban counties all across the country.
The state demographer provides data to state
and regional agencies to help guide their decisions. Brower noted
that historically the demographer's role in state government has been
to provide long-term strategic guidance. The office is involved day to
day in helping various divisions across state government with specific
data to aid their decisions. For example, the demographic center
recently helped the Office of Early Learning understand how many young
children are living in poverty, aided the Department of Health in
estimating the Somali population and assisted the Public Facilities
Authority in determining median incomes for small communities to
equitably distribute public infrastructure dollars.
An interviewer asked how people in local
areas around the state are applying demographic information. Brower
responded that she has made presentations to various economic
development regions across the state, as well as local governments,
nonprofits and business groups. "They're using the same data we're
using and we're making the same information available, so that
everyone can make smart decisions, especially related to these aging
trends that are likely to affect everyone."
In conclusion, one interviewer commented,
"The first thing that gets axed at the local level is analytical
folks, but we need more of them than ever."